(19)AR 102108 Reassessment District Bonds

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ITEM #19 CITY OF COLTON For the Redevelopment Agency Board Meeting of October 21, 2008 TO: Honorable Mayor and Councilmembers Honorable Chairperson and Boardmembers FROM: Candace E. Cassel, Economic Development Direct SUBJECT: Consideration and Approval of Payment of Reassessment District Bonds in Full and Authorization to Purchase Affordable Housing Covenants or Enter into a Loan Agreement to Replace the Assessment Lien for the Eighteen Privately Owned Lots. DATE: October 8, 2008 BACKGROUND In 1993, the Redevelopment Agency acquired the Rancho Mediterrania Manufactured Home Estates (the "Park") as a negotiated settlement of a dispute with the former owners regarding the application of the City's mobilehome rent control ordinance. The Agency subsequently converted the Park to condominium lots and sold lots to the residents for the purposes of providing the residents a homeownership opportunity, an opportunity to control their total housing cost and to aid the Agency in maintaining and preserving affordable housing. In 1994, the City of Colton issued assessment district bonds and later refinanced the bonds in 2000 (collectively "RAD 2000-01"). The revenue stream to pay the debt service on the bonds is generated by a lien on each of the lots and that is due and payable with property tax payments. In 1999, the Agency Board reaffirmed its decision to continue with the condominium conversion project, providing affordable housing options to the residents within the Park, and continued to sell the lots with a 1/259th undivided interest in the common areas, including the streets set forth in the condominium map that was recorded June 28, 1994. As part of its reaffirmation to continue with the conversion project, the Agency Board also agreed to reduce the burden on the lot owners by paying off the balance of the assessment district for each lot upon the transfer of the lot to new lot owners and for original lot owners who still occupied the property in 1999, if the owner agreed to record affordability covenants against the lot. The affordability covenants (CC&Rs) restrict the resale of the lot to low and moderate income housing residents and assists the Agency in satisfying its housing production unit requirements under California Redevelopment Law. The CC&Rs have been executed and recorded at the time of closing of escrow for each lot sale beginning with closings in 1999. The assessment remains on thirty-one (3 1 ) Agency owned lots and eighteen (18) privately owned lots. California Redevelopment Law requires the Agency to set aside at least 20% of its gross tax increment revenue into a Housing Fund and to spend it solely on projects to preserve, rehabilitate and increase the community's supply of low -and moderate -income housing. Affordability restrictions on Agency assisted housing runs for 45 years for owner occupied units. One of the goals of the Agency is to promote affordable home ownership and recordation of these CC&Rs has enabled the Agency to increase its affordable housing production units by restricting the resale of the lots to qualifying low and moderate income households as defined by California Health and Safety Code Section 50093.