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HomeMy WebLinkAboutOrdinance 2663 N.C.S. 09/17/2018EFFECTIVE DATE OF ORDINANCE October 18, 2018 Introduced by Mike Healy ORDINANCE NO. 2663 N.C.S. Seconded by Gabe Kearney 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 units 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 Ordinance No. 2663 N.C.S. Page 1 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, at a City Council workshop on September 25, 2017, EPS presented an administrative report dated August 29, 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 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 to 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 a July 24, 2018 public hearing before the Planning Commission to consider a proposed Second Amendment to the 2015-2023 Housing Element and zoning text amendments to codify associated inclusionary housing requirement in Ordinance No. 2663 N.C.S. Page 2 Chapter 3 of the IZO 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, on July 24, 2018 the Planning Commission held a duly noticed public hearing in accordance with Chapter 25 of the IZO to consider a proposed Second Amendment to the 2015-2023 Housing element and proposed zoning text amendments to codify associated inclusionary housing requirements in Chapter 3 of the IZO, and at the conclusion of the public hearing, the Planning Commission adopted Resolution No. 2018-25, recommending that the City Council adopt the proposed inclusionary housing requirements as amendments to the IZO; and WHEREAS, on June 7, 2018, public notice of a June 18, 2018 public hearing before the City Council to consider the proposed inclusionary housing amendments to the IZO 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 proposed IZO amendments and continued the item to a date certain of August 6, 2018; and WHEREAS, on August 6, 2018, the City Council continued the item to a date certain of September 10, 2018; and WHEREAS, on September 10, 2018 the City Council of the City of Petaluma held a duly noticed public hearing to consider proposed amendments to the IZO, Ordinance 2300 N.C.S. incorporating inclusionary housing requirements into the IZO; 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: 1. The text amendments contained in this ordinance are exempt from the California Environmental Quality Act ("CEQA") pursuant to Section 15061(b) (3) of the 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. This ordinance is also statutorily exempt from CEQA pursuant to Section 15283 of the CEQA Guidelines because this ordinance and the inclusionary housing policies it adopts reflect determinations by the City regarding the need to adequately provide for the City's share of regional housing needs pursuant to Government Code section 65584. Any development that occurs in the future subject to the land use standards in the City's General Plan and the IZO, including the inclusionary requirements added by this ordinance, will undergo an independent analysis pursuant to the requirements of CEQA. 49 2. In accordance with the holding of the California Supreme Court in California Building 50 Association v. City of San Jose, (2015) 61 Cal. 4th 435, where a city adopts an 51 inclusionary ordinance to mitigate the effect of new market rate housing on the 52 City's stock of affordable housing, to increase the number of affordable units in the 53 city, and to distribute the affordable units throughout the city to obtain the benefits 54 of economically diverse communities, such an ordinance is not an exaction, if it does Ordinance No. 2663 N.C.S. Page 3 1 not require a developer to pay a monetary fee or convey a protected property 2 interest, but rather imposes lawful, non -confiscatory land use restrictions in the form of 3 price limits. Under California Building Association, such inclusionary ordinances, to be 4 valid, need only be reasonably related to the broad general welfare purposes for 5 which they are enacted. Such inclusionary housing ordinances that require 6 residential projects to provide a reasonable amount of on-site affordable units, and 7 offer reasonable alternative means of satisfying the ordinance's inclusionary 8 objectives, are valid local land use regulations and not takings. The City Council finds 9 that the text amendments contained in this ordinance are valid local land use 10 regulations and do not effect takings in accordance with California Building 11 Association. 12 13 3. In accordance with Sections 25.010 and 25.050(B) of the City's IZO, Ordinance No. 14 2300 N.C.S., the proposed amendments to the IZO are in general conformity with the 15 General Plan in that these amendments do not change the general character or 16 impacts of current zoning regulations and implement policies of the General Plan as 17 outlined in the June 12, 2018 Planning Commission agenda materials and June 18, 18 2018 and September 10, 2018 City Council agenda materials. 19 20 4. In accordance with Section 25.050(B) of the IZO, the proposed amendments are 21 consistent with the public necessity, convenience, and welfare in that they clarify 22 inclusionary housing requirements and regulations to implement the policies and 23 programs in the Housing Element of the General Plan, 24 25 5. The above recitals and the findings in this section are hereby declared to be true and 26 correct and are incorporated into this ordinance as findings of the City Council of the 27 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. 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: 42 1. Location. Unless otherwise permitted in accordance with this section, inclusionary 43 housing units shall be provided on the site of the residential development. 44 45 2. Quantity. The number of onsite inclusionary housing units shall be equal to or 46 greater than 15 percent of the total number of residential units or lots in the 47 residential project. 48 49 3. Income Levels. The following income restrictions shall apply based on the 50 ownership structure of the residential project. 51 a. Inclusionary housing units in a rental project shall be made affordable to 52 very low and low income households as follows: 7.5% of the total number of 53 residential units or lots in the residential project shall be affordable to very Ordinance No. 2663 N.C.S. Page 4 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 available 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 0.5 or greater, 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 (B) (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: 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 Ordinance No. 2663 N.C.S. Page 5 1 2. Payment of a housing in -lieu fee established by the City's adopted fee schedule; 2 or 3 3. Alternative mixture of units by income levels; or 4. Use of an alternative method, such as provision of a smaller percentage of onsite inclusionary units coupled with payment of a housing 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 section. 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 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 the proposed alternative for compliance. In considering requests from a developer for alternative compliance to 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 retained by the City to 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 the developer's sensitive proprietary information utilized in the report shall be redacted before making the report public to the extent permitted by law. Section 3. Procedures. The City Council may, by duly adopted resolution, adopt procedures, or authorize the City manager to promulgate procedures, intended to implement the requirements of this ordinance in accordance with all applicable provisions of the city charter, the City's Housing Element and State Housing 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. Ordinance No. 2663 N.C.S. Page 6 Section 5. 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 6. 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 application or mixed-use project application with a residential component that either a) has a recorded final map as of January 1, 2019 that is consistent with the previously approved tentative map (regardless of whether further subdivision of further discretionary approvals for the project are required), or b) that is deemed complete by the Planning Division prior to January 1, 2019, shall be subject to those inclusionary requirements in effect immediately prior to the new inclusionary requirements taking effect pursuant to this ordinance. The exception in clause a) of this provision for residential project applications or mixed-use project applications with residential components that have recorded final maps as of January 1, 2019 shall expire and cease to be of any effect without further action of the City Council concerning project applications that would otherwise qualify for the exemption but that are not deemed complete prior to January 1, 2024. 22 23 24 INTRODUCED, and ordered posted/published, this 10th day of September 2018, 25 26 ADOPTED this 17th day of September 2018, by the following vote: 27 28 Ayes: Albertson, Barrett, Mayor Glass, Vice Mayor Healy, Kearney, King, Miller 29 Noes: None 30 Abstain: None 31 Absent: None 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 ATTEST: aovl�_Lll Claire Cooper, City Clerk s d d , avid Glass, Mayor APPROVED AS TOtFORM: Eric W. Danly, City Atorney Ordinance No. 2663 N.C.S. Page 7