HomeMy WebLinkAboutStaff Report 5.B 11/19/2018IMF
DATE: November 19, 2018
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TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Sue Castellucci, Housing Administrator
SUBJECT: Resolution Amending the Inclusionary Housing Program in the City of
Petaluma's General Plan 2025, 2015-2023 Housing Element as Adopted by
Resolution No. 2014-190 N.C.S.
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution amending the
Inclusionary Housing Program, Program 4.3, in the City of Petaluma's General Plan 2025, 2015-
2023 Housing Element as Adopted by Resolution No. 2014-190 N.C.S.
BACKGROUND
As part of Council goal discussion in February 2017, the Council prioritized a review of housing -
related fees to generate funding for affordable housing projects. Beginning with the first
workshop on September 25, 2017, staff presented the inclusionary policy along with the housing
fee increases at five City Council meetings; a joint workshop with the Planning Commission; and
two Planning Commission meetings.
On July 24, the Planning Commission approved Resolution 2018-24 recommending the City
Council adopt amendments to the City's Inclusionary Housing Program, Program 4.3 in
Petaluma's General Plan 2025, 2015-2023 Housing Element following the Housing and
Community Development Department'(HCD) approval of the amendments or expiration of the
time for HCD review of the amendments.
On August 6, 2018, City Council approved a resolution increasing the Commercial Linkage fees
to the current level of Sonoma County's commercial linkage fee. The fees went into effect upon
the adoption of the resolution
On September 5, 2018 a letter was sent to HCD with Planning Commission Resolution No.
2018-24, regarding the proposed amendment to the City's Inclusionary Housing Program,
requesting a targeted limited review of Policy 4.2, Program 4.3 of Petaluma's 2015-2023
Housing Element.
On September 10, 2018, City Council approved a resolution increasing the Housing In -Lieu fees
as required by Program 4.3 of the 2015-2023 Housing Element. The new fees became effective
upon the adoption of the resolution with the exception of any residential project application or
mixed-use project application with a residential component that either is deemed completed by
the Planning Division prior to January 1, 2019 or has recorded a final map as of January 1, 2019
that is consistent with the previously approved tentative map.
On September 17, 2018 the City Council adopted an ordinance amending the' text of Chapter 3,
of the Implementing Zoning Ordinance, Ordinance 2300 N.C.S., to add requirements for
Inclusionary Housing. Ordinance No. 2663 N.C.S. became effective on October 18, 2018.
DISCUSSION
On August 6, 2018, Council reached consensus on:
• Implementation of a 15% inclusionary requirement for providing onsite affordable units
for any residential development with 5 or more units.
• Increasing the housing in -lieu fee to a 20% inclusionary requirement, which would
equate to $10.12 per square foot.
• Increasing the commercial linkage fee to the current Sonoma County commercial linkage
fee.
• Adoption of a process whereby developers can request approval for satisfying the City's
inclusionary goals by means other than providing onsite affordable units.
• Development applications deemed complete before January 1, 2019 will be subject to the
in -lieu fees and inclusionary requirements in effect immediately prior to the new housing
in lieu fees and inclusionary requirements taking effect.
Section 65585 of the Planning Law requires local agencies submit proposed housing element
amendments to HCD for review 60 days prior to adoption and requires that local cities consider
HCD findings prior to adoption of housing element amendments. Staff notified HCD on
September 5, 2018 of the proposed amendment to the City's 2025 General Plan (Attachment #2).
On October 29, HCD sent a letter making the finding that the proposed amendment would not
adversely impact the current compliance status of the housing element once adopted. The revised
element will continue to comply with state housing element law (GC Article 10.6) when the
revisions are adopted and submitted to HCD. (Attachment #3)
FINANCIAL IMPACT
There are no financial impacts implementing the program and approving the proposed
amendment to the 2025 General Plan, 2015-2023 Housing Element.
ATTACHMENTS
1. Resolution Amending the Inclusionary Housing Program
2. Letter sent to HCD on proposed General Plan Amendment
3. HCD letter approving the proposed General Plan Amendment
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ATTACHMENT #1
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA AMENDING
THE CITY'S INCLUSIONARY HOUSING PROGRAM, PROGRAM 4.3 IN THE CITY
OF PETALUMA'S GENERAL PLAN 2025,2015-2023 HOUSING ELELMENT AS
ADOPTED BY RESOLUTION NO. 2014-190 N.C.S.
WHEREAS, the California Planning and Zoning Law, Government Code Section 65000
et seq. ("Planning Law"), in Section 65300 requires California cities to prepare and adopt general
plans to guide future development of the city, and specifies in Section 65302 the mandatory
elements general plans must contain, including housing elements; and
WHEREAS, Section 65585, subdivision (a) of the Planning Law requires consideration
of guidelines adopted by the California State Department of Housing and Community
Development ("HCD") in Health and Safety Code Section 50459 in the preparation of housing
elements; and
WHEREAS, Section 65588, subdivision (e) of the Planning Law prescribes the timetable
for complying with housing element update requirements; and
WHEREAS, on May 19, 2008, the City Council approved Resolution No. 2008-085
N.C.S., adopting the City of Petaluma General Plan 2025 ("General Plan"), which contained the
City's then -existing housing element; and
WHEREAS, on June 15, 2009, the City Council approved Resolution No. 2009-094
N.C.S., adopting the Petaluma 2009-2014 Housing Element; and
WHEREAS, Section 65585 of the Planning Law requires that local agencies submit
proposed housing element amendments to HCD for review 60 days prior to adoption, and
requires that local legislative bodies consider HCD findings prior to adoption of housing element
amendments, if such findings are made available within the 60 day review period, and permits
local legislative bodies to adopt housing element amendments without HCD findings if they are
not made available within the review period; and
WHEREAS, HCD reviewed the Petaluma Housing Element 2015-2023 as presented to
the Planning Commission on October 28, 2014, and determined that the element meets the
requirements of the Planning Law; and
WHEREAS, on December 1, 2014, the City Council approved Resolution No. 2014-190
N.C.S., adopting the Petaluma 2015-2023 Housing Element; and
WHEREAS, on January 23, 2015, the HCD approved the 2015-2023 Housing Element
as approved by the City Council; and
WHEREAS, on November 2, 2015 the City Council approved Resolution No. 2015-171
N.C.S., adopting a First Amendment to the 2015-2023 Housing Element Program 4.3 to ensure
consistency between the City's Housing Element and the holding in Palmer/Sixth Street
Properties, L.P. v. City of Los Angeles, (2009) 175 CA 4th 1396, which held that the Costa -
Hawkins Act, Civil Code section 1954.53(a), prohibits local agencies from requiring on-site
inclusionary housing in rental housing developments; and
WHEREAS, recent amendments to the 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 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, the 2015-2023 Housing Element as amended identifies and analyzes
existing and projected housing needs and states goals and policies, and quantifies 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 pipeline development but only 75 units
are affordable in accordance with the City's then current inclusionary housing requirements; and
WHEREAS, in -lieu fees collected by the City in accordance with Program 4.3 of the
2015-2023 Housing Element, are insufficient to fund construction of sufficient numbers of
affordable housing units to meet the City's projected housing needs; 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 2015-2023
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 a nexus study ("EPS Study") to identify funds the City could lawfully recover from
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inclusionary housing in lieu fees and to provide information and analysis in support of potential
updates to the City's affordable housing in lieu fee; 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
WHEREAS, it is the desire of the City Council to approve a Second Amendment to the
inclusionary housing policy contained in the 2015-2023 Housing Element 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 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 with the EPS Study 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 City's 2015-2023 Housing Element policies and programs; and
WHEREAS, the proposed Second Amendment to the 2015-2023 Housing Element is
substantially consistent with the 2015-2023 Housing Element as adopted by the City Council on
December 1, 2014, because it implements the same objectives; and
WHEREAS, on December 1, 2014, the City Council adopted Resolution No. 2014-189
N.C.S. approving a negative declaration of environmental impact of the 2015-2023 Housing
Element, all in accordance with the requirements of Public Resources Code Section 21000 et.
seq. ("CEQA"), the CEQA Guidelines at 14 CFR 15000 et seq. ("CEQA Guidelines") and the
City of Petaluma Environmental Review Guidelines; and
WHEREAS, the proposed Second Amendment to the 2015-2023 Housing Element is
categorically exempt from environmental review under Section 15061(b)(3) of the CEQA
Guidelines because CEQA applies only to projects that have the potential for causing a
significant effect on the environment, and it can be seen with certainty that there is no possibility
that the proposed Second Amendment to the 2015-2023 Housing Element may have a significant
effect on the environment, since the proposed amendment does not create changes in the physical
environment, does not result in any changes to the General Plan or Implementing Zoning
Ordinance land use policies, and any development that occurs in the future subject to such
standards will undergo an independent analysis pursuant to the requirements of CEQA; and
WHEREAS, on May 31, 2018, public notice of the June 12, 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 received regarding the proposed Second Amendment to the 2015-
2023 Housing Element were collected and provided to the members of the Planning
Commission; and
WHEREAS, on June 12, 2018, the Planning Commission held a duly noticed public
hearing to consider the proposed Second Amendment to the 2015-2023 Housing Element 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
adopted a resolution recommending the City Council amend, subject to HCD approval, the
City's Inclusionary Housing Program, Program 4.3 in the City of Petaluma's General Plan 2025,
2015-2023 Housing Element; and
WHEREAS, in accordance with Resolution No. 2018-24 adopted by the Planning
Commission on July 24, 2018, and the requirements of Section 65585, subdivision (b)(1) of the
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Planning Law, the Clerk of the Commission and/or City staff have submitted the proposed
Second Amendment to the 2015-2023 Housing Element to HCD for review and approval; and
WHEREAS, on October 25, 2018, HCD reviewed the proposed changes and determined
that the proposed amendment would not adversely impact the current compliance status of the
housing element once adopted; and
WHEREAS, on November 8, 2018, public notice of the November 19, 2018 public
hearing before the City Council 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 received regarding the proposed Second Amendment to the 2015-
2023 Housing Element were collected and provided to the members of the City Council; and
WHEREAS, on November 19, 2018, the City Council held a duly noticed public hearing
to consider the proposed Second Amendment to the 2015-2023 Housing Element, the public
comments received and any findings provided by HCD;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma
as follows:
1. The above recitals are true and correct and are incorporated into this resolution as
findings of the City Council.
2. The Second Amendment to the 2015-2023 Housing Element is exempt from CEQA
pursuant to Section 15061(b)(3) of the CEQA Guidelines because CEQA applies only to
projects that have a potential for causing a significant effect on the environment and
adoption of the Second Amendment to the 2015-2023 Housing Element does not create
changes to the physical environment.
3. Based on the findings and conclusions contained in this resolution, the City Council finds
it in the public interest to amend, and hereby amends Program 4.3 of the City of Petaluma
2015-2023 Housing Element in Chapter 11 of the City's General Plan 2025 to read as
follows:
Program 4.3:
a. By provisions incorporated into the City's Implementing Zoning Ordinance,
require residential projects, both homeownership and rental projects consisting of
five or more units to provide 15% of the number of units in the project on-site as
affordable housing with affordability restrictions of at least a 45 year duration for
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homeownership developments and affordability restrictions for of at least a 55
year duration for rental developments.
b. The City Council in its sole discretion may approve alternative compliance in one
of the following forms:
i. 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
ii. Payment of a fee in -lieu of providing affordable housing on site
established by the City's adopted fee schedule; or
iii. Use of an alternative method, such provision of a smaller percentage of
on-site units, and/or donation of a separate parcel of land for development
of affordable housing to otherwise satisfy the objectives of the City's
inclusionary policies reflected in this program.
4. Except as amended herein, the City of Petaluma 2015-2023 Housing Element continues
unchanged and in full force and effect.
5. Submission to HCD. Staff is directed to submit the Housing Element amendment
pursuant to this resolution to HCD for approval in accordance Section 65585, subdivision
(g) of the Planning Law.
6. Effective Date. This amendment shall take effect thirty days from the date of its adoption
pursuant to State law, including Midway Orchards v. County of Butte (1990) 220
Cal.App.3d 765, 778 and DeVita v. County of Napa (1995) 9 Cal. 4th 763, 787, fn. 9.
ATTACHMENT #2
LU
CITY, OF PETALUMA
POST OrincE BOX 61
s $ PETAI UMA, CA 94953-0061
David Glass
Mayor
Chris Albertson
Teresa Barrett
Mike Healy
Gabe I{earney
Dave King
Kathy Miller
Councih neobers
City Manager's Office
11 English Street
Petahnna, CA 94952
Phone (707) 778-4345
rax (707) 778-4419
E -Mail:
citymgi{alcipetahona, ca, us
Economic Development
Phone (707) 778-4549
rax (707) 778-4586
HousiugDivision
Phone (707) 778-4555
Fax (707) 778- 4586
Information Technology Division
Phone (707) 778-4417
Fax (707) 776-3623
Risk Management Division
Phone (707) 776-3695
Fax (707) 776-3697
Q1
ipYt 90
ODiVA1VNIIY
September 5, 2018
Melinda Coy, Senior Policy Specialist
Housing & community Development
2020 W. El Camino Ave., Suite 500
Sacramento, CA 95833
RE: Targeted Limited Review
Melinda,
In May 2018, we had a conversation on the process of amending one of
Petaluma's programs in our 2015-2023 Housing Element. Over the past months,
we have had community meetings, Planning Commission meetings, and City
Council meetings to discuss this proposed change to Program 4.3 of Policy 4.2
which requires developers of market -rate residential and non-residential projects
share in the responsibility of providing affordable housing in Petaluma.
We are requesting a targeted limited review of Program 4.3 as this amendment is
not substantial and does not change Policy 4.2 of the Housing Element but
clarifies how the market -rate developer can meet their responsibility for providing
affordable units onsite or by means of another alternative.
Attached is the proposed change in our inclusionary program in the 2015-2023
Housing Element. 1 am also attaching the Planning Commission resolution
recornmending the City Council approve the amendment. Let me know if there is
any other information you need.
Sincerely,
Sue Castellucci
Housing Administrator
Enclosures
CITY OF PETALUMA
Housing Element In -Lieu Policy
CURRENT IN -LIEU POLICY (amended and adopted November 2, 2015)
Policy 4.2 Assign a share of the responsibility for providing affordable housing to the developers of
market -rate housing and non-residential projects.
Programs:
4.3 Continue to require residential projects of five or more units to contribute to the provision
of below-market rate housing in one of the following ways:
a. Dedicate 15% of the units on-site or a portion of the project site or property to the
City or a non-profit organization for use as affordable housing.
b. Within a half -mile radius of the planned SMART stations, developers are encouraged
to provide at least 15 percent of the units in a rental housing project at rents
affordable to very low -and low-income households and 15 percent of the units in a
for -sale project at prices affordable to low -and moderate -income households for a
minimum period of 30 years.
c. Within a half -mile radius of the planned SMART stations, developers may be
required to provide at least 15 percent of the units in a rental housing project at rents
affordable to very low and low-income households and 15 percent of the units in a
for -sale project at prices affordable to low and moderate -income households for a
period of at least 30 years.
d. The developer can make an in -lieu payment to the City's Housing Fund.
e. Use alternative methods to meet the intent of the inclusionary requirement, subject to
approval by the City Council.
PROPOSED AMENDMENT#2 TO ADDRESS RECENT COURT CASES...
Policy 4.2 Assign a share of the responsibility for providing affordable housing to the
developers of market -rate housing and non-residential projects.
Programs:
4.3 Require developers of residential projects, both homeownership and rentals, of five or
more units to provide 15% of the units on-site for use as affordable housing with affordability
restrictions for 45 years for homeownership developments and affordability restrictions for 55
years for rental developments.
Subject to approval by the City Council, developers may fulfill their inclusionary
requirement by one of the following ways:
a. Donate a portion of the project site or property to the City or a non-profit
organization for use as affordable housing.
b. The developer may make an in -lieu payment to the City's Housing Fund in an
amount equal to a 20% inclusionary requirement.
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c. Use alternative methods, such as requesting a smaller percentage of on-site units,
and/or donating a separate parcel of land for development affordable housing to
otherwise satisfy the objectives of the City's inclusionary policies reflected in this
program.
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ATTACHMENT #3
STATE OF CALIFORNIA - BUSINESS CONSUMER SERVICES AND HOUSING AGENCY EDMUND G BROWN IR Governor
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
DIVISION OF HOUSING POLICY DEVELOPMENT o ®I
2020 W. EI Camino Avenue, Suite 500
Sacramento, CA 95833
(916) 263-2911 /FAX (916) 263-7453
www.hcd.ca.00v
October 25, 2018
Sue Castellucci, Housing Administrator
City of Petaluma
P.O Box 61
Petaluma, CA 94953
RE: Review of the Draft Amendment to the City of Petaluma's Housing Element
Dear Sue Castellucci:
Thank you for submitting the draft amendment to the City of Petaluma's housing
element which was received for review on September 5, 2018. Pursuant to Government
Code, section 65585, the Department of Housing and Community Development (HCD)
is required to review draft housing elements and report the findings to the locality
pursuant to Government Code (GC) Section 65585(b).
The amendment made a change to Program 4.3 of Policy 4.2, which. amends the city's
In -Lieu Program to provide increased flexibility in meeting affordability requirements.
HCD finds the draft amendments would not adversely impact the current compliance
status of the housing element once adopted. As a result, the revised element will
continue to comply with state housing element law (GC, Article 10.6) when these
revisions are adopted and submitted to HCD, pursuant to Gov. Code Section 65585(g).
HCD looks forward to following Petaluma's progress in implementing the policies, and
programs set forth in the element, pursuant to Gov. Code Section 65400. If we can be of
additional assistance in implementing the element, please contact Melinda Coy, of our
staff, at (916) 263-7425.
Sincerely,
Zachary Olmstead
Deputy Director
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