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HomeMy WebLinkAboutPlanning Commission Resolution 2018-25 07/24/2018RESOLUTION 2018-25 CITY OF PETALUMA PLANNING COMMISSION RECOMMENDING THE CITY COUNCIL AMEND THE TEXT OF CHAPTER 3 ENTITLED "DEVELOPMENT AND LAND USE APPROVAL REQUIREMENTS" OF THE IMPLEMENTING ZONING ORDINANCE 2300 N.C.S. TO ADD REQUIREMENTS FOR INCLUSIONARY HOUSING WHEREAS, Section 25.010 of the City of Petaluma Implementing Zoning Ordinance (IZO) provides in pertinent part that no amendment that regulates matters listed in Government Code Section 65850 which matters include the use and construction of buildings and structures, shall be made to the IZO unless the Planning Commission and City Council find the amendments to be in conformity with the General Plan and consistent with the public necessity, convenience, and general welfare in accordance with Section 25.050(B) of the IZO; and WHEREAS, the Petaluma Housing Element 2015-2023 ("Housing Element"), a mandatory element of the City of Petaluma General Plan 2025, identifies and analyzes existing and projected housing needs and states goals, policies, quantified objectives and special programs for the reservation, improvement and development of housing in the City from 2015 through 2023; and WHEREAS, the City has 2,161 housing units in various stages of development but only 75 of the units are planned as affordable in accordance with the City's inclusionary housing requirements in the Housing Element; and WHEREAS, in -lieu fees collected by the City in accordance with Program 4.3 of the Housing Element are insufficient to fund construction of sufficient numbers of affordable housing units to meet the City's projected housing needs; and WHEREAS, recent amendments to the state Planning Law and Zoning Law, Government Code section 65000 et seq. ("Planning Law") pursuant to AB -1505, which took effect January 1, 2018 and are codified in sections 65850 and 65850.1, permit cities to adopt ordinances requiring inclusion of affordable residential units for moderate, low, very low, and extremely low income households in rental housing developments, and require that such ordinances provide alternate means of compliance that may include, but are not limited to, in -lieu fees, land dedication, off-site construction, or acquisition and rehabilitation of existing units, and grant the state Department of Housing and Community Development ("HCD") the authority to review certain such ordinances that require more than 15 percent of the total number of units in a residential rental development to be affordable to households earning 80 percent or less of the area median income; and WHEREAS, on February 12, 2018 the City Council held a workshop to discuss inclusionary housing policies and directed staff to prepare amendments to the Housing Element and other legislative documents as needed to utilize the authority provided in AB -1505 to require construction of on-site inclusionary units in residential rental developments; and WHEREAS, the City contracted with Economic and Planning Systems (EPS) to complete studies ("EPS Studies") to identify funds the City could lawfully recover from inclusionary housing fees and to provide information and analysis in support of potential updates to the City's affordable housing fees; and, WHEREAS, EPS issued an administrative report in August 2017 that detailed a gap between market prices of housing in the City and prices affordable to very low, low, and moderate -income households, and included a proposed per square foot in lieu fee for rental and ownership projects based on the affordability gap; and Planning Commission Resolution No. 2018-25 Page 1 WHEREAS, it is the desire of the City Council to approve an inclusionary housing ordinance in accordance with the authority in AB -1505 to require on-site inclusionary housing units as part of residential housing development projects, both homeownership and rental, in the City to mitigate the effect of new market rate housing on the City's stock of affordable housing to increase the number of affordable units in the city, and to distribute the affordable units throughout the city to obtain the benefits of economically diverse communities and generally to ensure the provision of affordable housing to help address the City's Regional Housing Need Allocation and the acute housing crisis in Sonoma County, and to provide for alternative means of compliance as AB -1505 requires; and WHEREAS, it is the desire of the City Council to increase the City's Inclusionary Housing In -Lieu fee in accordance the EPS Studies apply to developers of residential housing that the Council permits to make a payment in -lieu of providing affordable housing on site to more closely approach developers' fair -share responsibility toward contributing to implementing the Housing Element policies and programs; and WHEREAS, the text amendments contained in this ordinance provide regulations to implement Policy 4.2 and Program 4.3 of the Housing Element; and WHEREAS, on May 31, 2018 public notice of the June 12, 2018 Planning Commission meeting to consider the text amendments was published in the Argus -Courier as an eighth page ad; and WHEREAS, on June 12, 2018, the Planning Commission held a duly -noticed public hearing in accordance with Chapter 25 of the IZO to consider the amendments and after discussion continued the item to a date uncertain to provide time for further discussion at a joint workshop of the City Council and Planning Commission; and WHEREAS, on July 9, 2018, the City Council and Planning Commission held a duly noticed joint workshop to consider amendments to the City's inclusionary housing program; and WHEREAS, on July 12, 2018, public notice of the July 24, 2018 public hearing before the Planning Commission to consider the proposed Second Amendment to the 2015-2023 Housing Element was published in the Argus Courier as an eighth page display ad in accordance with the requirements of Government Code sections 65090, 65091, and 65853; and WHEREAS, in accordance with Section 65585, subdivision (b)(2) of Planning Law, the public comments that the City has received regarding the proposed Second Amendment to the 2015-2023 Housing Element have been collected and provided to the members of the Planning Commission; and WHEREAS, on July 24, 2018, the Planning Commission held a duly noticed public hearing to consider the proposed Second Amendment to the 2015-2023 Housing Element; and NOW THEREFORE, BE IT RESOLVED by the Planning Commission of the City of Petaluma as follows: 1. The above recitals are hereby declared to be true and correct and are incorporated into the resolution as findings of the Petaluma Planning Commission. The text amendments contained in Exhibit A to this resolution are exempt from the California Environmental Quality Act ("CEQA") pursuant to Section 15061(b) (3) of the State CEQA Guidelines. The proposed text amendments are covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Adoption of this amendment does not create changes in the physical environment and is therefore exempt. In addition, the proposed amendments do not result in any changes to the Petaluma General Plan 2025 ("General Plan") land use policies or Planning Commission Resolution No. 2018-25 Page 2 Implementing Zoning Ordinance ("IZO"). Any development that occurs in the future subject to such standards will undergo an independent analysis pursuant to the requirements of CEQA. 2. In accordance with the holding of the California Supreme Court in California Building Association v. City of San Jose, (2015) 61 Cal. 4th 435, where a city adopts an inclusionary ordinance to mitigate the effect of new market rate housing on the City's stock of affordable housing, to increase the number of affordable units in the city, and to distribute the affordable units throughout the city to obtain the benefits of economically diverse communities, such an ordinance is not an exaction, if it does not require a developer to pay a monetary fee or convey a protected property interest, but rather imposes lawful, non - confiscatory land use restrictions in the form of price limits. Under California Building Association, such inclusionary ordinances, to be valid, need only be reasonably related to the broad general welfare purposes for which they are enacted. Such inclusionary housing ordinances that require residential projects to provide a reasonable amount of on-site affordable units, and offer reasonable alternative means of satisfying the ordinance's inclusionary objectives, are valid local land use regulations and not takings. The City Council finds that the text amendments contained in this ordinance are valid local land use regulations and do not effect takings in accordance with California Building Association. 3. In accordance with Sections 25.010 and 25.050(B) of the City's IZO, Ordinance No. 2300 N.C.S., the proposed amendments to the IZO as contained in Exhibit A are in general conformity with the Petaluma General Plan 2025 in that these amendments do not change the general character or impacts of current zoning regulations and implement policies of the General Plan as outlined in the June 12, 2018 Planning Commission report. 4. In accordance with Section 25.050(B) of the IZO, the proposed amendments are consistent with the public necessity, convenience, and welfare in that they clarify inclusionary housing requirements and regulations to implement the policies and programs in the Housing Element of the General Plan. Planning Commission Resolution No. 2018-25 Page 3 ADOPTED this 24th day of July, 2018, by the following vote: Commission Member Aye No Absent Abstain Councilmember Healy X Chair Marzo X Vice Chair Alonso X Bauer X Benedetti- Petnic X Gomez X Wolpert X TTEST: He her Hines, Com ion Secretary s s Scott Alonso, Vice Chair aaWel V Lisa Tennenbaum, TO FORM: City Attorney Planning Commission Resolution No. 2018-25 Page 4 Exhibit A ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PETALUMA AMENDING THE TEXT OF CHAPTER 3 ENTITLED "DEVELOPMENT AND LAND USE APPROVAL REQUIREMENTS" OF THE IMPLEMENTING ZONING ORDINANCE, ORDINANCE 2300 N.C.S. TO ADD REQUIREMENTS FOR INCLUSIONARY HOUSING WHEREAS, Section 25.010 of the City of Petaluma Implementing Zoning Ordinance (IZO) provides in pertinent part that no amendment that regulates matters listed in Government Code Section 65850 which matters include the use and construction of buildings and structures, shall be made to the IZO unless the Planning Commission and City Council find the amendments to be in conformity with the General Plan and consistent with the public necessity, convenience, and general welfare in accordance with Section 25.050(B) of the IZO; and WHEREAS, the text amendments contained in this ordinance modify Chapter 3 entitled "Development and Land Use Requirements" of the IZO to add a new section 3.040 - Inclusionary Housing; and WHEREAS, the Petaluma Housing Element 2015-2023 ("Housing Element"), a mandatory element of the City of Petaluma General Plan 2025, identifies and analyzes existing and projected housing needs and states goals, policies, quantified objectives and special programs for the reservation, improvement and development of housing in the City from 2015 through 2023; and WHEREAS, the City has 2,161 housing units in various stages of development but only 75 of the units are planned as affordable in accordance with the City's inclusionary housing requirements in the Housing Element; and WHEREAS, in -lieu fees collected by the City in accordance with Program 4.3 of the Housing Element are insufficient to fund construction of sufficient numbers of affordable housing units to meet the City's projected housing needs; and WHEREAS, recent amendments to the state Planning Law and Zoning Law, Government Code section 65000 et seq. ("Planning Law") pursuant to AB -1505, which took effect January 1, 2018 and are codified in sections 65850 and 65850.1, permit cities to adopt ordinances requiring inclusion of affordable residential units for moderate, low, very low, and extremely low income households in rental housing developments, and require that such ordinances provide alternate means of compliance that may include, but are not limited to, in -lieu fees, land dedication, off-site construction, or acquisition and rehabilitation of existing units, and grant the state Department of Housing and Community Development ("HCD") the authority to review certain such ordinances that require more than 15 percent of the total number of units in a residential rental development to be affordable to households earning 80 percent or less of the area median income; and WHEREAS, on February 12, 2018 the City Council held a workshop to discuss inclusionary housing policies and directed staff to prepare amendments to the Housing Element and other legislative documents as needed to utilize the authority provided in AB -1505 to require construction of on-site inclusionary units in residential rental developments; and WHEREAS, the City contracted with Economic and Planning Systems (EPS) to complete studies ("EPS Studies") to identify funds the City could lawfully recover from inclusionary housing fees and to provide information and analysis in support of potential updates to the City's affordable housing fees; and, WHEREAS, EPS issued an administrative report in August 2017 that detailed a gap between market prices of housing in the City and prices affordable to very low, low, and moderate -income households, and included a proposed per square foot in lieu fee for rental and ownership projects based on the affordability gap; and Planning Commission Resolution No. 2018-25 Page 5 WHEREAS, it is the desire of the City Council to approve an inclusionary housing ordinance in accordance with the authority in AB -1505 to require on-site inclusionary housing units as part of residential housing development projects, both homeownership and rental, in the City to mitigate the effect of new market rate housing on the City's stock of affordable housing to increase the number of affordable units in the city, and to distribute the affordable units throughout the city to obtain the benefits of economically diverse communities and generally to ensure the provision of affordable housing to help address the City's Regional Housing Need Allocation and the acute housing crisis in Sonoma County, and to provide for alternative means of compliance as AB -1505 requires; and WHEREAS, it is the desire of the City Council to increase the City's Inclusionary Housing In -Lieu fee in accordance the EPS Studies apply to developers of residential housing that the Council permits to make a payment in -lieu of providing affordable housing on site to more closely approach developers' fair -share responsibility toward contributing to implementing the Housing Element policies and programs; and WHEREAS, the text amendments contained in this ordinance provide regulations to implement Policy 4.2 and Program 4.3 of the Housing Element; and WHEREAS, on May 31, 2018 public notice of the June 12, 2018 Planning Commission meeting to consider the text amendments was published in the Argus -Courier as an eighth page ad; and WHEREAS, on June 12, 2018, the Planning Commission held a duly -noticed public hearing in accordance with Chapter 25 of the IZO to consider the amendments and after discussion continued the item to a date uncertain to provide time for further discussion at a joint workshop of the City Council and Planning Commission; and WHEREAS, on July 9, 2018, the City Council and Planning Commission held a duly noticed joint workshop to consider amendments to the City's inclusionary housing program; and WHEREAS, on July 12, 2018, public notice of the July 24, 2018 public hearing before the Planning Commission to consider the proposed Second Amendment to the 2015-2023 Housing Element was published in the Argus Courier as an eighth page display ad in accordance with the requirements of Government Code sections 65090, 65091, and 65853; and WHEREAS, in accordance with Section 65585, subdivision (b)(2) of Planning Law, the public comments that the City has received regarding the proposed Second Amendment to the 2015-2023 Housing Element have been collected and provided to the members of the Planning Commission; and WHEREAS, on July 24, 2018, the Planning Commission held a duly noticed public hearing to consider the proposed Second Amendment to the 2015-2023 Housing Element; and WHEREAS, after the conclusion of said public hearing, the Planning Commission adopted Resolution No. 2018-25, recommending that the City Council adopt the amendments; and WHEREAS, on June 7, 2018, a public notice of the June 18, 2018 public hearing before the City Council to consider the amendments was published in the Argus -Courier as an eighth page ad; and WHEREAS, on June 18, 2018, the City Council of the City of Petaluma held a duly noticed public hearing to consider the amendments and continued the item to a date certain of August 6, 2018; and WHEREAS, on August 6, 2018 the City Council of the City of Petaluma held a duly noticed public hearing to consider the amendments; and Planning Commission Resolution No. 2018-25 Page 6 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PETALUMA AS FOLLOWS: Section 1: Findings, The City Council of the City of Petaluma hereby finds: 2. The text amendments contained in this ordinance are exempt from the California Environmental Quality Act ("CEQA") pursuant to Section 15061(b) (3) of the State CEQA Guidelines. The proposed text amendment s are covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Adoption of this amendment does not create changes in the physical environment and is therefore exempt. In addition, the proposed amendments do not result in any changes to the Petaluma General Plan 2025 ("General Plan") land use policies or Implementing Zoning Ordinance ("IZO"). Any development that occurs in the future subject to such standards will undergo an independent analysis pursuant to the requirements of CEQA. 3. In accordance with the holding of the California Supreme Court in California Building Association v. City of San Jose, (2015) 61 Cal. 4th 435, where a city adopts an inclusionary ordinance to mitigate the effect of new market rate housing on the City's stock of affordable housing, to increase the number of affordable units in the city, and to distribute the affordable units throughout the city to obtain the benefits of economically diverse communities, such an ordinance is not an exaction, if it does not require a developer to pay a monetary fee or convey a protected property interest, but rather imposes lawful, non - confiscatory land use restrictions in the form of price limits. Under California Building Association, such inclusionary ordinances, to be valid, need only be reasonably related to the broad general welfare purposes for which they are enacted. Such inclusionary housing ordinances that require residential projects to provide a reasonable amount of on-site affordable units, and offer reasonable alternative means of satisfying the ordinance's inclusionary objectives, are valid local land use regulations and not takings. The City Council finds that the text amendments contained in this ordinance are valid local land use regulations and do not effect takings in accordance with California Building Association. In accordance with Sections 25.010 and 25.050(B) of the City's IZO, Ordinance No. 2300 N.C.S., the proposed amendments to the IZO are in general conformity with the Petaluma General Plan 2025 in that these amendments do not change the general character or impacts of current zoning regulations and implement policies of the General Plan as outlined in the June 12, 2018 Planning Commission agenda report and June 18, 2018 City Council agenda report. 5. In accordance with Section 25.050(B) of the IZO, the proposed amendments are consistent with the public necessity, convenience, and welfare in that they clarify inclusionary housing requirements and regulations to implement the policies and programs in the Housing Element of the General Plan. 6. The above recitals and the findings in this section are hereby declared to be true and correct findings of the City Council of the City of Petaluma. Section 2. IZO Chapter 3, is hereby amended to add a new Section 3.040 entitled "Inclusionary Housing" to read as follows: 3.040 - Inclusionary Housing This section shall govern inclusionary housing as part of residential development pursuant to Housing Element Policy 4.2 and associated Program 4.3. Planning Commission Resolution No. 2018-25 Page 7 A. Applicability. The provisions of this section shall apply to all residential projects of five or more units, including residential components of mixed-use projects. B. Requirements. All residential projects of five or more units shall comply with following requirements: 1. Location. Unless otherwise permitted in accordance with this section, inclusionary housing units shall be provided on the site of the residential development, 2. Quantity. The number of onsite inclusionary housing units shall be equal to or greater than 15 percent of the total number of residential units or lots in the residential project. 3. Income Levels. The following income restrictions shall apply based on the ownership structure of the residential project. a. Inclusionary housing units in a rental project shall be made affordable to very low and low income households as follows: 7,5% of the total number of residential units or lots in the residential project shall be affordable to very low income households and 7.5% of the total number of residential units or lots in the residential project shall be affordable to low income households. b. Inclusionary housing units in an ownership project shall be made affordable to low and moderate income households as follows: 7.5% of the total number of residential units or lots in the residential project shall be affordable to low income households and 7,5% of the total number of residential units or lots in the residential project shall be affordable to moderate income households. 4. Duration. Affordable units required pursuant to this section shall be made subject to affordability covenants that are binding on owners of the units and their successors for a duration of at least 55 years in the case of rental projects and for a duration of at least 45 years in the case of ownership projects. 5. Fractional Units. In determining the number of inclusionary units required to be provided pursuant to this section, fractional units shall be rounded to the nearest whole integer. For fractions less than 0.5 the number shall be rounded down and the fractional unit shall be paid by applicable in -lieu fee. For fractions greater than 0.5 the number shall be rounded up to the nearest whole integer to provide onsite units. For example, in the case of a 20 unit residential rental project, provision (13)(3)(a) would require making 7.5% or 1.5 of the units affordable to very low income households, and 7.5% or 1.5 of the units affordable to low income households. In this example, the inclusionary unit obligation for the project for would be rounded up 2 units affordable to very low income households and 2 units affordable to low income households, C. Inclusionary unit development standards. In addition to other development standards and requirements set forth in this ordinance and other applicable laws and regulations, all inclusionary housing units shall be consistent with the following standards: 1. Inclusionary units shall be constructed and occupied concurrently with or prior to the construction and occupancy of the market rate residential units in the project, unless an alternative schedule based on extenuating circumstances is adopted as part of the project approval. In phased projects inclusionary units shall be constructed and occupied in proportion to the number of units in each phase of the project, 2. Inclusionary units shall be distributed throughout the residential project site, to the fullest extent practicable. 3. The design, appearance and general quality of the affordable units shall be comparable and compatible with the design of the market rate units as determined through the Site Plan and Architectural Review process., provided that all other zoning and building codes are met. D. Alternative Compliance. At the sole discretion of the City Council, a project's inclusionary housing requirement may be met through alternative compliance in one of the following ways or a combination thereof: 1. Donation of a portion of the project site or an off-site property to the City or a non-profit organization deemed acceptable by the City for development of affordable housing; or 2. Payment of a housing in -lieu fee established by the City's adopted fee schedule; or 3. Alternative mixture of units by income levels; or Planning Commission Resolution No. 2018-25 Page 8 4. Use of an alternative method, such as provision of a smaller percentage of onsite inclusionary units coupled with payment of in -lieu fee for the inclusionary units not provided. E. Submittal Requirements. All applications submitted to the City for development of a residential project of five or more units or a mixed-use project including a residential component of five or more units shall include the proposed method of satisfying the requirements of this section. Compliance with the inclusionary housing requirements shall be reviewed as part of the development review process and presented to the decision making body as part of the overall project analysis for consistency with both the City's General Plan and this ordinance. Submittal requirements to demonstrate compliance with this section shall include the following; 1. Total number of residential units in the project 2. Number of onsite inclusionary units 3. Proposed sale price of both market rate and inclusionary units and/or proposed rental price for both market rate and inclusionary units 4. Location of onsite inclusionary units within the project 5. Size and bedroom count for the proposed inclusionary units 6. Should the applicant wish to request alternative compliance from the City Council, the application shall include the request and describe the method and details of proposed alternative compliance. In considering requests from a developer for alternative compliance rather than creating inclusionary affordable units, the City Council's consideration will include whether creating inclusionary affordable units would render the overall project financially infeasible under then -current economic conditions. To that end, the developer may, at its option and at its own expense, provide its project financial information to an independent, third -party housing/real estate analyst contracted by the City, who will conduct a financial feasibility analysis. The independent analysis will be conducted utilizing the applicant's data, and any additional information that may be required of the developer to complete a thorough assessment. The independent analyst shall employ recognized best practices for the industry, and render a detailed recommendation to the City Council to support its conclusions Any of developer's sensitive proprietary information utilized in the report shall be redacted before making the report public to the extent permitted by law. Section 4. Except as amended herein, the City of Petaluma Implementing Zoning Ordinance, Ordinance No. 2300 N.C.S. remains unchanged and in full force and effect. Section S. Severability. If any section, subsection, sentence, clause, phrase or word of this ordinance is for any reason held to be unconstitutional, unlawful, or otherwise invalid by a court of competent jurisdiction or preempted by state legislation, such decision or legislation shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Petaluma hereby declares that it would have passed and adopted this ordinance and each and all provisions thereof irrespective of the fact that any one or more of said provisions be declared unconstitutional, unlawful, or otherwise invalid. Section b. Effective Date. This ordinance shall become effective thirty (30) days after the date of its adoption by the Petaluma City Council except that any residential project or mixed use application with a residential component that is deemed complete by the Planning Division prior to XXXXX shall, in addition to the compliance options prescribed in this ordinance, have the option of paying the affordable housing in lieu fees in effect and otherwise applicable to the project at the time of payment. Planning Commission Resolution No. 2018-25 Page 9