Rancho Palos Verdes City Council
   

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PLANNING, BUILDING AND CODE ENFORCEMENT

DATE: MAY 20, 2003

SUBJECT: EXTENDING THE IN-LIEU AFFORDABLE HOUSING FUND PROGRAM FOR AN ADDITIONAL FIVE YEARS

Staff Coordinator: Gregory Pfost, AICP, Deputy Planning Director

RECOMMENDATION

Adopt Resolution No. 2003-__, making certain findings to extend the Affordable Housing In-lieu Fee Fund and retain the fees that were deposited into the fund for an additional five (5) years.

BACKGROUND

With the adoption of the revised Development Code in May 1997, the City established several affordable housing programs. One of these, contained in Section 17.11.140, has provisions for the establishment of an in-lieu affordable housing fee to be applied to new development projects in lieu of constructing affordable housing units within the project. Further, on June 3, 1997, the City Council adopted Resolution No. 97-48 establishing the appropriate fee that would be charged to development projects in-lieu of providing affordable housing.

Over the past five years, in lieu of providing affordable housing units, the City has collected $256,683 from the development of the Seabreeze Tract and $596,494 from the development of the Oceanfront Estates Tract. Including interest, the estimated June 30, 2003 fund balance in the City's In-lieu Affordable Housing Fund Program will be $1,005,345

Government Code Section 66001 requires that for the fifth fiscal year following the first deposit into the In-lieu Affordable Housing Program Fund, and every five years thereafter, the City shall make certain findings with respect to that portion of the account or fund remaining unexpended, whether committed or uncommitted. Since the City obtained funds from the Seabreeze project on June 12, 1998, the City must make the necessary findings to extend the deadline by June 12, 2003. If the City does not adopt these findings then the City shall be required to return the funds collected in 1998 from the Seabreeze Tract back to the developer. As such, the purpose of this report is to request that the City Council extend the use of the In-lieu Affordable Housing Fund Program.

DISCUSSION

At this time, the City has not yet adopted a specific program to expend the in-lieu affordable housing funds. Unlike the Redevelopment Agency's 20% affordable housing set-aside funds, there are no requirements on what type of affordable housing program the in-lieu funds can be spent on, nor the total amount of funds the City can maintain in its In-lieu Affordable Housing Fund Program. For example, the funds can be used on: land acquisition for a future affordable housing site; building acquisition to purchase a building reserved for affordable housing; on-site or off-site improvements associated with the development of affordable housing; building rehabilitation for persons of low and moderate income; rental subsidy where the funds would be used to make up the difference between what a low or moderate income family could afford and the actual rental rate; and loans that could be used in a first time homebuyers program. In fact, the City's General Plan Housing Element identifies the use of the In-lieu Affordable Housing funds for a variety of programs, including the development of affordable housing units and providing rental assistance to very low, low and moderate-income families.

As the Council is aware, since August 1999, the Redevelopment Agency (RDA) has been working with developers in regards to providing affordable housing units on a vacant parcel located on the northwest corner of Crestridge Road and Crenshaw Boulevard. Currently, Standard Pacific submitted an application for a 109-unit condominium project for seniors that would involve development on the RDA owned parcel. Although Standard Pacific is required to provide affordable housing units as part of the project, the City could also contribute some of its in-lieu funds to purchase additional affordable units within the project.

Although the City has taken initial steps, no final decisions have been made as to exactly what affordable housing program the funds will be used for. However, over the next five years, Staff believes that the City Council will have the opportunity to determine whether these funds should be spent towards purchasing additional affordable units in the Standard Pacific project (if that project is approved), or in other programs.

It is important to note that the Government Code allows for and requires a review of the funds every 5 years from the initial date that the first funds were submitted. Hence, if this extension is granted, and the funds have not been spent in the next 5 years, City Council review and approval of another extension will be required by June 12, 2008.

CONCLUSION

It is important for the City to maintain these funds for the provision of affordable units as obligated through the acceptance of the funds, and implementation of the Development Code and General Plan. If the City does not extend the use of these funds for an additional five years, then the funds obtained from the Seabreeze Tract would be returned back to the developer. As such, based upon the information presented in this report, Staff recommends that the City Council adopt the attached Resolution, extending the In-lieu Affordable Housing Fund Program for an additional five years.

FISCAL IMPACT

If the Council elects not to extend the Affordable Housing In-lieu Fund Program, then the funds submitted from the Seabreeze Tract plus any interest accrued (total of approximately $302,508), would be refunded back to the developer, and the remaining funds that were contributed to the City by the Oceanfront Estates Tract would be evaluated within 5 years of its initial deposit (by March 3, 2005).

Respectfully submitted:
Joel Rojas, AICP
Director of Planning, Building and Code Enforcement

Reviewed,
Les Evans
City Manager

ATTACHMENT:

Resolution No. 2003-__

RESOLUTION NO. 2003-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES MAKING CERTAIN FINDINGS TO EXTEND THE AFFORDABLE HOUSING IN-LIEU FEE FUND AND RETAIN THE FEES THAT WERE DEPOSITED INTO THE FUND FOR AN ADDITIONAL FIVE (5) YEARS

WHEREAS, the City of Rancho Palos Verdes' General Plan Housing Element includes goals, policies and programs to address the housing needs of low and moderate income families in the City; and

WHEREAS, on March 18, 1997, the City Council adopted Ordinance No. 320, which amended Titles 16 and 17 of the City of Rancho Palos Verdes Municipal Code, including Section 17.11.050, to allow in-lieu fees to be provided by developers of certain housing projects within the City as an alternative to constructing affordable housing units required pursuant to Sections 17.11.040 or 17.11.030 of that Chapter; and

WHEREAS, on June 3, 1997, the City Council adopted Resolution No. 97-48, which adopted an affordable housing in-lieu fee and associated administrative fee to be applied towards those projects that are permitted to provide a fee in-lieu of providing affordable housing; and

WHEREAS, on June 12, 1998, the developers of the Seabreeze Residential Tract submitted a fee in lieu of providing affordable housing within their development, and on March 3, 2000, the developers of the Oceanfront Estates Residential Tract submitted a fee in lieu of providing affordable housing within their development; and

WHEREAS, Government Code Section 66001 requires that for the fifth fiscal year following the first deposit into the account or fund, and every five years thereafter, the local agency shall make certain findings with respect to that portion of the account or fund remaining unexpended, whether committed or uncommitted; and

WHEREAS, it has been almost five years since the first deposit was submitted into the fund by the Seabreeze tract; and

WHEREAS, as of May 20, 2003, the funds submitted by the developers of the Seabreeze Tract and the Oceanfront Estates Tract have been retained in a separate interest bearing account, where none of the funds have yet to be expended or have been committed to a specific affordable housing project; and

WHEREAS, on May 20, 2003, the City Council held a meeting to consider the requirements of Government Code Section 66001, at which time all interested parties were given an opportunity to be heard and present evidence:

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES DOES HEREBY FIND, DETERMINE, AND RESOLVE AS FOLLOWS:

Section 1: The City's In-lieu Affordable Housing Program funds shall be used to implement the City’s General Plan and Housing Element and the goals, policies and programs set forth therein that address the affordable housing needs of the City. The Housing Element specifies a variety of purposes to which these funds can be applied in order to provide housing in the City that is affordable to low and moderate income families, and these funds, which were paid by the developers of the Seabreeze Tract and the Oceanfront Estates Tract, have been retained in a separate interest bearing account, and are hereby pledged to be used for those purposes.

Section 2: There is a direct relationship between the City's In-lieu Affordable Housing Program funds and the purpose of meeting the affordable housing needs of the City because these funds can only be used for this specific purpose. This relationship is confirmed through page 2-6 of the General Plan Housing Element, which describes the City's In-lieu Housing Fund as a funding source to implement various programs. Further, Housing Element Program 1.3 notes that these funds could be used for the development of a Senior Affordable Housing Project; and Housing Program 2.1 notes that these funds could be used for the implementation of a Rental Assistance Program.

Section 3: Each developer of certain projects within the City is required to pay a fee so that low and moderate income households will be able to reside in the City. The fee that is required to be paid is based upon the size of the particular project. Due to the periodic economic downturns in the State of California, which have affected development within the City, it has taken a considerable period of time for the City to accumulate funds that, when aggregated together, will be sufficient to accomplish any of the purposes set forth in the Housing Element. The City is continuing to evaluate how to utilize these funds to best accomplish the goals of the Housing Element of providing housing within the City that is affordable to low and moderate income households.

Section 4. These funds are to be used for only for the provision of affordable housing and will not be used towards financing any public facilities or for any other purpose.

Section 5: The City Council of the City of Rancho Palos Verdes hereby adopts these findings in order to preserve the City’s affordable housing fund so that affordable housing will be provided in the City in a manner that accomplishes the goals of its Housing Element and adequately serves the needs of all present and future community residents in compliance with State law.

PASSED, APPROVED, and ADOPTED this 20th day of May 2003.

MAYOR

ATTEST:

CITY CLERK

STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )ss
CITY OF RANCHO PALOS VERDES )

I, Jo Purcell, City Clerk of the City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2003-__ was duly and regularly passed and adopted by the said City Council at a regular meeting held on May 20, 2003.

Jo Purcell, City Clerk

City of Rancho Palos Verdes