HomeMy WebLinkAboutStaff Report 4.G 08/01/2016DATE:
August 1, 2016
TO: Honorable Mayor and Members of the City-Council '
FROM: John C. Brown, City Manage
Agenda Item #4.G
SUBJECT: Resolution Approving the Response to the Sonoma County Grand Jury's Final
Report for Fiscal Year 2015/16
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution Approving the Response
to the Sonoma County Grand Jury's Final Report for Fiscal Year 2015/16.
BACKGROUND
Under California law, the civil Grand Jury is an independent institution that oversees all aspects
of the legislative and administrative departments that make up county, city and special district
governments, and has the power to investigate them to ensure they are serving the public and
individual citizens. At the end of each fiscal year, the Grand Jury issues its final report to the
community.
DISCUSSION
The Grand Jury provided its final report for Fiscal Year 2015/16 to the City on June 27, 2016
and to the public on June 29, 2016. One of their investigations, "Spotlight on Affordable
Housing ", made little specific mention of Petaluma but requires a response from the City,
Planning and the City Council to its Recommendations R -2, R -3, R -4, and R -9.
Petaluma's draft response is attached for Council's consideration and approval. The response
must be submitted to the Grand Jury no later than 90 days, or September 25, 2016, after the
Grand Jury submits its final report to any public agency.
ATTACHMENTS
1. Resolution
2. Draft Letter
3. Grand Jury Report, "Spotlight on Affordable Housing"
ATTACHMENT 1
RESOLUTION APPROVING THE RESPONSE TO THE SONOMA COUNTY GRAND
JURY'S FINAL REPORT FOR FISCAL YEAR 2015/16
WHEREAS, under California law, the civil Grand Jury is an independent institution that
oversees all aspects of the legislative and administrative departments that make up county, city,
and special district governments, and has the power to investigate them to ensure they are
serving the public and individual citizens; and
WHEREAS, the Grand Jury conducts investigations, culminating in a final report to the
community at the end of each fiscal year; and
WHEREAS, the 2015/16 Sonoma County Grand Jury issued its final report to the City
of Petaluma on June 27, 2016; and
WHEREAS, one of their investigations from the City of Petaluma, titled "Spotlight on
Affordable Housing ", requires a response.
NOW, THEREFORE, BE IT RESOLVED that the City Council approves the response
letter to the Grand Jury and authorizes the Mayor and City Manager to sign said letter on behalf
of the City Council.
2
DRAFT LETTER
August 2, 2016
ATTACHMENT 2
The Honorable Raima Ballinger Foreperson
Presiding Superior Court Judge Sonoma County Civil Grand Jury
Hall of Justice P.O. Box 5109
600 Administration Drive Santa Rosa, CA 95402
Santa Rosa, CA 95403
RE: Grand Jury Final Report for FY 2015/16 — Responses and Recommendations
Dear Judge Ballinger:
The City of Petaluma is pleased to provide our responses on behalf of the City of Petaluma
(Planning) and the Petaluma City Council, to the Findings and Recommendations in the
2015/2016 Grand Jury Final Report, "Spotlight on Affordable Housing ". These are formatted in
accordance with Penal Code Section 933 and 933.05.
Thank you for the opportunity to respond to the Grand Jury's report. If you have additional
questions, please let us know.
Sincerely,
David Glass
Mayor
cc: Sonoma County Board of Supervisors
Sonoma County Clerk
Petaluma City Clerk
Petaluma City Council
Sonoma County Cities
John C. Brown
City Manager
Response to Grand Jury Report Form
Report Title: Spotlight on Affordable Housing
Report Date: August 2, 2016
Response By: David Glass Title: Mayor and
John C. Brown Title: City Manager
FINDINGS:
We agree with the findings numbered: 1,2,3, 4 5 6 7 8 9
F8 New or untapped sources of public and private monies are accessible to jurisdictions
within the County.
Petaluma's Response:
The City agrees with F8, however, with each of those funding sources, the application
process is highly competitive and comes with criteria that have to be met before funding
is awarded.
We disagree wholly or partially with the findings numbered: n/a
RECOMMENDATIONS:
Recommendations numbered: R2, R3, R4 and R9 have been implemented.
R2 The City of Santa Rosa Planning and Economic Development Department and the
Petaluma Planning Department encourage construction of granny units by reducing
permit fees and zoning restrictions (F6).
Petaluma's Response:
The current Implementing Zoning Ordinance allows such units subject to development
standards that are common in suburban communities and are not overly restrictive (e.g.,
allows maximum size of 640 square feet, requires one additional parking space, allows
use of setbacks for accessory structures.) The Ordinance also has no maximum lot
coverage limitations, which are often a constraint for the development of in -fill second
units in established neighborhoods. Impact fees were reduced on accessory units in 2010
to 25% of the fees of a typical single - family unit.
R3 The Sonoma County Board of Supervisors, City Council of Santa Rosa and City Council
of Petaluma improve regulation and oversight of vacation rental activity in order to
determine how rental rates are affected by having long -term rentals removed from the
market (F9).
Petaluma's Response:
In 2015, the City Council approved a short-term vacation rental ordinance which is
Chapter 7.110 of the Implementing Zoning Ordinance. There are conditions that need to
4
be met in order to rent property as a short-term vacation rental. This program is used to
regulate short-term rentals and charge fees for the program. The ordinance contains a
review provision to determine its impacts and effectiveness; this review will occur in
approximately 24 months. Twelve properties have applied for the short-term rental
program. The City's ordinance also stipulates the difference between "hosted" and "non-
hosted" properties. Hosted properties are not an impact on long -term rentals. Before the
ordinance was adopted, there were approximately 75 properties advertising with Airbnb;
currently there are approximately 35 properties listed with Airbnb. It is too early to
determine how the short-term vacation rentals will affect supply or affordability, but at
this early stage, it appears to be minimal.
R4 The Sonoma County Board of Supervisors, City Council of Santa Rosa and City Council
of Petaluma develop appropriate tax and fee schedules to offset the impact of short -term
vacation rentals on housing supply (F9).
Petaluma Response:
Petaluma's short -term vacation program is charging fees for applicants who want to rent
their property as a short-term rental. The ordinance also restricts the number of days that
property can be rented as a short-term rental to 90 days in a calendar year.
R9 The Sonoma County Board of Supervisors, City Council of Santa Rosa and City Council
of Petaluma consider invoking AB 2135 to donate surplus lands to Land Trusts or to sell
these properties at below market rates to developers in exchange for commitments to
include affordable housing (F7, 8).
Petaluma Response:
The Grand Jury's recommendation that Petaluma donate surplus lands to Land Trusts or
to sell these properties at below market rates to developers in exchange for commitments
to include affordable housing has been implemented in Petaluma in the past. This
practice is consistent with the goals found in Petaluma's Housing Element and the
Community Development Block Grant Consolidated Plan, which benefits the low income
housing community, and will be recommended to be incorporated into the Housing
Element when it is next updated. As noted in the report, there are two properties in
Petaluma that could be surplused, and the City will examine each in the context of the
Grand Jury's recommendation. It should be noted that the property at 951 Petaluma
Boulevard South is subject to divestiture under Redevelopment dissolution and the City's
actions with respect to this property will need to comply with Section 33334.16 of the
California Health and Safety Code for property held by the Housing Successor Agency.
Recommendation numbered: n/a has not yet been implemented, but will be implemented in
the future.
Recommendations numbered: n/a require further analysis.
Recommendations numbered: n/a will not be implemented because they are not warranted or
are not reasonable.
Date: Signed:
Date:
Number of pages attached
Signed:
Mayor David Glass
John C. Brown, City Manager
ATTACHMENT 3
Spotlight
Housing for All: Promote Private Development Or Spend $40 Million
SUMMARY
Securing housing that is affordable continues to be
a challenge for almost half the citizens of Sonoma
County. Providing housing options for workingfamilies
who are well below the median income requires
public subsidies. Funding sufficient development
to meet the needs of this population and curb the
intense upward pressure on rents would require new
public investments in excess of $40 million per year.
Without significant realignment of current County and
city budgets, such sums are simply not available.
In order to increase the housing supply, the County
and its cities will have to aggressively promote
private sector development: Changing fee structures
and improving' the 'permitting process will help
private developers include affordable housing. in
then- projects. At the same time, the County and th'e
cities need to prioritize accessing new federal and
state subsidies for tHese'housing developments: The
Sonoma County -0,.ivll- Grand Jury learned' that 'the
County and the'City of Santa Rosa are considering a
wide''rarigeof policychoicesthat, if imple,mented,�will
eventually begin to increase the supply of housing,in
the Co'uhty. Absent,new funding; expediting adaptive
re -use of County /City owned properties such as
Chahate Hospital,. Los Guilicos and the underutilized
County Administration' campus appear to be logical
priorities.
BACKGROUND
Communities' throughout Sonoma County are
grappling with the challenge of housing costs that
are increasingly prohibitive for a significant portion of
the population. The recession of 2008 resulted in a
severe'slowdown in construction and renovation that
aggravated the irnDalance in the supply and demand.
In short, without sharing living quarters, working
multiple jobs; accepting substandard conditions or
commuting long distances, housing affordability is
simplyoutof reachfor manycitizens ofthe County. The
impact, especially on work force residents, has been
profound and has the potential to erode the fabric
of our communities. The Grand Jury investigated
the mechanisms that could increase the supply of
affordable housing to see if there are specific steps
that local jurisdictions can take to materially improve
the situation.
METHODOLOGY
Between September 2015 and April 2016, members
of the Grand Jury conducted more than twenty
interviews. These included representatives of the
following agencies: the Board of Supervisors; the
Community Development Commission (which acts
as Housing Authority for all jurisdictions in the
County except the City of Santa Rosa); the Permit
and Resource Management Department; the Santa
Rosa Housing Authority, the Santa Rosa Planning.
and Economic ;Development Department and the
Petaluma Housing Division. Jurors --also interviewed
non- profit housing .advocates,.. non - profit housing
proViders and. both (ocaVand national.for- profitreal
estate ' developers: Jurors researched numerous
publications and online -resources related ;,to
housing, housing finance, zoning, 'permitting and
construction.
D.ISCUSSiON
Affordability in Sonoma County
The conventional measure *of affordability is that a
family should not .pay- more than 30 percent of its
monthly household income for housing costs. By this
standard, Sonorria County ranks as one of the least
affordable housing markets in the United States.
Accord ingtothe2015 "OutofReach" Report published
by the National Low Income - Housing Coalition,
74,000 households, representing 40 percent of the
County, are :renters..According to the same report,
the countywide estimated average rental .cost for
a two bedroom apartment is $1,370 (many press
reports put this figure as high as $1;600). In order
to not exceed the 30 percent of income threshold
for housing costs, one full -time. worker would have to
earn $26.35 per hour to afford the average county
rent. A household with two wage earners would
require average hourly wages in excess of $13 per
hour to afford the average rent. The state minimum
wage is currently $10 dollars per hour.
Sonoma County Civil Grand Jury 14 Final Report 2015 -2016
On December 15th, 2015, the Sonoma County
Board of Supervisors passed a living wage ordinance
covering employees of certain companies that
contract with the County. Over time, the ordinance
will raise the minimum wage to $15 per hour for
employees of these contractors. While this ordinance
covers only 1,100 workers it is an important step.
On April 4, 2016, Governor Brown signed Senate
Bill 3 which gradually raises the statewide minimum
wage to $15 per hour by 2022. It is important to
note, however, that the Governor retains the option
to delay wage increases should economic conditions
warrant.
Another barometer of the housing crisis is the waiting
list for rental assistance from the. Housing Choice
Voucher program commonly referred to as Section
8 housing vouchers. The Section 8 program offers a
monthly subsidy that bridges the gap, between what
qualifying low- income, workers-can pay and the actual
market rent. Currently 10,000 local.applicants, and'
twice that .number . of out -of- state: applicants, have
met the criteria to qualify, for the :program and are
on_ the waiting list. Only. about 300.. -500 rental. units
become available each,year,.leavingthe vast:majority
of:,eligible Sectidn:8 recipients; unable to find,housing
within the , program . an'd having; to share- housing,
accept substandard housing, become a commuter
or leave the County.
In the past, the primary source of _subsidies for
construction of affordable housing came from local
redevelopment agencies. These agencies created
special redevelopment zones.that attracted financing
for new commercial -;and residential development.
These', redevelopment zones 'generated .,new fax
revenues. Taxesine excess ofthosecollectedpriortotl e
Affordable Housing Categories
• 43 percent of the City's households are below
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creation of the redevelopment zone were distributed
'directly to the redevelopment agency. By law, 20
percent of this incremental tax revenue was reserved
for investment in affordable housing. Redevelopment
agencies were ended in 2012. As a result, Sonoma
County and the City of Santa Rosa lost approximately
$6 million and $4 million, respectively, of annual
funding for affordable housing. This loss represents
between 150 -200 units peryearof housing intended
for Extremely Low and Very Low Income households.
The accompanying table, produced by the Santa
Rosa Housing Authority in 2015, covers the City of
Santa. Rosa but is representative of the situation
throughout the County.
The cost of housing is a challenge for many families
but, as shown in the chart, for Extremely Low and
Very Low Income families it is simply out of reach
without financial support. This table is based on
`family income' and reflects _wages :of two ,or. more
members of the household,. The private sector cannot
build housing that is affordable.to Extremely Low and
Very Low - income fa rhilies,.without public ,funding,,
Limiting the rent.charged makes,a Unit worth less
than the cost of building that,uniit. Thus there is .a
funding gap between, the cost:.of the ,bui.lding and..
its value that must 'be subsidized. Federal grants
and tax credit programs account for-as much as 75
percent of the . funding :gap..The.balance..njust,come r
from local jurisdictions. The Santa Rosa :Housing
Authority_estim,ates that Locally provided subsidies__
range from $48,000 to $.60,0,00: per unit. The size
of the funding gap becomes. clear when one looks
at the total number of new affordable housing units
the Association of Bay Area Governments (ABAG) has
allocated to Sonoma County. This allocation target is
called the Regional Housing Needs Allocation (RHNA)
and is part of a statewide program to -track whether
housing availability. keeps pace with .population
growth.
The local funding required to meetthe RHNAtargetfor
the cityofSanta Rosa is $155,764,634foreightyears.
This equals roughly $19 million.per year, compared
to Santa Rosa's historical annual spending of $5._6
million and results in a shortfall of $13.4 million.
Petaluma estimates a shortfall of $7.7 million per
year with respect to its RHNA allowance. The County
as a whole faces similar shortfalls in public funding
for the affordable housing developments suggested
by the RHNA.
Sonoma County Civil Grand Jury 15 Final Report 2015 -2016
County and City Actions Affecting Affordable
Housing Development
County and municipal policies covering affordable
housing are outlined in the Housing Elements of
their respective General Plans. These plans provide
roadmaps for growth and development that promote
affordable housing construction. Below are examples
of some of these policies.
Density Allowances: All jurisdictions provide for
"density allowances" that enable a developer to
increase the number of units that can be built on a
property. To be eligible, a certain percentage of the
units, rented or sold, must be affordable to specific
income groups. For example, on a parcel zoned for
twenty units a developer may be allowed to build
thirty units. The extra ten units equal a density bonus
of 50'per cent. A developer can build the additional
units provided he limits the sale or rental prices of at
least 30 percent of the total number of units in the
project (nine of thirty) to levels that are affordable to
households, i6�the Low Income category.
Fees: The Grand. Jury compared Sonoma County
building fees .to- -those in other Bay'`Area cities
and.:'found,.t'he County's to `be' higher than many
neighboring jur`isaictio_ns. Private sector developers
whom vve` n'terviewed highlighted fees ranging from
$50,000= 80,000lper dwelling as a major barrier to
increased building activity. Fees are referred to' as
`impact fees' because they; attempt to. recover the
increased.`associated- costs of community services
I 5i (fire, protection, traffic, police,. parks). Fees are
traditionallycharged on a per- unitbasis.This practice
has the uhinte'hded consequence of penalizing
smaller, higher density'units.'and encouraging large
single family dwellings. The - developer of four small
units.sellingfor'$400,000 each or $1.6 million total
might pay $20.0000 in fees While a' builder who
builds a 4,000 square foot mansion selling for $1.6
million could pay only $50,000 in fees.
By making it more profitable to build large houses,
both builders and p.olicymakers acknowledge that
the current fee formula promotes construction of
large single family dwellings. The County and the
City of Santa Rosa are reconsidering the method of
calculatingfees. The California Environmental Quality
Act (CEQA) mandates that all developments consider
their community impact. Thus efforts to reform fee
calculations must be carefully crafted so as not to
violate CEQA rules. The County plans to conduct a
study to justify such changes so that they will comply
with CEQA.
Fast Track Approval: Most General Plans call
for `fast track' approval processes for affordable
housing projects. City and County officials are keenly
aware that uncertainty surrounding the process of,
and delays in, obtaining permits increases developer
costs. Both the County and the City of Santa Rosa
permitting departments are attemptingto streamline
and simplify the permitting process. In practice, the
complexity of larger developments can and does
derail these good intentions. Early in our investigation
we could not find a private developer satisfied with
the progress made in either Santa Rosa's or the
County's approval processes. Several industry-
wide efforts to correct, this problem have produced
recommendations for ir- hproVements. None `has been
successfullyimpl- emented. It was not the intent'ofthis
investigation to addressthis issue, butthb,lack offast
track implementation is an important bottleneckthat
impacts -the overall supply and'dei-riand for housing
countywide: Santa Rosa'and'the County -are taking
steps to'streamline'their processes.
Rent Control: Rent `controls a`re often cited as' a
serious measure. to address s'oanng rental -prices;'
While rent 66' ntrol may 'p.rovide"`Cemporary ns, relief; -
many economists argue that such restrictio can
inhibit new buflding'and reduce maintenarice levels
of existing rentalstock: Imposing'rent controls would
also,require establisliingan- enforcement mechanism.
With limited budgets, it might'b'e more productive to
invest in improving code enforcement rather than
investing in a new bureaucracy.: It is unclear to.the*
Grand Jury how rent control effectively addresses
the underlying shortage `of hodsin,g.` This view is
echoed in the California State legislative Analyst's
2016 Report entitled "Perspectives- on Helping Low
Income Californians Afford Housing."
Inclusionary Zoning Versus 'In. Lieu! Fees: In 2016
the United States Supreme Court`allowe' a California
Supreme Court's decision to stand, Which upheld
the use of Inclusionary Zoning laws. Inclusionary
Zoning requires developers of more than twenty
housing units to market 15 percent of those units at
affordable rates. Inclusionary Zoning is, therefore a
tool that the County and cities Will continue to use to
promote affordable housing construction.
Sonoma County Civil Grand Jury 16 Final Report 2015 -2016
In the past, developers have had the option to pay
fees instead of actually building the affordable units.
In theory, these `in lieu' fees are used in partnership
with non - profit housing developers to build affordable
housing.There is rarely directaccountingtrail linking
`in lieu' fees to actual construction of affordable
housing, making it difficult to track the effectiveness
of these fees. The City of.Santa Rosa Is currently
studying the possibility of raising `in lieu' fees to
dissuade developers from paying their way out of the
obligation, forcing them to build and market lower
cost housing. Raising fees in orderto increase private
sector building is counterintuitive.. The S.upreme
Court's validation of inclusionary zoning .laws has
increased our, jurisdiction's leverage to .induce the
private sector to build affordable housing.
Fighting "Not in My Backyard "(NI,MBY)bbstruction:
Public .complaints can derail projects. that' meet, all
local zoning requirements. Re.centapprovalofhousing
on North. Street in Santa Rosa is. an ,example of a
project that neighbors challenged even though it met-
all -existing zoning and building code requirements.
Elected officials can be tempted,.to , mediate such
disputes, but, in doingso, theyunderminethe' General
Plan,and the ability of the planning department to
promote private sector. d m
evelopent. City and County.
planners. can ,rtot attract,d.eyelopers if the rules-of the
game are going.to be rewritten as part ofthe process..
The.appropriate time to challenge zoni,ng.and defend
neighborhood character is du`ring,the periodic,review,
of the General -Plan.. Large scale developments.that
include affordable housing, meet, existing zoning
requirements, and. comply . with all. other. codes,
merit expedited approval without being derailed: by.
NIMBYism. The 19.82 Housing Acco,untability.Act has.
repeatedly been upheld by.the courts:. Sometimes
called.the Anti -Nimby law;.this act makes it illegal-
to force developers to decrease the number of units
in a proposal that.otherwise complies with all .local
zoning and codes.
Area Specific Plans (ASP): Developers .frequently
cite the delays and complexities of complying with
CEQA as a major impediment to getting homes
from planning to permit. County and city planners
can create Area Specific Plans that pre - qualify a
project area for development. Once an ASP has been
approved, CEQA obligations have been met, making
parcels within the ASP more attractive to developers.
Our investigation disclosed numerous instances
where housing development was stymied by CEQA
challenges. This 1970 law is a major impediment to
housingdevelopmentthroughoutCalifornia. CEQAhas
prevented rampant. development, but it has become
a blunt instrument in need of reform. Advances in
conservation techniques should, for example, allow
Sonoma County to develop a countywide plan to
preserve the tiger salamander. This could be more
effective than repeated CEQA challenges that
discourage and delay needed housing projects.
Absent such reform, ASPs are the only way that the
County. and cities can eliminate this risk factor for
developers.
Building Homes,and Homelessriiess: Any discussion
of housing affordability must mention homelessness.
Assisting the chronically homeless is part. of the
ov6rall equation of housing supply' and demand
and thus has an impact. on .housing ,.gffordobiIity.
This is particularly true with respect to use of public
funds. In .2015, the County 'Board of ,Supervisors
voted to adopt, as priority policy, . the, Sonoma'
County Community. . Development Commission
report "Building Homes: .A Policy Maker's Toolbox
fo.r Ending Homelessness." .This report_ presents a
series of policy tools and .regulatory steps that fulfill
the goal of eradicating homelessness in* Sonoma
County. The central premise of Building Homes is
that.the investment required to shelter the' 2,000-
4;000 chronically homeless .peoIple in Sonoma
County by 2025 will yield a significant' savin_gs iri
reduced health care, emergency services, jail stays
and mental health services. Nevertheless, the
estimated net cost of implementing all the Building
Homes recommendations is $11 million per year
over ten years. Although the Board of Supervisors
has endorsed Building Homes, it is unclear that this
endorsement will translate into budget allocations.
County /City Owned Surplus Property: The County
and most cities within the County own property that
is either abandoned or underused. In addition, the
County faces a maintenance backlog estimated to
be $70 million over the next five years. Abandoned
properties, like the hospital on Chanate Road-or the
Sonoma County Civil Grand Jury 17 Final Report 2015 -2016
Los Guilicos facility adjacent to the new Juvenile
Justice Center, represent significant opportunities to
negotiate for affordable housing commitments from
developers. The Los Guilicos property, with current
maintenance costs in excess of $700,000 per year,
has significant residential and recreational potential
if developed. The County Administration Campus
offers significant redevelopment potential that could
also yield savings in County office costs. Similarly,
the City of Santa Rosa has thirty vacant parcels that
possibly could be used for affordable housing. The
City of Petaluma has two such parcels.
Private Sector Role in Creating Affordable
Housing
Without significant new.. public funding for affordable
housing, the private sector must be encouraged to
add supply to the housing market. There are several
ways to promote private, construction efforts:
Developers,. both for-profit and non - profit, using
only existing density bonus allowances, can and-do
build housing with -up to 3.Q percent of the units with
affordability restrictions.. These:. units. would meet
the needs of. Low and Moderate lrico;m,e residents.
However,.because.ofdelays inobta1ning'permits, many
b,uilders.prefer notjto attempt such :developments..
one frustrated- de.yeloper has abandoned projects
on several suitable properties because of permitting
delays and uncertairnties
The Land Trust Model, buying land and holding it
in trust for the benefit of the community,. effectively
removes the cost: of land from the equation. By
partnering with for - profit developers, Land Trusts help
bridge the funding. ga.p,:and encourage construction
of affordable housing: A Land Trust retains ownership
of the land to assure permanent affordability. This
model has been successfully used in the County.
Individual Home Owners play both positive and
negative roles in the supply and demand for all types
of housing. On the negative side, vacation rentals
take supply off the market. The impact of vacation
rental properties on housing supply is difficult to
assess. In today's market, with a 1 percent vacancy
rate, shifting even a small number of houses from
long -term leases to vacation rentals can increase
rental prices for the remaining supply.
Private home owners could also have a positive impact
on availability of alternative housing in the County.
Vancouver, British Columbia loosened its zoning and
permitting requirements covering accessory dwelling
units (granny units) and saw over a thousand of
these unit's built in a short period of time. Cities i'n
our County have differing rules covering additions of
this type. In some cases, like Santa Rosa, fees on the
order of $23,000 per granny unit maybe prohibitive.
Nevertheless, accessory dwellings represent an
opportunity to quickly increase supply and diversity
of housing options.
Similarly,, Shared Housing and Resource Exchange.
(SHARE) of 'Sonoma' County; which began 'in
201k atternpts. to match the . growing, number of
older County residents living in larger homes with
tenants. SHARE is modeled after a program in -San
Mateo County that has' matched more than 1,000
homeowners with tenants since it began. The. County.
is drafting amendments to its zoning rules to permit
this practice.
New Sources of Funding
Affordable housing development for Extremely Low
and Very low income residents requires leveraging
local grant funding plus County, or.city concessions-
to obtain federal tax .'credits. Since the , end of
Redevelopment Agencies, and barring new general
fund outlays, there are 'no significant sources' of
supplemental fundingforthe construction bf housing.
Federal funds are limited to the Federal Housing and
Human Development Agency (HUD) administered
programs such as Community Development Block
Grants (CDBG) and HOME Investment Partnerships'
Program (HOME). These programs annually yield
about. $2 million in awards that are allocated to
various programs across the County. According to
2015 -16 allocations, only $612,721 out of the $2
Sonoma County Civil Grand Jury 18 Final Report 2015 -2016
million is committed to actual new construction. The
balance is committed to Americans with Disabilities
Act (ADA) compliance upgrades, homelessness
services and maintenance of existing affordable
units. While the current funding picture is limited,
there are important sources of funding that may be
available to cities and the County, such as:
Cap and Trade Funds: California's Cap and Trade
law created an auction market for carbon credits.
Companies that do not want to invest in factory
improvements to reduce carbon emissions can buy
carbon credits. The funds generated by the purchase
of carbon credits have been reserved by the State, in
part, to subsidize "TransitOriented Development ".The
goal is'to encourage development around transit hubs
to increase the use of mass transport. The ope.ning.of
the Sonoma Marin Area, Rapid Transit (SMART) train
will create the opportunity for communities along the
rail line to� compete for grants from. these `cap and
trade' funds. The State has started a competitive
bidding process and anticipates that $200.milli.on
per year will be awarded under this program.
Surplus Land Sales: California Assembly .Bill 2135
(AB 2135) amended the State Surplus-Land Statute
tot permit the sale of public land at below .ma,rket
rates. The City of Santa ..Rosa and the County
control..'numerous properties that.:are unused or
underutilized. Since land acquisition rep'res.erits an
important component of housing development cost,
AB 2135 permits .the County or City to discount the
sale of land in exchange for affordability restrictions
on the dwellings that would be constructed there.
The County could take advantage of this legislation
in their efforts to redevelop the recently vacated
hospital site off Chanate Road in Santa Rosa.
New types of Redevelopment Areas: California
Assembly Bill 2 (AB 2), signed into law on September
22, 2015,. allows for the creation of Community
Revitalization and Investments Areas (CRIA). These
are similar to the now. ended Redevelopment Zones.
The criteria for creating a CRIA are so stringent
that they will likely preclude all but a few of the
poorest neighborhoods, in the County from this new
designation. If CRIA eligibility can be established,
these neighborhoods will function in the same way
they did under redevelopment. Incremental tax
revenues will be directed to local control and 25
percent ofthese monies will be reserved for affordable
housing. Another recent California law, Senate Bill
628, amends Title 5 of the Government Code to
allow for the creation of Enhanced Infrastructure
Financing Districts (EIFD). Such EIFDs will be allowed
to capture incremental tax revenues generated
from improvements constructed within the district.
The purposes of the EIFD are restricted but include
affordable housing development.
National Housing Trust Fund: The two federal
mortgage finance companies, Fannie Mae and
Freddie Mac, collect a small fee on every mortgage
transaction. A portion of this fee is designated for the
National Housing Trust Fund to support affordable
housing construction and rehabilitation nationwide.
Following the 2008 recession these funds were
restricted. With the economic recovery, they are
sche6led to. be released and California could receive
as much as $89' million annually.
Building Homes and Jobs Act: Pending California
Assembly Bill 1335 (AB 1335) proposes a $75 fee on
real.estate transactions. Some monies raised from
this fee would be. reserved, for housing. If passed,
the Bill will 'raise as much as $3004400 million
annually' of which 20 percent would be designated
for workforce housing and 10 percent for farrnworker
housing. The: remainder would be used to match
funds.'placed in a local or regional housing .trust
fund: When our investigation began, few agencies: in
the County had officially supported this bill: We'are
pleased to reportthat both the County and the City of
Santa Rosa have done so.
The Community Reinvestment Act (CRA): The CRA
"..:is intended to encourage depository institutions
to help meet the credit needs of the communities in
whichtheyoperate." Along 'with direct lending activity,
financial institutions mayfulfill their obligations under
this Act by investing in special purpose Community
Development Entities (CDEs), which facilitate capital
investments in lowto moderate income communities.
County officials have,indicated an interest in forming
public/0. rivate partnerships with local financial
institutions to encourage such CDE investments in
Sonoma County.
Without unrealistic sums of public funds, increasing
the supply of affordable housing will be a long -term
challenge for Sonoma County. Elected officials and
administrators should focus on those policies that
can accelerate construction of all types of housing.
and on building consensus for those policies.
Sonoma County Civil Grand Jury 19 Final Report 2015 -2016
FINDINGS
F1. The downturn in new home construction following
the recession, combined with low vacancy rates,
high rents, wage stagnation and the desirability of
Sonoma County as a place to live or vacation, has
resulted in systemic undersupply of housing of all
types.
F2. The end of redevelopment. agencies reduced
funding for affordable housing by $10 million
annually between the County and City of Santa
Rosa.
F3. Increasing the supply of affordable housing is
dependent upon budgeting priorities because a
$48- $60,000 local subsidy is required for every unit
of Very Low and Extremely Low Income Housing.
F4. The County would need to invest $40 million
annually to ensure adequate development' of
affordable housing for Very Low and Extremely Low
Income Housing.
F5. Density bonus allowances make it possible for
private sector developers to build 'Low and Moderate
Income housing without public subsidies.
F6. Private sector developers, including individual
homeowners with granny unit ,potential; .are often'
stymied in their efforts to pursue development
opportunities due to. high unit -based .permitting
costs, long bureaucratic delays, ''neighborhood
opposition and CEQA compliance.
F7. Area Specific Plans can accelerate the
development approval process and would facilitate
private development.
F8. New or untapped sources of public and private
monies are accessible to jurisdictions within the
County.
F9. The impact that vacation rentals have on the
overall supply of housing in the County is difficult to
quantify.
RECOMMENDATIONS
The Grand Jury recommends that:
R1. The Sonoma County Permit and Resource
Sonoma County Civil Grand Jury 20
Management Department and the City of Santa Rosa
Planning and Economic Development Department
reduce impactfeeswhere possible bychangingfrom
per unit to per square foot calculation and prioritize
working with for - profit developers by continuing to
improve permitting turnaround time (F5; F6).
R2. The City of Santa Rosa Planning and Economic
Development Department and the Petaluma
Planning Department encourage construction of
granny units by reducing permit fees and zoning
restrictions (F6).
R3. The Sonoma County Board of Supervisors, City
Council of Santa Rosa and City Council of Petaluma
improve regulation and oversight of vacation rental
activity in order to determine how rental rates are
affected by having long -term rentals removed from
the market (F9).
R4. The Sonoma County Board of Supervisors, City
Council of Santa Rosa and City Council of Petaluma
develop appropriate tax and fee schedules to offset
the impact of short -term vacation rentals on housing
supply (F9)•
R5. The Sonoma County Community Development
Commission and the Santa Rosa Housing Authority
take necessary steps to pre - approve building sites
with maximum density allowance to take advantage
of transit - oriented development grants available
from Cap and Trade funds (F 4,5,8).
R6. The Sonoma County Board of Supervisors,
Community Development Commission and Santa
Rosa Housing Authority prioritize the development
of new sources of affordable housing funding by
supporting the passage of AB 1335, applying for
grants from the National Housing Trust Fund and
creating Community Revitalization and Investment
Areas or Enhanced Infrastructure Financing Districts
(F8)
R7. The Sonoma County Board of Supervisors
coordinate with loca land regiona [financial institutions
to discharge their Community Reinvestment Act
obligations by investing in affordable housing efforts
(F8).
R8. The Sonoma County Community Development
Commission and the Santa Rosa Housing Authority
expedite formation of Area Specific Plans to facilitate
Final Report 2015 -2016
private housing development (F7).
R9. The Sonoma County Board of Supervisors, City
Council of Santa Rosa and City Council of Petaluma
consider invoking AB 2135 to donate surplus
lands to Land Trusts or to sell these properties at
below market rates to developers in exchange for
commitments to include affordable housing (F7,8).
REQUIRED RESPONSES
Pursuant to Penal Code Section 933.05, the Grand
Jury requires responses as follows:
R1. The Sonoma County Permit and Resource
Management Department, the City of Santa Rosa
Planning and Economic Development Department
R2. City of Santa Rosa Planning and Economic
Development Department, Petaluma Planning
Department
R3. Sonoma County Board of Supervisors,. City
Council of Santa Rosa, City Council of Petaluma:
R4.. Sonoma County Board. of Supervisors, the
City.Council of Santa Rosa and the City Council of
Petaluma
R5. Sonoma County Board of Supervisors,
Community Development Commission, Santa-Rosa.
Housing Authority
R6. Sonoma. County Board of Supervisors, Sonoma
Countyl Community Development Commission,
Santa Rosa Housing Authority
R7..Sonoma County Board of Supervisors
R8. Sonoma County Board of Supervisors, Sonoma
County Community Development Commission,
Santa Rosa Housing Authority
R9. Sonoma County Board of Supervisors, City
Council of Santa Rosa, City Council of Petaluma
BIBLIOGRAPHY
Building Homes- A Policy Maker's Toolbox for Ending
Homelessness
CA Legislative Analyst Report: California's High
Housing Costs
CA Legislative Analyst Report: Perspectives on
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City of Santa Rosa 2015 -2016 Budget
City of Petaluma 2015 -2016 Housing Element
City of Santa Rosa 2015 -2016 Housing Element City
of Santa Rosa Housing Report #1- Housing Programs
and Funding Recommendations
County of Sonoma Consolidated Plan for years
2010 -2015
County of Sonoma 2015 -2016 Housing Element
Economic Development. Strategy and Jobs Plan,
2011 for Sonoma County
Housing Land, Trust of Sonoma County
Housing Seattle: A Roadmap to an Affordable and
Livable City
Management Partner's Assessment of the Santa
Rosa Planning, and ; Economic Development
Department
Next 10: Current 5tate.,of the California Housing.
Market. - A Comparative Analysis
North Bay Biz: Cost of Living Article
Permit Process Improvement Task Force Report
Santa Rosa Housing Authority Action Plan Sonoma
County 2015 -2016 and 2016 -2017 Budget
Sonoma County Community Development
Commission.2016 -2017 Budget
Sonoma County Comprehensive County Facilities
Plan
The 1982 Housing Accountability Act Strong Towns -
Santa Rosa: A City In Flux
Urban Land Institute: 10 Principles for Developing
Affordable Housing
Sonoma County Civil Grand Jury 21 Final Report 2015 -2016