HomeMy WebLinkAbout JOINT ITEM 2 - AFFDBL HSG STRATEGY 06-17-08AGENDA REPORT
MEETING DATE: JUNE 17, 2008
Agenda Item JOINT ITEM 2
Reviewed:
City Manager
Finance Director NIA
TO: WILLIAM A. HUSTON, CITY MANAGER AND RDA EXECUTIVE DIRECTOR
FROM: REDEVELOPMENT AGENCY STAFF
SUBJECT: PROPOSED COMPREHENSIVE AFFORDABLE HOUSING STRATEGY FOR
FISCAL YEARS 2008-2009 TO 201.7-2018.
SUMMARY
Redevelopment Agency and City Council approval is requested of the Comprehensive
Affordable Housing Strategy for fiscal years 2008-2009 to 2017-2018.
RECOMMENDATION
It is recommended that at a Joint Meeting of the Redevelopment Agency and City
Council:
1. The Redevelopment Agency adopt Resolution No.RDA 08-02 approving the
proposed Comprehensive Affordable Housing Strategy for fiscal years 2008-2009 to
2017-2018.
2. The City Council adopt Resolution No. 08-45 approving the proposed Comprehensive
Affordable Housing Strategy for fiscal years 2008-09 to 2017-2018.
FISCAL IMPACT
The adoption of the proposed Comprehensive Affordable Housing Strategy (CANS) will
not have an immediate fiscal impact on the Redevelopment Agency or City. However, it
does establish a six-year capital plan for the expenditure of approximately $19,268,672
in Community Development Block Grant (CDBG) funds and MCAS Tustin, South
Central and Town Center Project Area tax increment housing set-aside funds.
As the CAHS is implemented, each program and each year's budget expenditures will
be required to be reviewed and approved by the Redevelopment Agency and City
Council, as applicable.
BACKGROUND/DISCUSSION
There are a number of documents which guide affordable housing activities in a City
under both State and Federal statutes and regulations including but not limited to the
following:
• Redevelopment Plans with requirements for production of affordable housing;
• Redevelopment Five -Year Project Area Implementation Plans which lay out
housing activities for 5 year implementation segments in implementing
Redevelopment Plans and the Mid -Term report required approximately every 2 '/2
years on the progress of each Redevelopment Project Area's Implementation
Plan;
• A Redevelopment Agency's Comprehensive Affordable Housing Strategy
(CANS)—which is a ten-year strategic plan for City and Redevelopment Agency
affordable housing activities;
• The Regional Housing Needs Assessment (RHNA) produced by the Southern
California Association of Governments (SCAG);
• The City's Housing Element;
• The Annual General Plan Report to the State on progress on General Plan
Implementation ("HCD Report");
• The HUD Consolidated Plan;
The City by Resolution No. 93-111 and the Agency by Resolution No. RDA 93-15
approved a CAHS for fiscal years 1993-1994 to 2003-2004 on November 1, 1993. On
February 7, 2000, the City by Resolution No. 00-9 and the Agency by Resolution No.
00-2 approved a second CAHS for fiscal years 2000-2001 to 2009-2010. While the
Agency and City would not normally have been required to update its CAHS until 2009-
2010, Agency staff believed it critical that an update to the city-wide CAHS be
conducted to coincide with and to ensure consistency with the preparation of a new
Housing Element of the General Plan which is required to be adopted prior to July 1,
2008. In fact, much of the data and technical analysis required for the Housing
Element has come out of work prepared as part of the CAHS update.
The CAHS is a strategic document that should be viewed as a guide and not as a static
and inflexible document. As new programs are evaluated and additional strategies
identified as part of the Agency's activities, the Agency and City is only limited by
broad overall programs identified in the Implementation Plans for each Project Area,
specific provisions contained in its Redevelopment Plans, and statutory requirements
and restrictions.
The proposed updated CAHS is attached for the City Council's consideration. The
document has been reviewed by the Planning Commission for information and their
questions responded to at both a public workshop and hearing on the Housing Element.
However, unlike the Housing Element the Planning Commission is not a recommending
body on the CAHS. Only the Redevelopment Agency and City Council need act on the
CAHS document. What follows is a brief overview of the contents of the CHAS and its
proposed programs, goals, scheduling and projected expenditures.
NTENTS OF THE COMPREHENSIVE AFFORDABLE HOUSING STRATEGY
The Comprehensive Affordable Housing Strategy contains an Executive Summary and
six appendices, dealing will all aspects of the housing needs of the community in terms
of very low, low and moderate cost units as well as very low, low and moderate income
residents and households. The Strategy is divided as follows:
Executive Summary
The Executive Summary provides background into the development of the
Comprehensive Affordable Housing Strategy and summarizes the findings of
each Appendix.
Appendix A — Housing Needs Assessment
This section reviews current and projected housing needs and conditions within
the City of Tustin. A demographic profile of the City's population, housing, and
income characteristics establishes the foundation for evaluating current housing
needs. Comparisons of current conditions with historical data provide an
indication of recent and potential future trends, while comparisons with Orange
County provide insight into the City's relative position in the region. Finally, it
reviews the Regional Housing Needs Allocation (RHNA) plan projections for
future housing needs prepared by the Southern California Association of
Governments (SCAG).
Appendix B — Local Resources for Affordable Housing
The local funding resources are identified and Low and Moderate Income
Housing Set -Aside Fund Projections for fiscal years 2007/08 through 2017/2018
are provided.
Appendix C — Affordable Housing Assistance Programs
This section provides a description of Federal, State and Local Programs
available to fund affordable housing opportunities.
Appendix D - Affordability Gap and Leveraged Financing Analysis
Appendix D identifies the difference between the supportable mortgage on a unit
at affordable rents and sales prices and the actual development cost of the unit.
The gap analysis provides planning -level estimates of the typical per unit subsidy
to make different types of housing affordable to households at alternative income
levels.
Appendix E - Vacant and Underutilized Land Suitable for Residential
Development
This section illustrates the residential development potential of the vacant and
underutilized land inventory in the City of Tustin.
Appendix F - Affordable Housing Capital Plan
Appendix F identifies the City of Tustin affordable housing programs, including
assistance goals and projected expenditures, for the first six years of the
Comprehensive Affordable Housing Strategy.
PROPOSED PROGRAMS, GOALS, SCHEDULING AND EXPENDITURES
The following is a brief outline of specific programs proposed in the Comprehensive
Affordable Housing Strategy, along with the funding source. More information on each
of these programs is found in the Affordable Housing Capital Plan (Appendix F) of the
Strategy.
Preservation of At -Risk Affordable Rental Units
The program has identified 277 affordable rental units at -risk of losing their
affordability due to expiring use restrictions. The Agency would assist, if
necessary and financially prudent, with maintaining the low to moderate rent
structure of these units.
Funding Source: Housing Set -Aside Funds
2. Single and Multi -Family Home Rehabilitation Program
The Agency would continue to assist homeowners and owners of rental housing
with the rehabilitation of their property.
Funding Source: Housing Set -Aside Funds
3. Ownership Multi -Family New Construction
The program would provide gap financing for the construction of affordable
ownership opportunities within a multi -family housing development.
Funding Source: Housing Set -Aside Funds
4. Multi -Family Rental New Construction/Acquisition and Rehabilitation
The Agency would provide leverage funding sources for the construction of
affordable multi -family rental units.
Funding Source: Housing Set -Aside Funds
5. First -Time Homebuyer and/or Foreclosure Negotiated Purchase
The program would assist first-time homebuyers with a foreclosure negotiated
purchase, which may represent a lower cost opportunity while also stabilizing
affected neighborhoods.
Funding Source: Housing Set -Aside Funds
6. Homeless Assistance and Supportive Services
The program funds homeless assistance and supportive services in the City.
Funding Source: Community Development Block Grant (CDBG) Funds
7. Tustin Legacy Ownership Multi -Family New Construction
Development Agreements for Tustin Legacy are projected to create 323 new
affordable multi -family ownership units in the City over the next six years.
Funding Source: Housing Set -Aside Funds
8. Tustin Legacy Rental New Construction
Development Agreements for Tustin Legacy are projected to create 253 new
affordable rental units in the City over the next six years.
Funding Source: Housing Set -Aside Funds
9. Administrative Support
The Agency will provide administrative support to implement its affordable
housing activities.
Funding Source: Housing Set -Aside Funds
FINDING OF BENEFIT
The California Community Redevelopment Law generally requires a Redevelopment
Agency to spend the housing set-aside tax increment funds generated from each
project area in that specific project area. Under the law, however, housing set-aside
funds can be spent outside of project areas if the City Council and Redevelopment
Agency find that the expenditure of these funds outside the project areas of a benefit to
the project areas.
While the MCAS Tustin, South Central and Town Center Project Areas have low to
moderate income housing located within their boundaries, such housing in the City of
Tustin is not limited to these Project Areas, but is dispersed throughout the community
and can benefit each Redevelopment Project Area. In order to ensure there are
resources available to address Project Area affordable housing needs, the City Council
and the Redevelopment Agency made a finding of benefit on March 21, 2005, for the
South Central and Town Center Project Areas and on June 2, 2003, for the MCAS
Tustin Project Area that the expenditure of housing set-aside tax increment funds
outside of these Project Areas will be a benefit to these Project Areas. The housing set-
aside funding flexibility provided by the findings of benefit will maximize the programs
outlined in the Comprehensive Affordable Housing Strategy and ensure that the Agency
meets its Project Area affordable housing obligations.
Staff will be available to respond to any questions at the meeting of June 17, 2008.
Christine A. Shingletply
Assistant City Manacyer
Attachments:
Jerry Craig
Redevelopme
.,i
Resolution No. RDA 08-02
Resolution No.08-45
2008/09 -2017/18 Comprehensive Affordable Housing Strategy
S:\RDA\CC report\2008\AgendaReport 6-17-08 RDAAdoptComprehensiveAffordableHousingStrategy.doc
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RESOLUTION NO,
A RESOLUTION OF THE TUSTIN COMMUNITY
REDEVELOPMENT AGENCY APPROVING THE
COMPREHENSIVE AFFORDABLE HOUSING STRATEGY FOR
FISCAL YEARS 2008-2009 TO 2017-2018
WHEREAS, the Tustin Community Redevelopment Agency of the City of Tustin
(the "Agency") has adopted Redevelopment Plans (the "Redevelopment Plan") for the
MCAS Tustin Project Area, South Central Project Area and Town Center Project Area;
WHEREAS, the Redevelopment Plans provide for the allocation of tax increment
from their respective Project Areas;
WHEREAS, Section 33334.2(a) of the California Community Redevelopment Law
(Health and Safety Code Section 33000 et seq.) requires that not less than twenty percent
(20%) of all tax increment so allocated be used for the purpose of increasing, improving
and preserving the community's supply of low and moderate income housing available at
affordable housing costs;
WHEREAS, Section 33334.2(g)(1) of the Health and Safety Code provides that
such funds may be used outside of a Project Area if a finding is made by resolution of the
Agency and the City Council that such use will be of benefit to the Project Area;
WHEREAS, the Project Areas comprise only a limited portion of the low to
moderate income housing supply in the City of Tustin and the overall low to moderate
income housing supply is dispersed throughout the City;
WHEREAS, the City by Resolution No. 03-78 and the Redevelopment Agency by
Resolution RDA No. 03-10, on June 2, 2003 adopted a finding that the use of tax
increment housing set-aside funds allocated from the MCAS Tustin Project Area for the
purpose of increasing, improving and preserving the community's supply of low and
moderate income housing outside the Project Area and within the City of Tustin will be of
benefit to the MCAS Tustin Project Area;
WHEREAS, the City by Resolution No. 05-48 and the Redevelopment Agency by
Resolution RDA No. 05-01, on March 21, 2005 adopted a finding that the use of tax
increment housing set-aside funds allocated from the South Central Project Area for the
purpose of increasing, improving and preserving the community's supply of low and
moderate income housing outside the Project Area and within the City of Tustin will be of
benefit to the South Central Project Area;
WHEREAS, the City by Resolution No. 05-49 and the Redevelopment Agency by
Resolution RDA No. 05-02, on March 21, 2005 adopted a finding that the use of tax
increment housing set-aside funds allocated from the Town Center Project Area for the
purpose of increasing, improving and preserving the community's supply of low and
moderate income housing outside the Project Area and within the City of Tustin will be of
benefit to the Town Center Project Area;
WHEREAS, the Tustin Community Redevelopment Agency has adopted a
Comprehensive Affordable Housing Strategy to assist in providing for the housing needs
of low to moderate income households throughout the City; and
NOW, THEREFORE, THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
Section 1: The Comprehensive Affordable Housing Strategy for fiscal years
2008-2009 to 2017-2018 is hereby approved.
Section 2: The Agency finds that the use of these funds continues to be of
primary benefit to the MCAS Tustin, South Central and Town Center Redevelopment
Project Areas, and constitutes redevelopment activity.
Passed, approved and adopted this 17`h day of June, 2008.
Jerry Amante
Mayor
PAMELA STOKER
City Clerk
RESOLUTION NO. 08-45
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA APPROVING THE COMPREHENSIVE
AFFORDABLE HOUSING STRATEGY FOR FISCAL YEARS 2008-
2009 TO 2017-2018
WHEREAS, the City Council of the City of Tustin (the "Agency") has adopted
Redevelopment Plans (the "Redevelopment Plan") for the MCAS Tustin Project Area,
South Central Project Area and Town Center Project Area;
WHEREAS, the Redevelopment Plans provide for the allocation of tax increment
from their respective Project Areas;
WHEREAS, Section 33334.2(a) of the California Community Redevelopment Law
(Health and Safety Code Section 33000 et seq.) requires that not less than twenty percent
(20%) of all tax increment so allocated be used for the purpose of increasing, improving
and preserving the community's supply of low and moderate income housing available at
affordable housing costs;
WHEREAS, Section 33334.2(g)(1) of the Health and Safety Code provides that
such funds may be used outside of a Project Area if a finding is made by resolution of the
Agency and the City Council that such use will be of benefit to the Project Area;
WHEREAS, the Project Areas comprise only a limited portion of the low to
moderate income housing supply in the City of Tustin and the overall low to moderate
income housing supply is dispersed throughout the City;
WHEREAS, the City by Resolution No. 03-78 and the Redevelopment Agency by
Resolution RDA No. 03-10, on June 2, 2003 adopted a finding that the use of tax
increment housing set-aside funds allocated from the MCAS Tustin Project Area for the
purpose of increasing, improving and preserving the community's supply of low and
moderate income housing outside the Project Area and within the City of Tustin will be of
benefit to the MCAS Tustin Project Area;
WHEREAS, the City by Resolution No. 05-48 and the Redevelopment Agency by
Resolution RDA No. 05-01, on March 21, 2005 adopted a finding that the use of tax
increment housing set-aside funds allocated from the South Central Project Area for the
purpose of increasing, improving and preserving the community's supply of low and
moderate income housing outside the Project Area and within the City of Tustin will be of
benefit to the South Central Project Area;
WHEREAS, the City by Resolution No. 05-49 and the Redevelopment Agency by
Resolution RDA No. 05-02, on March 21, 2005 adopted a finding that the use of tax
increment housing set-aside funds allocated from the Town Center Project Area for the
purpose of increasing, improving and preserving the community's supply of low and
moderate income housing outside the Project Area and within the City of Tustin will be of
benefit to the Town Center Project Area;
WHEREAS, the Tustin Community Redevelopment Agency has adopted a
Comprehensive Affordable Housing Strategy to assist in providing for the housing needs
of low to moderate income households throughout the City; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN DOES
HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
Section 1: The Comprehensive Affordable Housing Strategy for fiscal years
2008-2009 to 2017-2018 is hereby approved.
Section 2: The City Council finds that the use of these funds continues to be of
primary benefit to the MCAS Tustin, South Central and Town Center Redevelopment
Project Areas, and constitutes redevelopment activity.
Passed, approved and adopted this 17th day of June, 2008.
Jerry Amante
Mayor
PAMELA STOKER
City Clerk
City of Tustin
Comprehensive Affordable Housing Strategy
Executive Summary
June 5, 2008
Prepared for: City of Tustin
Submitted By: David Paul Rosen & Associates
Northern California
David Rosen, Principal
1330 Broadway, Suite 937
Oakland, CA 94612-2509
Phone: 510-451-2552
Fax: 510-451-2554
e-mail: David@DRAConsultants.com
www.draconsultants.com
Southern California
Nora Lake -Brown, Principal
3941 Hendrix St
Irvine, CA 92614-6637
Phone: 949-559-5650
Fax: 949-559-5706
e-mail: Nora@DRAConsultants.com
www.draconsultants.com
Table of Contents
PAGE
1.0 Introduction................................................................................................ 1
2.0 Affordable Housing Needs Assessment.........................................................: 2
2.1 Population and Housing Characteristics .............................................. 2
2.2 Affordable Housing Needs.................................................................. 4
2.3 Housing Element Requirements.......................................................... 5
3.0. Affordable Housing Resources....................................................................... 6
3.1 Available Local Funding Sources for Affordable Housing .................... 6
3.2 Agency Housing Set -Aside Fund Projections ....................................... 7
3.3 Non -Local Resources for Housing ...................................................... 10
4.0 Affordability Gap Analysis............................................................................. 10
5.0 Vacant and Underutilized Land Suitable for Residential Development........... 12
6.0 Affordable Housing Capital Plan................................................................... 13
Appendices (Under Separate Cover)
Appendix A:
Affordable Housing Needs Assessment
Appendix B:
Local Resources for Affordable Housing
Appendix C:
Affordable Housing Assistance Programs
Appendix D:
Affordability Gap and Leveraged Financing Analysis
Appendix E:
Vacant and Underutilized Land Suitable for Residential
Development
Appendix F:
Affordable Housing Capital Plan
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page ii
List of Tables
Table
Page
1. Regional Housing Needs Allocation, City of Tustin, 2006 to 2014 ................. 9
2. Summary of Low and Moderate Income Housing Set -Aside Fund
Projections, City of Tustin Community Redevelopment Agency,
FY 2008/09 to 2017/18................................................................................. 8
3. Low and Moderate Income Housing Fund Allocation, Percentage
Benchmark, City of Tustin, FY 2006 to 2014 ................................................. 9
4. Summary of Per Unit Subsidy Requirements, Owner and Renter Housing
Prototypes, City of Tustin, 2007..................................................................... 11
5. Summary of Six -Year Capital Plan Goals, City of Tustin Comprehensive
Affordable Housing Strategy, fY 2008/09 to FY 2013/14 ............................... 14
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page iii
Comprehensive Affordable Housing Strategy
Executive Summary
1.0 Introduction
The City of Tustin (City) and the Tustin Community Redevelopment Agency
(Agency) retained David Paul Rosen & Associates (DRA) to prepare a
Comprehensive Affordable Housing Strategy ("Strategy") to guide the City's and
Agency's affordable housing activities and make maximum use of the Agency's
local housing resources, primarily Redevelopment Housing Set -Aside funds, to
meet local affordable housing needs.
The Comprehensive Affordable Housing Strategy will complement the Agency's
Five -Year Implementation Plan and the City's forthcoming Housing Element
update. The resulting Strategy for the period FY 2008/09 to FY 2013/14 is based
on the City's housing needs, affordability gap analysis, site assessment, and
available local and non -local financial resources as analyzed by DRA.
This Strategy addresses a range of household incomes from $27,900 to $100,900
for a family of four in 2008, representing families earning 30 percent to 120
percent of area median income under current state income limits. Affordable
housing programs define affordability as a percentage of area median income for
the County, as adjusted by HUD annually and by household size.
Section 2.0 provides a summary of demographic and housing characteristics and
affordable housing needs in the City. Section 3.0 summarizes projections of
Agency Redevelopment Housing Set -Aside funds for the period FY 2008 through
FY 2017. Section 4.0 presents the findings of the affordability gap analysis, which
determines the capital subsidy required to develop housing affordable to families
at a variety of income levels in Tustin. Section 5.0 discusses vacant and
underutilized land suitable for residential development in Tustin. Finally, Section
6.0 presents six-year capital plan goals for the assistance of affordable housing in
the City.
In order to provide the factual background necessary for the City Council to make
informed policy decisions, the Strategy contains a series of appendices that
provide detailed data, information and economic analyses. These appendices
were prepared over the period from November 2007 to May 2008. Appendix A
contains an assessment of Tustin's affordable housing needs, providing a
demographic and economic profile of the community, as well as Regional
Housing Needs Allocation by the Southern California Association of Governments
(SCAG).
' Based on the HUD median income for a household of four persons in Orange County of $84,100
in 2008 and published State income limits.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 1
Appendix B summarizes the local resources available to assist the development
and preservation of affordable housing in the City of Tustin, primarily
Redevelopment Housing Set -Aside Funds.
Appendix C provides a comprehensive inventory of the range of non -local sources
of subsidy with which to leverage Tustin's local housing resources. DRA identifies
income -targeting requirements, funding Limits, and other requirements of local,
state, federal and private sources for rental and owner housing.
Appendix D presents an affordability :gap and leveraged financing analysis that
examines the economics of affordable housing development in Tustin for renters
and owners. This analysis calculates the gap between the costs of affordable
housing development in Tustin and the amount that low and moderate income
households can afford to pay for that housing. The "affordability gap" represents
the capital subsidy required from the Agency or non -local sources to develop
housing affordable to families at various income levels in Tustin. The gap analysis
was applied to five housing prototypes (four owner and one renter) typical of
housing developed today in Tustin. In addition, DRA examined the gap under
leveraged financing scenarios assuming 9% Low Income Housing Tax Credits
("tax credits"), 4% tax credits with tax-exempt bonds, and the Multifamily
Housing Program. These are the three most valuable leveraged financing sources
for rental housing today in California.
Appendix E analyzes vacant and underutilized land suitable for residential
development in the City of Tustin. It identifies potential sites for development of
new housing, and the number of units that may be accommodated on these sites.
Appendix F provides a six-year capital plan for the expenditure of local affordable
housing resources in Tustin. The capital plan reflects the City's policy goals and
objectives and a realistic assessment of non -local resource leverage opportunities
for the City's housing programs.
Together, these appendices provide substantial data, information and analyses to
assist the City in formulating policies, programs and a capital plan for affordable
housing that best meets Tustin's needs and economic conditions.
2.0 Affordable Housing Needs Assessment
Key housing characteristics and affordable housing needs in Tustin are summarized
below based on data from the 2000 U.S. Census and the California Department of
Finance. Quantified housing goals contained in the City of Tustin's Housing
Element 2002 — 2007 are also summarized. This information sets the stage for
developing a strategy to meet affordable housing needs and requirements in the
City.
City of Tustin June 5, 2,008
Comprehensive Affordable Housing Strategy Page 2
2.1 Population and Housing Characteristics
2.1.1. The City of Tustin's housing inventory has increased dramatically
since 1990, reflecting the City's population growth.
• Tustin's total population increased 16,815 persons during the 1990's, at
a rate of 2.9 percent annually.
• As of the 2000 Census, the City of Tustin had a population of 67,504.
From 2000 to 2007, the City added another 5,038 persons, at an annual
compound growth rate of 1.0 percent.
• Reflective of the conversion of land from agricultural to residential use,
24.9 percent of Tustin's units were built during the 1960s and 24.5
percent were built during the 1970s. The City's rapid population growth
in the 1990s is reflected in the number of units built during that period as
well. Approximately 23 percent of Tustin's units were built in the 1990s.
• One third of Tustin's housing stock was built prior to 1970 and is at least
36 years old. This indicates a potential need for rehabilitation of
approximately 8,294 units built prior to 1970 and another 6,238 units
that were built during the 1970s and are approaching 30 years of age.
• The City's housing stock is comprised of almost equal proportions of
single-family homes and multifamily housing, making up 49.1 and 47.4
percent, respectively. Mobile homes make up the remaining 3.6 percent.
2.1.2 Tustin demographics vary slightly from Orange County's. Tustin has
a smaller average household size, a higher proportion of renters,
and a lower median income than the County.
• The average household size in Tustin in 2007 was 2.91 persons, up
slightly from 2.82 in 2000 and 2.66 in 1990. Orange County's average
household size continues to be slightly larger than Tustin's, at 3.09
persons in 2007, 3.00 in 2000, and 2.87 in 1990.
• In 2000, owner households comprised 49.6 percent of households in the
City, compared to 61.4 percent countywide. Renters comprised 50.4
percent of Tustin households in 2000, compared to 38.6 percent
countywide.
• Tustin's 2,000 median household income was slightly lower than the
County's at $55,985 and $58,820, respectively. An estimated 7.5
percent of the City's households had incomes of less than $15,000 in the
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 3
year 2000. Another 18.9 percent had incomes between $15,000 and
$34,999. In addition, 38.9 percent had incomes between $35,000 and
$74,999, and 34.7 percent had incomes of $75,000 or more.
2.1.3 Tustin's average rents increased in 2007, reflecting a tight housing
market.
• In 2007, 2.71 percent of Tustin's housing units were vacant. Of the City's
rental units, 4.6 percent were vacant in the second quarter of 2007, up
slightly from 4.3 percent in the first quarter of 2007. Generally, a
vacancy rate of 5 percent or lower is considered to r�fiect a "tight"
housing market.
• Tustin's average monthly rent in 2007 was $1,528. The weighted
average rental rate for the -housing inventory increased 5.4 percent in
2006, with rents for one -bedroom units increasing the most, at 6.9
percent.
2.1.4 The City's residential capacity and population will increase in the
coming year, due to development of the MCAS Tustin/Tustin Legacy
project.
• Development of Tustin Legacy will result in 4,210 new dwelling units
and accommodations for up to 282 persons in group -quarter dwellings.
This represents a potential increase of an estimated 8,600 new residents.
As of July 2007, 1,033 units at Tustin Legacy were completed.
2.2 Affordable Housing Needs
Current housing needs include those households overpaying for housing,
households living in overcrowded housing, and certain special -needs groups,
which have a more difficult time finding decent, safe and affordable housing due to
special circumstances. Tustin's affordable housing needs also take into account
those currently affordable housing units whose financing or affordability restrictions
are nearing expiration.
According to the U.S. Department of Housing and Urban Development (HUD)
standard, households paying 30 percent or more of their gross income on housing
are considered to be cost -burdened, paying more than they can afford for housing.
Households paying greater than this amount therefore have less discretionary
income remaining for other necessities such as food, clothing, utilities, education
and health care.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 4
According to HUD occupancy standards, households with an average of more than
1 person per room (excluding kitchens and bathrooms) are considered
overcrowded.
2.2.1 Approximately one quarter of Tustin's households are overpaying
for their housing.
• In 2006, 25.7 percent of renters in Tustin, or 3,080 households, paid
more than 30 percent of gross income for housing. Twenty-six percent of
owners, or 3,110 households, paid more than 30 percent of gross
income on housing in 2006.
• The 2000 Census reports that more than 14 percent of renters, or 1,754
households, were considered severely cost -burdened, defined by HUD
as paying more than 50 percent of their income for housing (rent plus
utilities).
• The problem of housing overpayment is most severe for those
households with limited incomes. In 2006, 55.9 percent of renter
households and 64.8 percent of owner households earning less than 30
percent of Area Median Income (AMI) were paying more than 30 percent
of gross income on housing. Of those renter households earning between
30 and 50 percent of AMI, 45.3 percent were overpaying for housing. Of
owner households earning between 30 and 50 percent of AMI, 46
percent were overpaying for housing.
2.2.2 Renter households have a significantly higher incidence of
overcrowding than owner households in Tustin.
• The Southern California Association of Governments reported in 2006
that 3,465 renter households, or 28.9 percent of all renter households in
Tustin had more than 1.0 person per room. Of Tustin's owner
households, 820 households, or 6.9 percent, were overcrowded.
2.2.3 One multi -family project in Tustin is at -risk.
• There is onemulti-family project in Tustin with a Section 8 contract that
expires in July 2008. The project owners have indicated that they intend
to renew the contract.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 5
2.3 Housing Element Requirements
The Housing Element for the City of Tustin is an element of the City's General Plan.
It contains the numerical goals for the City's share of the region's future housing
needs (regional share goals). The Southern California Association of Governments
(SCAG) establishes Tustin's regional share goals. The most recent Regional Housing
Needs Allocation (RHNA) plan was adopted by SCAG in July 2007 and provides
projections for the 2006 through 2014 period. Table 1 summarizes the City's
regional share goals for the period 2006 through 2014.
Table 1
Regional Housing Needs Allocation
City of Tustin
2006 to 2014
Housing Need
Total Five -Year
Housing Need
percent of Total
Very Low Income (No more than 50% AMI)
512
21.5%
Low Income (Between 50% and 80% AMI)
410
17.2%
Subtotal, Low and Very Low
922
38.7%
Moderate Income (Between 80% and 120% AMI)
468
19.7%
Above Moderate (More than 120% AMI)
991
41.6%
Total Regional Housing Needs Allocation
2,380
100%
SOURCE: Southern California Association of Governments, Final Regional Housing Need
Allocation Plan, Planning Period January 1, 2006 — June 30, 2014, approved July 12,
2007.
3.0 Affordable Housing Resources
3.1 Available Local Funding Sources for Affordable Housing
The key source of local funding for affordable housing development and
preservation in Tustin is the Tustin Community Redevelopment Agency's Low and
Moderate Income Housing Fund, also known as the 20 Percent Set -Aside Fund.
The estimated fund balance in the Agency's Low and Moderate Income Housing
Fund as of June 30, 2007 was $17.86 million.
The City is not an entitlement jurisdiction for HOME funds, but may apply to the
State for HOME funds as described in a separate report prepared by DRA entitled
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 6
Affordable Housing Assistance Programs, presented as Appendix C of the
Comprehensive Affordable Housing Strategy.
The City is an entitlement jurisdiction for Community Development Block Grant
(CDBG) funds. For FY 2007/08, the City of Tustin was allocated $827,201 in CDBG
funds. These funds may be used for a number of community development
purposes besides housing. Given the many competing needs for these funds and
the restrictions on these funds for housing purposes, the Agency does not typically
allocate CDBG funds for affordable housing development.
3.2 Agency Housing Set -Aside Fund Projections
Table 2 summarizes projected Agency financial resources available for affordable
housing in the City of Tustin over the six-year period from FY 2008/09 through
FY 2013/14 and the ten-year period through FY 2017/18 based on information
provided by Community Redevelopment Agency staff.
California Redevelopment Law (CRL) requires redevelopment agencies to set aside
20 percent of all tax increment revenues into a Low and Moderate Income Housing
Fund, also commonly known as the "20 Percent Set -Aside Fund, to be used in
improving and increasing the supply of housing affordable to low and moderate
income individuals. Funds may be spent on very low income (less than 50 percent
of area median income), low income (51 percent to 80 percent of area median
income) and moderate income (81 to 120 percent of area median income)
households.
The MCAS Project Area accounts for the majority of projected Set -Aside Fund tax
increment revenues to the Agency. In addition, the Agency will receive Set -Aside
Fund tax increment revenues from the South Central and Town Center Project
Areas. Combined, the three project areas are projected to generate a total of
$46.3 million in Set -Aside Fund tax increment revenues over the six-year period,
and $87.9 million over the ten-year period. These projections do not include
interest income.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 7
Table 2
Summary of Low and Moderate Income Housing Set -Aside Fund Projections
City of Tustin Community Redevelopment Agency
FY 2007/08 to 2017/18
Total operating expenses funded from Housing Set -Aside revenues are projected to
total $4.95 million over the six-year period and $9.00 million over the ten-year
period.
The Tustin Community Redevelopment Agency entered into an agreement with
the City of Tustin to reimburse the City for the land write-down that the City
provided on the property in Tustin Legacy, which is located within the WAS
Project Area, to provide and meet the Agency's affordable housing requirements.
' Includes Low and Moderate Income Housing Set -Aside Fund tax increment revenues from Town
Center, South Central and MCAS Tustin Project Areas. Includes interest earnings for 2007/08 only,
as future interest earnings will depend on the rate of expenditures and remaining fund balances.
' Payments from the Agency Set -Aside Fund to the City of $48,728,123 based on an agreement
between the Redevelopment Agency and the City regarding Tustin Legacy. These funds are
assigned to pay for specific CIP projects. CIP priorities and costs can change annually as could the
projected payment amounts by year. Starting in 2010/11, City loan payments are distributed
proportionately among the three Project Areas based on each Project Area's previous year's fund
balance. Between 2007/08 and 2010111, payments are based on immediate needs. Loan payments
are projected to end in 2013/14.
4 Net of administrative support/operating expenses.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 8
Six -Year Total
Ten -Year Total
FY 2008/09 to
FY 2008/09 to
FY 2013/14
FY 2017/18
Projected Fund Balance as
of June 30, 2008
$15,620,218
$15,620,218
20% Set -Aside Tax
Increment Revenues2
$46,302,202
$87,896,903
Less: Operating Expenses,
20% Set -Aside Fund
$4,953,314
$9,002,853
Less: City Loan Payments3
$42,713,748
$42,713,748
Projected Ending Balance
Before Interest and
$14,255,358
$51,800,520
Programs/Projects4
Total operating expenses funded from Housing Set -Aside revenues are projected to
total $4.95 million over the six-year period and $9.00 million over the ten-year
period.
The Tustin Community Redevelopment Agency entered into an agreement with
the City of Tustin to reimburse the City for the land write-down that the City
provided on the property in Tustin Legacy, which is located within the WAS
Project Area, to provide and meet the Agency's affordable housing requirements.
' Includes Low and Moderate Income Housing Set -Aside Fund tax increment revenues from Town
Center, South Central and MCAS Tustin Project Areas. Includes interest earnings for 2007/08 only,
as future interest earnings will depend on the rate of expenditures and remaining fund balances.
' Payments from the Agency Set -Aside Fund to the City of $48,728,123 based on an agreement
between the Redevelopment Agency and the City regarding Tustin Legacy. These funds are
assigned to pay for specific CIP projects. CIP priorities and costs can change annually as could the
projected payment amounts by year. Starting in 2010/11, City loan payments are distributed
proportionately among the three Project Areas based on each Project Area's previous year's fund
balance. Between 2007/08 and 2010111, payments are based on immediate needs. Loan payments
are projected to end in 2013/14.
4 Net of administrative support/operating expenses.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 8
The agreement calls for the Agency to reimburse the City for the total amount of
this land write-down. Payment amounts made by year to the General Fund,
projected in Table 2 to total $42.71 million, may change annually, at the
discretion of the City's Finance Director, and are only shown for purposes of
Table 2 as one potential alternative. How these payments are actually made each
year will determine the total loan payments with interest to be made to the City's
General Fund.
The Agency is projected to have total housing funds to spend on projects and
programs of $14.26 million over the six-year period and $51.80 million over the
ten-year period, net of administrative support/operating expenses.
According to CRL Section 33334.4(a), beginning January 1, 2002, Low and
Moderate Income Housing Funds must be targeted to specific income levels using
the regional fair share allocation, summarized in Table 3 below, as the benchmark.
Table 3
Low and Moderate Income Housing Fund Allocation
Percentage Benchmark
City of Tustin
2006 to 2014
Very Low Income (No more than 50% AMI) 512 37%
Low Income (Between 51 % and 80% AM[) 410 29%
Moderate Income (Between 81 % and 120% AMI) 468 34%
Total Low and Moderate Housing Needs Allocation 1,390 100%
SOURCE: Southern California Association of Governments, Final Regional Housing Need
Allocation Plan, Planning Period January 1, 2006 — June 30, 2014, approved July 12,
2007.
In addition, as of January 1, 2003, according CRL Section 33334.4(b), each agency
shall expend, over the duration of each redevelopment implementation plan, the
moneys in the Low and Moderate Income Housing Fund to assist housing that is
available to all persons regardless of age in at least the same proportion as the
number of low-income households with a member under age 65 years bears to the
total number of low-income households of the community as reported in the most
recent census of the United States Census Bureau. According to the 2000 U.S.
Census, Tustin must spend 87.4 percent of its low and moderate income housing
funds to assist housing that is available to all persons regardless of age.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 9
3.3 Non -Local Resources for Housing
A number of governmental agencies are involved in affordable housing
development and financing. Key federal and state agencies include the U.S.
Department of Housing and Urban Development (HUD),. the California State
Department of Housing and Community Development (HCD), the California
Housing Finance Agency (CalHFA), the California Tax Credit Allocation Committee
(TCAC), and the California Debt Limit Allocation Committee (CDLAC). The County
of Orange Housing and Community Services Department (HCS) administers HOME
and CDBG funds for non -entitlement jurisdictions in the County and oversees the
Orange County Housing Authority which administers the County's Section 8
voucher program.
Appendix C, Affordable Housing Assistance Programs, details income and rent
limits for five income levels based on Orange County's Area Median Income, and
provides fact sheets on non -local programs and financing available to Tustin
affordable housing projects.
4.0 Affordability Gap Analysis
The affordability "gap" represents the capital subsidy required to develop housing
affordable to families at a range of income levels. This gap must be filled from
Agency housing funds, other local funds, or non -local resources available for
affordable housing development in Tustin.
Per unit financial subsidy requirements for prototypical housing developments in
Tustin are summarized in Table 4 below. These housing prototypes are described
in Appendix B, Affordability Gap and Leveraged Financing Analysis. For the rental
prototype, the per unit subsidies are shown by alternative leveraging scenario.
Income targeting for the leverage scenarios, specified in detail in Appendix 8,
includes very low income households earning up to 50 percent of AMI for the 9
percent tax credit financing scenario, a combination of very low and low income
households earning up to 60 percent of AMI for the 4 percent tax credit and tax
exempt bond scenario, and a combination of extremely low and low income
households earning 30 and 60 percent of AMI, respectively, for the 4 percent tax
credit, tax exempt bond, and MHP scenario. For the owner prototypes, per unit
subsidies are shown by buyer income level as a percentage of area median income.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 10
Table 4
Summary of Per Unit Subsidy Requirements'
Owner and Renter Housing Prototypes
City of Tustin
2007
50% 80% 120%
Owner Housing Prototypes AMI AMI AMI
Owner Prototype #1, Attached Townhome
$393,500
$345,500
$205,400
Owner Prototype #2, Stacked Flat
Condominium
$268,800
$223,100
$89,900
Owner Prototype #3, High Density
Condominium
$487,900
$442,200
$308,900
Owner Prototype #4, Mixed Use over Ground
Floor Retail
$541,300
$497,800
$370,900
4% Tax
4% Tax Credits/Tax
Credits/Tax Exempt
9% Tax Exempt Bonds and
Renter Housing Prototype Credits6 Bonds' MHP8 No Leverage9
Renter Prototype, Stacked Flat
Apartments $57,000 $140,100 $109,600 $326,125
Source: David Paul Rosen & Associates
s Based on 2007 HUD income limits for Orange County, adjusted for household size. Subsidies
requirements shown are the average of all unit sizes.
' Assumes average affordability at 47% of area median income.
7 Assumes average affordability at 57% of area median income.
s Assumes average affordability at 51 % of area median income.
9 Assumes units affordable at 60% of area median income and average subsidy of all unit sizes.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 11
5.0 Vacant and Underutilized Land Suitable for Residential
Development
DRA reviewed the residential development potential of the vacant and
underutilized land inventory in the City of Tustin.
Vacant parcels at the former MCAS Tustin (Tustin Legacy) provide approximately
379 acres suited for residential development. Under the adopted MCAS Tustin
Specific Plan, these sites will provide for the development of an additional 3,645
units (565 units have already been constructed on other sites at Tustin Legacy). Of
the 5,104 potential new units that could be developed on land suitable for
residential development or underutilized land in the City, approximately 71
percent is expected to be provided at Tustin Legacy. With Tustin Legacy, located in
the MCAS Tustin Redevelopment Project Area, California Redevelopment Law
requires a minimum of 15 percent of the new units to be affordable to very low,
low and moderate income households, of which 6 percent are required to be
affordable to very low income households. The City has adopted more stringent
affordability inclusionary obligations for the Tustin Legacy project, through
adoption of the MCAS Tustin Specific Plan and specific entitlement approvals and
grants of density bonuses on certain sites.
The Tustin High School site presents another significant parcel of land suitable for
residential development. This site totals 39.4 acres and could accommodate up to
400 residential units. The MCAS Tustin Specific Plan includes the development of
a new Tustin High School at Tustin Legacy. If a new high school is built, the
current Tustin High School site would present another significant parcel of land
suitable for residential development.
Aside from MCAS Tustin and the Tustin High School site, additional infill sites are
located either within existing Redevelopment project areas or in the Old Town
Tustin area. Sites that are located within Redevelopment project areas are subject
to Redevelopment Law. As a means to ensure affordability and the use of housing
set-aside funds, the City and its Redevelopment Agency will require developers to
provide at least 15 percent of all units constructed or rehabilitated within
Redevelopment Project areas at prices affordable to very low, low and moderate
income households consistent with California Redevelopment Law affordable
housing requirements.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 12
6.0 Six -Year Capital Plan
DRA prepared a six-year capital plan showing anticipated expenditures of projected
local revenues for affordable housing in Tustin over the six-year period from FY
2008/09 through FY 2013/14 based on the policy priorities established by the City
and on per unit subsidy requirements derived from the affordability gap analysis.
As CDBG funds are typically used for purposes other than affordable housing
production, they are excluded from the analysis.
The policy recommendations developed by the City for the forthcoming Housing
Element update provide guidelines for expenditures by renter/owner,
family/senior/special needs and income targeting categories. The actual number of
units that Tustin can assist will depend upon its success in securing non -local
leveraged financing, including 9 percent tax credits and 4 percent tax credits with
tax-exempt bonds.
The capital plan goals are summarized in Table 5.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 13
Table 5
Summary of Six -Year Capital Plan Goals
City of Tustin Comprehensive Affordable Housing Strategy
FY 2008/09 Through FY 2013/14
Program
Assistance Goals
Estimated Subsidy
(No. of Units)
Required
1. Preservation of At -Risk
277
$2,181,672
Affordable Rental Units
2. Single and Multi -Family Home
162
$947,000
Rehabilitation Program
3. Ownership Multi -Family New
18
$4,363,343
Construction
4. Multi -Family Rental New
31
$4,353,343
Construction/ Acquisition and
Rehabilitation
5. First -Time Homebuyer and/or
30
$2,400,000
Foreclosure Negotiated
Purchase
6. Homeless assistance and
200 per yeart0
$60,000
Supportive Services
7. Tustin Legacy Ownership Multi-
323
To Be Determined
Family New Construction
8. Tustin Legacy Rental New
253
To Be Determined
Construction
9. Administrative Support
Not Applicable
$4,953,314
TOTAL
11094"
$19,268,67212
10 Assistance goal is measured in number of persons as opposed to number of housing units.
11 Excludes the number of persons served under Homeless Assistance and Supportive Services.
12 Inclusive of administrative support/operating expenses.
City of Tustin June 5, 2008
Comprehensive Affordable Housing Strategy Page 14
City of Tustin
Comprehensive Affordable Housing Strategy
Appendix A
Affordable Housing Needs Assessment
November 29, 2007
Prepared for: City of Tustin
Submitted By: David Paul Rosen & Associates
Northern California
David Rosen, Principal
1330 Broadway, Suite 937
Oakland, CA 9461 2-2 509
Phone: 510-451-2552
Fax: 510-451-2554
e-mail: David@DRAConsuItants.com
www.draconsultants.com
Southern California
Nora Lake -Brown, Principal
3941 Hendrix St
Irvine, CA 92614-6637
Phone: 949-559-5650
Fax: 949-559-5706
e-mail: Nora 0DRAConsultants.com
www.draconsultants.com
Table Of Contents
City of Tustin
Housing Needs Assessment
Listof Tables........................................................................I...........................................
1.0 Introduction...................................................................:.........................................1
2.0.. Population and Housing Characteristics...............................:....................................1
2.1 Population.................................................................. . ..................... 1
2.2 Age Distribution.....................::.............................................................................2
2.3 Households...........................................................................................................3
2.4. Household Size and Tenure
2.5 Household Income Distribution..............................::............:::.:...................°......... 8
2.6 Employment........................................................................................................12
2.7 Jobs -Housing Balance.........................................................................................14
3.0 Housing Inventory Conditions................................................................................15
3.1 Housing:Un•its and Composition..............................................::..4....................... 15
3.2 Age and Condition of the Housing Stock................................................:............ 16
3.3 Single -Family Home Prices.................................................................................. 17
3.4 Apartment Rents and Vacancy Rates.................................................................... 17
3.5 Assisted Housing Inventory................................................................................. 19
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page i
Table Of Contents
City of Tustin
Housing Needs Assessment
Listof Tables .................................................... ...
1.0 Introduction .............................................................................................................1
2.0 Population and Housing Characteristics...................................................................1
2.1 Population............................................................................................................ 1
2.2 Age Distribution.................................................................................................... 2
2.3 Households...........................................................................................................3
2.4 Household Size and Tenure................................................................................... 4
2.5 Household Income Distribution ..................................... ............................... 8
2.6 Employment........................................................................................................12
2.7 )obs -Housing Balance......................................................................................... 14
3.0 Housing Inventory Conditions................................................................................15
3.1 Housing Units and Composition.......................................................................... 15
3.2 Age and Condition of the Housing Stock............................................................. 16
3.3 Single-family Home Prices......................................................................... ..... 17
3.4 Apartment Rents and Vacancy Rates.................................................................... 17
3.5 Assisted Housing Inventory................................................................................. 19
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page i
Table Of Contents (Continued)
City of Tustin
Housing Needs Assessment
4.0 Current Housing Needs..........................................................................................22
4.1 Overpayment...................................................................................................... 22
4.2 Overcrowding.....................................................................................................25
4.3 Substandard Housing.......................................................................................... 26
4.4 Special Housing Needs....................................................................................... 26
4.4.1 Elderly...........................................................................................................26
4.4.2 Large Families................................................................................................ 28
4.4.3 Female -Headed Households.......................................................................... 29
4.4.4 The Disabled.........................................................................._...................... 30
4.4.5 The Homeless................................................................................................ 30
4.4.6 Farmworkers..................................................................................................33
4.4.6 Farmworkers..................................................................................................33
4.4.7 At -Risk Affordable Housing.............................................................................. 33
5.0 Regional Housing Needs......................................................:............ ... .......... 33
6.0 Redevelopment Agency Affordable Housing Requirements ...................................... 34
6.1 Housing Production Requirements...................................................................... 35
6.2 Proportionality Requirements.............................................................................. 37
6.3 Replacement Housing Requirements....................................................................38
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page ii
List of Tables
1. Population and Growth Trends, City of Tustin, 1990 to 2007 .................................. 2
2. Population Age Distribution, City of Tustin, 2000 ..................................................... 3
3. Household Characteristics, City of Tustin, 1990 to 2007 ........................................... 4
4. Average Household Size, City of Tustin, 1990 to 2,007 ............................................. 5
5. Household Size by Household Tenure, City of Tustin, 2000 ..................................... 7
6. Household Income Distribution, City of Tustin, 2000 ............................................... 9
7. Household Income Distribution by Household Tenure, City of Tustin,
2000......................................................................................................................10
8. Household Income Distribution by Household Tenure, City of Tustin,
2006..................................................................................................................... 11
9. Major Tustin Employers, 2007..................................:............................................. 13
10. Employment Projection, City of Tustin, 2005 - 2035 .............................................. 14
11. Jobs -Housing Balance, City, County, and Region, 2005 ......................................... 14
12: Housing Units by Type, City of Tustin, 1990 to 2007., ...................... ................... 15
13. Age of Housing Stock, City of Tustin, 2007......................:..................................... 16
14. Apartment Inventory Characteristics, City of Tustin, June 2007 ............................. 18
15. Assisted Housing Inventory, City of Tustin............................................................ 20
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page iii
List of Tables (Continued)
16. Housing Cost as a Percentage of Household Income, City of Tustin,
2000.................................................................................................................... 23
17. Households Paying More Than 30 Percent of Gross Income on Housing by Income
Level, City of Tustin, 2006.................................................................................... 24
18. Overcrowded Households by Income Level, City of Tustin, 2006 .......................... 25
19. Tenure of Households with Head of Household Aged 65 Years or Older,
Cityof Tustin, 2000.............................................................................................. 27
20. Estimated Household Income Distribution, Households with Head of Household
Aged 65 Years or Older, City of Tustin, 2000 ........................................................ 28
21. Households with Five or More Persons, City of Tustin, 2000 ................................. 29
22. Female -Headed Households with Children Under 18, City of Tustin,
2000.................................................................................................................... 30
23. Emergency Shelter/Transitional Housing Facilities, City of Tustin ........................... 32
24. Regional Housing Needs Allocation, City of Tustin, 2006 to. 2014........................... 34
25. Tustin Community Redevelopment Agency, Inclusionary Housing Obligations,
1976 through December 31, 2005....................................................................... 36
26. Low and Moderate Income Housing Fund Allocation, City of.Tustin,
2006-2014
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page iv
Affordable Housing Needs Assessment
1.0 Introduction
This section reviews current and projected affordable housing needs and conditions within
the City of Tustin. A demographic profile of the City's population, housing, and income
characteristics establishes the foundation for evaluating current housing needs.
Comparisons of current conditions with historical data provide an indication of recent and
potential future trends, while comparisons with Orange County provide insight into the
City's relative position in the region.
This section further reviews the Regional Housing Needs Allocation Plan fRHNAP)
projections of future housing needs prepared by the Southern California Association of
Governments (SCAG).
2.0 Population and Housing Characteristics
2.1 Population
As illustrated in Table 1, Tustin experienced rapid growth during the 1990s, slowing
significantly since 2000. Tustin's total population increased by 16,815 persons during the
1990s, at a rate of 2.9 percent annually. From 2000 to 2007, the City added another
5,038 persons, at an annual compound growth rate of 1.0 percent. The City's total
population includes those persons living in group quarters, while the household
population includes only those persons living in the City's housing units.
Tustin was previously home to the Marine Corps Air Station (MCAS) Tustin, established in
1951 and closed in 1999. The MCAS Tustin Base Reuse Plan was adopted in October
1996 and amended in September 1998. Development of those portions of the former base
within the City of Tustin fnow identified as the Tustin Legacy project), will result in the
development of a total of 4,210 dwelling units, and accommodate up to 282
additional persons in group quarter -type dwellings (whether they are located within or
outside of the redevelopment project area). This represents a potential increase of an
estimated 8,600 new residents through build -out -of the Tustin Legacy project. As of July
2006, 565 of the total units anticipated at Tustin Legacy were completed, this has
increased to 1,033 through July 2007. The majority of the Tustin Legacy impact on the
City's population growth will thus be felt in the coming year.
City of Tustin November 29, 2,007
Affordable Housing Needs Assessment Page 1
Table 1
Population and Growth Trends
City of Tustin
1990 to 2007
Annual Compound
Growth Rate
11990 U.S. Census.
22000 U.S. Census.
3California Department of Finance Population and Housing Estimates, January 1, 2007.
SOURCE: David Paul Rosen & Associates
2.2 Age Distribution
Table 2 reports the age distribution and median age of Tustin's residents in 2000. The
median age in Tustin in 2000 was 31.8, about one and one-half years younger than the
countywide median age of 33.3 years. The percentage of Tustin's population over 65
years of age was 7.1, compared to 9.9 percent countywide.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 2
19901
20002
20073
1990-2000
2000-2007
Total Population
50,689
67,504
72,542
2.9%
1.0%
Household. Population
48,813
67,086
72,154
3.2%
1.0%
11990 U.S. Census.
22000 U.S. Census.
3California Department of Finance Population and Housing Estimates, January 1, 2007.
SOURCE: David Paul Rosen & Associates
2.2 Age Distribution
Table 2 reports the age distribution and median age of Tustin's residents in 2000. The
median age in Tustin in 2000 was 31.8, about one and one-half years younger than the
countywide median age of 33.3 years. The percentage of Tustin's population over 65
years of age was 7.1, compared to 9.9 percent countywide.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 2
Table 2
Population Age Distribution
City of Tustin
2000
Age Range
2000
Number
Percent
0-4
5,815
8.6%
5-14
9,9.16
14.7%
15-17
2,391
3.5%
Subtotal, Under 18
18,122
26.8%
18-19
1,490
2.2%
20-24
4,804.
7.1%
25-34
13,798
20.4%
Subtotal, 18-34
20,092
29.8%
35-44
11,930
17.7%
45-54
7,780
11.5%
Subtotal, 35-54
19,710
29.2%
55-64
4,776
7.1%
65+
4,804
7.1%
Subtotal, 55+
9,580
14.2%
Total Population
67,504
100.0%
Median Age,
31.8
years
City of Tustin
Median Age,
33.3 years
Orange County
Population 65+ Years,
9.9%
Orange County
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates.
2.3 Households
The Bureau of the Census defines a household as all persons who occupy a housing unit,
which may include single persons living alone, families related through blood or marriage,
and unrelated individuals living together. Employees or boarders residing within the
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 3
primary housing unit are considered part of the same household. Individuals residing
outside the primary dwelling unit (e.g., in a guesthouse) are considered a separate
household. Persons living in retirement or convalescent homes, dormitories, or other
group living situations are not considered households.
The City of Tustin currently has an estimated 24,787 households in 2007, as shown in
Table 3, up from 23,831 households in 2000. The proportion of family, single, and other
non -family households remained roughly constant between 1990 and 2000, at
approximately 67 percent family, 24 percent singles, and 9 percent other.
Table 3
Household Characteristics
City of Tustin
1990.to 2007
Household Type
19901
20002 -
20073
Families
12,317 67.2%
16,055 67.4%
N/A
Singles
4,329 23.6%
5,734 24:0%
N/A
Other Non -Family
1,686 9.2%
2,042 8.6%
N/A
Household
Total Households
18,332 100.0%
23,831, 100.0%
24,787
11990 U.S. Census.
22000 U. S. Census.
3California Department of Finance.
SOURCE: David Paul Rosen & Associates
2.4 Household Size and Tenure
When compared with the sizes of available housing units, household size is an important
indicator of housing need. As shown in Table 4, the average number of persons per
household in Tustin was 2.91 in 2007, up slightly from 2.82 in 2000 and 2.66 in 1990.
The average household size in Orange County continues to be slightly larger than in
Tustin, at 3.09 in 2007, up from 3.00 in 2000, and 2.87 in 1990.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 4
Table 4
Average Household Size
City of Tustin
1990 to 2007
Jurisdiction 1990 2000
2007
Tustin 2.661 2.823
2.915
Orange County 2.872 3.004
3.096
Based on 48,813 household population and 18,332 occupied housing units. Source: 1990 U.S.
Census.
2Based on 2,373,377 household population and 827,066 occupied housing units. Source:
1990 U.S.
Census
3Based on 67,086 household population and 23,831 occupied housing units. Source: 2000 U.S.
Census.
4Based on 2,803,924 household population and 935,287 occupied housing units. Source:
2000 U.S.
Census.
5Based on 72,154 household population and 24,787 occupied housing units. Source:
California
Department of Finance, Demographic Research Unit.
6Based on 3,054,128 household population and 988,560 occupied housing units. Source:
California
Department of Finance, Demographic Research Unit.
SOURCE: David Paul Rosen & Associates
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 5
Table 5 shows the distribution of renter and owner households by size in Tustin according
to the 2000 U.S. Census. Owners comprised 49.6 percent of all households in Tustin in
2000, compared to 61.4 percent countywide. Renters comprised 50.4 percent of Tustin
households in 2000, compared to 38.6 percent countywide.
Owner households tend to be slightly smaller than renter households in Tustin. 16 2000,
73.1 percent of owner households in the City had three or fewer persons, compared to
68.5 percent of renter households. Four -person households comprise approximately the
same proportion of both owner and renter households, at 14.8 and 132 percent
respectively. However, the proportion of households containing five or more persons is
significantly higher for renters than for owners, at 18.2 percent and 12.2 percent,
respectively.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 6
Table 5
Household Size by Household Tenure
City of Tustin
2000
SOURCE: 1990 U.S. Census; 2000 U.S. Census; David Paul Rosen & Associates
City of TustinNovember 29, 2007
Affordable Housing Needs Assessment Page 7
Renter
Owner
Total
Household
No.
%
Cum %
No.
%
Cum.
No.
%
Cum %
Size
1 Person
3,085
25.7%
25.7%
2,649
22.4%
22.4%
5,734
24.1%
24.1%
2 Persons
3,220
26.8%
52.5%
4,042
34.2%
56.6%
7,262
30.5%
54.6%
3 Persons
1,924
16.0%
68.5%
1,953
16.5%
73.1%
3,877
16.3%a
709%
4 Persons
1,584
13.2%
81.7%
1,747
14.8%
87.9%
3,331
14.0%
84.9%
5 Persons
1,013
8.4%
90.1%
809
6.8%
94.7%
1,822
7.6%
92.5%
6 Persons
545
4.5%
94.6%
349
3.0%
97.7%
894
3.8%
96.3%
7 or More
631
5.3%
100.0%
280
2.4%100.0%
911
3.8%100.0%
Total
12,002
100.0%
11,829
100.0%
23,831
100.0%
% of All Households By Tenure
City of Tustin
1990
10,828
59.1%
7,504
40.9%
18,332
2000
12,002
50.4%
11,829
49.6%
23,831
Orange County
1990
330,284
39.9%
496,782
60.1%
827,066
2000
360,831-
38.6%
574,456
61.4%
935,287
SOURCE: 1990 U.S. Census; 2000 U.S. Census; David Paul Rosen & Associates
City of TustinNovember 29, 2007
Affordable Housing Needs Assessment Page 7
2.5 Household Income Distribution
Household income is an important determinant of housing affordability. While upper
income households have more discretionary income to spend on housing, low and
moderate income households are more limited in the range of housing they can afford.
The presence of a large number of low and moderate income households in a region
where housing costs are high is likely to result in many_ households paying more than they
can afford for housing.
Tustin's 2000 median household income ($55,985) was 4.8 percent lower than the
County's median income ($58,820). As shown in Table 6,. .an estimated 7.5 percent of
Tustin's households had incomes of less than $15,000 in the year 2000. Another 18.9
percent had incomes of between $15,000 and $34,999. In addition, 38.9 percent had
incomes between $35,000 and $74,999, and 34.7 percent had incomes of $75,000 or
more.
Owner households had higher incomes than did renter households in 200,0, as shown in
Table 7. Approximately 37 percent of the renter households earned less than $35,000
annually, compared to only 16 percent of owner households. Furthermore, 60.7 percent
of renters earned less than $50,000 in 2000, compared to only 27 percent of owners.
While a higher proportion of renter households (22.1 percent) than owner households
(20.7 percent) earned between $50,000 and $74,999, only 17.2 percent of renter
households had incomes of more than $75,000 annually, compared to 52.3 percent of
owner households.
Table 8 shows Tustin's household income distribution by household tenure in 2006,
according to the Southern California Association of Government's (SLAG) Regional
Housing Need Allocation Plan for the period January 1, 2006 — June 30, 2014. Owner
households in Tustin continued to have higher incomes than renter households in 2006.
While over half (52.4 percent) of Tustin's renter households earned 80 percent of Area
Median Income (AMI) or below, only 22.4 percent of owner households fell into this
income category. A majority of owner households (70.1 percent) and only 33.7 percent of
renter households earned over 95 percent of AMI.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 8
t Derived by applying the percentage of households by income level from Summary File 3, Table P-52 (total
number of households shown as 23,853) to a total of 23,831 occupied households from Summary File 1,
Table H-3 for consistency with other Census data on the number of households used in this report.
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 9
Table 6
Household Income Distribution
City of Tustin
2000
Income Range
#t Households'.
% Households
%Cumulative
Less than $14,999
1,787
7.5%
7.5%
$15,000 to $24,999
2,026
8.5%
116.0%
$25,000 to $34,999
2,479
10.4%
26.4%
$35,000 to $49,999
4,194
-17.6%
44.0%
$50,000 to $74,999
5,076
21.3%
65.3%
$75,000 to $99,999
3,193
13.4%
78.7%
More than $100,000
5,076
21.3%'
100.0%
TOTAL
23,831
100.0%
Median Household
$55,985
Income,
City of Tustin
Median Household
$58,820
Income,
Orange County
t Derived by applying the percentage of households by income level from Summary File 3, Table P-52 (total
number of households shown as 23,853) to a total of 23,831 occupied households from Summary File 1,
Table H-3 for consistency with other Census data on the number of households used in this report.
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 9
Total Renters
OWNER HOUSEHOLDS
Less Than $10,000
$10,000 to $19,999
$20,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $149,999
$150,000 or More
12,002 100.0%
246
Table 7
2.1%
537
Household Income
Distribution by Household Tenure
1,110
9.4%
City of Tustin
1,301
11.0%
27.0%
2000
20.7%
47.7%
Tenure/Income Range
Number'
Percent
Cumulative
RENTER HOUSEHOLDS
85.5%
1,718
14.5%
Less Than $10,000
720
6.0%
6.0%
$10,000 to $19,999
1,140
9.5%
15.5%
$20,000 to $34,999
2,568
21.4%
36.9%.
$35,000 to $49,999
2,857
23.8%
60.7%
$50,000 to $74,999
2,653
22.1%
82.8%
$75,000 to $99,999
1,308
10.9%
93.7%
$100,000 or More
756
6.3%
100.0%
Total Renters
OWNER HOUSEHOLDS
Less Than $10,000
$10,000 to $19,999
$20,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $149,999
$150,000 or More
12,002 100.0%
246
2.1%
2.1%
537
4.56/0
6.6%
1,110
9.4%
16.0%
1,301
11.0%
27.0%
2,442
20.7%
47.7%
1,894
161.0%
63.7%
2,581
21.8%
85.5%
1,718
14.5%
100.0%
Total Owners 11,829 100.0%
1 Derived by applying the percentage of household tenure by household income from Summary File 3, Table
HCT11 (total number of renter households shown as 11,993 and owner households as 11,845) to a total of
12,002 occupied renter and 11,829 occupied owner households from Summary File 1, Table H-3 for
consistency with other Census data on the number of households used in this report.
SOURCES: 2000 U.S. Census; David Paul Rosen & Associates
City of Tustin jNovember 29, 2007
Affordable Housing Needs Assessment Page 10
Table 8
Household Income Distribution by Household Tenure
City of Tustin
2006
Tenure/Income Range, Number Percent Cumulative %
as percentage of AMI
RENTER HOUSEHOLDS
Below 30 percent AMI
1,585
13.2%
13.2%
30 — 50 percent AMI
1,910
16.0%
29.2%
50 — 80 percent AMI
2,780
23.2%
52.4%
80 — 95 percent AMI
1,670
13.9%
66.3%
Over 95 percent AMI
4,040
33.7%0
100.0%
Total Renters
11.,985
100.0%
OWNER HOUSEHOLDS
Below 30 percent AMI
. 525
4.4%
4.4%
30 — 50 percent AMI
760
6.4%
10.8%
50 — 80 percent AMI
.1,370
11.6%
22.4%
80 — 95 percent AMI
885.
7.5%
29.9%
Over 95 percent AMI
8,315
70.1%
100.0%
Total Owners
11,855
100.0%
AMI = Area Median Income
SOURCE: Southern California Association of Governments, Draft
Regional Housing Need Allocation Plan,
Planning Period January 1, 2006 — June 30, 2014.
City of Tustin
November 29, 2007
Affordable Housing Needs Assessment
Page 11
2.6 Employment
According to the 2000 U.S. Census, the City of Tustin had 36,681 residents in the labor.
force, of which 34,906, or 95.2 percent, were employed. Of these, 79.3 percent were
private wage and salary workers.
In 2000, the largest occupational category of Tustin workers was professional and related
occupations, in which a total of 7,467 were employed. The second largest category,
employing 6,657 workers, was management, business, and financial operations
occupations.
The industries employing the largest number of Tustin workers, according to the 2000 U.S.
Census, were the manufacturing and educational, health and social services sectors. The
manufacturing sector employed 5,980, or 17.1 percent of employed residents, while the
educational, health and social services sector employed 5,081, or 14.6 percent.
The State of California Employment Development Department (-EDD) reports monthly
unemployment data through September. 2007. According to EDD data, as of September
2007 the City of Tustin had 42,800 residents in the labor force, ofwhich 41,000, or 95.8
percent were employed. Tustin's monthly unemployment rate has ranged from 3.3 percent
to 4.1 percent during 2007.
Table 9 lists the major employers in Tustin in 2007.1 Table 10 shows employment
projections for the years 2005 - 2035. According to 2006 Center for Demographic
Research data on Orange County, employment in the City- of Tustin is expected 'to
increase by approximately 71 percent by the year 2035.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 12
Table 9
Major Tustin Employers
2007
Company/Address/Telephone
No. of Emp.
Product/Service
Tustin Unified School District — (714) 730-7301 — 300
1,886
'Education
South C St — Tustin 92780
AT&T — (714) 259-6667
1,300
Telecommunications
1442 Edinger Ave— Tustin 92780
Ricoh Electronics, Inc — (714) 259-1220
1,038
-Manufacturer
1100 Valencia Ave — Tustin, 92780
Rockwell Collins — (714) 317-8102
700
Manufacturer
14192 Franklin Ave—Tustin, 92780
Cherokee International — (714) 544-6665
330
Power Supplies
2841 Dow — Tustin, 92780
ADC Telecommunications, Inc — (714) 259-7729 — 15621
300
Telecommunications
Red Hill Ave—Tustin, 92780
Equipment
Balboa Instruments — (714) 384-0384
300
Electronic Manufacturer
1382 Bell Ave —Tustin, 92780
Toshiba America Medical Systems — (714) 730-5000 —
300
Distributor, Medical
2441 Michelle —Tustin, 92780
Equipment
City of Tustin — (714) 573-3000
300
Government
300 Centennial Way — Tustin 92780
Costco Wholesale — (714) 838-7895
241
Wholesale Trade
2655 EI Camino Real - Tustin 92780
Woodbridge Glass Inc — (714) 838-4444
205
Glass & Glazing Work
14321 Myford Rd — Tustin 92780
Costco Wholesale — (714) 338-1943
200
Wholesale Trade
2700 Park Ave — Tustin 92780
Logomark, Inc. — (714) 675-6100
200
Wholesale Trade
1201 Bell Ave — Tustin, 92780
SMC Corporation of America — (714) 669-0941 — 14191
200
Manufacturer
Myford Rd — Tustin 92780
Tustin Hospital — (714) 669-5880
200
Hospital
14662 Newport Ave — Tustin, 92780
Vitatech International, Inc. — (714) 832-9700 — 2832 Dow
178
Pharmaceutical
Ave — Tustin 92780
Preparations
Home Depot — (714) 838-9200
154
Retail
27.82 EI Camino - Tustin, 92780
Straub Distributing Company — (714) 247-7300 — 2701
150
Wholesale Trade
Dow Ave —Tustin, 92780
Dawn Food Products, Inc — (714) 258-1223
150
Wholesale Bakery
15601 Mosher Ave — Tustin, 92780
Durabag Company Inc — (714) 259-8811
150
Manufacturer
1301 Santa Fe Dr —Tustin, 92780
SOURCE: City of Tustin Website, October 26, 2007, Tustin Chamber of Commerce, 1999, Tustin
Community Development Department, and Orange County Workforce Investment Board 2007
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 13
Table 10
Employment Projection
City of Tustin
2005-2035
2005 2015 -2025 2035 Percent Change
(2005 — 2035)
Total Employment 40,449 56,340 68,551 69,053 71
SOURCE: Center for Demographic Research, 2006
2.7 Jobs -Housing Balance
The "jobs -housing balance" test is a general measure of a community's employment
opportunities with respect to its residents'. needs. A balanced community would reach
equilibrium between employment and housing opportunities so the majority of the
residents could also work within the community.
Table 11 shows the 2005 jobs -housing balance for the City of Tustin as well as Orange
County and the Southern California region. Tustin had a jobs/housing ratio of 1.56 in
2005, while Orange County and the region had jobs/housing ratios of 1.48 and 1.19;
respectively. This demonstrates that Tustin is a job -rich community when compared to
county and regional averages.
Table 11 _
Jobs -Housing Balance
City, County, and Region
2005
Tustin Orange County SCAG Region
Employment
40,449
1,496,200
7,123,700
Housing Units
25,927
1,013.,:036
6;005,879
jobs / Housing Ratio
1.56
1.48
1.19
SOURCE: California Department of Finance; Center for Demographic Research; SCAG; David Paul Rosen &
Associates.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 14
3.0 Housing Inventory Conditions
3.1 Housing Units and Composition
Table 12 shows trends in housing units by type of structure and vacancy rates from 1990
to 2007. The distribution of housing units by type has changed over this period, with
single-family homes steadily increasing and multifamily housing steadily decreasing as a
proportion of Tustin's housing units. In 2007, Tustin's housing stock is comprised of
almost equal proportions of single-family homes and multifamily housing, making up 49.1
and 47.4 percent, respectively. Mobile homes make up the remaining 3.6 percent.
According to the California Department of Finance, 2.71 percent of Tustin's housing units
were vacant in 2007, down from 6.6 percent in the year 2000, as shown in Table 12.
Table 12
Housing Units by Type
City of Tustin
1990 to 2007
Household
1990
2000
2007
Size
Number
Percent
Number
Percent
Number
Percent
Single Family
7,881
40.8%
11,534
, 45.2%
12,504
49.1%
Attached
2,530
13.1%
3,459
13.6%
3,807
14.9%
Detached
5,351
27.7%
8,075
31.7%
8,697
34.1%
Multifamily
10,717
55.5%
13,059
51.2%
12,065
47.4%
2-4 Units
3,089
16.0%
3,836.
15.0%
3,110
12.2%
5+ Units
7,628
39.5%
9,223
36.2%
8,955
35.1 %
Mobile Homes
702
3.6%
908
3.6%
908
3.6%
TOTAL UNITS
19,300
100.0%
25,501
100.0%
25,477
100.0%
Total Occupied
18,332
23,831
24,787
Units
Vacancy Rate
5.0%
6.6%
2.71%
SOURCE: California Department of Finance; David Paul Rosen & Associates
City of Tustin November 29, 21007
Affordable Housing Needs Assessment Page 15
3.2 Age and Condition of the Housing Stock
Table 13 shows the distribution of housing units by year built in Tustin in 2007.
Reflecting the conversion of land from agricultural to residential use and the construction
of housing on the MCAS Tustin base during the 1960s and 1970s, 24.9 percent.of Tustin's
units were built during the 1960s and 24.5 percent were built during the 1970s. The
City's rapid population growth in the 1990s is reflected in the number of housing units
built during that period, a total of 5,924 units representing 23.2 percent .of Tustin's total
housing stock.
Table 13
Age of Housing Stock
City of Tustin
2007
Year Built # of Units % of Total Cumulative %
1939 or earlier
451
1.8%
1.8%
1940-1949
225
0.9%
2.7%
1950-1959
1,285
5.0%
7.7%
1960-1969
6,333
24.9%
32.6%
1970-1979
6,238
24.5%°
57.1%
1980-1989
2,792
11.0%
68.1%
1990-1994
3,240
12.7%
80.8%
1995-1998
2,684
10.5%
91.3%
1999-2000
590
2.3%
93.6%
2001-2007
1,639'
6.4%
100.0%
TOTAL 25,477
' Derived by counting only increases in Tustin's total number of housing units between 2000 and 2007, as
reported by the California Department of Finance. According to the Department of Finance's Table 2: E-5
City/County Population and Housing Estimates 2000 through 2007, Tustin experienced a net loss of 24
housing units during this period. Counting only the increases in housing units during this period assumes
that any increases in the number of housing units represent newly constructed units and any decreases
represent older units being taken off of the market. The estimated 1,639 units constructed from 2001 to 2007
includes the 1,033 new units built in the MCAS Tustin Redevelopment Project Area during this time period.
SOURCES: 2000 U.S. Census; California Department of Finance Population and Housing Characteristics;
David Paul Rosen & Associates
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 16
3.3 Single -Family Home Prices
The median price for new and resale homes and condominiums in Tustin in July 2007 was
$590,000, based on data of 64 home sales compiled by Dataquick. By comparison, the
median price for new and resale homes and condominiums countywide in July 2007 was
9.1 percent higher, at $643,750. The median price for all homes is down 12.75 percent
from $676,250 in Tustin and down less than one percent from $645,000 countywide in
July 2006.
The median price for new and resale homes and condominiums in Tustin for all of 2006
was $629,000 (933 sales) compared to $630,000 countywide (32,691 sales).
3.4 Apartment Rents and Vacancy Rates
Table 14 summarizes the characteristics of the current apartment inventory in the City of
Tustin as of the second quarter 2007 based on data from REALFACTS. The data include a
total of 29 apartment properties and 5,903 units, with an average of 203 units per
property. All properties in the inventory have at least 93 units and were built between
1957 and 1997. Therefore, the data do not include small multifamily properties.
The overall rental vacancy rate for Tustin in the second quarter of 2007 was 4.6 percent,
up slightly from 4.3 percent in the first quarter of 2007. Generally, a vacancy rate of 5
percent is considered to reflect a "tight' housing market. As noted above, Department of
Finance data for Tustin as of January 2007 show a vacancy rate of 2.71 percent for all
housing types in Tustin (single- and multi -family, owner and rental).
The data show that approximately 40 percent of apartment units in the City have one
bedroom, 52 percent have two bedrooms, and 5 percent have three bedrooms. Average
monthly rents are $1,292 for a one -bedroom, one -bath unit. For two-bedroom units,
average monthly rents are $1,436 for units with one bath, $1,253 for units with one and a
half baths, $1,810 for units with two baths, and $1,674 for two-bedroom townhouse units.
The average monthly rent for a three-bedroom unit with one and a half baths is $1,641
and for a three-bedroom unit with two baths the average rent is $2,431. The average rent
for a three-bedroom townhouse unit is $1,861.
The weighted average rental rate for the inventory increased 5.4 percent over the past
year'. Rents for one-bedroom/one-bath properties increased the most at 6.9 percent,
followed by three-bedroom townhouse units at 6.8 percent, junior one -bedrooms at 6.6
percent and two-bedroom/one-bath units at 5.2 percent.
' These weighted average rents weight the average rent by bedroom count by the number of units in that
bedroom count category.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 17
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 18
Table 14
Apartment Inventory Characteristics
City of Tustin
June 2007
Average
Average
Unit Size
Units
Percent Average SF
Rent
Rent/SF
Studio
200
3.4%
521
$1,138
$2.18
Jr 1 BR
32
0.5%
470
$1,050
$2.23
1 BR/1 BA
2,312
39.2%
733
$1,292
$1.76
2 BRA BA
706
12.0%
974
$1,436
$1.47
2 BR/1.5 BA
266
-4.5%
945
$1,2-53 ,
$1.33
2 BR/2 BA
1,885
31.9%
1,024
$1,810
$1.77
2 BR TH
194
3.3%
1.,074
$1,674
$1.56
3 BR/1.5 BA
36
0.6%
1,371
$1,641
$1.20
3 BR/2 BA
21.6
3.7%
1,173
$2,431.
$2.07
3 BR TH
56
0.9%
1,441
$1,861
$1.29
TOTAL
5,903
100.0%
894
$1,528
$1.72
"TH" signifies a Townhouse Unit.
Note: Averages for
the Total row are weighted averages.
SOURCES: REALFACTS; David Paul Rosen & Associates
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 18
3.5 Assisted Housing Inventory
Table 15 is an inventory of all multi -family rental Units assisted under federal, state, and/or
local programs, including HUD programs, state and local bond programs, redevelopment
programs, and local in -lieu fee, inclusionary, density bonus, or direct assistance programs.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 19
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4.0 Current Housing Needs
Current housing needs include households overpaying for housing, households living in
overcrowded housing, and certain special needs groups which have a more difficult time
finding decent, affordable housing due to special circumstances. Available data on
overpayment, overcrowding and special needs populations in Tustin including the elderly,
large families, single -parent families, the disabled, homeless and farmworkers are
described below.
4.1 Overpayment
According to the U.S. Department of Housing and Urban Development's -(HUD) standard,
households paying 30 percent or more of their gross income on housing are considered to
be cost -burdened, paying more than they can afford for housing. Households paying
greater than this amount have less income remaining for other necessities such as food,
clothing, utilities and health care. The problem is most severe for families with limited
incomes.
Table 16 shows the distribution of housing cost as a percentage of household income for
renter and owner households in Tustin as of the 2000 U.S. Census. Overall, 39.9 percent
of renters, or 4,786 households, paid more than 30 percent of gross income for housing in
2000. More than 14 percent of renters, or 1,754 households, were considered severely
cost -burdened, defined by HUD as paying more than 50 percent of their income for
housing (rent plus utilities).
Owner overpayment may be considered a choice, as households choose to pay a higher
percentage of their income for the benefits and security of owning a home. Also, the 30
percent standard is considered low for owners. Lenders typically allow owners to pay 35
percent or more of gross income for mortgage principal, interest, taxes and insurance. In
2000, 19.2 percent of Tustin's owner households . paid ' more than 35 percent of gross
income for housing.
Table 17 shows the number and percentage of renter and owner families in Tustin that
were overpaying for housing as of September 2006, according to SCAG's Regional
Housing Need Allocation Plan (RHNAP) for the planning period. January 1, 2006 to June
30, 2014. Not surprisingly, the incidence of overpayment for housing was highest for low
income renters and owners earning less than 30 percent of Area Median Income (55.9
percent of renters and 64.8 percent of owners in this income category). A high proportion
of households earning between 30 and 50 percent of AMI were also overpaying for
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 22
housing 145.3 percent of renters and 46.0 percent of owners in this income category).
Overall, about one quarter of all households were paying more than 30 percent of their
income for housing: 25.7 percent of all renter and 26.2 of all owner households.
Table •16
Housing Cost as a Percentage of Household Income
City of Tustin
2000
Housing Cost as a Rentersl Owners2
Percentage of Income
# Households % Households3 # Households % Households4
Less than 25% 5,307 44.2% 6,932 58.6%
25% to 29% 1,575 13.1% 1,490 12.6%
30% to 34% 1,148 9.6% 1,100 9.3%
35% to 39% 819 6.8% 2,271 19.2%
40% to 49% 1,065 8.9% N/A5 N/A5
50% or More 1,754 .14.6% N/A5 N/A5
Not Computed 334 2.8% 36 0.3%
TOTAL 12,002 100.0% 11,829 100.0%
1 Derived by applying the percentage of households by housing cost category from Summary File 4 Table
HCT59 (total number of renter households shown as 11,993) to a total of 12,002 renter households from
Summary File 1, Table H-1 for consistency with other Census data on the number of renter households used
in this report.
2Derived by applying the percentage of households by housing cost category from SummaryFile 3 Table H-
97 (total number of owner households shown as 9,487) to a total of 11,829 owner households from
Summary File 1, Table H-1 for consistency with other Census data on the number of owner households used
in this report.
3Percent of all renter households.
4Percent of all owner households.
5Not available for owners. Included in the 35% to 39% category.
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 23
Table 17
HouseholdsPaying More Than 30 Percent
of Gross Income on Housing by Income Level
City of Tustin
2006
Household Income Renters Owners
Category, as percentage of
Area Median Income
# Households % Householdsl # Households % Households'!
Less than 30 percent AMI . 855 55.9% 340
64.8%
30 _ 50 -percent AMI 865 45.3% 350
46.0%
50 — 80 percent AMI 940 33.8% 585
42.7%
80 — 95 percent AMI 260 15.6% 425
48.0%
Over.95 percent AMI 160 4.0% 1,410
17.0%
TOTAL2 3,080 25.7% 3,110
26.2%
AMI = Area Median Income
l Percentage of households in specified.income category {see Table 8).
.2 Percentages based on a total of 11,985 renter households and 11,855 owner households.
SOURCE: Southern California Association of Governments, Draft Regional Housing Need Allocation Plan,
Planning. Period January 1, 2006 -,June 30, 2014..
It should be noted that California Redevelopment Law (CRL) defines affordable housing
cost at the top or midpoint. of each,income category, rather than based on, actual income.
.This reduces the. percentage of households in each income category that are considered
cost burdened. In addition, CRL, together with common bank underwriting practice,
allows many homebuyers to pay 35 percent of their gross income for homeownership
expense, including principal, interest, insurance, taxes, utilities and condominium
membership fees, if appropriate.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 24
4.2 Overcrowding
HUD defines overcrowding as more than one person per room, .excluding bathrooms and
kitchens. According to SCAG's 2007 Draft RHNAP, the incidence of overcrowding in
Tustin was high in 2006, at 4,285 households, or 18.0 percent of all households. Renter
households had a significantly higher incidence of overcrowding than owner households:
28.9 percent of renter and 6.9 percent of owner households were overcrowded. Table 18
shows the number and percentage of Tustin households by income category that are
overcrowded, according to HUD's definition.
Table 18
Overcrowded Households by Income Level
City of Tustin
2006
AMI = Area Median Income
1 Percentage of households in specified income category (see Table 8)
2 Percentages based on a total of 11,985 renter households and 11,855 owner households.
SOURCE: Southern California Association of Government's Draft Regional Housing Need Allocation Plan,
Planning Period January 1, 2006 — June 30, 2014.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 25
Renters
Owners
Household Income
Category, as percentage of
Area Median Income
# Households
% Householdsl
# Households
% Householdsl
Less than 30 percent AMI
520
32.8%
45
8.6%
30 — 50 percent AMI
870
45.5%
140
18.4%
50 — 80 percent AMI
1,100
39.6%
225
16.4%
80 — 95 percent AMI
425
25.4%
85
9.6%
Over 95 percent AMI
550
13.6%
325
3.9%
TOTAL2
3,465
28.9%
820
6.9%
AMI = Area Median Income
1 Percentage of households in specified income category (see Table 8)
2 Percentages based on a total of 11,985 renter households and 11,855 owner households.
SOURCE: Southern California Association of Government's Draft Regional Housing Need Allocation Plan,
Planning Period January 1, 2006 — June 30, 2014.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 25
It should be noted that there are no federal. or California State legal standards for
overcrowding. In a reasonable effort to allocate scarce financial resources for affordable
housing, housing programs typically use occupar}cy standards, which allow for up to "two
persons per bedroom plus one" (e.g., five persons in a two-bedroom unit). The California
Health and Safety Code standard, applicable for housing receiving financial assistance
from the Redevelopment Housing Set -Aside Fund, is one person per bedroom plus one
.(e.g., three persons in a two-bedroom unit).
4.3 Substandard Housing
Housing generally requires major rehabilitation after 30 years due to deferred
maintenance. As illustrated in Table 13 above,- one-third of Tustin's housing stock was
built prior to 1970 and is at least 36 years old. This indicates potential need for
rehabilitation and continued maintenance of approximately 8,294 units built prior to
1970. Another 24.5 percent of Tustin's housing stock, or 6,238 units, were built during the
1970's and will be at least 30 years of age by 2010.
4.4 Special Housing Needs
DRA .examined housing issues facing special needs populations such as the homeless,
seniors, large families, female -headed households, and the disabled. The following
sections briefly describe the special needs of these population segments in the community.
4.4.1 Elderly
The special needs of many elderly households result -from their lower; fixed incomes,
physical disabilities, and need for assistance. As shown previously in Table 2, persons
aged 65 years or older in Tustin comprised 7.1 percent of the population in 2000.
Table 19 .shows the tenure of households with the. head of household aged 65 years or
older in the City of Tustin in 2000. The City had 747�renter households and 2,086 owner
_households with a head of household aged 65 years or older. Households with a senior
householderrepresented 11.9 percent of all households in the City.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 26
Table 19
Tenure of Households with Head of Household Aged 65 Years or Older
City of Tustin
2000
Head of Household
65 Years or Older
# Households % Households
Tenure
Renters 747 .6.2%1
Owners 2,086 17.6%2
Total Households 2,833 11.9%3
1 A a percentage of 12,002 renter households.
2As a percentage of 11,829 owner households.
3As a percentage of 23,831 total households.
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates.
Table 20 shows the estimated household income distribution for householders aged 65
years or older in 2000. Approximately 27 percent of elderly households earned less than
$20,000 annually, or about 36 percent of AMI for a household of two persons in 2000.2
2 HUD median household income fora family of four in Orange County in 2000 was $69,600.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 27
Table 20
Estimated Household Income Distribution
Households with Head of Household Aged 65 Years or Older
City of Tustin
2000
Income Range
Less Than $10,000
$10,000-$19,999
$20,000-$34,999
$35,000-$49,999
$50,000-$74,999
$75,000-$99,999
$100,000 or More
Number' Percent Cumulative %
300
10.4%
10.4%
467
16.2%
26.6%
618
21.4%
48.0%
439
15.2%
63.2%
520
18.0%
81.2%
211
7.3%
88.5%
332
11.5%
100.0%
Total Households 2,887 100.0%
Derived by applying the percentage of households with head of household aged 65 years or older by
income category from Summary File 3 Table P55 (based on sample data; total number of households shown
as 23,853) to a total of 23,831 households from Summary File 1, Table H-1 for consistency with other
Census data on the number of households used in this report.
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates.
4.4.2 Large Families
Large families are another population of concern due to both the difficulty of finding
adequately sized housing units and the high costs associated with these larger units. Thus,
large families typically suffer disproportionately from both overcrowding and inability to
pay. Table 21 shows the number of households with -five or more persons in Tustin
according to the 2000 U.S. Census. There were 1,438 owner households with five or
more persons, representing 12.2 percent of all owner households. Tustin also had 2,189
renter households with five or more persons, representing 18.2 percent of all renter
households. Overall, large households comprised approximately 15.2 percent of all
Tustin households in 2000.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 28
Table 21
Households with five or More Persons
City of Tustin
2000
Households with Five or More Persons
Number of Households % of Total Renter or Owner
Households
Owners 1,438 12.2% of Owner Households
Renters 2,189 18.2% of Renter Households
Total Households 3,627 15.2% of Total Households
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates.
4.4.3 Female -Headed Households
Single -parent families tend to have low incomes,, limiting their ability to find affordable
housing. These families also have a large need for affordable child care. As shown in
Table 22, there were 1,700 female -headed households with children under 18 living at
home, as of the 2000 U.S. Census. These households represented 18 percent of a -II
families with children under 18 in Tustin in 2000.
City of Tustin
Affordable Housing deeds Assessment
November 29, 2007
Page 2 9
Table 22
Female -Headed Households with Children Under 18
City of Tustin
2000
2000
Number of % of Total'
Households
Female -Headed Household
1 Percentage of 9,418 total families with children under 18 in Tustin in 2000.
SOURCE: 2000 U.S. Census; David Paul Rosen & Associates.
4.4.4 The Disabled
1,700 18.0%
Physical handicaps can hinder access to housing units of traditional design as well as limit
an individual's ability to earn an adequate income. According to the 2000'U.S. Census, a
total of 7,610 persons between 16 and 65 years of age reported a disability. In addition,
1,795 persons over age 65 reported a disability in 2000.
4.4.5 The Homeless
The homeless population is comprised of subgroups, which include:
• The economic homeless who lack financial resources to pay rent;
• The situational homeless who have suffered economic or personal trauma and find
themselves in personal disorganization; and,
• The chronic homeless who are unable to care for themselves due to chronic illness,
disability or debilitating substance abuse.
According to the County of Orange's 2004 Continuum of Care Application to HUD and
the City of Tustin's 2005 - 2010 Consolidated Plan, there are approximately 35,000
homeless men, women and children in Orange County. Of these, 10,500 are horneless
individuals and 24,500 are persons in homeless families with children. The City's
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 30
Consolidated Plan states that, according to police reports and windshield surveys
performed within the City of Tustin, most homeless persons migrate through Tustin to
other parts of the County rather than stay for extended periods of time within the City.
Although there are no established areas where homeless persons congregate in the City,
there are several homeless services facilities in the City. The Village of Hope is being built
on five acres of the former MCAS site. When complete, The Village will provide housing
for a total of 192 homeless men, women and children. It will include 128 dorm rooms, a
child development center, playground, parent education center, vocational training
classrooms, health care facility, donation warehouse, and support offices. There will also
be a cafeteria with an outdoor dining area, and vegetable gardens. Table 23 describes the
emergency shelters and transitional housing facilities currently operating in Tustin.
In addition to those facilities described in Table 23, transitional housing developments in
or assisted by the City of Tustin include the following:
• 6 new transitional housing units granted to the Salvation Army at no cost on the
John Laing Homes Tustin Field 1 site in Tustin Legacy, integrated with the total
development of 376 units;
• 16 apartment units for use as a Salvation Army transitional housing facility in Buena
Park, assisted through acquisition and grant funds by the City of Tustin;
• 6 new transitional housing units granted to Human Options at no cost at the
Columbus Grove project in Tustin Legacy, developed by Lennar/William Lyon
Homes, integrated with the development of 465 units;
• 6 new transitional housing units granted to Orange Coast Interfaith Shelter at no cost
at the Columbus Grove project in Tustin Legacy, developed by Lennar/William Lyon
Homes, integrated with the development of 465 units; and
• 14 new transitional housing units conveyed, in coordination with the City of Irvine,
to Irvine Temporary Housing at the Columbus Grove project in Irvine, .on behalf of
both communities' desire to meet regional homeless accommodation needs in the
vicinity. The transitional housing units were integrated into a total development of
402 units.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 31
Table 23
Emergency Shelter/Transitional Housing Facilities
City of Tustin
Facility Services Provided
Sheepfold Provides shelter, food, clothing, job -training, and job -referral
services to women with children.
Laurel House Temporary housing for teenagers in crisis. The facility also
provides food, informal counseling, and access to medical care
and clothing.
St. Cecilia's Distributes food supply to needy populations.
Redhill Lutheran Operates a food pantry three times a week.
Village of Hope, . , . Provides transitional housing, child care, parent education,
Orange County Rescue vocational training and health care to homeless families and
Mission individuals.
Orange County Tustin Will provide temporary and transitional housing to juvenile
Family Campus court -dependent children and youth, young adults
emancipated from foster -care, and mothers with their children.
Will also include an early childhood development center,
medical services and support services.
Tustin Presbyterian Collects food supplies and distributes the food to various
organizations involved in providing homeless services.
Aldersgate Refers interested persons to Ecumenical Services Alliance in
Santa Ana.
SOURCE: City of Tustin 2005 — 2010 Five -Year Consolidated Plan; Orange County Social Service Agency
Request for Proposals for The Tustin Family Campus, October 12, 2007; City of Tustin
Community Development Department.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 32
4.4.6 Farmworkers
According to the 2002 Housing Element, the City of Tustin does not contain farmlands or
other agricultural activities generating primary income. The 2000 U.S. 4Gerrsus reports only
30 Tustin residents employed in agricultural or related occupations and the Southern
California Association of Governments reports only 33 Tustin residents employed in
agricultural or related occupations as of January 2007. This represents less than one
percent of all employed_ residents of the City. SCAG also reports that 140 of Tustin's jobs
are agricultural, a majority of which are filled by workers who do not live within the'City.
4.4.7 Extremely Low Income
As identified in the 2007 Regional Housing Needs Allocation 1RHNA) estimates prepared
by the Southern California Association of Governments �SCAG), approximately 1,585
renter households and 525 owner households in Tustin are at or below 30% of the Area
Median Income (considered "Extremely Low Income"). The 2007 RHNA estimates
indicate.that 340 of the 525 extremely low income owner households �65 percent) pay
more than 30 percent of their income for housing. In addition, 855 of the 1,585 extremely
low income renter households (54 percent) are overpaying for housing.
While the extremely low income households are currently housed, they are in a
precarious position in light of the current housing market, particularly those overpaying for
housing, and could face the threat of homelessness.
4.4.8 At -Risk Affordable Housing
Tustin has one project that contains units at risk of converting to unrestricted market rate
rents. Tustin Gardens is a 101 unit Section 221(D)(4) project with a Section 8 contract for
100 units. In 2003, the owners of Tustin. Gardens signed a five-year agreement with the
U.S. Department of Housing and Urban .Development (HUD). This agreement serves as a
one-year Section 8 contract that automatically renews for four additional one-year terms,
provided that funds., are. available. The current contract expires on July 13, 2048. The
project owners have indicated that they. intend to renew the contract.
5.0 Regional Housing Needs
State law requires jurisdictions to provide for their share of.regional housing needs across
all income levels. All California jurisdictions are required to update the housing element
of their general plans every five years and to submit their housing elements to the State
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 33
Department of Housing and Community Development (HCD) for a determination of
substantial compliance with state law. In order to have their housing element found in
compliance by HCD, a jurisdiction must identify adequate sites to accommodate their
"regional share. For Tustin, the.regional share allocations are established by SCAG. The
most recent Regional Housing Needs Allocation Plan was adopted by SCAG in July 2007
and provides projections for the period from January 1, 2006 through June 30, 2014. The
regional share allocations for Tustin for this period are shown in Table 24.
Table 24
Regional Housing Needs Allocation
City of Tustin
2006 to 2014
Housing Need Total Five -Year Percent of Total
Housing Need
Very Low Income (No more than 50% AMI) 512 21.5%
Low Income (Between 50% and 80% AMI) 410 17.2%
Subtotal, Very Low and Low 922 38.7%
Moderate Income (Between 80% and 120% AMI) 468 19.7%
Above Moderate (More than 120% AMI) 991 41.6%
Total Regional Housing Needs Allocation 2,380 100%
AMI: Area Median Income
SOURCE: Southern California Association of Governments, Final Regional Housing Need Allocation Plan,
Planning Period January 1, 2006 — June 30, 2014, approved July 12, 2007.
6.0 Redevelopment Agency Affordable Housing Requirements
California Community Redevelopment Law (CRL) specifies a number of requirements for
the assistance and production of affordable housing by redevelopment agencies in the
State of California. The Tustin Community Redevelopment Agency ("Agency") is
responsible for meeting these requirements for housing -related redevelopment activity in
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 34
the City of Tustin. CRL requires redevelopment agencies to set aside 20 percent of all tax
increment revenues into a Low and Moderate Income Housing fund to be used in
improving and increasing the supply of housing affordable to low and moderate income
individuals.
6.1 Housing Production Requirements
California Redevelopment Law requires at least 15 percent of all new or rehabilitated
dwelling units developed within the project area by private or public entities or persons
other than the redevelopment agency to be available at affordable housing cost to, and
occupied by, persons and families of low or moderate income. Not less than 40 percent
of these dwelling units (or 6 percent of total units developed in the project area) must be
available at affordable housing cost to, and occupied by, very low income households.
This is commonly known as the agency's inclusionary requirement.
CRL allows an agency to assist in the construction of affordable housing outside a project
area. However, for every two affordable housing units constructed outside a project area,
an agency may count one unit of affordable housing toward the agency's inclusionary
housing compliance. This is referred to as the "two-for-one" rule.
CRL requires redevelopment agencies to report on affordable housing production and
adopt a plan showing how the agency intends to meet its housing requirements over the
historic production period, for the 10 -year affordable housing compliance period, and
over the life of the Redevelopment Plan Area.
The Tustin Community Redevelopment Agency oversees three Redevelopment Project
Areas: Town Central, South Central and MCAS Tustin. The Third Five -Year
Implementation Plan for the Town Central and South Central Project Areas covers the
period from fiscal year 2005/06 through 2009/10. The MCAS Tustin Redevelopment Area,
established in 2003, operates on a different five-year schedule. Its Midterm Review and
Public Hearing on the Initial Five -Year Implementation Plan was prepared in July 2006
and reports on activities within the Project Area since its adoption in 2003.
Table 25 shows the inclusionary obligations and production in the three Project Areas
from each Project Area's adoption through 2005.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 35
Table 25
Tustin Community Redevelopment Agency
Project Area Affordable Housing Production Requirements
1976 through December 31, 20051
1Covering the time period from adoption of each Project Area through 2005. The Town Center Project Area Plan was adopted in 1976; the South
Central Project Area Plan in 1983 and amended in 1985; and the MCAS Tustin Project Area Plan in 2003. The December 31, 2005 end date to the
ten-year compliance period sets up a starting date of January 1, 2006 for the next ten-year compliance period, coinciding with the start of the time
period for the Regional Housing Need Allocation Plan. The Tustin Community Redevelopment Agency was in compliance with Inclusionary
Housing requirements for the ten-year compliance period of 7/1/95 — 6/3/05.
2Pre-AB 1290 historic production, covering production and obligations prior to 1995. Based on total production of 346 housing units
3 Tustin Grove: 21 units produced/5 sold. FTHB: 1 unit produced/1 unit sold. The covenant documents contained a buyout provision for the
owners. At the time, California Community Redevelopment Law (CRL) did not require a 45 year covenant restriction. However, based on the
affordability restrictions in the agreements, sale proceeds came back to the Agency and were deposited in the Housing Set Aside Fund.
4 Ambrose Lane: 8 units produced/2 sold; The covenant documents contained a buyout provision for the owners. At the time, CRL did not require
a 45 year covenant restriction. However, based on the affordability restrictions in the agreements, sale proceeds came back to the Agency and
were deposited in the Housing Set Aside Fund.
5 Under CRL, for every 2 housing units produced outside the Project Areas, the Agency receives 1 production credit (2 housing units produced = 1
production credit). On this basis, production credit assigned to each credited site outside the project area was as follows: The Heritage Place (54 =
27); Olson/Tustin Block (10 = 5); Orange Garden (150 = 75); Hampton Square (210 = 105); Flanders Pointe (49 = 24), and FTHB: 14 units
produced/12 sold, (2 = 1); Under the First Time Homebuyer Program (FTHB); the covenant documents contained a buyout provision for the
owners. At the time, CRL did not require a 45 year covenant restriction. However, based on the affordability restrictions in the agreements, sale
proceeds came back to the Agency and were deposited in the Housing Set Aside Fund.
SOURCE: Tustin Community Redevelopment Agency's Third Five -Year Implementation Plan for the Town Center and South Central
Redevelopment Project Areas (FY 2005-2006 to FY 2009-2010); Midterm Review and Public Hearing on Initial Five -Year Implementation Plan for
the MCAS Tustin Redevelopment Project, July 10, 2006; City of Tustin Community Development Department Planning Division — Tustin Legacy
Monitoring Report; David Paul Rosen & Associates.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 36
Total Project
Area
Construction
Very Low
Income Units
Low/Moderate
Income Units
Total
Inclusionary
Units
Historic Production2
346
Production Requirement
22
32
54
Actual Production
116
0
116
Unit Surplus / (Deficit)
94
(32)
62
Ten -Year Compliance
Period 7/1/95 — 12/31/05
491
Production Requirement
29
45
74
South Central
145
9
13
22
Town Center
38
2
4
6
WAS Tustin
308
18
28
46
Actual Production
46
304
350
South Central3
8
8
16
Town Center4
0
6
6
WAS Tustin
27
64
91
Outside Project Areas
11
226
237
Unit Surplus
17
259
276
Tota I
Production Requirement
51
77
128
Actual Production
162
304
466
Unit Surplus
111
227
338
1Covering the time period from adoption of each Project Area through 2005. The Town Center Project Area Plan was adopted in 1976; the South
Central Project Area Plan in 1983 and amended in 1985; and the MCAS Tustin Project Area Plan in 2003. The December 31, 2005 end date to the
ten-year compliance period sets up a starting date of January 1, 2006 for the next ten-year compliance period, coinciding with the start of the time
period for the Regional Housing Need Allocation Plan. The Tustin Community Redevelopment Agency was in compliance with Inclusionary
Housing requirements for the ten-year compliance period of 7/1/95 — 6/3/05.
2Pre-AB 1290 historic production, covering production and obligations prior to 1995. Based on total production of 346 housing units
3 Tustin Grove: 21 units produced/5 sold. FTHB: 1 unit produced/1 unit sold. The covenant documents contained a buyout provision for the
owners. At the time, California Community Redevelopment Law (CRL) did not require a 45 year covenant restriction. However, based on the
affordability restrictions in the agreements, sale proceeds came back to the Agency and were deposited in the Housing Set Aside Fund.
4 Ambrose Lane: 8 units produced/2 sold; The covenant documents contained a buyout provision for the owners. At the time, CRL did not require
a 45 year covenant restriction. However, based on the affordability restrictions in the agreements, sale proceeds came back to the Agency and
were deposited in the Housing Set Aside Fund.
5 Under CRL, for every 2 housing units produced outside the Project Areas, the Agency receives 1 production credit (2 housing units produced = 1
production credit). On this basis, production credit assigned to each credited site outside the project area was as follows: The Heritage Place (54 =
27); Olson/Tustin Block (10 = 5); Orange Garden (150 = 75); Hampton Square (210 = 105); Flanders Pointe (49 = 24), and FTHB: 14 units
produced/12 sold, (2 = 1); Under the First Time Homebuyer Program (FTHB); the covenant documents contained a buyout provision for the
owners. At the time, CRL did not require a 45 year covenant restriction. However, based on the affordability restrictions in the agreements, sale
proceeds came back to the Agency and were deposited in the Housing Set Aside Fund.
SOURCE: Tustin Community Redevelopment Agency's Third Five -Year Implementation Plan for the Town Center and South Central
Redevelopment Project Areas (FY 2005-2006 to FY 2009-2010); Midterm Review and Public Hearing on Initial Five -Year Implementation Plan for
the MCAS Tustin Redevelopment Project, July 10, 2006; City of Tustin Community Development Department Planning Division — Tustin Legacy
Monitoring Report; David Paul Rosen & Associates.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 36
Historic production in the Town Center and South Central Project Areas from adoption of
the Town Center Redevelopment Area Plan on November 22, 1976 through June 30, 1995
totaled 346 new housing units within the project areas, which were not assisted with Low
and Moderate Income Housing Funds. This resulted in an inclusionary requirement of 54
units of affordable housing. Of these 54 units, 32 must be affordable to low and moderate
income households and no less than 22 units must be affordable to very low income
households. During this period, the Agency produced 116 units of affordable inclusionary
housing, exceeding the total requirement by 62 units. All of the inclusionary units
produced were affordable to very low income households. The Agency did not meet its
obligation, then, in production of housing affordable to low and moderate income
households.
The Agency's last 10 -year affordable housing production compliance period ran from
fiscal year 1995/96 through December 31, 2005. During this period, 491 new housing
units were constructed within the three project areas, 308 of which were constructed in
the MCAS Tustin Project Area as of December 2005. The Agency is required to provide 74
units of affordable inclusionary housing based on this number of units constructed.
During the 10 -year compliance period, the Agency produced 351 units of affordable
inclusionary housing, including 305 units affordable to low and moderate income
households, 226 of which were rehabilitated outside of the project areas, and 46 units
affordable to very low income households. The Agency exceeded its inclusionary
requirement by 277 units.
CRL allows for agencies that have exceeded the affordable inclusionary housing
requirements within the 10 -year compliance period to count the excess units in order to
meet the inclusionary requirements during the next 10 -year compliance period. If the
legislature does not change this provision of the CRL, the Agency may carry over its total
surplus of 339 affordable units, including 228 low and moderate income units and 111.
very low income units.
6.2 Proportionality Requirements
As of January 1, 2002, Low and Moderate Income (LMI) Housing Funds must be targeted
to specific income levels using the regional fair share allocation (shown in Table 26
below) as the benchmark. This means that 36.8 percent of Low and Moderate Income
Housing Fund expenditures must be on housing affordable to very low income households
and 29.5 percent of expenditures must be on housing affordable to low income
households.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 37
In addition, as of January 1, 2003, according CRL Section 33334.4(b), each agency shall
expend, over the duration of each redevelopment implementation plan, the moneys in the
Low and Moderate Income Housing Fund to assist housing that is available to all persons
regardless of age in at least the same proportion as the number of low-income households
with a member under age 65 years bears to the total number of low-income households of
the community as reported in the most recent census of the United States Census Bureau.
According to the 2000 U.S. Census, Tustin must spend 87.4 percent of its low and
moderate income housing funds to assist housing that is available to all persons regardless
of age.
Table 26
Low and Moderate Income Housing Fund Allocation
City of Tustin
2006-2014
Low and Moderate Income Housing Need Total Five -Year Percent of Total
Housing Need
Very Low Income (No more than 50% AMI) 512 36.8%
Low Income (Between 50% and 80% AMI) 410 29.5%
Moderate Income (Between 80% and 120% AMI) 468 33.7%
Total LMI Fund Allocation 11390 100%
SOURCE: Southern California Association of Governments, Final Regional Housing Need Allocation Plan,
Planning Period January 1, 2006 —June 30, 2014, approved July 12, 2007.
6.3 Replacement Housing Requirements
CRL also requires the replacement of all housing units occupied by low or moderate
income households which are destroyed or taken out of the low and moderate income
market as part of a redevelopment project, subject to a written agreement with or financial
assistance by a redevelopment agency. This is known as the Agency's replacement
housing obligation. As of the Five -Year Implementation Plan completed in December
2004, the Town Center and South Central Redevelopment Areas have replacement
requirements of 64 units and have produced 510 replacement units, resulting in a surplus
of 446 units. The MCAS Tustin Redevelopment Area has not, and does not anticipate,
removing or destroying any housing units and thus does not anticipate having a
replacement requirement.
City of Tustin November 29, 2007
Affordable Housing Needs Assessment Page 38
City of Tustin
Comprehensive Affordable Housing Strategy
Appendix B
Local Resources for Affordable Housing
February 6, 2008
Prepared for: City of Tustin
Submitted By: David Paul Rosen & Associates
Northern California
David Rosen, Principal
1330 Broadway, Suite 937
Oakland, CA 94612-2509
Phone: 510-451-2552
Fax: 510-451-2554
e-mail: David@DRAConsultants.com
www.draconsultants.com
Southern California
Nora Lake -Brown, Principal
3941 Hendrix St
Irvine, CA 92 61 4-663 7
Phone: 949-559-5650
Fax: 949-559-5706
e-mail: Nora@DRAConsuItants.com
www.draconsultants.com
Local Resources for Affordable Housing
Introduction
The key source of local funding for affordable housing development and preservation in
Tustin is the Tustin Community Redevelopment Agency's Low and Moderate Income
Housing Fund, also known as the 20 Percent Set -Aside Fund. The estimated fund balance
in the Agency's Low and Moderate Income Housing Fund as of June 30, 2007 was $17.86
million.
The City is not an entitlement jurisdiction for HOME funds, but may apply to the State for
HOME funds as described in a separate report prepared by DRA entitled Affordable
Housing Assistance Programs, presented as Appendix C of the Comprehensive Affordable
Housing Strategy.
The City is an entitlement jurisdiction for Community Development Block Grant (CDBG)
funds. For FY 2007/08, the City of Tustin was allocated $827,201 in CDBG funds. These
funds may be used for a number of community development purposes besides housing.
Given the many competing needs for these funds and the restrictions on these funds for
housing purposes, the Agency does not typically allocate CDBG funds for affordable
housing development.
Low and Moderate Income Housing Set -Aside Fund
Table 1 presents projected Low and Moderate Income Housing Funds available to the City
of Tustin Community Redevelopment Agency over the eleven -year period from FY
2007/08 through FY 2017/18, based on information provided by Community
Redevelopment Agency staff.
California Redevelopment Law (CRL) requires redevelopment agencies to set aside 20
percent of all tax increment revenues into a Low and Moderate Income Housing Fund, also
commonly known as the "20 Percent Set -Aside Fund," to be used in improving and
increasing the supply of housing affordable to low and moderate income individuals.
Funds may be spent on very low income (less than 50 percent of area median income), low
income (51 percent to 80 percent of area median income) and moderate income (81 to 120
percent of area median income) households.
According to CRL Section 33334.4(a), beginning January 1, 2002, Low and Moderate
Income Housing Funds must be targeted to specific income levels using the regional fair
share allocation, summarized on the next page, as the benchmark (see Table 24 of the
Affordable Housing Needs Assessment, Appendix A of the Comprehensive Affordable
Housing Strategy).
Tustin Comprehensive Affordable Housing Strategy February 6, 2008
Local Resources for Affordable Housing Page 1
Low and Moderate Income Housing Fund Allocation
Percentage Benchmark
City of Tustin
2006-2014
Very Low Income (No more than 50% AMI) 512 37%
Low Income (Between 51 % and 80% AMI) 410 29%
Moderate Income (Between 81 % and 120% AMI) 468 34%
Total Low and Moderate Housing Needs Allocation 1,390 100%
SOURCE: Southern California Association of Governments, Final Regional Housing Need Allocation Plan,
Planning Period January 1, 2006 — June 30, 2014, approved July 12, 2007.
In addition, as of January 1, 2003, according CRL Section 33334.4(b), each agency shall
expend, over the duration of each redevelopment implementation plan, the moneys in the
Low and Moderate Income Housing Fund to assist housing that is available to all persons
regardless of age in at least the same proportion as the number of low-income households
with a member under age 65 years bears to the total number of low-income households of
the community as reported in the most recent census of the United States Census Bureau.
According to the 2000 U.S. Census, Tustin must spend 87.4 percent of its low and
moderate income housing funds to assist housing that is available to all persons regardless
of age.
The Redevelopment Agency Set -Aside Fund is projected to receive $3.71 million in
Housing Set -Aside funds in FY 2007/08, increasing to $10.92 million in FY 2017/18 as
the significant amount of development planned for Tustin Legacy in the MCAS Project
Area continues to occur.
The MCAS Project Area accounts for the majority of projected Set -Aside Fund tax
increment revenues. Projected income for the MCAS Project Area equals $2.07 million in
FY 2007/08. Annual tax increment revenues to MCAS are projected to grow to $8.65
million by FY 2017/18. MCAS tax increment growth is based on projections from Taussig
& Associates Consulting Group, adjusted to reflect a one-year delay in the implementation
schedule.
Town Center Project Area tax increment revenues are projected at approximately $0.83
million in FY 2007/08 and $0.84 million in FY 2008/09. South Central Project Area tax
increment revenues are projected at $0.81 million in FY 2007/08 and $0.83 million in FY
2008/09. Tax increment revenues in the Town Center and South Central Project Areas are
thereafter projected to increase 3.5 percent annually, with annual tax increment revenues
Tustin Comprehensive Affordable Housing Strategy February 6, 2008
Local Resources for Affordable Housing Page 2
projected to reach $1.14 million and $1.13 million, respectively, in the two Project Areas
in FY 2017/18.
Total operating expenses funded from Housing Set -Aside revenues are projected at
approximately $647,300 in FY 2007/08, increasing 3.5 percent annually, except for a 10
percent annual increase projected for the MCAS project area for each of FY 2010/11 and
FY 2011/12. In 2009/10, an additional $320,000 in operating expenses is allocated to the
MCAS Project Area as a result of expenses previously assigned to the Tustin Legacy
Enterprise Fund. The Enterprise Fund closes at the end of FY 2008/09 and the additional
expenses will be allocated to the MCAS Project Area expenditure accounts. Of the total
$320,000, 25 percent, or $80,000 is assigned to the Low and Moderate Income Housing
Set -Aside fund. Over the eleven -year period, total operating costs are projected to equal
$9.65 million for the three Project Areas combined.
The Tustin Community Redevelopment Agency entered into an agreement with the City of
Tustin to reimburse the City for the land write-down that the City provided on the property
in Tustin Legacy, which is located within the MCAS Project Area, to provide and meet the
Agency's affordable housing requirements. The agreement calls for the Agency to
reimburse the City for the total amount of this land write-down. Projected payment
amounts by year made to the General Fund, which are shown in Table 1, may change
annually, at the discretion of the City's Finance Director, and are only shown for purposes
of Table 1 as one potential alternative. Given how these payments will actually be made
each year, will determine the actual total loan payments with interest to be made to the
City's General Fund.
The projections in Table 1 exclude potential interest earnings on the fund balance, except
for the figures shown for FY 2007/08. Interest earnings will depend on the rate at which
the Agency spends its tax increment funds and the year-end balance for each Project Area.
The Agency projects interest earnings at 3 percent annually.
Tustin Comprehensive Affordable Housing Strategy February 6, 2008
Local Resources for Affordable Housing Page 3
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DAVID PAUL ROSEN & ASSOCIATES
City of Tustin
Comprehensive Affordable Housing Strategy
Appendix C
Affordable Housing Assistance Programs
Prepared for: City of Tustin
Submitted By: David Paul Rosen & Associates
Northern California
David Rosen, Principal
1330 Broadway, Suite 937
Oakland, CA 94612-2509
Phone: 510-451-2552
Fax: 510-451-2554
e-mail: David@DRAConsuItants.com
www.draconsultants.com
Southern California
Nora Lake -Brown, Principal
3941 Hendrix St
Irvine, CA 92614-6637
Phone: 949-559-5650
Fax: 949-559-5706
e-mail: Nora@DRAConsuItants.com
www.draconsultants.com
November 9, 2007
TABLE OF CONTENTS
INTRODUCTION: DESCRIPTION OF MAJOR HOUSING AGENCIES............................................................1
INCOMEAND RENT LIMITS.............................................................................................................................. 3
PROGRAM FACT SHEETS
U.S. Department of Housing and Urban Development (HUD)—
RenterPrograms..................................................................................................................................................
6
Section 202 Supportive Housing for the Elderly Program.........................................................................
7
Section 811 Supportive Housing for Persons with Disabilities Program ...................................................
8
Housing Choice (Section 8) Voucher Program..........................................................................................
9
Supportive Housing for the Homeless (McKinney Act)
SupportiveHousing Program (SHP)....................................................................................................
10
Supportive Housing for the Homeless (McKinney Act)
Shelter Plus Care (S+C) Program.........................................................................................................
11
Supportive Housing for the Homeless (McKinney Act)
Emergency Shelter Grants (ESG) Program............................................................................................
12
U.S. Department of Housing and Urban Development (HUD)—
EntitlementPrograms........................................................................................................................................13
Community Development Block Grant (CDBG) Program.......................................................................
14
HOME Investment Partnerships Program (HOME)..................................................................................
15
California Tax Credit Allocation Committee (TCAC)—
RenterPrograms................................................................................................................................................16
Low Income Housing Tax Credit Program(LIHTC).................................................................................
17
California Debt Limit Allocation Committee (CDLAC)—
RenterPrograms................................................................................................................................................18
Tax -Exempt Private Activity Bonds
Qualified Residential Rental Project Pool............................................................................................
19
California Debt Limit Allocation Committee (CDLAC)—
OwnerPrograms................................................................................................................................................
20
Tax -Exempt Mortgage Revenue Bonds
Single -Family Housing Programs Pool.................................................................................................
21
California Department of Housing and Community
Development (HCD)—Renter Programs..........................................................................................................
22
Multifamily Housing Program (MHP)......................................................................................................
23
Emergency Housing and Assistance Program
Capital Development (EHAPCD), Operating Facility (EHAP).............................................................
24
Affordable Housing Innovation Fund(AHIF)...........................................................................................25
Regional Planning, Housing and Infill Incentive Account (RPHIIA).......................................................
26
Transit -Oriented Development (TOD) Housing Program........................................................................
27
PredevelopmentLoan Program (PLP).......................................................................................................
28
TABLE OF CONTENTS (Continued)
California Department of Housing and Community
Development(HCD)—Owner Programs..........................................................................................................
29
CalHOMEProgram...................................................................................................................................
30
Building Equity and Growth in Neighborhoods (BEGIN) Program.........................................................
31
California Self -Help Housing Program(CSHHP).....................................................................................
32
Joe Serna, Jr. Farmworker Housing Grant (JSJFWHG) Program...............................................................
33
California Housing Finance Agency (CaIHFA)—
RenterPrograms................................................................................................................................................
34
Predevelopment Finance Program...........................................................................................................35
Permanent financing Program.................................................................................................................36
Preservation Acquisition Finance Program..............................................................................................37
Special Needs Financing Program...........................................................................................................
38
Tax -Exempt Bridge Financing Program....................................................................................................
39
ConstructionLoan Program......................................................................................................................
40
California Housing Finance Agency (CaIHFA)—
OwnerPrograms................................................................................................................................................
41
Homeownership Mortgage Loan Program
40 -Year Fixed Mortgage and 30 -Year fixed Mortgage........................................................................
42
Interest Only PLUS Mortgage Loan Program...........................................................................................
43
30 -Year Fixed Rate Government Insured/Guaranteed Loan Program .....................................................
44
Affordable Housing Partnership Program(AHPP)....................................................................................
45
CaIHFA Housing Assistance Program (CHAP).........................................................................................
46
Extra Credit Teacher Home Purchase Program........................................................................................
47
High Cost Area Home Purchase Assistance Program(HiCAP)................................................................
48
HomeChoiceProgram..............................................................................................................................49
California Homebuyer's Downpayment Assistance Program(CHDAP).................................................
50
Homeownership in Revitalization Areas Program(HIRAP).....................................................................
51
School facility Fee Downpayment Assistance Program(SFF).................................................................
52
Self -Help Builder Assistance Program(SHBAP).......................................................................................
53
Public Utilities Commission/Pacific Gas & Electric
California Multifamily New Homes Program (CMFNH).....................................................................
54
CaliforniaCommunities joint Powers Authority..............................................................................................
55
California Statewide Communities Development Authority Housing Bond Program ............................
56
Countyof Orange Housing and Community Services (HCS)..........................................................................
57
Multifamily Affordable Rental Housing Program
Mental Health Services Act (MHSA)........................................................................................................
58
Federal Home Loan Bank of San Francisco(FHLBSF)......................................................................................59
Affordable Housing Program (AHP)......................................................................................................... 60
ii
INTRODUCTION
DESCRIPTION OF MAJOR HOUSING AGENCIES
The following is a brief description of the major government agencies involved in affordable housing
development and financing.
U.S. Department of HUD is the primary federal agency providing funding for the
Housing and Urban development of affordable housing. The purpose of HUD programs is to
Development provide housing for those unable to afford safe, decent, and sanitary
(HUD) housing.
Federal Home Loan Bank The Federal Home Loan Bank is a congressionally chartered central -
(FHLB) credit facility for real estate mortgage lending. FHLB members are
federally insured financial institutions with substantial mortgage, real
estate and housing experience. There are 12 FHLB Districts in the
United States. Tustin is located in the 11 th District, which includes
California, Arizona, and Nevada. The 11th District FHLB is
headquartered in San Francisco.
Federal National Mortgage FNMA is a federally chartered corporation, owned by shareholders and
Association (FNMA or privately managed. Considered generally to be a secondary mortgage
Fannie Mae) market agency, FNMA buys long-term loans originated by private
lenders. This purchase "recycles" the originating private lender's money,
so that the lender can lend funds out again. FNMA has recently
committed itself to becoming a more vigorous force for affordable
housing, developing and offering new programs that meet special
housing needs.
California State HCD is the primary state agency in California that provides long-term
Department of Housing deep subsidy funds for housing projects developed for low and moderate
and Community income persons. Several major programs administered by HCD are
Development funded solely from the proceeds of bond issues approved by California
(HCD) voters.
California Housing Finance CaIHFA is the principal state agency providing tax-exempt bond -
Agency financed amortized loans to developers for affordable rental and
(CaIHFA) ownership housing. Most CaIHFA financing is provided through the
issuance of tax-exempt bonds, and is subject to federal and state
requirements governing tax-exempt bonds.
California Tax Credit Located within the State Treasurer's Office, TCAC allocates state and
Allocation Committee federal tax credits for qualifying affordable housing projects.
(TCAC)
California Debt Limit CDLAC was created by the California Legislature to assist state and local
Allocation Committee government agencies with the monitoring, issuance, and management of
(CDLAC) private activity bonds. CDLAC determines the state limit on the issuance
of private activity bonds, sets priorities on apportionment of the ceiling,
allocates bonding authority, and monitors the use of private activity
bonds throughout the State.
Introduction - 1
California Redevelopment Each redevelopment agency in the State of California is required under
Law and the 20 Percent law to set aside a minimum of twenty percent {20 percent) of any tax
Low and Moderate Income increment revenues generated from redevelopment project areas into a
Housing Set -Aside Fund separate 20 percent Low and Moderate Income Housing Fund ("Housing
Fund"). Housing Fund monies must be used for the purpose of
"increasing and improving the community's supply of low and moderate
income housing" (Health & Safety Code Section 33334.2). The Housing
Fund may be used for a broad range of activities.
County of Orange Housing HCS administers Community Development Block Grant (CDBG) and
and Community Services HOME Investment Partnership Program (HOME) funds for non -
Department (HCS) entitlement jurisdictions in the County. HCS also oversees the Orange
County Housing Authority, which administers the County's Section 8
Voucher program.
City of Tustin Community The RDA offers various housing programs including a Residential
Redevelopment Agency Rehabilitation Program. The RDA monitors all housing produced which
(RDA) benefits the City's Redevelopment Project Areas and also administers the
20 Percent Housing Set -Aside Fund and other affordable housing
programs. The City's Community Development Department administers
the Community Development Block Grant (CDBG) funds received by the
City.
Introduction - 2
INCOME AND RENT LIMITS (2007)
Income Limits Affordable housing assistance programs generally target specific income groups
eligible for assistance, relying on standard definitions of income. Income limits are
defined as percentages of the Area Median Income {AMI), adjusted for family size.
Government -assisted housing programs currently use a number of different income
levels. Five income levels are defined below, reflecting categories currently used in
most government -assisted housing programs. The income limits shown are based on
a 2007 median income of $78,700 for Orange County for a family of four. For some
income categories, income limits are adjusted from the actual percentages.
Source: http://www.hcd.ca.gov/hpd/hrc/rep/state/incNote.html, Official State Income
Limits for 2007, California Department of Housing and Community Development
(HCD)
Affordable For most housing programs, affordable monthly housing cost is defined as no more
Monthly than 30 percent of monthly gross income. Housing is considered affordable when a
Housing Cost household pays no more than 30 percent of its gross income for housing expenses.
For renters, housing expenses include rent and utilities. For owners, these expenses
generally include mortgage, property tax, insurance, and condominium fees or
maintenance expenses.
The Orange County Housing Authority publishes utility allowances annually for the
County. Utility allowances vary according to the specific combination of gas and
electricity used and the size and type of structure.
Income and Rent Limits - 3
Income Category (% of Area Median Income)
Household Size
30%
50%
80%
100%
120%
1 Person
$18,200
$30,300
$48,500
$55,100
$66,100
2 Persons
$20,800
$34,650
$55,450
$63,000
$75,500
3 Persons
$23,400
$38,950
$62,350
$70,800
$85,000
4 Persons
$26,000
$43,300
$69,300
$78,700
$94,400
5 Persons
$28,100
$46,750
$74,850
$85,000
$102,000
6 Persons
$30,150
$50,250
$80,400
$91,300
$109,500
7 Persons
$32,250
$53,700
$85,950
$97,600
$117,100
8 Persons
$34,300
$57,150
$91,500
$103,900
$124,600
Source: http://www.hcd.ca.gov/hpd/hrc/rep/state/incNote.html, Official State Income
Limits for 2007, California Department of Housing and Community Development
(HCD)
Affordable For most housing programs, affordable monthly housing cost is defined as no more
Monthly than 30 percent of monthly gross income. Housing is considered affordable when a
Housing Cost household pays no more than 30 percent of its gross income for housing expenses.
For renters, housing expenses include rent and utilities. For owners, these expenses
generally include mortgage, property tax, insurance, and condominium fees or
maintenance expenses.
The Orange County Housing Authority publishes utility allowances annually for the
County. Utility allowances vary according to the specific combination of gas and
electricity used and the size and type of structure.
Income and Rent Limits - 3
Health & The California Health and Safety Code definitions of affordability apply to housing
Safety Code assisted from Redevelopment Agencies' Low and Moderate Income Housing 20
Definition of Percent Set -Aside Funds. The definition of affordability differs depending on income
Affordability levels and whether the housing is renter- or owner -occupied housing.
As defined by Health & Safety Code Section 50053(b) et seq.:
"'Affordable rent,' including a reasonable utility allowance, shall notexceed:
(1) For extremely low income households the product of 30 percent times 30 percent
of the area median income, adjusted for family size appropriate for the unit.
(2) For very low income households, the product of 30 percent times 50 percent of
the area median income adjusted for family size appropriate for the unit.
(3) For lower income households whose gross incomes exceed the maximum income
for very low income households, the product of 30 percent times 60 percent of
the area median income adjusted for family size appropriate for the unit. In
addition, for those lower income households with gross incomes that exceed 60
percent of the area median income adjusted for family size, it shall be optional for
any state or local funding agency to require that affordable rent be established at a
level not to exceed 30 percent of gross income of the household.
(4) For moderate income households, the product of 30 percent times 110 percent of
the area median income adjusted for family size appropriate for the unit. In
addition, for those moderate income households whose gross incomes exceed
110 percent of the area median income adjusted for family size, it shall be
optional for any state or local funding agency to require that affordable rent be
established at a level not to exceed 30 percent of gross income of the household."
The City of Tustin places no annual cap on housing cost for moderate income
households whose gross income exceeds 110 percent of the area median income.
As defined by Health & Safety Code Section 50052.5(b) et seq.:
"'Affordable housing cost' may not exceed the following:
(1) For extremely low income households the product of 30 percent times 30 percent
of the area median income adjusted for family size appropriate for the unit.
(2) For very low income households the product of 30 percent times 50 percent of the
area median income adjusted for family size appropriate for the unit.
(3) For lower income households whose gross incomes exceed the maximum income
for very low income households and do not exceed 70 percent of the area median
income adjusted for family size, the product of 30 percent times 70 percent of the
area median income adjusted for family size appropriate for the unit. In addition,
for any lower income household that has a gross income that equals of exceeds
70 percent of the area median income adjusted for family size, it shall be optional
for any state or local funding agency to require that affordable housing cost not
exceed 30 percent of the gross income of the household.
(4) For moderate income households, affordable housing cost shall not be less than
28 percent of the gross income of the household, nor exceed the product of 35
percent times 110 percent of area median income adjusted for family size
appropriate for the unit. In addition, for any moderate income household that has
a gross income that exceeds 110 percent of the area median income adjusted for
family size, it shall be optional for any state or local funding agency to require that
affordable housing cost not exceed 35 percent of the gross income of the
household."
The City of Tustin places no annual cap on housing cost for moderate income
households whose gross income exceeds 110 percent of the area median income.
Income and Rent Limits - 4
Affordable Housing Type of Housing
Cost Income Level of Occupants Rental Ownership
Community
Redevelopment
Law
Very Low Income 30% of 50% 30% of 50%
(50% of Area Median Income and
below)
Lower Income 30% of 60%' 30% of 70%'
(51 % to 80% of Area Median Income)
Moderate Income 30% of 110°/x' 35% of 110%,' but
(81 % to 120% of Area Median Income) no less than 28% of
actual income
' At the upper end of the income range, housing cost is linked to a household's actual income instead of the
area median income.
Income and Rent Limits - 5
U.S. Department of Housing and Urban Development {HUD)
Renter Programs
HUD Renter Programs - 6
Section 202 Supportive Housing for the Elderly Program
Program Purpose To help expand the supply of affordable housing with supportive services for the
very low income elderly and to provide options that allow them to live
independently but in an environment that provides some support activities such as
cleaning, cooking, transportation, etc.
Program Terms of Loans/Type of Financial Assistance
Description This program provides interest-free capital advances to finance the construction,
rehabilitation, or acquisition, with or without rehabilitation, of structures that will
serve as supportive housing for very low income elderly persons, including the frail
elderly, and provides rent subsidies for the projects to help make them affordable.
Rental assistance funds are also provided to cover the difference between HUD -
approved operating costs for the project and the tenants' contribution towards rent.
• Repayment of capital advances is not required so long as housing remains
available to very low income elderly for at least 40 years.
• Project rental assistance is provided through an annual rental assistance
contract that covers the costs of units occupied by very low income elderly
residents that the project income does not cover.
• Project Rental Assistance Contracts (PRACs) are for 20 -year terms with
extensions in five-year increments based on availability of funds.
• The program requires sponsors to provide a range of supportive services.
The costs of supportive services are considered an eligible rental assistance
cost.
Eligible Activities
Capital advances may be used for construction, reconstruction, or rehabilitation of
any structure that will be used for supportive housing for the elderly.
Rent Restrictions
Rents must be set at the highest of (i) 30 percent of adjusted monthly income, (ii)
10 percent of monthly income, or (iii) a portion of welfare payments specifically
designated to meet housing costs. The project must meet program affordability
standards for a minimum 40 -year term.
Targeted Population
Very low income elderly persons at least 62 years old (annual income not in excess
of 50 percent of Area Median Income, adjusted for family size).
Who Can Apply Private, nonprofit organizations.
Application Funding is awarded on a competitive basis through a Notice of Funding
Procedure Availability (NOFA) published each fiscal year. In 2006, eight projects in California
(HUD's Region 9) were awarded a total of $62.1 million.
Administering U.S. Department of Housing and Urban Development
Agency/ 925 L Street
Contact Sacramento, CA 95814-3702
916-498-5220
www.hud.gov/offices/hsg/mfh/progdesc/eld202.cfm
HUD Renter Programs - 7
Section 811 Supportive Housing for Persons with Disabilities Program
Program Purpose To allow persons with disabilities to live as independently as possible in the
community by increasing the supply of rental housing with on-site supportive
services.
Program Terms of Loans/Type of Financial Assistance
Description This program provides interest-free capital advances to nonprofit sponsors to help
finance the development of rental housing such as independent living projects,
condominium units, and small group homes with the availability of supportive
services for persons with disabilities. The program requires a supportive services
plan and requires funding of those services from a source other than the Section
811 program. This current program was separated from the former Section 202
Program by the National Affordable Housing Act of 1990.
• Repayment of capital advances is not required so long as housing remains
available to very low income disabled persons for at least 40 years.
• Project rental assistance is to be provided through an annual rental assistance
contract that covers costs of units occupied by very low income disabled
residents that project income does not cover.
• Project Rental Assistance Contracts (PRACs) are for 20 -year terms with
optional extensions in five-year increments based on availability of funds.
• The program requires the provision of a supportive services plan with
services targeted to disabled residents. The costs of supportive services are
not considered an eligible rental assistance cost. The project sponsor must
provide evidence of funding for the supportive services.
Eligible Activities
Eligible activities include construction, rehabilitation, and acquisition of small
group and independent living homes.
Rent Restrictions
Rents must be set at the highest of (i) 30 percent of adjusted monthly income, (ii) 10
percent of monthly income, or (iii) a portion of welfare payments specifically
designated to meet housing costs. The project must meet affordability standards for
a minimum 40 -year term.
Targeted Population
Very low income disabled persons (annual income not in excess of 50 percent of
Area Median Income, adjusted for family size).
Who Can Apply Private nonprofit organizations.
Application Funding is awarded on a competitive basis through a Notice of Funding Availability
Procedure (NOFA) published each fiscal year. In 2006, four projects in California (HUD's
Region 9) were awarded a total of $6.2 million.
Administering U.S. Department of Housing and Urban Development
Agency/ 925 L Street
Contact Sacramento, CA 95814-3702
916-498-5220
www.hud.gov/offices/hsg/mfh/progdesc/disab81 l .cfm
HUD Renter Programs - 8
Housing Choice (Section 8) Voucher Program
Program Purpose To assist very low income families, the elderly, and the disabled to afford decent,
safe, and sanitary housing in the private market. Since housing assistance is
provided on behalf of the family or individual, participants are able to find their
own housing, including single-family homes, townhouses, and apartments.
Program Terms of Loans/Type of Financial Assistance
Description Housing choice vouchers are administered locally by Public Housing Agencies
(PHAs). The PHAs receive federal funds from the U.S. Department of Housing and
Urban Development (HUD) to administer the voucher program. A housing subsidy
is paid to the landlord directly by the PHA on behalf of the participating family.
The family then pays the difference between the actual rent charged by the
landlord and the amount subsidized by the program. Under certain circumstances,
if authorized by the PHA, a family may use its voucher to purchase a modest home.
Family income may not exceed 50 percent of the median income for the
county or metropolitan area in which the family chooses to live.
A PHA must provide 75 percent of its vouchers to applicants whose incomes
do not exceed 30 percent of Area Median Income.
Eligible Activities
Rental assistance to eligible very low income families, seniors, and disabled
households. In some cases, vouchers may be used toward homeownership, if
authorized by the PHA.
Rent Restrictions
PHAs establish a payment standard based on Fair Market Rents in the local housing
market. The maximum amount of the housing assistance is the lesser of the
payment standard minus 30 percent of the family's monthly adjusted income or the
gross rent for the unit minus 30 percent of monthly adjusted income. The assistance
is paid directly to the landlord.
Targeted Population
Very low income families, seniors, and disabled households (annual income not in
excess of 50 percent of Area Median Income, adjusted for family size).
Who Can Apply Families and individuals
Application Families and individuals first apply to the PHA, which determines eligibility. If
Procedure eligible, the PHA puts the family's or individual's name on a waiting list. In FY
2006/07, the Orange County Housing Authority administered 347 Section 8
vouchers. The Orange County Housing Authority's waiting list is currently closed.
Administering Orange County Housing Authority
Agency/Contact 1770 N. Broadway
Santa Ana, CA 92706
714-573-3117
www.ochousing.org/renter.asp
HUD Renter Programs - 9
Supportive Housing for the Homeless (McKinney Act)
Supportive Housing Program (SHP)
Program Purpose To promote the development of housing and supportive services to assist homeless
persons in the transition from streets and shelters to permanent housing and
maximum self-sufficiency.
Program Terms of Loans/Type of financial Assistance
Description
As part of a Continuum of Care strategy, this program has fivecomponents:
(1) Transitional Housing, (2) Permanent Housing for Persons with Disabilities,
(3) Supportive Services Only, (4) Safe Havens, and (5) Innovative Supportive
Housing. The Transitional Housing component of SHP is intended to assist eligible
individuals and families in the transition to independent living through the
provision or support of transitional housing facilities and related services. The
Permanent Housing element is limited to disabled homeless persons. The program
provides grants and technical assistance. Assisted projects must be operated as
transitional housing and permanent housing for a minimum 10 -year term.
Eligible Activities
The types of activities eligible for program support include acquisition,
rehabilitation, new construction, leasing, operations, supportive services costs,
administration, establishment and operation of employment assistance programs
and child-care services, and technical assistance.
Rent Restrictions
Resident rents must be set at the highest of (i) 30 percent of adjusted monthly
income, (ii) 10 percent of monthly income, or (iii) a portion of welfare payments
specifically designated to meet housing costs.
Targeted Population
Homeless persons, in particular, de -institutionalized mentally ill, developmentally
disabled, or physically disabled persons and families with children.
Who Can Apply Based on priorities established by a county's Continuum of Care, projects
sponsored by state and local government entities and nonprofit organizations may
apply. Tustin participates in the Supportive Housing Program as a part of Orange
County's Continuum of Care. Tustin has allocated Supportive Housing funds to
assist in creation of new transitional housing units for the Salvation Army and the
purchase of a 16 -unit apartment house for transitional housing in Anaheim.
Application U.S. Department of Housing and Urban Development (HUD) publishes a Notice of
Procedure Funding Availability (NOFA). Awards are made on a competitive basis.
Administering U.S. Department of Housing and Urban Development (HUD)
Agency/Contact 600 Harrison Street, 3'd Floor
San Francisco, CA 94107-1300
415-489-6400
www.hud.gov/offices/cpd/homeless/programs/Shp/index.cfm
HUD Renter Programs - 10
Supportive Housing for the Homeless (McKinney Act)
Shelter Plus Care (S+C) Program
Program Purpose Provide housing and supportive services on a long-term basis for homeless persons
with disabilities (primarily those with serious mental illnesses, chronic problems
with alcohol and/or drugs, or acquired immunodeficiency syndrome (AIDS) or
related diseases) and their families who are living in places not intended for human
habitation (e.g., streets) or in emergency shelters. The program allows for a variety
of housing choices and a range of supportive services funded by other sources in
response to the needs of the hard -to -reach homeless population with disabilities.
Program Terms of Loans/Type of Financial Assistance
Description
Grants for the provision of rental assistance payments
Eligible Activities
• Tenant -based Rental Assistance (TRA)
• Sponsor -based Rental Assistance (SRA)
• Project -based Rental Assistance with (PRAW) or without (PRA) rehabilitation
• Section 8 Moderate Rehabilitation Program for Single Room Occupancy
(SRO) Dwellings
Targeted Population
Hard -to -reach homeless persons with disabilities.
Who Can Apply Based on priorities established by a county's Continuum of Care, projects
sponsored by state and local government entities and nonprofit organizations may
apply. Tustin participates in the Shelter Plus Care Program through Orange
County's Continuum of Care.
Application U.S. Department of Housing and Urban Development (HUD) publishes a Notice of
Procedure/ Funding Availability (NOFA). Awards are made on a competitive basis.
Amount
Available
Administering U.S. Department of Housing and Urban Development (HUD)
Agency/Contact 34 Civic Center Plaza, Room 7015
Santa Ana, CA 92701-4003
714-796-5577
www.hud.gov/offices/cpd/homeless/programs/splusc/index.cfm
HUD Renter Programs - 11
Supportive Housing for the Homeless (McKinney Act)
Emergency Shelter Grants (ESG) Program
Program Purpose Improve the availability of existing emergency shelters for the homeless, help make
available additional emergency shelters, help meet operating costs of such shelters
and provide specified social services to homeless individuals, and help prevent the
increase of homelessness through preventive programs. First step in Continuum of
Care model.
Program Terms of Loans/Type of Financial Assistance
Description
• Formula grants pursuant to a Community Development Block Grant (CDBG)
formula to entitlement cities, counties, and states. Grants are then made to
eligible recipients, which can be either local government agencies or private
nonprofit organizations. FSG grants must be matched dollar for dollar by
locally generated amounts.
Shelter must be maintained for the homeless for the following specified
minimum time periods: 10 years for conversion or major rehabilitation, three
years for renovation, (no continued use requirement for homeless
prevention), and up to two years for all other activities during which
assistance is provided.
Eligible Activities
• Renovation that involves costs of 75 percent or less of the value of the
building before renovation or major rehabilitation that involves costs of more
than 75 percent of value of the building before rehabilitation
• Conversion of a building to an emergency shelter when cost of conversion
and rehabilitation exceeds 75 percent of building value before conversion
• Provision of essential services (e.g., assistance in obtaining permanent
housing, employment counseling, nutritional counseling, substance abuse
treatment, child care, food supply, and transportation to social services,
among others)
• Operational expenses
• Homeless prevention
• Designated administrative costs of program
Targeted Population
Homeless persons.
Who Can Apply Entitlement cities and counties, state governments, and U.S. territories. The City of
Tustin participates in Orange County's Continuum of Care program, which is
entitled for the ESG program.
Application Funds are allocated to entitlement communities pursuant to a U.S. Department of
Procedure/ Housing and Urban Development (HUD) -required Consolidated Plan. Non -
Amount entitlement communities may apply through their Continuum of Care consortium
Available directly on an annual basis to HUD.
Administering U.S. Department of Housing and Urban Development
Agency/ 34 Civic Center Plaza, Room 7015
Contact Santa Ana, CA 92701-4003
714-796-5577
www.hud.gov/offi,ces/cpd/homeless/library/esg/index.cfm
HUD Renter Programs - 12
U.S. Department of Housing and Urban Development (HUD)—
Entitlement Programs
HUD Entitlement Programs - 13
Community Development Block Grant (CDBG) Program
Program Purpose Provides grants to local governments for the provision of adequate housing,
suitable living environments, and expanded economic opportunities for persons of
low and moderate income.
Program Terms of Loans/Type of Financial Assistance
Description
Entitlement grants
Eligible Activities
CDBG funds can be used for many housing activities including acquisition,
relocation, demolition and clearance activities, rehabilitation, installation of
utilities, and counseling and refinancing existing debt. CDBG funds generally
cannot be used directly for new construction of housing.
Affordability Restrictions
A minimum of 70 percent of CDBG funds must be spent on activities that benefit
low and moderate income persons. Affordable housing costs are not defined.
Targeted Population
Low income households (incomes not exceeding 50 percent of Area Median
Income, adjusted for family size) and moderate income households (incomes
exceeding 50 percent but not exceeding 80 percent of Area Median Income,
adjusted for family size)
Who Can Apply Local and state governments in entitlement communities are allocated funds.
They, in turn, administer programs for the use and allocation of funds.
Application Funds are allocated to entitlement communities pursuant to a U.S. Department of
Procedure/ Housing and Urban Development (HUD)- required Consolidated Plan. Tustin is an
Amount entitlement community for the CDBG program. For FY 2007/08, the City of Tustin
Available is allocated $827,201 in CDBG funds.
Administering U.S. Department of Housing and Urban Development (HUD)
Agency/Contact 34 Civic Center Plaza, Room 7015
Santa Ana, CA 92701-4003
714-796-5577
www.hud.gov/offices/cpd/Communitydevelopment/programs/
City of Tustin
Community Development Department
300 Centennial Way
Tustin, CA 92780
714-573-3174
www.tustinca.org/citydept/CommDev/index.htm
HUD Entitlement Programs - 14
HOME Investment Partnerships Program (HOME)
Program Purpose Provides state and local governments with block grants to encourage them to
undertake activities and adopt policies aimed at expanding the supply of, and
accessibility to, affordable housing.
Program Terms of Loans/Type of Financial Assistance
Description
• Formula -based grant that requires percentage local match (generally $0.25
for every $1.00 of grant), dependent on activity type
• To be considered an eligible entitlement community, allocation amount must
equal at least $500,000; to be a participating entitlement community, an
allocation amount must equal at least $750,000. If a jurisdiction receives an
allocation between $500,000 and $750,000, it must cover the difference
before it may participate in the program.
• A percentage of a jurisdiction's funds must be set aside for Community
Housing Development Organizations (CHDOs), a specific type of nonprofit.
Eligible Activities
Acquisition, construction, reconstruction, and moderate or substantial
rehabilitation. Under some circumstances, HOME funds may be used for tenant -
based rental assistance.
Affordability Restrictions
On a program -wide basis, at least 90 percent of funds used for affordable rental
housing must be used for units serving households at or below 60 percent of Area
Median Income (AMI). The remainder may be used for units serving households at
or below 80 percent of AMI. For owner -occupied housing, all funds must be used
for units serving households at or below 80 percent of AMI.
Targeted Population
Households at or below 60 percent and 80 percent of AMI.
Who Can Apply Local and state governments are allocated funds and administer programs for use
and allocation of funds. At least 15 percent of HOME funds received by a
jurisdiction must be set aside in a fund for housing developed, owned, or
sponsored by CHDOs. Ten percent of HOME funds may be allocated for
predevelopment activities by CHDOs.
Application The U.S. Department of Housing and Urban Development (HUD) allocates funds
Procedure/ to entitlement communities on a formula basis. Orange County is a participating
Amount jurisdiction for the HOME program. The City of Tustin is not an entitlement
Available community for the HOME program but may apply to the State of California
Department of Housing and Community Development (HCD) for HOME
allocations.
Administering California Department of Housing and Community Development (HCD)
Agency/ 1800 Third Street
Contact Sacramento, CA 95834
916-327-3942
www.hcd.ca.gov/fa/home/
HUD Entitlement Programs - 15
California Tax Credit Allocation Committee (TCAQ—
Renter Programs
TCAC Renter Programs - 16
Low Income Housing Tax Credit Program (LIHTC)
Program Purpose Create additional rental housing units affordable to persons of low income by
encouraging private capital investment.
Program Terms of Loans/Type of Financial Assistance
Description The federal program provides a tax credit to owners of low income rental housing
that may be claimed annually over a 10 -year period. A.companion state tax credit
may be claimed over a four-year period as a supplement to the federal credit.
Federal Credit
Credits are computed as a percentage of the eligible basis of an affordable
housing unit. Eligible basis is generally development costs less land value.
Costs associated with market -rate units are excluded from eligible basis.
Two credit types: (1) "9 percent credit"—for non -federally subsidized new
construction or acquisition and substantial rehabilitation, and (2) "4 percent
credit"—for federally subsidized (often through tax-exempt private activity
bond financing) new construction or acquisition/rehabilitation.
Eligible Activities
Construction and acquisition of low income rental housing units.
Rent and Income Restrictions
Rents: Maximum rent limits are based on 30 percent of target incomes (i.e., 30
percent of 50 percent, or 30 percent of 60 percent, of Area Median Income (AMI))
and unit size.
Income: At least 20 percent of the housing units must be set aside for households
with incomes of 50 percent or less of AMI, or, at least 40 percent of the units must
be set aside for households of 60 percent or less of AMI, adjusted for family size.
Targeted Population
Low income households are defined as those with incomes that do not exceed 60
percent of AMI, adjusted for family size.
Who Can Apply Owners (either for-profit or nonprofit entities) of qualified rental developments.
Application 9 percent tax credits: Eligible rental project owners apply to the California Tax
Procedure/ Credit Allocation Committee (TCAC). There are generally two highly competitive
Amount allocation cycles per year. In each calendar year, a limited number of federal tax
Available credits (equal to a credit ceiling formula of $1.90 per capita) are available. The
state credit ceiling formula is the same as the federal with a current allocation cap
of $73 million established by the California Legislature.
4 percent tax credits: 4 percent tax credits are provided on a non-competitive
basis to projects receiving allocations of tax-exempt private activity bonds.
Administering California Tax Credit Allocation Committee (TCAC)
Agency/Contact 915 Capitol Mall, Room 485
Sacramento, CA 95814
916-654-6340
www.treasurer.ca.gov/ctcac/
TCAC Renter Programs - 17
California Debt Limit Allocation Committee (CDLAC)—
Renter Programs
CDLAC Renter Programs - 18
Tax -Exempt Private Activity Bonds
Qualified Residential Rental Project Pool
Program Purpose Lower interest rates on debt for multifamily housing. Tax-exempt bond financing
results in lowering interest rates by approximately one to two percent, allowing
project sponsors to produce market -rate and affordable rental housing for low and
very low income households by reducing rents to these individuals and families.
Program Eligible Activities
Description State and local agencies and joint powers authorities may issue tax-exempt housing
revenue bonds to assist developers of multifamily rental housing units to acquire
land and construct new projects or to purchase and rehabilitate units.
Applicants receiving an allocation of tax-exempt bonds are eligible for a non-
competitive allocation of 4 percent Low Income Housing Tax Credits.
Rent and Income Restrictions
Rents: Maximum rent limits are based on 30 percent of target incomes O.e., 30
percent of 50 percent, or 30 percent of 60 percent, of Area Median Income (AMI))
and unit size.
Income: At least 20 percent of the housing units must be set aside for households
with incomes of 50 percent or less of AMI, adjusted for family size; or, at least 40
percent of the units must be set aside for households with incomes of 60 percent or
less of AMI, adjusted for family size.
Targeted Population
Low income households, which are defined as those with incomes below 60
percent of AMI, adjusted for family size
Who Can Apply Owners (either for-profit or nonprofit entities) of qualified residential rental
projects.
Application Eligible rental project owners apply to the California Debt Limit Allocation
Procedure/ Committee (CDLAC), which administers the tax-exempt private activity bond
Amount program available annually for California. CDLAC accepts applications monthly on
Available an "open window" basis. For calendar year 2007, California's State ceiling for tax-
exempt private activity bonds was $3.10 billion, and $1.74 billion was allocated to
the Rental Project Pool. Within the Rental Project Pool there are three sub -pools:
General Pool, Mixed Income Pool, and the Rural Project Pool. Currently, there
are specified allocations to the General Pool (qualified residential rental projects),
Mixed Income Developments, Single -Family Housing, and the Extra Credit Teacher
Home Purchase Program. (See also Tax -Exempt Mortgage Revenue Bonds)
Administering California Debt Limit Allocation Committee (CDLAC)
Agency/Contact 915 Capitol Mall, Room 311
Sacramento, CA 95814
916-653-3255
www.treasurer.ca.gov/cdlac/
CDLAC Renter Programs - 19
California Debt Limit Allocation Committee (CDLAC)—
Owner Programs
CDLAC Owner Programs - 20
Tax -Exempt Mortgage Revenue Bonds
Single -Family Housing Programs Pool
Program Purpose Lower interest rates on debt for single-family housing. Tax-exempt bond financing
results in lowering interest rates by approximately one to two percent.
Program Eligible Activities
Description Single -Family Housing: State and local agencies and joint powers authorities may
issue tax-exempt mortgage revenue bonds (MRBs), the proceeds of which back
below-market interest -rate mortgages for homebuyers. Homebuyers may purchase
single-family homes, either free-standing, detached homes or
condom iniums/townhomes. The tax-exempt source of funds reduces the interest
rate paid by purchasers. As an alternative to issuing MRBs, state and local
agencies may issue mortgage credit certificates (MCCs) to individual homebuyers.
Homebuyers use the MCCs to reduce their federal tax liability by applying the
credit to the net tax due.
Extra Credit Teacher Home Purchase Program: In 2002, the California Debt Limit
Allocation Committee (CDLAC) adopted revisions to this program to make it more
effective. MRBs are allocated for the program to the California Housing Finance
Agency (CaIHFA), which administers the program.
Income Restrictions
A minimum of 40 percent of the participants in the single-family program must
earn 80 percent or less of Area Median Income, adjusted for family size, or must be
located in a Qualified Census Tract. The price of the homes purchased must also
fall within the program's purchase -price limitations.
Who Can Apply State and local governmental agencies and joint powers authorities may apply for
an allocation of bond authority and issue tax-exempt Mortgage Revenue Bonds
(MRBs) or Mortgage Credit Certificates (MCCs) to assist first-time homebuyers to
purchase homes.
Application State and local governmental agencies and joint powers authorities apply to
Procedure/ CDLAC. Currently, CDLAC accepts applications monthly on an "open window"
Amount basis. For calendar year 2007, California's State ceiling tax-exempt private activity
Available bonds was $3.10 billion, $640 million was allocated to the Single -Family Housing
Program, and $207 million was allocated to the Extra Credit Teacher Program.
Administering California Debt Limit Allocation Committee (CDLAC)
Agency/Contact 915 Capitol Mall, Room 311
Sacramento, CA 95814
916-653-3255
www.treasurer.ca.gov/cdlac/
CDLAC Owner Programs - 21
California Department of Housing and Community
Development (HCD)—Renter Programs
HCD Renter Programs - 22
Multifamily Housing Program (MHP)
Program Purpose Assist the new construction, rehabilitation, and preservation of permanent,
supportive, and transitional multifamily rental housing developments for lower
income households. Proposition 1C, passed in November 2006, provides funds to
continue MHP's low interest rate housing loan programs created by Proposition 46.
The MHP funding is allocated to three components: $345 million for general
affordable housing development, $195 million for supportive housing, and $50
million for homeless youth. MHP funds are also available through the Governor's
Homeless Initiative for the chronically homeless with severe mental illnesses.
Program Terms of Loans/Type of Financial Assistance
Description Post construction, permanent financing only.
• Loans bear a simple interest of three percent (3 percent) per annum.
• Loan terms are for a minimum of 55 years.
• For the first 30 years, annual interest payments will be required in the amount
of 0.42 percent of the outstanding loan balance.
• The payment amount for the next 25 years will be set by the California
Department of Housing and Community Development (HCD) in year 30 and
will be the minimum amount necessary to cover HCD's monitoring costs.
• Unpaid principal and interest are due at the end of the loan term.
Eligible Activities
Eligible activities include new construction, rehabilitation, or acquisition and
rehabilitation of permanent or transitional rental housing and the conversion of
nonresidential structures to rental housing. Other eligible costs include child care,
after-school care, and social service facilities integrally linked to the assisted housing
units. MHP may not be used with 9 percent tax credits.
Rent Restrictions
Maximum rents are not to exceed those set by the Tax Credit Allocation Committee
(TCAC) at 30 percent of 60 percent of the monthly Area Median Income (AMI), for
the household size applicable to the unit. To score maximum leverage points, an
application must include a portion of units at lower incomes with rents set at 30
percent of the applicable income limit.
Targeted Population
Low income households (income not exceeding 60 percent of AMI, adjusted for
household size).
Who Can Apply Any local public entities, for-profit and nonprofit entities, limited equity housing
cooperatives, individuals, Indian reservations and rancherias, and limited
partnerships in which an eligible applicant or an affiliate is a general partner.
Application HCD periodically publishes a Notice of Funding Availability (NOFA) for an amount
Procedure/ for each MHP funding component. A NOFA for the general component was issued in
Amount August 2007 for $70.8 million. NOFAs for the homeless youth component for $37
Available million and for the Governor's Homeless Initiative for $40 million were both issued
in January 2007.
Administering California Department of Housing and Community Development (HCD)
Agency/Contact Barbara Stolk
1800 Third Street
Sacramento, CA 95834
916-445-0576
www.hcd.ca.gov/fa/mhp/
HCD Renter Programs - 23
Emergency Housing and Assistance Program
Capital Development (EHAPCD)
Operating Facility (EHAP)
Program Purpose Provide capital development and operating grants for emergency shelters, transitional
housing, and supportive services for homeless individuals and families.
Program Terms of Loans/Type of Financial Assistance
Description
Capital development: deferred -payment loans at 3 percent simple interest, forgiven
at completion of 5 to 10 year term
Operating facility: grants
Eligible Activities
Capital development: Acquiring, constructing, converting, expanding and/or
rehabilitating, emergency shelter, transitional housing, and/or safe haven housing,.
and administration of the award (limited to 5 percent)
Operating facility: Providing direct client housing, including facility operations and
administration, residential rent assistance, leasing rooms for provision of temporary
shelter, capital development activities of up to $20,000 per site, and administration
of the award (limited to 5 percent).
Targeted Population
Homeless individuals and families
Who Can Apply Local government agencies and nonprofit corporations that shelter the homeless on
an emergency or transitional basis and provide support services.
Application Capital development: Competitive application process announced annually via a
Procedure/ Notice of Funding Availability (NOFA). Eighty percent of total allocation is available
Amount to urban counties, and 20 percent to non -urban counties. The most recent NOFA
Available was issued on November 9, 2006 for a minimum of $31 million.
Operating facility: Each county receives a formula grant allocation. Eighty percent of
total allocation is available to urban counties, and 20 percent to non -urban counties.
Applications are invited through a NOFA. The most recent NOFA was announced on
September 22, 2006 for $3.84 million.
In some counties, Designated Local Boards (DLBs) develop local strategies to allocate
EHAP funding and rate and recommend applications. Where no DLB exists,
applications are submitted directly to California Department of Housing and
Community Development (HCD)/EHAP. Orange County is a DLB county, with EHAP
funding coordinated through the Orange County Partnership.
Administering Orange County Partnership
Agency/Contact Dawn Lee or Shawn Kelly
139 S. Olive Street
Orange, CA 92866
714-288-4007 x112
www.ocpartnership.net/index.php
www.hcd.ca.gov/fa/chap/
HCD Renter Programs - 24
Affordable Housing Innovation Fund (AHIF)
Program Purpose Assist in the development of innovative programs that create affordable housing.
Proposition 1C, passed in November 2006, allocates $100 million for this new
program. Details to be announced.
Program Terms of Loans/Type of Financial Assistance
Description
Grants and loans to entities that develop or invest in affordable housing projects.
Emphasis on programs that demonstrate innovative, cost-saving approaches to
creating or preserving affordable housing.
Who Can Apply Entities that develop or invest in affordable housing projects.
Application Competitive process administered by the California Department of Housing and
Procedure/ Community Development (HCD).
Amount
Available
Administering California Department of Housing and Community Development (HCD)
Agency/Contact 1800 Third Street
Sacramento, CA 95834
916-445-4782
www.hcd.ca.gov/
HCD Renter Programs - 25
Regional Planning, Housing and Infill Incentive Account (RPHIIA)
Program Purpose Provide incentive grants related to infill housing projects. Proposition 1C, passed in
November 2006, allocates $850 million for this new program. These funds are
subject to implementing legislation.
Program Terms of Loans/Type of Financial Assistance
Description
The infrastructure and housing funds from this account will be prioritized for infill
projects near mass transit.
Eligible Activities
• No more than $200 million can be used for the creation, development, or
rehabilitation of parks. These funds are likely to be allocated through the
budget process.
• Water, sewer, and other public infrastructure needs.
• Transportation improvements related to infill development.
• Traffic mitigation.
• Brownfield cleanup projects.
Who Can Apply TBD
Application TBD
Procedure/
Amount
Available
Administering California Department of Housing and Community Development (HCD)
Agency/Contact 1800 Third Street
Sacramento, CA 95834
916-445-4782
www.hcd.ca.gov/
HCD Renter Programs - 26
Transit -Oriented Development (TOD) Housing Program
Program Purpose Provide loans to assist in the development of higher density uses, including housing
and other uses, within close proximity to a transit station. A transit station includes
rail stations, bus hubs, and bus transfer stations. Proposition 1C, passed in November
2006, provides $300 million for this new program. Draft guidelines for administering
this program were issued in August 2007.
Program Terms of Loans/Type of Financial Assistance
Description
Low interest loans provided as gap financing for rental housing developments that
include affordable units and as mortgage assistance for homeownership
developments. Grants also available for infrastructure improvements necessary for
the development of specified housing developments or to facilitate connections
between these developments and transit stations.
Eligible Activities
New construction or substantial rehabilitation of residential units or conversion of
nonresidential structures to residential use. Developments can contain renter or
ownership housing or a combination of both, and must contain a total of not less
than 20 units. Cannot be used in conjunction with 9 percent tax credits or any other
program administered by the California Department of Housing and Community
Development (HCD) (with the exception of the Predevelopment Loan Program and
the Infill Incentive Grant Program).
Infrastructure projects may include capital improvements required to develop a
housing development or to enhance pedestrian or bicycle access from a housing
development to a transit station.
Rent Restrictions
Proposition IC also enacts the Transit -Oriented Development Implementation
Program, which provides some direction to HCD in ranking projects, and requires
private projects that receive a loan to include 15 percent of the units available at an
affordable rent or at an affordable housing cost to households of very low or low
income.
Targeted Population
Developments must be areas where there is substantial roadway congestion and
convenient and reliable transit.
Who Can Apply Cities, counties, redevelopment agencies, transit agencies, and developers. Must be
located in one of the urbanized areas designated by HCD. The City of Tustin and
Orange County are in the Los Angeles -Long Beach -Santa Ana urbanized area, as
designated by the 2000 Census, and therefore eligible.
Application Funds allocated through a competitive bidding process, based on the merits of the
Procedure/ individual projects. Selection criteria focus on both traditional concerns of publicly
Amount funded housing programs and the extent to which developments realize the
Available program's objectives of reducing auto trips and increasing transit ridership. Funding
availability will be announced through a Notice of Funding Availability (NOFA). A
total of $285 million will be made available over approximately three years.
Administering California Department of Housing and Community Development (HCD)
Agency/Contact 1800 Third Street
Sacramento, CA 95834
916-445-4782
www.hcd.ca.gov/fa/tod/
HCD Renter Programs - 27
Predevelopment Loan Program (PLP)
Program Purpose Provide predevelopment or "seed" money to nonprofit corporations and local
government agencies in the form of loans for projects in urban and rural areas.
Program Terms of Loans/Type of Financial Assistance
Description
• Three percent simple -interest rate, deferred -payment loans for up to two
years.
• Unspecified site loans shall be made for a maximum term of 12 months, with
a renewal option.
• The maximum amount loaned for purposes other than the option, purchase
of real property, or physical site development is $100,000.
• The maximum amount committed to any single borrower, at any one point in
time, is $800,000.
• The amount loaned for purchase of real property will not exceed its fair
market value.
Eligible Activities
Loans may be used for costs associated with land purchase or options to buy land;
consultant, architectural, engineering, or legal fees; permit or application fees;
bonding; costs of site preparation; repayment of a predevelopment loan obtained
from another source; options or deposits to buy or preserve existing government -
assisted rental housing; closing costs; or site acquisition, including land banking for
future low income housing development.
Rent and Income Restrictions
Housing receiving funds from Predevelopment Loan Program must be assisted by
one or more programs designed to reduce housing costs for households of low and
moderate income. At least 51 percent must be designated for lower income
households (income not exceeding 80 percent of Area Median Income (AMI),
adjusted for family size). The program has no rent restrictions of its own, but relies
on rent restrictions of the other program(s) used in conjunction with the
Predevelopment Loan Program.
Targeted Population
Lower income households (income not exceeding 80 percent of AMI, adjusted for
family size).
Who Can Apply Local governmental agencies, nonprofit corporations, cooperative housing
corporations, and limited partnerships or limited liability companies where all the
general partners are nonprofit or public benefit corporations.
Application Applications are accepted on a continuous basis. Funding availability depends on
Procedure/ loan repayments to the fund. Funding availability is announced through a Notice of
Amount Funding Availability (NOFA). The last NOFA was issued August 2006 for
Available approximately $2.5 million and expired June 30, 2007. Additional NOFAs will be
issued as sufficient repayments are accumulated.
Administering Department of Housing and Community Development (HCD)
Agency/Contact Predevelopment Loan Program
1800 Third Street
Sacramento, CA 95814
916-445-0877
www.hcd.ca.gov/fa/polp/
HCD Renter Programs - 28
California Department of Housing and Community
Development (HCD)—Owner Programs
HCD Owner Programs - 29
CaIHOME Program
Program Purpose Enable low and very low income households to become or remain homeowners.
Proposition 1 C, passed in November 2006, provides $270 million to continue this
program.
Program Terms of Loans/Type of Financial Assistance
Description
• Public agencies or nonprofit corporations may use program grant funds to
make loans to first-time homebuyers for mortgage assistance for permanent
financing of a unit ready for occupancy or a unit acquired by a loan such as
a HUD FHA 203(k) acquisition/rehabilitation loan.
• Loans may also be made to owner -occupants for rehabilitation of a home.
• The maximum aggregate application amount may not exceed $600,000,
with a maximum of $40,000 per unit. For cities with populations of 400,000
or more, the maximum aggregate loan amount is $1,000,000. The minimum
loan amount for any one activity must be at least $100,000.
• Loans to public agencies for the development of new construction
homeownership development projects.
Eligible Activities
First-time Homebuyer Mortgage Assistance/Owner-Occupied Rehabilitation:
Downpayment assistance, mortgage financing, homebuyer counseling, and
technical assistance for self-help.
Homeownership Housing Development: Loans may be used for costs other than
hard construction costs, such as architect expenses and site improvements.
Targeted Population
Lower income households whose incomes shall not exceed 80 percent of county
median income.
Who Can Apply Funds are available to nonprofit corporations and local public agencies.
Application Funding availability is announced through a Notice of Funding Availability
Procedure/ (NOFA). The latest NOFA was issued for $50 million on February 13, 2007 and
Amount addresses First -Time Homebuyer Mortgage Assistance and Owner Occupied
Available Rehabilitation programs only. A separate NOFA for Homeownership Housing
Development programs will be issued later in 2007.
Administering California Department of Housing and Community Development (HCD)
Agency/Contact CalHOME Program
1800 Third Street
Sacramento, CA 95252
916-327-3646
www.hcd.ca.gov/fa/Cal home/
HCD Owner Programs - 30
Building Equity and Growth in Neighborhoods (BEGIN) Program
Program Purpose Provide incentives or reduce or remove regulatory barriers for affordable
homeownership housing developments and provide downpayment assistance
loans to qualifying first-time low and moderate income buyers. Proposition 1C,
passed in November 2006, provides $125 million to continue this program.
Program Terms of Loans/Type of Financial Assistance
Description
In exchange for regulatory concessions made at the local level, provides up
to the lesser of 20 percent of the home sales price or $30,000 per dwelling
unit in downpayment assistance in the form of silent second financing.
Local public agency applicants must perform at least one "major" or two
"minor" specified regulatory relief actions (such as modification of density,
zoning standards, reduction in impact fees, flexible parking standards,
project design) to be eligible to apply.
Eligible Activities
Funds may be used for mortgage assistance for permanent financing of a new
homeownership unit ready for occupancy, a unit constructed using the self-help
method, or for non-recurring loan -closing costs.
Targeted Population
Low or moderate income households whose incomes shall not exceed 120 percent
of Area Median Income.
Who Can Apply Funds are available to local public agencies.
Application Funding availability is announced by the California Department of Housing and
Procedure/ Community Development (HCD) through a Notice of Funding Availability (NOFA).
Amount The latest NOFA was issued for $33 million on May 21, 2007.
Available
Administering California Department of Housing and Community Development (HCD)
Agency/Contact BEGIN Program
1800 Third Street
Sacramento, CA 95252
916-327-3646
www.hcd.ca.gov/fa/begin/
HCD Owner Programs - 31
California Self -Help Housing Program (CSHHP)
Program Purpose Help low and moderate income families to construct and rehabilitate their homes
with their own labor, thereby reducing the costs of new housing through the use of
"sweat equity." Proposition 1 C, passed in November 2006, provides $10 million to
continue this program.
Program Terms of Loans/Type of Financial Assistance
Description
Considered part of CaIHOME, this program is structured to provide sponsoring
organizations grants for technical assistance, loans for development assistance, and
mortgage assistance for eligible purchases. Technical assistance grants are limited
to $300,000 per project with no more than 20 percent of available funds awarded
to any one sponsor. Applicants must complete all grant -funded activities within
the maximum two-year grant term.
Eligible Activities
Technical assistance: assistance, training, and supervision on self-help construction
activities and techniques; and assistance in project development including
preparation of plans, contracts for professional services, applications for project
funding, applications for household's assistance, preparation of subdivision maps,
review of plans and specifications, compliance with funding agency and local
government requirements, and administrative costs.
Targeted Population
Low income households (income not in excess of 80 percent of Area Median
Income (AMI), adjusted for family size) and moderate income households (income
not in excess of 120 percent of AMI, adjusted for family size).
Who Can Apply Local government agencies, nonprofit corporations, and cooperatives.
Application Funding availability is announced through a Notice of Funding Availability
Procedure/ (NOFA). The latest NOFA was issued for $3.0 million on March 28, 2007.
Amount
Available
Administering California Department of Housing and Community Development (HCD)
Agency/Contact 1800 Third Street
Sacramento, CA 95814
916-445-9581
www.hcd.ca.gov/fa/Cshhp/
HCD Owner Programs - 32
Joe Serna, Jr. Farmworker Housing Grant (JSJFWHG) Program
Program Purpose Finance the new construction, rehabilitation, and acquisition of owner -occupied
and rental units for agricultural workers, with a priority for lower income
households. Proposition 1C, passed in November 2006, provides $135 million for
this program.
Program Terms of Loans/Type of Financial Assistance
Description
Grants and loans. A match of at least 100 percent is required for the primary
JSJFWHG program.
Homeowner grants: 20 -year lien restrictions are required. If the unit is sold to a
non-farmworker buyer before completing the 10`h year, the full grant must be
repaid. Between the 10`h and 20`h anniversaries, the grant is forgiven at a rate of 10
percent per completed year; it is fully forgiven after completing 20 years.
Rental construction grants or loans: 40 -year lien restrictions are required. If the
unit is sold for a use other than farmworker housing before the 40"' year, under
most circumstances the full grant must be repaid. Loans may be made in
conjunction with low income tax -credit financing only.
Rental rehabilitation grants or loans: 20 -year lien restrictions are required. If the
unit is sold for a use other than farmworker housing before the 20" year, under
most circumstances the full grant must be repaid. Loans may be made in
conjunction with low income tax -credit financing only.
Eligible Activities
Costs for the development of homeowner or rental housing for agricultural
workers, including land acquisition, site development, construction, rehabilitation,
design services, operating and replacement reserves, repayment of predevelopment
loans, provision of access for the elderly or disabled, relocation, homeowner
counseling, and other reasonable and necessary costs.
Targeted Population
Agricultural workers: households with at least one person who derives, prior to
retirement or disability, a substantial portion of their income from agricultural
employment.
Who Can Apply Local government agencies, nonprofit corporations, cooperative -housing
corporations, limited partnerships where all the general partners are nonprofit
mutual or public -benefit corporations, and federally recognized Indian tribes.
Application Funding availability is announced by the California Department of Housing and
Procedure/ Community Development (HCD) through a Notice of Funding Availability (NOFA).
Amount The latest NOFA was issued for $15 million on January 17, 2007 with funds
Available allocated from Proposition 1 C; this NOFA was for the single-family component.
Administering California Department of Housing and Community Development (HCD)
Agency/ 1800 Third Street
Contact Sacramento, CA 95252
916-324-069
www.hcd.ca.gov/fa/fwhg/
HCD Owner Programs - 33
California Housing Finance Agency (CaIHFA)—
Renter Programs
CaIHFA Renter Programs - 34
Predevelopment Finance Program
Program Purpose Provide predevelopment funding to cover the costs associated with affordable
rental projects that will have permanent California Housing Finance Agency
(CaIHFA) financing.
Program Terms of Loans/Type of Financial Assistance
Description
• 5.55 percent interest rate, interest -only payments for up to two years.
• The maximum amount is $250,000.
• Loan may be secured by a mortgage on the subject property or other
collateral acceptable to CaIHFA.
• CaIHFA must approve site and development concept.
Eligible Activities
Loans may be used for costs associated with architectural, engineering, permits and
related fees, bonding fees, and costs associated with debt financing. Loans may not
be used for administration expenses and hard construction costs. Eligible
developments shall consist of five or more units.
Rent and Income Restrictions
Maximum rent limits are based on 30 percent of target income and unit size. At
least 20 percent of the housing units must be set aside for households with incomes
of 50 percent or less of Area Median Income (AMI). 501(c)(3) projects additionally
require at least another 60 percent of the units to have rents at less than 80 percent
of AMI. The program has no rent restrictions of its own, but relies on the rent
restrictions of CaIHFA's Permanent Financing Program in conjunction with
Predevelopment Finance Program funds.
Targeted Population
Low income households (income not exceeding 80 percent of AMI, adjusted for
family size).
Who Can Apply Nonprofit housing entities.
Application The sponsor applies directly to CaIHFA.
Procedure/
Amount
Available
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Laura Whittall-Scherfee
Multifamily Programs Division
P.O. Box 4034
Sacramento, CA 95812
916-327-2588
www.calhfa.ca.gov/multifamily/financing/index.htm
CaIHFA Renter Programs - 35
Permanent Financing Program
Program Purpose Provide permanent loan financing for new multifamily construction projects and
existing affordable housing multifamily projects.
Program Terms of Loans/Type of Financial Assistance
Description
• Interest rates vary according to the term of the loan (30-, 35-, or 40 -year loans).
• Tax credits, subordinate loans, and grants from local government and third
parties to achieve project feasibility are allowed. All loans, leases, and
development and regulatory agreements must be coterminous and subordinate
to the California Housing Finance Agency {CaIHFA) financing.
• Nonprofit borrowers may be eligible for 50Uc)(3) bond financing.
Eligible Activities
Permanent take-out financing for new construction, acquisition/rehabilitation, and
acquisition multifamily projects
Rent and Income Restrictions
Maximum rent limits are based on 30 percent of target income and unit size. At
least 20 percent of the housing units must be set aside for households with incomes
of 50 percent or less of Area Median Income {AMI). 501(c)(3) projects additionally
require at least another 60 percent of the units to have rents at less than 80 percent
of AMI. Loans in excess of $10 million require additional levels of affordability.
Targeted Population
Very low income households (incomes not exceeding 50 percent of AMI, adjusted
for family size) and low income households (incomes not exceeding 80 percent of
AMI, adjusted for family size).
Who Can Apply For-profit, nonprofit, and public agency sponsors of low income multifamily rental
housing.
Application The sponsor applies directly to CaIHFA.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Laura Whittall-Scherfee
Multifamily Programs Division
P.O. Box 4034
Sacramento, CA 95812
916-327-2588
www.calhfa.ca.gov/multifamily/financing/index.htm
CaIHFA Renter Programs - 36
Preservation Acquisition Finance Program
Program Purpose Facilitate the acquisition of at -risk affordable -housing development and provide
low-cost funding to preserve the affordability status of existing government -assisted
projects deemed at risk.
Program Terms of Loans/Type of Financial Assistance
Description
• Interest rates vary according to the term of the loan (30-, 35-, or 40 -year loans).
• Subordinate loans and grants from local government and third parties to
achieve project feasibility are allowed. All loans, leases, and development and
regulatory agreements must be coterminous and subordinate to the California
Housing Finance Agency (CaIHFA) financing.
Eligible Activities
Acquisition financing for government -assisted projects financed with programs
such as Project -Based Section 8, state or local government loans, or locally issued
tax-exempt bonds. Designed to be used with CaIHFA Permanent Financing.
Rent and Income Restrictions
Maximum rent limits are based on 30 percent of target income and unit size. At
least 20 percent of the housing units must be set aside for households with incomes
of 50 percent or less of Area Median Income (AMI). Loans in excess of $10 million
require additional levels of affordability.
Targeted Population
Very low income households (incomes not exceeding 50 percent of AMI, adjusted
for family size).
Who Can Apply For-profit, nonprofit, and public agency sponsors of low income multifamily rental
housing.
Application The sponsor applies directly to CaIHFA.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact James T. Liska
Multifamily Finance Division
1415 L Street, Suite 650
Sacramento, CA 95814
916-324-5698
www.calhfa.ca.gov/multifamily/financing/index.htm
CaIHFA Renter Programs - 37
Special Needs Financing Program
Program Purpose Provide low interest -rate financing for the development of rental housing to serve a
broad range of special needs tenants in need of supportive services.
Program Terms of Loans/Type of Financial Assistance
Description
• Interest rates vary according to the term of the loan (30-, 35-, or 40 -year loans).
• Subordinate loans and grants from local government and third parties to
achieve project feasibility are allowed. All loans, leases, and development and
regulatory agreements must be coterminous and subordinate to the California
Housing Finance Agency (CaIHFA) financing.
Eligible Activities
Bridge, permanent, or Loan -to -Lender loans for new construction, or
acquisition/rehabilitation of multifamily rental special -needs projects.
Rent and Income Restrictions
Maximum rent limits are based on 30 percent of target income and unit size. At
least 35 percent of the units are required to be restricted to special -needs
households earning 50 percent or less of Area Median Income (AMO. Loans in
excess of $10 million require additional levels of affordability.
Targeted Population
Very low income households (incomes not exceeding 50 percent of AMI, adjusted
for family size).
Who Can Apply For-profit, nonprofit, and public agency sponsors of low income multifamily rental
housing.
Application The sponsor applies directly to CaIHFA.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Kathy Weremiuk
Multifamily Programs Division
100 Corporate Pointe, Suite 250
Culver City, CA 90230
310-342-1250
www.calhfa.ca.gov/multifamily/financing/index.htm
CaIHFA Renter Programs - 38
Tax -Exempt Bridge Financing Program
Program Purpose Provide tax-exempt bridge loans for projects receiving 4 percent tax credits at an
amount necessary to ensure the award of tax credits.
Program Terms of Loans/Type of Financial Assistance
Description
• One- to three-year fully -amortized bridge loans with annual level payments.
• Second priority loan behind a California Housing Finance Agency (CaIHFA)
Permanent Mortgage.
• Loan amount is the amount necessary to meet Tax Credit Allocation
Committee (TCAC) tax-exempt funding requirements.
• Loan amounts are typically committed for up to 55 percent of eligible basis;
bridge loans in excess of 55 percent of eligible basis are approved on an
individual basis.
Eligible Activities
Bridge loans for new construction or acquisition/rehabilitation developments using
4 percent tax credits and CaIHFA permanent financing.
Rent and Income Restrictions
Maximum rent limits are based on 30 percent of target income and unit size. At
least 20 percent of the housing units must be set aside for households with incomes
of 50 percent or less of Area Median Income (AMI).
Targeted Population
Very low income households (incomes not exceeding 50 percent of AMI, adjusted
for family size).
Who Can Apply For-profit, nonprofit, and public agency sponsors of low income multifamily rental
housing.
Application The sponsor applies directly to CaIHFA.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Laura Whittall-Scherfee
Multifamily Finance Division
P. O. Box 4034
Sacramento, CA 95812
916-327-2588
www.calhfa.ca.gov/multifamily/financing/index.htm
CaIHFA Renter Programs - 39
Construction Loan Program
Program Purpose Provide construction loans at commercially competitive rates and terms to
developments approved for California Housing Finance Agency (CaIHFA)
permanent financing to provide one-stop shopping, simplify the financing process,
and reduce transaction costs.
Program Terms of Loans/Type of Financial Assistance
Description
• Twelve- to 36 -month construction loans.
• Maximum loan amount is $35,000,000.
• Monthly interest -only payments (capitalized) through permanent loan closing.
Eligible Activities
Construction loans for new construction or acquisition/rehabilitation developments
using CaIHFA permanent financing and otherwise subject to State prevailing wage
requirements.
Rent and Income Restrictions
Maximum rent limits are based on 30 percent of target income and unit size. At
least 20 percent of the housing units must be set aside for households with incomes
of 50 percent or less of Area Median Income (AMI).
Targeted Population
Very low income households (incomes not exceeding 50 percent of AMI, adjusted
for family size).
Who Can Apply For-profit, nonprofit, and public agency sponsors of low income multifamily rental
housing.
Application The sponsor applies directly to CaIHFA.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Ruth Vakili
Multifamily Programs Division
1415 L Street, Suite 650
Sacramento, CA 95814
916-445-7953
www.caihfa.ca.gov/multifamily/financing/index.htm
CaIHFA Renter Programs - 40
California Housing Finance Agency (CalHFA)—
Owner Programs
CaIHFA Owner Programs - 41
Homeownership Mortgage loan Program
40 -Year Fixed Mortgage and 30 -Year Fixed Mortgage
Program Purpose Assist low and moderate income first-time homebuyers with home purchases.
Program The program consists of first -mortgage financing in the form of a 30 -year or 40 -year
Description below-market fixed-rate loan.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new construction homes. Manufactured housing is allowed if Fannie Mae
housing requirements are met. May be combined with California Housing Finance
Agency (CaIHFA) subordinate -financing options. As of August 2007, the sales price
limits for non -targeted areas of Orange County, including the City of Tustin, are
$601,274 for new -construction homes and $596,217 for resale homes.
Targeted Population
Low and moderate income households. Orange County moderate income limits for
2007 are $98,724 for a household of one or two persons and $115,178 for a
household of three or more persons, for both existing and new -construction homes.
Low income limits for 2007 for existing homes are $62,352 for a household of one
or two persons and $71,705 for three or more persons. Low income limits for 2007
for new -construction homes are $72,744 for a household of one or two persons
and $83,656 for three or more persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies directly to one of CalHFA's approved lenders.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Homeownership Division
1121 L Street, 7'h Floor
Sacramento, CA 95814
916-324-8088
www.calhfa.ca.gov/homeownership/programs/index.htm
CaIHFA Owner Programs - 42
Interest Only PLUS Mortgage Loan Program
Program Purpose Assist low and moderate income first-time homebuyers with home purchases.
Program The program features a below-market interest rate, 35 -year term, and interest -only
Description payments for the first five years. The interest rate does not change for the entire
35 -year term. Borrowers qualify at the interest -only payment plus impounds.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new -construction homes, including condos. Manufactured housing is allowed if
Fannie Mae housing requirements are met. May be combined with California
Housing Finance Agency (CaIHFA) subordinate -financing options. As of August
2007, the sales price limits for non -targeted areas of Orange County, including the
City of Tustin, are $601,274 for new -construction homes and $596,217 for resale
homes.
Targeted Population
Low and moderate income households. Orange County moderate income limits for
2007 are $98,724 for a household of one or two persons and $115,178 for a
household of three or more persons, for both existing and new -construction homes.
Low income limits for 2007 for existing homes are $62,352 for a household of one
or two persons and $71,705 for three or more persons. Low income limits for 2007
for new -construction homes are $72,744 for a household of one or two persons
and $83,656 for three or more persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies directly to one of CaIHFA's approved lenders.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Homeownership Division
1121 L Street, 7`h Floor
Sacramento, CA 95814
916-324-8088
www.calhfa.ca.gov/homeownership/programs/iop.htm
CaIHFA Owner Programs - 43
30 -Year Fixed Rate Government Insured/Guaranteed Loan Program
Program Purpose Enhance affordability and homeownership opportunities for low and moderate
income first-time homebuyers.
Program The program features a below-market interest rate for first-time homebuyers using a
Description Federal Housing Administration (FHA), Veterans Administration (VA), or United
States Department of Agriculture (USDA) insured/guaranteed loan.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the .purchase of existing
or new -construction homes, including condos. Manufactured housing must meet
eligibility requirements. May be combined with California Housing Finance
Agency (CaIHFA) subordinate -financing options (one program per transaction). As
of August 2007, the sales price limits for non -targeted areas of Orange County,
including the City of Tustin, are $601,274 for new -construction homes and
$596,217 for resale homes.
Targeted Population
Low and moderate income households. Orange County moderate income limits for
2007 are $98,724 for a household of one or two persons and $115,178 for a
household of three or more persons, for both existing and new -construction homes.
Low income limits for 2007 for existing homes are $62,352 for a household of one
or two persons and $71,705 for three or more persons. Low income limits for 2007
for new -construction homes are $72,744 for a household of one or two persons
and $83,656 for three or more persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies directly to one of CalHFA's approved lenders.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency/Contact Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/30-government.htm
CaIHFA Owner Programs - 44
Affordable Housing Partnership Program (AHPP)
Program Purpose Assist low income first-time homebuyers with home purchases with below-market
fixed-rate loans.
Program The program is a joint effort between California Housing Finance Agency (CaIHFA)
Description and cities, counties, redevelopment agencies, housing authorities, and nonprofit
housing organizations. Low income first-time homebuyers who obtain direct
financial assistance from a local government agency or locality with their
downpayment and closing costs may be able to obtain a CaIHFA below-market
fixed-rate first -mortgage loan at the AHPP interest rate.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new -construction homes, including condos. May be combined with CaIHFA
subordinate -financing options. As of August 2007, the sales price limits for non -
targeted areas of Orange County are $601,274 for new -construction homes and
$596,217 for resale homes. Manufactured housing must meet eligibility
requirements.
Targeted Population
Low income households. Orange County low income limits for 2007 for existing
homes are $62,352 for a household of one or two persons and $71,705 for three or
more persons. Low income limits for 2007 for new -construction homes are
$72,744 for a household of one or two persons and $83,656 for three or more
persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies to local jurisdiction partners.
Procedure
Administering Tustin Community Redevelopment Agency
Agency/Contact 300 Centennial Way
Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/ahpp.htm
CaIHFA Owner Programs - 45
CaIHFA Housing Assistance Program (CHAP)
Program Purpose Assist low and moderate income first-time homebuyers with home purchases.
Program The program provides up to 3 percent of the downpayment assistance needs of
Description eligible homebuyers to buy existing or new -construction homes. The program
consists of two loans:
a California Housing Finance Agency (CaIHFA) below -market -rate first -
mortgage loan; and ,
a deferred -payment junior -mortgage loan for downpayment assistance with a
low simple -interest rate and term of 30 years. Payments on the junior loan are
deferred for the life of the first loan.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new -construction homes, including condos. Manufactured housing is allowed if
it is permanently attached, with fee simple title. May be combined with other
CaIHFA subordinate -financing options. As of August 2007, the sales price limits for
non -targeted areas of Orange County are $601,274 for new -construction homes
and $596,217 for resale homes.
Targeted Population
Low income households. Orange County low income limits for 2007 for existing
homes are $62,352 for a household of one or two persons and $71,705 for three or
more persons. Low income limits for 2007 for new -construction homes are
$72,744 for a household of one or two persons and $83,656 for three or more
persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies directly to one of CaIHFA's approved lenders.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency
Contact Tustin Community Redevelopment Agency
300 Centennial Way
Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/chap.htm
CaIHFA Owner Programs - 46
Extra Credit Teacher Home Purchase Program
Program Purpose Assist teachers, school administrators, and other eligible staff members at high-
priority schools with home purchases.
Program The program consists of two loans:
Description . a California Housing Finance Agency (CaIHFA) below -market -rate first -
mortgage loan; and
• a deferred -payment second mortgage up to $7,500 or 3 percent of the sales
price in CaIHFA-defined statewide non -high-cost areas, or up to $15,000 or 3
percent of the sales price in CalHFA-defined high-cost areas.
The interest rate on the junior loan will be reduced by 1 percent for each full year
the borrower remains employed in a high-priority school, up to a maximum of
three years. At the end of three years, the rate is reduced to zero.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new -construction homes, including condos. Manufactured housing must meet
eligibility requirements. May be combined with other CaIHFA subordinate -
financing options. As of August 2007, the sales price limits for non -targeted areas
of Orange County, including the City of Tustin, are $601,274 for new -construction
homes and $596,217 for resale homes.
Targeted Population
Low and moderate income households. Orange County moderate income limits for
2007 are $98,724 for a household of one or two persons and $115,178 for a
household of three or more persons, for both existing and new -construction homes.
Low income limits for 2007 for existing homes are $62,352 for a household of one
or two persons and $71,705 for three or more persons. Low income limits for 2007
for new -construction homes are $72,744 for a household of one or two persons
and $83,656 for three or more persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies directly to one of CalHFA's approved lenders. This
Procedure/ program was funded through Proposition 46 bond funds, and Proposition 1C will
Amount provide funds for its continuation.
Available
Administering Tustin Community Redevelopment Agency
Agency/ 300 Centennial Way
Contact Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division—Special Programs
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.caIhfa.ca.gov/homeownership/programs/ecip.htm
CaIHFA Owner Programs - 47
High Cost Area Home Purchase Assistance Program (HiCAP)
Program Purpose Assist first-time homebuyers in high-cost areas of California with home purchases.
As of June 2007, Orange County is defined as a high-cost area.
Program The program consists of two loans:
Description
• a California Housing Finance Agency (CaIHFA) below -market -rate first -
mortgage loan; and,
• a deferred -payment second mortgage up to $15,000 to be used for
downpayment assistance. The second loan has a low simple -interest rate and a
term that will match the term of the CaIHFA first -mortgage loan; however,
payments on the second loan are deferred for the life of the first loan.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new -construction homes, including condos in the high-cost counties of
California. Manufactured housing must meet eligibility requirements. May be
combined with other CaIHFA subordinate -financing options. As of August 2007,
the sales price limits for non -targeted areas of Orange County, including the City of
Tustin, are $601,274 for new -construction homes and $596,217 for resale homes.
Targeted Population
Low and moderate income households. Orange County moderate income limits for
2007 are $98,724 for a household of one or two persons and $115,178 for a
household of three or more persons, for both existing and new -construction homes.
Low income limits for 2007 for existing homes are $62,352 for a household of one
or two persons and $71,705 for three or more persons. Low income limits for 2007
for new -construction homes are $72,744 for a household of one or two persons
and $83,656 for three or more persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies directly to one of CalHFA's approved lenders.
Procedure
Administering Tustin Community Redevelopment Agency
Agency/Contact 300 Centennial Way
Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/hicap.htm
CaIHFA Owner Programs - 48
HomeChoice Program
Program Purpose Assist first-time homebuyers who are disabled, or have family members with
disabilities living with them, in purchasing a home. The program is a joint effort by
Fannie Mae, the California HomeChoice Coalition, and the California Housing
Finance Agency (CaIHFA).
Program The program consists of two loans:
Description
• a Fannie Mae first -mortgage loan; and,
a CaIHFA Housing Assistance Program (CHAP) deferred -payment second
mortgage up to 3 percent of the sales price. The second loan has a low simple -
interest rate and a term that will match the term of the CaIHFA first -mortgage
loan; payments on the second loan are deferred for the life of the first loan.
Eligible Activities
Permanent take-out financing to first-time homebuyers who have households with
a disabled family member for the purchase of existing or new -construction homes
anywhere in California. Manufactured housing must meet eligibility requirements.
As of August 2007, the sales price limits for non -targeted areas of Orange County,
including the City of Tustin, are $601,274 for new -construction homes and
$596,217 for resale homes.
Targeted Population
Low and moderate income households. Orange County moderate income limits for
2007 are $98,724 for a household of one or two persons and $115,178 for a
household of three or more persons, for both existing and new -construction homes.
Low income limits for 2007 for existing homes are $62,352 for a household of one
or two persons and $71,705 for three or more persons. Low income limits for 2007
for new -construction homes are $72,744 for a household of one or two persons
and $83,656 for three or more persons.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies to the California HomeChoice Coalition at 888-346-9700.
Procedure
Administering California Housing Finance Agency (CaIHFA)
Agency
Contact California HomeChoice Coalition
888-346-9700
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/homechoice.htm
CaIHFA Owner Programs - 49
California Homebuyer's Downpayment Assistance Program (CHDAP)
Program Purpose Assist first-time homebuyers in purchasing a home. Proposition 1C, passed in
November 2006, provides $200 million to continue this program.
Program The program provides a deferred -payment second mortgage up to 3percent of the
Description sales price to be used for downpayment or closing costs. This junior loan may be
combined with a California Housing Finance Agency (CaIHFA) or non-CaIHFA
first -mortgage loan. It may not be combined with the Extra Credit Teacher Program
or the Homeownership in Revitalization Areas Program.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new -construction homes. Manufactured housing must meet eligibility
requirements. As of August 2007, the sales price limits for non -targeted areas of
Orange County, including the City of Tustin, are $601,274 for new -construction
homes and $596,217 for resale homes.
Targeted Population
Moderate income households. Moderate income limits for 2007 for Orange County
are: $66,100 for a one person, $75,500 for a two person, $85,000 for a three
person, $94,400 for a four person, $102,000 for a five person, $109,500 for a six
person, $117,100 for a seven person, and $124,600 for an eight person household.
Who Can Apply First-time homebuyers who will occupy the property as their primary residence.
Application The homebuyer applies directly to one of CaIHFA's approved lenders. This
Procedure/ program was funded through Proposition 46 bond funds, and Proposition 1C will
Amount provide funds for its continuation.
Available
Administering Tustin Community Redevelopment Agency
Agency/Contact 300 Centennial Way
Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.caIhfa.ca.gov/homeownership/programs/Chdap.htm
CaIHFA Owner Programs - 50
Homeownership in Revitalization Areas Program (HIRAP)
Program Purpose Assist first-time homebuyers in purchasing a home in designated revitalization
areas.
Program The program provides a deferred -payment second mortgage up to 6 percent of the
Description sales price to be used for downpayment or closing costs. The eligible borrowers
must receive homeownership counseling from a California Housing Finance
Agency (CaIHFA)-approved nonprofit counseling agency. This junior loan may be
combined with a CaIHFA or non-CaIHFA first -mortgage loan. It may not be
combined with the Extra Credit Teacher Program or the California Homebuyer's
Downpayment Assistance Program.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of existing
or new -construction homes, including condos, located in community revitalization
area (designated by the CaIHFA-approved nonprofit counseling agency).
Manufactured housing must meet eligibility requirements. As of August 2007, the
sales price limits for non -targeted areas of Orange County, including the City of
Tustin, are $601,274 for new -construction homes and $596,217 for resale homes.
Targeted Population
Low income households. Low income limits for 2007 for Orange County are:
$48,500 for a one person, $55,450 for a two person, $62,350 for a three person,
$69,300 for a four person, $74,850 for a five person, $80,400 for a six person,
$85,950 for a seven person, and $91,500 for an eight person household.
Who Can Apply Low income first-time homebuyers who will occupy the property as their primary
residence.
Application The homebuyer applies directly to one of CaIHFA's approved nonprofit
Procedure/ organizations. This program was funded through Proposition 46 bond funds, and
Amount Proposition 1 C will provide funds for its continuation.
Available
Administering Tustin Community Redevelopment Agency
Agency/Contact 300 Centennial Way
Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov
CaIHFA Owner Programs - 51
School Facility Fee Downpayment Assistance Program (SFF)
Program Assist first-time homebuyers in purchasing a home.
Purpose
Program Provides qualified homebuyers with a partial or full rebate of the school -facility
Description fees paid by the home builder. While the amount varies according to the school
district and square footage of the home, the average rebate is approximately
$3,500.
Eligible applicants receive a conditional grant based on either a partial or full
rebate of the school -facility fees paid by the builder, depending on whether the
home they purchase is in a designated economically distressed area (Orange
County is not a designated economically distressed area).
The assistance can be used for downpayment, closing costs, or any costs associated
with the buyer's first -mortgage loan, subject to acceptance by the mortgage lender
or the mortgage insurer. The assistance will be in the form of a conditional grant,
not a loan. If the homebuyers occupy their home for five years, the full amount of
the grant is forgiven. If the home is owner -occupied less than five years, the grant
must be repaid on a pro rata basis.
Eligible Activities
Permanent take-out financing to first-time homebuyers for the purchase of newly
constructed single-family homes or condominiums not previously owned or
occupied with a building permit issued on or after January 1, 2002. Manufactured
housing must meet certain standards.
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/sff.htm
CaIHFA Owner Programs - 52
Targeted Population
Moderate income households. Moderate income limits for 2007 for Orange County
are: $66,100 for a one person, $75,500 for a two person, $85,000 for a three
person, $94,400 for a four person, $102,000 for a five person, $109,500 for a six
person, $117,100 for a seven person, and $124,600 for an eight person household.
Who Can Apply
First-time homebuyers who will occupy the property as their primary residence.
Application
Borrowers must apply for the rebate during their loan -application process, directly
Procedure/
to one of the California Housing Finance Agency (CaIHFA)'s approved lenders.
Amount
This program was funded through Proposition 46 bond funds, and Proposition 1 C
Available
will provide funds for its continuation.
Administering
Tustin Community Redevelopment Agency
Agency/Contact
300 Centennial Way
Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/sff.htm
CaIHFA Owner Programs - 52
Self -Help Builder Assistance Program (SHBAP)
Program Provide a source of financing to nonprofit 501(c)(3) corporations that utilize the
Purpose mutual self-help method of home construction.
Program Development loans up to $750,000 for site acquisition, site development, and/or
Description home construction. The program also provides permanent take-out affordable
financing through the nonprofit developer for its eligible owner -builders who are
participating in the mutual self-help construction method of a defined development
sponsored by an eligible 501(c)(3) nonprofit developer.
Eligible Activities
Site acquisition, site development, and/or home construction. The minimum
number of units per development is eight.
Who Can Apply Nonprofit 501(c)(3) corporations statewide who use the mutual self-help method of
construction.
Administering Tustin Community Redevelopment Agency
Agency/Contact 300 Centennial Way
Tustin, CA 95380
714-573-3121
www.tustinca.org/citydept/CommDev/index.htm
California Housing Finance Agency (CaIHFA)
Homeownership Division
P.O. Box 4034
Sacramento, CA 95812
916-324-8088
www.calhfa.ca.gov/homeownership/programs/shbap.htm
CalHFA Owner Programs - 53
Public Utilities Commission/Pacific Gas & Electric
California Multifamily New Homes Program (CMFNH)
Program
Purpose
Program
Description
Who Can Apply
Application
Procedure/
Amount
Available
Offers incentives to new -construction multifamily projects in the Pacific Gas &
Electric (PG&E) service area that incorporate energy-efficient design through the
implementation of an integrated -design approach.
Financial Incentives
• $150 (coastal) or $200 (inland) per unit to developer
• Additional $50/unit for the cost of an energy consultant
• Additional $60/unit for the cost of a Home Energy Rating System (HERS)
rater
• Requires 15 percent above standard Title 24 minimum requirements
• Appliance incentives
• Qualify for additional funding: Energy Efficiency Based Utility Allowance
(EEBUA); Low Income Housing Tax Credits (LIHTC); California Solar
Initiative (CSI)
Eligible Activities
• High -efficiency windows
• Energy-efficient water heating
• Improved wall and ceiling insulation
• High -efficiency space -heating and cooling equipment
• High -efficiency appliances and lighting
Targeted Population
There are no affordability restrictions.
For-profit and nonprofit developers.
Applicants may contact Herschong Mahone Group (HMG). The program was
funded for a three-year cycle terminating December 2008 by the California Public
Utilities Commission. The program is administered by PG&E and implemented by
the Herschong Mahone Group.
Administering Herschong Mahone Group
Agency/Contact Linda S. Murphy, CEA
-11626 Fair Oaks Blvd., #302
Fair Oaks, CA 95628
916-962-7001 ext. 20
www.h-m-g.com/multifamily/CMFNH
CaIHFA Owner Programs - 54
California Communities Joint Powers Authority
California Communities Joint Powers Authority Programs = 55
California Statewide Communities Development Authority
Housing Bond Program
Program Assists for-profit and nonprofit developers in accessing tax-exempt bonds for the
Purpose financing of low income and senior housing projects.
Program By accessing tax-exempt bonds, California Statewide Communities Development
Description Authority ("California Communities") assists developers of affordable housing in
securing lower interest rates than are available through conventional financing.
Eligible Activities
Financing or refinancing the acquisition and rehabilitation of an existing
project or the construction of a new project.
Developers must agree to set aside all, or a portion, of the units in the
project for individuals and families of very low, low or moderate income.
Targeted Population
Very low, low or moderate income families and individuals.
Who Can Apply For-profit and nonprofit developers of low income and senior housing projects.
Application California Communities and the developer must file an application with the State
Procedure/ of California to secure an award of volume cap. California Communities guides
Amount each developer through the state application process and works with each
Available developer post bond issuance to ensure the project remains in compliance with
state and federal laws. Since inception, California Communities has issued over
$5.8 million in bonds for more than 661 multifamily and senior housing projects
throughout the state. The City of Tustin is a member of the California Communities
Joint Powers Authority and has participated in the State's issuance of tax-exempt
bonds on at least three existing rehabilitated multifamily housing projects in Tustin.
Administering California Statewide Communities Development Authority
Agency/Contact James Hamill or Terrence Murphy
2033 North Main Street, Suite 700
Walnut Creek, CA 94596
925-933-9229 ext. 216 or 223
www.psacommunities.org
California Communities Joint Powers Authority Programs - 56
County of Orange Housing and Community Services (HCS)
County of Orange HCS Programs - 57
County of Orange Housing and Community Services
Multifamily Affordable Rental Housing Program
Mental Health Service Act (MHSA)
Program Promotes the acquisition, new construction, and acquisition/rehabilitation of
Purpose permanent and transitional affordable rental housing for Orange County's mentally
ill population.
Program Provides permanent and acquisition loans to eligible developments.
Description
Eligible Activities
• Purchase and construction of permanent or transitional housing.
• Acquisition and rehabilitation of rental housing serving the homeless
population.
• Developers must commit to work with a Full Service Partnership (FSP) to
ensure that supportive services are provided to eligible residents under the
MHSA.
• Projects providing housing to at least 15 households receiving services
under the Mental Health Services Act are preferred. Projects should
demonstrate that MHSA funds are leveraged with other funds. Projects
serving less than 15 households may be considered on a case-by-case basis.
Targeted Population
Eligible residents include families, persons 18 years of age or older, and seniors
whose household income does not exceed 30 percent of Area Median Income
(AMI). In order to be eligible, persons must be eligible to receive services under
the MHSA, be homeless, at risk of homelessness, or inappropriately placed.
Who Can Apply Nonprofit and for-profit organizations, joint ventures, or partnerships with projects
serving the mentally ill population.
Application Funding was announced through a Notice of Funding Availability (NOFA) in
Procedure/ December 2006. Up to $8 million is available on a first-come, first-served basis.
Amount The 2006 NOFA deadline has been extended until all MHSA funding is committed.
Available
Administering County of Orange Housing and Community Services Department
Agency/Contact Sidney Stone
Housing and Community Services
1770 North Broadway, Fourth Floor
Santa Ana, CA 92706-2642
714-480-2992
www.ochousing.org
County of Orange HCS Programs - 58
Federal Home Loan Bank of San Francisco (FHLBSF)
FHLBSF Programs - 59
Federal Home Loan Bank of San Francisco
Affordable Housing Program (AHP)
Program Facilitates the development of affordable rental housing and homeownership
Purpose opportunities for very low, low, and moderate income households. Through a
competitive application process, the Federal Home Loan Bank of San Francisco
(FHLBSF) provides grants or subsidized interest rates on advances to member banks
to finance their affordable housing initiatives.
Program Ten percent of the FHLBSF's net income is set aside for AHP. Of this amount, 80
Description percent of these funds are allocated to rental housing and 20 percent to
homeownership programs. The rental housing subsidy provides up to $1 million
per project. The homeownership -housing subsidy provides up to $400,000 per
member bank. There are two homeownership -subsidy programs: WISH (Workforce
Initiative Subsidy for Homeownership) and IDEA (Individual Development and
Empowerment Accounts). Each of the homeownership programs provides up to
$15,000 in matching grants for individual homebuyers.
Eligible Activities
• Purchase, construction, or rehabilitation of rental housing in which at least
20 percent of the units are occupied by and affordable for very low
income households
• Purchase, construction, or rehabilitation of owner -occupied housing by
and for very low, low, and moderate income households
Targeted Population
Very low, low and moderate income households up to 80 percent of Area Median
Income.
Who Can Apply Member banks of the FHLBSF.
Application Competitive process for rental -housing sponsors, who apply through member
Procedure/ banks. Projects meeting eligibility standards are then scored on pre -established
Amount criteria by FHLBSF. Subsidy is awarded to highest-ranking projects.
Available Homeownership subsidy is a set-aside program, and individual homebuyers apply
to member banks.
Administering Federal Home Loan Bank of San Francisco
Agency/Contact 600 California Street
San Francisco, CA 94120
800-283-0700
www.fhlbsf.com/ci/grant/ahp/default.asp
FHLBSF Programs - 60
City of Tustin
Comprehensive Affordable Housing Strategy
Appendix D
Affordability Gap and Leveraged Financing Analysis
February 15, 2008
Prepared for: City of Tustin
Submitted By: David Paul Rosen & Associates
Northern California
David Rosen, Principal
1330 Broadway, Suite 937
Oakland, CA 94612-2509
Phone: 510-451-2552
Fax: 510-451-2554
e-mail: David@DRAConsuItants.com
www.draconsultants.com
Southern California
Nora Lake -Brown, Principal
3941 Hendrix St
Irvine, CA 92614-6637
Phone: 949-559-5650
Fax: 949-559-5706
e-mail: Nora@DRAConsuItants.com
www.draconsultants.com
Table of Contents
PAGE
1.0 Executive Summary....................................................................................
1
2.0 Housing Prototypes....................................................................................
9
3.0 Financing Scenarios, Income Targeting and Affordable Housing Cost.........
9
3.1 Financing Scenarios............................................................................
9
3.2 Target Income Levels...........................................................................
9
3.3 Affordable Housing Cost Definitions ..................................... I..............
12
3.4 Occupancy Standards.........................................................................
12
3.5 Utility Allowances...............................................................................
13
3.6 Affordable Net Rents and Affordable Monthly Housing Cost ................
14
4.0 Development Costs....................................................................................
16
4.1 Developer Interviews, Rental Housing Development ...........................
16
4.1.1 Jamboree Housing....................................................................
16
4.1.2 Keyser Marston Associates........................................................
17
4.2 Developer Interviews, Owner Housing Development ..........................
17
4.2.1 Springbrook Advisors................................................................
18
4.2.2 Nevis Homes............................................................................
18
4.2.3 The Olson Company.................................................................
18
4.2.4 Keyser Marston Associates........................................................
18
4.2.5 CIM Group...............................................................................
19
4.2.6 William Lyon Homes................................................................
19
4.2.7 Sun Cal Companies..................................................................
19
4.2.8 John Laing Homes....................................................................
19
4.3 Land Acquisition Costs........................................................................
20
4.4 Development Impact Fees...................................................................
21
4.5 Hard Costs and Site Improvement Costs ..............................................
24
4.6 Estimated Total Prototype Development Costs .....................................
25
5.0 Operating and Financing Cost Assumptions ...............................................
26
5.1 General Operating Costs, Rental Prototype ..........................................
26
5.2 Financing Costs...................................................................................
29
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page i
6.0 Per Unit Affordability Gaps........................................................................ 29
7.0 Renter Leveraged Financial Analysis........................................................... 32
7.1 Hard Construction Costs..................................................................... 32
7.2 Eligible Basis and Tax Credit Equity Calculations ................................. 32
7.3 Income Targeting Scenarios, Occupancy Standards
andAffordable Rents...............................:.......................................... 33
7.4 Operating Costs and Vacancy............................................................. 34
Attachment A: Ownership Affordability Gap Analysis Tables
Attachment B: Renter Affordability Gap Analysis Tables
Attachment C: Leveraged Financial Analysis, Renter Prototype
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page li
List of Tables
TABLE PAGE
1. Homeowner Per Unit Subsidy Requirements .............................................. 4
2.
Tenant Per Unit Subsidy Requirements.......................................................
6
3.
Average Per Unit Subsidy Requirements, Leveraged Financing
Scenarios.................................................................................................
8
4.
Owner Housing Prototype Projects.............................................................
10
5.
Rental Housing Prototype..........................................................................
11
6.
Affordable Housing Cost Definitions..........................................................
12
7.
Current Monthly Utility Allowances, County of Orange ..............................
14
8.
Affordable Net Rents..................................................................................
15
9.
Affordable Monthly Housing Cost..............................................................
15
10.
Tustin Legacy Comparable Land Prices ......................................................
20
11.
Per Unit Land Acquisition Cost Assumptions by Prototype ..........................
21
12.
Development Processing and impact Fee Assumptions, Owner Housing
Prototypes.............................................................................................
22
13.
Development Processing and Impact Fee Assumptions, Rental Housing
Prototype..............................................................................................
23
14.
Per Net Square Foot Hard Construction Cost Assumptions by Prototype .....
25
15.
Estimated Prototype Development Costs, Owner Housing Prototypes.........
27
16.
Estimated Prototype Development Costs, Rental Housing Prototype ...........
28
17.
Development and Financing Cost Assumptions, Owner
HousingPrototypes....................................................................................
30
18.
Development and Financing Cost Assumptions, Rental
Prototype.................................................................................................
31
19.
Income Targeting Assumptions for Leveraged Financing Scenarios .............
33
20.
Construction and Permanent Sources and Uses, Leveraged Financing
Analysis, Rental Housing Prototype .......................................... a............
35
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page iii
City of Tustin
Affordability Gap and Leveraged Financing Analysis
1.0 Executive Summary
The City of Tustin retained David Paul Rosen & Associates (DRA) to prepare an
affordability gap analysis and evaluation of leveraged financing options for new residential
development in Tustin. The "affordability gap" methodology determines the difference
between the supportable mortgage on the unit at affordable rents and sales prices and the
actual development cost of the unit. The gap analysis provides planning -level estimates of
the typical per unit subsidized required to make different types of housing affordable to
households at alternative income levels.
The per unit affordability gaps calculated in this report are based on housing prototypes
that are 100% affordable to households at each of the income levels modeled (or in the
case of the leveraged financing analysis, at the mix of income levels necessary to meet the
requirements and/or competitive standards of the leveraged financing programs).
However, the results can be used in estimating subsidy requirements for mixed income
housing developments as well. Under the assumption that the market rate units are
financially feasible without subsidy, the subsidy requirement for a mixed income
development can be estimated by multiplying the number of affordable units by the
appropriate per unit affordability gap. The results of the gap analysis provide a useful tool
to the City of Tustin and Tustin Redevelopment Agency for capital plannin purposes.
DRA recommends that the subsidy provided to any individual housing development be
determined based on analysis of the specific economic conditions pertaining to that
project.
The first step in the gap analysis establishes the amount a tenant or homebuyer can afford
to contribute to the cost of renting or owning a dwelling unit based on established State
and Federal standards. Income levels, housing costs and rents used in the analysis are
defined below using 2007 published data for Tustin.
The second step estimates the costs of new housing construction in Tustin. For this
purpose, DRA, in collaboration with City staff, formulated five prototypical housing
developments (one rental development and four owner developments) suitable for the
Tustin market today. DRA estimated the cost to develop these housing prototypes in
Tustin under current housing conditions using information on actual recent housing
developments provided by Tustin and Orange County area deveiopers.
The third step in the gap analysis establishes the housing expenses borne by the tenants
and owners. These costs can be categorized into operating costs, and financing or
mortgage obligations. Operating costs are the maintenance expenses of the unit,
including utilities, property maintenance and/or Homeownership Association (HOA) fees,
property taxes, management fees, property insurance, replacement reserves, and
insurance. For the rental prototype examined in this analysis, DRA assumes that the
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 1
landlord pays all but certain tenant -paid utilities as an annual operating cost of the unit
paid from rental income. For owner prototypes, DRA assumes the homebuyer pays all
operating and maintenance costs for the home.
Financing or mortgage obligations are the costs associated with the purchase or
development of the housing unit itself. These costs occur when all or a portion of the
development cost is financed. This cost is always an obligation of the landlord or owner.
Supportable financing is deducted from the total development cost, less any owner equity
or downpayment, to determine the gap between the supportable mortgage on the
affordable units and the cost of developing those units.
For the rental housing prototype, the gap analysis calculates the difference between total
development costs and the conventional mortgage supportable by net operating income
from restricted rents. For owners, the gap is the difference between development costs
and the supportable mortgage plus the buyer's down payment. Affordable housing costs
for renters and owners are calculated based on California Redevelopment Law definitions
and occupancy standards. Household income is adjusted based on an occupancy
standard of one person per bedroom plus one. -
The gaps for the owner prototypes tare summarized in Table 1. The gaps have been
calculated for the following three income levels:
Affordable
Income Limit Housing Cost
1. Very Low Income 50% of Area Median Income (AMI), adjusted 30% of 50% AMI
for household size .
2. Low Income 80% of AMI, adjusted for household size 30% of 70% AMI
3. Moderate Income 120% of AMI, adjusted for household size 35% of 110% AMI
Depending upon the source of subsidy for ownership housing, the gaps may vary. For
example, Federal HOME funds do not require deduction of a utility allowance in the
calculation of affordable mortgage payment. However, under California Redevelopment
Law, owner affordable housing expense is defined to include monthly utility costs. This
increases the ownership gaps. The affordability gaps shown in Table 1 include utility
allowance deductions.
The gaps for the rental prototype, without non -local leveraged financing, are summarized
in Table 2. The gaps have been calculated for the following three income levels:
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 2
Affordable Housing
Income Limit Cost
1. Very Low Income 50% of Area Median Income (AMD, 30% of 50% AMI
adjusted for household size
2. Low Income 80% of AMI, adjusted for household size 30% of 60% AMI
3. Moderate Income 120% of AMI, adjusted for household size 30% of 110% AMI
DRA produced, under separate cover, a comprehensive review of federal, State, and
private sources of funding that might be used to subsidize affordable rental and ownership
housing in Tustin. For ownership housing, per unit mortgage assistance, as available,
generally reduces the gap on a dollar for dollar basis. For rental developments, the use of
the Low Income Housing Tax Credit Program and/or tax-exempt bonds is more
complicated, because of the formulas for calculating tax credits and the specific income
targeting required.
Therefore, for the rental prototype, we have examined the following leverage scenarios:
1. 9% Low Income Housing Tax Credits (federal only)';
2. 4% tax credits with tax-exempt bonds; and
3. 4% tax credits, tax-exempt bonds, and the Multifamily Housing Program
(MHP) of the California Department of Housing and Community
Development (HCD).
The assumptions and findings are described in the following section. The sources and
uses for each leveraged rental scenario are summarized in Table 3.
Since Orange County was designated as a Difficult to Develop Area (DDA) by HUD in 2007, projects in
the County are eligible for a 130% basis boost for the calculation of Federal tax credits but are not
eligible for State tax credits.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 3
Table 1
Homeowner Per Unit Subsidy Requirements'
City of Tustin
2008
Prototype/Unit Bedroom Count
Owner Prototype #13
Attached Townhome
Two Bedroom
Three Bedroom
Four Bedroom
Average
Owner Prototype #26
Stacked Flat Condominium
One Bedroom
Two Bedroom
Three Bedroom
Four Bedroom
Average
Owner Prototype #3'
High Density Condominium
One Bedroom
Two Bedr000m
Three Bedroom
Four Bedroom
Average
Owner Prototype #48
Mixed Use, Ground Floor Retail
One Bedroom
Two Bedr000m
Three Bedroom
Average
Source: David Paul Rosen & Associates
Very Low Low Moderate
Income' Income Income
$366,000
$387,800
$426,800
$393,500
$258,600
$259,000
$267,100
$290,500
$268,800
$407,500
$432,500
$542,000
$569,400
$487,900
$491,700
$537,400
$595,000
$541,300
$322,400
$339,400
$374,600
$345,500
$219,900
$215,500
$218,800
$238,300
$223,100
$368,800
$389,000
$493,700
$517,200
$442,200
$453,000
$493,900
$546,600
$497,800
$195,500
$198,400
$222,300
$205,400
$107,100
$88,600
$77,800
$86,000
$89,900
$256,000
$262,100
$352,600
$364,800
$308,900
$340,200
$366,900
$405,600
$370,900
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 4
Notes to Table 1:
' Per unit subsidy requirements are calculated as per unit total development cost fess affordable
home purchase price, based on an occupancy standard of one person per bedroom plus one, per
California Redevelopment Law. Affordable home purchase price is calculated based on monthly
affordable housing expense, inclusive of mortgage principal and interest, property taxes and
insurance, utilities and homeowners association (HOA) dues. Calculations are based on the
following assumptions: 30-year mortgage interest rate of 8 percent; average property tax rate of
1.20 percent, property insurance costs of $50 per month; HOA dues of $175 per month; and a
utility allowance calculated based on County of Orange, Housing and Community Services
Department utility allowance schedule, effective October 1, 2006.
'Very low income owner affordable housing is cost calculated as 30 percent of 50 percent of AMI,
adjusted for household size. Average very low income affordable home purchase price is
$70,764.
s Low income owner affordable housing cost is calculated as 30 percent of 70 percent of AMI,
adjusted for household size. Average low income affordable home purchase price is $116,457.
4 Moderate income owner affordable housing cost is calculated as 35 percent of 110 percent of
AMI, adjusted for household size. Average moderate income affordable home purchase price is
$249,723.
s Owner Prototype #1 average unit size is 1,296 square feet. Average per unit development cost is
$468,663. Per unit development costs are adjusted by unit size/bedroom count.
e Owner Prototype #2 average unit size is 1,142 square feet. Average per unit development cost is
$339,591. Per unit development costs are adjusted by unit size/bedroom count.
Owner Prototype #3 average unit size is 1,350 square feet. Average per unit development cost is
$558,617. Per unit development costs are adjusted by unit size/bedroom count.
e Owner Prototype #4 average unit size is 1,515 square feet. Average per unit development cost is
$608,112. Per unit development costs are adjusted by unit size/bedroom count.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 5
Table 2
Tenant Per Unit Subsidy Requirements'
Rental Housing Prototype: Stacked Flat Apartments
City of Tustin
2008
Renter Prototype
Stacked Flat Apartments
Unit Bedroom Count
•a,■ 7 www
Income
a "rr
Income'
novas a.uac.
Income4
One Bedrooms
$311,300
$294,600
$211,400
Two Bedroom'
$348,000
$329,300
$235,600
Three Bedroom'
$321,800
$301,000
$197,000
Four Bedrooms
$402,000
$379,600
$174,800
Average
$345,775
$326,125
$204,700
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 6
Notes to Table 2:
Tenant per unit subsidy requirements are calculated as per unit total development cost less per
unit tenant supported debt. Tenant supported debt is calculated based on tenant monthly operating
income which equals: affordable monthly rent, inclusive of utilities, less a monthly per unit
operating cost of $300, property taxes assumed at an average annual rate of 1.20 percent; and a 3
percent vacancy rate. Tenant supported debt calculations are based on a 30 -year mortgage interest
rate of 8 percent and a debt coverage ratio of 1.25. Affordable monthly rents are based on
household income, adjusted for household size assuming an occupancy standard of one person
per bedroom plus one, per California Redevelopment Law.
' Very low income renter affordable housing cost is calculated as 30 percent of 50 percent of AMI,
adjusted for household size. Average very low income affordable monthly rent is $847.
3 Low income renter affordable housing cost calculated as 30 percent of 60 percent of AMI,
adjusted for household size. Average low income affordable monthly rent is $1,033.
" Moderate income renter affordable housing cost calculated as 30 percent of 110 percent of AMI,
adjusted for household size. Average moderate income affordable monthly rent is $1,963.
-'One bedroom unit is 750 square feet. Per unit total development cost is $321,075.
' Two bedroom unit is 950 square feet. Per unit total development cost is $362,224.
' Three bedroom unit is 1,050 square feet. Per unit total development cost is $382,799.
' Four bedroom unit is 1,250 square feet. Per unit total development cost is $423,947.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 7
Table 3
Average Per Unit Subsidy Requirements
Rental Housing Prototype: Stacked Flat Apartments
Leveraged Financing Scenarios
City of Tustin
2008
Leveraged Financing Scenarios
9% Tax Credits
Renter Prototype
Stacked Flat Apartments
$57,000
4% Tax Credits, Tax -Exempt Bonds $140,100
4% Tax Credits, Tax -Exempt Bonds,
Multi -Family Housing Program (MHP) $109,600
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Nge 8
2.0 Housing Prototypes
Tables 4 and 5 describe the owner and renter housing prototypes, respectively, examined
in the gap analysis. These prototypes were developed in collaboration with City staff
based on recently constructed and planned residential developments. The prototypes are
designed to represent typical market -rate rental and owner housing developments in
Tustin in terms of the resident population, product and construction type, density, number
of units, unit mix by bedroom count, and unit size.
3.0 Financing Scenarios, Income Targeting and Affordable Housing Cost
3.1 Financing Scenarios
DRA first modeled the owner and renter housing prototypes under a conventional
financing scenario that does not incorporate leverage from alternative sources of public
subsidy for affordable housing. Because of the limited availability of affordable housing
subsidies, it is not possible to predict the ability of any particular affordable housing
development to secure such subsidies. We calculate the affordability gap per unit by unit
bedroom count and homebuyer/tenant income level.
In the leveraged financing analysis, described in Section 7.0 below, we model the renter
housing prototype assuming use of the Low Income Housing Tax Credit and tax-exempt
bond programs.
3.2 Target Income Levels
The affordability gap analysis uses income limits as commonly defined by HUD,
California Redevelopment Law, California Housing Element law, and most affordable
housing assistance programs. Extremely low income households are defined as
households with incomes up to 30 percent of AMI. Very low income households are
defined as households with incomes from above 30 percent to 50 percent of AMI. Low
income households are defined as households with incomes from above 50 percent to 80
percent of AMI. Moderate income households are defined as households with incomes
from above 80 percent to 120 percent of AMI. All of these income limits are adjusted by
household size using HUD family size adjustment factors. The affordability gap
calculations are based on the 2007 median household income of $78,700 for Orange
County.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 9
Table 4
Owner Housing Prototype Projects
City of Tustin
2008
PROTOTYPE
Owner 1
Attached Townhome
Owner 2
Stacked Flat
Condominium
Owner 3
High Density
Condominium
Owner 4
Mixed Use,
Ground Floor Retail
UNIT COUNT
234 Units
325 Units
400 Units
20 Units
ZONING
R3
R3
PC
C2 P
NUMBER OF STORIES
2.5 Stories
2 Stories
4 Stories
3 Stories
(2 Stories Resid.)
CONSTRUCTION TYPE
Type V
Type V
Type V
Type V
Wood Frame
Wood Frame
Wood Frame
Wood Frame
DENSITY (DU'S/Acre)
18.0
25.0
45-50
29.0
FLOOR AREA RATIO (FAR)
0.5
0.7
1.5
1.5
LAND AREA (Acres)
13.00 Acres
13.00 Acres
8.00 Acres
0.69 Acres
UNITS BY BR COUNT
One Bedroom
0
75
100
4
Two Bedroom
90
100
125
6
Three Bedroom
90
100
125
10
Four Bedroom
54
50
50
0
UNIT SIZE (Net Square Feet)
One Bedroom
WA
950
1,000
1,100
Two Bedroom
1,050
1,050
1,150
1,400
Three Bedroom
1,300
1,200
1,650
1,750
Four Bedroom
1,700
1,500
1,800
N/A
Average Square Feet
1,296
1,142
1,350
1,515
BLDG. SQ. FEET
Net Living Area
303,300
371,250
540,000
30,300
Community Space
2,500
2,000
0
0
Total Net Bldg. Square Feet
305,800
373,250
540,000
30,300
TYPE OF PARKING
Garage
Carport
Parking Structure
Garage
NO. OF PKC. SPACES
Garage
468
0
0
40
Carport
0
650
0
0
Open
59
82
100
10
Parking Structure
0
0
700
0
TOTAL SPACES
527
732
800
50
City of Tustin
Affordability Gap and Leveraged Fnancing Analysis page 10
Table 5
Rental Housing Prototype
City of Tustin
2008
PROTOTYPE
Renter Prototype
Stacked Flat rtments
UNIT COUNT
325 Units
TYPE OF PRODUCT
Stacked Flats
ZONING
R3
NUMBER OF STORIES
2
CONSTRUCTION TYPE
Type V
Wood Frame
DENSITY (DU'S/Acre)
25.0
FLOOR AREA RATIO (FAR),
0.6
LAND AREA (Acres)
13.00 Acres
UNITS BY BR COUNT
One Bedroom
73
Two Bedroom
100
Three Bedroom
100
Four Bedroom
50
Manager's Units (Two Bedroom)
2
UNIT SIZE (Net Square Feet)
One Bedroom
750
Two Bedroom
950
Three Bedroom
1,050
Four Bedroom
.1,250
Average Square Feet
982
BLDG. SQ. FEET
Net Living Area
319,150
Community Space
0
Total Net Bldg. Square Feet
319,150
TYPE OF PARKING
Parking Structure
No. OF PARKING SPACES
Garage
0
Carport
0
Open
81
Parking Structure
650
TOTAL SPACES
731
Giiy of Tustin
Affordability Cap and Leveraged Financing Analysis Page i 1
3.3 Affordable Housing Cost Definitions
Calculation of the affordability gap requires defining affordable housing expense for
renters and owners. Table 6 shows the affordable housing cost definitions and income
levels developed for this analysis based on discussions with City staff and consistent with
California Redevelopment Law. Affordable housing expense for renters is defined to
include rent plus utilities. For owners, affordable housing expense is defined to include
mortgage principal and interest, property taxes and insurance, utilities and homeowners
association (HOA} dues.
Table 6
Affordable Housing Cost Definitions
City of Tustin
Income Level
of Occupants
Extremely low income
(30% of AMI and below)
Very low income
(greater than 30% to 50% of AMI)
Low income
(greater than 50% to 80% of AM])
Moderate income
(greater than 80% to 120% of AMI)
AMI = Area Median Income
3.4 Occupancy Standards
Type of Housing
Rental Ownership
Not Analyzed
3'0% of 50% AMI
30% of 60% AMI
30% of 110% AMI
Not Analyzed
30% of 50% AMI
30% of 70% AMI
35% of 110% AMI
Because income definitions for affordable housing assistance programs vary by household
size, calculations of affordable rents and affordable owner housing costs require the
definition of occupancy standards (the number of persons per unit) for each unit size. For
the purposes of this analysis, affordable housing cost for renters and owners is calculated
based on an occupancy standard of one person per bedroom plus one, consistent with
California Redevelopment Law requirements.
City of Tustin
Affordability Cap and Leveraged financing Analysis Page 12
3.5 Utility Allowances
Allowable affordable net rents are calculated by subtracting allowances for the utilities
paid directly by the tenants from the gross rent (or affordable housing cost). For owners,
the affordable mortgage principal and interest payment is calculated by determining the
affordable housing cost and deducting costs for property taxes, property insurance, utilities
and HOA dues.
We incorporated utility allowances effective October 1, 2006 provided by the County of
Orange, Housing and Community Services Department, summarized in Table 7 below.
The rental gap analysis assumes that the resident pays utilities (assumed to include basic
electric and electric heating, cooking and water heating). It assumes the landlord pays for
trash, water and sewer. For the owner gap analysis, we assume the homeowner pays
utilities (basic electric and electric heating, cooking and water heating), plus water, trash
and sewer.
Actual utility allowances depend upon a variety of factors, including the utilities that are
paid by the residents (e.g., water, gas, electricity, sewer, trash), the type of appliances and
heating units incorporated in the units, and whether appliances and heating units require
electricity or gas.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 13
Table 7
Current Monthly Utility Allowances
County of Orange Housing and Community Services
Renter Households
Bedroom Size Monthly Utility Allowance'
1 Bedroom
$54
2 Bedroom
$68
3 Bedroom
$98
4 Bedroom
$109
Owner Households
Bedroom Size
Monthly Utility Allowance2
1 Bedroom
$93
2 Bedroom
$110
3 Bedroom
$148
Source: County of Orange, Mousing and Community Services,
effective October 1, 2006.
3.6 Affordable Net Rents and Affordable Monthly Housing Cost
Table 8 summarizes the affordable net rents used in the renter gap analysis. Table 9
summarizes the affordable housing costs used in the owner gap analyses.
1 Includes electric utilities (heating, cooking, water heating and basic electric).
2 Includes electric utilities (heating, cooking, water heating and basic electric) and water, trash and sewer.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 14
Table 8
Affordable Net Rents'
City of Tustin
2008
Unit Size
(No. of Bedrooms)
Very Low
50% AMI
Low
80% AMI
Moderate
120% AMI
1 Bedroom
$733
$890
$1,677
2 Bedroom
$817
$994
$1,880
3 Bedroom
$886
$1,083
$2,066
4 Bedroom
$953
$1,166
$2,228
Table 9
Affordable Monthly Housing Cost 2
City of Tustin
2008
Unit Size
(No. of Bedrooms)
Very Low
50% AMI
Low.
80% AMI
Moderate
1120% AMI
1 Bedroom
$787
$1,102
$2,02.0
2 Bedrooms
$885
$1,240
$2,272
3 Bedrooms
$984
$1,377
$2,525
4 Bedrooms
$1,062
$1,478
$2,727
1 U.S. Department of Housing and Urban Development published 2007 very low income limits, adjusted
proportionally for 60% of percentage of AMI category. Gross rents are calculated assuming an occupancy
standard of 1 person per bedroom plus one, consistent with California Redevelopment Law. Net rents are
calculated assuming 30% of gross income spent on rent and then deducting the utility allowances from
Table 7.
2 California Department of Housing and Community Development published 2007 low and median income
limits. Owner affordable housing costs are calculated assuming an occupancy standard of one person per
bedroom plus one and 30% of gross income spent on housing for low income households and 35% of
gross income spent on housing for moderate income households. The Affordable Monthly Housing Cost
includes the monthly mortgage payment, property taxes, property insurance, utilities and HOA dues.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 15
4.0 Development Costs
Development costs include: land acquisition, hard costs, hard cost contingency, on- and
off-site improvements, development fees, soft or indirect costs, financing costs,
sales/marketing, and developer profit, overhead and general conditions. Hard costs
include building and parking construction costs. Soft or indirect costs include architectural
and engineering costs, property taxes and insurance.
Development costs for the renter and owner prototypes were estimated based on a review
of land sales comparables, interviews with local Tustin area developers and DRA's
extensive experience with housing development throughout Southern California.
4.1 Developer Interviews, Rental Housing Development
The following developers and advisors were interviewed regarding rental housing
development costs:
• Laura Archuleta, Jamboree Housing
• Jerry Trimble and Michael Wong, Keyser Marston Associates
4.1.1 jamboree Housing
Jamboree Housing provided DRA with development cost summaries of 48 recent bids on
14 new housing projects in the Tustin area. Thirty-four of these bids relate to 10 garden -
style, or stacked -flat walk-up rental projects with carports. The projects range from 20 to
162 units with unit densities between 38 and 71 units per acre. Every site is unique
representing different development costs and Jamboree's 14 projects' bids represent a
wide range of costs. This range can be explained by a number of factors including the
sites' unique conditions and the projects' timing, which can vary costs based on cost
fluctuations in the market. In addition, about half of Jamboree's bids assume payment of
prevailing wages.
4f Jamboree's non -prevailing wage bids, the hard costs range from $94 to $185 per
square foot, with the average cost at $155 per square foot. The average hard cost of the
prevailing wage bids is about 22 percent higher at $198 per square foot.
Jamboree's remaining 14 bids relate to five podium style projects, or stacked flat
apartments over parking with densities ranging from 40 to 64 units per acre. The hard
costs, inclusive of parking construction, for the non -prevailing wage bids range from $171
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 16
to $342 per square foot for this product, with the average cost at $239 per square foot.
The prevailing wage bids average $270 per square foot hard construction costs.
Five of these bids include land cost estimates that range from $21 to $79 per square foot.
The average land cost is $43 per square foot.
4.1.2 Keyser Marston Associates (KMA)
KMA prepared a residual land value analysis for Tustin Legacy, including development
cost estimates for several different development prototypes. KMA's cost estimates do not
include land costs or site improvements. For an apartment project with 30 dwelling units
to the acre, KMA estimates $165 per square foot in hard costs and soft costs equal to 18.5
percent of hard costs.
4.2 Developer Interviews, Owner Housing Development
The following developers and advisors were interviewed regarding owner housing
development costs:
• Tom Sakai, Springbrook Advisors
• Scott Young, Nevis Homes
• Scott Newcomb, The Olson Company
• Jerry Trimble and Michael Wong, Keyser Marston Associates
• Justin Rimel, CIM Group
• Tom Grable, William Lyon Homes
• Ian Vickers, Sun Cal Companies
• Steve Kabel, john Laing Homes
Below we review the results of these interviews and detail the hard costs that the
interviewees have seen in recent housing developments in the Tustin area, especially
those developments that are similar to the five prototypes examined in this analysis.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 17
4.2.1 Springbrook Advisors
Springbrook Advisors represents Lennar and Lyon Homes on development projects
throughout Southern California. In the Tustin area, Springbrook has experience with an
owner townhouse project with 13.5 dwelling units per acre. On this project, hard costs
were $90 per square foot.
Springbrook also advised on a low density, mixed-use project with no parking that had
hard costs of $110 per square foot.
Another project, a high density owner development with 40 dwelling units per acre and
podium parking, had hard costs of $225 per square foot, inclusive of parking and site
improvements.
4.2.2 Nevis Homes
Nevis Homes has recently developed a 93 -unit townhome project in the Tustin area. Land
costs for this project were about $106 per square foot and hard costs were $136 per
square foot.
4.2.3 The Olson Company
The Olson Company provided DRA with development cost estimates for the four owner
prototypes, based on the company's development experience in Orange County. For
Owner Prototype #1, Attached Townhomes, Olson estimates $78 per square foot in hard
costs. For Owner Prototype #2, Stacked Flat Condominiums with podium parking, hard
costs were estimated at $82 per square foot..
Olson also estimates $115 per square foot hard costs and a $21,000 to $27,000 cost per
parking space for Owner Prototype #3, High Density Condominiums. For Owner
Prototype #4, Mixed Use Condominiums, Olson estimates $85 per square foot hard costs.
4.2.4 Keyser Marston Associates (KMA)
KMA prepared a residual land value analysis for Tustin Legacy, including development
cost estimates for several different development prototypes. KMA's cost estimates do not
include land costs or site improvements.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 18
For a stacked flat product with 50 dwelling units to the acre, KMA estimates hard costs at
$165 per square foot with additional costs of $30 per square foot for parking construction.
For a townhouse product with 13 dwelling units to the acre, they estimate hard costs at
$96 per square foot. A mixed use, Texas Wrap style project with 75 dwelling units to the
acre is estimated to have $119 per square foot hard costs with additional $35 per square
foot costs for parking construction. All of KMA's prototypes assume soft costs to be equal
to 18.5 percent of hard costs.
4.2.5 CIM Group
The CIM Group has developed several mixed use projects in and around Tustin that have
ground -floor retail below residential. The costs they have seen on these projects range
from $130 to $140 per gross square foot for hard costs, with additional costs of $25,000
per at -grade structured parking space to $35,000 per below -grade structured parking
space.
4.2.6 William Lyon Homes
William Lyon Homes is currently developing a 102 -unit mixed -income housing project on
the Columbus Grove site of Tustin Legacy. This project consists of triplex buildings with
two two-story townhomes and an upstairs carriage, or walk-up, unit. Of these units, 60 are
market rate, 30 are affordable to low and moderate income households and 12 are
transitional housing units. The hard costs estimated for this project total $76 per square
foot, inclusive of two -car garages within the building envelopes. The land cost for this
project was $133,000 per unit or approximately $79.50 per square foot.
William Lyon Homes is also developing a 156 -unit development of townhomes and flats,
with a mix of market rate and affordable units. This project's hard costs are $98 per square
foot and the land cost was $72,600 per unit or $32 per square foot.
4.2.7 Sun Cal Companies
Sun Cal Companies has experience with several housing products in the Tustin area.
Currently, the company is developing two townhome projects in Tustin. These projects
have hard costs ranging from $95 to $99 per square foot. Site improvement costs vary
widely by site and so Sun Cal could not provide an estimate of typical site improvement
costs.
Sun Cal Companies is also familiar with stacked flat and mixed use developments in the
Tustin area. These projects have hard costs ranging from $90 to $110 per square foot, with
the higher costs associated with projects that have more than three stories.
City of Tustin
Affordability Cap and Leveraged Financing Analysis Page 19
According to Sun Cal's experience, high density housing developments built in the wrap
design, with buildings surrounding at -grade parking have hard costs around $200 per
square foot while those with podium parking have hard .costs around $225 per square
foot.
4.2.8 John Laing Homes
John Laing Homes last developed housing in Tustin two years ago but has several current
projects in Irvine. These include a row townhouse development with a density of 16.5
units per acre, and two townhouse and condominium flats combination projects at 17.5
and 16.3 units per acre. The row townhouse project has hard costs of $82 per square foot.
The two townhouse and flat combination projects have hard costs of $84 and $87 per
square foot.
In Irvine, developers are most commonly purchasing partially -finished lots, according to
Mr. Kabel. Therefore, the land costs for these projects would not be comparable to buying
unfinished lots for development in Tustin.
4.3 Land Acquisition Costs
Harris Realty Appraisal prepared an Appraisal Report for the City of Tustin, Community
Facilities District No. 66-1, Tustin Legacy/Columbus Villages in May 2007. Of the 16
Tustin Legacy land sales analyzed in the appraisal, four parcels have comparable housing
type and density to the Owner Prototype 1 examined in this study. The land prices and
density of these parcels are shown in Table 10 below.
Table 10
Tustin Legacy Comparable Land Prices
City of Tustin
2008
Land Sale Data
Land Cost, per
square foot
Lot Density,
units per gross
site acre
No. 1
.$53 / SF
16.6 units/acre
No. 6
$46 /SF
16.3 units/acre
No. 9
$47 /SF
16.2 units/acre
No. 9A
$33 /SF
16.2 units/acre
Average
$45 /SF
16.3 units/acre
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 20
Based on the above interviews and land cost comparables, DRA estimates per unit and per
square foot land costs for the various housing product types represented by the housing
prototypes. The land acquisition cost assumptions are shown in Table 11.
Table 11
Per Unit Land Acquisition Cost Assumptions by Prototype
City of Tustin
2008
Prototype
Land Cost Per Dwelling
Land Cost Per Square Foot
Unit
Gross Site Area
Owner #1
Attached Townhome
$109,000
$45
Owner #2
Stacked Flat Condominiums
$�'� 000
$43
Owner #3
High Density Condominiums
$52,000
$b0
Owner #4
Mixed Use Condominiums
$90,000
$ 60
Renter #1
$70,000
$43
Stacked Flat Apartments
Source: Dataquick Information Systems; City of Tustin; DRA interviews of Tustin area developers.
4.4 Development Impact Fees
Development impact fees for new residential development in the City of Tustin include
Orange County Sanitation District fees, East Orange County Water District fees,
Transportation Corridor Agency fees, Tustin Unified School District fees, and building
permit and plan check fees. Current fee estimates for each housing prototype were
provided by the Tustin Community Redevelopment Agency and the Community
Development Department Planning Division.
Estimates of the development impact fees for the housing prototypes are detailed in
Table 12 for the owner prototypes and Table 13 for the renter prototype. Fees for Owner
Prototype #4, Mixed Use Condominiums, include only those that are applicable to the
residential portion of the development. For those fees that are assessed project -wide, the
fees are pro -rated based on the proportion of the total project that is dedicated to
residential use.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 21
Table 12
Development Processing and Impact Fee Assumptions
Owner Housing Prototypes
City of Tustin
2008
Prototype xa:
Prototype :1: Prototype k2: Prototype ;t3: Mixed Use
Attached Stacked Flat High Density Ground Floor
r_..._L.....,.. rnn rnnrinc Retail (1)
Number of Units
v 234 Units
325 Units
400 Units
20 Units
Orange County Sanitation District
$1,026,018
$1,296,025
$1,570,300
$78,300
East Orange County Water District
$117,000
$162,500
$200,000
$10,000
Transportation Corridor A a
$759,564
$1,054,950
$1,298,400
564,920
Subtotal
81,902582
$2,513475
13,068,700
5153,220
Design Review (Tentative Map, traffic study,
preliminary WQMP &site plan)
$14,000
$14,000
$12,000
$6,600
Final Map
$6,000
$6,000
$6,000
$5,280
Public Improvements
$18,000
$18,000
$15,000
$6,600
Water Quality Management Plan
$5,000
$5,000
$2,700
$1,782
Precise Grading Plan
$12,000
$12,000
$10,000
$3,300
Permit &ins ion
$10,000
$10,000
$7,500
$3,630
Subtotal (Public Works Services)
$65,000
$65,000
153,200
===== $27,192
Development Agreement
$0
$0
$O
$7,320
Design Review
$3,000
$3,000
$3,000
$1,980
Tentative Tract Map
$3,000
$3,000
$3,000
$1,980
Final Tract Map
$1,335
$1,335
$1,335
$881
Conditional Use Permit
$0
$0
$0
$1,980
Environment Impact Report Fee
$1,333
$1,333
$0
$0
Negative Declaration
$0
50
$125
$0
$690
Precise Grading Permit Fees
$9,060
$9,060
$6,273
Public Improvements Permit Fees
$9,060
$9,060
$6,273
$690
New Construction Fee
$125,100
$158,750
$192,500
$6,336
Building Permit Fee
$64,859
$78,955
$113,969
$3,398
Planning Plan Check Fee
$9,080
$11,054
$15,956
$476
Building Plan Check
$45,401
$55,268
$79,778
$2,378
Planning Inspection Fee
$12,972
$15,791
$22,794
$680
Building Issuance Fee
$35
$35
$35
$23
Strong Motion Instrumentation Program Fee
$2,546
$3,116
$4,532
$182
Electrical Permit Fee
$22,415
$22,415
$22,415
$14,794
Mechanical Permit Fee
$10,460
$15,791
$18,550
$665
Mechanical Plan Check Fee
$5,230
$7,895
$9,275
$333
Plumbing Permit Fee
$33,336
$35,733
$45,453
$1,730
Plumbing Plan Check Fee
$16,668
$17,867
$22,726
$865
Orange County Fire Authority inspection fee
$33,300
$23,530
$14,480
$1,465
Tustin Unified School District Fees - Level 2
$2,050,308
$2,509,650
$3,650,400
$135,186
Quimby Fee
$ 2,981,464
$ 3,956,882
$ 6,795,360
$282,896
Tustin Transportation System Improvement
$0
$0
$1,787,400
$110,584
P am
Subtotal
$5,436,964
6,936,520
$12,615,626
$570,197
Total
$7,404,546
$9,514,995
$15,937,526
5750 609
Average Per Unit
$31,643
529,277
539,844
537 530
(1) includes fees associated with residential portion of development only. For fees assessed per project,
calculations assume residential portion of project is: 66% of total.
Source: City of Tustin Community Development Department Planning Division, Tustin Community Redevelopment
Agent' City of Tustin Public WorksIngineering Department, David Paul Rosen & Associates.
Cityof Tustin Page 22
Affordability Cap and Leveraged Financing Analysis
Table 13
Development Processing and impact Fee Assumptions
Rental Housing Prototype
City of Tustin
2008
Rental Prototype t`1: Stacked Flat
Apartments
Number of Units
325 Units
Orange County Sanitation District
$1,133,154
East Orange County Water District
$162,500
Transportation,Corridor Agency
$613,925
Subtotal
$1,909,579
Design Review (Tentative Map, traffic study, preliminary
WQMP & site plan)
$14,000
Final Map
$6,000
Public Improvements
$1$1000
Water Quality Management Plan
$51000
Precise Grading Plan
$12,000
Permit & inspection
$10,000
Subtotal (PW Services)
$65,000
Development Agreement
$0
Design Review
$3,000
Tentative Tract Map
$0
Final Tract Map
$0
Conditional Use Permit
$0
Environment Impact Report Fee
$1,333
Negative Declaration
$0
Precise Grading Permit Fees
$9,060
Public Improvements Permit Fees
$9,060
New Construction Fee
$158,950
Building Permit Fee
$60,677
Planning Plan Check Fee
$8,495
Building Plan Check
$41,474
Planning Inspection Fee
$12,135
Building Issuance Fee
$35
Strong Motion Instrumentation Program Fee
$2,377
Electrical Permit Fee
$22,415
Mechanical Permit Fee
$12,188
Mechanical Plan Check Fee
$6,094
Plumbing Permit Fee
$28,268
Plumbing Plan Check Fee
$14,134
Orange County Fire Authority Inspection Fee
$18,100
Tustin Unified School District Fees - Level 2
$2,157,454
Quimby Fee
$3,956,882
Tustin Transportation System Improvement Program
$0
Subtotal
$6,340,729
Total
$8,315,308
Average Per Unit
$25,586
Source:. City of Tustin Community Development Department Planning Division, Tustin Community
Redevelopment Agency, City of Tustin Public Works/Engineering Department,
David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 23
4.5 Hard Costs and Site Improvement Costs
Hard costs are estimated based on the information obtained through developer interviews,
as described above. Hard costs include residential building and parking construction
costs, inclusive of contractor profit and overhead, expressed per net square foot of
residential building area and do not include site improvement costs. Hard costs will vary
with the level of finishes provided in the units. The prototypes modeled represent more
basic, entry-level products rather than luxury units.
Site improvement costs are estimated per square foot of site area. - On- and off-site
improvement costs can also vary widely depending upon the extent of existing
infrastructure and unique site conditions.
For the affordability gap analysis, we model the prototypes assuming a market -rate
development. This analysis illustrates the economic gap between the cost of a market -rate
unit and the amount households at various income levels can afford to pay for housing.
Therefore, the hard cost assumptions for the gap analysis do not assume payment of
prevailing wages.
However, to the extent the gap is filled with many forms of public subsidy, then the
payment of prevailing wages may be required. The difference in hard costs associated
with prevailing wages is estimated at 25% for the rental prototypes in the leveraged
financing analysis in Section 7.0.
The per square foot hard cost and per unit site improvement cost assumptions used in the
gap analysis for each prototype are presented in Table 14. The hard costs are inclusive of
parking construction.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 24
Table 14
Per Net Square Foot Hard Construction Cost Assumptions by Prototype
City of Tustin
2008
Prototype
Hard Construction Cost Per
Average Site Improvement
Net SF Building Area
Cost Per Net SF Site Area
Owner #1
$95
$25
Attached Townhome
Owner #2
$85
$20
Stacked Flat Condominiums
Owner #3
$195
$30
High Density
Condominiums
Owner #4
$155
$20
Mixed Use Condominiums
Renter #1
$155
$20
Stacked Flat Apartments
Source: DRA interviews of Tustin area developers.
4.6 Estimated Total Prototype Development Costs
Total development costs, as defined for the purposes of this report, equal the sum of the
hard costs, site improvement costs, soft costs, sales/marketing costs, financing costs,
general conditions, developer overhead and profit. Hard costs include building and
parking construction costs. Soft costs include architectural and engineering costs, property
taxes and insurance. General conditions include items such as the trailer, utilities,
security, supervision and material storage, if any, associated with the job site. Developer
overhead and profit refers to the fee the developer charges for constructing the project,
including the administration costs and the developer's profit.
Minimum developer profit is estimated at 12% of total development costs, based on DRA
experience and input from developers and the Building Industry Association. This level is
considered a baseline profit or "hurdle rate," representing the minimum necessary for the
City of Tustin
Affordability Gap and leveraged Financing Analysis Page 25
deal to proceed. Developer overhead is estimated at 4% of total development costs.
Developer overhead cost line items typically represent a larger percentage of costs on
small projects than larger projects.
For market -rate owner housing, developer profit is typically measured as a percentage of
gross sales revenues (typically 7 — 9 percent), rather than total development cost.
However, this measure does not work well with affordable homebuyer units, where the
affordable purchase price is often well below total development cost. In DRA's extensive
experience with first-time homebuyer programs throughout California, developer profit
and overhead for affordable homebuyer developments is typically measured as a
percentage of total development cost, usually around 15%.
For market -rate rental housing, developer return is commonly measured using a
discounted cash flow analysis, which takes into account the annual net cash flow and the
ultimate sales proceeds to the project developer/owner over the term of ownership.
However, the net cash flow and sale value from affordable rental units is severely
constrained by the restrictions on rents. For affordable rental housing, the return to the
developer typically comes in the form of a developer fee, which is calculated as a
percentage of total development cost. For example, the Low Income Housing Tax Credit
program used to subsidize affordable rental housing limits developer profit and overhead
to 15% of total development cost.
Total development costs for the prototypes are presented in Table 15 for the owner
prototypes and Table 16 for the renter prototype. The key development cost assumptions
used in the analysis are specified in Table 17 and Table 18, referenced below.
5.0 Operating and Financing Cost Assumptions
5.1 General Operating Costs, Rental Prototype
Annual operating costs are estimated at $3,600 per unit for the gap analysis, excluding
property taxes and reserves, based on interviews with local apartment owners and
property managers and DRA experience with rental housing developments throughout
Southern California. DRA assumes annual property taxes at 1.20 percent of estimated
total development costs.
A vacancy allowance of 3% for affordable units is deducted from rental income to
compensate for the landlord's potential loss of rental income when units become
unoccupied, particularly when tenants move before a new tenant is found.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 26
Table 15
Estimated Prototype Development Costs
Owner Housing Prototypes
City of Tustin
2008
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page 27
Owner 1
Owner 2
Owner 3
Owner 4
Attached
Stacked Flat
High Density
Mixed Use,
Townhome
Condominium
Condominium
Ground Floor
Gross Site Area in Acres
13.000
13.000
8.000
0.689
No. of Units
234
325
400
20
Parking Spaces
527
732
800
50
Net Square Feet Living Area
303,300
371,250
540,000
30,300
Community Space SF
2,500
2,000
0
0
Total Net Square Feet Residential
305,800
373,250
540,000
30,300
Percent Residential
100%
100%
100%
66%
Total Gross SF Bldg. Area
305,800
373,250
540,000
45,909
Land Acquisition Costs
$25,482,600
$24,350,040
$20,908,800
$1,188,000
Site Improvements
$14,157,000
$11,325,600
$10,454,400
$396,000
Building/Parking Hard Costs
$29,051,000
$31,726,250
$105,300,000
$4,696,500
Hard Cost Contingency
$2,160,400
$2,152,593
$5,787,720
$254,625
Arch./Eng./Constr. Supervision
$1,296,240
$1,291,556
$3,472,632
$152,775
City Development Impact/Processing Fees
$7,404,546
$9,514,995
$15,937,526
$750,609
Construction Loan Fees
$919,647
$928,754
$1,859,558
$106,483
Construction Interest
$6,644,448
$6,710,244
$11,457,346
$2,516,665
Environmental Phase 1
$7,500
$7,500
$7,500
$7,500
Soils Testing
$40,000
$40,000
$40,000
$20,000
Property Taxes
$259,248
$258,311
$694,526
$30,555
Insurance
$1,296,240
$1,291,556
$3,472,532
$152,775
Sales Commissions
$1,081,937
$1,092,651
$2,187,715
$125,274
Selling/Closing Costs
$5,409,687
$5,463,256
$10,938,576
$626,371
Developer Overhead
$4,327,750
$4,370,605
$8,750,861
$501,097
Developer Profit
$8,655,499
$8,741,209
$17,501,721
$1,002,194
TOTAL PROJECT COST
$108,193,743
$109,265,118
$218,771,513
$12,527,424
PER UNIT
$462,366
$336,200
$546,929
$626,371
PER NET SF
$353.81
$292.74
$405.13
$413.45
TOTAL COST, EXCLUDING LAND
$82,711,143
$84,915,078
$197,862,713
$11,339,424
PER UNIT
$353,466
$261,277
$494,657
$566,971
PER NET SF
$270.47
$227.50
$366.41
$374.24
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page 27
Table 16
Estimated Prototype Development Costs
Rental Housing Prototype: Stacked Flat Apartments
City of Tustin
2008
Acres
Number of Units
Parking Spaces
Net Square Feet Living Area
Total Net Square Feet
Ratio Net/Gross SF
Total Gross Square Feet Building Area
Land Acquisition
Site Improvements
--- Building(Parking Hard Costs
Hard Cost Contingency
Archictecture/Engineering/Constr. Supervision
Development Impact and Processing Fees
ALTA Survey
Environmental Phase 1
Soi Is Testing
Construction Loan Fees
Construction/Lease-Up Interest
Property insurance
Property Taxes During Construction
Construction Loan Title and Closing
Appraisal Fees
Legal
Market Study/Consulting
Marketing/Lease-Up/Start-Up
Developer Overhead
Developer Profit
Total Project Costs
Total Cost Per Unit
Total Cost Per Net Square Foot
TOTAL COSTS, WITHOUT LAND
TOTAL COST PER UNIT
TOTAL COST PER SQUARE FOOT
Source: David Paul Rosen & Associates
Renter Prototype
Stacked Flat Apartments
13.000
325
731
319,150
319,150
100%
319,150
$24,350,040
$11,325,600
$49,468,250
$3,039,693
$4,255,570
$8,315,308
$3,000
$7,500
$10,000
$456,065
$3,095,367
$607,939
$364,763
$15,000
$10,000
$30,000
$25,000
$100,000
$4,794,504
$9,589,008
$119,862,606
$368,808
$375.57
$95,512,566
$293,885
$299.27
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 28
5.2 Financing Costs
Financing costs vary according to the amount of equity invested, the term of the loan, the
annual interest rate, and, in the case of ownership projects, mortgage insurance rates. for
the purposes of this gap analysis, the amount of the first mortgage for the rental prototype
is assumed to be the amortized debt that may be supported by tenant net affordable rents.
The balance of project financing is the affordability cost or gap.
Loan pricing is typically pegged to the LIBOR plus a spread that varies depending on the
lender, the creditworthiness of the borrower, and financial market conditions. The LIBOR
is currently at a near -historical low of 3.14%. Because this analysis is part of a 5 -year plan,
we assume a construction loan interest rate of 8.5% and a permanent loan interest rate of
8.0% to account for potential future rate increases during the planning period.
With the renter prototype, we assume a conventional construction loan during
construction. The construction loan is calculated based on a loan -to -cost ratio of 75%
and an average loan balance of 60%. DRA has assumed an 8.5% construction interest
rate and a 1.0% construction loan fee. The construction and lease -up period is assumed
at 15 months for the renter prototype. We use an 8.0% permanent loan interest rate for the
rental prototype.
For the owner prototypes, the maximum supportable construction loan is calculated based
on a loan -to -cost ratio of 85% and an average loan balance of 60%. DRA has assumed an
8.5% construction interest rate and a 1.0% construction loan fee. The construction period
is assumed at 12 months and the sales period at 3 months.
For the owner prototypes, DRA assumed homebuyer mortgages based on an effective
interest rate of 8.0% (combined loan interest and mortgage insurance where appropriate).
We assume a 5% downpayment on the owner prototypes.
The assumed interest rates are higher than current rates due to the five-year planning
period for the Affordable Housing Strategy.
Development cost and financing assumptions for the owner and renter prototypes are
summarized in Table 17 and Table 18, respectively.
6.0 Per Unit Affordability Gaps
For the rental housing prototype, the gap analysis calculates the difference between total
development costs and the conventional mortgage supportable by net operating income
from restricted rents, based on the above assumptions. For owners, the gap is the
difference between development costs and the supportable mortgage plus the buyer's
down payment.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 29
Table 17
Development and Financing Cost Assumptions
Owner Housing Prototypes
City of Tustin
2008
Construction Loan
Construction Loan % of TDC
Owner 1
Attached
Townhome
Owner 2
Stacked Flat
Condominium
Owner 3
High Density
Condominium
Owner 4
Mixed Use,
Ground Floor
Retail
Land Acquisition Cost
$91,964,681
$92,875,351
$185,955,786
$10,648,310
Land Cost Per Gross SF Site Area
$45.00
$43.00
$60.00
$60.00
Land Cost Per Unit
$109,000
$75,000
$52,000
$90,000
Development Cost Assumptions
60.00%
60.00%
60.00%
60.00%
Site Improvement Costs per Net SF
$25.00
$20.00
$30.00
$20.00
Site Improvement Costs per Unit
$61,000
$35,000
$26,000
$20,000
Unit Hard Construction per SF
$95.00
$85.00
$195.00
$155.00
Hard Cost Contingency (1)
5%
5%
5%
5%
Arch hectural/Engineering(1)
3%
3%
3%
3%
Property Taxes During Construction (1)
0.60%
0.60%
0.60%
0.60%
Insurance During Construction (1)
3.00%
3.0096
3.00%
3.00%
Selling/Closing Costs (%TDC)
5.00%
5.00%
5.009/6
5.00%
Sales Commissions (%TDC)
1.00%
1.00%
1.001/0
1.00%
Developer Overhead/General Conditions (%TDC)
4.00%
4.00%
4.000/9
4.00%
Developer Profit (%TDC)
8.00%
8.00%
8.0096
8.00%
Construction Loan
Construction Loan % of TDC
85.00%
85,00%
85.00%
85.00%
Construction Loan Amt.
$91,964,681
$92,875,351
$185,955,786
$10,648,310
Interest Rate
8.50%
6.50%
8.50%
8.50%
Loan Fees
1.00%
1.00%
1.0011/0
1.00%
Average Loan Balance -Construction
60.00%
60.00%
60.00%
60.00%
Construction Period
12 Months
12 Months
12 Months
12 Months
Sale Period
3 Months
3 Months
3 Months
3 Months
Total Construction Loan Term
15 Months
15 Months
15 Months
15 Months
Construction Loan Interest --Construction
$4,690,199
$4,736,643
$9,483,745
$543,064
Construction Loan Interest --Sale Period
$1,954,249
$1,973,601
$1,973,601
$1,973,601
Total Construction Loan Interest
$6,644,448
$6,710,244
$11,457,346
$2,516,665
Construction Loan Points
$919,647
$928,754
$1,859,558
$106,483
Note: TDC =Total Development Costs
(1) As a percentage of direct costs (site improvements and and building shell hard costs).
Source: David Paul Rosen & Associates.
City of TUSiin
Affordability Gap and Leveraged Financing Analysis Page 30
Table 18
Development and Financing Cost Assumptions
Rental Prototype: Stacked Fiat Apartments
City of Tustin
2008
Renter Prototype
Construction Loan
Stacked Flat Apartments
Construction Loan As a % of TDC
75.00%
Land/Building Acquisition Cost
$89,896,955
Land Lost Per .Gross SF Site Area
$43.00
LandBuildingCost Per Unit
$70,000
Development Cost Assumptions
60.00%
Site Improvement Costs per SF Site Area
$20.00
Site Improvement Costs per Unit
$35,000
Hard Construction Costs per Net Bldg. SF
$155.00
Hard Cost Contingency (1)
5.00%
Architectural/Engineering (1)
7.000%
Property Taxes During Construction (1)
0.600/6
Insurance During Construction (1)
1.00%
Marketing/Leasing/Start-Up Per Unit
$1,000
Developer Overhead (%TDC)
4.000/c
Developer Profit (% TDC)
8.000k
Construction Loan
Construction Loan As a % of TDC
75.00%
Construction Loan Amount
$89,896,955
Interest Rate
8.50%
Loan Fees (2)
$898,970
Average Loan Balance (Constr/Lease-Up)
60.00%
Construction Period
12 Months
Lease -Up Period
3 Months
Total Construction Loan Term
15 Months
Construction Loan Interest
$5,730,931
Permanent Loan
Debt Coverage Ratio 1.25
Mortgage Term 30 years
Interest Rate 8•00%
(1) As a percentage of direct costs (site Improvements, parking structure and building shell hard costs).
(2) At 1.0% of construction loan amount.
Source: David Paul Rosen & Associates
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 31
Attachment A contains the per unit affordability gap calculations for the ownership
housing prototypes by prototype and unit bedroom count.
Attachment B contains the per unit affordability gap calculations for the rental housing
prototype by unit bedroom count.
7.0 Renter Leveraged Financial Analysis
DRA modeled the renter housing prototype assuming various forms of non -local financing
assistance. We examined the following leverage scenarios:
1. 9% Low Income Housing Tax Credits (Federal only)';
2. 4% tax credits with tax-exempt bonds; and
3. 4% tax credits, tax-exempt bonds, and MHP.
The leveraged financing analysis incorporates the assumptions of the gap analysis
described above, with a few exceptions. Differences between the gap analysis and
leveraged financing assumptions are described below.
7.1 Hard Construction Costs
As noted above, the affordability gap analysis evaluates market -rate prototypes and does
not assume prevailing wages. Private residential projects built on private property are not
subject to prevailing wages unless the projects are built pursuant to an agreement with a
State agency, redevelopment agency, or local public housing authority. In addition,
certain types of public funding do not necessarily require prevailing wages (for example,
tax credits). However, the State of California Department of Housing and Community
Development's Multifamily Housing Program (MHP) does require prevailing wages.
Therefore, we have assumed prevailing wages for the financing scenario that uses MHP
funding. We have increased hard construction costs by 25% as an estimate of the cost
differential associated with prevailing wages.
7.2 Eligible Basis and Tax Credit Equity Calculations
In calculating eligible basis for the purposes of determining Federal tax credits, we have
used 2007 non -elevator threshold basis limits for Orange County. We also used the 130%
Since Orange County was a designated Difficult to Develop Area (DDA) in 2007, projects in the County
were eligible for a 130% basis boost but not for State tax credits.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 32
basis boost because Orange County was designated by HUD as a Difficult to Develop
Area (DDA) in 2007.
We have assumed tax credit pricing of $1.00 for the 9% tax credit scenario and $1.05 for
the 4% tax credit/bond scenarios.
7.3 Income Targeting Scenarios, Occupancy Standards and Affordable !tents
The leveraged financing alternatives analyzed require specific income targeting for a
project to be competitive. We have modeled the highest income profile to score
maximum points when competing for these financial resources undereach scenario. The
income targeting under each source is summarized in Table 19 below. for more
information on each of these financing sources, see DRA's report entitled Affordabie
Housing Assistance Programs, presented under separate cover.
Table 19
Income Targeting Assumptions for Leveraged Financing Scenarios
City of Tustin
Source: David Paul Rosen & Associates
The California Tax Credit Allocation Committee {CTCAC) requires affordable rents to be
calculated assuming an occupancy standard of 1.5 persons per bedroom. If
Redevelopment Agency funds are used to finance the project, the Caiifornia Health and
Safety Code occupancy standard of one person per bedroom plus one applies. This
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 33
Income Targeting
Assumptions
Average Affordability
Leveraged Financing
(% of Units at % Area
Based on Income Targeting
Source/Scenario
Median Income)
(% Area Median Income)
9% Low Income Housing Tax
10% of units @ 30% AMI
47% AMI
Credits
15% of units @ 45% AMI
75% of units @ 50% AMI
4% Low Income Housing Tax
30% of units @ 50% AMI
57% AMI
Credits, Tax -Exempt Bonds
70% of units @ 60% AMI
4% Low Income Housing Tax
30% of units @ 30% AMI
51 % AMI
Credits, Tax -Exempt Bonds,
70% of units @ 60% AMI
and MHP
Source: David Paul Rosen & Associates
The California Tax Credit Allocation Committee {CTCAC) requires affordable rents to be
calculated assuming an occupancy standard of 1.5 persons per bedroom. If
Redevelopment Agency funds are used to finance the project, the Caiifornia Health and
Safety Code occupancy standard of one person per bedroom plus one applies. This
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 33
analysis therefore calculates household size using the lesser of the two occupancy
standards, or the lesser of 1.5 persons per bedroom and one person per bedroom plus one.
7.4 Operating Costs and Vacancy
For the leveraged financing analysis, annual operating costs are estimated at $3,600 per
unit and annual reserve deposits are estimated at $400 per unit, based on DRA's
experience with affordable housing development and operations in Orange County and
throughout Southern California. We assume an annual property tax rate equal to 1.2
percent of total development costs.
For the leveraged financing analysis, we have assumed a vacancy rate of 5%, consistent
with the requirements of most leveraged financing sources, even though actual vacancy in
well-run affordable housing developments are often 3% or less.
Table 20 summarizes the construction and permanent sources and uses for the Renter
Prototype under the leveraged financing scenarios examined. To make this financing
scenario feasible, the permanent and financing gap required would have to be filled by
other subsidy sources, namely local housing resources. In addition, for the 9% tax credit
scenario, the rental prototype would have to be built in four phases, to comply with the
current limit of $2 million in federal tax credits per project under the 9% tax credit
program. There is also a 150 -unit size limit under the 9% tax credit program. The tax-
exempt bond scenario without MHP would have to be built in two phases, to comply with
the current bond limit of $30 million per project. With MHP, the tax-exempt bond
scenario would have to be built in three phases, due to the higher costs associated with
prevailing wages, which are required under MHP.
The leveraged financing analysis is detailed in Attachment C for the Renter Prototype.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page 34
Table 20
Construction and Permanent Sources and Uses
Leveraged Financing Analysis
Rental Housing Prototype: Stacked Flat Apartments
City of Tustin
2008
FUNDING SCENARIO
9% Tax Credits 4% Tax Credits 4% Tax Credits,
Tax Exempt Bonds Bonds, MHP
Number of Units 325 325 325
Acres 13.00 13.00 13:00
Units/Acre 25.00 25.00 25.00
SOURCES OF FUNDS
CONSTRUCTION
Tax Credit Equity
$1,601,192
$813,772
$951,186
Construction Loan
$93,857,236
$59,393,300
$67,161,-024
MHP (1)
$0
$0
$22;609,147
Affordable Housing Program (AHP) (1)
$1,625,000
$1,625,000
$1,625,000
Temporary Gap Financing Required (2;
$17,317,865
$48,263,749
$31,205,104
TOTAL SOURCES
$114,401,293
$110,095,822
$123,551,461
PERMANENT
Federal Tax Credit Equity
$80,059,618
$40,688,609
$47,559,315
State Tax Credit Equity
$0
$0
$0
MHP (1)
$0
$0
$22,609,147
Affordable Housing Program (AHP) (1)
$1,625,000
$1,625,000
$1,625,000
Permanent Financing
$14,207,327
$22,245,144
$16,145,037
Gap Financing Required
$18,509,348
$45,537,069
$35,612,962
TOTAL SOURCES
$114,401,293
$110,095,822
$123,551,461
Permanent Gap Financing/Unit
$56,952
$140,114
$109,578
USES OF FUNDS
CONSTRUCTION AND SOFT COSTS $114,401,293 $110,095,822 $123,551,461
TOTAL COST/UNIT $352,004 $338,756 $380,158
(1) Estimated at $5,000 per unit.
(2) Equals temporary gap financing required after assuming 2 percent of total tax credit equity is used
to fund construction and soft costs during construction.
Source: David Paul Rosen & Associates
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 35
Table A-1
PER UNIT PROTOTYPE DEVELOPMENT COSTS BY BEDROOM COUNT
OWNER PROTOTYPE «1
CITY OFTUSTIN
D.nfnf.mn ilnerr:nt:nn• Attarhpd Tnwnhnmf• TYPE AND SIZE OF UNIT
Total Number of Units: 234 Units
2 Bedroom
3 Bedroom
4 Bedroom
1,050 Net S.F.
1,300 Net S.F.
1,700 Net S.F.
1,059 Total S.F. (1)
1,311 Total S.F. (1)
1,714 Total S.F. (1)
Hard Construction Costs
Site Improvements $60,500 /DU
$60,500
$60,500
$60500
Unit/Parking Constr. Costs $102.06 /Cr. S.F.
$108,051
$133,778
$174,940
Total Hard Costs
$168,551
$194,278
$235,440
Development Impact and
Processing Fees $31,643/Unit
$31,643
$31,643
$31,643
Indirect/SoftCosts $72,457 IDU
$72,457
$72,457
$72,457
Total Costs (Except Land and Overhead/Profit)
$272,652
$298,378
$339,541
Land Costs $108,900 /DU
$108,900
$108,900
$108,900
Dev. Fee/Profit & Overhead 12%
$52,030
$55,538
$61,151
Total Project Costs Per Dwelling Unit
$433,582
$462,816
$509,592
(1) Assumes efficiency ratio (net/gross SF) of: 101%
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-1
Table A-2
PER UNIT PROTOTYPE DEVELOPMENTCOSTS BY BEDROOM COUNT
OWNER PROTOTYPE 92
CITY OF TUSTIN
Stacked Flat TYPE AND SIZE
iwtlT
Prototype Uescripuon:
Total Number of Un(ts: 325 Units
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
950 Net S.F.
1,050 Net S.F.
1,200 Net S.F.
1,500 Net S.F.
955 Total S.F. (1)
1,056 Total S.F. (1)
1,206 Taal S.F. (1)
1,508 Tota) S.F. (1)
Hard Construction Costs
Site Improvements $34,848 /DU
$34,648
534,840
$34,848
$34,848
Unit/Parking Constr. Costs $90.77 /Gr. S.F.
$86,693
$95,819
$109,507
$136,864
Total Hard Costs
$121,541
$130,667
$144,355
$171,732
Development Impact and
Processing Fees $29,277 /Unit
$29,277
$29,277
$29,277
$29,277
Indirect/Soft Costs $52,566 /DU
$52,566
i
$52,566
S52,566
$52,565
Total Costs (Except Land and Overhead/ProfiD
$203,384
$212,509
$226,198
$253,575
Land Costs $74,923 /DU
$74,923
$74,923
$74,923
$74,923
Dev, Fee/Profit & Overhead 12%u
$37,951
$39,195
$41,062
$44,795
Total Project Costs Per Dwelling Unit
$316,258
$326,628
$342,183
$373,293
(1) Assumes efficiency ratio (net/gross SF) of: 101%
Source: David Paul Rosen & Associates.
City ofTustin Pap
A-2
Affordability Gap and leveraged Financing Analysis
Table A-3
PER UNIT PROTOTYPE DEVELOPMENT COSTS BY BEDROOM COUNT
OWNER PROTOTYPE 43
CITY OF TUS71 N
High Density
n,... .: e7 r .,.t r r. 6,,., TYPE AND StZE OF UNIT
Total Number of Units: 400 Units
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
1,000 Net S.F.
1,150 Net S.F.
1,650 Net S.F.
1,800 Net S.F.
1,000%tal S.F. (1)
1,150Total S.F. (1)
1,650 Total S.F. (1)
1,800Tota1 S.F. (1)
Hard Construction Costs
Site Improvements $26,136 /DU
$26,136
$26,136
$26,136
$26,136
Unit/Parking Constr. Costs $205.72 /Gr. S.F.
$205,718
$236,576
$339,435
$370,292
Total Hard Costs
$231,854
$262,712
$365,571
$396,428
Development Impact and
Processing Fees $39,844 /Unit
$39,844
$39,844
$39,844
$39,844
Indirect/Soft Costs $85,326 /DU
$85,326
$85,326
$85,326
$85,326
Total Costs (Except Land and Overhead/Profit)
$357,024
$387,882
$490,741
$521,598
Land Costs $52,272 IDU
$52,272
$52,272
$52,272
$52,272
Dev. Fee/Profit & Overhead 12%
$55,813
$60,021
$74,047
$78,255
Total Project Costs Per Dwelling Unit
$465,109
5500,175
$617,060
$652,125
(1) Assumes efficiency ratio (neUgross SF) of: 100%
Source: David Paul Rosen & Associates.
Cty ufftmin
Affordability Gap and Leveraged Financing Analysis Page A•3
Table A-4
PER UNIT PROTOTYPE DEVELOPMENTCOSTS BY BEDROOM COUNT
OWNER PROTOTYPE,74
CITY OF TUSTIN
Mixed Use, Ground
._ . TVPr Ar to [17F nF UNIT
rroiorype Lmscnpuun; • .,,.,. ••
Total Number of Unitr. 20 Units
-
1 Bedroom
2 Bedroom
3 Bedroom
1,100 Net S.F.
1,400 Net S.F.
1,750 Net S.F.
1,100 Total S.F. (1)
1,400 Total S.F. (1)
1,750 Total S.F. (1)
Hard Construction Costs
Site Improvements $19,800 /DU
519,800
$19,800
$19,800
UnibParking Constr. Costs $163.40 /Gr. S.F.
$179,744
$228,765
$285,956
Total Hard Costs
$199,544
$248,565
$305,756
Development Impact and
Processing Fees $37,530 /Unit
$37,530
$37,53Q
$37,530
Indirect/Soft Costs $186,9201DU
$186,920
$186,920
$186,920
Total Costs (Except Land and Overhead/Profit)
$423,9941
$473,015
$530,206
Land Costs $59,400 /DU
$59,400
$59,400
$59,400
Dev. Fee/Profit & Overhead 12%
$65,917
$72,602
$80,401
Total Project Costs Per Dwelling Unit
$549,312
$605,017
$670,007
(1) Assumes efficiency ratio (net/gross Sr-) of: 100%
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A <
Table A-5
Homeowner Subsidy Requirements
Owner 1
Attached Townhome
Two Bedroom
City of Tustin
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $433,582
less buyer downpayment, less supportable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-1
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$35,415
$49,581
$77,913
Affordable Monthly Housing Cost (2)
$885
$1,240
$2,272
Less: Monthly Utility Allowance (3)
$110
$110
$110
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$550
$905
$1,937
Less: Property Taxes (4)
$79
$130
$278
Supportable Mortgage Before Prop. Taxes (5)
$75,007
$123,272
$264,044
Assumed Assessed Value at Sale
$78,955
$129,760
$277,941
Available for Mortg. Principal and Interest
$471
$775
$1,660
Supportable Mortgage (5)
$64,247
$105,588
$226,165
Affordable Purchase Price (6)
$67,628
$111,145
$238,069
Buyer Downpayment
$3,381
$5,557
$11,903
Required Capital Subsidy (7)
$365,953
$322,437
$195,513
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $433,582
less buyer downpayment, less supportable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-1
Table A-6
Homeowner Subsidy Requirements
Owner 1
Attached Townhome
Three Bedroom
City of Tustin
Income Level (1)
Affordable Monthly Housing Cost (2)
Less: Monthly Utility Allowance (3)
Less: Homeowner Association Dues
Less: Property Insurance
Available for Principal; Interest, Taxes
Less: Property Taxes (4)
Supportable Mortgage Before Prop. Taxes (5)
Assumed Assessed Value at Sale
Available for Mortg. Principal and Interest
Supportable Mortgage (5)
Affordable Purchase Price (6)
Buyer Downpayment
Required Capital Subsidy (7)
50% of
Median
70% of
Median
$39,350
$55,090
110% of
Median
$86,570
$984
$1,377
$2,525
$148
$148
$148
$175
$175
$175
$50
$50
$50
$611
$1,004
$2,152-
$88
$144
$309
$83,235
$136,863
$293,276
$87,616
$144,066
$308,712
$523
$860
$1;843
$71,295
$117,229
$251,204
$75,047
$123,399
$264,425
$3,752
$6,170
$13,221
$387,769
$339,417
$198,391
(1) Income limit for a family of 4.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $462,816
less buyer downpayment, less supportable mortgage.
Source: -David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis
Page A-2
Table A-7
Homeowner Subsidy Requirements
Owner 1
Attached Townhome
Four Bedroom
City of Tustin
(1) Income limit for a family of 5.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $509,592
less buyer downpayment, less supportable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-3
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$42,498
$59,497
$93,496
Affordable Monthly Housing Cost (2)
$1,062
$1,487
$2,727
Less: Monthly Utility Allowance (3)
$164
$164
$164
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
_Available for Principal, Interest, Taxes
$673
$1,098
$2,338
Less: Property Taxes (4)
$97
$158
$335
Supportable Mortgage Before Prop. Taxes (5)
$91,780
$149,698
$318,625
Assumed Assessed Value at Sale
$96,611
$157,577
$335,394
Available for Mortg. Principal and Interest
$577
$941
$2,003
Supportable Mortgage (5)
$78,614
$128,223
$272,916
Affordable Purchase Price (6)
$82,751
$134,971
$287,280
Buyer Downpayment
$4,138
$6,749
$14,364
Required Capital Subsidy (7)
$426,840
$374,620
$222,312
(1) Income limit for a family of 5.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $509,592
less buyer downpayment, less supportable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-3
Table A-8
Homeowner Subsidy Requirements
Owner 2
Stacked Flat Condominium
One Bedroom
City of Tustin
(1) Income limit for a family of 2.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange -Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $316,258
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-1
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$31,480
$44,072
$69,256
Affordable Monthly Housing Cost (2)
$787
$1,102
$2,020
Less: Monthly Utility Allowance (3)
$93
$93
$93
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$469
$784
$1,702
.Less: Property Taxes (4)
$67
$112
$244
Supportable Mortgage Before Prop. Taxes (5)
$63,917
$106,819
$231,950
Assumed Assessed Value at Sale
$67,281
$112,441
$244,158
Available for Mortg. Principal and Interest
$402
$671
$1,458
Supportable Mortgage (5)
$54,748
$91,495
$198,675
Affordable Purchase Price (6)
$57,629
$96,311
$209,132
Buyer Downpayment
$2,881
$4,816
$10,457
Required Capital Subsidy (7)
$258,629
$219,947
$107,126
(1) Income limit for a family of 2.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange -Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $316,258
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-1
Table A-9
Homeowner Subsidy Requirements
Owner 2
Stacked Flat Condominium
Two Bedroom
City of Tustin
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $326,628
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page A-2
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$35,415
$49,581
$77,913
Affordable Monthly Housing Cost (2)
$885
$1,240
$2,272
Less: Monthly Utility Allowance (3)
$110
$110
$110
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$550
$905
$1,937
Less: Property Taxes (4)
$79
$130
$278
Supportable Mortgage Before Prop. Taxes (5)
$75,007
$123;272
$264,044
Assumed Assessed Value at Sale
$78,955
$1291760
$277,941
Available for Mortg. Principal and Interest
$471
$775
$1,660
Supportable Mortgage (5)
$64,247
$105,588
$226,165
Affordable Purchase Price (6)
$67,628
$111,145
$238,069
Buyer Downpayment
$3,381
$5,557
$11,903
Required Capital Subsidy (7)
$259,000
$215,483
$88,559
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $326,628
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page A-2
Table A-10
Homeowner Subsidy Requirements
Owner 2
Stacked Flat Condominium
Three Bedroom
City of Tustin
(1) Income limit for a family of 4.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of. $342,183
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page A-3
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$39,350
$55,090
$86,570
Affordable Monthly Housing Cost (2)
$984
$1,377
$2,525
Less: Monthly Utility Allowance (3)
$148
$148
$148
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$611
$1,004
$2,152
Less: Property Taxes (4)
$88
$144
$309
Supportable Mortgage Before Prop. Taxes (5)
$83,235
$136,863
$293,276
Assumed Assessed Value at Sale
$87,616
$144,066
$308,712
Available for Mortg. Principal and Interest
$523
$860
$1,843
Supportable Mortgage (5)
$71,295
$117,229
$251,204
Affordable Purchase Price (6)
$75,047
$123,399
$264,425
Buyer Downpayment
$3,752
$6,170
$13,221
Required Capital Subsidy (7)
$267,136
$218,784
$77,758
(1) Income limit for a family of 4.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of. $342,183
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page A-3
Table A-11
Homeowner Subsidy Requirements
Owner 2
Stacked Flat Condominium
Four Bedroom
City of Tustin
50% of 70% of 110% of
Median Median Median
Income Level (1)
$42,498
$59,497
$93,496
Affordable Monthly Housing Cost (2)
$1,062
$1,487
$2,727
Less: Monthly Utility Allowance (3)
$164
$164
$164
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$673
$1,098
$2,338
Less: PropertyTaxes (4)
$97
$158
$335
Supportable Mortgage Before Prop. Taxes (5)
$91,780
$149,698
$318,625
Assumed Assessed Value at Sale
$96,611
$157,577
$335,394
Available for Mortg. Principal and Interest
$577
$941
$2,003
Supportable Mortgage (5)
$78,614
$128,223
$272,916
Affordable Purchase Price (6)
$82,751
$134,971
$287,280
Buyer Downpayment
$4,138
$6,749
$14,364
Required Capital Subsidy (7)
$290,542
$238,322
$86,013
(1) Income limit for a family of 5.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(3) Includes homeowner association dues and/or other maintenance expenses.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $373,293
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-4
Table A-12
Homeowner Subsidy Requirements
Owner 3
High Density Condominium
One Bedroom
City of Tustin
(1) Income limit for a family of 2.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $465,109
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-1
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$31,480
$44,072
$69,256
Affordable Monthly Housing Cost (2)
$787
$1,102
$2,020
Less: Monthly Utility Allowance (3)
$93
$93
$93
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$469
$784
$1,702
Less: Property Taxes (4)
$67
$112
$244
Supportable Mortgage Before Prop. Taxes (5)
$63,917
$106,819
$231,950
Assumed Assessed Value at Sale
$67,281
$112,441
$244,158
Available for Mortg. Principal and Interest
$402
$671
$1,458
Supportable Mortgage (5)
$54,748
$91,495
$198,,675
Affordable Purchase Price (6)
$57,629
$96,311
$209,132
Buyer Downpayment
$2,881
$4,816
$10,457
Required Capital Subsidy (7)
$407,480
$368,798
$255,977
(1) Income limit for a family of 2.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $465,109
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-1
Table A-13
Homeowner Subsidy Requirements
Owner 3
High Density Condominium
Two Bedr000m
City of Tustin
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $500,175
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-2
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$35,415
$49,581
$77,913
Affordable Monthly Housing Cost (2)
$885
$1,240
$2,272
Less: Monthly Utility Allowance (3)
$110
$110
$110
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$550
$905
$1,937
Less: Property Taxes (4)
$79
$130
$278
Supportable Mortgage Before Prop. Taxes (5)
$75,007
$123,272
$264,044
Assumed Assessed Value at Sale
$78,955
$129,760
$277,941
Available for Mortg. Principal and Interest
$471
$775
$1,660
Supportable Mortgage (5)
$64,247
$105,588
$226,165
Affordable Purchase Price (6)
$67,628
$111,145
$238,069
Buyer Downpayment
$3,381
$5,557
$11,903
Required Capital Subsidy (7)
$432,547
$389,030
$262,106
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $500,175
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-2
Table A-14
Homeowner Subsidy Requirements
Owner 3
High Density Condominium
Three Bedroom
City of Tustin
Income Level '(1)
Affordable Monthly Housing Cost (2)
Less: Monthly Utility Allowance (3)
Less: Homeowner Association Dues
Less: Property Insurance
Available for Principal, Interest, Taxes
Less: Property Taxes (4)
Supportable Mortgage Before Prop. Taxes (5)
Assumed Assessed Value at Sale
Available for Mortg. Principal and interest
Supportable Mortgage (5)
Affordable Purchase Price (6)
Buyer Downpayment
Required Capital Subsidy (7)
50% of
70% of
Median
Median
$39,350
$55,090
$984
$148
$175
$50
$611
$88
$83,235
$87,616
$523
$71,295
$75,047
$3,752
$542,013
$1,377
$148
$175
$50
$1,004
$144
$136,863
$144,066
$860
$117,229
$123,399
$6,170
$493,661
110% of
Median
$86,570
$2,525
$148
$175
$50
$2,152
$309
$293,276
$308,712
$1,843
$251,204
$264,425
$13,221
$352,635
(1) Income limit for a family of 4.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $617,060
less buyer downpayment, fess affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and leveraged Financing Analysis
Page A-3
Table A-15
Homeowner Subsidy Requirements
Owner 3
High Density Condominium
Four Bedroom
City of Tustin
(1) Income limit for a family of 5.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $652,125
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page A-4
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$42,498
$59,497
$93,496
Affordable Monthly Housing Cost (2)
$1,062
$1,487
$2,727
Less: Monthly Utility Allowance (3)
$164
$164
$164
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$673
$1,098
$2,338
Less: Property Taxes (4)
$97
$158
$335
Supportable Mortgage Before Prop. Taxes (5)
$91,780
$149,698
$318,625
Assumed Assessed Value at Sale
$96,611
$157,577
$335,394
Available for Mortg. Principal and Interest
$577
$941
$2,003
Supportable Mortgage (5)
$78,614
$128,223
$272,916
Affordable Purchase Price (6)
$82,751
$134,971
$287,280
Buyer Downpayment
$4,138
$6,749
$14,364
Required Capital Subsidy (7)
$569,374
$517,154
$364,845
(1) Income limit for a family of 5.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $652,125
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page A-4
Table A-16
Homeowner Subsidy Requirements
Owner 4
Mixed Use, Ground Floor Retail
One Bedroom
City of Tustin
(1) Income limit for a family of 2.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(3) Includes homeowner association dues and/or other maintenance expenses.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $549,312
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-1
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$31,480
$44,072
$69,256
Affordable Monthly Housing Cost (2)
$787
$1,1D2
$2,020
Less: Monthly Utility Allowance (3)
$93
$93
$93
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$469
$784
$1,702
Less: Property Taxes (4)
$67
$112
$244
Supportable Mortgage Before Prop. Taxes (5)
$63,917
$106,819
$231,950
Assumed Assessed Value at Sale
$67,281
$112,441
$244,158
Available for Mortg. Principal and Interest
$402
$671
$1,458
Supportable Mortgage (5)
$54,748
$91,495
$198,675
Affordable Purchase Price (6)
$57,629
$96,311
$209,132
Buyer Downpayment
$2,881
$4,816
$10,457
Required Capital Subsidy (7)
$491,683
$453,001
$340,180
(1) Income limit for a family of 2.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(3) Includes homeowner association dues and/or other maintenance expenses.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $549,312
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page A-1
Table A-17
Homeowner Subsidy Requirements
Owner 4
Mixed Use, Ground Floor Retail
Two Bedr000m
City of Tustin
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(3) Includes homeowner association dues and/or other maintenance expenses.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $605,017
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-2
50% of
70% of
110% of
Median
Median
Median
Income Level (1)
$35,415
$49,581
$77,913
Affordable Monthly Housing Cost (2)
$885
$1,240
$2,272
Less: Monthly Utility Allowance (3)
$110
$110
$110
Less: Homeowner Association Dues
$175
$175
$175
Less: Property Insurance
$50
$50
$50
Available for Principal, Interest, Taxes
$550
$905
$1,937
Less: Property Taxes (4)
$79
$130
$278
Supportable Mortgage Before Prop. Taxes (5)
$75,007
$123,272
$264,044
Assumed Assessed Value at Sale
$78,955
$129,760
$277,941
Available for Mortg. Principal and Interest
$471
$775
$1,660
Supportable Mortgage (5)
$64,247
$105,588
$226,165
Affordable Purchase Price (6)
$67,628
$111,145
$238,069
Buyer Downpayment
$3,381
$5,557
$11,903
Required Capital Subsidy (7)
$537,389
$493,872
$366,948
(1) Income limit for a family of 3.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(3) Includes homeowner association dues and/or other maintenance expenses.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $605,017
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page A-2
Table A-18
Homeowner Subsidy Requirements
Owner 3
Mixed Use, Ground Floor Retail
Three Bedroom
City of Tustin
Income Level (1)
Affordable Monthly Housing Cost (2)
Less: Monthly Utility Allowance (3)
Less: Homeowner Association Dues
Less: Property Insurance
Available for Principal, Interest, Taxes
Less: Property Taxes (4)
Supportable Mortgage Before Prop. Taxes (5)
Assumed Assessed Value at Sale
Available for Mortg. Principal and Interest
Supportable Mortgage (5)
Affordable Purchase Price (6)
Buyer Downpayment
Required Capital Subsidy (7)
50% of
Median
$39,350
$984
$148
$175
$50
$611
$88
$83,235
$87,616
$523
$71,295
$75,047
$3,752
$594,960
70% of
Median
$55,090
$1,377
$148
$175
$50
$1,004
$144
$136,863
$144,066
$860
$117,229
$123,399
$6,170
$546,608
110% of
Median
$86,570
$2,525
$148
$175
$50
$2,152
$309
$293,276
$308,712
$1,843
$251,204
$264,425
$13,221
$405,582
(1) Income limit for a family of 4.
(2) At 30% of gross income for low income and 35% of gross income for moderate income households.
(3) Based on current utility allowances from County of Orange Housing and Community Services Dept.
Assumes homeowner pays for basic electric, electric heating, cooking, and water heating, water,
trash and sewer.
(4) Based on 1.20% average tax rate.
(5) Based on 30 -year mortgage at: 8.00%
(6) Assumed to include downpayment at 5.0% of purchase price;
(7) Total development costs of: $670,007
less buyer downpayment, less affordable mortgage.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page A-3
Table B-1
Per Unit Development Costs By Unit Bedroom Count
Rental Housing Prototype: Stacked Flat Apartments
City of Tustin
2908
Prototvoe Descrintion: Stacked Flat Apartments TYPE AND SIZE OF UNIT
Total Number of Units: 325 Units
1 Bedroom
750 Net S.F.
2 Bedroom
950 Net S.F.
3 Bedroom
1,050 Net S.F.
4 Bedroom
1,250 Net S.F.
Hard Construction Costs
Site Improvements $34,848/DU
Un':t/Nrking Constr. Costs $155.00 Per SF
Total Hard Costs
$34,848
$116,250
$151,098
$34,848
$147,250
$182,098
$34,848
$162,750
$197,598
$34,848
$193,750
$228,598
Development Processing and Impact Fees
City Processing Fees $26.05/ Net S.F.
$19,541
$24,752
$27,357
$32,568
Indirect/Soft Costs $36,984
$36,984
$36,984
$36,984
$36,984
Total Costs (Except Land, Overhead, Profit)
$207,623
$243,834
$261,940
$298,150
Land Costs $74,923 /DU
$74,923
$74,923
$74,923
$74,923
Dev. Fee/Profit & Overhead 12%
$38,529
$43,467
$45,936
$50,874
Total Project Costs Per Unit
$321,075
$362,224
$362,799
$423,947
Source: David Paul Rosen & Associates
Cityo(1Lstin
Aifordaisility Gap and leveraged Financing Analysis Page U-1
Table B-2
Tenant Subsidy Requirements
Renter Prototype
Stacked flat Apartments
One Bedroom
City of Tustin
2008
(1) For a household size of 2 persons, pro -rated from 2007 HUD income limits for Orange County.
(2) Assumes 30% of gross income spent on housing.
(3) Based on current utility allowances from County of Orange Housing and Community Services Department.
Assumes tenant pays for electric heating, cooking, water heating and basic electricity.
(4) Based on estimated monthly operating costs per unit of $300
(5) Based on annual property tax rate of 1.2% applied to total development cost.
(6) Assumed at 3% of affordable monthly rent.
(7) Based on 30 -year mortgage at: 8.00% Assumes debt coverage ratio of: 1.25
A negative tenant supported debt indicates the rents do not cover operating costs and a capitalized
"sinking fund" of this amount is added to total development cost to cover operating deficits.
(8) Equivalent to total development cost less tenant supported debt.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 8-1
50% of
60% of
110% of
Median
Median
Median
Income Level (1)
$31,480
$37,776
$69,256
Affordable Monthly Housing Cost (2)
$787
$944
$1,731
Less: Monthly Utilities (3)
$54
$54
$54
Affordable Monthly Rent
$733
$890
$1,677
Less: Monthly Operating Cost (4)
$300
$300
$300
Less: Monthly Property Taxes (5)
$321
$321
$321
Less: Vacancy Allowance (6)
$22
$27
$50
Tenant Monthly Net Operating Income
$90
$243
$1,006
Tenant Supported Debt (7)
$9,805
$26,451
$109,681
Total Development Cost Per Unit
$321,075
$321,075
$321,075
Required Capital Subsidy (8)
$311,270
$294,624
$211,394
(1) For a household size of 2 persons, pro -rated from 2007 HUD income limits for Orange County.
(2) Assumes 30% of gross income spent on housing.
(3) Based on current utility allowances from County of Orange Housing and Community Services Department.
Assumes tenant pays for electric heating, cooking, water heating and basic electricity.
(4) Based on estimated monthly operating costs per unit of $300
(5) Based on annual property tax rate of 1.2% applied to total development cost.
(6) Assumed at 3% of affordable monthly rent.
(7) Based on 30 -year mortgage at: 8.00% Assumes debt coverage ratio of: 1.25
A negative tenant supported debt indicates the rents do not cover operating costs and a capitalized
"sinking fund" of this amount is added to total development cost to cover operating deficits.
(8) Equivalent to total development cost less tenant supported debt.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 8-1
Table B-3
Tenant Subsidy Requirements
Renter Prototype
Stacked Flat Apartments
Two Bedroom
City of Tustin
2008
(1) For a household size of 3 persons, pro -rated from 2007 HUD income limits for Orange County.
(2) Assumes 30% of gross income spent on housing.
(3) Based on current utility allowances from County of Orange Housing and Community Services Department.
Assumes tenant pays for electric heating, cooking, water heating and basic electricity.
(4) Based on estimated monthly operating costs per unit of $300
(5) Based on annual property tax rate of 1.2% applied to total development cost.
(6) Assumed at 3% of affordable monthly rent.
(7) Based on 30 -year mortgage at: 8.00% Assumes debt coverage ratio of: 1.25
A negative tenant supported debt indicates the rents do not cover operating costs and a capitalized
"sinking fund" of this amount is added to total development cost to cover operating deficits.
(8) Equivalent to total development cost less tenant supported debt.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page B-2
50% of
60% of
110% of
Median
Median
Median
Income Level (1)
$35,415
$42,498
$77,913
Affordable Monthly Housing Cost (2)
$885
$1,062
$1,948
Less: Monthly Utilities (3)
$68
$68
$68
Affordable Monthly Rent
$817
$994
$1,880
Less: Monthly Operating Cost (4)
$300
$300
$300
Less: Monthly Property Taxes (5)
$362
$362
$362
Less: Vacancy Allowance (6)
$25
$30
$56
Tenant Monthly Net Operating Income
$131
$302
$1,161
Tenant Supported Debt (7)
$14,242
$32,969
$126,603
Total Development Cost Per Unit
$362,224
$362,224
$362,224
Required Capital Subsidy (8)
$347,982
$329,255
$235,621
(1) For a household size of 3 persons, pro -rated from 2007 HUD income limits for Orange County.
(2) Assumes 30% of gross income spent on housing.
(3) Based on current utility allowances from County of Orange Housing and Community Services Department.
Assumes tenant pays for electric heating, cooking, water heating and basic electricity.
(4) Based on estimated monthly operating costs per unit of $300
(5) Based on annual property tax rate of 1.2% applied to total development cost.
(6) Assumed at 3% of affordable monthly rent.
(7) Based on 30 -year mortgage at: 8.00% Assumes debt coverage ratio of: 1.25
A negative tenant supported debt indicates the rents do not cover operating costs and a capitalized
"sinking fund" of this amount is added to total development cost to cover operating deficits.
(8) Equivalent to total development cost less tenant supported debt.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page B-2
Table B-4
Tenant Subsidy Requirements
Renter Prototype
Stacked Flat Apartments
Three Bedroom
City of Tustin
2008
(1) For a household size of 4 persons, pro -rated from 2007 HUD income limits for Orange County.
(2) Assumes 30% of gross income spent on housing.
(3) Based on current utility allowances from County of Orange Housing and Community Services Department.
Assumes tenant pays for electric heating, cooking, water heating and basic electricity.
(4) Based on estimated monthly operating costs per unit of $300
(5) Based on annual property tax rate of 1.2% applied to total development cost.
(6) Assumed at 3% of affordable monthly rent.
(7) Based on 30 -year mortgage at: 8.00% Assumes debt coverage ratio of: 1.25
A negative tenant supported debt indicates the rents do not cover operating costs and a capitalized
"sinking fund" of this amount is added to total development cost to cover operating deficits.
(8) Equivalent to total development cost less tenant supported debt.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 8-3
so% of
60% of
110% of
Median
Median
Median
Income Level (1)
$39,350
$47,220
$8-6,570
Affordable Monthly Housing Cost (2)
$984
$1,181
$2,164
Less: Monthly Utilities (3)
$98
$98
$98
Affordable Monthly Rent
$886
$1,083
$2,066
Less: Monthly Operating Cost (4)
$300
$300
$300
Less: Monthly Property Taxes (5)
$383
$383
$383
Less: Vacancy Allowance (6)
$27
$32
$62
Tenant Monthly Net Operating Income
$559
$750
$1,704
Tenant Supported Debt (7)
$60,965
$81,773
$185,810
Total Development Cost Per Unit
$382,799
$382,799
$382,799
Required Capital Subsidy (8)
$321,834
$301,026
$196,989
(1) For a household size of 4 persons, pro -rated from 2007 HUD income limits for Orange County.
(2) Assumes 30% of gross income spent on housing.
(3) Based on current utility allowances from County of Orange Housing and Community Services Department.
Assumes tenant pays for electric heating, cooking, water heating and basic electricity.
(4) Based on estimated monthly operating costs per unit of $300
(5) Based on annual property tax rate of 1.2% applied to total development cost.
(6) Assumed at 3% of affordable monthly rent.
(7) Based on 30 -year mortgage at: 8.00% Assumes debt coverage ratio of: 1.25
A negative tenant supported debt indicates the rents do not cover operating costs and a capitalized
"sinking fund" of this amount is added to total development cost to cover operating deficits.
(8) Equivalent to total development cost less tenant supported debt.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged financing Analysis Page 8-3
Table B-5
Tenant Subsidy Requirements
Renter Prototype
Stacked Flat Apartments
Four Bedroom
City of Tustin
2008
Income Level (1)
Affordable Monthly Housing Cost (2)
Less: Monthly Utilities (3)
Affordable Monthly Rent
Less: Monthly Operating Cost (4)
Less: Monthly Property Taxes (5)
Less: Vacancy Al lowance (6)
Tenant Monthly Net Operating Income
Tenant Supported Debt (7)
Total Development Cost per Unit
Required Capital Subsidy (8)
50% of
60% of
110% of
Median
Median
Median
$42,498
$50,998
$93,49,6
$1,062
$1,275
$2,337
$109
$109
$109
$953
$300
$424
$29
$201
$21,903
$423,947
$402,044
$1,166
$300
$424
$35
.yc.,c v
$300
$424
$67
$407
$2,285
$44,376
$249,179
$423,947
$423,947
$379,571
$174,768
(1) For a household size of 5 persons, pro -rated from 2007 HUD income limits for Orange County.
(2) Assumes 30% of gross income spent on housing.
(3) Based on current utility allowances from County of Orange Housing and Community Services Department.
Assumes tenant pays for electric heating, cooking, water heating and basic electricity.
(4) Based on estimated monthly operating costs per unit of $300
(5) Based on annual property tax rate of 1.2% applied to total development cost.
(6) Assumed at 3% of affordable monthly rent.
(7) Based on 30 -year mortgage at: 8.00% Assumes debt coverage ratio of: 1.25
A negative tenant supported debt indicates the rents do not cover operating costs and a capitalized
"sinking fund" of this amount is added to total development cost to cover operating deficits.
(8) Equivalent to total development cost less tenant supported debt.
Source: David Paul Rosen & Associates.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page B-4
Table C-1
LEVERAGED FINANCING ANALYSIS
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
DEVELOPMENT PROGRAM
CITY OF TUSTIN
2008
Type
# Units
% Units
1 Bedroom
73
23%
2 Bedroom
100
31%
3 Bedroom
100
31%
4 Bedroom
50
15%
Total Affordable Units
323
100%
2 Bit Manager's Unit
2
Total Housing Units
325
Community Room
Total Net SF Building Area
Parking/Circulation Spaces
Open Spaces 81
Parking Structure 650
Total Spaces 731
Units
Sq. Ft/Unit Total SF Per Acre Acres
750
54,750
950
95,000
1,050
105,000
1,250
62,500
317,250 25.00 13.00
1,900
319,150
0
319,150
City of Tustin
Affordability Gap and Leveraged Financing Analysis Paget 1
Table C-2
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
INCOME AND OPERATING COSTS
WITH 9% TAX CREDITS, FEDERAL AND STATE
ASSUMPTIONS
2007 Median Household Income, Family of Tour
Affordable Housing Cost As a %of Income
No. of Bedrooms Totals
Household Size (1)
Household Size income Adjust. Factor
Utility Allowance (2)
No. of Units 323
Total Bedrooms 773
AFFORDABLE RENTS BY INCOME LEVEL
30% of Median
Annual Gross Income
Affordable Monthly Housing Cost
Less: Monthly Utility Allowance
Affordable Monthly Rem
45°% of Median
Annual Gross Income
Affordable Monthly Housing Cost
Less: Monthly Utility Allowance
Affordable Monthly Rent
50% of Median
Annual Gross Income
Affordable Monthly Housing Cost
Less: Monthly Utility Allowance
Affordable Monthly Rent
NET OPERATING INCOME
Affordability Level/No. of Bedrooms
301% of Median
10.2%of Units
45% of Medlar
15.2% of Units
50% of Median
74.6°% of Units
Totals 323 $251,450
Manager's Units 2
GROSS RENTAL INCOME
Less: Vacancies (3) m 5.0°%
Miscal. Income $100 Per Unit
GROSS ANNUAL INCOME
LESS: OPERATING EXPENSES $3001uniVmo. $3,600 Per Unit/Year
Less: Operating Reserves 3% of 0per. Budget
Less: Replacement Reserves $400 Per Unit(Year
NETOPMATING INCOME
(1) Assumes the lesser of TGC occupancy standard 0.5 persons per bedroom) and California Health and Safety
Occupancy standard (one person per bedroom plus one).
(2) Source; County of Orange Housing and Community Services, effective October 1, 2006. Assumes tenant pays
all electric heating, cooking. and water heating and basic electricity; landlord pays water and trash.
(3) TCAC requires a 5% minimum vacancy rate unless waived based on vacancy data in the market area.
$42,498
$1,062
($109)
$953
$3,017,400
($150,870)
$32,300
$2,898,830
($1,170,000)
($35,100)
($130,000)
$1,563,730
City of Tustin
Affordability Gap and Leveraged Financing Analysis Paget -2
vera
$78,700
$35,415
$39,350
30%
$885
$984
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
1.5 Persons
3.0 Persons
4.0 Persons
5.0 Persons
75%
90%
100%
108%
$54
$68
$98
$109
73
100
100
50
73
200
300
200
$17,708
$21,249
$23,610
$25,499
$443
$531
$590
$637
($54)
($68)
($98)
($109)
$389
$463
$492
$528
$26,561
$31,874
$35,415
$38,248
$664
$797
$885
$956
($54)
($68)
($98)
($109)
$610
$729
$787
$847
Totals 323 $251,450
Manager's Units 2
GROSS RENTAL INCOME
Less: Vacancies (3) m 5.0°%
Miscal. Income $100 Per Unit
GROSS ANNUAL INCOME
LESS: OPERATING EXPENSES $3001uniVmo. $3,600 Per Unit/Year
Less: Operating Reserves 3% of 0per. Budget
Less: Replacement Reserves $400 Per Unit(Year
NETOPMATING INCOME
(1) Assumes the lesser of TGC occupancy standard 0.5 persons per bedroom) and California Health and Safety
Occupancy standard (one person per bedroom plus one).
(2) Source; County of Orange Housing and Community Services, effective October 1, 2006. Assumes tenant pays
all electric heating, cooking. and water heating and basic electricity; landlord pays water and trash.
(3) TCAC requires a 5% minimum vacancy rate unless waived based on vacancy data in the market area.
$42,498
$1,062
($109)
$953
$3,017,400
($150,870)
$32,300
$2,898,830
($1,170,000)
($35,100)
($130,000)
$1,563,730
City of Tustin
Affordability Gap and Leveraged Financing Analysis Paget -2
vera
$29,513
$35,415
$39,350
$738
$885
$984
($54)
($68)
($98)
$684
$817
$886
Monthly
Units
Rent
Gross Income
1 Bedroom
8
$389
$3,112
2 Bedroom
10
$463
54,630
3 Bedroom
10
$492
$4,920
4 Bedroom
5
$528
$2,640
1 Bedroom
11
$610
$6,710
2 Bedroom
15
$729
$10,935
3 Bedroom
15
$787
$11,805
4 Bedroom
8
$647
$6,776
1 Bedroom
54
$684
$36,936
2 Bedroom
75
$817
$61,275
3 Bedroom
75
$886
$66,450
4 Bedroom
37
$953
$35,261
Totals 323 $251,450
Manager's Units 2
GROSS RENTAL INCOME
Less: Vacancies (3) m 5.0°%
Miscal. Income $100 Per Unit
GROSS ANNUAL INCOME
LESS: OPERATING EXPENSES $3001uniVmo. $3,600 Per Unit/Year
Less: Operating Reserves 3% of 0per. Budget
Less: Replacement Reserves $400 Per Unit(Year
NETOPMATING INCOME
(1) Assumes the lesser of TGC occupancy standard 0.5 persons per bedroom) and California Health and Safety
Occupancy standard (one person per bedroom plus one).
(2) Source; County of Orange Housing and Community Services, effective October 1, 2006. Assumes tenant pays
all electric heating, cooking. and water heating and basic electricity; landlord pays water and trash.
(3) TCAC requires a 5% minimum vacancy rate unless waived based on vacancy data in the market area.
$42,498
$1,062
($109)
$953
$3,017,400
($150,870)
$32,300
$2,898,830
($1,170,000)
($35,100)
($130,000)
$1,563,730
City of Tustin
Affordability Gap and Leveraged Financing Analysis Paget -2
vera
Table C-3
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
DEVELOPMENT COSTS
9% TAX CREDITS, FEDERAL AND STATE
Acres
13.00
$1,362,302
$1,362,302
$15,000
TITLE ANDCLOSING
No. of Units
325
$10,000
APPRAISAL FEES
Total Net Living Area (SF)
319,150
REAL ESTATE LEGAL
$30,000
Community Room
0
$25,000
$25,000
Total Net Square Feet, Residential Units
319,150
$15,000
$o
POST -CONSTRUCTION AUDIT
Other Building Area
0
$0
MARKETING/LEASE-UP/START-UP
Total Net Square feet
319,150
OPERATING RESERVE
3 Months O r
$112,079,022
Total Gross Square Feet
566,280
100.00%
15.000/0 ofTDC
$1,940,000
Tax Credit ties. Basis
% Residential Basis Eligible
$30,000
Total
(100% Resid.)
LAND ACQUISITION
$43
Per Site SF
$24,350,040
$0
SITE WORK
$20
Per Site SF
$11,325,600
$11,325,600
UNIT CONSTRUCTION HARD COSTS
$155
Per SF
$49,468,250
$3,039,693
$49,468,250
$3,039,693
CONTINGENCY
5.00%
7.00%
of Hard Costs
of Hard Costs
$5,960;072
$5,960,072
ARCHJf-NG.KONSTR. SUPERVISION
LOCAL IMPACT AND PROCESSING FEES
$26.05
Per SF
$8,315,308
$8,315,308
$3,000
$3,000
ALTA SURVEY
$7,500
$7,500
ENVIRONMENTAL PHASE 1
$10,000
$10,000
SOILS TESTING
CONSTRUCTION LOAN FEES
1.00%
$938,572
$938,572
CONSTRUCTION/LEASE-UP INTEREST
B.50%
15 Months
$6,781,185
$6,781,185
REAL ESTATE TAXES AND INSURANCE
1.60% of Hard Costs
$1,362,302
$1,362,302
$15,000
TITLE ANDCLOSING
$15,000
$10`000
$10,000
APPRAISAL FEES
$30,000
$12,000
REAL ESTATE LEGAL
$30,000
$0
ORGANIZATIONAL LEGAL
$25,000
$25,000
MARKET STUDY
$15,000
$o
POST -CONSTRUCTION AUDIT
$100,000
$0
MARKETING/LEASE-UP/START-UP
$292,500
$0
OPERATING RESERVE
3 Months O r
$112,079,022
$87,273,482
TOTAL DEVELOPMENT COST
15.000/0 ofTDC
$1,940,000
$1,200,000
DEVELOPER FEE (1)
$30,000
$0
TAX CREDIT CONSULTANT
$2,000
$0
TAX CREDIT APPLICATION FEE
4.00% of Ann. Credit
$320,270
$0
TCAC ALLOCATION FEE
$30,000
$0
SYNDICATION LEGAL
TOTAL PROJECT COST
PER UNIT
PER SF
$114,401,293 $88,473,482
$352,004 $272,226
$358.46
(1) As of 2006, the maximum developer fee permitted by ICAC is the lesser of 15% of development costs or
$2 million. The maximum amount that can be included in eligible basis is $1.4 million. Development and
tax credit consulting and syndication costs are included In the developer fee cap.
City of Tustin
Affordability Gap and Leveraged financing Analysis
Nge C-3
Table C-4
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
FINANCING ASSUMPTIONS
9% TAX CREDITS, FEDERAL AND STATE
TAX CREDIT EQUITY
Requested Eligible Basis $71,616,838
Less: Non -Qualified Non -Recourse financing $0
Unadjusted Eligible Basis $71,616,838
Adjusted Eligible Basis (High Cost Area Adjust) 1.30 $93,101,889
Qualified Basis (% Low Income Units) 100% $93,101,889
Tax Credit Rate 8.60%
Annual Allow. federal Credits $8,006,762
Tax Credit Pricing (Equity Raised Per Tax Credit Dollar)
Federal $1.000
Federal Tax Credit Equity (99.99%) $80,059,618
FAIR MARKET VALUE CALCULATION
Net Operating Income; Restr. Rents $1,563,730
Capitalization Rate 8.50%
Capitalized Value at Restricted Rents $18,396,824
MAXIMUM CONSTRUCTION LOAN CALCULATION
Max. Constr. Loan as Percent of FMV 75% $13,797,618
Plus: Federal and State Tax Credits $80,059,618
Maximum Construction Loan $93,857,236
CONSTRUCTION LOAN
Constr. Loan Amt.
$93,857,236
Interest Rate
8.50%
Loan Points
1.00%
Average Loan Balance --Construction
60.00%
Construction Loan Term
12 Months
Lease -Up Period
3 Months
Total Construction Loan Period
15 Months
Construction Loan Interest --Construction
$4,786,719
Construction Loan Interest--Lease-Up
$1,994,466
Total Construction Loan Interest
$6,781,185
Construction Loan Points
$938,572
PERMANENT MORTGAGE
Net Operating Income
$1,563,730
Debt Coverage Ratio
1.25
Debt Service Based on DCR
$1,250,980
Mortgage Term
30 years
Interest Rate
8.00%
Max. Mortgage Amount (DCR)
$14,207,327
Loan Fees
1.00% $142,073
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page C-1
Table C-5
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
THRESHOLD BASIS LIMITS
9% TAX CREDITS, FEDERAL AND STATE
Unit Size
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
2 Bedroom Mgr's Unit
Total Threshold Basis
Threshold Basis Boosts
Plus: Prevailing Wage Boost
Plus: Subterranean Parking Boost
Plus: Day Care Center Boost
Plus: Special Needs Boost
Plus: Elevator Boost
Orange Co. 9% Threshold Basis Limits, 2008
$60,866,856
Max allowed
20%
TCAC Basis
Total
# of Units
Limit Per Unit
Basis
73
$139,272
$10,166,856
100
$168,800
$16,880,000
100
$215,040
$21,504,000
50
$239,568
$11,978,400
2
$168,800
$337,600
$60,866,856
Max allowed
20%
0%
$0
7%
0%
$0
2%
0%
$0
2%
0%
$0
10%
0%
$0
Subtotal Boost (1)
39%
Plus: Energy Efficiency Basis Boost
4%
Plus: Distributive Energy Boost
5%
Plus: Seismic Upgrade Boost
15%
Plus: Development Impact Fees
Total Adjusted Threshold Basis
Total Unadjusted Eligible Basis
Requested Eligible Basis
4% $2,434,674
0% $0
0% $0
$8,315,308
$71,616,838
$88,473,482
$71,616,838
(1) Under 2008 TCAC regulations, the total combined boost for prevailing wage, parking, day care center,
special needs and elevator may not exceed 39 percent.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page C-1
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Table C-8
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
RENTAL INCOME AND OPERATING COSTS
4%.TAX CREDITS, TAX-EXEMPT BONDS
ASSUMPTIONS
2007 Median Household Income, Family of Four
$78,700
Affordable Housing Cost As a % of Income
30%
No. of Bedrooms Totals
1 Bedroom 2 Bedroom
3 Bedroom
4 Bedroom
Household Size (1)
1.5 Persons 3.0 Persons
4.0 Persons
5.0 Persons
Household Size Income Adjust. Factor
75% 90%
1000/0
108%
Utility Allowance (2)
$54 $68
$98
$109
No. of Units 323
73 100
100
50
Total Bedrooms 773
73 200
300
200
AFFORDABLE RENTS BY INCOME LEVEL
301A of Median
Annual Gross Income
$29,513 $35,415
$39,350
$42,498
Affordable Monthly Housing Cost
$738 $885
$984
$1,062
Less: Monthly Utility Allowance
($54) ($68)
($98)
($109)
Affordable Monthly Rent
$684 $817
$886
$953
60% of Median
Annual Gross Income
$35,415 $42,498
$47,220
$50,998
Affordable Monthly Housing Cost
$885 $1,062
$1,181
$1,275
Less: Monthly Utility Allowance
($54) ($68)
($98)
($109)
Affordable Monthly Rent
$831 $994
$1,083
$1,166
NET OPERATING INCOME
Monthly
Affordability Level/No. of Bedrooms
Units Rent Gross Income
50% of Median 1 Bedroom
22 $684
$15,048
30.00% of Units 2 Bedroom
30 $817
$24,510
3 Bedroom
30 $886
$26,580
4 Bedroom
15 $953
$14,295
60% of Median 1 Bedroom
51 $831
$42,381
70.0% of Units 2 Bedroom
70 $994
$69,580
3 Bedroom
70 $1,083
$75,810
4 Bedroom
35 $1,166
$40,810
Totals
323
$309,014
Manager's Unit
2
GROSS RENTAL INCOME
$3,708,168
Less: Vacancies (3) ® 5.0%
($185,408)
Misc. income $100 Per Unit
$32,300
GROSS ANNUAL INCOME
$3,555,060
LESS. OPERATING EXPENSES $300tunittmo.
$3,600 Per Un)t/Year
($1,170,000)
Less: Operating Reserves
3.00/6 of Oper. Budget
($35,100)
Less: Replacement Reserves
$400 Per UniUYear
($130,000)
NET OPERATING INCOME
$2,219,960
(1) Assumes the lesser of TCAC occupancy standard (1.5 persons per
bedroom) and California Health and Safety
occupancy standard (one person per bedroom plus one).
(2) Source: County of Orange Housing and Community Services, effective October 1, 2006. Assumes tenant
pzys
all electric heating, cooking, and water heating and basic electricity; landlord pays water and trash.
(3) TCAC requires a 5% minimum vacancy rate unless waived based on vacancy data in the market area.
City of Tustin
Affordability Cap and Leveraged Financing Analysis
Page C-12
Table C-9
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
DEVELOPMENT COSTS
4% TAX CREDITS, TAX-EXEMPT BONDS
Acres (Units Plus Parking)
No. of Units
Total Living Area
Community Room
Total Net Square Feet, Residential Units
Other Building Area
Total Net Square Feet
Total Cross Square Feet
% Residential
13.00
325
319,150
0
319,150
0
319,150
319,150
100.00%
Tax Credit Elig. Basis
Total (10(rResid.)
LAND ACQUISITION
$43 Per Site SF
$20 Per Site SF
$24,350,040
$11,325,600
$0
$11,32S,600
SITE WORK
UNIT CONSTRUCTION HARD COSTS
$155 Per SF
$49,468,250
$49,468,250
CONTINGENCY
5.00% of HardCosts
Hard Costs
$3,039,693
$5,960,072
$3,039,693
$5,960,072
ARCHJENGJCONSTR. SUPERVISION
7.00% of
$26.05 Per SF
$8,315,308
$8,315,308
LOCAL IMPACT AND PROCESSING FEES
$3,000
$3,000
ALTA SURVEY
$7,500
$7,500
ENVIRONMENTAL PRASE 1
$10,000
$10,000
SOILSTESTiNG
CONSTRUCTION BOND FEES/COSTS
1.00% Plus $100,000
$693,933
$0
CONSTRUCTION/LEASE-UP INTEREST
5.50% 15 Months
$2,776,637
$2,776,637
REAL ESTATE TAXES AND INSURANCE
1.600/. of Hard Costs
$1,362,3{32
$1,362,302
$15,000
TITLE AND CLOSING
$15,000
$10,000
$10,000
APPRAISAL FEES
$30,000
$12.000
REAL ESTATE LEGAL
$30'000
$0
ORGANIZATIONAL LEGAL
$25,000
$25,000
MARKET STUDY
$15,000
$0
POST -CONSTRUCTION AUDIT
$100,000
$0
MARKETING/LEASE-UP/STARTUP
3 Months Oper
$292,500
$0
OPERATING RESERVE
2.00%
$107,417
$107,417
SOFT COST CONTINGENCY
$107,937,252
$82,437,779
TOTAL DEVELOPMENT COST
15.00% of Dev. Costs
$1,940,000
$1,200,000
DEVELOPER FEE (1)
$30,000
$0
BOND/TAX CREDIT ADVISOR
$2,000
$0
TAX CREDIT APPLICATION FEE
4.000% of Ann. Credit
$156,570
$0
TCAC ALLOCATION FEE
$30,000
$0
SYNDICATION LEGAL
TOTAL PROJECT COST
$110,095,822
$338,756
$83,637,779
$257,347
PER UNIT
$344.97
PER SF
(1) As of 2006, the maximum developer fee permitted by TCAC is the lesser of 15% of development costs or
$2 million. The maximum amount that can be included in eligible basis is $1.4 million.
Development and
tax credit consulting and syndication costs are
included in the developer fee cap.
City of Tustin
Affordability Cap and Leveraged Financing Analysis Page C•73
Table C-10
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
FINANCING ASSUMPTIONS
4% TAX CREDITS, TAX-EXEMPT BONDS
TAX CREDIT EQUITY
Total Eligible Basis
Less: Non -Qualified Non -Recourse Financing
Less: Eligible Amount Voluntari ly Excluded
Unadjusted Eligible Basis
Adjusted Eligible Basis (High Cost Area Adjust)
Qualified Basis
Tax Credit Rate
Annual Allow. Credits
Tax Credit Pricing (Equity Raised Per Tax Credit Dollar)
Federal
Federal Tax Credit Equity (99%)
CONSTRUCTION BOND AMOUNT
Constr. Loan Amt.
Interest Rate
Constr. Bond issuance Costs/Fees
Average Loan Balance --Construction
Construction Period
Lease Up Period
Construction Loan Interest --Construction
Construction Loan Interest--Lease-Up
Net Interest Cost
Bond Issuance Costs
PERMANENT BOND AMOUNT
Net Operating Income
Debt Coverage Ratio
Debt Service
Mortgage Term
Interest Rate
City of Tustin
Affordability Gap and Leveraged Financing Analysis
0%
1.30
100%
55% of Agg. Basis
$100,000 Plus
$83,637,779
$0
$0
$83,637,779
$108,729,113
$108,729,113
3.60%
$3,914,248
$1.05
$40,688,609
$59,393,300
5.50%
1.00%
60.00%
12 Months
3 Months
$1,959,979
$816,658
$2,776,637
$693,933
$2,219,960
1.25
$1,775,970
30 years
7.00%
Page C-14
Table C-11
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
THRESHOLD BASIS LIMITS
4% TAX CREDITS, TAX-EXEMPT BONDS
Orange Co. 4% Threshold Basis Limits, 2008
Total Adjusted Threshold Basis $89,894,906
Total Unadjusted Eligible Basis $83,637,779
Requested Eligible Basis $83,637,779
(1) Under 2008 TCAC regulations, the total combined boost for prevailing wage, parking, day care center,
special needs and elevator may not exceed 39 percent.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page C-1
TCAC Basis
Total
Unit Size
# of Units
Limits
Basis
1 Bedroom
73
$179,727
$13,120,071
2 Bedroom
100
$216,800
$21,680,000
3 Bedroom
100
$277,504
$27,750,400
4 Bedroom
50
$309,157
$15,457,850
2 Bedroom Mgr's Unit
2
$216,800
$433,600
Total Threshold Basis
$78,441,921
Threshold Basis Boosts
Max allowed
Plus: Prevailing Wage Boost
20%
0%
$0
Plus: Subterranean Parking Boost
7%
0%
$0
Plus: Day Care Center Boost
2%
0%
$0
Plus: Special Needs Boost
2%
0%
$0
Plus: Elevator Boost
10%
00/0
$0
Subtotal Boost (1)
39%
Plus: Energy Efficiency Basis Boost
4%
4%
$3,137,677
Plus: Distributive Energy Boost
5%
0%
$0
Plus: Seismic Upgrade Boost
15%
0%
$0
Plus: Development Impact Fees
$8,315,308
Total Adjusted Threshold Basis $89,894,906
Total Unadjusted Eligible Basis $83,637,779
Requested Eligible Basis $83,637,779
(1) Under 2008 TCAC regulations, the total combined boost for prevailing wage, parking, day care center,
special needs and elevator may not exceed 39 percent.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page C-1
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Table C-14
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
MHP LOAN LIMITS
2007
City of Tustin
Affordability Gap a nd Leveraged Financing Analysis Page C-22
Units @
Units @
MHP loan Limit Per Unit
Maximum MHP Loan
Unit Size
A of Units
30% AMI
60% AMI
30% AMI
60% AMI
30% AMI
69% AMI
Total
1 Bedroom
73
22
51
5110,686
$45,000
$2,435,092
$2,295,000
$4,730,092
2 Bedroom
100
30
70
$123,938
$45,000
$3,718,140
$3,150,000
$6,868,140
3 Bedroom
100
30
70
$136,182
$45,000
$4,085,460
$3,150,000
$7,235,460
4 Bedroom
50
15
35
$146,697•
$45,000
$2,200,455
$1,575,000
$3,775,455
Total
323
97
226
$12,439,147
$10,170,000
$22,609,147
City of Tustin
Affordability Gap a nd Leveraged Financing Analysis Page C-22
Table C-15
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
RENTAL INCOME AND OPERATING COSTS
MHP PROGRAM, TAX-EXEMPT BONDS, 4% TAX CREDITS
ASSUMPTIONS
2007 Median Household Income, Family of Four
$78,700
Affordable Housing Cost As a % of Income
30%
No. of Bedrooms
Totals
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
Household Size (1)
1.5 Persons
3.0 Persons
4.0 Persons
5.0 Persons
Household Size Income Adjust. Factor
75%
900/0
100%
108%
Utility Allowance (2)
$54
$68
$98
$109
No. of Units
323
73
100
100
50
Total Bedrooms
773
73
200
300
200
AFFORDABLE RENTS BY INCOME LEVEL
MHP B (30%)
Affordable Monthly Housing Cost
$456
$547
$632
$705
Less: Monthly Utility Allowance
($54)
($68)
($98)
($109)
Affordable Monthly Rent
$402
$479
$534
$596
60% of Median
Annual Gross Income
$35,415
$42,498
$47,220
$50,998
Affordable Monthly Housing Cost
$885
$1,062
$1;181
$1,275
Less: Monthly Utility Allowance
($54)
($68)
($98)
($109)
Affordable Monthly Rent
$831
$994
$1,083
$1,166
NET OPERATING INCOME
Monthly
Affordability Level/No. of Bedrooms
Units
Rent
Gross Income
MHP B (30%)
1 Bedroom
22
$402
$8,844
30.00% of Units
2 Bedroom
30
$479
$14,370
3 Bedroom
30
$534
$16,020
4 Bedroom
15
$596
$8,940
600/.o f Median
1 Bedroom
51
$831
$42,381
70.0% of Units
2 Bedroom
70
$994
$69,580
3 Bedroom
70
$1,083
$75,810
4 Bedroom
35
$1,166
$40,810
Average Affordability
50.99%
Totals
323
$276,755
Manager's Unit
2
GROSS RENTAL INCOME
$3,321,060
Less: Vacancies (3)
@ 5.0%
($166,053)
Miscel. Income
$100 Per Unit
$32,300
GROSS ANNUAL INCOME
$3,187,307
LESS: OPERATING EXPENSES
$300/unit/mo.
$3,600 Per Unit
($1,170,000)
Less: Operating Reserves
3.0% of Oper. Budget
($35,100)
Less: Replacement Reserves (4)
0.6% of Construction Costs
($371,012)
NET OPERATING INCOME
$1,611,195
(1) Assumes the lesser of TCAC occupancy standard 0.5 persons per bedroom) and California Health and Safety
occupancy standard (one person per bedroom plus one).
(2) Source: County of Orange Housing and Community Services, effective October 1, 2006. Assumes tenant pays
all electric heating, cooking, and water heating and basic electricity; landlord pays water and trash.
(3) TCAC requires a 5% minimum vacancy rate unless waived based on vacancy data in the market area.
(4) MHP requires replacement reserves equal to 0.6% construction costs unless otherwise approved.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page C-1
Table C-16
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
DEVELOPMENT COSTS
MHP PROGRAM, TAX-EXEMPT BONDS, 4% TAX CREDITS
Acres (Units Plus Parking)
13.00
No. of Units
325
Total Living Area
319,150
Community Room
0
Total Net Square Feet, Residential Units
319,150
Other Building Area
0
Total Net Square Feet
319,150
Total Gross Square Feet
319,150
% Residential
100.00%
Tax Credit Elig. Basis
Total
(100% Resid.)
LAND ACQUISITION
$43 Per Site SF
$24,350,040
$0
SITE WORK
$20 Per Site SF
$11,325,600
$11,325,600
UNIT CONSTRUCTION HARD COSTS (1)
$194 Per SF
$61,835,313
$61,835,313
CONTINGENCY
5% of Hard Costs
$3,658,046
$3,658,046
ARCH./ENGJCONSTR. SUPERVISION
7% of Hard Costs
$5,960,072
$5,960,072
LOCAL IMPACT AND PROCESSING FEES
$26.05 Per SF
$8,315,308
$8,315,308
ALTA SURVEY
$3,000
$3,000
ENVIRONMENTAL PHASE 1
$7.500
$7,500
SOILSTESTING
$10,000
$10,000
CONSTRUCTION BOND FEES/COSTS
1.00% Plus $100,000
$771,610
$771,610
CONSTRUCTION/LEASE-UP INTEREST
5.50% 15 Months
.$3,139,778
$3,139,778
REAL ESTATE TAXES AND INSURANCE
1.60% of Hard Costs
$1,362,302
$1,362,302
TITLE AND CLOSING
$15,000
$15,000
APPRAISAL FEES
$10,000
$10,000
REAL ESTATE LEGAL
$30,000
$12,000
ORGANIZATIONAL LEGAL
$30,000
$0
MARKET STUDY
$25,000
$25,000
POST -CONSTRUCTION AUDIT
$15,000
$0
MARKETING/LEASE-UP/START-UP
$100,000
$0
OPERATING RESERVE
3 Months Oper
$292,500
$0
SOFT COST CONTINGENCY
2.00%
$110,384
$110,384
TOTAL DEVELOPMENT COST
$121,366,452
$96,560,912
DEVELOPER FEE (2)
15.00% of Dev. Costs
$1,940,000
$1,200,000
BOND/TAX CREDIT ADVISOR
$30,000
$0
TAX CREDIT APPLICATION FEE
$2,000
$0
TCAC ALLOCATION FEE
4.00% of Ann. Credit
$183,008
$0
SYNDICATION LEGAL
$30,000
$0
TOTAL USES
$123,551,461
$97,760,912
PER UNIT
$380,158
$300,803
PER SF
$387.13
(1) Estimated hard costs, assuming prevailing wages, at a 25% increase in hard costs over non -prevailing wage
costs.
(2) For MHP projects with tax credits, the difference between the maximum developer fee
underTCAC: $1,940,000
and the maximum under MHP:
$3,137,500
be deferred and paid only out of cash flow.
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page C -t
Table C-17
RENTAL PROTOTYPE: STACKED fLAT APARTMENTS
FINANCING ASSUMPTIONS
MHP PROGRAM, TAX-EXEMPT BONDS, 4% TAX CREDITS
TAX CREDIT EQUITY
Total Eligible Basis
Less: Non -Qualified Non -Recourse Financing
Less: Eligible Amount Voluntarily Excluded
Unadjusted Eligible Basis
Adjusted Eligible Basis (High Cost Area Adjust)
Qualified Basis
Tax Credit Rate
Annual Allow. Credits
Tax Credit Pricing (Equity Raised Per Tax Credit Dollar)
Federal
Federal Tax Credit Equity (999/6)
CONSTRUCTION BOND AMOUNT
Constr. Loan Amt.
Interest Rate
Constr. Bond Issuance Costs/Fees
Average Loan Balance—Construction
Construction Period
Lease Up Period
Construction Loan Interest --Construction
Construction Loan Interest--Lease-Up
Total Interest Cost
Bond issuance Costs
PERMANENT BOND AMOUNT
Net Operating Income
Debt Coverage Ratio
Debt Service
Mortgage Term
Interest Rate
Max. Mortgage Amount (DCR)
0%
1.30
100%
550% of Agg. Basis
$100,000 Plus
$97,760,912
$0
$0
$97,760,912
$127,089,186
$127,089,186
3.60°/v
$4,575,211
$1.05
$47,559,315
$67,161,024
5.50%
1.00%
60.00%
12 Months
3 Months
$2,216,314
$923,464
43,139,778
$771,610
$1,611,195
1.25
$1,288,960
30 years
7.00%
$16,145,037
City of Tustin
Affordability Gap and Leveraged Financing Analysis Page C-25
Table C-18
RENTAL PROTOTYPE: STACKED FLAT APARTMENTS
THRESHOLD BASIS LIMITS
MHP PROGRAM, TAX-EXEMPT BONDS, 4% TAX CREDITS
Orange Co. 4% Threshold Basis Limits, 2008
Total Adjusted Threshold Basis
Total Unadjusted Eligible Basis
Requested Eligible Basis
$105,583,290
$97,760,912
$97,760,912
(1) Under 2008 TCAC regulations, the total combined boost for prevailing wage, parking, day care center,
special needs and elevator may not exceed 39 percent.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page C-1
TCAC Basis
Total
Unit Size
# of Units
Limits
Basis
1 Bedroom
73
$179,727
$13,120,071
2 Bedroom
100
$216,800
$21,680,000
3 Bedroom
100
$277,504
$27,750,400
4 Bedroom
50
$309,157
$15,457,850
2 Bedroom Mgr's Unit
2
$216,800
$433,600
Total Threshold Basis
$78,441,921
Threshold Basis Boosts
Max allowed
Plus: Prevailing Wage Boost
20%
20%
$15,688,384
Plus: Subterranean Parking Boost
7%
0%
$0
Plus: Day Care Center Boost
2%
0%
$0
Plus: Special Needs Boost
2%
0%
$0
Plus: Elevator Boost
10%
0%
$0
Subtotal Boost (1)
39%
Plus: Energy Efficiency Basis Boost
4%
4%
$3,137,677
Plus: Distributive Energy Boost
5%
o%
$0
Plus: Seismic Upgrade Boost
15%
0%
$0
Plus: Development Impact Fees
$8,315,308
Total Adjusted Threshold Basis
Total Unadjusted Eligible Basis
Requested Eligible Basis
$105,583,290
$97,760,912
$97,760,912
(1) Under 2008 TCAC regulations, the total combined boost for prevailing wage, parking, day care center,
special needs and elevator may not exceed 39 percent.
City of Tustin
Affordability Gap and Leveraged Financing Analysis
Page C-1
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City of Tustin
Comprehensive Affordable Housing Strategy
Appendix E
Vacant and Underutilized Land
Suitable for Residential Development
January 9, 2008
Prepared for: City of Tustin
Submitted By: David Paul Rosen & Associates
Northern California
David Rosen, Principal
1330 Broadway, Suite 937
Oakland, CA 94612-2509
Phone: 510-451-2552
Fax: 510-451-2554
e-mail: David@DRAConsuItants.com
www.draconsultants.com
Southern California
Nora Lake -Brown, Principal
3941 Hendrix St
Irvine, CA 92614-6637
Phone: 949-559-5650
Fax: 949-559-5706
e-mail: Nora@DRAConsultants.com
www.draconsu Itants.zom
Vacant and Underutilized Land Suitable for Residential Developments
Tables 1 and 2 illustrate the residential development potential of the vacant and
underutilized land inventory in the City of Tustin. Vacant parcels at the former MCAS
Tustin (Tustin Legacy) provide approximately 379 acres suited for residential
development. Under the adopted MCAS Tustin Specific Plan, these sites will provide
for the development of an additional 3,645 units (565 units have already been
constructed on other sites at Tustin Legacy). Of the 5,104 potential new units that
could be developed on land suitable for residential development or underutilized
land in the City, approximately 71 percent is expected to be provided at Tustin
Legacy. With Tustin Legacy, located in the MCAS Tustin Redevelopment Project
Area, California Redevelopment Law requires a minimum of 15 percent of the new
units to be affordable to very low, low and moderate income households, of which 6
percent are required to be affordable to very low incorne households. Since the City
has adopted more stringent affordability inclusionary obligations for the Tustin
Legacy project, through adoption of the MCAS Tustin Specific Plan and specific
entitlement approvals and grants of density bonuses on certain sites, it is expected
that development sites at Tustin Legacy will generate the following affordability
accommodation:
Very Low
Total
Market Rate Units
Affordable Units
125
Units
Total Units
Percent
Total Units
Percent
Columbus Square
1,075
809
75.3%
266
24.7%
Columbus Grove
465
423
91.0%
42
9.0%
Subtotal
1,540
1,232
80.0%
308
20.0%
TLCP -
Neighborhoods
2,105
1,652
78.5%
453
21.5%
D and G
Non -Profit Sites
(Group Quarters
- Village of
Hope)
Tustin Family
Campus
Very Low
Low
Moderate
61
125
80
12
0
30
73
125
110
126
94
233
192
90
The Tustin High School site presents another significant parcel of land suitable for
residential development. This site totals 39.4 acres and could accommodate up to
400 residential units.
Aside from MCAS Tustin and the Tustin High School site, additional infill sites are
located either within existing Redevelopment project areas or in the Old Town Tustin
City of Tustin January 9, 2008
Vacant and Underutilized Land Suitable for Residential Development Page 1
area. Sites that are located within Redevelopment project areas are subject to
Redevelopment Law. As a means to ensure affordability and the use of housing set-
aside funds, the City and its Redevelopment Agency will require developers to
provide at least 15 percent of all units constructed or rehabilitated within
Redevelopment Project areas at prices affordable to very low, low and moderate
income households consistent with California Redevelopment Law affordable
housing requirements.
City of Tustin January 9, 2008
Vacant and Underutilized Land Suitable for Residential Development Page 2
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City of Tustin
Comprehensive Affordable Housing Strategy
Appendix F
Affordable Housing Capital Plan
May 2, 2008
Prepared for: City of Tustin
Submitted By: David Paul Rosen & Associates
Northern California
David Rosen, Principal
1330 Broadway, Suite 937
Oakland, CA 94612-2509
Phone: 510-451-2552
Fax: 510-451-2554
e-mail: David@DRAConsultants.com
www.draconsultants.com
Southern California
Nora Lake -Brown, Principal
3941 Hendrix St
Irvine, CA 92614-6637
Phone: 949-559-5650
Fax: 949-559-5706
e-mail: Nora@DRAConsultants.com
www.draconsultants.com
Table of Contents
PAGE
1.0 Introduction............................................................................................... 1
2.0 Affordable
Housing Assistance Goals and Programs ................................... 1
2.1
Preservation of At -Risk Affordable Housing ......................................... 1
2.2
Single- and Multi -Family Home Rehabilitation Program ..................... 2
2.3
Ownership Multifamily New Construction .......................................... 2
2.4
Multifamily Rental New Construction/Acquisition and
Rehabilitation..................................................................................... 2
2.5
First -Time Homebuyer and/or Foreclosure Negotiated Purchase ......... 2
2.6
Homeless Assistance and Supportive Services ..................................... 2
2.7
Tustin Legacy Ownership Multifamily New Construction .................... 3
2.8
Tustin Legacy Rental New Construction .............................................. 3
2.9
Administrative Support ....................................................................... 3
City of Tustin Administrative Review Draft May 2, 2008
Comprehensive Affordable Housing Strategy Page ii
List of Tables
Table Page
Six -Year Capital Plan Goals, City of Tustin Comprehensive Affordable
Housing Strategy, FY 2008/09 to FY 2013/14 ................................................ 4
City of Tustin Administrative Review Draft May 2, 2008
Comprehensive Affordable Housing Strategy Page iii
Affordable Housing Capital Plan
1.0 Introduction
DRA prepared a six-year capital plan showing anticipated expenditures of projected
local revenues for affordable housing in Tustin over the six-year period from
FY 2008/09 through FY 2013/14 based on the policy priorities established by the
City and on per unit subsidy requirements derived from the affordability gap
analysis.
The policy recommendations developed by the City for the forthcoming Housing
Element update provide guidelines for expenditures by renter/owner,
family/senior/special needs and income targeting categories. The actual number of
units that Tustin can assist will depend upon its success in securing non -local
leveraged financing, including 9 percent tax credits and 4 percent tax credits with
tax-exempt bonds.
Table 1 presents the six-year capital plan goals for Tustin over the projection
period. Over the six-year period, the City/Agency is projected to have $19.27
million in Housing Set -Aside and CDBG Funds available to assist affordable
housing. The Agency's operating costs related to its affordable housing activities
are projected to equal $4.95 million over this time period, leaving $14.32 million
for affordable housing and homeless assistance. The City's assistance goals total
1,094 housing units over the projection period, excluding the number of persons
assisted under the Homeless Assistance and Supportive Services program.
The programs and assistance goals listed in the capital plan are described in the
sections below.
2.0 Affordable Housing Assistance Goals and Programs
2.1 Preservation of At -Risk Affordable Housing Rental Units
The City of Tustin has identified the preservation of existing affordable housing
units as one of the most cost-effective methods of maintaining the stock of
affordable housing therefore a high-priority program for the City.
The City has identified 277 units of at -risk housing with expiring use restrictions
within the six-year planning period, including 145 units of very low income
housing and 132 units of low income housing.
Given the relative weakness of economic conditions and the housing market
currently, the City will proceed to negotiate the extension of affordability
restrictions on these units in advance of the specific expiration dates for these units.
The amount of assistance provided will be negotiated based on the specific
economics of each development and the potential availability of leverage
City of Tustin Administrative Review Draft May 2, 2008
Affordable Housing Capital Plan Page 1
financing, such as tax-exempt bonds and 4% tax credits. The total amount of funds
allocated to this program is $2,181,672.
2.2 Single- and Multi -Family Home Rehabilitation Program
The City has identified single- and multifamily home rehabilitation loans and grants
as another cost-effective method of extending the life of affordable housing in the
community. The City will target single-family neighborhoods in the vicinity of the
Town Center opportunity area as part of the Town Center revitalization effort, as
well as multifamily units citywide. The City's -goals under this program are to
rehabilitate 162 units, including 54 single-family units and 108 multifamily units.
2.3 Ownership Multifamily New Construction
The City also intends to assist ownership multifamily new construction. Per unit
subsidy requirements by income level are derived from the gap analysis, assuming
construction of new stacked flat condominiums (Owner Prototype #2), which is the
least costly ownership housing type examined. The City proposes to spend
approximately half of the funds allocated to new affordable housing construction to
ownership housing, and half to rental housing, in the amount of $4.36 million
each. The City's goal is to build 18 new owner units, including 7 units affordable
to very low income households and 11 units affordable to low income households.
2.4 Multi -Family Rental New Construction
In addition, the City will assist multi -family rental new construction. Per unit
subsidy requirements by income level are derived from the gap analysis for the
renter stacked flat prototype, assuming leverage from 4% tax credits and tax-
exempt bonds. Additional leverage may be obtained if the City is able to identify a
project competitive for the 9% tax credit program. The City's goal is to assist 31
new construction rental units under this program, at a total subsidy cost of
approximately $4.36 million.
2.5 First -Time Homebuyer and/or Foreclosure Negotiated Purchase
The City's First -Time Homebuyer Program -provides downpayment and second
mortgage assistance to low and moderate income buyers to assist them to purchase
an existing home in the City. The recent mortgage credit crises has resulted in
increasing foreclosure rates throughout many parts of California and the nation.
The City has allocated $2.4 million to assist new first-time homebuyers in
purchasing a home. This may include negotiated purchase of homes in foreclosure,
which may represent a lower cost buying opportunity for first-time homebuyers.
The City anticipates assisting 30 homebuyers with these funds.
2.6 Homeless Assistance and Supportive Services
The City has allocated $60,000 in CDBG funds to continue its financial support of
homeless assistance and supportive services in the City. The City's goal for this
program is to assist 200 homeless individuals per year over the projection period.
City of Tustin Administrative Review Draft May 2, 2008
Affordable Housing Capital Plan Page 2
2.7 Tustin Legacy Ownership Multi -Family New Construction
The City's development agreements for Tustin Legacy are projected to create 323
new affordable multi -family ownership units in the City over the six-year projection
period. This includes 130 units in TLCP and 193 units in the Villages of Columbus.
The City anticipates the creation of 40 units affordable to very low income
households, 116 units affordable to low income households, and 167 units
affordable to moderate income households.
The TLCP unit count represents projected Phase 1 development and the subsidy
requirement is unknown at this time. The cost of maintaining the affordability of
the TLCP units will be transferred to the Redevelopment Agency and the expense
associated with maintaining the 45 -year covenants will be determined at the time
residential development proceeds.
There is no subsidy requirement for the affordable units in the Villages of
Columbus.
2.8 Tustin Legacy Rental New Construction
The City's development agreements for Tustin Legacy are projected to create 253
new affordable rental units, including 126 units affordable to very low income
households, 64 units affordable to low income households, and 63 units affordable
to moderate income households.
The TLCP unit count represents projected Phase 1 development and the subsidy
requirement is unknown at this time. The cost of maintaining the affordability of
the TLCP units will be transferred to the Redevelopment Agency and the expense
associated with maintaining the 55 -year covenants will be determined at the time
residential development proceeds.
2.9 Administrative Support
The Agency will provide administrative support to implement its affordable housing
activities. The Agency projects operating expenses of $4.95 million over the six-
year capital planning period.
City of Tustin Administrative Review Draft May 2, 2008
Affordable Housing Capital Plan Page 3
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