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HomeMy WebLinkAboutItem 8.2 - 3074 Update on Housing Legislation Page 1 of 6 STAFF REPORT CITY COUNCIL DATE: February 4, 2020 TO: Honorable Mayor and City Councilmembers FROM: Linda Smith, City Manager SUBJECT: Update on Housing Legislation and Affordable Housing Opportunities Prepared by: John Bakker, City Attorney EXECUTIVE SUMMARY: Staff will provide an update on important housing legislation and on various affordable housing opportunities being pursued. The legislative update includes a discussion of new laws that became effective on January 1, 2020, including: SB 330 (the Housing Crisis Act of 2019), AB 1486 (strengthening the Surplus Lands Act), and AB 1487 (creating the Bay Area Housing Finance Authority). The legislative update also includes an update on pending legislation, including SB 50’s status, and efforts to regulate development impact fees. The legislative update will be followed by a description of various opportunities that Staff is pursuing to facilitate the development of affordable housing, including an opportunity to join a joint powers authority that acquires apartment complexes and converts them to affordable rental housing. STAFF RECOMMENDATION: Receive the report and provide appropriate direction. FINANCIAL IMPACT: None. DESCRIPTION: This report has two parts. The first is a discussion of important new laws and pending legislation related to housing. It is followed by a discussion of opportunities that Staff is pursuing to facilitate the development of affordable housing. Housing Legislation Update 2019 Housing Legislation. One of the key issues in the 2019 legislative session was housing. The year started off with a flurry of bills designed to address the housing crisis. SB 50 garnered a lot of attention, including from the national media. Ultimately, Page 2 of 6 SB 50 failed to make it out of the Senate Committee on Appropriations, and it became a two-year bill (see below). Nonetheless, several important bills were enacted into law and became effective on January 1, 2020; they are summarized below. SB 330, Housing Crisis Act of 2019. The Housing Crisis Act of 2019 (SB 330) declares a statewide housing emergency and suspends certain existing restrictions on housing development projects and expedites the permitting of housing in affected cities and counties. Dublin is among the affected cities to which the Act applies. The law is an attempt by the Legislature to address California’s housing crisis and to facilitate the construction of additional housing units. Below is an explanation of key requirements in SB 330, which in general will remain in effect until January 1, 2025. SB 330 prohibits an “affected” city or county from enacting new, or enforcing existing, policies on land where housing is an allowable use that does any of the following: • Change the land use designation or zoning to a “less intensive use” than what was allowed on January 1, 2018. A “less intensive use” is anything that would limit the intensity of housing allowed, including a reduction in height or density, or increased setback requirements or maximum lot coverage requirements. • Impose a moratorium on housing development, with very limited exceptions. • Enforce design standards established on or after January 1, 2020, that are not objective. • Limit the number of permits for housing that can be issued, such as so -called “growth-control” ordinances. This type of limitation will remain permissible if the limit was first approved by voters prior to January 1, 2005, and the affected county or affected city is located within a county for which at least 50 percent, and a minimum of 550,000 acres, of the county area is agricultural land. The Housing Crisis Act of 2019 also makes a significant change to the Housing Accountability Act (HAA). The HAA currently prohibits an agency from disapproving a housing project or approving the project at a lower density if the project complies with the applicable, objective standards and criteria in place when the project application is determined to be complete, unless certain specific findings can be made. SB 330 amended the HAA to allow developers to lock in the standards and criteria that were in effect at the time of submittal of a simplified “preliminary application.” Finally, in order to streamline the processing of proposed housing development projects, SB 330 prohibits a jurisdiction from holding more than five hearings on a proposed project if the project complies with the applicable, objective standards and criteria in place at the time it is “deemed complete.” Public hearings, workshops or similar meetings held by the planning commission or governing body all count toward the five hearing maximum. AB 1486, Surplus Lands Act Amendments. The Surplus Lands Act requires local agencies to offer surplus lands to agencies for open space, recreation, and affordable Page 3 of 6 housing. AB 1486 strengthens the Act for the purpose of making public land potentially available for affordable housing development. Among other things it: • Expands the agencies subject to the Act. • Broadens the application of the Act to include nearly all “disposals” of real property. • Adds new oversight provisions. The provisions require local agencies to submit reports demonstrating compliance with the Act to the California Department of Housing and Community Development (HCD). If HCD determines that an agency has failed to comply, the Attorney General or third parties may bring lawsuits seeking a penalty of up to 30 percent of the final sales price for the first violation. While AB 1486’s changes are significant, the Surplus Lands Act still does not require an agency to sell property for affordable housing. It merely gives those receiving notices of availability an opportunity to negotiate in good faith with the seller. Ultimately, a local agency can elect to sell the property at its fair market value, even in the face of an affordable housing provider offering to purchase the property for less than its fair market value. AB 1487, Bay Area Housing Finance Authority. AB 1487 implements a suggestion of the CASA Compact. The CASA Compact was the work-product of the Committee to House the Bay Area, which was convened by the Metropolitan Transit Commission (MTC) and the Association of Bay Area Governments (ABAG). AB 1487 creates the Bay Area Housing Finance Authority within the nine -county San Francisco Bay Area to be jointly governed by MTC and ABAG’s Executive Board. With voter approval, the Authority may levy parcel taxes, business license taxes, and special business taxes based on number of employees. A ballot measure authorizing one of the levies can be placed on the ballot of as few as four of the Bay Area counties. The Authority can also levy commercial linkage fees on new commercial development projects “for the purpose of addressing the need for additional housing development necessitated by” commercial development. However, it can only do so if the voters first approve a parcel tax or a general obligation bond. Authority revenue must be used for construction of new affordable housing, affordable housing preservation, tenant protection programs, plann ing and technical assistance, and infrastructure to support housing. Other 2019 legislation of interest. The Legislature passed a number of other housing bills of lesser importance to the City. Among these are: • AB 881 incorporating a number of amendments to the section addressing accessory dwelling units. It requires ministerial approval of detached ADUs that are less than 800 square feet, no taller than 16 feet, and having at least four -foot Page 4 of 6 rear and side yard setbacks. It also prohibits the application of lot coverage requirements, lot size restrictions, and owner-occupancy requirements on ADUs. • AB 1483 requires the posting of “housing development related” information on city and county websites. The information includes things such as a schedu le of fees, an archive of impact fee studies, zoning ordinances that apply to each parcel, and information required of applicants for land use projects. • AB 1482 adds significant tenant projections. The protection includes a cap on rent increases to existing tenants at the consumer price index plus five percent, not to exceed 10 percent, in any 12 -month period. AB 1482 also adopted a statewide just cause eviction requirement (prohibiting landlords from evicting tenants for no reason). 2020 Housing Legislation. 2020 is shaping up to be another year in which housing remains high on the list of agenda items for the Legislature. As noted above, SB 50, which would override City land use regulations near transit stops and in “jobs rich” areas, faces a January 31 deadline to pass out of the Senate. The bill’s author, Senator Weiner, has made changes in an effort to eliminate opposition, including adding a provision that delays implementation for two years and providing a mechanism for local agencies to satisfy the requirements with an alternative land use plan that offers the same level housing development potential as SB 50 would. As of the date of this report, the bill is poised to receive a Senate floor vote before the January 31 deadline. Development impact fees are expected to be a focus of legislative attention. Toward the end of last year’s legislative session, HCD delivered a report requested by the Legislature that addressed the effect that development impact fees have on housing development in California. The report led Assembly Member Grayson to amend AB 1484 in a manner that would impose significant new requirements on development impact fees. It did not move in the last session, but Staff understands that either AB 1484 or another bill is likely to address some of the issues raised by the HCD report. Such legislation could have a significant impact on the City’s development fee programs—the Eastern Dublin Traffic Impact Fee, the Downtown Traffic Impact Fee, and the Public Facilities Fee being the most prominent—and, therefore, Staff is monitoring developments closely. It is also notable that ABAG has begun the 2022 -2030 Regional Housing Needs Allocation (RHNA) process. Staff will provide a report to the City Council on the status of the RHNA process and Housing Element Update at its February 18, 2020 meeting. Affordable Housing Opportunities Consistent with prior direction from the City Council, Staff is pursuing various opportunities for affordable housing. Page 5 of 6 CalCHA Middle-Income Rental Program. Staff has been presented with an option for the City Council’s consideration that provides affordable housing targeted at moderate and middle-income households earning between 81-120 percent of the area median income (AMI). There is currently limited Federal, State or local subsidies or programs to produce or preserve below market rate rental housing for moderate and middle -income households. The program is managed by a joint powers authority called the California Community Housing Agency (CalCHA). CalCHA was formed by Kings County and the Housing Authority of Kings County. Additional cities, counties and other local government entities may join CalCHA if they wish to participate in CalCHA’s programs. Under the program, CalCHA issues revenue bonds to acquire either new or existing apartment complexes. It then coverts the projects into income - and rent-restrict units for moderate- and middle-income households. CalCHA has used the program to acquire rental projects in Santa Rosa and in Fairfield. The revenue bonds are issued as limited obligations of CalCHA and not of the participating members and are payable solely out of the revenues and receipts derived from the project being financed. In addition, CalCHA grants the participating jurisdictions an option to purchase the property at an amount equal to the remaining debt. To participate in this new program, the City would need to become a member of the CalCHA. The City’s membership would be limited solely for the financing or refinancing of specific projects but would not create any liability for the City. If the City Council is interested in considering the CalCHA program further, Staff can return at a future meeting for the City Council to consider joining CalCHA. Staff would analyze the program in more detail at that time. Staff understands that it can be advantageous to join CalCHA before an acquisition is being pursued because it allows CalCHA to commit to sellers that it can close a transaction quickly. City Efforts to Facilitate Development of Affordable Housing. The City has funding available for affordable housing projects. The City is eligible to receive nearly $8,000,000 in revenue from the County of Alameda Measure A -1 Affordable Housing Bond. In addition, the City has approximately $13,276,800 available in its affordable housing fund, derived from in-lieu fee revenue under the Inclusionary Zoning Regulations and revenue from the commercial linkage fee. Staff is in the midst of identifying projects on which to deploy those resources. Identifying available, suitable land is the first step, and Staff is attempting to find sites that will allow it to further leverage the City’s affordable housing monies. It is expected that the City will partner with a non-profit affordable housing developer to pursue any project. Three sites are under active consideration for potential affordable housing projects. The first is an approximately 1.33-acre parcel at the end of Regional Street in Downtown that is near the West Dublin/Pleasanton BART station. The developer of the adjacent mixed-use St. Patrick Way project is required to dedicate that site to the City pursuant Page 6 of 6 the approved Community Benefit Agreement. The second site is an Alameda County Surplus Property Authority-owned site in the Transit Center adjacent to the Dublin/Pleasanton BART station. The County is developing a second BART garage on a portion of the property, and the remainder is suitable for affordable housing. The third opportunity is associated with Avesta’s proposed independent senior housing and assisted living project at 5751 Arnold Road. In accordance with the City Council’s direction when it initiated a General Plan Amendment study for that project, Staff is in the midst of discussions with the Developer to identify a potential site for affordable housing on that property. Finally, Staff also anticipates issuing a notice of funding availability seeking proposals from affordable housing developers. Proposers may be able to identify other sites within the City that would be suitable for affordable housing projects. STRATEGIC PLAN INITIATIVE: Strategy 3: Pursue efforts to help strengthen the City’s infrastructure and technology. Strategic Objective 3d: Develop a special needs affordable housing project. NOTICING REQUIREMENTS/PUBLIC OUTREACH: None. ATTACHMENTS: None.