City of San Jose Housing Production in San Jose

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					       City of San Jose

Housing Production in
     San Jose
           Presented to the
Driving a Strong Economy Committee
            June 23, 2003
      Goals of Presentation
         Trends in Affordable and Market
 Identify
  Rate Housing Development
 Describe   the Housing Development
  Activities in Project Areas
 DescribeAffordable Housing
  Development Process
 San Jose Continues to be a
   Regional Leader in the
   Production of Housing
 From 1996 through 2000, building
  permits were issued for an average of
  4,300 units per year
 Inthe current FY02-03, building permits
  have been issued for over 2,800
  housing units.
As shown on this slide, building permit issuance is stronger during
the current downturn than the previous downturn in the 1990s.
    San Jose Continues to be
   Proactive in Facilitating New
      Housing Opportunities
In the Current Fiscal Year:
 TheCity has approved General Plan
 Amendments creating housing sites
 over 5,000 net units.
 Phase Three of the
 Housing Opportunity
 Study could create
 an additional 2,000
 to 3,000 units.
San Jose Continues to be Proactive in
Facilitating New Housing Opportunities
              Continued….
 TheCity Council has
 approved Zonings for over
 2,600 units, over 20% of
 which are affordable.

         Permits have been
 Planning
 approved for an additional 1,700 units,
 over 35% of which are affordable.
       Housing Production in
            San Jose
                                           31
4000                 36
                                                               278
3000                           3230                                                     35
2000     2925                                          2171                     939

1000
                               1198                                            1510
           645                                           920
   0
            -0
                 0
                                  -0
                                       1
                                                          -0
                                                               2                   03
          99                    00                      01                      2-
       19                    20                      20                      00
                                                                       t   .2
                                                                     Es


                      Affordable            Market        Inclusionary
    Housing Development
   Activities in Project Areas
 Market   Rate Housing

 Agency   Historical Expenditures

            Strategy –
 Development
 Downtown and Neighborhoods

 Inclusionary   Housing
                       Cost Comparison
 Low-Rise
Wood Frame            Seattle,             Los Angeles,             San Jose,
Construction         Washington             California              California
Hard Cost per            $108                  $115                   $150
Rentable Sq.Ft.

Total Cost per           $197                  $230                   $262
Rentable Sq.Ft.

Market Rent             $2.10                  $2.41                  $2.30
per Sq. Ft. 2001

                    4-story over 2      4-story over 2 level      4-story over 2
Building Type
                     level garage             garage               level garage

Average Unit
                         900                    986                    897
Size

Density              81 units/acre         92 units/acre          88 units/acre

           San Jose vs. Seattle Equivalent Unit Sizes:         $ 37,530 Higher Cost
           San Jose vs. Los Angeles Equivalent Unit Sizes:     $ 31,812 Higher Cost
 Mid-Rise
                       Cost Comparison
 Concrete
                       Seattle,            Los Angeles,          San Jose,
Construction          Washington            California           California
Hard Cost per            $180                  $179                 $207
Rentable Sq.Ft.

Total Cost per           $290                  $285                 $325
Rentable Sq.Ft.

Market Rent              $2.33              $2.32-2.85           $2.10-2.35
per Sq. Ft. 2001

                    14-story, mixed                             14-story over
Building Type                           6-story over garage
                     use building                                  garage

Average Unit
                          940                  1181                 881
Size

Density              232 units/acre       100 units/acre       180 units/acre

          San Jose vs. Seattle Equivalent Unit Sizes:     $23,729 Higher Cost
          San Jose vs. Los Angeles Equivalent Unit Sizes: $24,492 Higher Cost
        Financial Gap Analysis – Residential
              Development - RENTAL
                                                Type V        Type I
I.    Market Rate Option
      Construction Cost/Unit                      $178,800     $244,100
      Supportable Land Cost/SF of Land Area            $37       ($140)
      Breakeven Rent
        Total-Monthly                       $2,173       $2,672
        Per Square Foot                              $2.41        $2.98

II.   Prevailing Wage & Basic Inclusionary Housing Policy Regs
      Construction Cost/Unit                    $204,800      $243,700
      Supportable Land Cost/SF of Land Area         ($36)       ($155)
      Breakeven Rent
         Total-Monthly                             $2,570       $2,841
         Per Square Foot                            $2.86        $3.17
      Financial Gap Analysis – Residential
         Development - OWNERSHIP
                                                Type V       Type I
I.    Market Rate Option
      Construction Cost/Unit                    $301,900     $363,300
      Supportable Land Cost/SF of Land Area        $107           ($9)
      Sales Price
         Total                                  $374,900     $438,500
         Per Square Foot                           $309         $362


II.   Prevailing Wage & Basic Inclusionary Housing Policy Regs
      Construction Cost/Unit                    $340,000      $362,600
      Supportable Land Cost/SF of Land Area          $36         ($17)
      Sales Price
         Total                                  $438,900      $453,700
         Per Square Foot                            $362          $374
 Market Rate Housing Historical
         Expenditures
Approximately $120      Million Expended
  Acquisition and   site delivery
  Off-site infrastructure improvements
  Provision of retail space
  Second mortgage programs for homebuyers
  Parking facilities
  Development Fees


22 Projects funded
Producing over 3,400 units
Greater Downtown Housing Development
       1980-2000 Completed Units
       2000-Current Completed Units
       Units Under Construction /Permit Process
       Anticipated Units Over the next 5 years



                                        5883 Total Units
                           2162
             3000                         Includes: 1480 Affordable Units
                                                    459 Very Low
                                                    232 Low
                             1689                   399 Moderate
                                                    390 SRO/Shelter Rooms
                  2032
      33 South Third




Developer:            Century Residential LLC
General Contractor:   Saratoga Capital
Location:             San Fernando and S. 3rd St.
Project Budget:       $26,716,000
Agency Funds:         $13,249,746
Units:                89 for rent units
Affordable Units:     8 moderate, 5 very low
Density:              62 units / acre
Parking Spaces:       114
Retail Space:         16,464 sq.ft.
      Twohy Lofts




Developer:          CIM Group
Location:           200 South First Street
Project Costs:      $10,232,620
Agency Funds:       $4,427,770
Units:              36 for rent units
Affordable Units:   n/a
Density:            160 units / acre
      Park Townsend




Developer:            Goldrich & Kest
General Contractor:   Trident
Location:             44 W. Julian
Est. Project Cost:    $44,074,900
Agency Funds:         $5,404,828
Units:                98 for sale units
Affordable Units:     n/a
Density:              55 units / acre
Parking Spaces:       211 residential; 108 public
Classics @ North Keystone




Developer:                  Classic Communities
Location:                   North First Street & Bassett Est.
Project Costs:              $16,800,000
Net Return to the Agency:   $3,176,500
Units:                      42 for sale units
Affordable Units:           9 Moderate
Density:                    32 units / acre
Parking:                    89 spaces
            Lofts @ The Alameda




Developer:                Green Valley Corporation, Barry Swenson
Location:                 Corner of the Alameda & Morrison Est.   Est.
Project Costs:    $13,300,000
Agency Funds:             $200,000 (off-sites)
Units:                    40 for sale units
Affordable Units:         8 Moderate
Density :                 40 units / acre
Parking:                  65 spaces
   North San Pedro Housing Sites




Developer(s):       Multi-Developer RFP process
Location:           North of Julian & West Market and San Pedro
Agency Budget:      $17,165,876
Units:              ~1,200 units maximum; 600 units minimum
Affordable Units:   at least 20% Moderate
Density:            Between 70 – 140 units per acre
        Inclusionary Housing

 All new market rate,
  for sale, and rental
  housing projects in
  Redevelopment
  Project areas must
  comply with the
  Inclusionary Housing Policy
 Developer   Options – For Sale Projects
 Developer   Options – Rental Projects
    Northpark Village




Developer:            Irvine Apt. Communities
General Contractor:   Haskell
Location:             N. First St. & Baypointe
Units:                2,678 for rent units
Affordable Units:     161 Very Low
                      242 Moderate
Density:              45 units / acre
 Affordable Housing FY 2003-2004
20% Housing                  $37.6M
ELI Housing                  $14.1M
Parkland Fee Repayment       $10.0M
CIM Housing                  $ 0.9M
First Time Homebuyer and     $ 7.3M
   Housing Rehab Programs
W. San Carlos Teacher Academy $ 1.0M

                             $70.9M
       Affordable Housing Production
9000
8500                                                              "CUMULATIVE GOAL"
8000
7500
                                                                                        7,236
7000
6500
6000                                                                   6,036

5500
5000
4500
                                                        4,203                                       8,256
4000
3500
                                                                                      6,161
3000
                                    2,802
2500                                                                 4,653
2000
1500                  1,469                           3,108
1000                               1,910
          537
 500
                681
   0

       1999-00           2000-01           2001-02         2002-03         2003-04        2004-05
                                           Preliminary Application (E)
                                           Application on File (D)
                                           Fund Reservation Approved (C)
                                           Under Construction (B)
                                           Construction Completed (A)
   Housing Department Role

 Evaluate funding   applications
 Underwrite Cityloan/grant
 and recommend City funding
 through each stage of development
 Coordinate with   our City partners
 Morerecently, identify and acquire surplus
 properties
 Leveraging Outside Funding
On average, 3:1 leveraging
Primary Outside Sources
  Tax-exempt   private activity bonds
  Tax credits
  Conventional/bank loans
  501(c)(3) tax-exempt bonds
  Developer’s Equity


Other    Sources
  Prop 46 (Multi-Family Housing Program)
  Federal Programs (HUD 202/811)
           Tax-Exempt Bonds
 During  2002, 7 San Jose projects were
  allocated $106.5 M
 Application issubmitted to California Debt
  Limit Allocation Committee (CDLAC)
 Funding Rounds    Occur 2 – 3 times per year
  (January, April, July in 2003)
 Level of competition depends on the volume of
  applications
        Low-Income Housing
            Tax Credits
 Provided under   both federal and State tax
 laws
 Applications submitted     to Tax Credit
 Allocation Committee
 (TCAC)
 Taxcredits sold to
 investors to raise equity
 capital
        Low-Income Housing
         Tax Credits (cont.)
 Non-competitive 4%       tax credits
     Automatically eligible with tax-exempt bonds
     12 projects and $79.7M in 2002



 Competitive 9%     tax credits
     Limited number of developments
      in San Jose receive an allocation
      of credits because of geographic
      allocation
     3 Projects and $23.4M in equity in 2002
         100-Unit Family Project
                            W/ELI         WO/ELI
Total ELI Units                10             0
Total VLI/LI Units             90            100
TOTAL UNITS                   100            100

SOURCE OF FUNDS
Tax Exempt Bonds            $10,645,000   $11,265,000
Tax Credit Equity           $6,000,000    $6,000,000
Lease Up Income             $252,612      $262,872
City Loan                   $6,717,364    $7,472,128
City Grant                  $1,385,024    $0
TOTAL SOURCES               $25,000,000   $25,000,000

City Loan Per Unit LI/VLI   $75,476       $75,476
City Grant Per ELI Units    $138,502      $0
Total Average Subsidy       $81,842       $75,465
         Other City Assistance
 ParkImpact Fees paid by Redevelopment
  Agency (LI, VLI, ELI)
 Development Tax Exemptions (VLI, ELI)
      Building and Structures Tax
      Construction portion of Construction &
       Conveyance Tax
      Commercial-Residential-

       Mobilehome Park Building
       Tax
      Residential Construction Tax
   Stages of Development

1. Initial Feasibility (6 - 18 mos.)
2. Acquisition/Predev (1 - 12 mos.)
3. Construction (12 - 18 mos.)
4. Lease Up (3 - 6 mos.)
        Stage 1: Initial
          Feasibility
 Developer obtains   site control
 Developer proceeds with due diligence
  process and predevelopment activities
 Developer filesPD rezoning application
  with Planning Department
           Stage 2:
 Acquisition/Predevelopment
 City
     Council approves
 PD rezoning

 City
     makes acquisition/
 predevelopment loan

 Developer applies
                  to CDLAC for tax-
 exempt bond allocation and/or 9% tax
 credits
         Stage 3: Construction
 Project receives
                 an allocation for either
  tax-exempt bonds and/or tax credits
 Bond-project developer applies  for 4% tax
  credits OR 9% tax-credit-project developer
  applies for conventional construction
  and first-mortgage loans

 Citymakes construction/
  permanent gap loan
  commitments
        Stage 3: Construction

 Investor commits to  buying tax credits and the
  Pay-In Structure for the equity
 Bonds  are sold and financing closes OR
  conventional construction
  loan closes
 Construction starts
                    and is
  monitored by lenders
           Stage 4: Lease Up
 Developer markets    units
 Final
      Cost Certification
  submitted
 Bonds  convert to
  permanent OR construction loan paid off
  with closing of permanent conventional
  loan
 City   loan converts to permanent
  Overall Financing Strategy
 Tax-exempt bonds  will continue to be the
 primary source of outside funds
 With the expected decrease in RdA funding,
 developers will need to be more creative in
 finding alternative funding sources
 Projects may need to be revised to meet
 policy goals of outside funding sources

				
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