2010-093-Replacement Housing Plan For Three Residential Units At 20 Dittos LaneRESOLUTION 2010-093
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS
.APPROVING THE REPLACEMENT HOUSING PLAN FOR
THREE RESIDENTIAL UNITS AT 20 DITTOS LANE
WHEREAS, the Town Council of the Town of Los Gatos adopted the Redevelopment Plan for
the Central Los Gatos Redevelopment Project Area on November 25, 1991 by Ordinance No. 1882
consistent with the policies and standards of the General Plan of the Town Council of the Town of Los
Gatos (the "Town");
WHEREAS, the goals for the Redevelopment Plan include alleviation of blighting conditions
and the stimulation of economic development activities in the Project Area;
WHEREAS, using tax increment funds, the Redevelopment Agency of the Town of Los Gatos
(the "Agency") has acquired 20 Dittos Lane (the "Property") for the purpose of engaging in
redevelopment activities consistent with the Redevelopment Plan, including the elimination of blight,
removing substandard and potentially hazardous housing units, and the construction of new affordable
residential units;
WHEREAS, redevelopment of the Property consistent with the Redevelopment Plan will result
in the removal from the community's housing stock of three residential units which were inhabited by
very low income and low income households; and
WHEREAS, pursuant to Health and Safety Code Section 33413(a), whenever dwelling units
housing persons and families of low or moderate income will be removed from the community's housing
stock as a result of the redevelopment program, the Agency must cause to be made available within four
(4) years of removal of such units, an equal number of replacement dwelling units of same or greater
bedroom count at affordable housing cost within the Town; and
WHEREAS, pursuant to Health and Safety Code Section 33413.5, the Agency has prepared and
made available to the public a replacement housing plan (the "Replacement Housing Plan") setting forth
the manner in which the Agency intends to comply with the foregoing replacement housing
requirement; and
WHEREAS, a copy of the Replacement Housing Plan is on file with the Agency Secretary; and
WHEREAS, as fully set forth in the Replacement Housing Plan, the final paragraph of Health
and Safety Code Section 33413.5 provided the Agency with authority to demolish the three residentially
occupied units on the Properly prior to adoption of the Replacement Housing Plan pursuant to this
Resolution in order to remedy an immediate danger to health and safety, and the Agency is now
adopting the Replacement Housing Plan as soon as practicable following such demolition; and
WHEREAS, notice of the Replacement Housing Plan and this meeting to consider the
Replacement Housing Plan has been duly provided by publication in the Agency's newspaper of general
circulation.
NOW, THEREFORE BE IT RESOLVED by the Redevelopment Agency of the Town of Los
Gatos as follows:
Section 1.
The Agency finds and determines that the above recitals are true and correct and are
incorporated herein.
Section 2.
The Agency finds that the Replacement Housing Plan for 20 Dittos Lane, attached hereto as
Exhibit A, provides a suitable method for replacing the dwelling units that will be removed from the
community's housing stock as a result of redevelopment of the Property.
Section 3.
Based on the foregoing and in compliance with Health and Safety Code Section 33413.5, the
Agency adopts the Replacement Housing Plan for 20 Dittos Lane as the Agency's replacement housing
plan for redevelopment of the Property.
Section 4.
The Agency Secretary shall certify to the adoption of this Resolution.
Section 5.
This resolution shall take effect immediately upon adoption.
PASSED AND ADOPTED at a regular meeting of the Board of Directors of the
Redevelopment Agency of the Town of Los Gatos, California held on the 20th day of September, 2010
by the following vote:
DIRECTORS:
AYES: Joe Pirzynski, Steve Rice, Barbara Spector, Mike Wasserman, Mayor Diane McNutt
NAYS:
ABSENT:
ABSTAIN:
ATTEST:
ADMINISTRATOR OF THE
TOWN OP LOS GATOS, CALIFORNIA
SIGNED•
~1aM~ ~c~c~'
CHAIRMAN OF THE BOARD OF DIRECTORS OF
THE REDEVELOPMENT AGENCY OF THE TOWN
OF LOS GATOS, CALIFORNIA
REPLACEMENT HOUSING PLAN
FOR 20 DITTOS LANE
LOS GATOS, CALIFORNIA
September 2010
Redevelopment Agency of the
Town of Los Gatos
110 East Main• Sheet
Los Gatos, CA 95030
N:VbIGR\AdminWorkFiles\2010 Council Reports\DittosRepLlcementHsngPlanAtfaclmient2Exlvl.doc
REPLACEMENT HOUSING PLAN
This Replacement Housing Plan ("Replacement Housing Plan") is being prepared on
behalf of the Redevelopment Agency of the Town of Los Gatos ("Agency") in conjunction with
the demolition of substandard and unsafe housing units at 20, 24 and 26 Dittos Lane
("Property"), in the Town of Los Gatos ("Town"). As detailed in this Replacement Housing Plan,
the Property contained three deteriorated structures recently inhabited by one low income
household and two very low income households, as well as two long uninhabitable former
residential units that are no longer a part of the community's housing stock. The Town and the
Agency have circulated for review and comment a Relocation Plan for the Property, and
relocation of the occupants of the units was completed on June 13, 2010.
Demolition of the structures on the Property was completed on August 25, 2010. In
accordance with the authority granted pursuant to the last paragraph of Health and Safety Code
Section 33413.5, the Town and Agency permitted the demolition of the structures on the
Property prior to the adoption of this Replacement Housing Plan as the buildings were
structurally unsound and susceptible to fire danger, among other blighting conditions. Swift
demolition was recommended by the Town's Parks and Public Works Department and Building
Division, as well as the Town's Police Department and the Santa Clara County Fire Department
as the Property poses a health and safety threat to the community.
As also detailed in this Replacement Housing Plan, the Agency envisions working with
Dittos Lane Family Housing, LLC, a qualified affordable housing developer ("Developer"), to
convey the Property from the Agency to the Developer and to cause the Developer to construct a
new affordable housing development consisting ofthirty-one (31) units of affordable housing
and one (1) on-site manager's unit ("Dittos Lane Apartments"). Three of the new units are
intended to serve as the replacement units for the three recently inhabited residential units that
were demolished on the Property.
In accordance with the Community Redevelopment Law (Health and Safety Code
Section 33000 et sec . ("CRL"), the Agency's obligations with regards to replacement housing are
to replace any low and moderate income units destroyed within four years of destruction. The
replacement units must have the same or greater number of bedrooms than the demolished units.
In addition, Health and Safety Code Section 33413(a) provides that of the replacement housing
units built, one hundred percent (100%) must be made available at affordable housing cost to the
same or lower income households (very low income, low income, or moderate income) as the
households displaced from the destroyed or removed units. Under the CRL, this Replacement
Housing Plan must cover the following elements:
The general location of the replacement housing (see Section D below);
2. An adequate means of fmancing the replacement housing (see Section E below);
3. A finding that the replacement housing is in compliance with Article XXXIV of
the California Constitution (see Section G below);.
4. The number of replacement housing units planned for construction and
rehabilitation (see Section D below); and
5. The timetable for meeting the replacement housing objectives (see Section C
below).
The Agency's goal in preparing this Replacement Housing Plan is to demonstrate that
providing replacement housing in accordance with the requirements of the CRL is feasible.
A. Replacement Housing Need.
The purpose of the demolition of the housing units was to eliminate blight, remove
substandard and hazardous housing units, and allow the development of new housing units and
other improvements. The demolition resulted in the destruction of one (1) low income housing
unit and two (2) very low income housing units located at 20, 24, and 26 Dittos Lane.
Additionally, two uninhabitable structures were removed that had been vacant for more than
twenty years. Because these uninhabitable structures had long since ceased being a part of the
community's affordable housing stock, they did not constitute residential units subject to a
replacement requirement pursuant to Health and Safety Code Section 33413(a). All ofthe
structures on the Property posed a threat to public safety according to the Los Gatos Building
Division, Parks and Public Works Department and Police Department, along with the County's
Fire Department. Table 1 summarizes the number of units to be replaced by bedroom mix and
incorne category as a result of the demolition. Map 1 shows the location of the Property.
TABLE 1
REPLACEMENT HOUSING NEED
BY INCOME CATEGORY AND NUMBER OF BEDROOMS
Income Studio/One Two Three Four
Cate or Bedroom Bedrooms Bedrooms Bedrooms Total Units
Moderate
Income 0 0 0 0 0
Low
Income 0 1 0 0 1
Very Low
Income 1 1 0 0 2
Total Units 1 2 0 0 3
Map 1
Location of the Demolished Units and Dittos Lane Aparhnents Project
Based on occupant income and unit rent information provided by Associated Right of
Way Services Inc. (ARWS), the consultant who prepared the draft Relocation Impact Study and
Last Resort Housing Plan for the Project ("Relocation Plan"), one (1) studio replacement unit
and one (1)two-bedroom replacement unit must be affordable to very low income households
and one two-bedroom replacement unit must be affordable to low income households. Under
Health and Safety Code Section 33413(a), replacement units maybe affordable to households at
the same or lower level of income than the households displaced.
B. Location and Number of Demolished Units.
The demolished units were located at the following addresses:
20 Dittos Lane: One (1) Studio unit
24 Dittos Lane: One (1)Two-bedroom unit
26 Dittos Lane: One (1)Two-bedroom unit
C. Time Schedule for Dernolifion.
The demolition of the units was completed August 25, 2010.
D. Location and Number of Units of Replacement Housing.
The Agency has initially identified three of the proposed units to be newly constructed on
the Property as part of the Dittos Lane Apartments to serve as the replacement housing units for
the three residential units that were demolished on the Property. As noted above, Map 1 shows
both the location of the demolished units and the location of the Dittos Lane Apartments
containing the proposed replacement units.
The Agency and the Developer have entered into an Exclusive Right To Negotiate
Agreement ("ERNA"), initially entered into as of September 21, 2009, as fully amended and
restated as of February 16, 2010. Pursuant to the ERNA, the Agency and the Developer are
currently negotiating the terms of a Disposition and Development Agreement ("DDA") whereby
the Agency would convey the Property to the Developer by a long term ground lease, and the
Developer would construct and operate the proposed Dittos Lane Apartments as an affordable
housing development for not less than 55 years. A DDA is expected to be presented for
consideration of approval by the Town Council and the Agency Board, each acting in its policy
discretion, late in 2010 or early in 2011. If a DDA is not approved by the Town Council and the
Agency Board, so that three units in the proposed Dittos Lane Apartments do not become
available as the replacement housing units for the three units about demolished on the Property,
the Agency will prepare and approve an amendment to this Replacement Housing Plan to
indicate an alternative location and financing plan for the units that will instead serve as the
required replacement housing units.
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Table 2 summarizes the total number of expected units in the Dittos Lane Apartments and
shows a breakdown of the expected number of units by unit size, type of units and affordability
category.
TABLE 2
TOTAL HOUSING UNITS IN THE DITTOS LANE APARTMENTS
BY INCOME CATEGORY AND NUMBER OF BEDROOMS
Income Studio/One Two Three Four Manger's
Cate or Bedroom Bedrooms Bedrooms Bedrooms Unit Total
Non-
restricted 0 0 0 0 1 1
Moderate
Income 0 0 0 0 0 0
Low
Income 10 10 -0 0 0 20
Very Low
Income 6 5 0 0 0 11
Total 16 15 0 0 1 32
As detailed in Table 2, the proposed Dittos Lane Apartments will provide five (5)
two-bedroom and six (6) one-bedroom units affordable to very low income households. One of
these two-bedroom units will serve as the replacement housing unit for the one (1)two-bedroom
very low income unit demolished on the Property, and one of these one-bedroom units will serve
as the replacement housing unit for the one (1) studio very low income unit demolished on the
Property. Similarly, the Dittos Lane Apartments will provide ten (10) two-bedroom low income
units, one of which will serve as the replacement housing unit for the one (1)two-bedroom low
income unit demolished on the Property.
As described above, these proposed units are anticipated to be provided within the next four
years and will remain affordable to the applicable income categories of households for not less
than the minimum 55-year affordability period required by the CRL. Thus the proposed Dittos
Lane Aparments will provide in a timely manner, three replacement units with the same number
of bedrooms and available at affordable rents to income categories comparable (or of lower
income) to those of the units demolished on the Property, thereby fully satisfying the
replacement housing requirements of Health and Safety Code Section 33413(a).
E. Financing Replacement Housine.
The Agency anticipates that a variety of funding sources will be used to finance the
proposed Dittos Lane Apartments, including Agency fmancial assistance, developer deferred fee,
tax credit equity, and tax exempt debt, among others. Financing arrangements for the Dittos Lane
Apartments are still under discussion. The sources and amounts of funding listed below are
preliminary at this time, and maybe changed as necessary. As currently proposed, the following
major sources will likely be used to fund the estimated development cost of the Dittos Lane
Apartments of approximately $10,175.000:
Low income housing tax credit equity in the approximate amount of $2,400,000;
Tax exempt bond fmancing in the approximate amount of $3,500,000; and
A combination of Agency housing set aside funds from tax increment, Developer
contributions/deferred developer fee and other sources for the balance of development
costs in amounts currently being determined by the Agency and that will be set forth in
the DDA.
The Agency already owns the Property, which is proposed to be conveyed to the
Developer bylong-term ground lease at nominal rent, reflecting the fair reuse value of the
Property given the extensive affordable housing regulatory controls that will produce a project
that is 100% affordable to very low income and low income households.
The Agency anticipates that funding from the sources summarized above in these
approximate amounts is reasonable fully fund both the acquisition and development costs of a
.project of this magnitude. The proposed combination of funds allows for an affordable housing
development project that is financially feasible. The Developer's financing plan avoids highly
competitive funding sources in favor of less competitive "four percent" Low Income Housing
Tax Credits and tax exempt bond financing. In addition, the Developer's financing plan includes
Developer participation through deferral of fees and Agency participation through a subsidy
from redevelopment housing set-aside funds, in amount to be agreed upon in the DDA. The
Agency and the Developer are also currently seeking to identify addifional funding sources to
reduce the Agency's subsidy, as available.
F. Time Schedule for Construction of the Replacement Housing.
The construction of the Dittos Lane Apartments is tentatively scheduled to begin in
June 2011 and to be completed by August 2012. The Agency will disclose to the public any
changes in the timing of the construction of the Dittos Lane Apartments as that information
becomes available.
G. Article XXXIV Ap rp oval.
Article XXXIV of the California Constitution requires approval of the electorate when a
state public body develops, constructs or acquires aloes-rent housing project. The proposed
Dittos Lane Apartments may be considered such aloes-rent housing project subject to Article
XXXIV because of the Agency's extensive assistance to the Developer contemplated by the
proposed DDA.
The three replacement units in the Dittos Lane Apartments that are detailed in this
Replacement Housing Plan do not require approval of the voters pursuant to Article XXXIV of
the California Constitution. Article XXXIV requires approval of the electorate only when a state
public body develops, constructs or acquires aloes-rent housing project. The Legislature has
6
enacted the Public Housing Implementation Law (Health & Safety Code Section 37000 et sew.)
to interpret and implement Article XXXIV. Health and Safety Code Section 37001(f) states that
the term "low-rent housing project" in Article XXXIV does not apply to any development that
consists of rehabilitation, reconstruction, improvement, or replacement of dwelling units of a
previously existing low-rent housing project, or a project previously or currently occupied by
households with incomes at or below 80% of the area median income:
The remaining 28 units of low-rent housing proposed to be developed in the Dittos Lane
Apartments do require Article XXXIV authority. By election of November 1998, the voters of
the County of Santa Clara granted Article XXXIV authority for the annual development,
construction or acquisition of 5401ow-rent housing units, including low-rent units in Los Gatos,
such as those units proposed for the Dittos Lane Apartments. The Town and Agency intend to
allocate up to 31 units of low-rent housing authorized by this election to enable construction of
the Dittos Lane Apartments, thus complying with the requirements of Article XXXIV for not
only the three replacement units, but also for the entirety of the Dittos Lane Apartments units.
This allocation was authorized by the County of Santa Clara, Office of Affordable Housing in a
letter dated Apri129, 2010 [attached].
H. Conclusion.
Based on the Agency's analysis of the replacement housing need resulting from the
demolished units and the Dittos Lane Apartments financing plan, the Agency has determined that
it can meet its replacement housing obligations. Assuming the Dittos Lane Apartments develops
as proposed, the Agency will have replaced one (1) studio very low income unit, one (1)
two-bedroom very low income unit, and one (1)two-bedroom low income unit with one (1)
one-bedroom unit and one (1)two-bedroom unit affordable to very income households, and one
(1)two-bedroom unit affordable to low income households. The total number of bedrooms in
the replacement units equals the number of bedrooms in the destroyed units as permitted under
the California Community Redevelopment Law and the affordability of the replacement units is
the same as the affordability of the demolished units. If the proposed DDA is not approved and
the proposed Dittos Lane Apartments are not developed as foreseen by this Replacement
Housing Plan, the Agency will act swiftly to indentify alternative replacement housing units to
be developed no more than four (4) years after the demolition of the units at 20, 24 and 26 Dittos
Lane.