Rancho Palos Verdes City Council
   

MARCH 7, 2006 CODE AMENDMENT TO CHAPTER 17.11, AFFORDABLE HOUSING MARCH 7, 2006 CODE AMENDMENT TO CHAPTER 17.11, AFFORDABLE HOUSING
MARCH 7, 2006 CODE AMENDMENT TO CHAPTER 17.11, AFFORDABLE HOUSING



TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PLANNING, BUILDING AND CODE ENFORCEMENT

DATE: MARCH 7, 2006

SUBJECT: CODE AMENDMENT TO CHAPTER 17.11, "AFFORDABLE HOUSING"
Staff Coordinator: Gregory Pfost, AICP, Deputy Planning Director

RECOMMENDATION

Introduce Ordinance No.__, thereby approving a Code Amendment that revises Municipal Code Chapter 17.11, "Affordable Housing", to specify a preference for the construction of new affordable housing units over the payment of an in-lieu fee.

EXECUTIVE SUMMARY

At their January 17, 2006 meeting, the Council reviewed a draft Ordinance specifying a preference for the construction of new affordable housing units over the payment of an in lieu fee. During the meeting, the Council expressed concerns regarding the draft Ordinance, particularly with the proposed "cost/benefit analysis" that would be necessary for review of any proposal to pay a fee in lieu of providing for affordable housing units. Specifically, the Council expressed that a cost/benefit analysis would not be that beneficial unless specific threshold standards or criteria were used to assess the analysis. The Council also expressed that the Ordinance needs to clearly state that the City prefers to have the units provided as opposed to payment of a fee, and that the Ordinance should identify the State's mandates as being the reason for this Ordinance.

Staff feels that it would be difficult to establish threshold criteria to evaluate a cost/benefit analysis, and therefore recommends removal of the "cost/benefit" portion from the draft Ordinance. Instead, the attached draft Ordinance requires the developer to submit a feasibility study addressing the specific economic, environmental or technical factors that render infeasible the provision of new affordable units, and the impacts to the development project if the Council denies the applicant's request to pay an in lieu fee. With the proposed Ordinance, upon considering the developer's submitted feasibility study, the Council would decide whether the developer would be required to provide the units, be allowed to pay a fee in lieu of providing the units, or provide a portion of the required units and pay a fee for those units that are not provided. This approach will provide the Council more flexibility in making a decision on a developer's request without having to analyze specific criteria or threshold standards to meet in order to permit the payment of an in lieu fee. In this report, Staff has also provided additional information that shows how the Ordinance indicates a City preference for provision of affordable units rather than payment of a fee, and the State mandated basis for the Ordinance.

BACKGROUND

At the October 18, 2005 City Council meeting, the Council approved an increase to the residential and non-residential affordable housing in-lieu fee to $201,562 plus a 10% administrative fee per affordable housing unit required. Additionally, at the meeting, the Council directed Staff to bring back proposed changes to the Affordable Housing Ordinance to clearly specify a preference for the construction of new affordable housing units over the payment of an in lieu fee.

On November 22, 2005, the Planning Commission reviewed a Staff Report and related background information (see attached "Affordable Housing - Background Information") and adopted the attached Resolution (PC Resolution No. 2005-47) recommending that the City Council approve a Code Amendment that revises Municipal Code Chapter 17.11, "Affordable Housing". A copy of the applicable portions of the November 22, 2005 Planning Commission Minutes are attached for reference.

Staff presented the Planning Commission recommendation to the Council on January 17, 2006. At that meeting, the Council expressed concerns regarding the draft Ordinance, specifically related to the lack of threshold criteria necessary to evaluate a cost/benefit analysis. The Council also requested that the Ordinance clearly specify the preference for providing units as opposed to an in-lieu fee, and include the State mandated basis for the Ordinance.

Since the January 17th meeting, Staff received one letter of correspondence from Mr. Dana Ireland. Mr. Ireland currently has an application pending before the City for a proposed 5-lot subdivision. Please see the "Additional Information" section of this report for alternatives that the Council may want to consider pertaining to Mr. Ireland's comments/request.

DISCUSSION:

Chapter 17.11, "Affordable Housing" (see attached) requires residential development projects of 5 units or more to provide for an affordable housing component as part of their project. For projects less than 5 units, no affordable housing component is required. Currently, Section 17.11.050, states that, "Upon city council approval, in-lieu fees may be provided as an alternative to units required". As such, currently, if a developer desires to pay a fee in lieu of constructing the required number of affordable units, upon Council approval, a fee may be paid. This has occurred with two projects in the past, the Seabreeze Tract and the Oceanfront Estates Tract.

Acknowledging that the City is currently faced with a problem of expending existing in-lieu fees, that the City will continue to face this problem as developers eagerly pay a fee in lieu of providing affordable units as part of their project, and that removing the in-lieu fee option from the Code is not viable, the Council directed Staff to prepare a draft Ordinance stating that the City prefers that developers provide the affordable units instead of paying an in-lieu fee. Upon reviewing a draft Ordinance at their January 17th meeting, the Council expressed concerns that 1) a proposed cost/benefit analysis requirement did not have any thresholds or criteria to evaluate it, 2) that the Ordinance needs to include a section referencing the State's mandate to provide affordable housing, and 3) that the Ordinance needs to clearly specify the City's preference for affordable units to be provided as opposed to the payment of an in-lieu fee.

Removal of the Cost/Benefit Analysis Requirement:

As presented on January 17th, if a developer requested to pay a fee in lieu of providing affordable units, the developer would need to submit a feasibility study request that would be reviewed by the City Council. As previously proposed, the feasibility study required a cost/benefit analysis, of which the threshold criteria for evaluating such an analysis were unknown. Upon hearing the Council's comments on January 17th, Staff felt that it would be difficult to establish threshold criteria to evaluate a cost/benefit analysis, and therefore has elected to remove the "cost/benefit" portion from the draft Ordinance. Instead, the attached draft Ordinance requires the developer to submit a feasibility study addressing the specific economic, environmental or technical factors that render infeasible the provision of new affordable units, and the impacts to the development project if the Council denies the applicant's request to pay an in lieu fee. This approach will allow the Council more flexibility in making a decision on a developer's request. Considering this, Staff is proposing the following changes to the existing Ordinance (text to be removed shown as strikethrough, and text to be added shown as bold underline):

17.11.050 Fees in lieu of providing affordable housing units. In lieu fees.
To help meet the city's affordable housing obligation, the payment of fees in lieu of providing one or more affordable housing units shall be permitted only if the applicant proves, to the satisfaction of the City Council, that provision of affordable housing units renders the project infeasible. Fees, in an amount set by city council resolution, may be paid in lieu of providing affordable housing units required by Sections 17.11.040 or 17.11.030 only if the project applicant files a request supported by a feasibility study conforming to the requirements set forth in Section 17.11.080, and the request is approved by the City Council. In order to grant a request to allow an applicant to pay fees in lieu of providing affordable housing units, the City Council must make, in writing, the finding set forth in Section 17.11.080 D. 3. The foregoing notwithstanding, an applicant shall provide the maximum number of the required affordable units feasible, and shall only be permitted to pay in lieu fees for that number of the required affordable units that render the project infeasible. Upon city council approval, in-lieu fees may be provided as an alternative to units required pursuant to Sections 17.11.040 or 17.11.130 of this chapter. The fee per affordable unit shall be established by city council resolution.

17.11.080 Feasibility.
A. Applicability. A feasibility study shall be required when:
1. Provision of units affordable to low and very low income households in accordance with Section 17.11.040 of this chapter is not contemplated;
2. An existing development in the coastal specific plan district meets the criteria of Section 17.11.130 of this chapter and the provision of replacement units affordable to low and moderate income households is not contemplated; or
3. A developer has requested one or more incentives in addition to the density bonus, pursuant to Section 17.11.060 of this chapter; or
4. A developer has requested to pay a fee in lieu of providing affordable housing units pursuant to Section 17.11.050.

B. Application.
1. Submission of a feasibility study per Sections 17.11.080.A.1 through 17.11.080.A.3 shall be as follows: The applicant shall deposit with the city a fee adequate to compensate for the cost of the study in addition to an administrative fee at a level to be established by resolution of the city council. The applicant shall provide a project proforma, data regarding existing rents and existing tenant income for existing residential projects to be converted or demolished, and any other information deemed necessary by the director. The application package shall not be deemed complete until the feasibility study is completed to the satisfaction of the director.
2. Submission of a feasibility study pursuant to Section 17.11.080.A.4 shall be as follows: The applicant shall submit a letter requesting to pay a fee in lieu of providing one or more affordable units and shall deposit with the city a fee to cover the costs of reviewing and processing such request at a level to be established by resolution of the city council. Said letter shall include the reason(s) why the request is being made, address all of the items noted in Section 17.11.080.C.2, and describe how the request satisfies the finding set forth in Section 17.11.080.D.3. Additionally, the applicant shall provide a project proforma, and/or any other information deemed necessary by the Director.

C. Study Contents. The study shall examine the feasibility of providing affordable units in accordance with Sections 17.11.040 and 17.11.130 of this chapter, as applicable. Additionally:
1. If an application has been filed for an affordable housing incentive in addition to a density bonus, the study shall examine the feasibility of providing the affordable housing without the additional affordable housing incentive. If this is demonstrated not to be feasible, the study shall examine other affordability scenarios at the discretion of the director. These may include the feasibility of providing fewer units affordable to low and very low income households and units affordable to progressively higher income households, as approved by the director.
2. If an application has been filed requesting to pay a fee in lieu of providing affordable housing units, then the feasibility study shall evaluate:
a. The specific economic, environmental or technical factors that may render infeasible the provision of any or all new affordable units required pursuant to Section 17.11.040 of this chapter;
b. The impacts to the development project if the city council denies the applicant's request to pay a fee in lieu of providing affordable housing as part of the development;
c. The project’s profit margin if the applicant is required to provide affordable units compared to the profit margin if the applicant is allowed to pay the in lieu fees;
d. The feasibility of providing some, but not all, of the required affordable housing units, with payment of in lieu fees paid for the units not provided,
e. A cost/benefit analysis that compares all of the available alternatives to the applicant in meeting the applicant's affordable housing obligation, which would include, but not be limited to, providing new affordable units as part of the project development, providing new affordable units elsewhere in the city, converting existing market-rate units to affordable units within the city, and providing the in-lieu fee.

D. Written Findings Required.
1. Approval of a lesser amount of housing affordable to the specified income groups than would otherwise be required under the provisions of Sections 17.11.040 and 17.11.130 of this chapter may be approved by the city council upon adoption of the following findings:
a. That specific economic, environmental or technical factors render infeasible the provision of new dwelling units affordable to low and/or very low income households, pursuant to the requirements of Section 17.11.040 of this chapter, or of replacement units affordable to low and/or moderate income households pursuant to the requirements of Section 17.11.130 of this chapter;
b. That these factors are documented in a feasibility study which has been prepared for the proposed project, which study has been reviewed and approved by the city and is part of the public record for the project.
2. Approval of an applicant’ s requested concession or incentive in addition to a density bonus shall be approved by the city council unless, based on substantial evidence including a feasibility study that has been reviewed and approved by the city and is part of the public record for the project, one or both of the following written findings is made:
a. That the concession or incentive is not required in order to provide for affordable housing costs, as defined in Section 50052.5 of the Health and Safety Code, or for rents for the targeted units to be set as specified in subdivision (c) of Section 65915 of the Government Code; or
b. That the concession or incentive would have a specific adverse impact, as defined in paragraph (2) of subdivision (d) of Section 65589.5 of the Government Code, upon the public health and safety or the physical environment or on any real property that is listed in the California Register of Historical Resources and for which there is no feasible method to satisfactorily mitigate of avoid the specific adverse impact without rendering the development unaffordable to low- and moderate-income households.
3. Approval of an applicant's request to pay a fee in lieu of providing affordable housing units shall be approved by the city council provided the following finding is made:
a. The payment of a fee in lieu of providing affordable units as part of the proposed project has been determined by the city council to be the most beneficial method for the city in meeting its affordable housing obligations.
a. Specific economic, environmental or technical factors render infeasible the provision of any or all of the new affordable units required pursuant to Section 17.11.040 of this chapter.

 

City Preference for Units as Opposed to Payment of In-lieu Fee:

As noted in the following Section, Staff has proposed text that indicates a City preference for units as opposed to the payment of an in-lieu fee (text to be removed shown as strikethrough, and text to be added shown as bold underline). If the Council desires stronger language, then Staff seeks direction:

17.11.050 Fees in lieu of providing affordable housing units. In lieu fees.
To help meet the city's affordable housing obligation, fees in lieu of providing affordable housing units shall be permitted only if the applicant proves, to the satisfaction of the City Council, that provision of affordable housing units renders the project infeasible. Fees, in an amount set by city council resolution, may be paid in lieu of providing affordable housing units required by Sections 17.11.040 or 17.11.030 only if the project applicant files a request supported by a feasibility study conforming to the requirements set forth in Section 17.11.080, for consideration by the City Council. In order to grant a request to allow an applicant to pay fees in lieu of providing affordable housing units, the City Council must make, in writing, the finding set forth in Section 17.11.080 D. 3. The foregoing notwithstanding, an applicant shall provide the maximum number of the required affordable units feasible, and shall only be permitted to pay in lieu fees for that number of the required affordable units that render the project infeasible. Upon city council approval, in-lieu fees may be provided as an alternative to units required pursuant to Sections 17.11.040 or 17.11.130 of this chapter. The fee per affordable unit shall be established by city council resolution.

Text to Describe the State's Mandate:

The Code currently includes the following text that describes the intent and purpose of the Affordable Housing Code section:

17.11.010 Intent and Purpose
This chapter specifies procedures under which applicants for new residential projects shall receive a density bonus or other incentives for providing housing affordable to low and very low income households. Nothing in this chapter shall be construed to prohibit the city from negotiating for greater numbers of dwelling units affordable to low and very low income households or the provision of varying affordable housing incentives.
In order to provide housing affordable to all segments of the community and preserve and maintain low and moderate income housing opportunities in the coastal specific plan district, consistent with the goals of the city’ s adopted general plan housing element and state law, this chapter further specifies procedures under which applicants for demolition or conversion of residential units occupied by low or moderate income households in the coastal zone, or for new residential projects, shall be required to provide for housing affordable to very low, low and moderate income households.
In addition, in order to mitigate the impact of local employment generation on the local housing market, consistent with the goals of the city’ s adopted general plan housing element and statewide housing goals as declared by the California state legislature, this chapter specifies procedures under which applicants of new nonresidential development or conversion of existing development to a more intense use, shall be required to make provisions for housing affordable to low and very low income households. (Ord. 320 § 7 (part), 1997)

If the Council desires modifications to this text, then Staff requests specific direction.

ADDITIONAL INFORMATION

On January 24, 2006, the City received the attached email comment from Mr. Dana Ireland, who currently has a pending application before the City for a 5 lot residential subdivision. The Municipal Code's Affordable Housing requirements would require Mr. Ireland's project to provide for 1 affordable housing unit.

In his comments, Mr. Ireland opines that the current Ordinance is not equitable as it requires 10% of the total number of units to be affordable to low-income, and for projects that are less than 10 units, rounding to 1 affordable unit actually means that the developer will be providing more than 10%. For example, for his proposed 5-unit subdivision, Mr. Ireland would have to provide for 1 affordable unit, which is 20% of the 5-unit subdivision. Mr. Ireland feels that the Ordinance should be modified to automatically accept in-lieu fees for developments of 5 to 8 units, whereas developments of 8 to 20 units shall provide units within the City boundaries (not necessarily within the proposed project boundaries), and developments of more than 20 units should be required to provide affordable units as part of the proposed development.

Using Mr. Ireland's project as an example, in addressing this issue, the Council could consider the following alternatives:

A. No Changes to the Proposed Code. In this alternative, Mr. Ireland would need to provide 1 affordable unit. Currently, Section 17.11.040 indicates that, "The affordable units shall be provided on-site or off-site at a location to be approved by the director". The Council may recall that the City recently (2003) entered into an Affordable Housing Agreement with the developer of an 11-lot subdivision (Tract 52666) and permitted that developer to provide his 1 affordable housing unit off-site. Mr. Ireland may provide his unit on-site or off-site. While the Code currently states "to be approved by the director", similar to the previous action, Mr. Ireland's project would probably also be subject to approval of the Council through a condition of approval of his project requiring an affordable housing agreement. Under the proposed Ordinance, if Mr. Ireland desired to pay a fee in lieu of providing the 1 unit, Mr. Ireland could also submit a Feasibility Study Application that would be acted upon by the Council.

B. Adopt Mr. Ireland's Recommendations: If the Council desires this alternative, then Staff recommends that the Council direct Staff to return to the Council at a subsequent meeting with revised text that allows an in-lieu fee to be paid for developments of 5 to 8 units, developments of 8 to 20 units to provide affordable units within the City boundaries, and developments more than 20 units to provide affordable units as part of the proposed development.

ALTERNATIVE

In addition to the Staff recommendation, the City Council may also wish to consider the following alternative:

1. Continue the public hearing to a future date to address changes to the proposed Code language.

FISCAL IMPACT

No fiscal impact will result from adopting this Ordinance.

Respectfully submitted:

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

Reviewed By:

Les Evans
City Manager

ATTACHMENTS:

Ordinance No. ___
PC Resolution No. 2005-47
Portion of the November 22, 2005 Planning Commission Minutes
Affordable Housing Background Information, dated 11/22/05
Municipal Code Chapter 17.11
Email from Mr. Ireland, dated January 24, 2006

ORDINANCE NO. ____

AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES AMENDING TITLE 17 OF THE CITY’S MUNICIPAL CODE PERTAINING TO CHAPTER 17.11 "AFFORDABLE HOUSING"

WHEREAS, on October 18, 2005, the City Council directed staff to initiate a code amendment to Chapter 17.11, "Affordable Housing", that would clearly specify a preference for the construction of new affordable housing units over the payment of an in lieu fee, including specific criteria to be used to determine when construction is financially infeasible; and,

WHEREAS, after notices issued pursuant to the provisions of the Rancho Palos Verdes Municipal Code, the Planning Commission conducted a public hearing on November 22, 2005 at which time the Planning Commission adopted PC Resolution No. 2005-47, recommending City Council approval of amendments to Title 17 as set forth in the such Resolution; and,

WHEREAS, on December 24, 2005 a notice was published in the Palos Verdes Peninsula News; and,

WHEREAS, after the notice was published pursuant to the provisions of the Rancho Palos Verdes Municipal Code, the City Council conducted a public hearing on January 17, 2005 and March 7, 2006 at which time all interested parties were given an opportunity to be heard and present evidence regarding said amendments to Title 17 as set forth in the City Council Staff Report of that date.

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

Section 1: The City Council has reviewed and considered the amendments to Title 17 of the Municipal Code.

Section 2: That the amendments to Title 17 of the Municipal Code are consistent with California Government Code Section 65853, zoning amendment procedures.

Section 3: That the amendments to Title 17 are consistent with the Rancho Palos Verdes General Plan and Coastal Specific Plan in that they continue to implement the General Plan Housing Element's Goal to "Assist in the provision of housing affordable to very low, low and moderate-income families" as the proposed amendments do not alter the requirements for number of affordable units to be provided by a developer per Chapter 17.11.

Section 4: That the proposed amendments to Chapter 17.11 will assist in the provision of affordable housing units by ensuring that developer requests for payment of fees to the City in lieu of providing affordable units will be analyzed in more detail to ensure that the payment of a fee is not a method used by developers to simply transfer their obligation for providing affordable housing units to the City.

Section 5: That there is no substantial evidence that the amendments to Title 17 would result in new significant environmental effects, or a substantial increase in the severity of the effects, as previously identified in Environmental Assessment No. 694 and the Negative Declaration, adopted through Resolution No. 97-25 in conjunction with Ordinance No. 320 for amendments to Titles 16 and 17 of the Municipal Code, since the new amendments simply identify a procedure for developers to go through when requesting to pay a fee in lieu of providing affordable units as part of their proposed project. An Addendum (No. 13) to the prior Negative Declaration has been prepared and is attached hereto as Exhibit “A”. The City Council hereby finds, based on its own independent judgment, that the facts stated in the Addendum are true.

Section 6: Section 17.11.050 of Title 17 is hereby amended to read as follows (the bold underlined text represents new language and the strikethrough text represents deleted language):

17.11.050 Fees in lieu of providing affordable housing units. In lieu fees.
To help meet the city's affordable housing obligation, the payment of fees in lieu of providing one or more affordable housing units shall be permitted only if the applicant proves, to the satisfaction of the City Council, that provision of affordable housing units renders the project infeasible. Fees, in an amount set by city council resolution, may be paid in lieu of providing affordable housing units required by Sections 17.11.040 or 17.11.030 only if the project applicant files a request supported by a feasibility study conforming to the requirements set forth in Section 17.11.080, and the request is approved by the City Council. In order to grant a request to allow an applicant to pay fees in lieu of providing affordable housing units, the City Council must make, in writing, the finding set forth in Section 17.11.080 D. 3. The foregoing notwithstanding, an applicant shall provide the maximum number of the required affordable units feasible, and shall only be permitted to pay in lieu fees for that number of the required affordable units that render the project infeasible. Upon city council approval, in-lieu fees may be provided as an alternative to units required pursuant to Sections 17.11.040 or 17.11.130 of this chapter. The fee per affordable unit shall be established by city council resolution.

Section 7: Section 17.11.080 of Title 17 is hereby amended to read as follows (the bold underlined text represents new language and the strikethrough text represents deleted language):

17.11.080 Feasibility.
A. Applicability. A feasibility study shall be required when:
1. Provision of units affordable to low and very low income households in accordance with Section 17.11.040 of this chapter is not contemplated;
2. An existing development in the coastal specific plan district meets the criteria of Section 17.11.130 of this chapter and the provision of replacement units affordable to low and moderate income households is not contemplated; or
3. A developer has requested one or more incentives in addition to the density bonus, pursuant to Section 17.11.060 of this chapter; or
4. A developer has requested to pay a fee in lieu of providing affordable housing units pursuant to Section 17.11.050.

B. Application.
1. Submission of a feasibility study per Sections 17.11.080.A.1 through 17.11.080.A.3 shall be as follows: The applicant shall deposit with the city a fee adequate to compensate for the cost of the study in addition to an administrative fee at a level to be established by resolution of the city council. The applicant shall provide a project proforma, data regarding existing rents and existing tenant income for existing residential projects to be converted or demolished, and any other information deemed necessary by the director. The application package shall not be deemed complete until the feasibility study is completed to the satisfaction of the director.
2. Submission of a feasibility study pursuant to Section 17.11.080.A.4 shall be as follows: The applicant shall submit a letter requesting to pay a fee in lieu of providing one or more affordable units and shall deposit with the city a fee to cover the costs of reviewing and processing such request at a level to be established by resolution of the city council. Said letter shall include the reason(s) why the request is being made, address all of the items noted in Section 17.11.080.C.2, and describe how the request satisfies the finding set forth in Section 17.11.080.D.3. Additionally, the applicant shall provide a project proforma, and/or any other information deemed necessary by the Director.

C. Study Contents. The study shall examine the feasibility of providing affordable units in accordance with Sections 17.11.040 and 17.11.130 of this chapter, as applicable. Additionally:
1. If an application has been filed for an affordable housing incentive in addition to a density bonus, the study shall examine the feasibility of providing the affordable housing without the additional affordable housing incentive. If this is demonstrated not to be feasible, the study shall examine other affordability scenarios at the discretion of the director. These may include the feasibility of providing fewer units affordable to low and very low income households and units affordable to progressively higher income households, as approved by the director.
2. If an application has been filed requesting to pay a fee in lieu of providing affordable housing units, then the feasibility study shall evaluate:
f. The specific economic, environmental or technical factors that may render infeasible the provision of any or all new affordable units required pursuant to Section 17.11.040 of this chapter;
g. The impacts to the development project if the city council denies the applicant's request to pay a fee in lieu of providing affordable housing as part of the development;
h. The project’s profit margin if the applicant is required to provide affordable units compared to the profit margin if the applicant is allowed to pay the in lieu fees; and
i. The feasibility of providing some, but not all, of the required affordable housing units, with payment of in lieu fees paid for the units not provided

D. Written Findings Required.
1. Approval of a lesser amount of housing affordable to the specified income groups than would otherwise be required under the provisions of Sections 17.11.040 and 17.11.130 of this chapter may be approved by the city council upon adoption of the following findings:
a. That specific economic, environmental or technical factors render infeasible the provision of new dwelling units affordable to low and/or very low income households, pursuant to the requirements of Section 17.11.040 of this chapter, or of replacement units affordable to low and/or moderate income households pursuant to the requirements of Section 17.11.130 of this chapter;
b. That these factors are documented in a feasibility study which has been prepared for the proposed project, which study has been reviewed and approved by the city and is part of the public record for the project.
2. Approval of an applicant’ s requested concession or incentive in addition to a density bonus shall be approved by the city council unless, based on substantial evidence including a feasibility study that has been reviewed and approved by the city and is part of the public record for the project, one or both of the following written findings is made:
a. That the concession or incentive is not required in order to provide for affordable housing costs, as defined in Section 50052.5 of the Health and Safety Code, or for rents for the targeted units to be set as specified in subdivision (c) of Section 65915 of the Government Code; or
b. That the concession or incentive would have a specific adverse impact, as defined in paragraph (2) of subdivision (d) of Section 65589.5 of the Government Code, upon the public health and safety or the physical environment or on any real property that is listed in the California Register of Historical Resources and for which there is no feasible method to satisfactorily mitigate of avoid the specific adverse impact without rendering the development unaffordable to low- and moderate-income households.
3. Approval of an applicant's request to pay a fee in lieu of providing affordable housing units shall be approved by the city council provided the following finding is made:
a. Specific economic, environmental or technical factors render infeasible the provision of any or all of the new affordable units required pursuant to Section 17.11.040 of this chapter.

E. Public Hearing. A noticed public hearing shall be held before the city council prior to adoption of any finding regarding feasibility. This hearing may be held concurrently with any hearing required for the project application.

F. Waiver or Reduction of Development Standards.
1. Any development standard set forth in the Municipal Code, general plan, any specific plan, condition, policy, law, resolution or regulation that has the effect of precluding the construction of a development meeting the criteria of Section 17.11.060(A)(1) of this chapter shall be waived or modified pursuant to a request from the applicant, except however nothing in this paragraph shall be interpreted to require the city to waive or reduce development standards if the waiver or reduction would have a specific adverse impact, as defined in paragraph (2) of subdivision (d) of Section 65589.5 of the Government Code, upon health, safety, or the physical environment and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact. Nothing in this paragraph shall be interpreted to require the city to waive or reduce development standards that would have an adverse impact on any real property that is listed in the California Register of Historical Resources.
2. The applicant shall include any request for waiver or reduction of development standards in the application required by Section 17.11.080(B) of this chapter. Further, the study required by Section 17.11.080(C) of this chapter shall study the feasibility of providing affordable housing in a manner that does not require waiver or reduction of the city’ s development standards. (Ord. 394 §§ 8--9, 2003; Ord. 320 § 7 (part), 1997)

Section 8: The rights given by any approval granted under the terms of Title 17 of the Rancho Palos Verdes Municipal Code prior to the effective date of the adoption of said ordinance shall not be affected by the amendments to Title 17 by this ordinance and shall continue in effect until and unless they are modified, revoked, expired or are otherwise terminated according to the terms of the approval or the terms of Title 17 as they existed prior to the effective date of this ordinance.

Section 9: The amendments to Title 17 of the Rancho Palos Verdes Municipal Code as identified herein shall apply to all development applications submitted after the effective date of the adoption of said ordinance and to all development applications that have not been decided upon prior to the effective date of the adoption of said ordinance.

Section 10: For the foregoing reasons, and based on the information and findings included in the Staff Report, Minutes, and other records of proceedings, the City Council of the City of Rancho Palos Verdes hereby adopts an Ordinance amending Title 17 of the City’s Municipal Code pertaining to revisions to Chapter 17.11, "Affordable Housing".

Section 11: The City Clerk shall cause this Ordinance to be posted in three (3) public places in the City within fifteen (15) days after its passage, in accordance with the provisions of Section 36933 of the Government Code. The City Clerk shall further certify to the adoption and posting of this Ordinance, and shall cause this Ordinance and its certification, together with proof of posting, to be entered in the Book of Ordinances of the Council of this City.

Section 12: This Ordinance shall go into effect and be in full force and effect at 12:01 a.m. on the thirty-first (31st) day after its passage.

PASSED, APPROVED and ADOPTED this 7th day of March 2006.

 

_____________________________
Mayor

ATTEST:

___________________________
City Clerk

ADDENDUM NO. 13 TO ENVIRONMENTAL ASSESSMENT/
NEGATIVE DECLARATION (EA/ND) NO. 694
MARCH 7, 2006

On April 1, 1997, the City Council adopted Resolution No. 97-25, thereby adopting a Negative Declaration for Environmental Assessment No. 694 for amendments to Titles 16 and 17 of the City's Municipal Code. Prior to its adoption, the Negative Declaration was circulated for public comment from March 4 through March 24, 1997 and no substantive comments were received from any persons or responsible agencies. In adopting the Negative Declaration, the City Council found: 1) that there would be no significant adverse environmental impacts resulting from the adoption of the amendments; 2) that many of the amendments were clarifications and minor non-substantive revisions; and 3) that the substantive amendments would reduce impacts on the environment since the requirements and regulations governing development in the City would generally be strengthened, thereby further reducing any adverse impacts to adjacent properties and upon the environment.

The City Council is currently reviewing amendments to Title 17 of the Development Code that would revise Chapter 17.11, "Affordable Housing", so as to define a process wherein a developer may request Council approval of the payment of a fee in lieu of providing affordable housing units. The City Council has independently reviewed this item and determined that the proposed amendments will not result in any new significant environmental effects. Furthermore, the City Council finds the amendments to be within the scope of EA/ND No. 694 that were prepared and adopted in conjunction with the amendments to Titles 16 and 17, which were adopted on April 19, 1997 by the City Council. As a result, the City Council finds that no further environmental review is necessary.

 

 

 

 

RANCHO PALOS VERDES

AFFORDABLE HOUSING - BACKGROUND INFORMATION
November 22, 2005

Staff Coordinator: Gregory Pfost, AICP, Deputy Planning Director
______________________________________________________________________

The following provides some background information on the requirements of State Housing Law, prior City decisions that created the foundation for the development of an affordable housing program in the City, and the status of the City's current affordable housing fund programs.

Why is there a need for Affordable Housing and what is the City's obligation to provide for it?

In a report entitled "California's Deepening Housing Crisis", authored by the California Department of Housing and Community Development (HCD), it is projected that California's population will increase by around 600,000 persons annually over the next decade. Unfortunately, housing production within the state has not kept pace with past population increases, nor is it expected to keep pace with projected future population increases. This disparity leads to an increase in demand for housing, higher housing costs, and subsequently a greater demand for affordable housing.

HCD's mission is "to provide leadership, policies and programs to preserve and expand safe and affordable housing opportunities and promote strong communities for all Californians". One of HCD's goals is to increase the supply of housing, especially affordable housing. To help meet this goal, HCD is charged with administering state housing law. State housing law affects all cities and counties within the State by requiring each to prepare and adopt a General Plan Housing Element. According to State law, the City's Housing Element "shall consist of an identification and analysis of existing and projected housing needs and a statement of goals, policies, quantified objectives, financial resources, and scheduled programs for the preservation, improvement, and development of housing". So, regardless of individual opinion of HCD's mission statement and implementation goals, and whether the City should be required to increase its housing stock while also providing for affordable housing, it is still incumbent upon the City to comply with State housing law.

To satisfy State requirements, the City's Housing Element must include certain components, one of which is an assessment of housing needs, as prescribed by State housing law. The assignment of a City's housing construction need has always been one of the most difficult aspects of housing law. Currently, based upon population projections, existing housing supply, economics and other factors, the State determines the total construction need for each region - meaning how many new housing units need to be constructed in the region to meet the region's need over the next 5 years. In our region HCD provides the construction needs number to the Southern California Association of Governments (SCAG), who is then responsible for disaggregating that number amongst all of the cities and counties in the SCAG region. This process is called the Regional Housing Needs Assessment (RHNA).

State housing law requires cities and counties to update their Housing Element every 5 years. In compliance with State law, the City of Rancho Palos Verdes adopted an updated Housing Element in August 2001. The City's Housing Element "needs analysis" is based upon the RHNA that was provided by SCAG. The City's share of the regional housing need as allocated by SCAG for the January 1, 1998 through June 30, 2005 planning period is as follows:
RHNA Construction Need for RPV

Income Category

Number of Housing Units

Very Low

8

Low

5

Moderate

8

Above Moderate

32

Total

53

 

It is important to note that it is not the City's responsibility to actually develop and build these units. State law only requires that a City show that there is adequate sites for these units, that the City assist in the development of housing to meet the needs, and remove governmental constraints where appropriate and legal. The City's Housing Element currently shows that there is land available to construct these new housing units. For example, the Housing Element identifies the Trump National Golf Club project (formally known as Ocean Trails) and the RDA's parcel located on the northwest corner of Crestridge Road and Crenshaw Boulevard as sites that can meet the 13-unit low and very-low income affordable housing need. It is important to note that, at this time, there are no penalties for a city not reaching its RHNA target. However, based upon the continuing housing crisis in the State and previously proposed legislation, Staff would expect that in the future as there may be legislation that would penalize a City for non-compliance.

How are affordable income levels derived and who fits into these income levels?

According to the U.S Department of Housing and Urban Development (HUD), affordable housing means that families should devote no more than 30% of their income to rent or mortgage payments and utilities.

The different levels of affordability are based upon a percentage of County median income, as follows:

Very Low Income Level = 0-50% of Median Income
Low Income Level = 50-80% of Median Income
Moderate Income Level = 80-120% of Median Income
Above Moderate Level = +120% of Median Income

According to HUD, the current median family income for a four-person household in Los Angeles County is $55,100. Based upon this figure, it is determined that a "Very Low" income family of four is not expected to pay more than $688.75 per month in housing costs. A "Low" income family of four is not expected to pay more than $1,102 per month in housing costs. During the preparation of the City's Housing Element in 2000 a survey was conducted of existing rental units in the City and it was found that only about 10% of the total rental units surveyed had monthly rents of less than $1,000. Subsequently, in this example, a Very Low Income family would most likely not be able to find a rental unit in the City. If they could, the survey showed that of the rental units less than $1,000, 24% of those were studio units, while 76% were one-bedroom units. For a family of four, this would lead to overcrowding.

When speaking of "Affordable Housing", there is a myth that the people who need and live in affordable housing will not fit into respected neighborhoods. It is important to identify who these people really are. Households earning lower incomes can have a variety of occupational and educational backgrounds. In an example presented by HCD in their report entitled, "Myths and Facts About Affordable and High Density Housing", it states that a starting elementary or high-school teacher in the City of Mountain View (Santa Clara County) with a gross monthly income of $3,200 (annual income of $38,400) can afford to pay $960 a month in rent, which qualifies as "Low" Income if she lives alone and "Very-Low" Income if she supports two children. Another example is that of a starting air-traffic controller in San Diego County, with income barely higher than $31,000 a year, would also qualify for affordable housing. Other occupations, such as librarians, sheriffs' deputies, nurses, and fire fighters, who are vital members of our communities, also fit into persons/families who need affordable housing.

Has the City met its required construction need as determined through the 1999 RHNA?

Although the City has not met all of its required construction need for the planning period (January 1, 1998 to June 30, 2005), as shown in the table below, the City has met most of it.

 

Income Category

Number of Housing Units Required (RHNA)

Number of Housing Units Provided

Very Low

8

2

Low

5

2

Moderate

8

4

Above Moderate

32

+32(1)

Total

53

+40


(1) During the planning period, there have actually been a total of 180 new above moderate income
housing units constructed.

Specifically, in the "Above Moderate" category, the City has exceeded its required number of new units. In the "Moderate" category, the four units that were developed were all second dwelling units constructed on a lot where an existing single-family residence was already constructed. According to HCD and the City's General Plan, second dwelling units qualify for meeting the "Moderate" income requirement. The two "Very Low" and two "Low" income units were new rental units constructed on-site by the Trump National Golf Club. These units have been completed and will be rented over the next month since Trump National is required to make them available for rent prior to opening the 18-hole golf course, which is expected Fall/Winter 2005.

It should be noted that in addition to the 4 units that Trump National has already provided, there is a potential for 3 additional "Very Low" to "Low" income units to be provided in the City by project developers. Specifically, Trump National is required to provide an additional 2 units off-site. Staff anticipates that Trump National will probably purchase existing units and rent them to persons of a "Very Low" to "Low" income. Further, as part of the development of Tract No. 52666, which is a new 13 unit residential project currently under construction off of Palos Verdes Drive West adjacent to Palos Verdes Estates, the developer must provide for 1 "Low" income affordable housing unit within the City. Staff expects that this unit will also be an existing unit that is rented at an affordable rate. Current State housing law permits cities to count existing units that are restricted to "Very Low" to "Low" income levels up to 25% of the RHNA's total construction need in these categories. For example, of the City's 13 affordable housing units needed (Very Low and Low Income Categories), up to 25% or 4 existing units, may be counted towards meeting the City's new construction need. As such, all of the 3 anticipated rental units can count towards the City's construction need. Unfortunately, these 3 units will not be made available during the most recent RHNA planning period, which ended in June 2005. However, they will be able to be counted towards the next planning period, which is yet to be defined by HCD.

As noted above, according to State Law, cities are required to adopt an updated General Plan Housing Element every 5 years. In order to prepare the updated General Plan Housing Element, cities rely upon SCAG to furnish the updated RHNA. In an effort to improve existing Housing Element Law, recent legislation was enacted that postpones the deadline for cities in the SCAG region to complete their updated Housing Element from June 30, 2005 to June 30, 2008. As of the date of this report, SCAG had not yet prepared the new RHNA, and therefore the City does not know yet what its RHNA construction needs requirement will be for the next 5-year planning period.

What is the Current Status of the City's Affordable Housing Fund Programs?

To help meet the affordable housing needs of the City as delegated by SCAG through the RHNA and identified in the City's General Plan Housing Element, the City has established two affordable housing fund programs. Below is a discussion of each program and its current fund status.

Redevelopment Agency 20% Affordable Housing Set-aside Fund:

Per State law, the Redevelopment Agency has set-aside twenty percent (20%) of its gross annual tax increment into the Agency’s Low and Moderate Income Housing Fund. The purpose of this Fund is to increase, improve and preserve the City’s supply of low and moderate-income housing. In carrying out the housing set-aside requirements, the Agency may expend these funds on a number of different programs, including acquiring real property.

Once the unexpended and unencumbered funds in this Fund exceed $1 million, the RDA has up to 1 year to either transfer the excess funds (funds over $1 million) to the County Housing Authority or come up with a plan on how it intends on expending the excess funds. If the Agency does not transfer the funds to the County, but instead comes up with an expenditure plan, the excess funds must be spent on a program within the City within 2 years of adoption of the expenditure plan. In summary, the Agency would have a maximum of 3 years to expend excess surplus funds once the $1 million Fund threshold is exceeded. If the excess surplus funds were not spent within 3 years, at the end of the third year, the Agency could face penalties that would affect the expenditure of other Agency funds. The Agency's Housing Fund balance exceeded the $1 million threshold in December 2004. Specifically, as of December 31, 2004, the fund balance was $1,003,663. As a result, the Agency has 1 year (until June 30, 2006) to decide whether to transfer or spend the excess funds, and 2 additional years to expend such excess funds if it opts not to transfer the excess funds to the County.

In March 2000, the Agency purchased the Crestridge property for $702,392 with RDA set-aside funds. Under state law, once purchased, the Agency has 5 years to initiate activities to provide affordable housing on the property. However, this was extended for one additional 5-year period as the Agency adopted a resolution in March 2005 affirming its intention that the property be used for the development of affordable housing - thereby extending the deadline to 2010.

City's In-Lieu Affordable Housing Program:

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 residential development projects in lieu of constructing affordable housing units within a project. Currently, through the In-lieu Program, the City has collected $256,683 from the development of the Seabreeze Tract in June 1998 and $596,494 from the Oceanfront Estates Tract in March 2000 for a total estimated June 30, 2005 in-lieu fund balance, plus interest, of $1,031,261.

According to State Law, the City must expend these funds within 5 years of obtaining them. However, the City has the option of extending the deadline for an additional 5 years. In 2003 the Council made the necessary findings to extend the deadline for funds received from the Seabreeze Tract for an additional 5 years to 2008. Likewise, in March 2005, the Council extended the deadline for the Oceanfront Estates Tract for another 5 years to 2010.

In addition to residential projects, the Development Code also requires non-residential projects to pay an in-lieu fee towards the development of affordable housing if the project exceeds certain thresholds. Thus far only one approved project has triggered this requirement, that being the Long Point Resort project. Based upon that project's estimated number of employees, it is estimated that the Long Point Resort developer will have to provide an in-lieu fee amount of $931,910. According to the Long Point Resort's conditions of approval, this fee would need to be paid prior to issuance of a certificate of use and occupancy for the resort.

What is the Current City Policy on Spending the City's Affordable Housing Funds?

On December 7, 2004, the City Council provided direction to Staff in regards to the expenditure of the City's In-lieu Affordable Housing Funds and the Redevelopment Agency's 20% Set-Aside Funds. Specifically, the Council directed Staff to pursue a combined program to utilize its affordable housing funds for: 1) a contribution toward development of an affordable housing component as part of the Crestridge site; and 2) implementation of a rental subsidy program managed by a non-profit housing agency.

What was the Council's Most Recent Action Regarding the In-lieu Fund Program?

At the December 7, 2004 meeting, Council members expressed concern regarding the amount of existing in-lieu fee that developers have the option to pay. Council members expressed that the fee may be too low and as a result places the City in the difficult position of providing for affordable housing units when there is not enough funds to do so. Additionally, the attractiveness of the low fee seems to shift the burden of providing affordable units to the City instead of the developer because the developer will most likely request the less expensive in-lieu fee method rather than the more expensive method of providing affordable housing units.

At the October 18, 2005 City Council meeting, the Council approved an increase to the residential and non-residential affordable housing in-lieu fee to $201,562 plus a 10% administrative fee per affordable housing unit required. Additionally, at the meeting, the Council directed Staff to bring back proposed changes to the Affordable Housing Ordinance to clearly specify a preference for the construction of new affordable housing units over the payment of an in lieu fee, including specific criteria to be used to determine when construction is financially infeasible

Since changes to the Affordable Housing Ordinance constitute a Zone Text Amendment, which according to the Government Code and the City's Municipal Code (Chapter 17.68) is first required to be reviewed by the Planning Commission through a public hearing before adopted by the City Council, requested changes to the Affordable Housing Ordinance (Chapter 17.11) will be brought back to the Council at a future meeting (estimated January 2006).