Agenda - 03-21-1990 - Laserfiche WebLink

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s ' 162 LAND USE AND ENVIRONMENT [18] Fairhaven in case land values were affected by builder percep- tions of marketing difficulties with respect to the sale of market units due to the presence of the low- and moderate-income units. The professor also said that perhaps an additional undetermined amount should be subtracted from the land value of Fairhaven because builders might be disinclined to become involved with the complicated administrative procedures that the ordinance required for the low- and moderate-income units. These regulations require builders to verify the incomes of prospective purchasers of low- and moderate-income units, and hire people to interview prospective buyers so that their posi- tions on waiting lists can be ascertained under the complex rules that Utopia has adopted in the interest of fairness. These rules give priority on the waiting list to certain minority groups, mu- nicipal and county employees, people who work in Utopia but cannot afford to live there, and others in accordance with a fairly complicated weighting system. In addition, the city attorney pointed out that the first inclusionary builders would spend a lot on lawyers' fees because title insurance companies, mortgagors and their attorneys, as well as the attorneys for various govern- ment agencies which insure mortgages, might need to be per- suaded that the deed restrictions and resale controls designed to keep the housing affordable in perpetuity were legal and would not affect their security interests. It has all been worked out in California, the city attorney said, and it can be worked out here but the first few projects will pay high legal fees. Everyone eventually agreed that the owner of Fairhaven, because of regu- latory costs and market perceptions, was not making quite $2 million but he was certainly making $1 million. Controversy Over Builders' Profits One issue caused a great deal of controversy in Utopia and almost delayed passage of the ordinance. The authors of the housing market study Utopia ordered pointed out that the pro- cess of rezoning Fairhaven would create two profit opportunities for the owners of Fairhaven if they were also the builders. Not only would the land appreciate, but the builders would make profits on 400 extra market housing units. The market study stated, for instance, that the two-bedroom inclusionary units, which could be built for only $40,000 without land costs, would have a fair market value of$65,000. Although the study pointed out that this would not be all profit (since the builder would incur \Mt -,ti