Separate Courthouse Property from other AHOZ Sitesp ow N� ,� MEETING DATE: 06/04/12
ITEM NO:
t
s COUNCIL AGENDA REPORT
OS GA'�0
DATE: May 29, 2012
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: REQUEST TO SEPARATE THE AHOZ REVIEW PROCESS FOR A
PORTION OF THE FORMER COURTHOUSE PROPERTY FROM THE
REMAINING AHOZ PROPERTIES
RECOMMENDATION
Approve the separation of the 3.4 acre portion of the Courthouse property from the four other
AHOZ sites to allow KT Properties to process a mixed income (affordable and market rate)
housing development generally consistent with the GPC recommendations on the AHOZ
development standards.
BACKGROUND
The former 5.2 acre County Courthouse and office property on the northwest corner of Knowles
and Capri Drives has been identified in the Town's approved Housing Element as one of the five
Affordable Housing Overlay (AHOZ) Properties. KT Properties has entered into a due diligence
process with the County to purchase two parcels totaling 3.4 acres of the three parcel site. KT
Properties was under contract with the County to purchase these parcels. The contract has
recently expired and KT Properties is currently working with the County to re -enter into the
contract. The two parcels wrap around the corner 1.8 acre parcel on Knowles and Capri Drives.
KT Properties has been participating in the General Plan Committee's (GPC) review of the
AHOZ development and architecture standards.
DISCUSSION
The GPC has completed its review and made recommendations on the development standards for
the five AHOZ sites, and in May and June will complete the review and recommendations on the
AHOZ architecture guidelines. Staff originally intended to schedule the AHOZ for Planning
Commission and Town Council review in June and August; however, based on the resulting
development standards that the GPC and staff are recommending, staff believes that further
environmental analysis is warranted, since the development standards are not completely
consistent with those studied in the General Plan Environmental Impact Report (EIR). The
additional environmental analysis will delay Planning Commission and Town Council review of
PREPARED BY : Wendie R. Rooney, Director of Community Development ,6 -�-
Reviewed by: _ &Assistant Town Manager —4-Jown Attorney Finance
N: \DEV \TC REPORI'S\20MAI-I0L Review Process- Crt.f- 1se.Prop.'rC 6- 4- 12.doe Relormatted: 5/30/02
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: REQUEST TO SEPARATE THE AI-IOZ REVIEW PROCESS FOR A PORTION
OF THE FORMER COURTHOUSE PROPERTY FROM TIIE REMAINING AHOZ
PROPERTIES
May 29, 2012
the AHOZ development standards for five to six months. Staff anticipates Planning Commission
review of the AHOZ, along with the environmental document, in December at the earliest. The
timing depends on the level of required environmental review. Town Council consideration of
the standards would occur in January 2013, at the earliest.
KT Properties has filed a CDAC application that includes 15 single family lots, 17 townhomes,
and 50 affordable senior apartments. The application is scheduled for CDAC review on June 13,
2012. Depending on the input from the CDAC, KT Properties has requested to begin processing
a formal development application. Based on staff recommendation, KT would also process the
AHOZ development standards and architecture guidelines and the General Plan Amendment and
Zoning Code /Map Amendment to establish the AHOZ for this property. KT Properties would
also be responsible for the required environmental document, which staff believes would be an
EIR. This would effectively result in a separation of this site from the review process for the
other four AHOZ sites. However, since the GPC has completed its review of the standards for
this property, the separation would afford the Planning Commission and Town Council the same
review process anticipated for the other four AHOZ sites. This would expedite the Courthouse
property, and it would provide a better opportunity to realize up to 50 affordable senior units
proposed for this property.
The GPC considered KT Properties' request at the May 9, 2012, GPC meeting and directed
forwarding the request to the Town Council with a recommendation to separate the Courthouse
property from the other AHOZ sites to help facilitate a timely review of the KT Properties
proposal. Both the GPC and staff have thoroughly explained to KT Properties the risk of
processing this application in advance of the rest of the AHOZ.
Staff does not find any risk to the Town as a result of separating the AHOZ process for this site.
On the contrary, this process would afford the Town the benefit of analyzing the effectiveness of
the AHOZ standards on an actual development application, could help facilitate the proposed
affordable units, and is consistent with the Town's service philosophy of efficient project
processing.
FISCAL IMPACT
KT properties will be financially responsible for the cost of the environmental review document,
which will include the analysis of the AHOZ standards.
Attachments
1. Letter from applicant dated May 2, 2012 (5 pages)
Distribution
cc: Mark Tersini, KT Properties, 21710 Stevens Creek Blvd., Suite 200, Cupertino, CA 95014
WRR:cgt
Tuesday, May 1, 2012
From: Mark Tersini, KT Properties
To: Members of the General Plan Committee, Town of Los Gatos
To: Wendie Rooney, Community Development Director,
Town of Los Gatos
Subject: Affordable Housing Overlay Zone (AHOZ) Issues
With Specific Reference to the Knowles Avenue Site
The purpose of this email is to provide you with information that you requested regarding
the development of affordable housing on the Knowles Avenue Property (formerly known
as the Courthouse Site).
KT Properties is interested in the Affordable Housing Overlay Zone issues related to this
site, and has done considerable research to fully understand the possibilities for a project
that would benefit the Town of Los Gatos and bring the site to its highest and best possible
use.
Attached to this email are two letters. In the first of these, Jan Lindenthal, Vice President,
MidPen Housing, the affordable housing developer with whom we hope to partner on this
project, discusses:
v The need to focus the affordable housing on one portion of the site on its own legal
parcel in order to facilitate the financing of the affordable housing;
• The need to view the entire project, both the market rate and affordable housing, as
a single project with distinct components;
• The need to waive the 30% moderate income requirement in order to ensure that
the project is viable and that all of the very low and low income units can in fact be
constructed.
The second letter is from Pete Smith, our civil engineer on this project. Pete has worked on
several affordable housing projects.in which different product types have been built as part
of an overall project. In these projects the different densities have been consolidated into
one overall density, producing a project that has reduced the impact on neighbors by
creating a community that is architecturally pleasing to both residents and those in
surrounding homes.
In addition, Jan Lindenthal has sent an email to Wendie Rooney that includes documents
from the City of Half Moon Bay. Earlier this year Half Moon Bay approved a MidPen project
similar to the one that KT Properties is contemplating for the Knowles Avenue Property,
KT Properties has submitted a site plan and elevations to the Town for consideration by the
Conceptual Development Advisory Committee (CDAC). This 3.34 acre site plan includes a
mix of attached flats, small lot single family detached, and townhomes. The project has
Attachment 1
been designed to compliment the existing medical office building along Knowles Drive to
the West and seamlessly transition to the townhomes and small lot housing to the Southern
and Easterly boundaries of the parcel. We are extremely fortunate to have the ability to
provide three housing types on this uniquely configured 3.34 acres of land while
maintaining the desired density of the AHOZ.
1 plan to attend the next meeting of the General Plan Committee, and will be happy to
answer any questions that you may have.
Mark Tersini
KT Properties
I MidPen
t H O U S I N G
Building Communities, Changing Lives.
April 30, 2012
Mr. Mark Tersini
KT Properties
21710 Stevens Creek Blvd, Suite 200
Cupertino, CA 95014.
Dear Mark:
As a follow up to our meeting last week, I wanted to provide my recommendations regarding the
structuring of the affordable housing component of the Los Gatos Courthouse, Knowles Drive
project.
First, let me begin my explaining that it is not unusual in an inclusionary housing project for the
affordable housing to be "focused" on one portion of the site, rather than "sprinkled" throughout
the site on a "door by. door" basis. The primary reason for this is that focusing the affordable
housing in a central location on the site is necessary to facilitate the financing of the affordable
housing. This financing which largely comes from the sale of low income housing tax credits to
a private investor requires that the affordable housing sit on its own legal parcel that can be
Iegally and specifically restricted for affordable housing for 55+ years as a condition of securing
the tax credits.
Second, in a situation such as this where the inclusionary housing requirement is expanded via an
Affordable Housing Overlay Zone to 50% of the total units in the project or more, the need to
centralize the affordable housing on the site is even more acute as it is virtually impossible to
finance this number of affordable housing units in a project in any other way and still maintain
the overall financial feasibility. of the project.
This requires that the entire project, both market rate and affordable components, be viewed
really as one project with distinct components. Viewed in this way, the project does provide a
variety of both housing types and affordability levels on site although the components may be
ultimately developed by different parties. This is very analogous to virtually any master planned
community where uses are concentrated on different portions of the site to create a diverse
neighborhood of housing types, enhance neighborhood compatibility and facilitate housing
affordability. We have seen numerous examples of this from Half Moon Bay to Santa Cruz
County to the redevelopment of the Former Fort Ord Military Base and believe that such an
approach is essential if the goal of achieving 50% affordability for very low and low income
households is to be achieved.
Finally, I understand that the Town's current proposed affordability for the Los Gatos
Courthouse site includes not only 50% affordability for very low and low income households but
also an additional 30% requirement for moderate income households. In this current market,
affordable moderate income housing is very difficult to accomplish for two reasons. First there
303 Vfntage park Drlve, Sufte 250 t. 650.356.2900 e, midpen ®mldpen- housfng.org
Foster City, CA 94404 f. 650,357.9766 www.midpon- housing.org
are no specific financing sources to assist moderate income buyers at this time and second, in my
experience, moderate income buyers would rather buy a "fixer upper" house via a short sale
rather than purchase a new home with a resale restriction requiring that it be sold in the future to
another moderate income homeowner.
As a result, it would be my recommendation that the AHOZ affordability requirement include
some provisions to waive the 30% moderate income requirement in the event one or more of the
following conditions are met;
a. If more than 50% of the total units in the project are provided as affordable (as is the
case in the Courthouse site (52 affordable out of 85 total units or 60 %) and/or
b. Where a diversity of product types is created from rental apartments to townhomes to
detached single family homes, enhancing overall neighborhood compatibility and/or
c. Where the average affordability of the affordable units exceeds the required
affordability under the AHOZ ordinance by at least 10 %. In the case of the
Gourt
house site the- r- equired- affordability -for very- low /low- income units is -an — -- - - - _ -- -
average of 60% AMI, the actual affordability that would be provided is 45 %.
I applaud the Town's goal of requiring.50% affordability on these designated sites, however in
order to achieve this goal, it will require flexibility and creativity to ensure that both the market
rate and affordable components of the project are financial feasible.
Should you have any further questions, feel free to call me at (650) 356 -2919.
Sincerely,
Jan Lindenthal
Vice President of Real Estate Development
IvlidPen Housing Corporation
g " gagau, .06M gc.'
Crielea W. Davids«,, President A California Corporation
Peter smah, Vice Pm dert Consuidng CMI Engineers
Wendle Rooney
Community Development Director
Town of Los Gatos
110 E. Main Street
Los Gatos, CA; 95031
Re, Capri Dr. & Knowles Dr.
Dear Ms. Rooney,
May 1, 2012
Job No. 1865
I apPredate the opportunity to meet with you and Suzanne last Friday to discuss Mark's project on the
Courthouse site. I left several examples of projects that we have done in ether cities where we combined ditmnt
Product types within the same project and consolidated the different densities Into one overall density. One of the
reasons for using this approach is site design, placing the higher densities and taller buildings along major street
frontages and lower densities and heights next to existing lower density neighborhoods. This Is particularly Useful for
aflbrdable housing projects, mixed use, or transit corridor projects, On projects that Include those features, cities
typically want higher densities and using different densities within a project helps to achieve the goal while reducing the
Impact on the neighbors. On larger projects it's not uncommon to have different developers construct c iffer�ent portions
of a project with different product types and densities,
Please feel free to contact me at mit . acedco.ccm or at (408) 491 -7709 If you have any questions or need
additional information.
Sincerely,
Peter Smith, P
Charles W. Davidson Co,
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