City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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RECOMMENDATION
Staff recommends the Culver City redevelopment Agency (the “Agency”) discuss
and provide input regarding the Comprehensive Housing Strategy and direct staff
to proceed with the first year program implementation.
BACKGROUND
This report analyzes the Agency’s use of redevelopment set aside funds in
addressing City affordable housing needs. It contains an assessment of
affordable housing production to date and provides recommendations on
allocating funding and developing new housing programs with available
resources. Using current housing needs projections provided by the State and
the Regional Housing Needs Assessments (RHNA), the report identifies potential
housing development sites, related development costs, funding sources, funding
allocation and project implementation over a 7.5 year planning period.
DISCUSSION
Culver City is known as one of the best cities in the region in which to live and
work. It is a leader in attracting entertainment, multimedia, and a variety of
creative firms as well as a new venue for theatre and restaurants. Because of
responsive government, safe neighborhoods, job opportunities and excellent
schools it is also a sought after location for housing. Top executives, clerical
staff, seniors, families with children and persons with disabilities all want to live in
Meeting Date: 03/17/08 Item Number: A3
AGENDA ITEM: Discussion of Comprehensive Housing Strategy
Contact Person/Dept:
Tevis Barnes
Sol Blumenfeld
Phone Number:
310-253-5702
310-253-5782
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification: Master Notification List (03/12/08).
Department Approval:
Sol Blumenfeld (03/11/08)
Executive Director Approval:
Jerry B. Fulwood by Marlee Chang
(03/13/08)
Fiscal Impact Approval:
Jeff Muir (03/13/08)
City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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and be a part of the tapestry that is Culver City. Unfortunately, the demand for
good affordable housing in the city far exceeds the supply.
The problems of affordable housing impact local land use and regional air quality
and mobility. As people seek less expensive housing in distant suburban
locations, they are compelled to travel huge distances on daily commutes to
urban centers. The lack of good affordable housing is reflected in diminished air
quality and a reduced quality of life affecting the entire region. The City has
expressed its desire to meet the challenge of housing affordability in its General
Plan.|1010| Unfortunately, as the median price of housing continually increases, the
problem of affordability gets worse each year. The cost of housing is determined
by many factors including the economy, land availability, demographics,
construction costs and land use regulations. Thus the lack of affordable housing
is a national, state and regional problem that is manifested locally.
The Housing Division has implemented various programs to increase the supply
of good affordable housing for all income levels, recognizing that safe, clean and
sanitary housing is critical to quality of life. These programs include:
Section 8 rental assistance
Roommate matching for seniors
Financial assistance to developers for the production of affordable housing
Rehabilitation funds for homes and rental property
Since 1992, the Housing Division has provided over $22.5 million in Section 8
Rental Assistance to 384 extremely-low and low-income families, rehabilitated
784 single family homes, and 771 multifamily housing units and provided
financial assistance to 243 units of affordable housing under new construction.
Even with these efforts, the City must do more to meet affordable housing needs.
The Comprehensive Housing Strategy (CHS) is designed to provide a
comprehensive approach for allocating city housing resources to meet identified
housing needs established by State Housing law. In addition, this effort will help
inform the Housing Element that is currently being produced by Planning the
Division
What is Affordable Housing?
Affordable housing is the best housing on the block that is well maintained and
well managed, specially financed to be affordable to a range of income levels.
Under Federal guidelines, housing is “affordable” when residents spend less than
thirty percent (30%) of their income on rent or mortgage payments. The amount
is based on each county’s median income. In 2007 in Los Angeles County the City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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annual median income for a family of four (4) is $56,500.|1010| Please see
Attachment No.1 (LA County Income Chart).
Who needs Affordable Housing?
According to the Housing Profile conducted by the Culver City Housing Agency in
2003, Culver City has the highest rents on the Westside outside of Beverly Hills.
The median rent for a two (2) bedroom apartment is $1,600, the median house
price in Culver City is $630,000, and the median household income in Culver City
is $59,973. According to 2007 Median Household Incomes for the Los Angeles
County/Culver City area this is considered low income at eighty percent (80%).
Thus, the above family of four (4) cannot afford to live in Culver City.
RHNA 1998-2005 Comparison of Neighboring Cities
RHNA Need New Housing Built % of RHNA Built
Beverly Hills 255 648 253%
Culver City 650 189 29%
Santa Monica 2,208 2920 132%
West Hollywood 410 379 92%
Subregional Total 3,524 4,136 117%
The Housing Division also conducted an analysis of the salaries of Culver City
employees to measure income compatibility with housing costs. From this
survey, it was noted that fifty percent (50%) of City employees cannot afford to
live where they work. This analysis was also conducted using the Culver City
United School District employees and it was found that fifty percent (50%) of
school district employees cannot afford to live where they work.
An “Affordability Chart” was developed depicting the salaries of common job
categories found in the region. The Affordability Chart is located in the appendix
of this document. It must be noted that the only job category listed that can
afford both to rent or purchase a home in Culver City is a General Practice
Doctor with an annual income of just below $140,000 a year, which is 180
percent above the Culver City median income. Please see Attachment No. 2
(Affordability Chart).
City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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Regional Housing Needs Assessment
The City is obligated to address the housing shortage as a statutory requirement
under the Regional Housing Needs Assessment. It also has obligations under
Redevelopment Law to utilize excess surplus Housing Set Aside Funds. The
proposed Comprehensive Housing Strategy provides a plan for allocating the use
of Set Aside Funds to meet the requirements of RHNA.
Every five (5) to seven (7) years, State law requires cities in California to update
the Housing Element of their General Plan. The Housing Element is designed to
outline the strategies and policies to ensure the production, improvement, and
conservation of housing. The Southern California Association of Governments
(SCAG) issues RHNA goals for each city in the region (Government Code,
Section 66584). With respect to new housing production, each city must facilitate
and encourage the production of new housing commensurate with its share of
the region’s need for new housing.|1010| This share includes four affordability levels.
In the current RHNA cycle, Culver City’s allocation of 504 units (see “note”
number 5) includes the following affordability breakdown:
• 129 units affordable to Very Low Income households
• 80 units affordable to Low Income households
• 85 units affordable to Moderate Income households
• 211 units affordable to Above Moderate income households
In evaluating housing production progress during the last RHNA cycle (2000-
2005), Culver City’s allocation of 650 units was broken down into the following
affordability levels:
• 71 units affordable to Very Low Income households
• 136 units affordable to Low Income households
• 134 units affordable to Moderate Income households
• 309 units affordable to Above Moderate Income households
Though 927 affordable housing units were created in the last RHNA cycle, no
new construction qualified as affordable housing. The City did provide affordable
housing through a combination of rehabilitation, preservation, and mortgage
assistance for first-time homebuyers and by securing affordability covenants
through financial assistance. Only 23 new units (totaling 14% of the RHNA City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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obligation) were recently constructed in the City that meet the affordable criteria
and these would only apply to the current planning period since they were
constructed in 2006.
4
Despite efforts to try to create affordable housing, the City has failed to meet its
housing obligations under RHNA for a variety of reasons. They include a lack of
land available at prices that support affordable housing development, regional
market forces that do not support creating affordable units, neighborhood
resistance to development at densities that support affordable housing, and
lengthy development processes with associated project overhead and carrying
costs that preclude affordable housing developments. The State does not
automatically penalize local jurisdictions that do not achieve their RHNA goals.
However, if a locality does not meet its RHNA requirements because of
governmental constraints (i.e. zoning laws that limit density to below the State’s
default density, construction moratoriums, or policies that do not allow affordable
housing) or non-governmental constraints that the City does not address, it may
be subject to certain “penalties”. These penalties may include withholding of
State funds such as the City’s local share of “gas tax” funds, civil suits by housing
advocates, and the potential disruption of City operations if it is deemed to be out
of compliance with its General Plan, Redevelopment Plan or State Housing Law.|1010|
Since the City has redevelopment resources that can be used to achieve its
RHNA allocation, non-utilization of these resources for affordable housing
development could be construed by the State as a constraint and is inconsistent
with Redevelopment Law.
Excess Surplus
Under Redevelopment Law, a Redevelopment Agency is prohibited from
generating an excess surplus of its Housing Set Aside Fund. The most
important provision of Redevelopment Law relating to housing was imposed by
the legislature in 1976. This requirement stipulates that in redevelopment project
areas adopted after 1976, a minimum of twenty percent (20%) of the tax
increment generated from the project area must be used by the Agency to
“increase, improve and preserve” the community’s supply of affordable housing
for persons and families of low and moderate income (Health and Safety Code
Section 33334.2). “Excess surplus” means an unexpended and unencumbered
amount in the housing fund that exceeds the greater of $1 million or the total
amount deposited in the housing fund during the preceding four years. Agencies
are required to either:
City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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• Spend or encumber the excess surplus funds or transfer the funds to a
housing authority within one year from the date the funds become
excess surplus, or
• Spend or encumber the excess surplus funds within two additional
years.
If the Agency does not spend or encumber the excess surplus funds within three
(3) years from the date the funds become excess surplus, the Agency is
prohibited from encumbering any additional funds or spending any monies from
any source – except that it may pay certain specified obligations.
6
The use of Housing Set Aside funding is tied to the Housing Element of the
General Plan. An Agency may only exempt itself from the 20% set aside
requirements if it makes two findings: 1) That no need exists in the community to
improve, increase or preserve the supply of low and moderate income housing;
and 2) That a stated percentage less than 20% is sufficient to meet the
community’s housing needs. Clearly neither of these requirements for exemption
applies to Culver City.
Keyser Marston and Associates (KMA) conducted a cash flow analysis to
determine whether the City is at risk of accumulating an “excess surplus” of
Housing Set Aside Funds and determined there was not an excess surplus in FY
2005/6 or 2006/7. However, KMA determined that the Agency will experience
excess surplus any time the amount of funds remaining at the end of the Fiscal
Year (“Ending Balance”) is greater than the sum of the preceding four (4) years
of Set Aside funds.
This means that with the Ending Balance of $16.3 million in 2006/7 and $17.8
million in 2007/8, the Agency may maintain an Ending Balance of up to $20.5
million 2008/9 without violating the excess surplus requirements. However, due
to on-going affordable housing need, the extensive amount of time it takes to
bring projects on line, and the continuing accumulation of funds, it is important
that the Agency to start to allocate Set Aside funds now.
Thus, the City must work to satisfy RHNA requirements and comply with
requirements for use of Housing Set Aside Funds or face the untenable prospect
of severe restrictions on exercising its normal authority. The restrictions would
prohibit the Agency from encumbering any additional funds or spending any
monies from any source – except that it may pay certain specified obligations, if
any, that were incurred prior to three years from the date the monies became
excess surplus and an amount for Agency operations and administration that City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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may not exceed 75 percent of the amount spent for these purposes the
preceding year. This prohibition continues until the Agency has spent or
encumbered the excess surplus plus an amount equal to 50 percent of the
excess surplus that remains at the end of the three-year period.
6
ANALYSIS
Comprehensive Housing Strategy (CHS)
The Comprehensive Housing Strategy (CHS) is proposed to allocate Housing
Set Aside Funds to meet the requirements of RHNA and Redevelopment Law.
The strategy is based upon the concept of providing low density, smaller,
scattered sites, and mixed income housing developments, rather than
concentrating affordable units in fewer high density projects which are likely to be
resisted by adjacent residents. With RHNA providing a target number for Agency
assisted and non-assisted units, staff identified sites of affordable for sale and
rental housing over the 7 ½ year planning cycle. Prototypical affordable projects
were identified and in some cases preliminary site plans were prepared. These
prototypical projects were then priced using industry standard construction cost
estimating techniques|1010|. The projected cost for meeting the total required housing
production program was calculated and a funding strategy was developed to
accommodate the housing demand utilizing Agency Set Aside Housing Funds
and/or lending from private institutions, and also non-profit sector, County, State
and Federal funding sources. An implementation program was then developed
for each program year. The Strategy utilizes all Housing Set Aside Funds by the
end of the fourth program year. The funding allocations are described on
Attachment Nos. 3, (Program Funding Part I and Part II) and 4, (Housing
Production Projections). Since the City’s housing needs far exceed the
Agency’s resources, it would be necessary to leverage Agency funds with bond
financing in order to cover the program gap for affordable housing development
to accommodate the entire RHNA. This alternate strategy is described in the
Funding section below.
The strategy also relies on State Density Bonus law (SB1818) to meet RHNA
targets using the low density, scattered site, mixed income housing approach.
The law states that governmental entities shall grant a density bonus of 25%
when the applicant for housing development agrees to construct twenty percent
(20%) of the total units of a housing development for lower income households or
ten percent (10%) of the total units for very low income households. Additionally,
condominium (for sale) units are also subject to the twenty percent (20%) density
bonus above the total dwelling units permitted in a project made affordable for City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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persons and families of moderate income (Section 65915 – Government Code,
Planning and Land Use|1010|).
Because RHNA emphasizes addressing the special housing needs of a
community such as needs of the elderly and disabled, the strategy incorporates
these populations in the prototypical affordable housing projects.
The Housing Division has surveyed the city to identify blighted, nuisance and
underutilized sites for affordable housing development. From this investigation,
over eighty (80) sites have been identified. These sites were organized into four
(4) tiers for new construction which included:
1.) Agency owned sites suitable for residential and mixed used development;
2.) Small lot development;
3.) Medium lot development; and
4.) Transit oriented development (TOD).
Included with the four (4) tiers were also sites designated for preservation or
rehabilitation projects. Thus through the redevelopment of Agency owned sites,
small to medium sized new construction projects, TOD, preservation and
rehabilitation, the requirements under RHNA and State Housing and
Redevelopment Law will be addressed.
Based upon RHNA requirements, the City must annually develop approximately
17 units of very low income housing, 10 units of low income housing and 11 units
of moderate income housing.|10 10| Attachment No. 4 (Housing Production
Projections) indicates how the City achieves this target.
These affordable housing goals are proposed to be met through the following
four broad objectives:
• To assess the key housing needs and funding requirements facing Culver
City over the 7 ½ year planning cycle.
• To identify three (3) priority potential affordable housing sites that can be
developed over the first year of the planning cycle, that addresses affordable
housing needs, eliminating blight and nuisance, protecting stable single-family
residential neighborhoods and maintaining Culver City’s “small-town feel”.
• To provide realistic housing initiatives that best address the City’s unmet
housing needs consistent with the goals and objectives of the Housing City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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Element over the 7 ½ year planning cycle with Agency owned, small/medium
lot development, TOD developments, building preservation and rehabilitation.
• To effectively allocate the Agency’s Housing Set Aside Funds consistent with
State law to meet the City’s housing needs.
Site Evaluation Process
The Housing Division undertook a detailed site evaluation of properties for
affordable housing development and over eighty (80) locations were identified.
Community Development Department staff from Building Safety, Housing,
Planning and Redevelopment Divisions then collaborated in evaluating the sites
using six (6) criteria: Feasibility, Implementation, Timing, Neighborhood Impact,
Economic Benefit and Community Impact.
Each factor was weighted on a scale of one (1) to five (5) with a score of five
representing the best housing opportunities. Thus, for example, if a site is near
transit and open space, eliminates nuisance and blight, can be implemented
quickly and promotes economic improvements while providing affordable housing
it was scored more highly than a project that satisfied fewer of these criteria.
Please see Attachment No. 5 (Housing Priority Projects).
The list of eighty (80) sites was narrowed to ten (10) potential sites based upon
the consideration of the criteria. The selection process was further refined to
identify three (3) sites for first and second years of the CHS program. Detailed
below are the site selection criteria:
Financial Feasibility – The project is cost effective and meets financial
model criteria.
Implementation – The project is suitable for the area without rezoning
and may more quickly move through the entitlement process with
fewer construction constraints.
Timing – The project can be accomplished in an approximate 2 year
timeframe.
Neighborhood Impact – The project makes sense for the neighborhood
because it is compatible in terms of density, housing type, parking, mix
of incomes, and impact on traffic.
Economic Benefit – The project increases the tax base and solves
other fiscal needs of the City. City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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Community Impact – The project site is near transit, creates open
space, promotes sustainability goals, removes blight and nuisance and
substantially improves the appearance of the community.
The Top Three
Based on the above criteria, the following three sites were selected as the top
priority for the first year of programming:
Priority Location Initiative Disposition Affordability
1 Globe Agency
Owned
Medium
12
Town Homes
Ownership
8-Mod
4-Market
2 Lafayette Agency
Owned
Small
6
Town Homes
Ownership
2-Very Low
2-Low
2-Mod
2 West
Washington
Blvd.
Agency
Owned
Medium
25
Multi-Family
Rental
Mixed Use
5-Low
10-Mod
10-Market
Since the Agency may at some time become involved in real property
negotiations related to the priority sites, the addresses have been redacted from
the priority housing site list. These priority sites will be reviewed by the Agency
in closed session and upon completion of real property negotiations will be
presented during the Agency’s open session hearing on the Housing Strategy.
This system for selecting sites can be updated as necessary for each year of
programming, allowing the substitution of new sites in the event that any become
unavailable for development.
The Housing Initiatives are guided by the following criteria:
Agency Owned - Housing Division staff first looked at land owned by the Agency
that was suitable for residential or mixed use development with an affordability
component. Utilizing Agency owned sites helps ensure project feasibility
because there is no risk related to property acquisition and because it helps
expedite the development process.
Small Lot Development – The general approach will be to first consider small
projects in RMD zoned areas on lots of approximately 5,000 square feet. Lots of
this size and zoned RMD can develop with up to four (4) units and possibly six
(6) units if a Density Bonus is proposed as part of the project. The type of product
that will be created through Small Lot Development is four-six (4-6) unit City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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condominiums, or four-plexes. Such development addresses the goal of
supporting a socially and economically diverse community with mixed-income,
workforce housing. Thus, in a six (6) unit development, two (2) units would assist
very low or low income households and the remaining units would be either
moderate income or market-rate. These types of projects are most feasible when
they are adjacent in order to increase construction efficiencies.
Medium and Larger Site Development – Of the eighty (80) potential sites for
affordable housing development, several can accommodate from twenty (20) to
thirty (30) affordable units. Staff will review the feasibility of these larger projects
based on the following criteria:
1.) The project is not adjacent to single family neighborhoods (in an effort to
protect R-1 neighborhoods);
2.) The development is located near transit;
3.) The project is located near amenities such as shopping and employment
centers;
4.) The development is buffered from Culver City neighborhoods and thus
presents limited impact upon Culver City; and
5.) The project is adjacent to high density development where it will fit with the
character of the surrounding housing density. Additionally, such projects must
promote the goals of sustainability, incorporating LEED Certification and
green building practices.
Transit Oriented Development (TOD) – Only seventeen percent of Culver City
residents work within the city and in general, an average household spends
nineteen percent of its income on transportation costs. In auto-dependent
neighborhoods, households spend twenty-five percent, and households with
good access to transit spend just nine percent.
10
While investigating potential
housing sites, the Housing Division identified sites that provide the opportunity to
provide housing closer to retail and commercial centers and to public transit.
These sites include locations adjacent to the Culver City Metropolitan Transit
Authority (MTA) Bus Lines and the Expo Light Rail.
Preservation – Preservation is defined as “paint-up/fix-up” of existing single- and
multiple-family units to address blight and deferred maintenance. According to
data collected from the 2000 Census, sixty-eight percent of the owner-occupied
housing units and 66 percent of the rental units in Culver City were constructed
prior to 1970. From this data, there may be a greater need for preservation of
housing units within the city. Preservation of the existing housing stock is a good
method to avoid the displacement of residents and maintain economic and social
diversity of the community. Preservation is also a more cost-effective way to City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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provide affordable housing than building new residential units, given the cost of
land, construction costs and the difficulties of securing financing.
Since 1992, the Housing Division has successfully implemented a Neighborhood
Preservation Program (NPP) assisting approximately one hundred units per year.
Through this program, 784 single family homes and 771 multiple-family units
have been preserved. The Housing Division will continue to provide this
assistance and is currently working with a cost estimator to refine costs of new
construction and building rehabilitation. This information will be used to update
the grant amounts offered under NPP.
Additionally, with recent approval of the Solar Photovoltaic Ordinance, the
Housing and Building Divisions will work to provide grants for projects that have a
low/moderate income component and include other sustainable features such as
higher efficiency windows and insulation. This grant is proposed to be offered as
a rebate where property owners/developers will be reimbursed for the cost of
“greening” their affordable units and will be presented to the Agency as a
separate program for consideration over the next fiscal year.
Rehabilitation – Under Redevelopment Law (Health and Safety Code Section
33413(b)(2)(A)(iv)) “rehabilitation” is defined as rehabilitation, the value of which
constitutes twenty-five percent of the after rehabilitation value of the dwelling,
inclusive of the land value. To count these units toward the jurisdiction’s
affordable housing requirement the Agency must record a covenant or restriction,
which runs with the land, for each parcel or housing unit subject to these
restrictions. For rental units, the covenant is fifty-five years and for owner-
occupied units the covenant is forty-five years. These income and affordability
restrictions were increased as part of the 2001 Legislative session. Prior to this
change, covenants were ten years for owner occupied units and fifteen for renter
occupied units.
In a strong real estate market where property owners are seeing significant
appreciation and low interest rates are available for major rehabilitation, property
owners are not likely to accept funds from the Housing Division to undertake
rehabilitation because of the current covenant restrictions. Based on these
realities and the need to encourage greater property owner participation, the
Housing Division will seek ten (10) to fifteen (15) year restrictive covenants.
However, the requirement for covenants stipulating the continued long-term
maintenance of the affordable units means that most will not qualify under
Redevelopment Law as “affordable units” because they will not meet the
aforementioned income and affordability restrictions as prescribed by
Redevelopments Law of fifty-five (55) years for rental units and forty-five (45) for
ownership units. City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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Other Cities Use of Housing Set Aside Funds
The Housing Division examined several cities on the Westside and in Los Angeles
County to determine their approach to affordable housing production. The cities
examined are: Torrance, Pasadena, Monrovia, West Hollywood Santa Monica,
Beverly Hills, El Segundo, Compton and Inglewood. Of these cities, two do not have
redevelopment agencies (Beverly Hill and El Segundo). Three have enacted
Inclusionary Housing Ordinances (Pasadena, Santa Monica and West Hollywood)
that require a specified percentage of all new residential construction to provide an
affordable housing component. Five of these cities are Entitlement Cites and receive
Federal HOME, CDBG, Housing for Persons with AIDS (HOPWA), and Shelter Plus
Care (homeless) dollars. In surveying these cities, it was noted that the general
approach for affordable housing production is to use a financial layering mechanism
with various funding sources such as inclusionary ordinances, HOME, and CDBG in
concert with Housing Set Aside Funds.
• Torrance - Mixed use/mixed income ownership condominium developments
that are funded through General Fund and conventional bank financing
• Pasadena – Utilizes Housing Set Aside Funds, Inclusionary Housing
Ordinance, HOME, CDBG, and New Market Tax Credits to facilitate the
production of very low to low rental housing and moderate ownership
projects. Housing Set Aside also used for historic homes acquisition and
rehabilitation, first time home buyer program and owner-occupied and rental
rehabilitation programs.
• Monrovia – Mixed use/mixed income ownership condominium developments
that are entirely funded with Housing Set Aside Funds
• El Segundo – Does not have a Redevelopment Agency
• Beverly Hills - Does not have a Redevelopment Agency, but has provided
funding to West Hollywood for the production of affordable housing
• West Hollywood – Through a combination of Housing Set Aside Funds,
HOME, CDBG, MHP, HOPWA and Inclusionary Housing Ordinance, they
created affordable rental housing units for seniors, disabled, families, and
HIV/AIDS
• Santa Monica – New construction of low to moderate affordable units for
seniors, disabled and families through Santa Monica Proposition R for
affordable housing (Inclusionary Ordinance), Housing Set Aside, Shelter Plus
Care, HOME, and CDBG. With Housing Set Aside Funds, developers are
also provided with loans for production. City of Culver City, California
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• Compton – First time home buyer, and single family rehabilitation and
ownership through a combination of HOME and Housing Set Aside Fund
• Inglewood- New Construction single family and condominiums for up to
moderate income, first time home buyer program and senior housing through
the use Housing Set Aside Funds and Tax Credits
Culver City differs from the above cities in that it is not an Entitlement City and does
not receive Federal HOME, CDBG, HOPWA, and Shelter Plus Care dollars. Culver
City does receive a small amount of CDBG funds that are used for human services
and infrastructure. In order for Culver City to receive HOME Funds an application
would have to be made to the County of Los Angeles through their project specific
competitive HOME request for proposal (RFP) process. Culver City relies
exclusively on Housing Set Aside for not only housing production but also programs
such as single and multi family rehabilitation, fair housing, senior roommate
matching, the installation of safety and security devices and rental assistance for up
to moderate income households.
The above cities also use tax credit for the production of affordable housing. Tax
Credits are discussed in more detail later in this report. Tax credit project require
higher density and deeper levels of affordability. Thus Culver City may not want to
take this approach since the Council objective is to create mixed income projects
with lower density to fit within the character of the City.
Funding Strategy - Housing Set Aside Funds
The City cannot construct 504 affordable units with Agency Set Aside funds
alone. Consequently the Strategy provides the option to leverage Agency dollars
though bond finance. Attachment No. 6 (Total Estimated Project Costs) details
priority affordable housing development costs by project. The total cost of these
projects is summarized on Attachment No. 7 (Project Summary Table). This
table also identifies the number of affordable units by income category and the
total cost by program year. Finally, the funds available by year are shown on
Attachment No. 3 (Program Funding Part I and Part II). Comparing the available
funds and the project programming by year, there is $38.5 million that can be
contributed by the Agency using Housing Set Aside Funds over the next seven
years and approximately $87.5 million that must be provided by secondary
sources. Additionally, $1.8 million is needed to preserve 350 units, $1.9 million is
needed to rehabilitate forty units, and the remaining funds will be utilized to
support the inventory of on-going programs.
City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
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The $35.8 million in Housing Set Aside Funds will be accumulated over seven (7)
fiscal years. From fiscal years (FY) 2008-2011, approximately two million dollars
will be available annually for the construction of new affordable housing units.
From FY 2011-2015, approximately three million dollars will be earmarked
annually to address affordable housing production. Additionally, $17.8 million in
Housing Set Aside Funds have been accumulated in unencumbered funds.
These monies will be equally divided over the next seven fiscal years at $2.2
million a year. Thus, a total of $35.8 million will be generated that can be used for
affordable housing production. Please see attachment No. 3 (Program Funding
Part I and Part II)
.The Agency may elect to spread funding and expenditures over seven years
through bond finance and other secondary sources or it can utilize the current
$17.8 million available in the Set Aside fund to produce three affordable housing
projects, leaving the market and the programs enumerated in the Housing
Element to address housing need.
Supplemental Funding Sources
As stated above, the required funding far exceeds the funds available through
Housing Set Aside for the production of new affordable units. The funding gap is
$87.5 million. Staff has identified alternative funding sources to supplement the
Housing Set Aside Funds. Please see Attachment No. 8. These sources range
from HOME Partnership Act (HOME) funds provided through the County of Los
Angeles to Proposition IC funds through the State of California Housing
Community Development Department (HCD) to Tax Exempt Bonds and Low
Income Housing Tax Credits (LIHTC).
The funding gap of $87.5 million requires private lending market resources. Staff
met with representatives from Government Banking and the Community
Development Banking Divisions of Bank of America (BofA).
11
From these
meetings three methods of leveraged financing were identified to supplement
Housing Set Aside funds were highlighted. They include:
• Tax Exempt Bond
• Low Income Housing Tax Credits (LIHTC)
• Loan Packages
Bonds - The representatives from BofA suggested that a taxable bond could
help the Agency secure monies to address the funding gap. Governmental City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 16 of 26
entities issue bonds to raise funds through receiving a cash payment at the time
of issuance in exchange for the promise to repay the investors who provide the
cash over time. Repayment periods range from twenty (20) to forty (40) years or
longer. The bond funds would be secured by the annual Housing Set Aside
Fund allotment.
According to KMA, based on the Agency’s receipt of $5 million annually in
Housing Set Aside, a bond could be secured in the range of $40 million.
If a bond was secured and combined with the $17.8 million currently available in
Housing Set Aside Funds, there would still be a gap of $64.8 million to produce
all the projects required to meet RHNA.
Furthermore, it is suggested that issuing such a large debt without specific
projects would not be in the best interest of the Agency at this time.
Low Income Housing Tax Credits (LIHTC) - LIHTC are allocated by the State
on a competitive basis. Federal law requires that the priority be given to projects
that serve the lowest income families and restricted to remain affordable for the
longest period of time. LIHTC Program (Section 42 of the Internal Revenue
Code) was enacted by Congress in 1986 to provide the private market with an
incentive to invest in affordable rental housing. Tax credits are awarded to
developers of qualified projects and these developers then sell these credits to
investors to raise capital (or equity) for the project. This reduces the debt that the
developer would otherwise have to borrow. Because the debt is lower, a tax
credit project can in turn offer lower, more affordable rents. To be eligible for
LIHTC, a project must have occupancy of twenty percent (20%) of the units
reserved for households with incomes at or below fifty percent (50%) of area
median income (AMI). Or have occupancy of forty percent (40%) of all units
reserved for households at or below sixty percent (60%) of AMI. Thus, under the
LIHTC Program, the more affordable units in a project, the more tax credits that
will be awarded. Additionally, to make a tax credit project “pencil”, most
developers require that a minimum of fifty units be produced. Thus LIHTC
requires higher density to achieve more affordability in a project. Given the City’s
objectives related to the scale and density of new development it was determined
that obtaining LIHTC to defray the cost of development is impractical.
Loan Packages – A potentially feasible method of leveraging funds to alleviate
the gap is through loan packages for developers for the production of housing
projects. Through the meeting with BofA three (3) types of packages were
identified: The first is Loans to Developers. This is the most common form of
local assistance for rental housing. The developer, either a nonprofit or for-profit
company or partnership, obtains tax credit financing for the construction of City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 17 of 26
affordable housing. In high-cost areas, it is generally necessary to supplement
this financing with a “gap” loan. This loan would be provided by the Agency
through the use of Housing Set Aside Funds. This usually takes the form of a
subordinate low-interest rate, long-term loan (3% for 55 years is a common
structure) payable from excess cash flow of the project. These so-called “cash
flow loans” are typically very “soft” because the lender on the first mortgage
requires the subordinate lender to “sit still” in the event that the loan is not paid.
These loans can range from a few thousand dollars per unit to as much as 10 –
15% of the overall development costs. Especially in the case of new
construction, these loans have the additional benefit of generally adding to the
supply of housing and improving the neighborhood with new construction. In
exchange for these loans, the Agency can require much longer income and
affordability restrictions, keeping the affordable units in these projects for the
original term of its loan (even if it is repaid).
The second type of loan is Participating Loans. In the case where the
subordinate loan is substantial, the Agency could negotiate a participating loan,
in which it can participate in cash flow and proceeds of sale.
The third is Loan Guarantees. Rather than making actual loans, the Agency
can pledge payments or create a reserve against a larger loan amount than the
loan amount that a lender would agree to based on project revenues. Then as
the project generated sufficient revenue, the guarantee could be released over
time. This is a particularly cost effective technique for projects that use variable
rate debt. Typically, lenders underwrite these projects at interest rates much
higher than the actual interest rate because of the variable rate risk. So the
project has the cash flow to pay a higher amount of debt, but the owner cannot
get the lender to provide a higher loan amount. By guaranteeing the debt, the
Agency facilitates the financing of the project, but may never have to actually
make a payment. CalPERS uses a similar program to invest in affordable
housing, and takes both fees for its guarantee and an equity position in the
project
If the above types of loans are utilized to leverage additional funding, they require
that each project be analyzed individually on a case by case basis by the City’s
financial consultant. The above Loan Packages give the Agency more flexibility
and control in determining what types of projects are built in the City. There is
less restrictions in terms of project density and the mix of affordability levels.
Additional Supplemental Funding Sources
In addition to the funding methods listed above, staff also investigated the
various affordable housing funds available at the County, State and Federal City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 18 of 26
levels. In Attachment Eight (Potential Funding Sources), a detailed matrix
provides information on the funding sources, total funds available, eligible activity
and application process. Where appropriate, staff will pursue these funding
sources on a project by project basis. The grant programs listed are competitive.
Potential housing projects for seniors and persons with disabilities are included
as part of the affordable housing prototypes profiled in the strategy. For the
senior housing project, there are funds available from the Department of Housing
and Urban Development (HUD) under the HUD 202 Program. The HUD 202 is
designed to provide interest-free capital advances to finance the construction of
housing projects for persons sixty-two (62) and older and provides rent subsidies
for the project to help make them affordable. The capital advance does not have
to be repaid as long as the project serves very low income elderly persons for
forty (40) years.
Similar to HUD 202, is the HUD 811 Program, which also provides interest-free
capital advances to help finance the development of rental housing with
supportive services for very low income persons with disabilities. HUD 811 also
provides rental subsidy for the projects to help make the rent affordable.
If the affordable housing prototypes which assist the elderly and the disabled are
approved to move forward and deemed feasible, staff will pursue the HUD 202 or
811 funds to help assist in supplementing the Housing Set Aside Funds.
It is important to note that the Agency’s outstanding repayment obligation to
Housing, for the two years of set-aside deferment in 1988 and 1992, is slated to
be repaid, by Agency action, after the Agency’s existing bonded indebtedness
has been repaid in 2025 and not earlier. The obligation will be repaid in current
dollars, based on the amount in the deficit increasing annually at a rate equal to
the City's annual investment rate. The current balance owed is approximately
thirty million dollars.
Implementation
The same collaborative effort used in the production of the Strategy will be
applied to project implementation. In the first program year, the Housing and
Redevelopment Divisions will work together on property assembly, proposal
requests, disposition agreements and project management. During the first year
while Housing and Redevelopment are working to implement the first three
priority projects, a project manager with background in construction management
and affordable housing implementation- will be hired now to manage the three
construction projects. Planning and Building Safety Divisions will continue to
provide support related to entitlements and construction. The Housing Division
will work in several areas to promote other project programs. This work includes: City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 19 of 26
• Outreach/Public Relations- At its February 2, 2007 meeting, the Agency
approved entering into a contract with BIG Imagination, a local public
relations firms to help “put a new face” on affordable housing and help the
CCHA “tell our story” in terms of our efforts to address the affordable
housing needs of our residents. This shall include the development of
property owner outreach tool, an outreach tool to the development
community informing them of the benefits of developing affordable housing
and how we can provide financial assistance, and a one (1) page fact sheet
providing an overview of our programs/project.
• Identifying Stakeholders- An essential component of Outreach and Public
Relations to educate the community about the affordable housing needs of
our community, who lives in affordable housing and its impact on the
community. Building Safety, Housing, Planning and Redevelopment will
begin the process of identifying stakeholders in our community and the
region, such as architects, developers, builders, banking institutions, non-
profits, housing advocates, community leaders, and other governmental
entities so we may dialogue with them on meeting affordable housing needs
in our community and soliciting their input to help strengthen the CHS.
• Conducting Workshops/Roundtable Discussion on the need for affordable
housing and to promote affordable housing projects. After the stakeholders
are identified, the CCHA will host a series of workshops and roundtable
discussions with our Stakeholders to gather information and support for the
CHS. This will involve a series of three (3) meetings. One (1) meeting will
be held with the residents to understand their needs and desires regarding
housing. The second meeting will be held with local government officials to
examine their “best practices” and how they may be suitable for our
community. The third meeting will be with the development and architectural
community and housing advocates to better understand the housing
environment, and what type of product works best in our community.
• The Art of Housing – Education plays a key role in the production of
affordable housing. The Housing and Redevelopment Divisions will work
with Cultural Affairs to produce an installment as part of the “Art of” Series to
include “The Art of Housing”. Housing developers will be invited to discuss
housing development, needs and strategies within the community.
• Identifying Other Funding Sources - To meet the demand of addressing the
affordable housing needs of the City, funding sources must be diversified.
The Housing Set Aside Fund and Section 8 cannot meet the need alone.
The Housing Division will continue to investigate other sources of funding to
supplement the Housing Set Aside Funds such as, but not limited to, private City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 20 of 26
lending institutions, HOME, Proposition 1C, HUD 202, HUD 811 and
Multifamily Housing Program (MHP) when it is appropriate and feasible in
seeking and leveraging these funds for the various housing projects and
programs mentioned above Please see No. 8 Attachment (Potential
Funding Sources).
Timeline
The attached timeline for each proposed priority projects is shown on
Attachment No. 9. The Timeline indicates that from initiation to completion the
three priority project will take approximately two (2) years to complete if they
are processed concurrently. Please see Attachment 9 (Project Timeline).
Other Programs
Since 1992, the Housing Division has created 2,539 units of affordable housing
and assisted 5,446 persons in accommodating their housing needs. While the
CHS is a central part of the City’s housing solution, it is also essential to
maintain the Division’s core programs which include:
• Neighborhood Preservation Program (NPP) provides financial and technical
assistance to up-to-moderate income Culver City homeowners to rehabilitate
their homes. Through this program, 784 single family homes have been
preserved.
• Neighborhood Preservation Rental Rehabilitation Program helps rental
property owners maintain the integrity and appearance of their buildings in
order to provide affordable rental housing. The multiple-family housing
component of NPP has preserved 771 units of housing.
• Section 8 Housing Choice Voucher Rental Assistance Program helps
subsidize the rent for very-low income families, the elderly and disabled in
Culver City. The CCHA has administered the Section 8 program since 1976.
With our current funding of $2.4 millions we are allotted to assist 384
households.
• Rental Assistance Program (RAP) helps subsidize the rent for low-income
working families in Culver City who have difficulty meeting housing costs. The
RAP program is budgeted to assist 100 households a year. RAP also has an
emergency component where we assist the homeless, persons involuntarily
displaced due to government action, and victims of domestic violence.
City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 21 of 26
• The elderly and disabled are assisted with living in a safe home environment
through the Home Secure Program. This program provides for the free
installation of safety and security devices. Through the Home Secure
Program, since 1998, 424 households have been assisted.
• Through Alternative Living for the Aging, a nonprofit organization, the Housing
Division assists with matching senior citizens who wish to share their homes
with live-in students, middle aged individuals, or other elderly. With the help of
this program 333 roommate matches have been made since 1998.
• The Acquisition and Rehabilitation program eliminates blight and nuisance
through the acquisition and/or rehabilitation and installation of professional
management of multifamily housing units in an effort to enhance and enrich
neighborhoods. The Agency has purchased and is currently rehabilitating a
nine (9) unit apartment located on Jackson Avenue.
• The Housing Division has contracted with the Housing Rights Center (HRC)
to handle housing discrimination complaints and questions regarding tenant-
landlord rights. Since 1998, the HRC has had 2,817 contacts from the
residents of Culver City.
• The City encourages tenants and owners of rental property to solve rent
increase problems without expensive litigation by requesting mediation
services from the Landlord-Tenant Mediation Board.
• Rental Assistance - Recipients can become economically self-sufficient
through job training, transportation, life skills training and the use of child-care
services provided by the Family Self Sufficiency (FSS) program. This program
increases the skills and earning power of Culver City’s workforce, contributing
to the City’s economic foundation. The FSS has graduated thirteen (13)
households that are now self sufficient and no longer require welfare
assistance.
• Mortgage Assistance – Expanding homeownership to residents of Culver City
is an important goal. While homeownership has always been difficult for
lower income residents, recent price escalation has also pushed moderate
income buyers out of the market. Homeownership still remains a priority as a
means to encourage long-term residence, address the needs of Culver City’s
workforce, and stabilize neighborhoods.
City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 22 of 26
• Though the provision of New Construction, CCHA assisted with Grandview
Palms which is a seventy-five unit assisted living facility for seniors and the
disable. The project has twenty-three (23) units restricted for low and
moderate income residents. The Agency also purchased six (6) homes
situated on seven (7) parcels of land from Caltrans as part of their widening of
the 405 freeway. This site is currently being reviewed to determine the best
type of development for the site.
• Rehabilitation is a major part of creating affordable units while also revitalizing
blighted and nuisance properties. The CCHA is currently assisting with the
rehabilitation of the Barman housing to install wheelchair ramps and to
upgrade the site to make it more accessible. Additionally, Culver Terrace
Mobile Home Park has recently completed extensive rehabilitation of the site
for repair and improvements to the site’s infrastructure. The CCHA assisted
this project with $1.1 million.
• Affordable and Green – Through, the Solar Initiative, the CCHA will be working
with Building Safety to provide grants through our NPP program to projects
that have a low/moderate income component to include sustainable features.
Having green elements that can be incorporated into affordable housing
projects not only shows conscientiousness towards the environment but also
cuts energy cost. For the interior, some of the sustainable features will include:
low flow toilets, tankless water heaters, FSC certified wood/wood alternatives
(cabinets and flooring), natural linoleum (kitchen countertop and flooring), low
VOC paint, energy efficient appliances (Energy Star), and CFL Light Bulbs.
For the exterior, the sustainable features will include: solar panels (including
hot water), double pane windows, cellulous insulation (recycled jeans),
native/drought tolerate plants and landscaping, trees (for shading) and
placement of windows (for more natural light).
• Mortgage Assistance/Employer Assisted Mortgage Assistance – Expanding
homeownership to residents of Culver City is an important goal. While
homeownership has always been difficult for lower income residents, recent
price escalation has also pushed moderate income buyers out of the market.
Homeownership still remains a priority as a means to encourage long-term
residence, address the needs of Culver City’s workforce, and stabilize
neighborhoods. The Housing Division will work with KMA is reevaluate the
prior mortgage assistance program to determine if it is feasible in today’s
market.
City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 23 of 26
Additionally, the Housing Division is gathering information from cities
through the region to evaluate employer assisted mortgage assistance
program that assist employees of major companies become homeowners.
It may be possible to develop a similar program in Culver City working with
local companies such as Sony and Culver Studios to provide the benefit of
living near work.
• Code Enforcement – The new Enforcement Services Division of the
Community Development Department will work as needed to help preserve
affordable housing units through current inspection efforts. The new Division
will work with the Housing Division on identifying unsafe housing and
developing “work-out” programs with owners on code compliance.
FISCAL ANALYSIS
The beginning available balance in the Low/Moderate Income Housing fund for
2007-08 was approximately $15.1 million. The projected ending balance for
2007-08 is approximately $17.8 million. As is mention in this report, if the
Low/Moderate Income Housing fund continues to accumulate funds, the fund will
eventually reach an excess surplus situation and be forced to either spend or
encumber the excess surplus, or risk losing the funds.
This report outlines a number of projects that the Agency may wish to consider
over the next ten years. For reference, a preliminary cash flow projection has
been included as Attachment 3, Part 1. The cash flow spreads the total
remaining projected cost (excluding costs that have already been incurred, such
as land purchases) of each project over two years. If the Agency implements the
proposed projects that are included in the cash flow, the Low/Moderate Income
Housing fund could absorb the cost of the first two tiers of projects (those
projects estimated to take place in years 1 through 4). Based on the projected
cash flow analysis, the fund would end fiscal year 2012-13 with a negative fund
balance. Of the two projects listed for fiscal years 2012-13 and 2013-14, it
appears only one or the other could be completed.
Another option, which is also outlined in the body of this report, is to issue bonds
to maximize the amount of capital available in the Housing fund. Issuing bonds
would provide the Housing fund with a significant amount of capital up front by
pledging future Housing tax increment revenues. This approach is typically used
to fund the construction of a very large project. Since there is currently no project
of that scope being proposed, staff does not recommend this option. However,
staff can gather more information if the Agency is interested in issuing bonds for
Low/Moderate Income Housing purposes. City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 24 of 26
.
CONCLUSION
The Comprehensive Housing Strategy provides a detailed plan for allocating the
City’s housing resources to meet housing needs. With Agency approval of the
Strategy, staff will prepare a detailed work program for the first program year.
The program will be coordinated with the City’s Housing Element and the goals
of redevelopment. Over the next several months implementation of the first five
priority projects should commence in order to address RHNA requirements and
ensure compliance with the Agencies Set Aside obligations. Staff recognizes
that this is an ambitious program that will continue to evolve as opportunity and
market conditions shift.
MOTION
That the Culver Redevelopment Agency discuss and provide input regarding the
Comprehensive Housing Strategy and direct staff to proceed with the first year
program implementation.
ATTACHMENTS
1. LA County Income Chart
2. Affordability Chart
3. Program Funding Part I and Part II
4. Housing Production Projections
5. Housing Priority Projects
6. Estimated Project Cost
7. Project Summary Chart
8. Potential Funding Sources
9. Project Timeline
NOTES:
1. As expressed in the City’s Housing Element Vision:
To maintain and develop quality housing for all income levels.
To support this vision, the Housing Element is built around the following goals:
To provide residential neighborhoods that offer current and future residents the
qualities of a peaceful, small-town environment.
Provide a variety of housing opportunities that complement and enhance the City’s
goals for continued economic vitality and prosperity.
The first goal will be achieved through the following objectives: City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 25 of 26
Housing Maintenance - Attain a high-level of housing maintenance to assure the
availability of decent housing and to protect the quality neighborhood environment.
Housing Coordination - Balance the provision of housing with the demand for transit,
school, parks, and community services
The second goal will be achieved through the following objectives:
Housing Supply – Provide opportunities for developing a variety of new housing types
while protecting the character and stability of existing Culver City neighborhoods.
Housing Affordability - Provide a variety of rental and homeownership housing
opportunities that are compatible with the incomes of Culver City residents.
Housing Access - Improve access to quality housing for all members of the community by
eliminating discrimination, reducing physical constrains, increasing affordability, and supporting
access to emergency shelter.
2. Affordable housing historically has been viewed as an issue for the poor, but there is also a
shortage of housing that is affordable for firefighters, secretaries, teachers, hospital workers,
and other household earning up to moderate income. Currently, at least 4 million U.S.
household working full time jobs pay more that half their income for housing, rather than the
one-third (1/3) that most financial advisors and the Federal Government recommend allotting
for shelter. Or, families find they must move farther away from job centers and endure long
commutes in exchange for less expensive housing with greater square footage (source ULI).
In the past 30 years, California’s housing prices have steadily outpaced residents’ incomes.
Housing production hasn’t kept up with job and household growth within the State. The
location and type of new housing does not meet the needs of the majority of California
households. As a result, only one in five households can afford a typical home, overcrowding
doubled in the 1990’s, and more than three (3) million California households pay more than
they can afford for their housing (source - HCD).
3. The Southern California Association of Governments (SCAG) projects considerable population,
household and employment growth, which will fuel a demand for new housing. Over the next
thirty (30) years, Culver City is projected to grow by less than 0.5 percent annually, increasing
by more than 2,650 new residents, 13,000 jobs and 160,000 households. This will create a
demand for more than 1,800 new homes, or about 60 new homes each year in Culver City
through 2035.
4. Grandview Palms Assisted Living Facility:
• Project – Grandview Palms Assisted Living Facility
• Developer – Grandview Palms, LLC (Jerry Katz)
• Project Location – 4061 Grandview
• Total number of affordable units – Twenty Three (23) (of this number 18 were through
density bonus and the remaining 4 were assisted through the use of Housing Set Aside
Funds)
• Affordability Levels – Nine (9) Low Income and Fourteen (14) Moderate Income
• Agency Assistance - $748,283.
5. Under the most onerous case, a judge could order a moratorium on all permits, except permits
for affordable housing. This moratorium could last until housing constraints are removed by the
City. In essence, the court takes over the operations of the City’s Building and Planning
Division to ensure that affordable housing can be quickly constructed. These extreme
sanctions by the Court or the State have rarely been used. City of Culver City, California
Culver City Redevelopment Agency Agenda Item Report
Page 26 of 26
6. Section 33334.12 provides that if the Agency does not spend or encumbered the excess surplus
funds within three years from the date the funds become excess surplus, the Agency is
prohibited from encumbering any additional funds or spending any monies from any source –
except that it may pay certain specified obligations, if any, that were incurred prior to three
years from the date the monies became excess surplus and an amount for Agency operations
and administration that may not exceed 75 percent of the amount spent for these purposes the
preceding year. This prohibition continues until the Agency has spent or encumbered the
excess surplus that remains at the end of the three-year period.
In other words, agencies can either transfer excess surplus funds within one year of their
becoming excess surplus or make a commitment to spend or encumber the funds within an
additional two years. If it makes this commitment but does not spend or encumber the funds
within the two-year period, the Agency is then prohibited from continuing to exercise its normal
authority. If this occurs, it is referred to as the “death penalty” provision.
The “Death Penalty” provision (Health and Safety Code Section 33334.12) prohibits
communities to which an Agency has transferred excess surplus funds from disapproving a
low- or moderate-income housing project funded by excess surplus funds if the project is
consistent with applicable building codes and the land use designation specified in any element
of the general plan as it existed on the date the application was deemed compete. A local
agency may, however, require compliance with local development standards and policies
appropriate to and consistent with meeting the qualified objectives relative to the development
of housing, as required in the community’s housing element.
7. A cost estimator was retained to furnish realistic costs for five prototypical housing
developments for programming purposes.
8. 25% density bonus is mandated unless a less percentage is elected by the applicant over the
otherwise maximum allowable residential density under the applicable zoning ordinance and
land use element of the general plan as of the date of application by the applicant (Section
65915 Government Code 2 g (1).
Affordable housing is developed by both profit and non-profit private developers sometimes in
collaboration with local government using a combination of rental income, private funding and
government subsidies (Southern California Association of Non-Profit Housing).
9. When the four housing income categories are added together the sum is actually 505 units and
not 504 units. SCAG staff has state that the 504 units is the City’s allocation. The discrepancy
is attributed to the rounding up or down issues.
10. Source, Center for TOD and Transportation Affordability Index
11. These meetings included the City’s Chief Financial Officer (CFO) and City Controller.
In an attempt to ensure that agencies will spend the monies placed in the housing fund, and not
accumulate large surpluses in their housing funds, the legislature enacted a statue that
attempts to balance the agency’s need to accumulate funds in order to develop or assist a
housing project with the state’s interest to assure that agencies with a properly established
housing fund make efforts to develop affordable housing as required by the law.