SUBJECT: Transfer
of 30-Year Affordability Restrictions from Property Located at 1361 and 1440
Dubert Lane to Property Located at 96 South Tenth Street as Accommodation to
Property Owner, InnVision of Santa Clara Valley
COUNCIL DISTRICT: 7 & 3
SNI AREA: SANTEE & 13TH STREET
The Housing Department recommends that the City Council adopt a resolution:
InnVision of Santa Clara Valley owns two properties, 1361 and 1440 Dubert Lane, which are currently in escrow with Alliance Title for sale. The sale of 1361 Dubert Lane is expected to close shortly, with the sale of 1440 to follow. Both properties are subject to the City of San José’s 30-year affordability restrictions because they were acquired with 20% Tax Increment Funds. One of these loans has been repaid to the City, with the remaining loan to be paid in full at the close of sale.
InnVision is purchasing a larger apartment building (14 units) located at 96 South Tenth Street, which they believe will allow them to serve very low income clients in a more suitable environment. Although this sale will not close until January 2002, InnVision is requesting that the 30-year affordability restrictions on the two Dubert Lane properties be transferred to the South Tenth Street property, in order that compliance under the legal requirements contained in California Health & Safety Code may continue. The use of 20% Tax Increment Funds will not be included in the purchase or development of the replacement units, and there will be no displacement of any existing tenants in the replaced units.
ANALYSIS
According to Health & Safety Code Section 33334.3 (h), the transfer of affordability restrictions to another property is allowable, if certain conditions are met. Rescinding restrictions on one property and recording new restrictions on a substitute property would be appropriate so long as:
a) replacement rental units are equally affordable and comparable to the rental units they are replacing; and
b) the replacement rental units are available for occupancy prior to the displacement of any persons and families of low- or moderate-income residing in the rental units to be replaced; and
c) the comparable replacement units are not developed with moneys from the Low and Moderate-Income Housing Fund.
InnVision’s purchase of the 96 South Tenth Street property cannot occur until January, 2002. Due to the disparity of timing, the City will agree to rescind the affordability restrictions on 1361 and 1440 Dubert Lane only when: a) Innvision is prepared to close on 96 South Tenth Street or an eligible substitute property; b) all the legal requirements of the Health & Safety Code are met to the City’s satisfaction; and c) new affordability restrictions are ready to be recorded on the 96 South Tenth Street property or the substitute property, concurrently with the rescission of the restrictions from the Dubert Street properties. Alliance Title Company is prepared to issue title insurance to the purchaser of the Dubert Street properties with the restrictions remaining recorded on the properties, provided the City agrees to rescind the restrictions at such time InnVision acquires title to the South Tenth Street property. At that time, a new set of affordability restrictions can be recorded and deemed transferred.
Not applicable.
Not applicable.
This report has been coordinated with the Office of the City Attorney.
LESLYE CORSIGLIA
Acting Director of Housing