Loading...
HomeMy WebLinkAbout050625-06.3 ADMINISTRATIVE STAFF REPORT 6.3 TO: Mayor and Town Council May 6, 2025 SUBJECT: Resolution No. 24-2025, authorizing the Town Manager to execute a Regulatory Agreement and Declaration of Restrictive Covenants for the below-market rate Accessory Dwelling Units associated with the nine-lot subdivision at 2830 Camino Tassajara BACKGROUND On July 12, 2022, the Danville Planning Commission adopted Resolution No. 2022-12 adopting a Mitigated Negative Declaration of Environmental Significance and approving a nine-lot Major Subdivision of a 3.04 acre site at 2830 Camino Tassajara. The subdivision is subject to the Town’s Inclusionary Housing Ordinance. The applicant chose the option of incorporating accessory dwelling units (ADUs) into 25% of the units in order to meet their obligation under the ordinance. The development’s architectural plans include two 414 square-foot attached ADUs. Section 32-73.15.c. of the Town’s Municipal Code states that ADUs under the Inclusionary Housing Ordinance require approval of an Affordable Housing Agreement and that the units be deed restricted to be rented at below- market rate and affordable to low-income households. DISCUSSION The Affordable Housing Agreement (Attachment B) between the Town and Ponderosa Homes II, Inc. specifies the maximum allowable household income and rental rate for renter. The restriction is for a term of 20 years. The ADUs are not required to be rented but, if they are, they are subject to the Affordable Housing Agreement. Low income is defined as households with an income of between 50% and 80% of Contra Costa County’s median income, adjusted for household size. The latest County income data was released on May 9, 2024. As an example, based on the current income data, a unit with a two-person household would have a maximum monthly rent of $2,416.00. PUBLIC CONTACT Posting of the meeting agenda serves as notice to the general public. Affordable Housing Agreement 2 May 6, 2025 FISCAL IMPACT None. RECOMMENDATION Adopt Resolution No. 24-2025, authorizing the Town Manager to execute a Regulatory Agreement and Declaration of Restrictive Covenants for the below-market rate Accessory Dwelling Units associated with the nine-lot subdivision at 2830 Camino Tassajara. Prepared by: David Crompton Chief of Planning Reviewed by: Diane J. Friedmann Development Services Director Attachments: A - Resolution No. 24-2025 B - Draft Regulatory Agreement and Declaration of Restrictive Covenants for 2830 Camino Tassajara RESOLUTION NO. 24-2025 AUTHORIZING THE TOWN MANAGER TO EXECUTE A REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS FOR THE BELOW-MARKET RATE ACCESSORY DWELLING UNITS ASSOCIATED WITH THE NINE-LOT SUBDIVISION AT 2830 CAMINO TASSAJARA WHEREAS, on July 12, 2022, the Danville Planning Commission adopted Resolution No. 2022-12 adopting a Mitigated Negative Declaration of Environmental Significance and approving a nine-lot Major Subdivision of a 3.04 acre site at 2830 Camino Tassajara; and WHEREAS, pursuant to the Town’s Inclusionary Housing Ordinance (Municipal Code Section 32-73), the development approval required that 25% of the units (two units) include an accessory dwelling unit to be deed restricted so that, if rented, they would be required to be rented to qualifying households at a low-income level; and WHEREAS, Ponderosa Homes II, Inc. accepted the obligation to execute a Regulatory Agreement and Declaration of Restrictive Covenants (Affordable Housing Agreement), restricting the rental rate for the two ADUs to be affordable to low-income households, adjusted for household size; 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 sales process and household income requirements at their meeting of May 6, 2025; and WHEREAS, a staff report was submitted recommending that the Town Council approve the draft Affordable Housing Agreement between the Town of Danville and Ponderosa Homes II, Inc.; 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 units associated with the 2830 Camino Tassajara development. Docusign Envelope ID: CEE062E8-F789-4D42-B4A2-A99DF987FF4D ATTACHMENT A PAGE 2 OF RESOLUTION 24-2025 APPROVED by the Danville Town Council at a regular meeting on May 6, 2025, by the following vote: AYES: NOES: ABSTAINED: ABSENT: ____________________________________ MAYOR APPROVED AS TO FORM: ATTEST: _______________________________ ____________________________________ CITY ATTORNEY CITY CLERK Docusign Envelope ID: CEE062E8-F789-4D42-B4A2-A99DF987FF4D RECORDING REQUESTED BY: Town Manager Town of Danville WHEN RECORDED, RETURN TO: Town of Danville 500 La Gonda Way Danville, CA 94526 Attention: Marie Sunseri, City Clerk REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS BETWEEN THE TOWN OF DANVILLE AND TH DANVILLE LLC This Regulatory Agreement and Declaration of Restrictive Covenants (the “Agreement”) is entered into as of ,_________ 2025, by and between the Town of Danville, a municipality (“Danville”) and Ponderosa Homes II, Inc. (the “Developer”), the developer of certain real property in the Town of Danville, Contra Costa County California, located at 2830 Camino Tassajara – SD 9598 (the “Project”) and described more specifically in Exhibit “1” attached hereto (the “Property”). RECITALS 1. Danville approved the development of the Property pursuant to Planning Commission Resolution No. 2022-12 (adopting a Mitigated Negative Declaration of Environmental Significance and approving Vesting Tentative Map request SD 9598, Development Plan request DEV22-0003, and Tree Removal request TR22- 0003. The subdivision resulted in nine single family residential lots. 2. As part of their proposed Project, the project was subject to the Town’s Inclusionary Housing Ordinance. The applicant chose the option of incorporating Assessory Dwelling Units (ADUs) into 25 percent (2) of the single family homes. If rented, the two ADU’s are required to be rented to Low Income households at a below market rate (BMR) applicable to low income households. 3. Danville finds that the Developer’s residential development will benefit the community by providing the two affordable units, for rent, to Qualifying Low Income Households. ATTACHMENT B 4. The Developer has proposed that the two Affordable Units shall be constructed in conjunction with the single family residences on Lots 3 and 5 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 two affordable 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 I - 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 two accessory dwelling units contained in the single family detached residential units to be developed on Lots 3 and 5 of SD 9598, to be designated as affordable units, for rent 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 3 and 5 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. 5. Low Income Household means income, adjusted for household size, listed as low income for the Contra Costa County area of the State of California, as published at Title 25, California Code of Regulations, Section 6932. 6. Danville means the Town of Danville, a political subdivision of the State of California. 7. Developer means Ponderosa Homes II, Inc. and its successors and assigns, and any surviving, resulting or transferee entity. 8. Income Certification Questionnaire 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. 9. 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. 10. Property means the parcel of real property described in Exhibit “1”. 11. Project means the 9-unit single-family residential development authorized for construction through Danville’s Town Council Resolution No.2022-12. 12. 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 3 and 5 of the Project to be developed as units whose occupancy and use is restricted such 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 year to date); 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 a BMR ADU Owner on a Qualifying Low Income Household occupying a BMR ADU shall be the lesser of the following: a. 35% of 1/12th 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. 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 1/12th 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 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 3 and 5 of the Project. Danville and Developer shall enter into and record an amendment to this Agreement memorializing the foregoing. 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 3 and 5 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 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 Inclusionary 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. 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: Ponderosa Homes II, Inc. Attention: Jeff Schroeder 5020 Franklin Drive, Suite 200 Pleasanton, CA 94588 Upon sale by the Developer of Lots 3 and 5 SD 9598, notification shall be sent to the acquiring owners of BMR ADUs. SECTION VII - MISCELLANEOUS 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 3 and 5 SD 9598 for the twenty (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 thirty-year term specified herein. 3. Attorneys' fees and costs. If 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. 4. 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 establishment of BMR AUs for the Project. 5. Limits on liability. Danville 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 paragraph 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. 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. The parties have executed this Agreement on the date first written above. Danville: Developer: The Town of Danville Poderosa Homes By: ______________________________ By: ______________________________ Joseph A. Calabrigo, Town Manager Jeff Schroeder, Senior Vice President Dated: ______________, 2025 Dated: ______________, 2025 Approved as to form: By: ______________________________ Robert Ewing, City Attorney Dated: ______________, 2025 Attest: By: ______________________________ Marie Sunseri, City Clerk Dated: ______________, 2025 EXHIBIT “1” Real property in the Town of Danville, County of Contra Costa, State of California, described as follows: LOTS 1 THROUGH 9, INCLUSIVE, AND PARCELS A THROUGH C, INCLUSIVE, AS SHOWN ON THE MAP ENTITLED "SUBDIVISION 9598" FILED ON AUGUST 21, 2024, IN BOOK 557 OF MAPS, AT PAGES 43 THROUGH 46, CONTRA COSTA COUNTY RECORDS. APN: 217-030-038 (Underlying APN - new APNs not yet assessed)EXHIBIT “2” MAXIMUM ALLOWABLE RENTAL RATES FOR QUALIFIED LOW INCOME HOUSEHOLDS - APRIL 2025 Income Level and Housing Costs / Household Size 1-Person Household 2-Person Household 3-Person Household 4-Person Household 5-Person Household Median Income May, 2024 HCD figures $109,000/yr. $124,550/yr. $140,150/yr. $155,700/yr. $168,150/yr. 80% of Median for Low Income $87,200/yr. $99,640/yr. $112,120/yr. $124,560/yr. $134,520/yr. 30% income assignment to housing $26,160/yr. $29,892/yr. $33,636/yr. $37,368/yr. $40,452/yr. Maximum monthly Low Income rent (includes cost of utilities) $2,180/mo. $2,491/mo. $2,803/mo. $3,114/mo. $3,371/mo.