STUDY STUDY SESSION MEMORANDUM 3.1
TO: Mayor and Town Council September 8, 2026
SUBJECT: Follow up on use of the Town’ s Low and Moderate Income Housing Fund to assist with low-income apartment projects
BACKGROUND
At the Town Council’ s study session of April 14, 2026, Town staff presented a potential use of the Town’ s Low and Moderate Housing Fund to assist income restricted apartment projects in Town with the transition to increase LLAD assessments for all apartment projects (see attached report). During the meeting, the Council directed staff to pursue a different approach with Armony Development, the developer of the 44-unit apartment project on Camino Ramon. The suggestion was to explore providing funding to Armony in exchange for restricting one or two additional units to a lower income bracket ( i.e., very low instead of low).
DISCUSSION
Town staff has had several conversations with Armony about the Council’ s preferred option. Unfortunately, that option will not work. Through the different funding sources being used for the project, the number of low and very low income units is already set and cannot be altered.
Given this, there would appear to be two options should the Council wish to assist with the economics of the project. One would be to provide some level of funding to the project without the additional income restrictions. Given changes in cost of construction and unanticipated increases in utility connection fees ( as well as the LLAD increase) Armony has faced unexpected costs while still providing 44-units of low and very low income units, units which are hard to achieve. The second option would be the original staff proposal of a fund to help offset the increase in LLAD assessments.
Use of the Housing Fund for either options would be consistent with Policy 6.1.B in the 2023-31 Housing Element. The current fund balance in the Housing Fund is approximately $ 2,100,000.
LLAD Rates for Low-Income Units 2 September 8, 2026
RECOMMENDATION
Consider the merits of providing some form of financial assistance to the Armony project.
If the Town Council is supportive of such support, the item would be placed on a future Town Council agenda for action.
Prepared by:
Robert B. Ewing
City Attorney
Attachment: 4/ 14/ 26 staff report
STUDY STUDY SESSION MEMORANDUM 3.2
TO: Mayor and Town Council April 14, 2026
SUBJECT: Consider use of the Town’ s Low and Moderate Income Housing Fund to assist with LLAD payments for low-income apartment projects
BACKGROUND
In 2025, the Town’ s property owners approved the creation of Landscaping and Lighting Assessment District No. 2025- 1 (“ LLAD 2025- 1”), replacing LLAD 1983- 1. The new LLAD includes an updated assessment methodology which conforms to current standards for the spread of benefit provided by the District. One of the most significant changes to methodology involved for-rent apartments. Under the methodology used in LLAD 1983-1, multi-family rental units were assessed based on the acreage of the property, not the number of units. This resulted in very low assessment rates and created an inequity compared to multi-family for sale units such as condominiums. Under the new methodology, multi-family rentals are assessed at 0.67 EDUs ( equivalent dwelling units) per unit on the property ( for comparison, condominiums are assessed at 0.75 EDUs).
Subsequent to property owner approval of LLAD No. 2025-1, the Town was contacted by The Armony Company, the developer of the new 44-unit low-income apartment project at the Borel property on Camino Ramon. They expressed the concern that the extent of the increase in their assessment created a budgetary problem for them that would be difficult to pass along to tenants given the income restrictions. To illustrate the financial implications, under LLAD 1983- 1, the total assessment for the 44 units would have been 758, while under LLAD 2025-1, the rate for the first year would have been $8,182 (as the project is not yet occupied, the full impact has not been realized). Armony provided the attached memo outlining the financial impact of the new rates.
Understanding the impact this increase can have on low-income housing, Town staff agreed to look into options, which are presented here.
DISCUSSION
The original suggestion from Armony was to have a different assessment rate for lowincome rental housing. While there is a process for this type of adjustment in a Mello Roos district, it does not work for assessments. As we discussed last year regarding the LLAD Rates for Low-Income Units 2 April 14, 2026
senior exemption previously utilized in LLAD No. 1983-1, assessments are based on the benefit provided to the property, not who currently owns or lives at the property. In discussions with our District Engineer, we do not believe it is possible to justify a lower assessment because the property receives the same benefits as any other multi-family apartment building.
The second option Town staff has identified is to use some of Town’ s Low and Moderate Income Housing Fund (the “ Housing Fund”) to partially subsidize this rate increase for a period of time. The Housing Fund is a restricted fund that must be spent to assist with the provision of low-income housing in Town. Use of the fund for this type of purpose is also consistent with Policy 6.1.B in the 2023- 31 Housing Element. The current fund balance in the Housing Fund is approximately $ 2,100,000.
Town staff proposes use of the Housing Fund for this purpose with the following parameters:
The Town would set aside $ 200,000 from the Housing Fund for the purpose of helping low-income rental projects make the transition into the new LLAD rates.
This dollar amount would still leave sufficient funds in assist in funding for the future low-income project at 510 La Gonda Way.
The only projects eligible would be those that are 100% low income. Currently this would include the Armony project as well as the BRIDGE Housing project on Laurel Drive ( their assessment went from $ 847 to $13,818). If funds were still available, the future low-income project at 510 La Gonda would also be eligible.
Owners of qualifying projects would be eligible for reimbursement of 50% of the LLAD assessment paid after providing proof of payment.
RECOMMENDATION
If the Town Council is supportive of this concept, a formal resolution could be brought forward to lay out the formal program and appropriate the funds from the Housing Fund.
Prepared by:
Robert B. Ewing
City Attorney