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HomeMy WebLinkAbout05-07-1996 PC Agenda • • PLANNING COMMISSION Regular Meeting - Dublin Civic Center Tuesday - 7:30 p.m. 100 Civic Plaza, Council Chambers May 7, 1996 1. CALL TO ORDER 2. ROLL CALL 3. PLEDGE OF ALLEGIANCE TO THE FLAG 4. ADDITIONS OR REVISIONS TO THE AGENDA 5. MINUTES OF PREVIOUS MEETINGS -April 8, 1996 Study Session and April 16, 1996 Regular Meeting 6. ORAL COMMUNICATION -At this time, members of the audience are permitted to address the Planning Commission on any item(s) of interest to the public; however, no ACTION or DISCUSSION shall take place on any item which is NOT on the Planning Commission Agenda. The Commission may respond briefly to statements made or questions posed, or may request Staff to report back at a future meeting concerning the matter. Furthermore, a member of the Planning Commission may direct Staff to place a matter of business on a future agenda. Any person may arrange with the Planning Director(no later than 11:00 a.m., on the Tuesday preceding a regular meeting) to have an item of concern placed on the agenda for the next regular meeting. 7. WRITTEN COMMUNICATIONS 8. PUBLIC HEARINGS 9. NEW OR UNFINISHED BUSINESS 9.1 PA 96-018 City of Dublin Inclusionary Zoning Ordinance. The City • Council and Planning Commission have held two special study sessions on the City's affordable housing program, and have provided staff with direction on several major issues related to the Inclusionary Zoning Ordinance. The draft Ordinance will be reviewed by the Planning Commission and a recommendation will be made to the City Council. 10. OTHER BUSINESS (Commission/Staff Informational Only Reports) 10.1 Staff discussion on upcoming projects and Commission scheduling. (next three month probable agenda items) 10.2 Staff discussion on possible new project Planning Commission field trip. 11. ADJOURNMENT (OVER FOR PROCEDURE SUMMARY) AGENDA STATEMENT PLANNING COMMISSION REGULAR MEETING DATE: MAY 7, 1996 SUBJECT: City of Dublin Inclusionary Zoning Ordinance Report Prepared by: Tasha Huston, Associate Planner EXHIBITS ATTACHED: Exhibit 1. Resolution No. 96-14 recommending City Council adoption of Negative Declaration, and approval of the Inclusionary Zoning Ordinance; with Draft Inclusionary Zoning Ordinance as Attachment A Exhibit 2 Summary of administration options Exhibit 3. Samples of City programs offering deferred fees RECOMMENDATION: A. Open Public Hearing B. Receive public testimony C. Forward draft Inclusionary Zoning Ordinance to City Council with a recommendation of approval FINANCIAL STATEMENT: The City Council has authorized obtaining consulting services to assist staff in evaluating housing programs and in preparing specific recommendations on the Inclusionary Zoning Ordinance. To date, the costs associated with housing consultant services are over $10,425. A portion of these costs will be recovered when future development projects occur in the Eastern Dublin Specific Plan area. DESCRIPTION: At the February 6, 1996 study session on affordable housing, the City Council and Planning Commission provided staff with direction on several major issues related to the Inclusionary Zoning Ordinance. The Commission and Council also instructed staff to research model programs for maintaining affordability of the Inclusionary units, consider alternatives to on-site construction of Inclusionary units, and offer incentive programs for constructing Inclusionary units. Staff provided information on these topics at the March 19, 1996 study session, after which the City Council and Planning Commission provided additional direction needed for preparation of the draft Inclusionary Ordinance. The draft Inclusionary Ordinance is enclosed as an attachment to the Resolution labeled Exhibit 1. COPIES TO: Planning Director Senior Planner Project Planner Project File Planning Secretary 9. ITEM NO. PAGE / OF �� At the March study session,the Council and Commission also requested that the staff look into options for administering the Ordinance,as well as define examples of programs where some City impact fees may be deferred as an incentive for developers to construct Inclusionary units. Information on these topics are contained in Exhibits 2 and 3. The staff recommendation is for the Planning Commission to review the draft Inclusionary Zoning Ordinance, and,after public testimony,recommend it for approval to the City Council. DRAFT ORDINANCE The proposed Inclusionary Zoning Ordinance is consistent with the requirements of the City's General Plan and Eastern Dublin Specific Plan. The Ordinance contains the following requirements: 1. For new residential projects of 20 units or more,5%of the units in the project must be units which are affordable to very low,low,and moderate income households,with a distribution of the Inclusionary Units in the following income categories: 2%of the project units targeted toward very low income households, 2%of the project units targeted toward low income households, 1%of the project units targeted toward moderate income households. 2. The Inclusionary Unit requirements apply to both rental and ownership projects 3. Some restrictions will be required on the Inclusionary Rental Units in order to maintain long-term affordability,with recapture mechanisms recorded with the deed for some Inclusionary Ownership Units. 4. Options for developers to meet their affordable housing obligations in ways other than on-site construction would be available. These could include the following: A. Payment of a fee in lieu of building the Inclusionary Units. The amount of the fee will be established by Resolution of the City Council. The Council has directed that the fee shall be based upon a charge of$.75 cents per square foot for multi-family and$1.00 per square foot for single family,and the fee would be based upon the total number of units in the project. There will be no per-unit cap on the fee,and the fee will be adjusted periodically,based upon the change in the Consumer Price Index. B. Off-site construction C. Land dedication D. Credit transfers. 5. Incentives will be offered to encourage Inclusionary Units to be constructed,with the understanding that no incentives are guaranteed to any projects,and use of the incentives must be approved by the City Council. 2 PACT Z, pr Zo V 6. The City will use the Department of Housing and Urban Development data on an annual basis for the purpose of determining affordability. 7. An Affordable Housing Agreement approved by the City Manager will be required to demonstrate how a project complies with the Inclusionary Zoning Ordinance requirements. If an Applicant pays the In-Lieu fee instead of constructing Inclusionary Units,a simple Agreement form may be used. If a project constructs Inclusionary Units,the agreement will need to address unit restrictions and any financing or resale issues. 8. This Chapter is not intended to replace any provisions of the City's Density Bonus Ordinance or other City Ordinances. PROGRAM OPTIONS At the previous study session,the Council and Commission requested additional information on the following two issues: 1. Administering the Inclusionary Ordinance;and 2. Offering deferred City fees as incentives to developers for constructing Inclusionary units. These issues are discussed below. ORDINANCE ADMINISTRATION Once the City has enacted an Inclusionary Zoning Ordinance,the issue of implementation and administration of the Ordinance and its programs will need to be considered. In the initial stages of Ordinance implementation,the City's staff time involvement would likely be minimal,involving only review and documentation of how development projects satisfy the requirements of the Ordinance. It is anticipated that most developers will comply with the Ordinance by opting to pay a fee in-lieu of constructing affordable units. However,if development projects do provide Inclusionary units,the City would need to be actively involved in monitoring or managing some aspects of the project,such as income qualification screening and financing details. Eventually,assuming the City generates funds through developer contributions of in-lieu fees, consideration will need to be given to the best use of those funds. During this period,as in-lieu fee funds begin to accumulate,City and Housing Authority Staff could prepare an implementation plan for use of the funds. This plan,when developed,could utilize additional resources which may be available at the time,such as federal government financing mechanisms,as well as produce a product which is feasible for the specific market period. Depending upon the program selected by the City for use of in- lieu fee funds,it is very possible that a non-profit housing developer such as Eden Housing or North Bay Ecumenical Homes,would provide the administration necessary to operate their program. City Staff have met with staff of the Dublin Housing Authority to discuss administration of the Ordinance. The Housing Authority staff proposes an arrangement for consultation services on a time and materials basis,with City staff overseeing the administration. A range of options may be considered depending upon the level of involvement and consultation desired by the City. One option may be to utilize a portion of the funds accrued through In-Lieu fees to cover the costs of development and initial administration of a pilot program or affordable housing project. However,it is anticipated that City participation in an affordable housing project would not occur until substantial funding has accumulated. Further discussion of possible future housing programs and projects to utilize in-lieu fee funds can be scheduled for a future meeting. 3 In summary,City staff is recommending that at this time,monitoring compliance with the ordinance be handled by City staff,with consultation from the Housing Authority for administering financial and other detailed aspects. The level of administration needed for monitoring compliance with the Ordinance,and the recommendation for who should provide the administration,is illustrated in the chart in Exhibit 3. INCENTIVES/FEE WAIVERS At the March 19th Study Session,the Council and Commission discussed whether they would like to offer incentives to developers in order to encourage them to construct the Inclusionary units,rather than collecting a fee in lieu of construction. Incentives for producing more than the required percentage of affordable units were also considered. The consensus was that a list of possible incentives which may be available should be included with the Ordinance,with no implied guarantee that the incentives will be offered. Some Commissioners and Councilmembers expressed concern with the implications from deferral of development fees as an incentive,and requested that Staff provide options and examples of how the fee deferral could work. There are commonly two types of fees for which a City allows deferred payment: 1)Project processing fees, and 2)Impact fees. When fee waivers are granted by a City,it is usually considered a project subsidy. The funds for subsidies usually come from City housing trust funds(such as the housing in-lieu fee fund)or government housing programs(such as CDBG or Home funds). Federal housing funds also have requirements which restrict the use of the funds for specific types of projects and/or income levels. If fees are waived,the City's financial and budget projections would be affected. If fees are deferred,the total amount collected would not change,but the City would need to establish a mechanism to ensure that the fees would be collected eventually,so that the City is not left holding the bag if a project is not completed. Staff recommends that there be two levels of opportunities for deferred fees. The first level of deferral could be approved by the City Manager,and would apply to project processing fees(i.e.:planning applications,plan review,etc.). The second level of deferral would require City Council approval,and would apply to project impact fees(i.e.:parks and improvement fees). Both types of deferrals would require an agreement entered into by the developer and City,establishing the terms for payment and method for recovering cost in the event of projects which are not completed. A list of Cities surveyed who allow deferral or waiver of fees,is included in Exhibit 3. RECOMMENDATION Staff recommends that the Planning Commission consider the information presented,and adopt Resolution No.96-14,recommending City Council adoption of the Negative Declaration,and approval of the draft Inclusionary Zoning Ordinance(Exhibit 1). g:\pa#\1996\pa96018\stfrpts\srpc5-96. 4 l r RESOLUTION NO.96-14 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF DUBLIN RECOMMENDING CITY COUNCIL ADOPTION OF A NEGATIVE DECLARATION AND APPROVAL OF AN INCLUSIONARY ZONING ORDINANCE WHEREAS,pursuant to the City of Dublin Housing Element Strategy I.B., the City of Dublin has prepared an Inclusionary Zoning Ordinance;and WHEREAS,the Planning Commission held a public hearing on said draft Ordinance on May 7, 1996, for which proper notice was given in accordance with California State Law;and WHEREAS,the Inclusionary Zoning Ordinance has been reviewed in accordance with the provisions of the California Environmental Quality Act;and WHEREAS,an Environmental Impact Report, SCH#84011002,was prepared for the Dublin General Plan and certified on February 11, 1985;which addressed impacts of the future development of the City of Dublin;and which impacts and analysis exceed the impacts of the Inclusionary Zoning Ordinance;and WHEREAS,the program proposed in the Inclusionary Zoning Ordinance,including in-lieu fees,does not raise any new significant environmental issues which were not addressed in the Dublin General Plan Environmental Impact Report,and therefore a Negative Declaration was prepared for this project;and WHEREAS,notice of preparation of the Negative Declaration was published in the local newspaper and posted in public buildings to provide for a 21 day public review period in accordance with the City of Dublin Environmental Guidelines and the California Environmental Quality Act(CEQA);and WHEREAS,Section 8.24.080(B)of the proposed Inclusionary Zoning Ordinance provides the option of paying a fee in-lieu of constructing Inclusionary Units,and states that the City Council shall establish the amount of the in-lieu fees by resolution;and WHEREAS,the methodology for determining the amount of the in-lieu fees will be set forth by City Council Resolution;and WHEREAS,the Planning Commission, at its May 7, 1996 meeting considered all written and oral testimony submitted at the public hearing. NOW,THEREFORE,BE IT RESOLVED THAT THE Dublin Planning Commission does hereby recommend that the City Council adopt a Negative Declaration,and approve the draft Inclusionary Zoning Ordinance,attached as Exhibit A. PASSED, APPROVED AND ADOPTED THIS 7th day of May, 1996. AYES: NOES: ABSENT: Planning Commission Chairperson ATTEST: Community Development Director EXHIBIT 1 DRAFT --- ORDINANCE NO. AN ORDINANCE OF THE CITY OF DUBLIN ADDING CHAPTER 8.24 TO THE DUBLIN MUNICIPAL CODE ESTABLISHING ZONING ORDINANCE PROVISIONS RELATING TO INCLUSIONARY HOUSING THE CITY COUNCIL OF THE CITY OF DUBLIN DOES HEREBY ORDAIN AS FOLLOWS: Chapter 8.24 is added to the Dublin Municipal Code to read as follows: Section 1.Provisions "ARTICLE I GENERAL PROVISIONS Section 8.24.010. Title. This Chapter shall be called the"Inclusionary Zoning Ordinance of the City of Dublin". Section 8.24.020. Findings. The City of Dublin finds that the citizens of Dublin are experiencing a housing shortage for very low,low and moderate income households. A goal of the City's adopted Housing Element is to achieve a balanced community with housing available for households of a range of income levels.Persons with very low,low, and moderate incomes who currently live and/or work in the City are increasingly unable to locate housing at prices they can afford,and often become excluded from living in the City. Federal and State housing subsidy programs are not sufficient by themselves to satisfy the housing needs of lower and moderate income households. The City finds that the high cost of newly constructed housing does not,to any appreciable extent,provide housing affordable by very low,low,and moderate income households,and that continued new development which does not include affordable housing will serve to further aggravate the current housing shortage by reducing the supply of developable land. The City further finds that it is a public purpose of the City,and a public policy of the State of California as mandated by the requirements for a housing element of the City's General Plan,to make available an adequate supply of housing for persons of all economic segments of the community. Section 8.24.030.Purpose. The purpose of this Chapter is to enhance the public welfare and assure that further housing development contributes to the attainment of the above-described housing goals by increasing the production of residential units affordable by households of very low,low,and moderate income,and by providing funds for the development of very low,low,and moderate income ownership and/or rental housing. A limited and finite amount of land remains for development of housing in the City and extended planning area. In order to assure that the remaining developable land is utilized in a manner consistent with the City's housing policies and needs,the City declares that FIVE(5)percent of the total number of units of all new residential developments containing twenty(20)or more units, constructed within the City as it now exists and as may be altered by annexation,shall be affordable by households of very low,low,and moderate income, including ownership and/or rental projects. t PAGE r; 20 DRAFT Section 8.24.040. Definitions. For the purposes of this Chapter,certain words and phrases shall be interpreted as set forth in this section unless it is apparent from the context that a different meaning is intended. Affordable Rent:A monthly rent(including utilities as determined by a schedule prepared by the City)which does not exceed the following: Very-Low-income households: 1/12 of 30%of 50%of the annual Median Income for Alameda County,as adjusted for household size,based upon the annual income figures generated by the Federal Department of Housing and Urban Development(HUD) Low-income households: 1/12 of 30%of 80%of the annual Median Income Alameda County,as adjusted for household size,based upon annual income figures provided by HUD Moderate-income households: 1/12 of 30%of 120%of the annual Median Income for Alameda County,as adjusted for household size,based upon the annual income figures provided by HUD Affordable Sales Price:A sales price which results in a monthly mortgage payment(including principal and interest)which does not exceed the following: For Very-Low-income households: 1/12 of 30%of 50%of the annual Median Income for Alameda County,as adjusted for household size,based upon the annual income figures generated by the Federal Department of Housing and Urban Development(HUD) For Low-income households: 1/12 of 30%of 80%of the annual Median Income Alameda County,as adjusted for household size,based upon annual income figures provided by HUD For Moderate-income households: 1/12 of 30%of 120%of the annual Median Income for Alameda County,as adjusted for household size,based upon the annual income figures provided by HUD Amenities: Interior features which are not essential to the health and safety of the resident,but provide visual or aesthetic appeal,or are provided as conveniences rather than as necessities. Interior Amenities may include,but are not limited to,fireplaces,garbage disposals,dishwashers,cabinet and storage space and bathrooms in excess of one. Amenities shall in no way include items required by City building codes or other ordinances which are necessary to insure the safety of the building and its residents. Applicant: Any person,firm,partnership,association joint venture,corporation,or any entity or combination of entities which seeks City permits and approvals for a project. 2 PAGE 7 U. . City: The City of Dublin or its designee or any entity with which the City contracts to administer this chapter. Dublin Employee: Any head of household,or in the case of married couples either spouse,who has worked within the City Limits of Dublin continually for one(1)year immediately prior to the date of application for an Inclusionary Unit. Dublin Resident: Any person who has lived within the City Limits of Dublin continually for one(1)year immediately prior to the date of application for an Inclusionary unit. Continually shall be construed to include lapses of residency of no longer than six months. Dwelling Unit: A dwelling designed for occupancy by one household. Household: One person living alone;or two or more persons sharing residency whose income is considered for housing payments. HUD: The United States Department of Housing and Urban Development or its successor. Inclusionary Unit: A dwelling as required by this Chapter which is rented or sold at Affordable Rents and/or Affordable Sales Prices(as defined by this Chapter)to Very Low,Low,or Moderate Income Households. Income: The gross annual household income as defined by HUD. In-lieu Fee: A fee paid to the City by an applicant for a project in the City,in lieu of providing the Inclusionary Units required by this Chapter. Life of the Inclusionary Unit: A 30 year period from the date of occupancy,which shall be the date the City of Dublin performs final inspection for the building permit. Low Income Household: A household whose annual income is more than 50%but does not exceed 80%of the annual median income for Alameda County,based upon the annual income figures provided by HUD,as adjusted for household size. HUD may establish income limits higher or lower than 80%of the median income for the area on the basis of its finding that such variations are necessary because of the prevailing levels of construction costs or unusually high or low family incomes. Median Income for Alameda County: The median gross annual income in Alameda County as determined by HUD,adjusted for household size. Moderate-income households:A household whose annual income is more than 80%but does not exceed 120%of the annual Median Income for Alameda County,based upon the annual income figures provided by HUD,as adjusted for household size. HUD may establish income limits higher or lower than 120%of the median income for the area on the basis of its finding that such variations are necessary because of the prevailing levels of construction costs or unusually high or low family incomes. Off-site Inclusionary units: Inclusionary Units on land within the City of Dublin other than that on which the applicant intends to construct market rate units. 3 PAGE OF.ZJ • -----__— _—___---------------------DRAFT----------------__---_—__----------- Ownership Units: Those Inclusionary Units developed as part of a residential development which the Applicant intends will be sold,or which are customarily offered for individual sale. Project owner: Any person,firm,partnership,association,joint venture,corporation,or any entity or combination of entities which holds fee title to the land on which the project is located. Project: A housing development at one location or site including all dwelling units for which permits have been applied for or approved. Property Owner: The owner of an Inclusionary Unit,excepting a"Project Owner". Rental Units: Those Inclusionary Units developed as part of a residential development which the Applicant intends will be rented or leased,or which are customarily offered for lease or rent. Resale Restrictions: Legal restrictions by which the price of Inclusionary Units may be controlled to insure that the units remain affordable to Very Low,Low,and Moderate Income households on resale. Recapture Mechanisms: Legal programs and restrictions by which subsidies provided to Inclusionary Units will be controlled and repaid to the City and/or other entity upon resale,to insure the ongoing preservation of affordability of Inclusionary Units or to insure funds for Inclusionary Units remain within the City's affordable housing program. Silent Second Mortgage:A deed of trust recorded against an Inclusionary Unit which makes the City and/or other private or non-profit lender the beneficiary. Unit Type: Various dwelling units within a project which are distinguished by number of bedrooms. Very Low Income Household: A household whose annual income does not exceed 50%of the annual median income for Alameda County,based upon the annual income figures provided by HUD,as adjusted for household size. HUD may establish income limits higher or lower than 50%of the median income for the area on the basis of its finding that such variations are necessary because of the prevailing levels of construction costs or unusually high or low family incomes. ARTICLE II ZONING REQUIREMENTS Section 8.24.050. General Requirements/Applicability. For all new residential development projects of 20 units or more,at least 5%of the project's dwelling units shall be affordable to Very Low,Low,and Moderate Income households.These dwelling units shall be referred to as"Inclusionary Units". Inclusionary Units shall be divided among these income groups by the following ratios: 2%of the project units must be affordable to Very Low Income households 2%of the project units must be affordable to Low Income households 1%of the project units must be affordable to Moderate Income households 4 "�cm!._G � --------------DRAFT ---------- The Inclusionary Units required for each income category shall be reserved for rent or purchase by eligible Very Low,Low,and Moderate Income Households. Projects subject to these requirements include,but are not limited to,single-family detached dwellings,townhomes,apartments,condominiums,or cooperatives provided through new construction projects,and/or through conversion of rentals to ownership units. The percentage of Inclusionary Units required for a particular project shall be determined only once on a given project,at the time of Tentative Map approval,or,for projects not processing a map,prior to issuance of building permit. If the subdivision design changes,which results in a change in the number of Inclusionary Units required,the number of Units required shall be recalculated to coincide with the final approved project. In applying and calculating the five(5)percent requirement,any decimal fraction less than or equal to 0.50 may be disregarded,and any decimal fraction greater than 0.50 shall be construed as one Unit. An Affordable Housing Agreement,discussed further under Section 8.24.070 of this Chapter,shall be used to document and further define the terms by which projects subject to this Ordinance will comply with its requirements. Section 8.24.060. Unit Provisions and Specifications A. Inclusionary Units shall be dispersed throughout the project. B. Inclusionary Units shall be constructed with identical exterior materials and an exterior architectural design which is consistent with the market rate units in the project. C. Inclusionary Units may be of smaller size than the units in the project,and may have fewer Amenities than the market rate units in the project. D. Inclusionary Units shall remain affordable for thirty years. Deed restrictions shall be recorded subjecting the Rental Units to maximum rental prices. When Inclusionary Ownership Units are constructed and offered for sale at a price which will maintain its affordability due to the Unit's design and size,no Resale Restrictions should be necessary. However,Ownership Units may require such restrictions recorded with the deed if necessary to address the recapture of value increases,in situations where units are not sold at substantially lower prices than market rate units, or when the units may lose affordability as the market changes.For units which require subsidies to attain an Affordable Sales Price,Resale Restrictions shall be recorded with the deed to recapture the subsidy upon resale(unless the unit is resold at an Affordable Sales Price and to an eligible household). The discussion of Resale Restrictions is addressed in Section 8.24.070 of this Chapter. Prior to the original sale,or any resale,of such Units,the buyer(s)shall sign an acknowledgment that they are aware of the requirements of this Chapter,any deed restrictions, and any declaration of conditions,covenants,and restrictions,as applicable. E. All Inclusionary Units in a project shall be constructed concurrently within or prior to the construction of the project's market rate units,unless the City Manager determines that extenuating circumstances exist which render this infeasible(e.g.,physical or financial difficulties). F. Purchasers of Ownership Inclusionary Units shall be required to occupy the Unit except when otherwise approved by the City Manager. In order to approve exceptions,evidence must be presented to the City Manager showing that the owner is temporarily unable to occupy the Unit 5 -------------- —DRAFT - —_____—_--------------------- due to extreme circumstances,such as illness or incapacity,or extreme financial hardship. In such cases,the City Manager may approve rental of the Inclusionary Unit to households meeting the same income level requirements as the owner for a limited time,but in no instance exceeding a twelve-month period. If an exception is approved,the City may stipulate whether the unit must be rented to a household of a certain income category,and at an Affordable Rent. G. In determining the appropriate household size per unit,for purposes of calculating Affordable Rent or Affordable Sales Price,dwelling Unit Types shall be assigned as follows: Studio Unit One Person One Bedroom Unit Two Persons Two Bedroom Unit Three&Four Persons Three Bedroom Unit Five Persons Four or more Bedroom Unit Six or more Persons H. Dublin residents who are senior citizens(65 years of age or older)shall be given first preference for Inclusionary Units;Dublin residents who are first-time homebuyers shall have second preference;other Dublin residents shall have third preference;fourth preference shall be given to those who need to move to Dublin to be near Dublin residents or services. Section 8.24.070. Affordable Housing Agreement An Affordable Housing Agreement shall be entered into by the City and the Project Owner. The Agreement shall record the method and terms by which a Project Owner shall comply with the requirements of this Chapter. The approval and recordation of this Agreement shall take place prior to final map approval or, where a map is not being processed,prior to the issuance of building permits for such lots or units. Two types of Agreements shall be used by the City. I. When an Applicant pays a fee in-lieu of constructing Inclusionary Units,a simple In-Lieu Agreement form shall be used to document that the Applicant has chosen the In-Lieu Fee option,and shall be submitted to the Community Development Department. 2. When an Applicant provides Inclusionary Units constructed with a project,a complete Affordable Housing Agreement shall be required,to document and further define how these units shall be provided at Affordable Sales Prices and reserved for purchase by eligible Households,and how the affordability of the Inclusionary Units will be preserved. Additional terms and conditions of the Affordable Housing Agreement may be determined at the time of each project approval and/or at the time the parties enter into the agreement. Further aspects of the Agreements are discussed below. A. Rental Units Applicants of a project which will provide Rental Units shall enter into an Affordable Housing Agreement with the City prior to issuance of any building permits for the project,to document and further define how these units shall be provided at Affordable Rents and reserved for rent by eligible Very Low,Low,and Moderate-Income Households. 6 PAGE I It OF ZO — —___---- — DRAFT -- ------ The City shall prepare an annual statement establishing the maximum rent levels and income limits for each household income category. These levels may be adjusted by the City at periodic intervals as new tables are published by the Federal,State,or local government agencies. The management of Rental Units shall be the responsibility of the Project Owner.The Affordable Housing Agreement shall require each Project Owner to submit an annual status report to the City Manager in a format approved by the City,including additional information as required by the City. This report may include,but is not limited to identification of which units are Rental Units,their monthly rents,vacancy information for the prior year,monthly income for tenants of each Rental Unit throughout the prior year, and similar information.The Affordable Housing Agreement shall be signed by the City Manager or his/her designee,shall be recorded,and shall run with the land. B. Ownership Units When an Applicant provides Inclusionary Units constructed with a project,the Affordable Housing Agreement shall document and further define how these units shall be provided at Affordable Sales Prices and reserved for purchase by eligible Very Low,Low,and Moderate-Income Households,and how the affordability of the Inclusionary Units will be preserved. This Agreement may include,but is not limited to,designation of the Inclusionary Unit sites,schedule of construction of units,terms and conditions governing the initial sale or rental payments of units, purchaser/renter qualifications,monitoring of rent/resale,and restrictions on resale where applicable. The Affordable Housing Agreement for Ownership Units shall specify that the Inclusionary Units must be occupied by the owner(s)and cannot be rented except upon approval of the City Manager. The Agreement shall also grant the City the right of first refusal to purchase an Inclusionary Unit each time it is sold. Prior to the original sale,or any resale,of an Ownership Unit,the buyer(s)shall sign an acknowledgment that they are aware of the requirements of this Chapter, the Affordable Housing Agreement,any deed restrictions,and any declaration of conditions,covenants,and restrictions,as applicable. The Affordable Housing Agreement shall be signed by the City Manager or his/her designee,shall be recorded,and shall run with the land. Mechanisms which may be utilized in the Affordable Housing Agreement for ensuring affordability for the Life of the Inclusionary Units include,but are not limited to,the following: 1. Affordable by Design In projects which provide Inclusionary Units at Affordable Sales Prices by virtue of the unit design,no resale restrictions are necessary. In these situations,an Affordable Housing Agreement is only required to document the method by which the project has complied with the Ordinance,and to define or address specific project issues. However,in order to avoid deed restrictions on resale of the Units, Inclusionary Units must be sold at substantially lower prices than market rate units,and be reasonably expected to maintain their affordability as the housing market changes. For units which require subsidies to attain an Affordable Sales Price,restrictions shall be recorded with the deed to recapture the subsidy upon resale,as described in Section 2 below. The City Council shall determine whether a project is Affordable by Design. t,,;'•_ Z r; Zo 7 —DRAFT 2. Recapture Mechanisms In cases where Inclusionary Units are provided at Affordable Sales Prices via project subsidies,the value of the subsidy shall be recorded with the property deed as a"Silent"Second Mortgage. The subsidy shall be considered the monetary difference between the initial Affordable Sales Price,and the initial appraised market value. The Affordable Housing Agreement will state the Affordable Sales Price and target income level at which Inclusionary Units in a particular project are initially sold,and should be resold. This target level should coincide with the level which is affordable to the same income category and household size for which the unit was designated when originally sold. If the unit is resold to a qualifying household at an Affordable Sales Price,the second mortgage will be transferred to the new owner. If the unit is resold at market rate,the Silent Second Mortgage will be paid off. The amount of the Silent Second Mortgage would be recaptured by the City and/or other financial entity participating in a shared equity program under the Affordable Housing Agreement.These recaptured funds will be placed into the affordable housing fund,to be utilized for providing affordable housing consistent with the intent of this Chapter. The monthly payments of principal and interest for the subsidy or loan may be waived as long as an eligible buyer continues to own and reside in the Inclusionary Units as his or her primary residence,or unless an exception is approved by the City,in accordance with Section 8.24.060.(F).The City Manager or his designee shall be responsible for monitoring the sale,occupancy and resale of Inclusionary Units. Section 8.24.080. Alternatives to constructing Inclusionary Units on-site The requirements of this Chapter may be satisfied by various methods other than the construction of Inclusionary Units on the project site. Some examples of alternate methods of compliance appear below. As housing market conditions change,the City may need to allow alternatives to provide options to Applicants to further the intent of providing affordable housing with new development projects. A. Off-Site Projects Inclusionary Units required pursuant to this chapter may be allowed to be constructed at a location within the City other than the project site. Any off-site Inclusionary Units must receive approval of the City Council and must meet the following criteria: (a) The off-site Inclusionary Units must be determined to be consistent with the City's goal of creating,preserving,maintaining,and protecting housing for Very Low,Low,and Moderate Income Households. (b) The off-site Inclusionary Units must not result in a serious concentration of Inclusionary Units in any one particular neighborhood. (d) The off-site Inclusionary Units shall conform to the requirements of all applicable City Ordinances and the provisions of this Chapter. �-` 8 ".',.....15 DRAFT (e) The occupancy and rents of the off-site Inclusionary Units shall be governed by the terms of a deed restriction,and if applicable,a declaration of covenants,conditions and restrictions similar to that used for the on-site Inclusionary Units. An Affordable Housing Agreement shall be established between the City and Applicant stipulating the terms of the off-site production of Inclusionary Units. If the construction does not take place at the same time as project development,the agreement shall require the Units to be produced within a certain time frame,but in no event longer than 10 years. A cash deposit or bond may be required by the City, refundable upon construction,as assurance that the units will be built. B. In-lieu Fee Option A fee may be paid by an Applicant in lieu of providing Inclusionary Units in the project. This fee must be paid prior to the issuance of the first building permit for the project. The amount of In-Lieu Fees shall be established by resolution of the City Council.The In-Lieu fee shall be adjusted periodically to reflect the change in the Consumer Price Index(CPI),and may also be adjusted as necessary for changing conditions in the City. C. Land Dedication An Applicant may dedicate land to the City or a local non-profit housing developer in place of actual construction of Inclusionary Units upon approval of the City Council. The intent of allowing a land dedication option is to provide the City or a local non-profit housing developer the free land needed to make an Inclusionary Unit development feasible,thus furthering the intent of this Chapter. The dedicated land must be appropriately zoned,buildable,free of toxic substances and contaminated soils,and large enough to accommodate the number of Inclusionary Units required for the project. The City's acceptance of land dedication shall require that the lots be fully improved,with infrastructure, adjacent utilities,grading,and fees paid. E. Other flexible solutions Applicants may propose creative concepts for meeting the requirements of this Chapter,in order to bring down the cost of providing Inclusionary Units,whether on or off site.The City Council may approve alternate methods of compliance with this Chapter if the Applicant demonstrates that such alternate method meets the purpose of this Chapter(as set forth in Section 8.24.030). Section 8.24.090. Credit Transfers The requirements of this Chapter may be satisfied by transferring Inclusionary Unit credits from one site to another,upon approval of the City Council,and as set forth herein. Transfer credits may be created if the City Council approves issuance of a specified number of Credit Certificates for that number of Inclusionary Units provided by a particular Project Owner in excess of the minimum required for the project. Credit Certificates,when approved,shall be issued for the specific Income Category for which the unit is designed, according to the number of rooms and Affordable Sales Price. Zo 9 -DRAFT----------------------------------------- Credit Certificates are issued to and become the possession of the Project Owner,who may then use them to satisfy the requirements of this Chapter for another project in the City,whether developed by the same Project Owner or another developer. If a Project Owner sells Credit Certificates to another developer,the parties shall report the transaction to the Community Development Director,who will document the transfer by Certificate number. When the Credit Certificate is applied to meet the Inclusionary Unit requirement of a particular project,it shall be recorded at the time of project approval,and the subject Certificates must be returned to the Community Development Director. The Inclusionary Units for which a Credit Certificate is sought shall meet all of the criteria of this Chapter. Credit Certificates issued for specific Income categories may only be used to satisfy the requirements for Inclusionary Units for the same Income category(Very Low,Low,or Moderate). The City Council shall determine the appropriate Income category for each Credit Certificate issued.The Inclusionary Units for which Credits are granted shall have resale controls applied to ensure their ongoing affordability. Terms of the Credit Transfer shall be included in the Affordable Housing Agreement. Section 8.24.100. Inclusionary Housing In-Lieu Fee Fund. In-lieu Fees shall be deposited into a fund known as the"Inclusionary Housing In-Lieu Fees Fund"("Fund"). All monies in the Fund,together with any interest earnings on such monies less reasonable administrative charges,shall be used or committed to use by the City for the purpose of providing Very Low,Low,and Moderate Income ownership or rental housing in the City of Dublin through Silent Second Mortgages,land acquisition,land writedowns,construction,contributions to non-profit associations or corporations for construction of housing,landbanking(including property exchanges)and any other mechanism available to the City to provide Very Low,Low,and Moderate income housing. The monies in the Fund shall be used or committed to use within seven(7)years of the date of payment into the Fund. Monies from a particular project which remain unexpended or uncommitted at the end of the seven year period may be refunded to the then-current Property Owners or Project Owner or may be contributed to a non-profit association or corporation for the purpose of providing Very Low,Low,and Moderate income ownership housing in Dublin,at the option of the City Council. The City Manager shall prepare an annual report for the City Council identifying the balance of monies in the Fund and the Inclusionary Units provided and any monies committed to providing Very Low,Low,and Moderate Income housing. The annual report shall also include a review of administrative charges. Section 8.24.110. Incentives to encourage On-site construction of Inclusionary Units The City shall consider making available to the Applicant incentives to increase the feasibility of residential projects to provide Inclusionary Units. Incentives or financial assistance will be offered only to the extent resources for this purpose are available and approved for such use by the City Council or City Manager,as defined below,and to the extent that the Project,with the use of incentives or financial assistance,assists in achieving the City's housing goals. However,nothing in this chapter establishes,directly or through implication,a right of an Applicant to receive any assistance or incentive from the City. Any incentives provided by the City shall be set out in the Affordable Housing Agreement pursuant to Section 8.24.070 of this Chapter.The granting of the additional incentives shall require demonstration of exceptional circumstances which necessitate assistance from the City,as well as documentation of how such incentives increase the feasibility of providing affordable housing, l. DRAFT The following incentives may be approved for Applicants who construct Inclusionary Units on-site: A. Fee Deferral The City Manager may approve deferred payment of City processing fees applicable to the review and processing of the Project. The terms and payment schedule of the deferred fees shall be subject to the approval of the City Manager, and require Agreement by the Project Owner, prior to any City Department authorizing deferral. The City Council, by Resolution may defer payment of City development impact fees applicable to the Inclusionary Units or the project of which they are a part. Approval of this incentive requires demonstration by the Applicant that the deferral increases the project's feasibility. The Affordable Housing Agreement for the project shall document and address the terms of payment and contain language which assures payment of such fees. B. Design Modifications The granting of design modifications shall require the approval of the City Council. Modifications to typical design standards include the following: - Reduced setbacks - Reduction in infrastructure requirements - Reduced open space requirements - Reduced landscaping requirements -Reduced interior or exterior amenities -Reduction in parking requirements - Height restriction waivers C. Priority Processing A Project which provides Inclusionary Units may be entitled to priority processing, subject to the approval of the City Manager. A Project eligible for priority processing shall be immediately assigned to planning staff and processed in advance of all non-priority items. The Project shall be scheduled for the next available meeting of the Planning Commission and/or City Council, upon meeting all submittal and environmental review requirements. When more than one Project qualifying for priority processing is applied for at the same time, first priority will be given to the Project whose application was determined to be complete earlier. ARTICLE II MISCELLANEOUS Section 8.24.120. Administration The City Manager may establish guidelines for administering the provisions of this chapter. The City may contract with the Dublin Housing Authority, the Alameda County Housing Authority, or other entity to administer any provisions of this chapter. l6 2d 11 .. . ... . .. . .. . .. . DRAFT Section 8.24.130. Availability of government subsidies. The requirements for Inclusionary Units shall not be reduced by the availability of government program subsidies,nor precluded by the use of such programs and subsidies. Section 8.24.140. Conflict of Interest. Individuals who,by virtue of their position or relationship,are hereby found to be ineligible to purchase or rent an Inclusionary Unit as their residence include all employees and officials of the City of Dublin who have,by the authority of their position,policy making authority or influence affecting City housing programs,and the Project Applicant and Project Owner. Section 8.24.150. Violations. It shall be unlawful for any person,firm,corporation,partnership or other entity to violate any provision or to fail to comply with any of the requirements of this Chapter. A violation of any of the provisions or failing to comply with any of the requirements of this Chapter shall constitute a misdemeanor;except that notwithstanding any other provisions of this Code,any such violation constituting a misdemeanor under this Chapter,may in the discretion of the enforcing authority,be charged and prosecuted as an infraction. Any person convicted of an infraction under the provisions of this Code shall be punishable as provided by the Government Code of the State of California. Section 8.24.160. Enforcement. The City Manager is designated as the enforcing authority. The City Manager may suspend or revoke any building permit or approval upon finding a violation of any provision of this chapter.The provisions of this chapter shall apply to all agents,successors and assigns of an Applicant. No building permit or final inspection shall be issued,nor any development approval be granted which does not meet the requirements of this chapter. In the event that it is determined that rents in excess of those allowed by operation of this Chapter have been charged to a tenant residing in an Inclusionary Unit,the City may take appropriate legal action to recover, and the Project Owner shall be obligated to pay to the tenant or to the City in the event the tenant cannot be located,any excess rents charged. Section 8.24.170. Appeals. Any person aggrieved by any action or determination of the City Manager under this ordinance,may appeal such action or determination to the City Council in the manner provided in Section 1.04.050 of the Municipal Code." Section 2. Severability. The provisions of this Ordinance are severable and if any provision,clause,sentence,word or part thereof is held illegal,invalid,unconstitutional,or inapplicable to any person or circumstances,such illegality,invalidity, unconstitutionality,or inapplicability shall not affect or impair any of the remaining provisions,clauses, sentences,sections,words or parts thereof of the ordinance or their applicability to other persons or circumstances. `7 0 12 4 • DRAFT Section 3. Effective Date and Posting of Ordinance This ordinance shall take effect and be in force thirty (30) days from and after the date of its final adoption. The City Clerk of the City of Dublin shall cause this Ordinance to be posted in at least three (3) public places in the City of Dublin in accordance with Section 39633 of the Government Code of California. PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF DUBLIN on this 11th day of June, 1996, by the following votes: Ayes: Noes: Absent: Abstain: Mayor Attest: City Clerk g:\pa#\1996\pa96018\ord\1996or2.doc l 2� 13 OPTIONS FOR ADMINISTERING ORDINANCE (FOR INFORMATION ONLY) City Financial City staff Time Administered METHOD OF COMPLIANCE Involvement Involvement By: Payment of Fee None Low Staff In-Lieu of unit construction Construction of units which are None Low Staff "affordable by design" Construction of units with None Moderate Staff/Housing developer-provided subsidy Authority to attain affordable prices Construction of units by Yes Moderate Staff/Housing developer,with City Authority subsidy to attain affordable prices (i.e.second mortgage) City participation in Yes High Staff/Housing affordable housing Authority/ project(i.e.using Non-profit in-lieu fee fund) EXHIBIT 2 g:\pa#\1996\pa96018\stfrpts\5-7ex2.doc - z� • SAMPLES OF CITY PROGRAMS OFFERING DEFERRED FEES (FOR INFORMATION ONLY) The City of Cupertino may utilize available government housing funds to create a greater percentage of affordable units and may additionally underwrite land and site improvements should a developer agree to develop affordable units in excess of the minimum percentage requirement. The City also waives inspection,park dedication,and similar fees for the"Below Market Rate"units. Danville allows applicant to request modification of standards or waiver where it is shown as necessary to make the project financially feasible. Submittal of a proforma is required to demonstrate the need,and if an incentive or fee waiver is granted,it is considered a direct subsidy by the City. City of Monterey allows developers to request incentives to increase the financial feasibility of a project. Incentives include modifications to standards,as well as fee reductions or waivers. The City uses specific criteria in deciding whether to grant a request for an incentive. The City of Petaluma exempts assisted housing for very low and low income households within new developments from portions of development fees as specified by the City Council. To date,all fees for below- market rate units have been waived or have been offset with in-lieu funds. The City has also used tax-exempt mortgage revenue bonds to encourage rental housing for low-income families. The City also has issued bonds for multi-family projects and works with Sonoma County to issue single-family mortgage revenue bonds. City of San Mateo may elect to contribute City funds to compensate for specified development fees for new BMR (Below Market Rate)units. City contributions shall not exceed the amount of one-half the amount of normal development fees(application and impact fees)for the affordable units. Santa Barbara County offers incentives for development of affordable units on-site,rather than paying the in-lieu fee. The deferred payment of fees applies to processing fees,and the schedule permits payment of 30%of the fees up front, and 70%prior to public hearing on the project. If a developer exceeds the required percentage of inclusionary units on site,a reduction in impact or processing fees may be granted. City of Santa Monica waives development impact fees for Parks&Recreation,and waives Condominium and Cooperative Tax,when inclusionary units are constructed. The City of Santa Rosa allows deferred development impact fees for all units in the project,with an agreement between the developer and the City defining the terms of payment prior to issuance of building permit,and allowing possible six-month extension of the fee payment until sale of the each unit. The deferred fees are secured by a deed of trust and title insurance in favor of the City. City of Sunnyvale offers waivers of City-imposed development impact fees for below-market rate units when the City determines a project to be eligible. The City offers technical and financial assistance,such as CDBG funds,to applicants for defraying the cost of certain off-site improvements(to the extent that the use of such funds is consistent with the applicable federal regulations and policies). Town of Tiburon may waiver certain development fees applicable to the inclusionary units of a proposed development,to encourage the provision of affordable units. The City of Woodland allows developers to apply for development impact fee deferrals and/or waivers,and requires the City Council approval of the deferral. Yountville's ordinance allows certain fees for inclusionary units to be waived,with City Council approval. g:PA96-018\5-7EX3 EXHIBIT 3 i'AGE 2.6 CT 2-(