JANUARY 24, 2005 EXTENSION OF THE AFFORDABLE HOUSING DEVELOPER FEE PROGRAM FOR AN ADDITIONAL FIVE (5) YEARS JANUARY 24, 2005 EXTENSION OF THE AFFORDABLE HOUSING DEVELOPER FEE PROGRAM FOR AN ADDITIONAL FIVE (5) YEARS

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PLANNING, BUILDING AND CODE ENFORCEMENT

DATE: JANUARY 24, 2005

SUBJECT: EXTENSION OF THE AFFORDABLE HOUSING DEVELOPER FEE PROGRAM FOR AN ADDITIONAL FIVE (5) YEARS

Staff Coordinator: Kit Fox, AICP, Senior Planner

RECOMMENDATION

Adopt Resolution No. 2005-__, making certain findings to extend the Affordable Housing Developer Fee Program and retain the fees that were deposited into the Program for an additional five (5) years.

EXECUTIVE SUMMARY

On March 3, 2000, the developer of the Oceanfront Estates tract (Tract No. 46628) paid $596,494 into the City’s Affordable Housing Developer Fee Program in lieu of providing affordable housing units. California Government Code Section 66001 requires that, during the fifth fiscal year following the first deposit into the Affordable Housing Developer Fee Program, and every five (5) years thereafter, the City shall make certain findings with respect to that portion of the account or fund remaining unexpended so that the fees can be retained and the Program extended further. It is now necessary to extend the Program and the fees deposited for the Oceanfront Estates tract 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 (codified in Section 17.11.140) provides for the establishment of an affordable housing fee to be applied to new development projects in lieu of constructing affordable housing units within the project. In addition, on June 3, 1997, the City Council adopted Resolution No. 97-48, thereby establishing the fee to be charged to development projects in lieu of providing affordable housing.

Since 1998, the City has collected $256,683 from the developer of the Seabreeze tract (Tract No. 46651) and $596,494 from the developer of the Oceanfront Estates tract in lieu of providing affordable housing units in those projects. On May 20, 2003, the City Council adopted Resolution No. 2003-32 (see attachments), extending the Affordable Housing Developer Fee Program and fees for the Seabreeze tract for five (5) years. Including interest, the estimated December 31, 2004, balance in the City's Affordable Housing Developer Fee Program was $1,024,761.

California Government Code Section 66001 requires that, during the fifth fiscal year following the first deposit into the Affordable Housing Developer Fee Program, and every five (5) 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 received funds from the developer of the Oceanfront Estates tract on March 3, 2000, the City must make the necessary findings to extend the deadline by March 3, 2005. If the City does not adopt these findings, the City will be required to refund the fee collected in 2000 for the Oceanfront Estates tract back to the developer. As such, the purpose of this report is to request that the City Council extend the use of the Affordable Housing Developer Fee Program.

DISCUSSION

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. Unlike the Redevelopment Agency's (RDA’s) 20-percent affordable housing set-aside funds, there are no specific requirements or restrictions regarding the type of affordable housing program on which the in-lieu funds can be spent, nor is there a cap on the total fund balance that the City can maintain in the Affordable Housing Developer Fee Program. As mentioned above, the estimated December 31, 2004, balance in the City's Affordable Housing Developer Fee Program was $1,024,761, including interest.

On December 7, 2004, the City Council was presented with a range of options for the expenditure of the City’s affordable housing fees. At this same meeting, the Board of the Rancho Palos Verdes Redevelopment Agency was also presented with a revised 5-Year Implementation Plan, which referred to the options for expenditure of the 20-percent affordable housing set-aside funds. Based upon the information presented, the City Council and the Board of the Rancho Palos Verdes Redevelopment Agency decided to expend the affordable housing funds by:

It is important to note that Government Code Section 66001 requires the review of the Program, and the funds deposited with the City pursuant thereto, every five (5) years after the initial date upon which the funds were first deposited. Therefore, if this extension is granted and the funds deposited for the Oceanfront Estates tract have not been expended within the next five (5) years, City Council review and approval of another extension will be required by March 3, 2010.

CONCLUSION

Now that the City has identified specific programs for the expenditure of its affordable housing funds, it is important to maintain these funds to implement the designated programs. If the City does not extend the use of these funds for an additional five (5) years, then the funds obtained from the developer of the Oceanfront Estates tract would be returned to the developer. Therefore, based upon the foregoing discussion, Staff recommends that the City Council adopt the attached Resolution, thereby extending the Affordable Housing Developer Fee Program for an additional five (5) years.

FISCAL IMPACT

If the Council elects not to extend the Affordable Housing Developer Fee Program, then the funds deposited for the Oceanfront Estates tract plus any accrued interest (estimated to be approximately $701,143 on December 31, 2004) would be refunded to the developer, and the remaining funds that were contributed to the City by the Seabreeze tract would be re-evaluated within five (5) years of their previous extension, or by June 12, 2008.

ALTERNATIVES

In addition to Staff’s recommendation, the alternatives available for the City Council’s consideration include:

1. Do not extend the Affordable Housing Developer Fee Program.

2. Continue this matter to a date certain prior to March 3, 2005.

Respectfully submitted:

Joel Rojas, AICP, Director of Planning, Building and Code Enforcement

Reviewed by:

Les Evans, City Manager

Attachments:

Draft Resolution No. 2005-__

Resolution No. 2003-32 (adopted May 20, 2003)

RESOLUTION NO. 2005-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES MAKING CERTAIN FINDINGS TO EXTEND THE AFFORDABLE HOUSING DEVELOPER FEE PROGRAM AND RETAIN THE FEES THAT WERE DEPOSITED INTO THE PROGRAM 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 the affordable housing units required pursuant to Sections 17.11.040 or 17.11.030 of Chapter 17.11; and,

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

WHEREAS, on June 12, 1998, the developer of the Seabreeze tract (Tract No. 46651) submitted a fee in lieu of providing affordable housing within its development, and on March 3, 2000, the developer of the Oceanfront Estates tract (Tract No. 46628) submitted a fee in lieu of providing affordable housing within its development; and,

WHEREAS, Government Code Section 66001 requires that for the fifth fiscal year following the first deposit into the Program account or fund, and every five (5) years thereafter, the local agency shall make certain findings with respect to that portion of the Program account or fund remaining unexpended, whether committed or uncommitted; and,

WHEREAS, it has been nearly five (5) years since the first deposit was submitted into the Program by the developer of the Oceanfront Estates tract; and,

WHEREAS, as of January 24, 2005, 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 January 24, 2005, 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 Affordable Housing Developer Fee 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 Affordable Housing Developer Fee 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 on Page 2-6 of the General Plan Housing Element, which describes the City's Affordable Housing Developer Fee Program 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 may, upon City Council approval, pay a fee in lieu of constructing affordable housing units, 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 Developer Fee Program 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 __th day of January 2005.

_________________________

Larry Clark, Mayor

_________________________

Carolynn Petru, City Clerk

State of California )

County of Los Angeles ) ss

City of Rancho Palos Verdes )

I, CAROLYNN PETRU, City Clerk of the City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2005-__ was duly and regularly passed and adopted by the said City Council at a regular meeting held on ____________, 2005.

________________________

City Clerk