09 Staff Report - Los Gatos Redevelopment ProjectN MEETING DATE: 5105108
ITEM NO:
9
ItIS• C
~On CII'~~'
V M REDEVELOPMENT AGENCY AGENDA REPORT
DATE: April 28, 2008
TO: CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY
FROM: GREG LARSON, EXECUTIVE DIRECTOR
SUBJECT: CONSIDER AND APPROVE THE REDEVELOPMENT AGENCY MIDTERM
REVIEW OF THE FIVE YEAR IMPLEMENTATION PLAN AND
AFFORDABLE HOUSING PRODUCTION PLAN FOR THE CENTRAL LOS
GATOS REDEVELOPMENT PROJECT FOR THE PERIOD OF JULY 1, 2004
TO JUNE 30, 2009.
RECOMMENDATION:
1. Open and hold the public hearing and receive public testimony.
2. Close the public hearing.
3. Adopt the attached resolution (Attachment 1) approving the Five Year Implementation Plan
and Affordable Housing Production Plan Midterm Review for the Central Los Gatos
Redevelopment Project for the period of July 1, 2004 to June 30, 2009.
BACKGROUND:
The Los Gatos Redevelopment Agency (Agency) originally adopted its Implementation Plan in
1994. In 1997, the Plan was reviewed and amended to add public parking as one of the activities
contemplated in the plan. Beginning in 1999, the Agency was developing detailed capital
improvement programs for the Project Area, and these were adopted and used as the Agency's
Implementation Plan. In February 2000, the Agency approved a resolution adopting a new
Redevelopment Affordable Housing Production Plan. This plan supplemented the CIP programs
that were adopted in 1999, 2000 and 2001 by specifically addressing affordable housing issues.
After discussions with Agency legal counsel, a single document was produced that combined the
housing and non-housing activities, which was adopted by the Agency on March 4, 2002 to serve
as the Agency's Implementation Plan for the remainder of the five year period from July 1, 1999
to June 30, 2004.
(Continued on Page 2)
PREPARED BY: Bud N. Lortz~
Director of Community Development
N:',,DEV~CNCLRPTS\20081,RDA5YRIinpletnentationP]anlvlidLemi Review
Reviewed by: l: ~Assistant Town Manager f own Attorney
Clerk Administrator Finance ommunity Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: MIDTERM REVIEW OF THE FIVE YEAR IMPLEMENTATION PLAN
April 14, 2008
On November 15, 2004, the Agency adopted a Five Year Implementation Plan for the five year
period from July 1, 2004 to June 30, 2009 (Attachment 3).
DISCUSSION:
Section 33490 of the California Community Redevelopment Law (CRL) requires a
redevelopment agency administering a redevelopment plan to prepare and adopt a five year
implementation plan for its project areas. The principal goal of an implementation plan is to
guide an agency in implementing its redevelopment program to help eliminate blighting
influences. Additionally, the required affordable housing component of the implementation plan
provides a mechanism for a redevelopment agency to monitor its progress in meeting both its
affordable housing obligations under the CRL and the affordable housing needs of the
community.
In addition to the preparation of the implementation plhn, the CRL requires that redevelopment
agencies hold public hearings to conduct midterm reviews of adopted implementation plans.
The purpose of the midterm review is to provide a review of the current status of the goals,
programs and projects, and estimated expenditures set forth in the adopted implementation plan
for the project area.
To fulfill the requirements of the CRL, the Town hired Seifel Consulting to work with staff and
prepare the attached Implementation Plan Midterm Review (Attachment 2). Seifel was chosen
due to their extensive background and expertise in the preparation of implementation plans and
midterm reviews. Additionally, Seifel prepared the Agency's Five Year. Implementation Plan
that was adopted on November 15, 2004.
As illustrated in the Midterm Review, the Agency has actively pursued the non-housing and
housing programs and projects stated in the Implementation Plan for the Project Area. The
Agency will continue to actively pursue the remaining non-housing and housing programs and
projects stated in the Implementation Plan for the remainder of the current Implementation Plan
period. There have not been any substantial modifications to the goals, programs and projects, or
estimated expenditures set forth in the adopted Implementation Plan for the Project Area.
CONCLUSION:
The Agency should adopt the attached resolution (Attachment 1) approving the Five Year
Implementation Plan and Affordable Housing Production Plan Midterm Review for the Central
Los Gatos Redevelopment Project for the period of July 1, 2004 to June 30, 2009 (Attachment
2).
FISCAL IMPACT:
The approval of the Implementation Plan Midterm Review itself has no direct fiscal impact.
Projects will be brought forward for funding through the normal budgetary process.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: MIDTERM REVIEW OF THE FIVE YEAR IMPLEMENTATION PLAN
April 14, 200
ENVIRONMENTAL IMPACT:
The Implementation Plan Midtenn Review is not a project as defined under CEQA, and no
action is required.
Attachment'
1. Resolution (3 Pages)
2. Implementation Plan Midtenn Review (34 Pages)
3. Five Year Implementation Plan FY 2004/05 to FY 2008109 (36 Pages)
BNL:RT:JP
N;IDEVICNCLRPTS120081RDA5YRImplementatianP lanMidterniReview.doc
RESOLUTION
RESOLUTION OF THE REDEVELOPMENT AGENCY
OF THE TOWN OF LOS GATOS
APPROVING THE FIVE YEAR IMPLEMENTATION PLAN AND AFFORDABLE
HOUSING PRODUCTION PLAN MIDTERM REVIEW FOR THE CENTRAL LOS
GATOS REDEVELOPMENT PROJECT AREA
WHEREAS, the Redevelopment Agency of the Town of Los Gatos (the "Agency") is
carrying out the Redevelopment Plan for the Central Los Gatos Project Area (the "Project Area");
and
WHEREAS, pursuant to Health and Safety Code Section 33490, the Agency on November
15, 2004 conducted a public hearing and adopted RDA Resolution 2004-13RD approving the
Agency's 2004-2009 Implementation Plan for the Project Area; and
WHEREAS, pursuant to Health and Safety Code Section 33490, the Agency is required to
conduct a noticed public hearing and hear testimony of all interested parties for the purpose of
reviewing the Redevelopment Plan and corresponding Implementation Plan for the Project Area and
evaluating the progress of the redevelopment project; and
WHEREAS, Agency staff has prepared and presented to the Agency an Implementation Plan
Midterm Review dated February 2008 for the five year period covering July 1, 2004 to June 30,
2009, a copy of which is on file with the Agency Secretary; and
WHEREAS, on the date of this resolution, the Agency has conducted and concluded a duty
noticed public hearing on the Implementation Plan Midterm Review dated February 2008 in
accordance with Health and Safety Code Section 33490; and
1
ATTACENEW I
WHEREAS, the Agency finds that the Implementation Plan Midterm Review dated February
2008, with any modifications as considered and approved in connection with the public hearing,
constitutes a statement of the Agency's goals and objectives for the Project Area, a summary of
specific programs and proposed expenditures proposed to be made by the Agency for the
redevelopment of the Project Area for the five year period stated, and an explanation of how the
goals and objectives, projects and expenditures will eliminate blight within the Project Area and
implement the affordable housing regulations of the Community Redevelopment Law; and
WHEREAS, pursuant to Health and Safety Code Section 33490, approval of an
Implementation Plan Midterm Review does not constitute a project for purposes of the California
Environmental Quality Act ("CEQA"), and therefore no environmental documentation is required
pursuant to CEQA.
RESOLVED, that the Agency hereby approves and adopts the Implementation Plan Midterm
Review for the Central Los Gatos Project Area and orders that a copy of the Implementation Plan
Midterm Review be maintained on file with the Agency Secretary.
FURTHER RESOLVED, that the Agency hereby authorized the Agency Executive Director
to take such other actions as are appropriate to effectuate the intent of the Implementation Plan
Midterm Review.
FURTHER RESOLVED THAT, that this Resolution shall take immediate effect from and
after its passage.
2
PASSED AND ADOPTED at a regular meeting of the Town of Los Gatos Redevelopment
Agency held on the day of , 2008, by the following vote:
REDEVELOPMENT AGENCY MEMBERS:
AYES :
NAYS:
ABSENT:
ABSTAIN:
SIGNED: Isl Barbara Spector
CHAIR OF THE REDEVELOPMENT AGENCY
TOWN OF LOS GATOS, CALIFORNIA
ATTEST:
Isl Jackie Rose
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
N:IDEWOELIRDAIRDARESOIMPLEMENTATIONPLANMIDTERMREV IEW. DOC
REPORT
Implementation Plan
Midterm Review
Prepared for:
Los Gatos Redevelopment Agency
February 2008
Seifel
S
,
221 Main Street
Suite 420
San Francisco CA
94105
415.618.0700
fax 415.618.0707
WWW.seifel.com
ATTACHMENT 2
I
Table of Contents
Los Gatos Redevelopment Agency
Implementation Plan Midterm Review
Executive Summary: Midterm Review of the Implementation Plan 1
A. Non-Housing Accomplishments ........................................................................................................1
B. Housing Accomplishments ................................................................................................................2
C. Program Funding ................................................................................................................................2
D. Conclusion .........................................................................................................................................3
1. Introduction I-1
A. Organization 1-1
B. Background on Project Areas I-1
II. Summary of Five-Year Implementation Plan .............................II-1
A. Five-Year Goals and Objectives II-1
B. Project and Activities Program Categories II-1
C. Alleviation of Blighting Conditions I1-3
D. Actual and Projected Tax Increment Revenue and Program Expenditures ...................................II-3
III. Non-Housing Accomplishments III-1
A. Accomplished and Planned Projects III-I
B. Conclusion .111-4
Los Gatos Redevelopment Agency i Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
Table of Contents
Los Gatos Redevelopment Agency
Implementation Plan Midterm Review (cont.)
W. Housing Accomplishments ...........................................................IV-1
A. Affordable Housing Program
B. Housing Fund Obligation IV-3
C. Housing Production Plan IV-10
D. Replacement Housing Plan fV-12
E. Housing Expenditures and Projects for the Remainder of the Period IV-12
F. Completion of Housing Obligations IV-13
G. Conclusion IV-13
Table of Figures
Figure I-1 Boundaries of Project Area I-3
Table of Tables
Table I Summary of Tax Increment for Non-Housing Programs ....................................................................2
Table 2 Tax Increment Deposits to the Housing Fund
.................3
Table I-1 Summary of Central Los Gatos Redevelopment Plan Time and Fiscal Limits
..............1-2
Table II-1 Linkage of Five-Year Programs and Activities with Elimination of Blight
.............II-4
Table II-2 Summary of Tax Increment for Non-Housing Programs .
II-5
Table II-3 Actual and Projected Revenues Available for Non-Housing Projects and Activities
.............II-6
Table II-4 Actual and Projected Five-year Non-Housing Redevelopment Program Expenditures
.............II-8
Table IV-I Tax Increment Deposits to the Housing Fund
IV-4
Table IV-2 Actual and Projected Revenues Available for Housing Program
IV-5
Table IV-3 Income Limits by Household Size for Santa Clara County, 2007
IV-7
Table IV-4 BAG Regional Fair Share Allocations, 2007 2014
IV-8
Table IV-5 Housing Fund Expenditures Requirements Non-Age Restricted Housing
IV-9
Table IV-6 Housing Production and Affordable Housing Obligation
IV-11
Los Gatos Redevelopment Agency ii Seitel Consulting Inc.
Implementation Plan Midterm Review February 2008
Executive Summary
The purpose of the Midterm Review of the Five-Year Implementation Plan is to provide a status
report of the goals, projects and estimated expenditures set forth in the Implementation Plan in
order to evaluate the progress to date. This Executive Summary serves as a synopsis of the
Midterm Review by highlighting some of the major accomplishments from the initial three years
of the Plan period, FY 2004105 through FY 2006107, and provides a snapshot of the tax increment
funds available for non-housing and housing programs.
A. Non-Housing Accomplishments
During the initial three years, the Agency has accomplished several major non-housing projects
including capital projects related to Downtown commercial revitalization and public
improvements. Two of these projects axe highlighted below.
Main Street and Santa Cruz Avenue Street
Improvements
The Town, with assistance from the Agency,
completed street improvements along Santa Cruz
Avenue and Main Street in three phases between
2005 and 2007 as directed by the Central Los Gatos
Redevelopment Plan and Downtown Strectscape
Plan. Work completed on the two streets includes
sidewalk, curb and gutter replacement and installation
of new planters, bulb-outs and light fixtures. These
projects have helped to beautify two primary streets
and improve access to support the growth of the
Downtown commercial district.
Main Street Bridge
Avenue, 2007
During the initial three years of the Implementation Plan period, the Agency has worked towards
beautifying the Main Street Bridge, which provides for a vehicle, bike and pedestrian crossing
over Highway 17. The Agency provided funding to
install new lighting, a multi-purpose fountain and a
marker commemorating the road's history as part of
the original El Camino Real.
r
Los Gatos Redevelopment Agency 1 Selfel Consulting Inc.
Implementation Plan Midterm Review February 2008
Downtown streetscape improvements, Santa Cruz
Main Street Bridge, 2007.
B. Housing Accomplishments
During the last three years, the Agency has continued its work to increase, improve and preserve
affordable housing in the Project Area. The Agency is tracking its Low and Moderate-income
Housing Fund (Housing Fund) production obligation requirement and expects to meet the
requirement by the end of the compliance period on December 31, 2014. The Agency has been
using; Housing Fund moneys to fund affordable housing projects by working with various
partners as highlighted below.
Housing Trust of Santa Clara County
The Agency provided an annual grant of $100,000 to the Housing Trust of Santa Clara County
(HTSCC) for FY 2005106 through FY 2007108 using Housing Fund moneys. The grants are being
used by HTSCC to increase the supply of housing affordable to very low, low and moderate-
income households in the Town of Los Gatos.
Senior Housing Solutions
For FY 2008109, the Agency has earmarked $778,000 for a loan to Senior Housing Solutions
(SHS), a non-profit agency that creates shared housing for low-income seniors. The loan will be
used by SHS to acquire and rehabilitate a home, potentially within the Project Area, on which it
will provide five to six units of low-income senior housing.
C. Program Funding
This section presents the Agency's actual tax increment for FY 2004105 through FY 2006/07 and
projected tax increment for FY 2007108 and FY 2008109 for non-housing and housing programs.
The Agency has two primary revenue sources: annual tax increment revenues and other Agency
financial resources such as investment income. Table 1 summarizes the actual and projected tax
increment fiends available for non-housing programs net of Housing Fund deposits and Agency
obligations.
Table 1
Summary of Tax Increment for Non-Housing Programs
Los Gatos Redevelopment Agency
Fiscal Year
Revenues
2004105 Actual
$785,175
2005106 Actual
$1,181,319
2006107 Actual
$1,681,908
2007108 Projected
$1,560,056
2008/09 Projected
$1,275,199
Total
$6,483,657
Source: Los Gatos Redevelopment Agency, Seifel Consulting Inc.
Los Gatos Redevelopment Agency 2 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
The CRL requires the Agency to set aside in a separate Housing Fund at least 20 percent of all tax
increment revenue generated from its Project Area for the purpose of increasing, improving and
preserving the community's supply of low and moderate-income housing. Table 2 shows the
actual and projected Housing Fund deposits over the Implementation Plan period.
Table 2
Tax Increment Deposits to the Housing Fund
Los Gatos Redevelopment Agency
Fiscal Year
Revenues
2004/05 Actual
$1,163,323
2005/06 Actual
$1,073,315
2006/07 Actual
$1,516,456
2007/08 Projected
$1,504,539
2008/09 Projected
$1,537,655
Total
$6,795,288
Source: Los Gatos Redevelopment Agency, Seifel Consulting Inc.
D. Conclusion
Each of the Implementation Plan's projects and activities will enable the Agency to achieve many
of the Redevelopment Plan goals and objectives in addition to meeting the goals and objectives of
the Town's General Plan. The Agency has accomplished many of these non-housing and housing
projects and activities in the Project Area over the initial three years of the Implementation Plan
period. During the final two years of the period, the Agency will continue to work towards
achieving the projects envisioned in its Implementation Plan.
Los Gatos Redevelopment Agency 3 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
I. Introduction
The purpose of the Midterm Review of the 2004 Five-Year Implementation Plan (Implementation
Plan) is to provide a review of the current status of the goals, programs and projects and estimated
expenditures set forth in the Implementation Plan.
In accordance with the California Community Redevelopment Law (CRL), the Los Gatos
Redevelopment Agency (Agency) adopted the Implementation Plan on November 15, 2004. The
purpose of the Implementation Plan was to set forth the specific goals, programs, projects, and
estimated expenditures for the Project Areas administered by the Agency for the five-year period
from FY 2004105 through FY 2008/09.
The Midterm Review provides an opportunity to evaluate the Agency's progress towards its
Implementation Plan goals. The CRL requires that a public hearing on the progress of the
Implementation Plan take place midway through the Implementation Plan period.
A. Organization
Chapter I of the Midterm Review provides a basic discussion of the CRL requirements for the
Midterm Review and describes the Project Area. Chapter 11 includes a summary of the five-year
Redevelopment Program, including goals and objectives, program categories and descriptions,
and a description of how blighting conditions have been and will continue to be alleviated by the
activities. Chapter II also includes actual revenues and expenditures for the first three years and
projected revenues and expenditures for the final two years of the Implementation Plan.
Chapter III discusses non-housing accomplishments and highlights projects in greater detail.
Chapter N charts Agency progress in meeting its affordable housing obligations. Chapter IV also
includes an updated Affordable Housing Production Plan.
B. Background on Project Areas
The Central Los Gatos Redevelopment Plan (Redevelopment Plan) was adopted by the Los Gatos
Town Council by Ordinance 1882 on November 25, 1991. The Central Los Gatos Redevelopment
Project Area consists of 441 acres including the Central Business District, the Civic Center and
the Historic Downtown residential neighborhoods. Figure I-I shows the Project Area.
The purpose of establishing the Redevelopment Plan was to provide a financing tool to assist the
Town and its residents in repairing damage from the Loma Pricta earthquake and completing
seismic strengthening and safety programs to ensure the public safety and welfare. The
Redevelopment Project was also intended to be a financing mechanism to assist in alleviating
blighting conditions, revitalizing the downtown commercial area and reconstructing deteriorated
infrastructure. All rehabilitation and development activities outlined in the Redevelopment Plan
must conform to the Town's existing and future planning programs including the General Plan.
Los Gatos Redevelopment Agency 1-1 5eifel Consulting Inc.
Implementation Plan Midterm Review February 2008
The Redevelopment Plan identified the following categories of public infrastructure, commercial
rehabilitation and housing improvement projects to be funded by the Agency:
• Street reconstruction
• Alley improvements
• Improvements to the Downtown
- Streetscape improvements
Loans for seismic strengthening
- Loans/assistance for geologic investigations and structural analysis
- Fagade improvements
Parking facilities
- Hazardous waste removal
• Improvements to community facilities
- Structural analysis
- Seismic strengthening and repair
• Public transit facilities
• Assistance to increase and improve the supply of low and moderate-income housing
Table 1-1 provides a summary of the time and financial limits of the Redevelopment Plan for the
Project Area.
Table 1-1
Summary of Central Los Gatos Redevelopment Plan
Time and Fiscal Limits
Background Information
Total Acres
441
Date of Adoption
11/25/1991
Time Limits
Incurring Debt
11/25/2011
Plan Effectiveness (Project Activities)
11/25/2031
TI Collection/Repayment of Debt
11125/2041
Eminent Domain
12/25/2015
Finandal.Limits
Tax Increment Cap
$250 million
Bond Limit
$52 million
Source: Los Gatos Redevelopment Agency.
Los Gatos Redevelopment Agency 1-2 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
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11. Summary of Five-Year Implementation Plan
This section describes the Redevelopment Program goals and objectives as outlined in the
2004 Implementation Plan. It also summarizes the four basic program categories in which the
Implementation Plan projects and activities are categorized, and addresses the relationship
between the projects and activities and the alleviation of blighting conditions. Finally, this section
presents actual revenues and expenditures for FY 2004105 through FY 2006107, and projected
revenues and expenditures for FY 2007108 and FY 2008109.
A. Five-Year Goals and Objectives
The following are the major goals and objectives for the five-year planning period pursued by the
Agency, which are the same as those for the overall Redevelopment Program:
• The elimination of blighting influences and the correction of environmental deficiencies in
the Project Area, including among others, obsolete and aged building types, substandard
alleys and inadequate or deteriorated public improvements, facilities and utilities.
• The assembly of land into parcels suitable for modern, integrated development with improved
pedestrian and vehicular circulation in the Project Area.
• The replanning, redesign and development of undeveloped areas, which are stagnant or
improperly utilized.
• The provision of opportunities for owner and tenant participation in the revitalization of their
properties.
• The strengthening of retail and other commercial functions in the downtown area.
• The strengthening of the economic base of the Project Area and the community by the
installation of needed site improvements to stimulate new commercial/light industrial
expansion, employment and economic growth.
• The provision of adequate land for parking and open spaces.
• The establishment and implementation of performance criteria to assure high site design
standards and environmental quality and other design elements, which provide unity and
integrity to the entire Project Area.
• The expansion and improvement of the community's supply of low and moderate-income
housing.
B. Project and Activities Program Categories
The Agency has been and will continue to undertake projects and activities in the Project Area to
alleviate blighting conditions and attain the five-year Redevelopment Program goals. These
projects and activities can be categorized into four Program categories, as described below:
1. Downtown Commercial Revitalization Plan
A goal of the Redevelopment Program for FY 2004105 through FY 2008109 is to continue to
implement the Downtown Commercial Revitalization Plan. Projects and activities include the
following:
Los Gatos Redevelopment Agency II 1 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
• Construct street improvements in Downtown, including new sidewalks and bulb outs on
Santa Cruz Avenue and Main Street.
• Reconfigure parking to provide additional parking spaces in the Downtown Core.
• Continue to implement the Parking Management Program to make better use of existing
parking, identify new parking opportunities and methods of financing new parking facilities.
• Implement a fagade grant program.
2. Public Improvements, Facilities and Utilities
The Agency has been and will continue to repair or reconstruct the substandard alleys and
damaged, inadequate or deteriorated public improvements, facilities and utilities in the
Project Area through the following:
• Develop a list of capital projects, estimated cost and projected revenues for the Agency and
present to Town Council to help establish priorities.
• Reconstruct parking lot surface on parking lots 1, 2, 5 and 6.
• Reconstruct deteriorated streets within the Project Area.
• Beautify Main Street Bridge.
• Provide gateway projects at Highway 9 and North Santa Cruz Avenue.
• Provide gateway projects at Wood Road and South Santa Cruz Avenue.
• Pave Main Street.
• Provide alley improvements.
• Provide multi-use fountain at Highway 17 and Main Street Trail Head.
• Improve curbs, gutters and sidewalks.
• Underground utilities.
• Make Americans with Disabilities Act (ADA) accessibility improvements.
3. Affordable Housing
The Affordable Housing Program promotes residential development on vacant and underutilized
sites in the Project Area. Through this program, the Agency will increase and preserve housing
affordable to very low, low and moderate-income households. Components of this program
include assistance for the construction of affordable housing and a loan program to assist in the
development of secondary dwelling units for very low, low and moderate-income households.
4. Agency Administration
The Agency will continue to have various administration and operational requirements associated
with implementing the above projects and activities. These will include program staff, planning
functions and legal and other technical assistance.
Los Gatos Redevelopment Agency 11-2 5eifel Consulting Inc.
Implementation Plan Midterm Review February 2008
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C. Alleviation of Blighting Conditions
The five-year Redevelopment Program described above has and will continue the process of
improving the Project Area and alleviating blighting conditions. Table II-1, on the following
page, provides a matrix summarizing the relationship between proposed goals, objectives,
projects and activities and how they have and will continue to eliminate blight.
D. Actual and Projected Tax Increment Revenue and Program
Expenditures
This sections presents the Agency's actual revenues and expenditures for FY 2004/05 through
FY 2006/07 and projected revenues and expenditures for FY 2007/08 and FY 2008/09.
1. Five-Year Revenues
The Agency has three primary revenue sources: annual tax increment revenues, interest income
and other Agency financial resources.
Los Gatos Redevelopment Agency II-3 5elfel Consulting Inc.
Implementation Plan Midterm Review February 2008
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a. Funds for Non-Housing Programs
During the first three years of the Implementation Plan period, the Agency had $3.6 million of tax
increment revenue available for non-housing projects. The Agency anticipates that approximately
$2.8 million in tax increment will be available during the remaining two years of the
Implementation Plan period for non-housing projects. Table 11-2 summarizes the actual and
projected Agency resources available for non-housing projects for each year.
Table II-2
Summary of Tax Increment for Non-Housing Programs
Los Gatos Redevelopment Agency
Fiscal Year
Revenues
2004105 Actual
$785,175
2005106 Actual
$1,181,319
2006107 Actual
$1,681,908
2007/08 Projected
$1,560,056
2008/09 Projected
$1,275,199
Total
$6,483,657
Source: Los Gatos Redevelopment Agency, Seifel Consulting Inc.
Table II-3 presents the supporting detail for the five-years of actual and projected revenues. As
indicated in Table 11-3, the beginning fund balance through FY 2003/04 was $10.8 million. By
the end of the Implementation Plan period, the Agency is projected to receive approximately
$34.4 million in gross tax increment revenues before deducting obligations including Housing
Fund deposits, pass-through payments, County and Agency Administration, ERAF payments, and
debt service payments.'
The Agency received higher tax increment revenues than projected during the first three years of
the Implementation Plan, which grew annually by 18 percent on average. Gross tax increment
revenues for FY 2007108 and FY 2008/09 are budgeted conservatively at an annual average
increase of 2 percent. However, gross tax increment revenues are expected to be higher given the
rate of growth in previous years.
b. Other Agency Financial Resources
Wherever possible, the Agency has leveraged and will continue to leverage other Agency funds
in connection with its redevelopment efforts. The Agency has received nearly $1 million for
non-housing activities from investment income during the past three years. The Agency expects
to receive another $0.9 million over the next two years.
t ERAF payments were only required for FY 2004/05 and FY 2005106.
Los Gatos Redevelopment Agency 11-5 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
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The Implementation Plan is required to include the proposed estimated expenditures for the
five-year period. The nature and scope of the activities and expenditures were shaped primarily
by Agency goals and objectives for the Project Area, available revenues for finding projects and
activities, and blighting conditions to be eliminated. Table II-4 summarizes actual expenditures
by projects and activities for the first three years and presents projected expenditures for the
remaining fiscal years.
During the first three years, the Agency spent $2.6 million on non-housing projects and activities.
The Agency anticipates spending an additional $6.4 million in the remaining fiscal years based on
reasonable assumptions regarding costs and tax increment and other revenues. The Agency
expects that the total expenditures for the five-year period will be less than what was proposed in
the Implementation Plan due to the fact that actual costs for some of the projects were less than
original estimates.
development Agency II-7 Seifel Consulting Inc.
Los Gatos Re
Implementation Plan Midterm Review February 2008
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III. Non-Housing Accomplishments
The Agency has undertaken many non-housing projects and activities in the Project Area over the
initial three years of the Implementation Plan period and has major projects in focus for the
remaining two years. Agency efforts have been focused on the alleviation of blight. This section
highlights the Agency's major accomplishments in the past three years and describes those
projects in greater detail.
The majority of the non-housing projects have focused on capital improvements in the
Project Area for the primary goal of maintaining a functional street system, which is also
consistent with the Town's General Plan. Such improvements included street reconstruction, the
paving of alleys, downtown streetscape improvements, and expansion of parking facilities in
support of the downtown commercial district, all of which have been identified as essential
components of the Redevelopment Program.
A. Accomplished and Planned Projects
1. Downtown Commercial Revitalization
a. Street Improvements
The Town, with assistance from the Agency, completed street improvements along Santa Cruz
Avenue and Main Street in three phases between 2005 and 2007 as directed by the Central Los
Gatos Redevelopment Plan and Downtown Streetscape Plan. The first two phases concentrated
on Santa Cruz Avenue. The third phase concentrated on Main Street, from N. Santa Cruz Avenue
to College Avenue, with additional street construction past College Avenue up to Loma Alta
Avenue. The Agency leveraged its
non-housing funds with a Caltrans Surface
Transportation Improvement Program
(STIP) grant to complete these street
improvement projects.
Elvenue, 2007.
Los Gatos Redevelopment Agency I11-1 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
Downtown streetscape improvements, Santa Cruz
Prior to the improvements, the surfaces of Main Street
and Santa Cruz Avenue were cracked and unsightly due
to deferred maintenance. On Santa Cruz Avenue, work
included extensive street rehabilitation along with the
installation of new planters, bulb outs and Villa Hermosa-
style sidewalks consistent with the Downtown
Streetscape Plan. On Main Street, most of the sidewalks
were replaced. Other improvements along Main Street
included curb and gutter replacement and replacement of
a traffic signal and signal box at the intersection of
Main Street and University Avenue. Street lighting
improvements such as installation of new fixtures and
wiring and the repainting of poles, were completed during
summer 2006.
New planters along Santa Cruz Avenue,
2007.
Similar to the work done on Main Street, street lighting
improvements are planned for N. Santa Cruz Avenue in
2008. Upon completion, all of the lights on N. Santa Cruz Avenue and adjacent to the Town Plaza
will have a uniform look, further enhancing the appearance of the Downtown. More street
reconstruction is also planned for the next few years on Elm Street between N. Santa Cruz and
University Avenues in the Downtown core as well as the Almond Grove area.
b. Downtown Parking Lots
Downtown parking lot improvements were identified in the Downtown Parking Management
Plan and are consistent with the goal of providing additional parking downtown per the Central
Los Gatos Redevelopment Plan. Since 2004, the Agency has funded various improvements to the
Town's public parking lots serving Downtown businesses. The Agency recognizes that investing
in Downtown public parking lots is essential to revitalizing and strengthening its Town center,
and has worked towards increasing the number of parking spaces, resurfacing old lots and
providing signage to direct visitors to the lots.
During the Implementation Period, the Agency funded the reconstruction of the Bus Depot (South
Side) and Verizon (Montebello) parking lots. In addition, wayfinding projects were also
completed including the Olive Zone sign project and other smaller projects that direct visitors to
the public parking areas. Agency funds were also used to assist with merchant and resident
relations during the construction period of the parking lot improvements.
Although improvements have been made with the creation of additional parking spaces, the
Agency recognizes that a shortage of parking still exist in the Downtown and will address this
issue with the continued implementation of the Downtown Parking Management Plan.
Los Gatos Redevelopment Agency III-2 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
2. Public Improvements, Facilities and Utilities
a. Main Street Bridge
During the five-year period, the Agency has
worked towards beautifying the Main Street
Bridge, which provides for a vehicle, bike and
pedestrian crossing over Highway 17. In addition,
the bridge marks the beginning point of the Los
Gatos Creek Trail, a 9.7-mile trail that runs from
Los Gatos to San Jose. The Agency supported
bridge improvements by providing funding to
install new lighting and a multi-purpose fountain
that provides drinking water to people as well as
pets. The Town discovered through a local student
that the bridge runs the course of the original El Main Street Bridge, 2007.
Camino Real, which historically connected a
number of cities and Spanish missions along the Pacific coast of California. As pant of the
Agency's plan to beautify the Main Street Bridge, the Agency provided funds to install a
monument to commemorate the historic road. The Agency will continue in its efforts to maintain
and upgrade the bridge over the rest of the Implementation Plan period.
b. Alleys and Curbs, Gutters and Sidewalk Improvements
The Town of Los Gatos, with assistance from the Agency, has been engaging in overall alleyway
improvements to fourteen alleys in the Project Area since the Town prepared a report on the
condition of these alleys in 2002. Work on the alleyways included improving their surface road
condition and addressing a number of drainage deficiencies.
The first of the alley improvements began in Almond Grove in 2003, and a total of six alleyways
were reconstructed by 2005. There were five alleyways in the Johnson/Loma Alta area, which
had been in disrepair for many years, and these were also reconstructed by the summer of 2005.
C. Gateways
The Town and the Agency are working together on two gateways: one located on N. Santa Cruz
Ave. at Highway 9 and another at Wood Road. Although the gateway improvements were not
included as part of the Redevelopment Agency bond financing secured in 2002, due to continued
interest by community members, the Town Council has directed staff to proceed to plan for the
gateways. The gateways are intended to enhance the appearance of these two entrances to the
Downtown and to increase pedestrian safety at the crosswalks. The Highway 9 gateway would
need to be coordinated with the University Avenue and Highway 9 project, and potentially with
other private developments in the vicinity of the intersection. Conceptual designs have been
developed and the Town and Agency will proceed when construction funding is allocated.
Los Gatos Redevelopment Agency III-3 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
B. Conclusion
The Agency has accomplished many significant non-housing projects and activities in the
Project Area over the initial three years of the Implementation Plan period, which will help
alleviate blight in the area. Many of the Implementation Plan projects and activities have been
completed or are in progress. During the final two years of the Implementation Plan period, the
Agency will continue to work towards the completion of projects as they plan for the future.
Los Gatos Redevelopment Agency III-4 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
IV. Housing Accomplishments
Over the initial three years of the five-year Implementation Plan period, the Agency has
undertaken housing activities focusing on the provision of affordable housing, as directed by the
housing component of the 2004 Five-Year Implementation Plan. The housing component
presented:
• Specific goals and objectives for the five-year Implementation Plan period FY 2004105
through FY 2008109.
• Estimates of Housing Fund deposits and expenditures planned for the Implementation Plan
period.
• A description of how the stated goals, objectives, programs, projects and expenditures would
produce affordable housing units to meet these obligations.
• Projected number of housing units produced over the life of the Plan.
The Agency has three primary housing obligations, which have been reviewed as part of this
Midterm Review:
• Housing Fund-Redevelopment agencies are required to deposit tax increment into the
Housing Fund and expend tax increment revenue for the provision of affordable housing.
• Housing Production-Minimum percentages of new or substantially rehabilitated housing
units in a project area are to be made available at an affordable housing cost.
• Replacement Housing Agencies must replace housing units removed from the housing
stock as a result of redevelopment activities.
In addition, if a project area is within three years of reaching the time limit of plan effectiveness,
an agency must address CRL requirements in the Midterm Review in regards to the agency's
ability to comply with its housing obligation. These requirements are not applicable to Los Gatos
at this time as the time limit for plan effectiveness for the Central Los Gatos Redevelopment Plan
is in 23 years.
A. Affordable Housing Program
During the five-year Implementation Plan period, the Agency has concentrated and will continue
to concentrate on housing activities that are most applicable to the Agency's goals and objectives.
Through its affordable housing activities, the Agency will also continue to support and advance
the Town's General Plan, and more specifically, the goals and strategies identified in the Housing
Element including:'
• Improve the choice of housing opportunities for senior citizens, families and singles and for
all income groups through a variety of housing types and sizes, including a mixture of
ownership and rental housing.
• Preserve existing moderately priced and historically significant housing.
' The parts of the Implementation Plan that address the affordable housing requirements must be adopted every
five years either in conjunction with the community's housing element cycle or the implementation plan cycle.
(Section 33490(a)(1)(A))
Los Gatos Redevelopment Agency IV-1 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
• Eliminate racial discrimination, lack of disabled accessibility and all other forms of
discrimination that prevent free choice in housing.
• Make infrastructure projects and residential and nonresidential developments be compatible
with environmental quality and energy conservation.
• Reduce the homeless population.
• Provide housing affordable to people who work in the Town.
1. Affordable Housing Program Components
The Agency recognizes the important role of the Affordable Housing Program and related
activities in the overall Redevelopment Program. Consequently, not only is the Affordable
Housing Program viewed as the means of implementing the Agency's stated goals and objectives
related to affordable housing, but it is also a key element in the Agency's overall blight
alleviation efforts. The Affordable Housing Program has two primary affordable housing
components as follows:
a. Affordable Housing Projects within the Project Area
The Agency will fund affordable housing projects in the Project Area during this five-year
Implementation Plan period. Going forward, the Agency will work with local non-profit and for
profit developers to produce affordable housing units to help address the needs of the community.
The Agency is considering assisting the production of approximately 4 units affordable to very
low-income households from FY 2007108 through FY 2008109.
b. Zero Interest Loans for Secondary Dwelling Units in the Project Area
The Agency will implement a loan program during this five-year Implementation Plan period.
The Agency will provide zero interest loans for the production of secondary dwelling units in the
Project Area that are restricted to occupancy by secondary dwelling units, often called "in-law"
units, typically referring to small one-bedroom or studio units located in existing single-family
homes or as detached units. Approximately one affordable unit per year will be assisted from
FY 2007108 through FY 2008109, for a total of 2 units.
2. Proposed Affordable Housing Activities and Expenditures
The Agency's Housing Fund revenues will continue to be used in a flexible manner to respond to
favorable development opportunities. The Town Council and Agency have approved resolutions
determining that the use of its Housing Fund moneys to assist housing activities located outside
the Project Area is of benefit to the Project Area. Accordingly, Housing Fund moneys may be
spent both inside and outside the Project Area. However, affordable units produced outside the
Project Area count on a two for one basis towards meeting the Agency's Housing Production
obligations.
In carrying out its purpose to preserve, improve and increase the Town's affordable housing
supply, the Agency will use the following methods:
• Provide cost write-down and gap financing for projects utilizing federal, state and other
locally controlled funds.
• Acquire land or building sites.
Los Gatos Redevelopment Agency IV-2 5eitel Consulting Inc.
Implementation Plan Midterm Review February 2008
• Fund Redevelopment costs and development fees.
• Improve land or building sites with on-site or off-site improvements.
• Donate land to private or public persons or entities.
• Finance insurance premiums pursuant to CRL Section 33136.
• Construct buildings or structures.
• Provide subsidies, loans and grants to, or for the benefit of, persons or families of very low,
low, or moderate-income.
• Develop plans, pay principal and interest on bonds, loans, advances or other indebtedness, or
pay financing or carrying charges.
• Require the integration of affordable housing sites with sites developed for market rate
housing.
• Assist the development of housing by developers.
• Acquire easements.
The Agency plans to target its Housing Fund expenditures for specific income groups as required
by the CRL. The Agency will make every effort to encourage the preservation and development
of housing affordable to a variety of income levels combining various funding sources, and
partnering and collaborating with other entities dedicated to the preservation and development of
affordable housing. The Agency is confident it will be able to meet its affordable housing
production obligations and expenditure requirements within the ten-year compliance period, as
well as over the life of the Redevelopment Plan.
Nevertheless, changing conditions may result in actual expenditures and unit production for given
years being either less than or greater than what is projected. These factors include fluctuations in
the timing of the development process, the levels of Housing Fund revenue and other public `
assistance, the need to amass sufficient funds for an efficiently sized development, and
development opportunities.
B. Housing Fund Obligation
The CRL requires the Agency to set aside in a separate, segregated Low and Moderate-Income
Housing Fund (Housing Fund) at least 20 percent of all tax increment revenue generated from its
Project Area for the purpose of increasing, improving and preserving the community's supply of
low and moderate-income housing. The Agency has and will continue to spend moneys from the
Housing Fund over the next two years on the programs and activities described above in
Section A.
Los Gatos Redevelopment Agency IV-3 Selfel Consulting Inc. t
Implementation Plan Midterm Review February 2008
1. Housing Fund Revenues
The Implementation Plan included the estimated annual Housing Fund deposits during the
five-year period. This Midterm Review provides the actual amounts deposited during FY 2004/05
through FY 2006/07 and the projected deposits for the remaining two years, FY 2007108 and
FY 2008/09, as reflected in Table N-1. The total five-year deposit of tax increment revenue into
the Housing Fund is estimated to be approximately $6.8 million. Table IV-2 presents the actual
and estimated Housing Fund balance for the Implementation Plan period. After including
additional revenues and deducting housing administration costs, the Agency will have
approximately $9.3 million available for its Housing Program by the end of the Implementation
Plan period.
Table IV-1
Tax Increment Deposits to the Housing Fund
Los Gatos Redevelopment Agency
Fiscal Year
Revenues
2004/05 Actual
$1,163,323
2005106 Actual
$1,073,315
2006107 Actual
$1,516,456
2007108 Projected
$1,504,539
2008109 Projected
$1,537,655
Total
$6,795,288
Source: Los Gatos Redevelopment Agency, Seifel Consulting Inc.
Los Gatos Redevelopment Agency IV-4 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
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2. Housing Fund Targeting
Under the CRL, Housing Fund moneys must be targeted to specific income levels according to
need and to non-age restricted housing. The targeting obligations must be met over the
compliance period beginning January 1, 2002 and ending in December 31, 2014.
a. Income Levels
Housing Fund moneys must be expended to assist very low and low-income households,
generally defined as:
• Very Low-Incomes up to 50 percent of area median income, adjusted for family size.
• Low-incomes from 50 percent up to 80 percent of area median income, adjusted for family
size.
• Moderate-incomes from 80 percent up to 120 percent of area median income, adjusted for
family size.
The current maximum incomes for each income category are presented in Table N-3. Incomes
are included for various household sizes.
Los Gatos Redevelopment Agency IV-6 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
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Housing Fund moneys must be used to assist housing for persons of very low and low-income in
at least the same proportion to the total number of housing units needed for each of these income
groups in the community. The Association of Bay Area Governments (ABAG) sets the affordable
housing need for the Town of Los Gatos. Table IV-4 shows the regional fair share allocation and
the targeting objective currently applicable to the Town for housing affordable to persons at or
below 120 percent of area median income. The Agency will use the Housing Fund to meet these
needs where feasible.
Table IV-4
ABAG Regional Fair Share Allocations, 2007-2014
Affordable Housing Need by Income Category
Los Gatos Redevelopment Agency
Income Group and Relation
Total Housing
Expenditure Percentage
to County Median Income
Units Needed
Need by Income Level
Very Low (0-50%)
154
At least 41 %
Low Income (51-80%)
100
At least 27%
Moderate 81-120%
122
No more than 321/o
Total
376
100%
Source: ABAG Draft Regional Housing Needs Allocation, July 2007.
As Table IVA indicates, the Agency is required to spend Housing Fund moneys in the following
proportions: at least 41 percent for units affordable to very low-income households, at least
27 percent for units affordable to low-income households, and no more than 32 percent on
housing affordable to moderate-income households. However, the Agency may spend more funds
for housing occupied by very low-income households, but in no event can the expenditures on
housing affordable to moderate-income households exceed the threshold amount (32 percent).
Units developed pursuant to a replacement-housing obligation under federal or state law do not
count against the Agency's income targeting requirement.
C. Targeting to Non-Age Restricted Housing
In addition to the requirement outlined above, as of January 1, 2002, a defined minimum
percentage of Housing Fund moneys must be spent on housing available to all persons regardless
of age. In 2005, the State Legislature amended the method of determining the minimum
percentage of Housing Fund moneys to be spent on non-age restricted housing. This minimum is
equal to the percentage of Los Gatos' low-income households with a member under age 65, as
reported in the most recent U.S. Census.
Los Gatos Redevelopment Agency IV-8 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
The 2000 Census indicates that 58 percent of the Town's low-income households have a
householder under 65 years of age, as shown in Table IV-5. Thus, the Agency must expend at
minimum 58 percent of its funds on housing that does not impose age restrictions on residents.
The Agency will continue to monitor Housing Fund expenditures and expects to be in compliance
with the requirement for minimum expenditures on non-age restricted housing by the end of the
compliance period.
Table IV-5
Housing Fund Expenditures Requirements
Non-Age Restricted Housing
Los Gatos Redevelopment Agency
Age Tar etin a
Low Income
Householdeb
Expenditure Percentage
With a Householder under 65
2,216
58%
With a Householder 65 and over
1,580
42%
Total
3,L96
100%
a. Based on Census data showing low income households by householder age. (The Census
does not report low income household information according to the age of household members.)
b. Includes households earning 80% or less of AMI based on limits published by HCD in 2000.
Source: 2000 U.S. Census, HCD Income Limits 2000.
I Affordable Housing Assisted by Housing Fund
The Agency is working to take advantage of various opportunities and initiate actions as
necessary, consistent with the CRL and the City's Housing Element, to preserve and facilitate the
development of housing affordable to households whose basic needs are not being met by the
private housing market.
The Agency expects to meet and exceed its housing production obligations under the CRL. The
Agency will implement the Affordable Housing Program, utilizing both the Non-Housing and
Housing Funds as appropriate, in a strategic approach to assist residential development projects,
in creating and preserving affordable housing within the community, as well as in meeting the
Agency's housing production requirement.
During FY 2005106 through FY 2007108, the Agency used its Housing Fund moneys to provide a
$100,000 grant each year to the Housing Trust of Santa Clara County (HTSCC) to be used
towards providing affordable housing within the Town of Los Gatos for households of very low,
low and moderate-income. For FY 2008109, the Agency has earmarked $778,000 as a loan to a
local non-profit, Senior Housing Solutions, to acquire and rehabilitate a home that will be used to
provide five to six units of shared housing for low-income seniors.
Los Gatos Redevelopment Agency IV-9 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
C. Housing Production Plan
The CRL requires redevelopment agencies to report on historical housing production and to adopt
a plan for each project area showing how the agency intends to meet its Housing Production
Requirement. For this Midterm Review, the Agency's housing production is reported for the first
three years of the Implementation Plan period, and is projected for the remaining two years of the
period. The Agency has met, and expects to continue to meet, its housing production obligations.
1. Agency Housing Obligation and Production
The CRL provides that a redevelopment agency is responsible for ensuring that the following
housing obligations are met:
• Fifteen percent of all new housing units developed in project areas by entities other than the
agency, and thirty percent of all new housing units developed by the agency, must be made
available at an affordable housing cost to persons of very low, low and moderate-income
("Inclusionary Housing").
• Whenever very low, low and moderate-income housing units are destroyed or removed as
part of a redevelopment project, such units will be replaced within four years of their
destruction or removal. One hundred percent of those replacement units must be affordable to
the same income categories as the persons displaced ("Replacement Housing").
The CRL requires the Agency to count substantially rehabilitated units as part of the Agency's
total housing production obligation. Prior to January 1, 2002, the CRL (under AB 1290) defined
substantially rehabilitated dwelling units as substantially rehabilitated multifamily rental dwelling
units (with three or more units) or agency-assisted substantially rehabilitated single-family
dwelling units (with one or two units). AB 637 modified the CRL definition of substantially
rehabilitated dwelling units so that, as of January 1, 2002, only agency-assisted substantially
rehabilitated multifamily (three or more units) and agency-assisted substantially rehabilitated
single family dwelling units (one or two units) will be included in the production unit calculation.
Table IV-6 presents the Agency's historically and projected future production obligation.
Los Gatos Redevelopment Agency IV-io Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
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2. Affordable Housing Production Plan
This section discusses affordable housing production in the Project Area and the Agency's
strategy for meeting its affordable housing obligation. The Agency expects to meet its legal
housing production obligations under Community Redevelopment Law (CRL).
The Agency itself has not developed any housing in the community in the past, nor does it have
plans to do so at any time in the future. The Agency has found it most cost effective and
administratively efficient to provide financial assistance, as necessary, to private developers (both
for-profit and nonprofit) and homeowners to produce affordable housing, than for the Agency to
act as a housing developer. Consequently, the Agency does not have an affordable housing
production requirement with respect to Agency-developed housing.
In carrying out its purpose to preserve, improve and increase the Town's affordable housing
supply, the Agency may work with the private sector as opportunities arise, providing financial
assistance to be used for the acquisition of land or buildings, construction of buildings, on- and
off-site improvements, rehabilitation of buildings, preservation of affordable housing, and gap
financing, among others.
D. Replacement Housing Plan
The Agency did not have any replacement obligations during the last five-year Implementation
Plan period and has no plans to destroy or remove any residential units. As the Agency does not
expect the displacement of any households in the next ten years, it does not expect to incur an
obligation to replace any units. In the event that the removal of housing is to be needed in the
future, the Town and Agency would follow all state requirements for replacement housing and
relocation, and make every effort to relocate persons as close as possible to their current place of
residence.
E. Housing Expenditures and Projects for the Remainder of the
Period
Housing Trust of Santa Clara County
The Agency provided an annual grant of $100,000 to the Housing Trust of Santa Clara County
(HTSCC) for FY 2005/06 through FY 2007/08 using Housing Fund moneys. The grants are being
used by the HTSCC to increase the supply of housing affordable to very low, low and
moderate-income households in the Town of Los Gatos.
2. Senior Housing Solutions
For FY 2008109, the Agency has earmarked approximately $778,000 to be loaned to Senior
Housing Solutions (SHS); a non-profit agency that creates shared housing for low-income
seniors. The loan will be used by SHS to acquire and rehabilitate a home, potentially within the
Project Area, on which it will provide five to six units of low-income senior housing. SHS
expects the home to be completed by December 2008 and fully occupied by the first quarter of
2009.
Los Gatos Redevelopment Agency IV-12 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
3. Opportunity Sites
The Agency will continue to explore redevelopment opportunities in the Project Area that have
the potential to become opportunity sites for both affordable and market rate housing
development in the future.
F. Completion of Housing Obligations
CRL Section 33333.8, requires that an agency comply with and fulfill its affordable housing
responsibilities, including housing fund, replacement housing and affordable housing production
responsibilities, prior to the expiration of the time limit on redevelopment plan effectiveness. A
redevelopment project cannot be terminated if an agency has not complied with its affordable
housing obligations.
The law further requires that the midterm review needs to address the ability of the agency to
comply with its housing responsibilities if the redevelopment project is within three years of
reaching its limit on plan effectiveness. The redevelopment project is not within three years of
reaching this time limit at the time of this Midterm Review.
G. Conclusion
The Agency has been working diligently towards achieving its housing goals for the
Implementation Plan period. While the Agency expects to have a production surplus through the
remainder of the Implementation Plan period, it is working to further increase the number of low
and moderate-income housing in the Project Area beyond the Housing Production Obligation.
Los Gatos Redevelopment Agency IV-13 Seifel Consulting Inc.
Implementation Plan Midterm Review February 2008
Five-Year
Implementation Plan
FY 2004/05 to FY 2008/09
October 2004
Prepared by
Los Gatos Redevelopment Agency
110 E. Main Street
Los Gatos, CA 95030
Seifel
I
N.
136fl. Suffer Shat
suile.5Z0
Sun hinicisca, U 94109
Tel 415.931.9600
v,M.seifd.coun
ATTACHMENT 3
Central Los Gatos Redevelopment Project
Five-Year Implementation Plan
FY 2004105 - FY 2008109
I. Introduction .............................................................................................I-1
A. Organization I-1
B. Interpretation I-2
C. Description of the Redevelopment Plan and Project Area I-2
D. Agency Accomplishments, FY 1999100 - FY 2003/04 I-3
E. Five-Year Goals and Objectives I-5
H. Non-Housing Implementation Plan II-1
A. Redevelopment Program FY 2004105 - FY 2008109 ........................................................................................I1-1
B. Linkage Between Proposed Redevelopment Program and Elimination of Blighting Influences ....................I1-2
C. Five-Year Implementation Plan Resources .......................................................................................................II-5
D. Five-Year Implementation Plan Expenditures
III. Housing Component .............................................................................III-1
A. Overview of Agency Affordable Housing Responsibilities .............................................................................III-1
B, Statutory Requirements for Housing III-2
C. Housing Production Plan III-10
D. Replacement Housing III-13
E. Housing Fund III-13
F. Housing Program
III-1
G. Fulfillment of Housing Obligations III-20
Los Gatos Redevelopment Agency i Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
Central Los Gatos Redevelopment Project
Five-Year Implementation Plan
FY 2004/05 - FY 2008109
Lists of Figures and Tables
Tables
Table I-1 Summary of Central Los Gatos Redevelopment Plan Time and Fiscal Limits I-3
Table II-1 Matrix Summarizing How Five-Year Programs and Activities Will Eliminate Blight
II-3
Table I1-2 Agency Revenue Available for Non-Housing Redevelopment Activities FY 2004/05 - FY 2008109......
II-6
Table II-3 Projected Five-Year Non-Housing Redevelopment Program Expenditures FY 2004/05 - FY 2008/09..
...I1-8
Table 111-1 2004 Santa Clara County Maximum Incomes by Income Category and Household Size
111-6
Table 111-2 Affordable Housing Cost
111-7
Table 111-3 ABAG Regional Fair Share Allocations 1999-2006
III-8
Table III-4 Housing Fund Expenditures Requirement Non-Age Restricted Housing
I11-9
Table III-5 Summary of Historical and Projected Housing Production in Project Area
III-11
Table 11I-6 Housing Production and Affordable Obligation
11I-14
Table III-7 Agency Revenue Available for Affordable Housing Activities, FY 2004/04 - FY 2008/09
111-15
Table 111-5 Housing to be Produced with Agency Assistance/Housing Fund Expenditures
III-18
Figures
Figure 1-1 Los Gatos Redevelopment Project Area I-4
Los Gatos Redevelopment Agency ii Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
Central Los Gatos Redevelopment Project {
Five-Year Implementation Plan
FY 2004/05 - FY 2008/09
1. Introduction
Section 33490 of the California Community Redevelopment Law (the "CRL") requires that a
redevelopment agency administering a redevelopment plan prepare and adopt a five-year implementation
plan for its project areas. The principal goal of the implementation plan is to guide an agency in
implementing its redevelopment program to help eliminate blighting influences. In addition, the
affordable housing component of the implementation plan provides a mechanism for a redevelopment
agency to monitor its progress in meeting both its affordable housing obligations under the CRL and the
affordable housing needs of the community. In effect, the implementation plan is a guide, incorporating
the goals, objectives and potential programs of an agency for the five-year Implementation Plan period,
while providing flexibility so the agency may adjust to changing circumstances and new opportunities.
This document constitutes the FY 2004/05 through FY 200$/09 Implementation Plan for the Central
Los Gatos Redevelopment Project Area (the "Project Area"), which was established in November 1991.
This Implementation Plan outlines the program of revitalization, economic development, and affordable
housing activities of the Los Gatos Redevelopment Agency (the "Agency") for FY 2004105 through
FY 2008/093' the required five-year planning period. In addition, information for later years-is provided in
the housing component of this Implementation Plan, as required by the CRL.
The Affordable Housing Production Plan is included in Chapter III, and covers historical and projected
housing production in the Project Area, the Agency's affordable housing production obligation, and the
Agency's plans to meet its obligation.
A. Organization
Generally, the implementation plan must contain the following information:
• Specific goals and objectives for the next five years for both housing and non-housing activities.
• Specific programs and expenditures for the next five years for both housing and non-housing activities.
• An explanation of how the goals, objectives, programs and expenditures will assist in the elimination
of blight and in meeting affordable housing obligations.
• Other information related to the provision of affordable housing.
Chapter I provides a basic discussion of the CRL requirements, Project Area description, Agency
accomplishments to date, and goals and objectives for the Project At-ca. Chapter If summarizes the
proposed Non-Housing activities and related revenues and expenditures for the five years, and a
description of the blighting conditions and how they will be alleviated by the activities. Chapter III
addresses affordable housing activities and expenditures, and charts Agency progress in meeting its
affordable housing obligations. Chapter III also includes the Affordable Housing Production Plan and
Housing Program.
Los Gatos Redevelopment Agency 1-1 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
B. Interpretation
The Implementation Plan is intended to provide general guidance for the implementation of the Agency's
programs and activities. The Agency expects that particular constraints and opportunities, not fully
predictable at this time, will arise in the course of undertaking the projects and activities described in this
Implementation Plan over the next five years. Therefore, the Agency intends to use and interpret this
Implementation Plan as a flexible guide. The Agency acknowledges that specific projects and activities as
actually implemented over the next five years may vary in their precise timing, location, cost,
expenditure, scope and content from those set forth in this document.
In developing its affordable Housing Program, the Agency has been guided by the goals and objectives of
the Town's Housing Element of the General Plan, incorporated into this Implementation Plan by this
reference. Through its affordable housing activities, the Agency will support and advance the overall
Housing Element programs as well as contribute to the implementation of the policies and strategies
identified in the Town's General Plan, as presented in Chapter III.'
C. Description of the Redevelopment Plan and Project Area
The Central Los Gatos Redevelopment Plan (the "Redevelopment Plan") was adopted by the Los Gatos
Town Council by Ordinance 1882 on November 25, 1991. The Central Los Gatos Redevelopment Project
Area consists of 441 acres including the Central Business District, the Civic Center and the Historic
Downtown residential neighborhoods. Figure 1-1 details the Project Area.
The purpose of establishing the Redevelopment Plan was to provide a financing tool to assist the Town
and its residents to repair damage from the Loma Prieta earthquake and complete seismic strengthening
and safety programs to ensure the public safety and welfare. The Redevelopment Project was also
intended to be a financing mechanism to assist in alleviating blighting conditions, revitalizing the
downtown commercial area and reconstructing deteriorated infrastructure. All rehabilitation and
development activities outlined in the Redevelopment Plan must conform to the Town's existing and
future planning programs including the General Plan.
The Redevelopment Plan identified categories of public infrastructure, commercial rehabilitation and
housing improvement projects to be funded by the Agency, which are listed below:
• Street reconstruction
• Alley improvements
• Improvements to the Downtown
o Streetscape improvements
o Loans for seismic strengthening
o Loans/assistance for geologic investigations and structural analysis
a Facade improvements
o Parking facilities
o Hazardous waste removal
• -Improvements to community facilities
o Structural analysis
' The parts of the Implementation flan that address the affordable housing requirements must be adopted every five years either
in coniunetiou with the community's housing element evele or the implementation Plan cvcle. (Section 33490(a)(1)(A))
Los Gatos Redevelopment Agency 1-2 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
o Seismic strengthening and repair
• Public transit facilities
• Assistance to increase and improve the supply of low and moderate income housing
Table I-1 provides a summary of the time and financial limits of the Redevelopment Plan for the Project
Area.
Table I-1
Summary of Central Los Gatos Redevelopment Plan
Time and Fiscal Limits
Central Los Gatos
Project Area
Background Information
Total Acres
441
Date of Adoption
11/25/1991
Time Limits
Incurring Debt
11/25/2011
Plan Effectiveness Project Activities)
11/25/2031
TI Collection/Repayment of Debt
11/25/2041
Eminent Domain
12/2512015
,ti a'u _ 1 •k.
Financial Limits
Tax Increment Ca - -
$250 million
Bond Limit
$52 million
Source: Town of Los Gatos Redevelopment Agency.
D. Agency Accomplishments, FY 1999100 - FY 2003/04
The Agency first received tax increment revenues in FY 1992/93. The small amount of revenue received
from FY 1992/93 through 1998/99 precluded the Agency from formally initiating any large scale
redevelopment projects. The revenues received during this time period were predominately used to fund
required administrative activities, planning activities, model capital improvements in the Downtown and
interest payments on the start up loan from the Town.
The Agency achieved several Non-Housing projects and activities in the Project Area during the last
five-year Implementation Plan period, FY 1999/00 through 2003/04, including the following:
• Began to implement a Downtown Commercial Revitalization Plan, which included street
improvements, parking reconfigurations, development of a Parking Management Program and
renovation of the Town Plaza.
• Implemented projects to reconstruct substandard alleys and deteriorated public improvements,
facilities and utilities, including repair and reconstruction of the Massol/Tait storm drain.
• Performed streetscape improvements along Santa Cruz Avenue.
• Completed key components of the Parking Management Plan, including construction of the South
Side Lot and Montebello Lot.
• Implemented first phase of parking zones.
Los Gatos Redevelopment Agency I-3 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
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During the last five-year Implementation Plan period, the Agency implemented several Housing projects
and activities in the Project Area. All projects were targeted to very low income households. They
included a 12-unit project on Miles Avenue and a one unit Habitat for Humanity project on Charles
Street. The Agency also provided assistance to the Blossom Hill project, which is located outside the
Project Area. The project provided one very low income senior housing unit.
E. Five-Year Goals and Objectives
The implementation plan provisions of the CRL require the Agency to establish goals and objectives for
the Project Area for the five-year planning period. The following major goals and objectives will be
pursued by the Agency, which are the same as those for the overall Redevelopment Program:
• The elimination of blighting influences and the correction of environmental deficiencies in the Project
Area, including among others, obsolete and aged building types, substandard alleys and inadequate or
deteriorated public improvements, facilities and utilities.
• The assembly of land into parcels suitable for modern, integrated development with improved
pedestrian and vehicular circulation in the Project Area.
• The replanning, redesign and development of undeveloped areas which are stagnant or improperly
utilized.
• The provision of opportunities for owner and tenant participation in the revitalization of their
properties.
• The strengthening of retail and other commercial functions in the downtown area.
• The strengthening of the economic base of the Project Area and the community by the installation of
needed site improvements to stimulate new commercial/light industrial expansion, employment and
economic growth. {
• The provision of adequate land for parking and open spaces.
• The establishment and implementation of performance criteria to assure high site design standards and
environmental quality and other design elements which provide unity and integrity to the entire
Project.
• The expansion and improvement of the community's supply of low and moderate income housing.
Los Gatos Redevelopment Agency I-5 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004 L .
II, Non-Housing Implementation Plan
This section describes the five-year Non-Housing Redevelopment Program, including a summary of the
project and activity descriptions, deficiencies to be corrected, and estimated revenues and expenditures.
As they are implemented, the projects and activities may be modified over time to better serve the
purposes of redevelopment. The cost estimates are preliminary and subject to refinement as the
Redevelopment Program planning and implementation proceed. Some of these projects and activities may
not be completed within the next five years of the Redevelopment Program, and thus, related costs may
not be incurred in the next five years.
A. Redevelopment Program FY 2004105 - FY 2008109
The Agency will undertake projects and activities in the Project Area over the next five years to alleviate
blighting conditions and attain the Redevelopment Program goals and objectives. The projects and
activities can be categorized into four basic program categories, as described below.
1. Downtown Commercial Revitalization Plan
A goal of the Redevelopment Program for FY 2004105 through FY 2008109 is to continue to implement a
Downtown Commercial Revitalization Plan. Projects and activities include the following:
• Construct street improvements in Downtown, including new sidewalks and bulb outs on Santa Cruz
Avenue and Main Street.
• Reconfigure parking to provide additional parking spaces in the Downtown Core. _ -
• Continue to implement the Parking Management Program to make better use of existing parking,
identify new parking opportunities and methods of financing new parking facilities.
• Implement a fagade grant program.
2. Public Improvements, Facilities and Utilities
The Agency will continue to repair or reconstruct the substandard alleys and damaged, inadequate or
deteriorated public improvements, facilities and utilities in the Project Area through the following:
• Develop a list of capital projects, estimated cost and projected revenues for the Agency and present to
Town Council to help establish priorities.
• Reconstruct parking lot surface on parking lots 1, 2, 5 and 6.
• Reconstruct deteriorated streets within the Project Area.
• Beautify Main Street Bridge.
• Provide gateway projects at Highway 9 and North Santa Cruz Avenue.
• Provide gateway projects at Wood Road and South Santa Cruz Avenue.
• Pave Main Street.
• Provide alley improvements.
• Provide multi-use fountain at Highway 17 and Main Street Trail Head,
• Improve curbs, gutters and sidewalks.
• Underground utilities.
Los Gatos Redevelopment Agency II-1 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
• Make Americans with Disabilities Act (ADA) accessibility improvements.
3. Affordable Housing
The Affordable Housing Program promotes residential development on vacant and underutilized sites in
the Project Area. Through this program the Agency will increase and preserve housing affordable to very
low, low and moderate income households, Components of this program include assistance for the
construction of affordable housing and a loan program to assist in the development of secondary dwelling
units for very low, low and moderate income households. Chapter III describes planned housing activities
in more detail.
4. Agency Administration
The Agency will continue to have various administration and operational requirements associated with
implementing the above projects and activities. These will include program staff, planning functions and
legal and other technical assistance.
B. Linkage Between Proposed Redevelopment Program and
Elimination of Blighting Influences
An implementation plan must provide an explanation of how the goals, objectives, programs and
expenditures for the five-year planning period will serve to eliminate blighting conditions in a project
area. The five-year -year Redevelopment Program described above will continue the process of improving the
Project Area and alleviating blighting conditions. Table II-1 on the following page provides a matrix
summarizing the relationship between proposed goals, objectives, projects and activities and how they
will eliminate blight. Section B.2 further describes how deficiencies will be corrected by the projects and J
activities proposed for the next five years.
1. Blighting Conditions in the Project Area
a. Unsafe Buildings - Age, obsolescence, deterioration, faulty interior arrangement,
seismic and exterior spacing
The Project Area contains numerous public, commercial and residential buildings that do not meet current
public safety codes due to lack of seismic reinforcement and age. A survey conducted in 1991 showed
that 30 percent of the 1,200 buildings in the Project Area had significant deficiencies, and a minimum of
280 homes in the Project Area were constructed prior to 1900. In addition, areas exist within the Project
Area that have poorly maintained commercial and residential buildings, some of which cannot be used
and necessitate significant code enforcement oversight.
b. Physically Obsolete Buildings/Lots Lack of Parking
The Central Business District, which forms the core of the Project Area, is primarily characterized by
small lots under separate ownership. These small lots are of inadequate size to meet current retail
standards. Further, the majority of businesses located in this area do not have adequate on-site parking.
Los Gatos Redevelopment Ageney II-2 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
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C. Deteriorated and/or Inadequate Utilities
The 1989 Loma Prieta earthquake caused significant damage to streets, sidewalks, water lines and storm
drains. The heaviest damage in the Town occurred in the Project Area. For example, the Almond Grove
neighborhood requires substantial street reconstruction due to earthquake damage and age. The Project
Area also contains many alleys which are inadequately paved and require drainage improvements to
prevent flooding. In addition, the Project Area has facilities that do not comply with the ADA, creating
unsafe conditions for physically challenged persons. The storm drains in the Project Area also require
reconstruction to prevent flooding.
d. Depreciated or Stagnant Property Values/Economically Obsolete Buildings/Lots
The Project Area contains irregularly shaped lots with limited access. These lots prevent viable
commercial or residential uses, thus stagnating property values and development opportunities
e. Inadequate Public Improvements
The Project Area contains a significant amount of inadequate infrastructure resulting from deterioration,
insufficient capacity, and earthquake damage. The deficiencies necessitate improvement and
reconstruction of streets, sidewalks, storm drains, water lines, sewer lines, undergrounding utilities,
electrical upgrades and conduit upgrades. Furthermore, the Main Street Bridge is in need of
improvements.
The Project Area also suffers from inadequate community facilities. For example, there is no performing
arts center, and the library, police department and neighborhood center are too small to meet the needs of
Town residents.
Although progress has been made in the Project Area, it is clear that blighting conditions remain. Neither
the private nor public sectors acting alone are able to surmount all of these conditions. A relatively high
proportion of both residential and commercial buildings in the area need redevelopment attention and
show evidence of physical deterioration. Further redevelopment activity continues to present the most
realistic financing vehicle for removing remaining blighting conditions in the Project Area.
2. How the Agency's Proposed Goals, Objectives, Programs and
Expenditures Will Eliminate Blighting Conditions
The Agency's proposed five-year goals, objectives, programs and expenditures, as outlined in Chapter I,
Section E and Chapter II, Sections A and D, will help eliminate blighting influences in the Project Area.
The Downtown Commercial Revitalization Plan projects and activities remove existing impediments to
the development and expansion of Downtown commercial facilities. The projects and activities will
improve the deteriorated conditions of streets, sidewalks and curbs in the Downtown, creating safer and
more pleasant conditions for both vehicular and pedestrian traffic. The projects and activities will also
address the current lack of parking through the implementation of the Parking Management Program. The
beautification projects and activities will complement the private sector commercial rehabilitation of the
Project Area by alleviating blighting conditions in areas that have suffered economic decline and
demonstrating public sector commitment to overall revitalization.
The ongoing improvements of public facilities and utilities will signal to the private sector the Town's
commitment to improving the Project Area. These improvements will enhance the competitiveness of the
businesses they serve. The public improvements will have a significant positive impact on the residents
and businesses of the Project Area. This program makes evident the Town's continuing interest in making
Los Gatos a better place to live, work and conduct business. It creates an environment where property
Los Gatos Redevelopment Agency 114 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
owners, businesses and outside developers have the incentive to make and carry out long range plans. The
Agency is committed to enhancing the economic vitality of the Project Area by identifying the needs of
existing businesses and attracting new ones. These activities will assist in reversing economic decline.
The expansion of the affordable housing program will allow the Agency to continue to provide increased
affordable housing opportunities for Los Gatos residents through the assistance for newly constructed
units and the provision of a loan program for secondary dwelling units. The Agency's Housing Fund will
be utilized throughout the Project Area and the Town. Chapter III presents the Housing Program in more
detail.
C. Five-Year Implementation Plan Resources
The Agency has two primary potential revenue sources: annual tax increment revenues and remaining
debt issuance proceeds. The Agency also receives additional income from interest income. The
FY 2004/05 starting fund balance equals $7.6 million of net tax increment and remaining debt issuance
proceeds, and the total available resources for Non-Housing programs for the five-year period equal
approximately $7.9 million. Agency resources available for Non-Housing projects and activities are
summarized in Table II-2.
1. Debt Issuance Proceeds
The Town issued a Certificate of Participation (COP) in 2002 in the amount of $10.7 million, all of which
was earmarked for the Redevelopment Fund. No proceeds were earmarked for the Housing Fund. The
remaining balance of COP proceeds will be available for Non-Housing programs for the FY 2004/05
through FY 2008/09 Implementation Plan period and no debt service on the 2002 COP is funded from the
Agency's Housing Fund. -
2. Annual Tax Increment Revenues
Tax increment revenues generated in the Project Area during the five-year Implementation Plan period
will be used for the payment of pass-through payments, Agency administration, Educational Revenue
Augmentation Fund (ERAF) payments mandated to be made by the Agency to address the State budget
crisis, debt service and Housing Fund obligations.
3. Other Agency Income
The Agency receives additional revenues from interest income. Approximately $0.9 million in other
Agency income is projected during the five-year Implementation Plan period.
4. Non-Agency Financial Resources
Wherever possible, the Agency has been and will continue to leverage other funds in connection with its
redevelopment efforts. The Agency has targeted local, state and federal funding sources to assist in
financing eligible projects, As permitted by law, possible funding sources include government grants and
assistance programs, as well as private sector sources.
To a limited extent, the Town's development impact fees generated from new development may be a
source of public infrastructure and facilities funding when feasible. The Agency will also pursue funds
from federal programs including CDBG and HOME Funds, in addition to state and county funds.
Los Gatos Redevelopment Agency II-5 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
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D. Five-Year Implementation Plan Expenditures
1. Proposed Program Expenditures - Five-Year Period
The Agency has developed programs to implement its goals and objectives for the current five-year
Implementation Plan period as described in Chapter I, Section E above. The estimated cost of the
FY 2004/05 through FY 2008109 program of Non-Housing activities is approximately $7.9 million, as
summarized in Table II-3.
The $7.9 million in Non-Housing program costs over the five-year implementation period matches the
estimated Agency resources for Non-Housing activities of approximately $7.9 million, as summarized in
Table II-2. Thus, the Agency has no programmed surplus after undertaking its Non-Housing programs
and activities over the next five years.
2. Proposed Programs and Expenditures - Project Life
It is possible that some program activities proposed by the Agency for this Implementation Plan period
may not necessarily occur as planned in the five-year period or may not occur at all. It is also possible that
other programs not listed in this Implementation Plan may instead be pursued. Further, some of the
activities to be undertaken beyond the five-year planning period of this Implementation Plan may actually
take place within the five-year planning period if development needs or opportunities warrant undertaking
the activities.
The projects, activities and expenditures contained in this Implementation Plan are in part based on
certain assumptions made by the Agency relating to revenues, ERAF payments, market conditions,
community needs and priorities, and resident and developer interest. Consequently, should Agency
assumptions not be realized or unforeseen circumstances arise, further mid-course modifications in
programs and this Implementation Plan may be required.
Los Gatos Redevelopment Agency II-7 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
Table II-3
Projected Five Year Non-Housing Redevelopment Program Expenditures
FY 2004105 - FY 2008109
Los Gatos Redevelopment Agency
Proposed Agency
Non-Housing Program Category and Project Description
Expenditures
FY 2004105 - FY 20081098
Downtown Commercial Revitalization Plan
Construct street improvements in Downtown, including new sidewalks
and bulb out on Santa Cruz Avenue and Main Street.
$1,500,000
Reconfigure parking to provide additional parking spaces in the
Downtown Core.
$50,000
Continue to implement the Parking Management Program.
$500,000
Implement a fagade grant program.
$10,000
Public Improvements, Facilities and -Utilities
Develop a list of capital projects, estimated costs and projected revenues
for the Agency and present to Town Council to help establish priorities,
$40,000
Reconstruct parking lot surface on parking lots 1, 2, 5 and 6.
$500,000
Reconstruct deteriorated streets within the Project Area.
$1,000,000
Beautify Main Street Bridge.
$100,000
Provide gateway projects at Highway 9 and North Santa Cruz Avenue.'
$150,000
Provide gateway projects at Wood Road and'Souih Santa Cruz Avenue.
$495,000
Pave Main Street.
$600,000
Provide alley improvements.
$200,000
Provide multi-use fountain at Highway 17 and Main Street Trail Head.
$10,000
Improve curbs, gutters and sidewalks.
$750,000
Underground utilities.
$1,000,000
Make ADA accessibility improvements.
$200,000
Subtotal
$7,105,000
Unanticipated Opportunities (at approx. 12% of subtotal)
$828,000
Total
$7,933,000
a. These listed expenditures do ant represent the complete funding for each of these projects.
The Agency will seek to leverage its resources with additional funding opportunities including local, state
and federal grants and assistance programs, as well as private sector sources.
b. The proposed expenditure for gateway projects at Highway 9 is predicated on securing grants to
complete this project.
Source: Town of Los Gatos.
Los Gatos Redevelopment Agency Five-'Year Implementation Plan
Central Los Gatos Redevelopment Project II-8 October 2004
III, Housing Component
This chapter comprises the housing component of the Implementation Plan, summarizing the Agency's
housing obligations pursuant to the legal requirements of the CAL and providing an overall framework
for the Agency's Housing Program goals and expenditures. The Agency is guided by the Town's adopted
and certified Housing Element of its General Plan. The Agency intends to implement all relevant goals,
policies, strategies and programs from the Housing Element, as generally described in this chapter.
This chapter is organized as follows:
• Section A presents an overview of the Agency's affordable housing responsibilities.
• Section B presents more detailed statutory requirements, including requirements for affordable
housing production, replacement housing, and the Housing Program Requirement, Low and Moderate
Income Housing Fund (Housing Fund) revenues and expenditures.
• Section C includes the Housing Production Plan.
• Section D describes performance of the Replacement Housing Plan requirement.
• Section E details the five year Housing Fund status and deposits.
• Section F includes the Agency's five year Housing Program, annual expenditures, the Housing Fund
assisted affordable housing production annual estimates, and expenditure targeting requirements.
• Section G describes the completion of housing obligations.
Please note, Chapter I summarizes the Agency's overall accomplishments for the previous five-year
Implementation Plan period (FY 1 9 9 91200 0 through FY 2003/2004), including both the non-housing and
housing accomplishments. Chapter III provides a more detailed description of housing program-,
performance.
A. Overview of Agency Affordable Housing Responsibilities
This section presents an overview of the Agency's CRL obligations related to the provision of affordable
housing. The housing portion of the Implementation Plan is required to set forth specific goals and
objectives for the five-year Implementation Plan period (FY 2004105 through FY 2008109), present
estimates of specific Housing Fund deposits, projects and expenditures planned for the five year
implementation period, and explain how the stated goals, objectives, deposits, programs, projects and
expenditures will produce affordable housing units to meet these obligations. The CRL requires an
implementation plan to include the following affordable housing planning components:
• The Housing Production Plan, which includes the total number of housing units to be produced and
the number of affordable housing units to be produced for two different time periods:
For the ten year compliance period (FY 2004105 through FY 201312014), and
For the life of the Redevelopment Plan (through FY 2031132).
• If a planned project will result in the destruction of existing affordable housing, identification of
proposed locations for replacement housing that the Agency would be -required to produce.
• Amount available in the Housing Fund, estimates of annual deposits into the Housing Fund during the
five-year Implementation Plan period, and the Agency's plans for using the annual deposits to the
Housing Fund.
Los Gatos Redevelopment Agency Ill-1 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
The Housing Program with estimates of the number of new, rehabilitated or price restricted affordable
housing units to be assisted by the Housing Fund during each of the five years, and estimates of the
expenditures of moneys from the Housing Fund during each of the five years.
A description of how the Housing Program will implement the Housing Fund expenditure targeting
and other requirements.
B. Statutory Requirements for Housing
This section summarizes the Agency's affordable housing requirements under the CRL and provides
background information and analysis regarding affordable housing needs and conditions in the Project
Area and the overall community. Relevant section references to the CRL are included in parentheses. The
major statutory requirements for affordable housing imposed on redevelopment agencies by the CRL may
be categorized generally as:
Affordable Housing Production Requirement (Section 33413): Agencies must cause specified
minimum percentages of new or substantially rehabilitated housing units in project areas subject to this
requirement to be available to very low, low and moderate income households at a legally defined
affordable housing costa
Replacement Housing Requirement (Section 33413): Agencies must replace within four years housing
units removed from the housing stock as a result of redevelopment activities.
Housing Fund Requirement (Sections 33334.2, 33334.4 and 33334.6): Agencies are required to deposit
specified percentages of tax increment revenue for the provision of affordable housing into the Housing
Fund. The CRL also imposes various limits on the use of Housing Fund moneys.
Housing Pra rg am (Section 33490(a(2)), (A}): Agencies are required to prepare a Housing Program with
estimates of the number of affordable housing units to be assisted during each of the five years, estimates
- of annual expenditures and a description of how the Housing Program will implement expenditure
requirements.
The sections of the Housing Component that address Housing Fund expenditure requirements must be
reviewed every five years in conjunction with updating the Housing Element or preparing the next five-
year Implementation Plan.
The CRL requirements are described in greater detail in the following sections.
1. Affordable Housing Production Requirement
Redevelopment agencies administering project areas created by redevelopment plans adopted on or after
January 1, 1976 and territory added to project areas by amendments adopted on or after January 1, 1976
must meet an affordable housing production requirement. Thus, this requirement applies to the Project
Area. As part of an implementation plan, an agency must adopt the Housing Production Plan, a plan
showing how the agency intends to meet its affordable housing production requirements. The plan must
be consistent with the community's housing element and must cover the following:
• Production over a ten year compliance period (FY 2004105 through FY 2013114).
• Production through the life of the Redevelopment Plan (through FY 2031132).
The CRL currently defines substantially rehabilitated units as all units substantially rehabilitated with Agency assistance.
Substantial rehabilitation means rehabilitation, the value of which constitutes at least 25 percent of the after-rehabilitation value
of the dwelling, inclusive of land value. (33416(b)(2)(A)(iii))
Los Gatos Redevelopment Agency III-2 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
The Housing Production Plan must include estimates of the number of residential units to be produced
within project areas. It also must include the number of units available at an affordable housing cost to
very low, low and moderate income households to be developed or substantially rehabilitated in order to
meet the affordable housing obligation. (Section 33413) Units produced outside of a project area after
January 1, 1994 count one for two towards meeting an agency's affordable production obligation.
(Section 33413(b)(2)(A)(ii)) Refer to Section 3.a below for definitions of income categories and
affordable housing costs.
Additionally, the plan must include estimates of the number of units the agency itself will produce or
provide assistance to produce during the time period of the plan, including the number of units available
at an affordable housing cost to very low, low and moderate income households. Section C of this chapter
contains the Agency's Housing Production Plan,
a. Agency Developed Housing
The CRL inclusionary housing obligation requires at least 30 percent of all new or substantially
rehabilitated dwelling units developed directly by an agency to be available at affordable housing cost to
persons and families of very low, low or moderate income. Of those units, at least 50 percent must be
affordable to very low income households. The 50 percent requirement translates to 15 percent of the total
number of units developed or rehabilitated by an agency (50 percent of 30 percent equals 15 percent).
This requirement applies only to units developed by an agency and does not apply to units developed by
housing developers pursuant to agreements with an agency. (Section 33413(b)(1)) This production
requirement would apply if the Agency develops units in the Project Area.
b. Housing Not Developed by the Agency
When new dwelling units are developed in a project area by public or private entities other than the
agency or when housing is substantially rehabilitated in a project area by public or private entities with
agency assistance, at least 15 percent of these units must be affordable to very low, low or moderate
income households! The income definitions are included in Section 3. a. below. Of those units, at least
40 percent must be affordable to very low income households. This 40 percent requirement for very low
income households translates to 6 percent of the total number of units (40 percent of 15 percent equals
6 percent). (Section 33413(b)(2)) This affordable housing production requirement applies to the Project
Area.
C. Duration and Enforceability of Affordability Covenants
As of January 1, 2002, rental units must be subject to affordability covenants of the longest feasible time,
but not less than 55 years for rental units and 45 years for owner occupied units to meet the affordable
housing production requirement.3 (Section 33413(c)(1)) An agency may permit sales of owner occupied
units prior to the expiration of the 45 year period for a sales price in excess of affordable cost pursuant to
a program that protects the agency's investment of Housing Fund monies, including, but not limited to, a
program that establishes a schedule of equity sharing that permits retention by the seller of a portion of
the excess proceeds, based on the length of occupancy. The remainder of the excess proceeds of the sale
must be allocated to the agency and deposited in the Housing Fund. Within three years from the sale of
the units, the agency must expend fands to make affordable an equal number of units at the same income
2 Prior to 1994, the rehabilitation of any unit, whether substantial or not, triggered affordable housing production requirements.
After 1993 and until January 1, 2002, housing production requirements were triggered by (a) the substantial rehabilitation of a
multifamily residential project with three or more units regardless of whether an agency provided financial assistance and
(b) the substantial rehabilitation of a one or two unit residential project if the project received Agency assistance. AB 637 and
SB 701, effective January 1, 2002, impose the affordable housing production requirement on substantial rehabilitation projects
that receive agency assistance.
3 Prior to AB 637 and SB 701 in 2002, in order for units to count towards fulfilling affordable housing production requirements,
units had to be subject to affordability covenants of at least the duration of the Redevelopment Plan's land use controls.
Los Gatos Redevelopment Agency III-3 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
level as the units sold. Only the units originally assisted by the agency can count towards the agency's
affordable housing replacement and production obligations. (Section 33413(c)(2))
An agency must require the recording of affordability covenants or restrictions for each parcel unit with
the office of the county recorder of covenants or restrictions. Covenants and restrictions must run with the
land and are enforceable by the agency or community. (Section 33413(c)(3))
d. Agency Acquisition of Affordability Covenants
To satisfy the affordable housing production requirements, an agency may purchase or otherwise acquire
affordability covenants on existing multifamily housing units that are not presently available at
affordable housing cost, or are affordable to households of low or very low incomes but are units that the
agency finds, based upon substantial evidence after a public hearing, cannot reasonably be expected to
remain affordable to the same group of persons or families. Affordable units made available by an
agency's acquisition of long term affordability covenants may count towards the agency's affordable
housing obligation. The covenants must be for at least 55 years for rental units and 45 years for owner
occupied units. However, no more than 50 percent of an agency's housing obligation can consist of units
made available by the acquisition of long term affordability covenants, and not less than 50 percent of
units made available by the acquisition of long term affordability covenants shall be available at an
affordable housing cost to, and occupied by, very low income households. (Sections 33413(b)(2)(B)
and (C))
2. Replacement Housing Requirement
The replacement housing requirement applies to project areas established by redevelopment plans (or
areas added by amendments) adopted on or after January 1, 1976, and merged project areas regardless of
the date of establishment of the individual project areas subsequently merged. Thus, this requirement
applies to the Project Area.,.
When residential units sheltering very low, low and moderate income households are destroyed or
removed, or are no longer affordable due to agency action or assistance, an agency must cause the
replacement of the units within four years. Each replacement unit must include at least the same number
of bedrooms as the units that were removed. The units may be replaced with fewer units if an equal or
greater number of bedrooms are provided. For example, four two bedroom units may be replaced with
two four bedroom units. (Section 33413) At least thirty days prior to acquiring property or adopting an
agreement that will lead to the destruction or removal of low and moderate income housing units, an
agency must adopt by resolution a Replacement Housing Plan that generally describes the location,
timing and method by which replacement housing will be provided. (Section 33413.5)
Replacement units may be located anywhere within the territorial jurisdiction of the agency!
(Section 33413(a)) An agency may either construct replacement housing, or assist with the development
of replacement housing through agreements with housing developers.'
a. Income and Affordability Requirements
The basic income and affordability standards for replacement housing are the same as those for the
affordable housing production requirement and for use of Housing Fund moneys, as described below in
Section 3. The units must be available at affordable housing cost to households of very low, low and
moderate income. As of January 1, 2002, the CRL requires 100 percent of replacement units to be
4 For city agencies, replacement units can be located anywhere within the city and for county agencies, replacement housing can
be located anywhere within the unincorporated portion of the county.
' Replacement housing units located inside a project area count towards the housing production requirement on a I:1 basis.
Replacement units located outside a project area count on a 1:2 basis.
Los Gatos Redevelopment Agency 111-4 Five--Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
available at affordable housing cost to the same income level of households as the households displaced.
For dwelling units destroyed or removed after September 1, 1989 and before January 1, 2002, the CRL
required that 75 percent of the replacement units be available at affordable housing cost to the same
income level of households (very low, low or moderate income) as were displaced from the units
removed or destroyed. (Section 33413(a)) Replacement units do not have to match the tenure (rental
versus ownership) or tenancy (age restricted or non-age restricted) of the units that were destroyed.
b. Duration and Enforceability of Affordability Covenants
The affordability duration and enforceability requirements for replacement housing are the same as those
required for affordable housing production. (Section 33413(c)) Refer to Subsection Le. above for a
description of the requirements.
C. Priority Households
An agency must give priority in renting or buying housing developed as part of a redevelopment project
to households displaced by an agency regardless of whether the units are inside or outside of a project
area. As of January 1, 2002, AB 637 requires an agency to maintain a list of displaced households who
are to be given priority. An agency may establish rules to determine priority among households.
The Agency does not anticipate that any of its current or planned redevelopment activities would require
the relocation of households. However, if future redevelopment activities were to require relocation, the
Agency would make every effort to minimize the extent of relocation in the Proj cot Area. All affected
households would be eligible for the Agency's relocation program. Furthermore, the Agency would meet
its replacement housing obligations, as described above.
3. Housing Fund Requirement
The CRL requires an agency to set aside in a separate Low and Moderate Income Housing Fund (the
Housing Fund) at least 20 percent of all tax increment revenue generated from its project areas. The funds
must be used for the purpose of increasing, improving and preserving the community's supply of
affordable housing. Such housing must be available at affordable housing cost and occupied by
households of very low, low or moderate income. (Sections 33334.2 and 33334.3)
Accordingly, the Project Area contributes tax increment revenues to a Housing Fund. The Agency's
deposits into the Housing Fund are described in Section E.
The CRL imposes Housing Fund expenditure requirements based on the proportion of unmet need for
housing affordable to households of very low, low and moderate incomes.6 (Section 33334.4(a)) It also
requires a minimum percentage of Housing Fund expenditures be spent on non-age restricted housing.
(Section 33334.4) The CRL also places other limits on the use of Housing Fund moneys, as described
below. Section T describes the Agency's compliance with meeting the expenditure requirements.
a. Income Levels and Affordable Housing Cost
Agencies are specifically required to expend their Housing Fund to assist very low, low and moderate
income households, generally defined as:'
• Very Low Income households do not exceed 50 percent of area median income, adjusted for family
size.
• Low income households do not exceed 80 percent of area median income, adjusted for family size.
6 As provided by AB 637 and SB 701.
7 The Health and Safety Code defines low and moderate income in Section 50093, low income in Section 50079.5, and very low
income in Section 50105.
Los Gatos Redevelopment Agency 11I-5 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
• Moderate Income are from 80 percent up to 120 percent of area median income, adjusted for family
size.
Table III-1 shows the maximum income limits for each income level by household size, as published by
the State of California Department of Housing and Community Development (HCD) utilizing income
limits prepared by the U.S. Department of Housing and Urban Development (HUD) for Santa Clara
County.
Table HI-1
2004 Santa Clara County Maximum Incomes
by Income Category and Household Size
Los Gatos Redevelopment Agency
Household
1
2
3
4
5
6
7
8
Size
Very Low
$37,150
$42,450
$47,750
$53,050
$57,300
$61,550
$65,800
$70,050
Income
Low
$59,400
$67,900
$76,400
$84,900
$91,650
$98,450
$105,250
$112,050
Income
Median
$73,850
$84,400
$94,950
$105,500
$113,950
$122,400
$130,800
$139,250
Income
Source: State of California, Department of HCD, February 2004.
Housing assisted by Housing Fund moneys must be available to low and moderate income households at
an affordable housing cost in accordance with1he;CRL:$ For housing assisted by Housing Fund moneys
after January 1, 1991, the affordable housing cost definitions presented in Table I11-2 apply. For housing r
assisted by Housing Fund moneys prior to January 1, 1991, affordable housing cost is defined as rent or l
cost for rental or ownership housing that does not exceed 25 percent of the household's gross income.
s CRL Section 50052.5 includes the definition of affordable housing cost. AB 637 added the words "occupied by" to all
references in the CRL that refer to the requirement that housing units be "affordable to" low and moderate income households
in order to clarify the existing law that the units required to be "available" at affordable housing cost to qualifying households
are also required to be "oceuuied by" such households.
Los Gatos Redevelopment Agency III-6 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
Table III-2
Affordable Housing Cost
Los Gatos Redevelopment Agency
Rental
Housin a
Ownership
Housing
Income
Level
% Income Spent
on Housing
% of Area
Median Income
% Income Spent
on Housing
% of Area
Median Income
Very Low
30%
50%
30%
50%
Low
30%
60 y/o
30%
70W
Moderate
30%
110%
35%c
110%
Rental housing costs include rent and utility allowance. Affordable housing costs are adjusted by number of
persons in household.
b If the gross income of the low income household is between 70% and 80% of Area Median Income, the
Agency may optionally require that housing cost not exceed 30% of the actual gross income of the household.
`But not less than 28 percent of actual income.
Source: CRL Section 50052.5.
b. Targeting According to Income Need
Housing Fund moneys must be used to assist housing for persons of very low and low income in at least
the same proportion as the total number of housing units needed for each of these income groups in the
community bears to the total number of units needed for very low, low, and moderate income groups
within the community. The proportion is calculated based on the number of housing units needed for very
low income and low income households divided by the total number of units needed for all three income
levels within the-community. (Section 33334.4) This income targeting obligation must be met over the ten
year compliance period.' However, the initial period for meeting this requirement will be January 1, 2002,
the date AB 637 became effective, through the ten year compliance period ending in 2014.
(Section 33490(a)(2)(A)(iii))
The Association of Bay Area Governments (ABAG) has determined the affordable housing need for the
Town of Los Gatos in its regional fair share allocation for 1999 through 2006. Table 111-3 shows the fair
share allocation applicable to the Agency for housing affordable to persons at or below 120 percent of
median income.
9 The Agency's first compliance period commenced with the adoption of the Agency's first Implementation Plan and extended
for a ten year period through FY 2003104, which is concurrent with the Agency's first two five-year Implementation Plan
periods (July 1, 1994 through June 30, 2004). To the extent the Agency has affordable housing production deficits or surpluses
from the first compliance period, such obligations must be taken into account in the Agency's current ten-year compliance
period (July 1, 2004 through June 30, 2014).
Los Gatos Redevelopment Agency III-7 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
Table III-3
ABAG Regional Fair Share Allocations 1999-2006
Affordable Housing Need by Income Category
Torun of Los Gatos
Income Group and Relation to
Count Median Income
Total Housing
Units Needed
Expenditure Percentage
Need by Income Level"
Ve Low 0-50%
72
At least 35%
Ve Low and Low 0-80%
107
At least 52%
Moderate 81-120%
97
No more than 48%
Total
204
100%
Source: ABAG Regional Housing Needs Determinations, Town of Los Gatos, March 15, 2001.
'See paragraph below for further explanations.
As Table 111-3 indicates, to supply its regional fair share of housing, the Agency is required to expend
Housing Fund moneys in the following proportions: at least 35 percent for units affordable to very low
income households, at least 52 percent for units affordable to low and very low income households, and
no more than 48 percent on housing affordable to moderate income households. The Agency is entitled to
expend a disproportionate amount of the fiends for very low income households, and to subtract a
commensurate amount from the low and/or moderate income thresholds. Similarly, the Agency can
provide a disproportionate amount of funding for low income housing by reducing the amount of funds
allocated to housing affordable to moderate income households. But in no event can the expenditures on
housing affordable to moderate income households exceed the threshold amount (48 percent).
Under the CRL, an agency is allowed to reduce its income targeting requirement if other locally
controlled funding is producing newly constructed housing for the targeted incomes, so Iong'as such units
are produced without any agency assistance and their continued affordability is ensured through long term
affordability covenants (at least 45 years for owner occupied and 55 years for rental). An agency may
adjust the income targeting proportion by subtracting from the need identified for each income category
the number of units for persons of that income category that are newly constructed with other locally
controlled government assistance over the duration of the implementation plan. However, an agency
cannot subtract units developed pursuant to a replacement housing obligation under federal or state law.
(Section 33334.4(a)) Locally controlled means government assistance where the local government entity
has discretion and authority to determine the recipient and the amount of assistance. (Section 33334.4)
Examples of such funding are CDBG, HOME Investment Partnership Program, and fees received by a
city or town pursuant to a city or town authorized program.
C. Targeting to Non-Age Restricted Housing
In addition to the requirement outlined above, a defined minimum percentage of Housing Fund moneys
must be spent on housing available to all persons regardless of age. (Section 33334.4(b)) This minimum
is equal to the percentage of Los Gatos' population under age 65, as reported in the most recent U.S.
Census. As shown in Table III-4, the 2000 Census indicates that 84.7 percent of the Town's population is
under 65 years of age. Thus, the Agency must expend at least 84.7 percent of its fiends on housing that
does not impose age restrictions on residents. This requirement must be achieved over the period between
January 1, 2002 and the ten year compliance period ending in 2014.
Los Gatos Redevelopment Agency III-8 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
Table III-4
Housing Fund Expenditures Requirement
Non-Age Restricted Housing
Town of Los Gatos
Age Targeting Population Expenditure Percentage
Less than 65 24,208 84.7% minimum expenditures
65 and over 4,384 15.3% maximum expenditures
Total 28,592 100% total expenditures
Source: 2000 U.S. Census
d. Duration and Enforceability of Affordability Covenants
The affordability duration and enforceability requirements for units assisted by Housing Fund moneys
are the same as those required for affordable housing production and replacement housing. Refer to
Section lc above for a description of the requirements. ((Sections 33334.3(f)(1) and (2))
C. CRL Restrictions on Use of Funds
Housing Fund Leveraging
The CRL prohibits agencies from using Housing Fund moneys to the extent that other reasonable means
of private or commercial financing are available. Whenever possible, Housing Fund moneys should
leverage other funding resources and not be used when private or commercial funding is available.
(Section 33334.30)) When more than 50 percent of an affordable housing development's funding is
provided solely from the Housing Fund, an agency must make a finding that no other private or
commercial funding sources could be reasonably obtained.
Use of Funds outside of Project Area
• An Agency can use funds outside a project area upon resolution by the agency and legislative body
that the use can benefit the project. (Section 33334.2(g))
If an agency has more than one project area, it can spend housing funds from one project area in other
areas, pursuant to a resolution by the agency and legislative body that such use of the funds will
benefit the project. (Section 33334.2(i))
• For merged project areas, Housing Fund moneys may be spent outside the merged areas upon
resolution of the agency and the legislative body that the use will be of benefit to the projects.
(Section 33487(b))
Other Limitations on Use of Housing Fund Mong ss
The CRL imposes limits on the use of Housing Fund moneys for the construction of infrastructure and
public improvements. (Section 33334.2(e)(2)) The conditions under which Housing Fund moneys may be
used to fund these costs are:
• The improvements must be a reasonable and fundamental component of the new construction or
rehabilitation of income restricted housing units that are directly benefited by the improvements.
• Affordability controls of not less than 55 years must be imposed on rental units and affordability
controls of not less than 45 years must be imposed on owner occupied units. Covenant and deed
restrictions must be recorded with the redevelopment agency.
• If the newly constructed or rehabilitated affordable units are part of a larger proj Oct such as a mixed
income or mixed use project, Housing Fund moneys may only be utilized for a pro rata share of the
cost of the improvements benefiting the affordable housing. For mixed income residential
developments, the maximum amount is based on the ratio of the number of affordable units to the
Los Gatos Redevelopment Agency III-9 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
total number of housing units. For mixed use projects, the maximum is based on the ratio of total cost
of the affordable units to the total cost of the project.
4. Housing Program Requirement
Agencies are required to prepare a Housing Program with estimates of the number of new, rehabilitated,
or price restricted affordable housing units to be assisted during each of the five years. The Housing
Program must also include estimates of expenditures of moneys from the Housing Fund during each of
the five years. Finally, it must include a description of how it will implement the expenditure
requirements over the ten year compliance period. Section F includes the Agency's Housing Program.
5. Requirement to Fulfill, Housing Obligations
CRL Section 33333.8, as amended by SB 211, requires that an agency comply with and fulfill its
affordable housing responsibilities, including housing fund, replacement housing, and affordable housing
production responsibilities, prior to the expiration of the time limit on redevelopment plan effectiveness.
Alternatively, a redevelopment plan may be extended until the Agency's housing obligations are met. A
redevelopment project cannot be terminated if an agency has not complied with its affordable housing
obligations. The law further requires that for a Redevelopment Project that is within six years of reaching
its limit on plan effectiveness, an implementation plan needs to address the ability of the agency to
comply with its housing responsibilities.
The affordable housing obligations to be fulfilled prior to the expiration of plan effectiveness are:
• Make deposits to and expenditures from the Low and Moderate Income Housing Fund.
• Eliminate project deficits.
• Expend or transfer excess surplus funds.
• Provide relocation assistance.
• Provide replacement housing.
• Provide inelusionary housing.
The Agency's plan for fulfilling its obligations within its time limits is addressed further in Section G.
C. Housing Production Plan
This section constitutes the Housing Production Plan of the Agency's FY 2004105 through FY 2008109
Implementation Plan. It includes estimates of housing production in the Project Area and the Agency's
strategy for meeting its affordable housing production obligation. The Agency has met, and expects to
continue to meet, its housing production obligations.
1. Housing Production
The Agency projects that approximately 165 housing units will be produced in the Project Area during the
life of the Redevelopment Plan. For purposes of the Housing Production Plan, the number of units
produced includes newly constructed units, as well as units substantially rehabilitated with Agency
assistance. Table III-5 shows historical and projected housing production.
a. Historical Production (through FY 2003/04)
The Agency reports that 120 units have been produced in the Project Area through FY 2003104.
Los Gatos Redevelopment Agency III-10 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
b. Projected Housing Production
The Agency has evaluated the potential for future housing production in the Project Area through the end
of the Redevelopment Plan. Based on the Agency's analysis of the potential for new development on
existing vacant residential parcels, the opportunity for substantial rehabilitation with Agency assistance,
the possibility for federal and state funding, and the anticipated date of development, the Agency has
projected the number of units likely to be produced in the Project Area over the next ten years and
through the life of the Redevelopment Plan.
Ten Year Production Y 2004105 through FY 2013114
During the next five years, the Agency estimates 25 housing units would be produced in the Project Area.
During the following five-year period from FY 2009110 through FY 2013114, the Agency estimates
10 housing units will be produced in the Project Area. Thus, a total of 35 units are estimated to be
produced in the next ten year compliance period.
Production over Life of Redevelopment Plan (through 2031/32)
Based on historical production and an analysis of remaining developable residential land, the potential for
substantial rehabilitation with Agency assistance, and other opportunities, the Agency projects that a total
of 165 units could potentially be produced within the Project Area prior to the end of the Redevelopment
Plan in 2031.
Table 1II-5 summarizes the units projected to be produced through the end of the Redevelopment Plan.
2. Affordable Housing Production Obligation
a. Historical Obligation (Through FY 2003104)
Through FY 2003104, 120 housing units were produced in the Project Area, creating housing production
obligations for 18 affordable units (15 percent), of which 8 units (40 percent of the affordable units) had
to be affordable to very low income households.
Table HI-5
Summary of Historical and Projected Housing Production in Project Area
Los Gatos Redevelopment Agency
Total Units Produced
Year
New
Substantially
Rehabilitated"
Total
Historical through FY 2003/04
120
0
120
FY 2004/05-2008109
25
0
25
FY 2009110-2013/14
10
0
10
FY 2014115-End
10
0
10
Total Ten Year Compliance Period
(FY 2004/05-2013114)
35
0
35
Total over Life of Plan
165
0
165
"Prior to 1994, the rehabilitation -substantial or not- of any residential unit, triggered the
housing production requirement. (Defer to footnote 2 on page I11-3.)
Source: Los Gatos Redevelopment Agency, Los Gatos 2000-2004 Implementation Plan.
Los Gatos Redevelopment Agency III-I l Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
b. Obligation for Ten Year Compliance Period (FY 2004105 through 2013/14)
Based upon the forecast of 35 housing units to be produced in the Project Area between
FY 2004/05 and FY 2013114, the Agency will have an obligation to ensure 5 units (15 percent) are
affordable to vety low, low and moderate income households. Of these, 2 units (40 percent) must be
available at affordable housing cost to very low income households.
C. Obligation for the Life of Redevelopment Plan
A total of 165 housing units are projected to be produced in the Project Area over the life of the
Redevelopment Plan. Based upon these projections, the Agency will have an obligation to ensure 25 units
(15 percent) are affordable to very low, low and moderate income households. Of these, 11 units
(40 percent) must be available at affordable housing cost to very low income households.
3. Agency's Plan to Meet the Affordable Housing Production Obligation
The Agency has supported, and plans to continue to support, the development of affordable housing both
inside and outside its Project Area. The Agency has met, and plans to continue to meet, its obligation
through Agency assistance for affordable housing development and substantial rehabilitation. Anticipated
future projects will continue the Agency's compliance over the next ten years and through the remaining
life of the Redevelopment Plan. The Agency will continue to provide assistance to units outside of the
Project Area as well as units within the Project Area.
The Agency itself has not directly developed any housing in the past, nor does it have plans to do so in.
the future. The Agency has found it more cost effective and administratively efficient to provide financial
assistance, as necessary, to private developers (both for-profit and nonprofit) and homeowners to
construct and rehabilitate affordable housing, than to act as a housing developer. Since it is not directly
developing housing, the Agency does not have an affordable housing production requirement with respect
to Agency-developed housing. Thus, the relevant affordable housing production requirement is that
15 percent of units must be affordable to very low, low and moderate income households, and of those
units, at least 40 percent must be affordable to low income households (6 percent of the total).
a. Historical Affordable Housing Production (Through FY 2003/04)
The Agency has met its affordable housing production requirements through FY 2003/04. To date,
55 affordable units have been produced, of which 27 are affordable to very low income households. 10 The
Agency exceeded the requirements for the production of units affordable to very low income households
and units available to very low, low and moderate income households. Thus, the Agency will exceed its
affordable housing production obligation for the first ten year compliance period, FY 1994/95 through
FY 2003/04.
b. Affordable Housing Production Ten Year Compliance Period
(FY 2004/05 FY 2013114)
During the next five years (FY 2004/05 through FY 2008109), the Agency estimates that 20 housing units
affordable to very low, low and moderate income households will be produced. Of these, 17 units will be
affordable to very low income households. During the following five years (FY 2009/10 through
FY 2013/14), the Agency estimates 5 housing units affordable to very low, low and moderate income
households will be produced. Of these, 3 units will be affordable to very low income households. For the
next ten year compliance period from FY 2004105 through FY 2013/14, 25 units of affordable housing
will be produced, of which 20 will be affordable to very low income households. Thus, the ten year
to Units produced outside Project Areas have been included on a one for two basis.
Los Gatos Redevelopment Agency III-12 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
housing obligation of 5 units affordable to very low, low and moderate income households, of which
2 units must be affordable to households of very low income, will be exceeded."
C. Affordable Housing Production for the Life of Plans
The Agency anticipates that from FY 2004105 through the end of the Redevelopment Plan, 30 housing
units affordable to very low, low and moderate income households will be produced and, of these, 23 will
be affordable to very low income households." Thus, given that the Agency has exceeded its obligations
through FY 2003104 and expects to exceed future obligations, it anticipates that it will exceed its
affordable housing production obligations over the life of the Redevelopment Plan.
Table III-6 shows housing production, the affordable housing obligation, and the Agency's progress
toward meeting the obligation.
D. Replacement Housing
The Agency did not have any replacement obligation during the last five-year Implementation Plan period
and has no plans to destroy or remove any residential units. As the Agency does not expect the
displacement of any households in the next ten years, it does not expect to incur an obligation to replace
any units. In the event that the removal of housing were to become a necessity in the future, the Town and
Agency would follow all state requirements for replacement housing and relocation, and make every
effort to relocate persons as close as possible to their current place of residence.
E. Housing Fund
The primary funding source for the Agency's affordable housing activities during the five-year
Implementation Plan period will be the 20 percent portion of annual tax increment revenue deposited by
the Agency into its Housing .Fund. A secondary funding source may be interest income, and CDBG,
HOME and other funds. The history, status and estimated future level of deposits into the Housing Fund
are described below, and shown on Table III-7.
1. History and Status
The Agency first deposited moneys into its Housing Fund in the first year it received tax increment, in
FY 1992193. In succeeding years, the Agency has made Housing Set-Aside deposits to the Housing Fund
in an amount not less than 20 percent of the cumulative tax increment revenue allocated to the Agency
during that period. The Agency begins the five-year Implementation Plan period with an accumulated
Housing Fund balance of approximately $3.5 million that is available for Housing projects and activities.
2. Deposits During the Implementation Plan Period
The Agency plans to continue to deposit fiends from its Project Area into the Housing Fund. Based on the
Agency's projections, the Agency estimates that the total five-year deposit of tax increment revenue into
the Housing Fund will be approximately $4.9 million between FY 2004/05 and FY 2008109. The Agency
estimates receiving additional income from interest income of approximately $400,000. After deducting
debt obligations and housing administration costs, and including the beginning Housing Fund balance, the
Agency will have approximately $7.4 million available for its Housing Program over the next five years.
I Units produced outside Project Areas have been included on a one for two basis.
is Units produced outside Project Areas have been included on a one for two basis.
Los Gatos Redevelopment Agency III-13 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
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As in the past, the Agency will seek to combine its Housing Fund revenue with other funding sources
devoted to the provision of affordable housing to maximize the number of affordable units that can be
developed or rehabilitated with the limited amount of available Housing Funds. These other funding
sources include Community Development Block Grants ("CDBG") and HOME Investment Partnership
funds from the U.S. Department of Housing and Urban Development ("HUD"), California Housing
Finance Agency ("CHFA") and Department of Housing and Community Development ("HCD") program
funds at the state level, and low income housing tax credit equity funds.
F. Housing Program
During the five-year Implementation Plan period, the Agency will concentrate on housing activities that
are most applicable to the Agency's goals and objectives. In developing its affordable Housing Program,
the Agency has been guided by the goals and objectives of the Town's Housing Element of the General
Plan. Through its affordable housing activities, the Agency will support and advance the overall Housing
Element programs as well as contribute to the implementation of the policies and strategies identified in
the Town's General Plan." The Agency is committed to assisting the Town in achieving the goals and
objectives and policies presented in the Housing Element including:
• To improve the choice of housing opportunities for senior citizens, families and singles and for all
income groups through a variety of housing types and sizes, including a mixture of ownership and
rental housing.
• To preserve existing moderately priced and historically significant housing.
• To eliminate racial discrimination, lack of disabled accessibility and all other forms of discrimination
that prevent free choice in housing.
• To make infrastructure projects and residential and nonresidential developments be. compatible with
environmental quality and energy cgnservation.
• To reduce the homeless population.
To provide housing affordable to people who work in the Town. 1
1. Housing Program Components
The Agency recognizes the important role of the Housing Program and its activities in its overall
Redevelopment Program. Consequently, the proposed Housing Program should be viewed not simply as
the means of implementing the Agency's stated goals and objectives related to affordable housing, but as
a key element in its overall blight alleviation revitalization efforts. The Agency's Housing Program has
two primary affordable housing components.
a. Initiate Affordable Housing Projects within the Project Area.
The Agency will initiate affordable housing projects in the Project Area during this five-year
Implementation Plan period. The Agency will work with local non profit developers to produce
affordable housing units to help address the needs of the community. The Agency is considering assisting
the production of approximately 15 units affordable to very low income households from
FY 2004105 through FY 2008109.
b. Provide Zero Interest Loans for Secondary Dwelling Units in the Project Area.
The Agency is planning to utilize a loan program during this five-year Implementation Plan period. The
Agency will provide zero interest loans for the production of secondary dwelling units in the Project
Area. Secondary dwelling units, often called "in-law" units, typically refer to small one-bedroom or
13 The parts of the Implementation Plan that address the affordable housing requirements must be adopted every five years either
in conjunction with the community's housing element cycle or the implementation plan cycle. (Section 33490(a)(1)(A)) _
Los Gatos Redevelopment Agency II1-16 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
studio units located in existing single-family homes or as detached units. Approximately one affordable
unit per year will be assisted from FY 2004105 through FY 2008109, for a total of five units.
2. Proposed Housing Activities and Expenditures
The Agency's Housing Fund revenues will be used in a flexible manner to respond to favorable
development opportunities. The Town Council and Agency have approved resolutions determining that
the use of its Housing Fund moneys to assist housing activities located outside the Project Area is of
benefit to the Project Area. Accordingly, Housing Fund moneys may be spent both inside and outside the
Project Area. The type of financial assistance to be provided may include cost write-down and gap
financing for projects utilizing federal and state funds, as well as loans for property acquisition,
development renovation, on- and off-site improvements, acquisition of easements, pedevelopment costs
and development fees. In carrying out its purpose to preserve, improve and increase the affordable
housing supply, the Agency may use the following methods:
• Acquire land or building sites.
• Improve land or building sites with on-site or off-site improvements.
• Donate land to private or public persons or entities.
• Finance insurance premiums pursuant to CRL Section 33136.
• Construct buildings or structures.
• Provide subsidies to, or for the benefit of, persons or families of very low, low, or moderate income.
• Develop plans, pay principal and interest on bonds, loans, advances or other indebtedness, or pay
financing or carrying charges.
• Require the integration of affordable housing sites with sites developed for market rate housing.
• _ Assist the development of housing by developers.
• Acquisition of easements.
The Agency plans to target its Housing Fund expenditures for specific income groups as required by the
CRL. The Agency will make every effort to encourage the preservation and development of housing
affordable to a variety of income levels combining various funding sources, and partnering and
collaborating with other entities dedicated to the preservation and development of affordable housing, the
Agency is confident it will be able to meet its affordable housing production obligations and expenditure
requirements within the ten year compliance period, as well as over the life of the Redevelopment Plan.
It should be noted, however, that several factors may result in expenditures and unit production for given
years being either less than or greater than what is projected. These factors include fluctuations in the
timing of the development process, the levels of Housing Fund revenue and other public assistance, the
need to amass sufficient funds for an efficiently-sized development, and development opportunities.
3. Housing Fund Assisted Affordable Housing Production
The Agency expects to take advantage of various opportunities as they are presented and to initiate
actions as necessary, consistent with the CRL and the Town's Housing Element, to preserve and facilitate
the development of housing affordable to households whose basic needs are not met by the private
housing market.
Table 111-8 presents the housing units to be assisted by the Housing Fund over the five-year
Implementation Plan period. In summary, from FY 2004/05 through FY 2008109, the Agency plans to
assist in the production of 17 housing units affordable to very low income households, and 3 housing
units affordable to low income households, totaling 20 Agency-assisted affordable units.
Los Gatos Redevelopment Agency 111-17 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
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Please note the number of affordable housing units in Table 11I-8 does not correspond to the number of
affordable housing units in Table 111-6 for several reasons. Table 111-6, which addresses housing
production and affordable housing obligations and production, presents affordable housing units produced
with and without Agency assistance. In addition, affordable units produced outside the Project Area are
counted on a one for two basis for purposes of calculating the affordable housing produced to meet the
affordable housing production obligation presented in Table III-6. Table III-8, which addresses Housing
Fund expenditure requirements, includes affordable housing units produced with Agency assistance.
These numbers include units located both inside and outside the Project Area. All units are counted on a
one for one basis; in other words, the number of units located outside the Project Area has not been
adjusted.
4. Estimated Housing Fund Expenditures FY 2004105 through 2008/09
The Agency estimates expenditures for housing activities of approximately $4.6 million and Housing
Fund resources of approximately $7.4 million during the next five years, leaving a surplus of
approximately $2.8 million. Thus, projected tax increment revenues will be sufficient to cover the
Agency's planned expenditures for housing projects and activities over the next five years. The Agency
will continue to pursue additional affordable housing projects and activities with the remaining funds
throughout the five-year Implementation Plan period. Table II1-8 presents the Agency's estimated
Housing Fund expenditures for the five years of the Implementation Plan period, in addition to the
number of housing units to be assisted by the Housing Fund.
The Agency plans to target its Housing Fund for specific income groups and non-age restricted housing as
required by the CRL. The Agency will make every effort to encourage the development of housing
affordable to a variety of income levels and needs. By combining various funding sources, and in
partnership and collaboration with others dedicated to the development of affordable housing, the Agency
is confident it will be able to meet its housing expenditure requirements.
a. Housing Fund Income Targeting
The Agency plans to target its Housing Fund moneys to specific income groups based on its fair share of
regional housing needs as determined by ABAG. From January 1, 2002 through the end of the ten year
compliance period in 2014, the Agency plans to target Housing Fund moneys in the following
proportions: at least 35 percent on units affordable to very low income households, at least 52 percent on
units affordable to low and very low income households, and no more than 48 percent on units to
moderate income households.
Since January 1, 2002, Housing Fund moneys in the amount of approximately $558,000 have been spent
to produce very low income housing as shown in Table 111-9. Thus, the Agency exceeded its expenditure
requirement threshold for the first two years of the current compliance period ending in 2014. The
Agency will continue to monitor its Housing Fund expenditures in conformance with the
relative percentages of need demonstrated by each income category, and anticipates that it will meet its
very low, low and moderate income targeting requirements for the ten year compliance period ending in
2014.
Los Gatos Redevelopment Agency III-19 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004
Table III-9
Housing Fund Expenditures
Targeting by Income
Los Gatos Redevelopment Agency
income Targeting
Expenditures
111/2002-6130/2004
Very Low
$557,920 100%
Low
$0 0%
Moderate
$0 0%
Total
$557,920 100%
Source: Los Gatos Redevelopment Agency
b. Housing Fund Assistance for Non-Age Restricted Housing
The Agency plans to target Housing Fund expenditures to provide affordable housing that is not restricted
by age. Specifically, at least 84.7 percent of Housing Fund moneys is planned to be spent on non-age
restricted housing over the period between January 1, 2002 and the ten year compliance period ending in
2014.
The Agency has expended a total of $307,920 on non-age restricted housing since January 1, 2002, as
shown in Table III-10. The Agency has expended $250,000 on age restricted housing. Although the
percentage of Housing Funds spent to date on non-age restricted housing is not adequate to satisfy the
CRL requirement regarding a minimum expenditure of funds on non-age restricted housing, the Agency
anticipates expending the majority of Housing Fund moneys on non-age restricted housing during the
five-year Implementation flan period. The Agency will monitor Housing Fund expenditures in order to~-
comply with this requirement by the end of the compliance period in 2014.
Table III-10
Housing Fund Expenditures
Targeting Non Age Restricted Housing
Los' Gatos Redevelopment Agency
Age Targeting Expenditures
1/1/2002-6130/2004
Non-age restricted Housing $307,920 55%
Age restricted Housing $250,000 45%
Total $557,920 100%
Source: Los Gatos Redevelopment Agency
G. Fulfillment of Housing Obligations
The time limit for plan effectiveness for the Project Area is 2031. Therefore, the FY 2024/25 through
FY 2028/29 Implementation Plan, which will be within six years of the time limit, will address the ability
of the Agency to comply with all of its affordable housing obligations under the CRL by the expiration of
the effectiveness of the Redevelopment Plan. This FY 2004/05 through FY2009/09 Implementation Plan
is not required to address this issue.
Los Gatos Redevelopment Agency III-20 Five-Year Implementation Plan
Central Los Gatos Redevelopment Project October 2004