Loading...
HomeMy WebLinkAbout071823-06.5ADMINISTRATIVE STAFF REPORT 6.S TO: Mayor and Town Council July 18, 2023 SUBJECT: Resolution No. 58-2023, authorizing the Town Manager to execute a Regulatory Agreement and Declaration of Restrictive Covenants for the below-market rate accessory dwelling units required for the Magee Ranch residential development BACKGROUND On July 2, 2019, the Danville Town Council adopted Ordinance No. 2019-06 and Resolution No. 46-2019, approving a Preliminary Development Plan - Rezoning request, Major Subdivision request, and Final Development Plan request allowing the development of a 69 -unit development on the 410 -acre Magee Ranch site. The applicant and developer are Davidon Homes. Pursuant to the Town's Inclusionary Housing Ordinance (Municipal Code Section 32-73), the development approval required that 10 percent of the units (seven units) incorporate below -market -rate (BMR) accessory dwelling units (ADUs). The Inclusionary Housing Ordinance requires Town Council approval of an Affordable Housing Agreement specifying the terms of the agreement. The agreement is then recorded to run with deeds of the subject lots. DISCUSSION The Affordable Housing Agreement (Attachment B) specifies the maximum allowable household income for tenants occupying the BMR ADU units. The agreement would also regulate the terms of occupancy of the BMR units and would set forth other restrictions to assure the long-term affordability of the BMR units to qualifying low-income households. The BMR ADUs are attached 500 -square -foot units, with separate entries, and with no internal connections. The units are not required to be rented, but if they are rented at any time within the 20 -year term of the agreement, they would be required to be rented at a qualifying rate to a qualifying low-income household. Low-income households are considered to be households with a gross annual income below 80 percent of the published median income for the Alameda County and Contra Costa County metropolitan area, adjusted for household size. The provision of for -rent BMR units serving low-income households addresses, in part, the housing needs identified in Danville's 2023 - 2031 Housing Element. The provision of the for -rent BMR ADU units will count towards the Town's fair share housing goal established by the Association of Bay Area Governments (ABAG) and the State Department of Housing and Community Development (HCD). PUBLIC CONTACT Posting of the meeting agenda serves as notice to the general public. FISCAL IMPACT None. RECOMMENDATION Adopt Resolution No. 58-2023, authorizing the Town Manager to execute a Regulatory Agreement and Declaration of Restrictive Covenants for the below-market rate accessory dwelling units required for the Magee Ranch residential development. Prepared by: �av David Crompton Chief of Planning Reviewed by: Tai J. Williams Assistant Town Manager Attachments: A - Resolution No. 58-2023 B - Draft Regulatory Agreement and Declaration of Restrictive Covenants for the Magee Ranch Development Affordable Housing Agreement 2 July 18, 2023 DocuSign Envelope ID: F0B24845-BC8C-4E15-8E86-7CD9A7A6D01 B RESOLUTION NO. 58-2023 AUTHORIZING THE TOWN MANAGER TO EXECUTE A REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS FOR THE BELOW-MARKET RATE ACCESSORY DWELLING UNITS REQ RED FOR THE MAGEE RANCH RESIDENTIAL DEVELOPMENT WHEREAS, at their meeting on July 2, 2019, the Danville Town Council adopted Town Council Ordinance No. 2019-06 and Town Council Resolution No. 46-2019, approving Preliminary Development Plan - Rezoning request, Major Subdivision request, and Final Development Plan request allowing a 69 -unit single-family residential development on the 410 -acre Magee Ranch property; and WHEREAS, under the provisions of the Town of Danville's Inclusionary Housing Ordinance, Davidon Homes accepted an obligation to execute a Regulatory Agreement and Declaration of Restrictive Covenants (Affordable Housing Agreement), restricting the development and operation of the Below Market Rate (BMR) accessory dwelling units (ADUs) that are to be constructed in conjunction with seven of the single-family units; and WHEREAS, promoting the development of affordable housing within the Town of Danville is a goal of the Danville 2023-2031 Housing Element; and WHEREAS, the Town Council reviewed the draft Affordable Housing Agreement prepared for the project that will provide for the regulation of the occupancy and use of the BMR ADU units at their meeting of July 18, 2023; and WHEREAS, a staff report was submitted recommending that the Town Council approve the draft Affordable Housing Agreement between the Town and Davidon Homes for the BMR ADU units; now, therefore, be it RESOLVED, that the Town Council authorizes the Town Manager to execute a Regulatory Agreement and Declaration of Restrictive Covenants for the below-market rate accessory dwelling units for the Magee Ranch development. ATTACHMENT A DocuSign Envelope ID: F0B24845-BC8C-4E15-8E86-7CD9A7A6D01 B APPROVED by the Danville Town Council at a regular meeting on July 18, 2023 by the following vote: AYES: NOES: ABSTAINED: ABSENT: O. • C APPROVED AS TO FORM: ATTEST: DxuSigned by: 895C6C40ADBF4BF. CITY ATTORNEY CITY CLERK PAGE 2 OF RESOLUTION NO. 58-2023 RECORDING REQUESTED BY: Town Manager Town of Danville WHEN RECORDED, RETURN TO: Town of Danville 500 La Gonda Way Danville, CA 94526 Attention: City Clerk REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS BETWEEN THE TOWN OF DANVILLE AND DAVIDON HOMES This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement") is entered into as of , by and between the Town of Danville, a municipality ("Danville") and DAVIDON HOMES, a California limited partnership (the "Developer"), the developer of certain real property in the Town of Danville, Contra Costa County California, commonly referred to as Magee Preserve (the "Project") and described more specifically in Exhibit "1" attached hereto (the "Property"). RECITALS 1. Danville approved the development of the Property pursuant to Town Council Resolution No. (adopting a Mitigated Negative Declaration of Environmental Significance and approving Vesting Tentative Map request , Final Development Plan request , and Tree Removal request , and Ordinance No. (approving Preliminary Development Plan - Rezoning request ). 2 The Project is subject to Danville's inclusionary housing ordinance, Municipal Code Chapter 32-73. Conditions of approval for the Project require the Developer to establish "attached for rent below market rate accessory dwelling units (BMR ADUs)," to be rented to "Low Income households." 3. Danville finds that the Developer's residential development will benefit the community by providing the affordable units, for rent, to Qualifying Low Income Households. 1 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve ATTACHMENT B 4 The Developer has proposed that the Affordable Units required to be established shall be on Lots of the Project, to be constructed as attached ADUs and occupied by rental households. It is the purpose of this Agreement to set forth certain conditions under which Danville has approved the Project; to impose enforceable restrictions on the occupancy and use of the affordable units, for rent, on the above-cited lots in the Project; and to ensure the continued viability of this affordable housing program as envisioned by the parties. Both parties recognize that the Project would not have been approved by Danville without the assurance that the Developer would execute this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Danville and the Developer hereby agree as follows: SECTION DEFINITIONS AND INTERPRETATION Underlined items used herein shall have the following -meanings unless the context in which they are used clearly requires otherwise. 1. Below Market Rate Accessory Dwelling Units (BMR ADUs) means the accessory dwelling units contained in the single family detached residential units to be developed on Lots of Magee Preserve, each with bedroom, to be designated as affordable units, for rent (as required by Danville's inclusionary housing ordinance, Municipal Code Chapter 32-73) for occupancy by Qualifying Low Income Households for the term established by this Agreement. 2. Below Market Rate Accessory Dwelling Unit (BMR ADU) Owner means the fee owner or owners of Lots with the authority to execute a lease providing for occupancy of a BMR ADU by a Qualifying Low Income Household. 3. Agreement means this Regulatory Agreement and Declaration of Restrictive Covenants. 4. Area Median Income means the median family income, as adjusted for family size and as annually revised, for the Contra Costa County area of the State of California, as published at Title 25, California Code of Regulations, Section 6932. (Note: In the event the foregoing determinations of area median income are discontinued, the Area Median Income shall be as alternately established and published by the U.S. Department of Housing and Urban Development ("HUD")). 2 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve 5. Danville means the Town of Danville, a political subdivision of the State of California. 6. Developer means DAVIDON HOMES, a California limited partnership and its successors and assigns, and any surviving, resulting or transferee entity. 7. Income Certification Quevonnaire means the Danville -supplied form provided to the BMR ADU Owners, which may be amended from time to time, which shall be completed by all prospective Qualifying Low Income Households to allow Danville and the BMR ADU Owners to ascertain eligibility for such households under the Agreement to occupy the BMR ADUs in the Project, based on income criteria and household size. S. Monthly Utility Allowance means the allowance for tenant -furnished utilities, published from time to time by HUD Office of Public and Indian Housing in their publication entitled "Allowances for Tenant -Furnished Utilities and Other Services" for the Housing Authority of the County of Contra Costa or other reasonable utility allowance consistent with the Density Bonus Ordinance and approved by Danville. 9. Property means the parcel of real property described in Exhibit "1". 10. Project means the -unit single-family residential development authorized for construction through Danville's Town Council Resolution No. 31-2019 (adopting a Mitigated Negative Declaration of Environmental Significance and approving Vesting Tentative Map request SD 9479, Final Development Plan request DEV 18-09, and Tree Removal request TR 18-26, and Ordinance No. 2019-04 (approving Preliminary Development Plan - Rezoning request PUD 18-01)). 11. Qualifying Low Income Household means a household with an annual gross household income between the lower income eligibility limit and 80% of area median income limits applicable to Contra Costa County, as published and periodically updated by the State Department of Housing and Community Development pursuant to Section 50079.5 of the California Health and Safety Code. SECTION II -RESTRICTIONS PERTAINING TO USE OF THE BMR ADUs The parties agree as follows: 1. General Terms. The Property shall be deed restricted to reflect requirements from the project conditions of approval that require the ADUs to be developed on Lots of the Project to be developed as units whose 3 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve occupancy and use is restricted, when leased, to require that they be made available to Qualifying Low Income Households. 2 Term of the Agreement. This Agreement shall become effective upon its execution and delivery. A twenty (20) year obligation upon the respective BMR ADU Owners, relative to the occupancy and use of the BMR ADUs they respectively control, commences at the issuance of the initial certificate of occupancy of the BMR ADUs. Each BMR ADU Owner hereby acknowledges and agrees that in the event that such owner elects to lease a BMR ADU to a third party, such lease shall be subject to the terms and provisions of this Agreement; provided, however, that the BMR ADU Owner shall have no obligation to lease the BMR ADU. 3. Income restrictions for households occupying BMR ADUs. Where a BMR ADU Owner receives rental income from renting a BMR ADU, said BMR ADU shall be rented to a Qualifying Low Income Household. 4 BMR ADU Owner's obligation to screen incomes of prospective occupants of the BMR ADU. Before executing a lease for BMR ADU, a BMR ADU Owner is required to first verify that the prospective Qualifying Low Income Household has a gross annual household income at, or below, the maximum allowable income range, as adjusted for household size both for projected annual household income for the current calendar year and for the most recently completed calendar year. To facilitate this determination, the BMR ADU Owners shall require prospective Qualifying Low Income Households to complete and submit an Income Certification Questionnaire to certify: a. The names and the number of occupants of the prospective Qualifying Low Income Household; and b. The projected current annual gross household income of the prospective Qualifying Low Income Household (based on pay check receipts covering the most recent two-month period); and C. Prior annual gross household income of the prospective Qualifying Low Income Household for the most recently completed calendar year period (as reported on most recent federal tax return(s) and W-2 form(s) detailing all income of all members of the prospective household); and d. Sources of all income of the prospective Qualifying Low Income Household. 5. Maximum allowable rental rate to be assessed for the BMR ADUs. The maximum allowable monthly rental rate assessed by an BMR ADU Owner on a Qualifying 4 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve Low Income Household occupying a BMR ADU shall be the lesser of the following: a. 35% of V12th of eighty percent (80%) of the Area Median Income, as adjusted for household size appropriate for the Affordable Unit, less the applicable Monthly Utility Allowance; or b. 35% of 1/12th of the projected gross annual household income of the Qualifying Low Income Household, less the applicable Monthly Utility Allowance. 6. Term of leases and allowable increases to incomes of Qualifying Low Income Households. The initial lease signed between a BMR ADU Owner and a Qualifying Low Income Household shall be for a maximum period of two years. One year extensions of these initial leases, and of subsequent leases as applicable, may be executed between a BMR ADU Owner and a Qualifying Low Income Household only if, after a Danville review of updated projected gross annual household income information for the household, Danville determines that the household's income has not increased during the prior lease period so as to have the projected annual gross household income of the household exceed 80% of published Area Median Income, adjusted for tenant household size. Upon a determination that the household's projected annual gross household income will be in excess of 80% of the published Area Median Income, a lease extension may not be executed between the BMR ADU Owner and the household. 7. Allowable increase to rental rate that may be assessed by BMR ADU Owner for authorized lease extensions. Where Danville determines that one year extensions of initial leases, and of subsequent leases as applicable, may be granted, the maximum allowable monthly rental rate assessed by an BMR ADU Owner on the affected household may be increased but the new rental rate shall be the lesser of the following: a. 35% of ]/12th of eighty percent (80%) of the Area Median Income, as adjusted for household size appropriate for the Affordable Unit, less the applicable Monthly Utility Allowance; or b. 35% of 1/12th of the projected gross annual household income of the Qualifying Low Income Household, less the applicable Monthly Utility Allowance. 8. Records. BMR ADU Owners shall maintain complete and accurate records pertaining to the BMR ADUs. BMR ADU Owners shall permit any duly authorized representative of Danville, on demand, to inspect the books and records of a BMR ADU Owner pertaining as to the declared income of the Qualifying Low Income Household residing in a BMR ADU and as to the rent assessed for 5 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve that BMR ADU. 9. Certification of statements in Income Certification Questionnaire. All leases for the BMR ADU shall contain clauses, among others, wherein each Qualifying Low Income Household lessee: (i) certifies the accuracy of the statements made in the Income Certification Questionnaire; and (ii) agrees to comply promptly with all requests for information regarding such household's income from the BMR ADU Owner or Danville - including requests for updated income information in conjunction with potential lease extensions. All leases for BMR ADUs shall also include provision for tenant acknowledgment that failure to provide accurate information in the Income Certification Questionnaire, or refusal to comply with a request for information with respect thereto, shall be deemed a violation of a substantial obligation of the tenancy and shall constitute cause for termination thereof. 10. Notwithstanding any other provision of this Agreement, upon recordation of the final subdivision map for the Project, this Agreement shall only apply to Lots of the Project and shall automatically terminate with respect to the other portions of the Property. Danville and Developer shall enter into and record an amendment to this Agreement memorializing the foregoing. The Town Manager for Danville shall be empowered and authorized to execute such amendment on behalf of Danville without the requirement of any further authorization or resolution of the Town Council. SECTION III - AGREEMENT TO RECORD The Developer hereby represents, warrants, and covenants that it will cause this Agreement to be recorded over the Property and over Lots of the Project in the real property records of Contra Costa County, California. The Developer shall pay all fees and charges incurred in connection with any such recording, if so requested by Danville. SECTION IV -RELIANCE Danville and the Developer hereby recognize and agree that the representations and covenants set forth herein may be relied upon by Danville and the Developer. In performing their duties and obligations hereunder, Danville may rely upon statements and certificates of the BMR ADU Owners and Qualifying Low Income Household tenants, and upon audits of the books and records of the BMR ADU Owners pertaining to occupancy of the BMR ADUs. In performing its duties hereunder, BMR ADU Owners may rely on tenant -supplied information in the Income Certification Questionnaire, unless they have actual knowledge or reason to believe that such information is inaccurate. SECTION V - ADDITIONAL DANVILLE REQUIREMENTS 6 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve 1. Enforcement. Danville may assign its authority to regulate and enforce the Agreement to the Housing Authority of the County of Contra Costa, a nonprofit housing agency or other similar entity upon advance written notice to the BMR ADU Owners and the Developer. 2. Priority for Danville Residents or Employees. So long as the Density Bonus Ordinance so provides, households with Danville residents who meet the qualifications for occupancy of the BMR ADUs will have first preference for the BMR ADUs; second preference will be given to households with Danville employees who meet the qualifications for occupancy of the BMR ADUs; third preference shall be given to all other eligible households. A Danville resident or employee (or spouse) is one who has lived or worked in Danville for the year immediately preceding the proposed occupancy of the BMR ADU. 3. Default. If Danville learns of any default under this Agreement, Danville may declare the defaulting party in default by giving such party written notice specifying the nature of the default. If the default is not cured to the reasonable satisfaction of Danville within thirty days after such notice (or as may be extended by Danville to reasonably cure such default), Danville may apply to a court of competent jurisdiction for such relief as may be appropriate. 4. Relief from Restrictions. The Danville Town Council may grant a waiver, relaxation or amendment of the restrictions contained in this Agreement upon a finding by the Council, in its reasonable discretion, of diligent effort by the BMR ADU Owner of efforts to comply with the provisions of this Agreement and an inability to find a Qualifying Low Income Household tenant. Requests to waive, relax and/ or amended these restrictions shall be placed on a regularly scheduled Danville Town Council meeting within forty-five days of receipt of such request. 5. Timing for Compliance. The Developer shall obtain a certificate of occupancy for all of the BMR ADUs no later than Danville's issuance of the certificate of occupancy for non -BMR ADUs inthe Project. 7 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve SECTION VI - NOTICES All notices sent pursuant to this Agreement shall be sent by certified mail return receipt requested to the following addresses: Danville: Town of Danville 500 La Gonda Way Danville, CA 94526 Attention: Chief of Planning Developer: Upon sale by the Developer of Lots notification shall be sent to the acquiring owners of BMR ADUs. SECTION VII -MISCELLANEOUS of Magee Preserve, 1. Recitals and definitions incorporated. The recitals and definitions are expressly incorporated in and made part of this Agreement. This Agreement is an integrated document, and it is intended that it be recorded to Lots of Magee Preserve for the 20 -year term specified herein. 2. Binding effect. Except as provided for elsewhere in this Agreement, the obligations of this Agreement shall run with the land and be binding on, and inure to the benefit of, all heirs, administrators, executors, successors, assigns, transferees, designees or agent of the parties for the 20 -year term specified herein. 3. Attorneys fees and costs. Any action is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs. 8 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve 4. Controlling agreement. The Developer represents that it has not, and will not, execute any other agreement with provisions contradictory to, or in opposition to, the provisions of this Agreement, and that, in any event, this Agreement is controlling as to the rights and obligations between and among Danville, the Developer and their respective successors in interest with respect to the Project. 5. Limits on liability. Danville and Developer shall not be liable to any BMR ADU Owner, or become obligated in any manner to any BMR ADU Owner, because of such BMR ADU Owner's failure to comply with the terms of any agreement for the operation and rent of a BMR ADU. 6. Intent and validity. The intent of this Agreement is to preserve the affordability of the BMR ADUs for Qualifying Low Income Households, while leaving ownership of the BMR ADUs, for federal income tax purposes, with BMR ADU Owners. To that end, if, for so long as the BMR ADUs are subject to this Agreement, any portion of this Agreement is determined to deprive an BMR ADU Owner of ownership of an BMR ADU for federal income tax purposes shall be invalid and shall have no force or effect with respect to the BMR ADU Owner and the associated BMR ADU. 7. Independent and several provisions. If any one or more of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 8. Captions and para rg_a ph headings. Captions and paragraph headings used in this Agreement are for convenience only and shall not be used to interpret any of its provisions. 9. State law. The terms of this Agreement shall be interpreted and enforced under the laws of the State of California. 10. Term. The term of this Agreement shall be a period of twenty years from the date on which a certificate of occupancy is issued with respect to the BMR ADUs and this Agreement shall terminate and be of no further force or effect thereafter. Upon the request of the Developer, Danville and the Developer shall enter into an amendment to this Agreement memorializing the date of the issuance of a certificate of occupancy for the BMR ADUs and the expiration of the term of the Agreement, which Amendment shall be recorded in the Official Records of the 9 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve County of Contra Costa. The Planning Director or Town Manager for Danville shall be empowered and authorized to execute such amendment on behalf of Danville without the requirement of any further authorization or resolution. SECTION VIII -RIGHTS OF MORTGAGEES In no way shall this Agreement defeat or render invalid the lien of any security instrument recorded before or after the recordation of this Agreement. This Agreement shall be binding and effective against the holder of such encumbrance whose interest is acquired by foreclosure. trustee's sale. deed or assignment in lieu thereof. or otherwise: provided. however. that the foreclosing lender or its affiliates shall not be personally liable for any violations arising prior to their acquiring any portion of the Property by foreclosure or conveyance in lieu of foreclosure but all such existing obligations (including existing violations) shall continue to run with the land under this Agreement and bind the subsequent owners. [SIGNATURE PAGE FOLLOWS] 10 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve The parties have executed this Agreement on the date first written above. Danville: Developer: The Town of Danville DAVIDON HOMES, a California limited partnership By: Davidon Corporation, a California By: corporation Name: Its: General Partner By: _ Approved as to form: Title: By: Name: Attest: By: Name: City Clerk 11 Regulatory Agreement and Declaration of Restrictive Covenants — Magee Preserve EXHIBIT "I" LEGAL DESCRIPTION OF THE PROPERTY EXHIBIT "2" MAXIMUM ALLOWABLE RENTAL RATES FOR QUALIFIED LOW INCOME HOUSEHOLDS - APRIL 2020 Income Level and Housin Costs / 1- Person 2- Person 3- Person 4- Person 5- Person Median Income April 2020 HCD $83,450/ $95,350/ $107,300/y $119,200/ $128,750/ 80% of Median for Low Income $73,100/y $83,550/y $94,000/yr $104,400/ $112,800Iy 30% income assignment to $21,930/ $25,065/ $28,200/ $31,320/ $33,840Iyr. Maximum monthly Low Income rent (includes cost of utilities) $1,827/ mo. $2,088/m o. $2,350/ mo. $2,610/mo $2,820/mo. A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On Notary Public, personally appeared ACKNOWLEDGMENT SS. before me, who 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 he/ she/ they executed the same in his/ her/ their authorized capacity(ies), and that by his/ her/ their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s), acted, executed the instrument. I certify under PENALTY OF PERJURY, under the laws of the State of California, that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public My Commission expires: A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On Notary Public, personally appeared ACKNOWLEDGMENT SS. before me, who 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 he/ she/ they executed the same in his/ her/ their authorized capacity(ies), and that by his/ her/ their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s), acted, executed the instrument. I certify under PENALTY OF PERJURY, under the laws of the State of California, that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public My Commission expires: