City Council Meeting: May 25, 2006
Agenda Item: 7-F
To: Mayor and City Council
From: Marsha Jones Moutrie, City
Attorney
Subject: Ordinance Amending the Affordable
Housing Production Program
Recommended
Action
In response to a City Council direction, Staff recommends
that the City Council review the
attached ordinance amending Chapter 9.56 of the Municipal Code, the Affordable
Housing Production Program (“AHPP”), to require the onsite or offsite
development of affordable housing units in conjunction with new multifamily
developments of four or more units.
Staff also recommends that the City Council direct staff to modify the proposed
ordinance, including limiting the onsite
requirement to condominium projects, limiting the ordinance’s application to
specified zoning districts, such as multi-family residential zoning districts,
and adjusting the income eligibility threshold for affordable units.
Executive
Summary
Council directed
preparation of the attached ordinance
(Attachment A) which would amend Chapter 9.56 of the Municipal Code to restrict
the circumstances in which an Affordable Housing Fee may be paid and to require
the onsite or offsite development of affordable housing units in conjunction
with new multifamily developments of four or more units, with limited
exceptions. The proposed ordinance
would establish three options for developers:
(1) 20% of the total number of
units in developments of four to fifteen units are affordable to low income
households with this percentage increasing to 25% for developments greater than
fifteen units, or (2) 100% of the units are restricted to moderate income
households, or (3) the affordable units
are constructed offsite from the subject development provided, in part, that
the number of units constructed is twice the number that would have been
constructed onsite. However, based on
legal considerations, staff recommends that the Council not mandate the
production of affordable rental units in this manner and that the Council
consider other modifications to the proposed ordinance as detailed below.
Discussion
On May 10, 2005, staff reported to Council
on its evaluation of the Affordable Housing Production Program and on various
alternatives for updating this program
to help attain the goals of Proposition R. That report included a summary of several
important legal considerations. A copy
of the report is attached as Attachment B.
On
May 17, 2005, the City Council directed staff to prepare for Council
consideration an ordinance amending the Affordable Housing Production Program
(Section 9.56 of the Municipal Code) to require that multifamily developments
satisfy their obligation to contribute to affordable housing by constructing
affordable units within a given development (onsite) or offsite in another
multifamily development. The City
Council direction established the parameters of the proposed ordinance.
A draft ordinance consistent with this
Council direction is attached. It
provides developers of multifamily housing of four or more units with three
options to satisfy their affordable housing obligation under the Affordable
Housing Production Program.
The first option establishes that for
developments of four to fifteen units, 20% of the total units shall be affordable
to low income households, and in developments of 16 units or greater, 25% of the
total units shall be affordable to low income households. “Low Income” is defined as those households
whose income does not exceed 60% of the
The second option permits a developer to
restrict all of the units in a development to moderate income households. “Moderate Income” is defined as those
households whose income does not exceed 100% of the
Finally, the third option allows developers
to satisfy their affordable housing obligation by constructing the affordable
units offsite from the subject development, so long as two conditions are
met. One condition requires that the
offsite units be built within one-quarter mile of the subject development (and
in
In addition to the three options described
above, developers of multifamily housing of two or three units may also elect
to meet their entire obligation by paying an affordable housing fee or by
acquiring land for affordable housing as currently authorized by the Affordable
Housing Production Program.
Alternatives
In considering the proposed ordinance, legal
parameters should be borne in mind. For
example, as explained in the May 10th staff report, the language of
the Costa-Hawkins Rental Housing Act appears to preclude cities from
controlling rents on inclusionary housing [absent a contractual agreement to
the contrary]. Additionally, the state’s
Housing Element Law establishes restrictions.
For instance, state law imposes procedures for amending housing
elements, including requiring review of proposed amendments by the California
Housing and Community Development Department.
Additionally, when housing elements are being adopted or amended, state
law authorizes state scrutiny of local laws and policies which operate as
“constraints” on housing production.
Opponents of the ordinance have urged that it would, if adopted, constitute a de facto amendment of the City’s
Housing Element. As such, they contend
that the City must first formally process a Housing Element amendment and
undertake a constraint analysis as part of that amendment process prior to
adopting the ordinance.
Staff has assessed both the legal constraints and the comments from opponents of the ordinance. Based upon these considerations, staff recommends that the Council consider declining to mandate production of affordable rental units and, instead, limit production mandates to condominium projects. Additionally, Council may wish to consider whether requirements should vary in different areas of the City and whether the income eligibility threshold for affordable units should be adjusted. To aid in Council’s consideration of these options, staff has completed a preliminary assessment of the potential financial impact of on-site affordable units on condominium development in the R2 district based on four illustrative prototypes. (Attachment D). Overall, amending the existing law more selectively will significantly reduce the likelihood of successful challenge to the Council’s action. Staff is prepared to revise the proposed ordinance at the May 25th meeting if Council wishes to pursue any of these alternatives.
Budget/Financial Impact
The amount
of the Affordable Housing Fees collected pursuant to the Affordable Housing
Production Program would likely decrease subsequent to the implementation of
the proposed ordinance.
Prepared by: Marsha Jones Moutrie, City Attorney
Attachments:
C:
Affordability Requirements Table
D: Financial Analysis
of Condominium Prototypes
Ordinance – as amended at 5/25 Council
meeting
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Approved: |
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Forwarded to Council: |
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Marsha
Jones Moutrie City
Attorney |
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P. City Manager |