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HomeMy WebLinkAbout01-03-1996 Item 9.1 Housing Program & Inclusionary Zoning Ord it • CITY OF DUBLIN PLANNING COMMISSION AGENDA STATEMENT/STAFF REPORT Study Session Date: January 3, 1996 TO: Planning Commission FROM: Planning Staff if CA PREPARED BY: Tasha Huston, Associate Planner JO SUBJECT: City of Dublin Housing Program & Inclusionary Zoning Ordinance GENERAL INFORMATION PROJECT: Implementation of the City of Dublin Housing Program by adopting an Inclusionary Zoning Ordinance APPLICANT: City of Dublin LOCATION: City-wide APPLICABLE REGULATIONS ENVIRONMENTAL REVIEW: A study session is considered a categorical exemption pursuant to the California Environmental Quality Act (CEQA), State CEQA Guidelines. The Inclusionary Zoning Ordinance will be subject to environmental review, and a Negative Declaration will likely be prepared. NOTIFICATION: Public Notices of the January 3, 1996 Planning Commission Study Session were posted in public buildings, published in the local newspaper, and mailed to interested parties. BACKGROUND California State Law requires the City to adopt a Housing Element as part of its General Plan, which includes goals, objectives, and policies for the provision of housing in the community. The Housing Element must include a program intended to provide for the housing needs of all economic segments of the community. The Dublin General Plan establishes a guiding policy for Housing Availability which requires the City to "Encourage housing of varied types, sizes and prices to meet current and future needs of all Dublin residents". In further defining this guiding policy, the Dublin Housing Element identifies various programs intended to implement the housing goals of the City, including the 1 adoption of an Inclusionary Housing (Zoning) Ordinance. The Eastern Dublin Specific Plan also directs that the City shall adopt an Inclusionary Housing program. The Inclusionary Zoning Ordinance is proposed to help achieve one of the City's housing element policy objectives, which reads: "Require the development of housing for lower income households" (Dublin Housing Element, Strategy I.B, Page 47). In August of 1991, the Planning Commission reviewed a draft Inclusionary Housing (Zoning) Ordinance proposed for adoption by the City. The Planning Commission requested changes to the Ordinance and the revised Ordinance was returned for review at the November 4, 1991 meeting. After reviewing the draft Ordinance's provisions in detail, the Commission decided to continue the discussion of the ordinance to an undetermined date, in order to investigate various options for the provisions of the program. However, due to the emergence of other higher priority projects and issues, work on the ordinance was delayed until 1995. Staff has conducted a substantial amount of research during the past few months, and as a result of this research and input, has prepared the following report. The background information and technical data contained in this report will provide the tools for guiding an affordable housing discussion for the upcoming Study Session. The purpose of this Study Session is to begin with a review of Dublin's affordable housing goals and strategies, especially as they relate to the Inclusionary Zoning Ordinance. A major section of this report addresses the City's established policies for adoption of the Ordinance. The study session will then include a review of potential guiding principles and issues related to developing the Inclusionary program. The Staff will seek input and guidance from the Planning Commission regarding these issues and principles so that an Inclusionary Zoning Ordinance can be drafted which meets the needs and desires of the City. A similar study session will also be held before the City Council. REPORT DUBLIN'S HOUSING NEED AND ACCOMPLISHMENTS To help understand why the goals, objectives, and strategies of the Housing Element were formulated in the first place, an assessment of the City's existing housing units and housing needs is useful. The housing needs assessment begins with a look at housing costs compared to City residents' incomes. The State Department of Housing and Community Development publishes an annual report listing the income categories for each County. Income categories are defined in terms of ranges which represent a certain percentage of the area median income. For example, for a family income to be considered "Very Low", it must be at or below 50% of the County median income. A family income which is considered "Low" includes those households which fall between 51% and 80% of the County median income. The following chart lists the annual income for various types of households, and is based upon the Alameda County Median Income of$55,400 for a family of 4: 2 FAMILY SIZE INCOME CATEGORY 2 3 4 5 Very Low Income Families $ 22,150 $ 24,950 $ 27,700 $ 29,900 (50%of Median Income and below) Low Income Families $ 35,450 $ 39,920 $ 44,320 $ 47,840 (51%-80%of Median Income) Moderate Income Families $ 53,160 $ 59,880 $ 66,480 $ 71,760 (81%-120%of Median Income) NOTE: The income figures shown in the chart represent the maximum end of the income range. The above information on annual income may be better understood by comparing these income categories to some typical job descriptions. Below is a table listing the annual salaries of various typical jobs, arranged according to the income category based upon a family of four (assuming one worker per household). TYPICAL SALARIES Very Low Income for a family of four ($ 27,700 or less) Stock Clerk (non-union) $14,000 Food Preparation Worker (union) $15,000 Cashier (union) $16,700 Watch Guard (in-house) $19,500 Food Service Manager $21,400 Secretary (City of Dublin) $25,584 Licensed Vocational Nurse $25,000 Bookkeeper (union) $25,700 Plumber (non-union) $27,400 Truck Driver-Light (union) $27,500 Low Income for a family of four ($ 27,701-$44,319) Electrical Technician $28,100 Paralegal $28,300 Physical Therapist Assistant $29,400 School Teacher $30,900 Surgical Technician $32,000 Truck Driver- Heavy (union) $33,900 Bus and Truck Mechanic (union) $34,000 Machinist (union) $36,300 Firefighter $37,500 Chemical Technician $41,200 Police Officer $42,300 3 Moderate Income for a family of four ($44,320-66,480) Carpenter (union) $46,100 Plumber (union) $46,300 Computer Programmer $47,700 Heating, A/C Mechanic (union) $60,500 Professional Administrator $63,000 As illustrated above, household income can fall below the Alameda County Median Income, into Lower Income categories even with highly skilled positions. The income category information above is useful in determining housing affordability by translating income into the monthly housing payment each household can afford, as follows: AFFORDABLE MONTHLY HOUSING COST (based upon 30%of the annual income, distributed over 12 months) FAMILY SIZE INCOME CATEGORY 2 3 4 5 Very Low $554 $623 $693 $748 (50%of Median Income and below) Low $886 $998 $1,108 $1,196 (51%-80%of Median Income) Moderate $1,329 $1,496 $1,662 $1,794 (81%-120%of Median Income) NOTE: The affordable Monthly Housing Cost figures above are based upon the maximum income figures for each category. To assess the need for affordable housing in the community, the Association of Bay Area Governments (ABAG) compares the number of existing housing units in the region to the number needed to provide affordable housing at all income levels. ABAG then determines the number of units which should be built in each jurisdiction in order to meet its "fair share" of the housing need. ABAG developed the following goals for housing unit development in the City of Dublin for the years 1990-1995: 4 CITY OF DUBLIN FAIR SHARE GOALS Based Upon ABAG PROJECTED REGIONAL HOUSING NEEDS* By Income Category CATEGORY TOTAL NEEDED 1988-1995 PERCENTAGE Very Low 678 20% Low 475 14% Moderate 780 23% Above Moderate 1,458 43% TOTAL 3,391 100% * ABAG's 1989 Housing Needs Determination report Due to a variety of factors, including a sagging housing market and limited land supply in the City, housing development in Dublin has not achieved the goals set by ABAG. The following table lists housing production in the City as it compares to the City's allocated "need": CITY OF DUBLIN HOUSING PRODUCTION Compared to ABAG REGIONAL FAIR SHARE GOALS* By Income Category CATEGORY UNITS NEEDED UNITS PRODUCED PRODUCTION 1988-1995 1988-1995 SURPLUS/(DEFICIT) Very Low 678 0 (678) Low 475 46 (429) Moderate 780 927 147 Above Moderate 1,458 730 (728) TOTAL 3,391 1,703 Surplus= 147 (Moderate Category) Deficit= 1835 (Very Low, Low, and Above Moderate Categories) * ABAG's 1989 Housing Needs Determination In order to help address the shortage of affordable housing, the City has developed a housing program as part of its Housing Element, which includes several strategies to increase affordable housing production. 5 DUBLIN'S HOUSING STRATEGY The purpose of an Inclusionary Zoning Ordinance is to utilize a regulatory approach in implementing the City's housing goals. The Ordinance, which would be a zoning regulation, would require that affordable housing units be provided as part of any new development. It is important to recognize that this use of the City's police power to regulate land uses by zoning is just one aspect of the City's overall housing strategy. Other elements of the strategy include administering additional regulatory programs, such as the City's Density Bonus Ordinance and its Rental Availability Ordinance, as well as providing ongoing City support of existing programs such as the Federally assisted housing complexes and the Community Development Block Grant (CDBG) Housing Rehabilitation programs. The purpose of the Density Bonus Ordinance is to provide incentives for new development projects to provide housing units which are affordable to very low and lower income households or are designated for senior citizens. Projects which meet the affordability criteria qualify for a density bonus, and may be considered for other concessions including a reduction in site development and design standards, modifications of zoning requirements such as reduced setbacks or square footage requirements, reduced parking requirements, mixed use zoning, and other incentives intended to reduce developer costs. The purpose of the Rental Availability Ordinance is to provide units which are maintained as rentals and available to all economic sectors. Although it is not required that the rental units be affordable specifically to lower income households, it may achieve this result by virtue of the fact that average monthly rents in this area typically are affordable to moderate income households. The ordinance also allows developers the flexibility to pay housing fees in lieu of providing the rental units. The fees would be placed into an affordable housing fund, and used to provide rental housing in the City. The Rental Availability Ordinance has helped ensure that units remained available for rent at the Dublin Meadows development project. The Donlon Canyon development, currently under construction by Kaufman and Broad, is also subject to the requirements of this ordinance. Donlon Canyon will either make a number of its units available for rent for at least 5 years, or will contribute funds for the City to use toward providing rental housing. The City participates in the Federal Community Development Block Grant (CDBG) program which is administered for the City by the Alameda County Planning Department. The CDBG programs include providing Housing Rehabilitation assistance in the form of grants and loans to qualified property owners for housing repairs. The program also provides assistance and counseling for tenants with affordable housing issues such as discrimination. Additionally, the City may apply for funds for various types of affordable housing projects such as new construction, acquisition, rehabilitation, and rental assistance through the Alameda County HOME consortium. The CDBG Housing Rehabilitation program has assisted several homeowners at lower income levels with loans and grants for housing rehabilitation over the past several years since its inception. 6 INCLUSIONARY ZONING ORDINANCE An Inclusionary Zoning Ordinance would require that developers provide a minimum percentage of affordable housing units as part of all new residential developments of 20 or more units. Alternative ways of meeting the requirements, such as paying a fee in lieu of constructing the units, could also be considered. One of the characteristics of an Inclusionary program is that it would provide affordable housing that is dispersed throughout the community. As mentioned earlier, the Dublin Housing Element identifies various programs intended to implement the housing goals of the City, including the adoption of an Inclusionary Zoning Ordinance. Strategy 1.B of the Housing Element reads as follows: LB. Adopt an inclusionary zoning ordinance requiring a minimum percentage (e.g. 10%) of low and moderate income housing in new developments with 20 or more units. Such an ordinance could include: - income-eligibility criteria for defining affordability; - pricing criteria for affordable units; - restrictions on resale and re-rental of affordable units; - provisions for in-lieu fees; - other provisions regarding on-site or off-site construction requirements and transfer of excess affordable housing credits; - time limit within which any in-lieu fees must be spent; - incentives such as fee waivers, priority processing, and reduced site design standards. Any in lieu fees collected under the program will go into an exclusive fund to be spent directly on creating new affordable housing opportunities in Dublin (i.e, fees could be paid to the City in lieu of the direct provision of affordable units). Such in-lieu fees usually are required to be spent within a limited time frame (e.g., three years) and could be used for landbank, rent writedowns, etc. Policy Objective: Require the development of lower income housing Quantified Objective: 190 units (affordable to low and very low income households) Actions to be Undertaken: Adopt an inclusionary ordinance Financing: Minor administrative cost Implementation: Planning Department, Planning Commission, and City Council Time Frame: 1991 (adopt ordinance) The Eastern Dublin Specific Plan also directs that the City shall encourage affordable housing, and adopt an Inclusionary program. The policies of the Specific Plan related to the Inclusionary Zoning Ordinance read as follows: Policy 4-7: Encourage the development of affordable housing throughout eastern Dublin, and avoid the concentration of such housing in any one area. Policy 4-8: Ensure that projects developed in the plan area provide affordable housing in accordance with the City's Housing Element, the Inclusionary Housing Ordinance, the Density Bonus Ordinance, and the Rental Availability Ordinance. 7 • Policy 4-9: Affordable housing in eastern Dublin shall include both ownership and rental units and a mix of single family and multi-family units. Policy 4-10: Developers shall include affordable housing units within their developments pursuant to City housing ordinances. The Action Program of the Eastern Dublin Specific Plan related to the Inclusionary Zoning Ordinance and Housing Affordability reads as follows: Program 4F: Develop an inclusionary housing program which requires a minimum percentage of all approved units to be affordable to very low, low, and moderate-income households. Program 4G: Explore the possibility of establishing an in-lieu fee to support the development of below-market rate housing. Program 4H: Develop a monitoring program that will track residential growth in Dublin in terms of unit type and price categories. Such a program will provide City decision-makers with data necessary to make informed decisions relating to City housing goals and new development. Program 41: Develop a specific numeric goal for percentage of affordable units in eastern Dublin which should be ownership units, as opposed to rental units. INCLUSIONARY HOUSING GUIDING PRINCIPLES The above policies include some elements which dictate specific requirements for the Inclusionary Zoning Ordinance, and others which allow some flexibility. For example, it is clear from the Housing Element, Strategy 1.B, that Dublin's Inclusionary Zoning Ordinance would apply to development projects with a minimum size of 20 housing units. There is no flexibility in this requirement unless the City wishes to amend the Housing Element. However, for those policies which allow flexibility, the City will need to make decisions in designing the Inclusionary Zoning Ordinance. Developing guiding principles which define some of the more detailed objectives of the program would help with making these decisions. The guiding principles should be based upon the consensus beliefs of the City decision makers, and reflect objectives developed after discussing the issues surrounding adoption of an Inclusionary Ordinance. The City of Fremont recently proposed a list of guiding principles for its "Below Market Rate" or BMR housing program. In Fremont's example, the BMR program is structured essentially the same way as an Inclusionary Zoning Program. The following guiding principles, which are based upon the Fremont list, may be considered for Dublin's program. These examples will be explained by the City's housing consultants at the study session. 1. An Inclusionary program should be targeted as much as possible to those in the greatest need of housing. 2. The economic effects of an Inclusionary program on market rate housing development should not be disproportionate to the program's benefit. 3. The required percentage of Inclusionary Units and the target income levels must be considered together, as there is a trade-off between them. 8 4. An Inclusionary program should have an effective threshold number of units (minimum project size), exempting small developments which produce less than this threshold from production requirements of the program. 5. Inclusionary units should have permanent or long-term affordability restrictions in order to provide benefits to as many households as possible for as long as possible. 6. In-lieu fees should be considered for at least part of an Inclusionary program, and if adopted, fee levels should take into account the amount necessary to fund an Inclusionary unit. 7. The prices of Inclusionary ownership units should be significantly below those of market rate units in order to attract ownership participation. 8. The prices and rents of Inclusionary units should be significantly below those of market rate units in order to provide a large enough benefit to justify the regulatory effort involved. 9. Requirements for Inclusionary units should be based on the allowable density of development sites rather than densities proposed for particular projects. Dublin's development of an Inclusionary Zoning Ordinance may include the establishment of a set of guiding principles, with which the Ordinance would be consistent. The principles may be established in advance, or, as mentioned above, may evolve as the discussion of more detailed housing issues occurs. INCLUSIONARY HOUSING ISSUES The following list of issues will need to be considered in the development of the Inclusionary Zoning Ordinance. These issues relate to aspects of the Ordinance which have not been specified by the City's Housing Element or Specific Plan, and therefore the City has flexibility in these areas. While it is not expected that decisions on all of these issues will be made at this point in the process, an explanation of the options available, including a discussion of their impacts and examples from surrounding cities, is planned for the Study Session. I. REGULATORY REQUIREMENTS • Minimum project size - 20 units or more • Affordability percentage - for example, 10% • Targeted income group -very low, low and moderate (use ABAG targets); Breakdown - %of each group • Product type requirements (ie: renter and owner subject to same requirements?) • How to set rents/sales prices for Inclusionary units • Resale Restrictions • Term of affordability - 30 years to permanent II. OPTIONS 9 . . . • Allow obligation to be provided off site • In lieu fees-calculation • Use of in lieu fees • Credit for providing more than threshold number of units or excess units • Incentives (fee waivers, priority processing, reduced site design standards, etc.) RECOMMENDATIONS: FORMAT: 1) Commission Chair opens Study Session 2) Staff(Tasha Huston) provides background and describes scope and purpose of meeting. 3) Consultants (Christine Gouig and Libby Seifel) present overview of Guiding Principles and Issues 4) Commission questions Staff, Consultants and the Public 5) Discussion by Commission members and possible consensus on Guiding Principles 6) Staff summarizes Commission's guidance on principles and on Inclusionary Program 7) Staff summarizes next steps in process 8) Commission Chair Zika adjourns Study Session ACTION: Staff recommends that the Planning Commission consider the information presented and provide the staff with guidance on the recommended Guiding Principles and Issues for the Inclusionary Zoning Ordinance. 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