Ojai City Council Special Meeting

1-2, 1- 2. Okay are we at time? Okay great all right welcome to the April 15th special meeting of the City Council roll call please.

Just as a point of order, I'll be recusing myself. So I will be out here and doing work. City work, of course!

Check one, two. One, two. Okay we're back.

So the report out from closed session is that there was no reportable action today.

Thank you. Okay with that we will move on. Tell me if I'm not doing it right? We move on to our... Hold on. Yes okay.

You're still in a special meeting, Mayor.

Yes I am so hold on one second.

Yep sorry no all good okay.

I just had the wrong document in front

of me. All

right so we move on to our only open session item correct?

Yes sir.

Okay please take it away

Okay, well I'm actually going to thank you everybody for your patience as we finished our closed session. I'd like to hand things over to Mr. Seibert who's going to go through the direction council provided as far as items to come back and an explanation so Mr. Seibert if you please take it away

Yes, thank you. Good afternoon Council Mayor. My name is Lucas Sybrand I'm the Community Development Director for the City of Ojai. The public hearing item that you have is continued from the March 24th meeting and what we have here tonight or this afternoon I suppose is an overview of the items that the council at that meeting had asked for and those have been provided as attachments to the staff report, as well as a summary of those pieces of information.

Some technical pieces as well. What I'd like to do is just kind of go through an overview. As I always say, I like to set the table for the discussion. I also have representatives for Habitat here tonight. They're not necessarily here to give a presentation really this is more to get into the weeds of the technical pieces that you had asked for and then obviously we've got our city attorney here to talk through some of the options as it relates to land lease versus sale

And then Mr. Seibert, you may not be aware of this but just from a procedural housekeeping point of view we're gonna lose Councilmember Lange around three o'clock so if there's something you want to cover in your list do that first.

Well my overview is only going to be about four minutes long maybe I'm not gonna go into great detail that was all provided from a technical standpoint and I had provided it to council early on so that you could have an opportunity kind of digest it. So here what So what we have is, so at the March 24th meeting Council requested additional analysis before considering moving forward. The first was property disposition and really what it was is the city attorney did an evaluation kind of earmarking two options either the ground lease which was originally contemplated where the city retains the ownership or a sale to Habitat through a disposition and development agreement which was spelled out in the staff report Both approaches do have their merits and challenges.

A ground lease keeps the property in the city's hands but creates some complications as identified within the staff report with homeowner financing and maintenance enforcement, a sale transfer title But includes a sale transfers title but includes a master affordable housing regulatory agreement that restricts affordability for at least 45 years as the sale is and gives the city enforcement rights either path Will be subject to California surplus land act. I'll turn to the attorney to make sure that that's correct factually, correct?

Yes, so whether we do a lease or whether we were ultimately to dispose of the property either one of those would be subject to the California Surplus Land Act. The property does qualify for exemptions at least at least for sure one possibly two And so instead of going through the full-blown surplus land disposal process, it would be able to go through a truncated process that would have to come back to City Council for a determina—and this is true again under either scenario.

It would come back to Council for a determination that the property is surplus land exempt from And then beyond that, there's a process by which you have to approve the disposal and we send it to... Well, we have to first send the declaration that it's exempt to the Department of Housing and Community Development. And once they provide us with confirmation that they agree that it's exempt, we would be able to move forward with the lease or disposition.

Thank you. Continuing on here, the second piece was local preference. Habitat has agreed to prioritizing homeownership selection for individuals living and working within the city. As you will recall, the ordinance that we have in place that governs and kind of informs the policy that we have really is more for renters than it is for homeownership, but they've agreed to follow through with that policy as well.

And then homeowner protections which is really kind of the CC&R's and homeowner purchase agreements those were included within the packet as well kind of self-explanatory go into pretty detailed pieces of information The last piece was community engagement. I know there was a nod to try to reach out to the Franklin Drive residents and have that conversation. We did have that conversation April 9th. There were about five residents that partook in the Zoom, had a really good, I would say productive conversation. I learned something which I didn't realize that Habitat was actually working or looking to work with the church to use a portion of the church as a potential lay down yard So then that gave me the idea, because I know the community had expressed one of the concerns which was the parking.

Obviously it meets the requirements as it relates to the density bonus through state law but is there potential for more? So that was kind of where I said you know I could have that conversation with the church see what they're open to what they're agreeable to if anything at all So I know Habitat is actively working to set up a meeting when that happens. I look forward to being part of that, to see what comes out of it and maybe even something I can report back here.

I just have one quick question. What is lay down?

Oh, sorry. Sometimes they use these

construction

terms

and I

assume everybody knows what that

means. Yeah, I don't.

So when you start construction you typically don't want all your equipment and materials to be in the area where you're doing the act of construction instead you end up picking another area where you can secure it and use it and it's easily accessible Lay your stuff down

and then there was also the traffic consideration

Yeah, so the last piece the very last piece is the traffic consideration. So I did reach out to Lindy with Public Works With the director and she had provided me a wealth of information as it relates to the stop sign and then really Kind of the pedestrian walkway and then even the red curbing piece. So there's certainly opportunities there She's very supportive of it and believes that even because Montgomery North Montgomery is actually going to be getting some street work this summer It sounds like so there's a possibility of us working that into To that summer work as well. Mm-hmm Anyway, that's it.

In terms of reporting out if there are any questions I know Habitat is here to answer any questions as well.

So then what was being asked for today when I look at the recommendations in the staff report basically we're looking at the traffic piece basically I guess leasing offering or some other solution there and What other, if we were then to go to the leasing option there's some decisions we would have to make. So you're asking us on the details that we asked you to provide them to enable them to go forward? That's what we're waiting on. Correct. Okay, all right now the the time frame you had talked about about Hypothetically if we were to say we're gonna offer them the land for sale Does that mean they had a time restraint where they need start?

So so what I would say on on the land disposition whether we're talking about at least or conveyance You know, right now we are operating under the Memorandum of Understanding between the City and Habitat that contemplates use of a ground lease. So as part of your agenda today you have the decision regarding the entitlements but we also included reference to the land piece in case Council is ready to discuss that today We did provide you with a lot of information. Some of it was new information, so both of those things don't have to happen today. I think council could potentially consider moving forward with approval of the land entitlements and then we can always revisit whether the project would be constructed subject to ground leases or whether it would be subject to a disposition.

I think the project can move forward and so the item that was before you at the council meeting a few weeks ago would have been approval only of the land entitlements. And so if Council moves forward with approval of the land entitlements, we don't have to do anything. We don't have to take any action on the land today.

I just have a couple of questions like with the land. So, I think if we were considering to giving them the land or whatever, I think personally an appraisal is important to see the value of the land and then my other thing would be so if we were to give them the land and then when they were selling these homes, the values of the homes would be higher because it's not just the unit you now have land.

So how much would it bring the purchase price or whatever of the unit up?

So as far as getting an appraisal, I think we recently acquired an appraisal on 503 South Ventura. I think if you provide a direction to staff that's certainly something that the community development director could do and bring back to you. As far as the question regarding how that might affect the purchase price of the homes, I think that's probably a question I would refer to Habitat.

As to whether that would have any impact on the price that a home owner or participant in this project would pay for those units. I don't know if-

Yes, oh zero right no change in the price. Well that's easy

If

we're offering it if we were to as is suggested here as a possibility if we're offered for $1 there There's no price that they have to try to get from the land right in that sale but It does, I guess for me reading your report carefully it seemed to me that it actually simplified the matter really dramatically to offer to the conveyance. That's how it appeared to me. Am I reading that correctly?

I think, so that's a complicated question. And the answer is yes, it does simplify things. We would put together a disposition and development agreement and bring that back to council. It would be subject to council approval. And it would address a number of the issues and concerns related to the affordability requirements and any other conditions That would the city might want to impose on such a conveyance

So

neither of them are as straightforward as if we were just simply conveying a piece of property Yeah,

I mean and I if I can jump in And I've I have a document It's a 70 page document. So I didn't print the whole thing out but I've got a you know important page And it talks about affordability, not just today but extending into the future. So this is the National League of Cities and it's a guide to local governments for community land trust. That's one of our goals and what has occurred to me is that we are in a really great position that most communities trying to incept a land trust.

would be starting at zero, we potentially have the ability to have both this land and that redevelopment money that's been identified as a housing asset to start out with three quarters of a million dollars in five units. But I understand there's reservations from the attorney But what I would like to have the opportunity to do, and I've already talked to Bethany about scheduling this is to work on this entire document with her to explain the concept and get guidance. I'm not asking us to go in that direction today. I am asking us not to go make a decision about selling the land until we fully explore This idea because I think this really is a great opportunity to explore the land trust Opportunity and so what I would ask is as Miss Burgess has indicated that we only address the entitlements today and that the rest of it.

We reserve for a future meeting

Can we hear from Habitat for Humanity about how this would affect you at all, if at all? Like in your ability to proceed immediately. damper on what you need from us right now to move forward.

And please come up if you can, whoever's

gonna... Is my question clear? Yeah. Okay.

And I think and if I could add I guess the question would, part of the question I would have maybe as well. So adding to your question is if the council were to move forward only with consideration of the entitlements does that give you what you need to move forward with the project? Or do you need a decision regarding disposition of the land?

Yeah we need a decision. And partly, the reason why that's important for us is the selection process for families takes a year. And we want to be able to move forward with the full Habitat project at this time. So there's a funding element that's tied to this Even though if we just have entitlements, that only allows us to do a certain amount of work with our architects and our subcontractors.

We want to have the freedom to start moving into final plan check then to get this thing going in a way where we can get shovels on the ground and part of that process is the selection of the families in order for them to accomplish their sweat equity hours they need to be onsite working on the project with us so

I guess the clarifying question, if I may is so when this was presented a few weeks ago it would not have included a disposition of the land. But you would have had, so that's the nuance I'm trying to

understand. Yeah, yeah, yeah. So the reason why that's part of the question before the council is the fact that there are two different build processes whether we have the land as habitat or whether the city owns the land through a project. Those are two different build processes for Habitat. So it's like the Council working through the idea of four versus five units, and the impact on Habitat is significant in that discussion. Some of that is cost, some of that is the designation of a low-income build project Those are all part of the rails that we're working within. So to answer your question, yes, there is an impact and there is a change.

And that's part of the challenge that we've been having for the last six years, this uncertainty as certain elements of the project, not necessarily in the planning space of it but through the other element that drive the habitat program.

I'm asking you to say what you said before. The leased land is an unusual circumstance for Habitat to work in Ventura County

correct? For us who is a build-for-sell Non-tax benefit nonprofit, absolutely. And to be perfectly honest, I've been there seven years, 30, 40 units. We've never built a project that way. We've always had the ability to control the construction, to control the land, to build the CC&Rs, to build the maintenance agreement with some controlling element to the property. What we can and what we do allow or what we like to see is we like long-term agreements that keep the property nonprofit and also low income. For example, Port Wene'mu has a 55 year agreement Which extends out for the term of the project goes long Much longer than the county's requirement and habitats requirement is only 20 years. So there is some there is some justification in your wanting to keep the land You know low income for or its eternity, but again I think the important thing is to understand that we are a build sell and purchase organization There's got to be an incentive for the homeowner To buy the unit and if there has there's no availability for them to have some kind of reward at the end of that journey of Making their payments on time and doing the things that are required to take care of the property That has an impact on the type of buyers.

You'll be able to secure so I It's like the 70 page document, which is complicated. How we build also is complicated as well.

Thank you My inclination right now is would be to proceed with the conveyance of the land and also the traffic recommendations. And the the who they're going to be selling it to based on our recommendations about who comes first in priority that's where my my head.

So are. Don't we need to do public comment before I

didn't see that on

the list no there's no public comment.

We should have

Well, I mean if anybody

has does anybody have in the public that would like to say anything you guys are here just to witness

Okay

Anybody online? Okay

My inclination is the same while I support and I know that we all support a housing trust. I think it's much more complicated like, I don't have a good sense of how a housing trust would actually work in Ojai what that actually means? How it's different, I mean we have very limited stock. Their Ventura has a housing trust. I would love to get their input on how it might work and I do want this project to move forward and I don't have the sense that this is the God-given project to do this, given everything that we know. Although I think there is a god given reason to explore deeply housing trust but I don' feel right now this is the project on which to do after having read the administrative report and Thank you very much.

They're not ready to really take all of that on in any kind of expedited way. So I am in agreement with you, although I am also deeply in agreement that we should be investigating a housing trust.

I agree with that. So we're talking about making a gift and I'm just going to guess based upon the McRae property that we're talking about making a gift of $1 million And we're going to benefit the first set of homeowners. And my perception is that it's going to stop after that because, first of all once you attach the land to the property You lose that, so the land cost ends up really inflating mortgage costs.

And so the model that's been developed and it's fairly new but the model that's being developed and I'd like to be able to talk to the Alishires Land Use Specialist about is that if you keep the land separate, that the purchaser ends up having the benefit of the equity that they gain as property values go up, the housing cost goes up and so their value goes up.

They gain equity but they're not gaining equity on the land, they're gaining equity on the residents And what that does is it creates a segment in the community that can't Afford to be in the position that that Habitat for Humanity is advocating for these are people below that and we're creating an opportunity for a person who would never be able to even You know consider this to to be in on A less valuable piece of property that they can live in for the rest of their lives The other part about it. Is that it? so I'm gonna I'm going to read from this

document. We usually have a timer for comments from council members, so if we can initiate that. OK,

we've already had five minutes.

OK. So I guess what? If we're at I, I'm not timing it, so I don't know, but I would like to make sure that we hear from everybody. So OK, well,

you know, I'll come around to us. OK around if you know, but I don't think I've talked for five minutes.

Well, I talk for one minute and then we'll go on.

Okay, so this document from the League of Cities says that lasting affordability requirements are what set community land trusts apart from more traditional forms of affordable housing developments. CLTs ensure that the homes on their land are affordable not only to the first buyer or renter which is what we're talking about with Habitat for Humanity, but to every subsequent buyer or renter as well. And I want lasting perpetual affordability for this property that we own.

In doing so the CLTs help communities address the growing affordability gap between what people can afford to pay for housing And how much that housing costs. Provide wealth building opportunities for families that otherwise would not be able to own a home, particularly families of low to moderate income and those that are black, indigenous or people of color.

Preserve community control of land, reduce absentee ownership and resist processes of gentrification and displacement. Capture the public's one-time investment in affordable homeownership for the long term benefit of community members over and over again. Weather periods of economic downturn through effective property stewardship and homeowner support. I've probably-

Yeah, well, I guess what I'm saying is for me, I see what you're saying here and I see that you're reading from it. I'm also seeing what our attorney has offered and it's that trusts are not a legal entity in California and that there's a lot of complexity So, I see that this is here but it feels very out

of the loop. I understand that you don't like this idea and that you are really in favor of giving away our assets. I'm hearing what you're saying. I would like the opportunity to speak with this attorney Because she hasn't considered the model that's in this 70-page document.

But let's do a bunch of voices, please. Mr. Whitman? Anybody else?

Well actually I had a question. So what were...I know that you specified some considerations from your perspective of why this wouldn't be a good model but would you mind just articulating some of those?

And articulate them.

I think at the high level, it creates complexity in terms of the documents. There is a cost involved in developing a housing trust and putting together the paperwork that goes with that. Can we do it? Absolutely. We can certainly do it. There are also costs involved for, potentially for the homeowners. It can create challenges in getting traditional financing.

There are also some challenges associated with being effectively a landlord and potential liability associated with ownership of the property. I think The other thing, and of course I'm relying on my real estate expert so she knows this stuff better than I do. But the other aspect of that is that from a strictly real estate standpoint as part of a disposition and development agreement we would have the ability to include conditions on how the property is developed and used. that would be recorded and run with the land, and would be binding not only on habitat but on the future owners of those parcels.

And so I think you can do that through a mechanism other than the city retaining ownership. Again we can do it either way. It doesn't mean that we can't do one or can't do the other I will say that our real estate experts recommendation is that the ground lease is too complicated. But again, it's legally viable and I think either option is something that could be accomplished.

Because I have to say that the argument for keeping the land available for this population of people who otherwise wouldn't have access to ownership in perpetuity, That's a stronger, like I would feel more convicted about that than the paperwork is a lot. Do you know what I'm saying? To me the argument feels weighted in terms of long-term potential

Well, and I was just pulling out the notes that we have on this. The other things that our in-house real estate person identified were challenges associated with maintenance of the property, environmental liability, premises liability, property damage, complications if there You know, a homeowner files bankruptcy and other potential contractual liability. It's also a bit complicated from a landlord-tenant standpoint because if you have a tenant who owns a structure it's not like you would go through the normal unlawful detainer process to remove them from the property.

It is because they own the asset that sits on top of it. I guess I have a question

for Habitat though, which is if we can put conditions on the conveyance of the land to say we're going to push the limit on what we want on affordability. I guess I'm making a kind of an assumption that, well what you said before tell me if i get it right. Wrongly any resale of that property before its term automatically there's some kind of a discount and there's some condition about the sale first off correct?

Yeah, so if a homeowner sells before, say the city says 50 years is the agreement. The new tenant starts at year one and it just keeps rolling forward for that amount of time. And again remember these are tiny homes. We're not talking about a 1600 square foot unit worth $700,000. We're talking about a tiny home that's gonna be worth $80,000 The realistic increase in the value of that property, I mean obviously can be determined by a number of factors but it's not going to increase dramatically over the term of the home ownership process. One other thing I would add is that Habitat International has, typically we have a mandatory 20-year agreement related to the homes we build.

There is some thought that reducing that based on the size of the unit and the cost of the unit. We've got a couple examples in North Carolina, I think, and in Ohio where those are the only two other states that are kind of building tiny homes in the way that we're trying to do here With regards to the length of the agreements that are associated with that. So there could be that process where a homeowner could move out in seven years, say they moved out at one unit every seven years right?

It would just keep turning over so that property would remain low income for the full term of whoever was living there through the 50-year agreement or whenever that unit sells or turns over and homeowners

So my question though is then, thank you for that. Let's say the person completely pays off the mortgage right whatever that term ends up being and then they want to sell it again are they entitled to sell it at market rate?

No in the Habitat model the mortgage payoff does not supersede the 50-year agreement. All that does is reduce the amount of money the homeowner's putting out each

month.

The agreements and the CC&Rs and maintenance agreements are tied to the years associated with the agreements with the city or with Habitat.

I'm just sorry to dwell on that it by giving them having the property, the land included with the unit that it wouldn't cost them money. You have property tax you have all of that stuff where the land is included in that so it would be more for them to qualify for

Yeah, so when you get a mortgage, right? You get a low-income mortgage. You don't factor in 20 years of taxes. That's not part of the mortgage agreement that any of us sign. So whatever the taxes are and also too taxing the County of Ventura They change. So anybody that owns a house knows that, you know your taxes change. That's not a factor when you go to a low-income lender they're not factoring in their factoring in the cost of the house and how much that homeowner has ability to pay that mortgage for that house All the other things that you're, the land and all that is not part of the factor of the cost of the loan that the homeowner is getting related to that individual unit.

So then what happens when they're paying their loan? They can't pay their property tax and then...

Well I mean that's for any of us if we buy a house and something happens in your COVID happens and you can't make your monthly payment, right? Say that as an example that there's a hardship. Then you have to find other ways to figure out to raise that money in our homeowners cases I don't know, we had a number of homeowners call us during COVID. We did not own the mortgages.

We had a partner in the county that helped us to raise additional funds to keep every single homeowner and our portfolio in their unit. And that would be something that as a homeowner, as Darcy and Amy Taylor, we'd do the same thing. We'd have to find a way to make that payment. That's just normal mortgage. Do you

have homeowners reaching out to you to say my property tax or do help? I don't have the money.

We don't have homeowners reaching out for that purpose no. No because think about it our mortgages are Low $900, high $1,300. Right but

to somebody that's a lot.

Well in the pre-qualification process one of the number one questions we ask or what they're qualified to do is we determine their ability to purchase the units that were building at the cost that they're being built. That's part of the pre qualification. Their ability to pay and secure a fair mortgage from a fair lender Part of the Habitat Homeownership process is we contract with a number of nonprofits in the county and all of our homeowners go through a process where they're taught financial literacy and how to manage their budgets, how to pay their bills.

How to do all those kind of things. Because a lot of our homeowners, it's the first time they've ever owned anything of that value. So it isn't just them going to a lender. There's a whole process of the qualifications that gets them prepared to be homeowners. And then the long-term relationship with Habitat, obviously we're kind of looking over the shoulder of each of our homeowners because we don't want—as I said before, I think a number of Councilman meetings ago—we've only had two of our homeowners not be able to move forward with the

process.

In both cases they weren't based on finances it was a divorce and a death in the family. And the children that were involved in the household could not qualify as a low-income buyer. So, the house had to be sold to another family. So there's all the things you're talking about, there are processes in place in the Habitat model to protect the ability to keep the units low income over the term of the agreements.

So we're pretty confident that these units will remain low-income for a very very very very long time.

So, a couple of things strike me. One is that we talked about ownership and generational wealth as opposed to sort of a long-term renter model which it appears that in a housing trust Like I said, I'm completely in support of a housing trust. I think we all are but in this particular instance there's a model and we've hired a builder who has that model and you know time is sort of the essence. There's a lot of complexities to a housing trust that we don't understand.

You know And we also don't know, for that long list of California cities' lists, we don't know which one of those are appropriate for Ojai and which ones aren't appropriate for Ojai. I mean, we are a small town with very little available land. So what do, how do those play with what we have? So basically my questions are just overarchingly. We have something ready to go. We have a model.

We have talked about generational wealth. I think that there are cases where you could say it would be easier Thank you. Thank you very much. Thank you, Mr. Chairman. As I said, it's the generational wealth. It's the habitat model that we talked about ownership. Housing trust is an idea. I think that from what I understand our attorneys, land use attorneys are pretty clear that this is not the strongest position to take.

It's way complex and it's for five units. It's not for 20 units or 25 units, so all of the groundwork that we lay will be for five units. So for the timing and let's move forward and the generational wealth and the complexities around getting loans versus when you don't own the property just doesn't make any sense to me this on hold and not move forward. Habitat has their model, and they've told us pretty clearly that there would be problems if we tried to change that model at this late date for that reason.

Okay so this is from the National Habitat for Humanity. Historically, Habitat focused on a model where homeowners gain full traditional equity. However in recent years the organization has shifted towards promoting lasting affordability to ensure that public and donor investment benefits multiple families over time. Habitat has noted that in the high-cost or gentrified markets, traditional affordable homes often lost to the speculative market after the first sale.

By using the land trust model Where the nonprofit retains ownership of the land and the homeowner owns the structure, Habitat can ensure the homes remain a community asset in perpetuity. So this chapter doesn't like that model. The national Chap, the national organization is promoting the model. I'm still talking.

When you're done, I asked them to come up so finish and then they'll come up. Okay please. So there

are 25 counties in California out of 58. that are working with these community trust models. What our legal counsel considered was not, was only the issue of a land lease and they saw complications with that but they haven't considered what all these different counties are doing And there's a national organization that's promoting this model, and I'm sure they have tons of resources available so that we can adapt.

The city's role in this to what is already being done in other jurisdictions. What I'm asking for is not a decision that we keep the land and not sell it, what I'm asking for is time to work with our attorneys so that they understand this model and if they still say no don't do it, I'm fine with that but I don't think that this issue has been fully vetted and I would like to fully vet this issue before we make a decision