HomeMy WebLinkAbout8.3 East Ranch Inclusionary Housing and Community Facilities District Proposals Agenda Item 8.3
i m i • STAFF REPORT
CITY COUNCIL
DATE: April 18, 2023
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SU B.ECT: East Ranch Inclusionary Housing and Community Facilities District Proposals
Prepared by.• Amy Million, Principal Planner and Kan Xu, Senior Civil
Engineer
EXECUTIVE SUMMARY:
The Applicant,TH East Ranch Dublin, LLC (Trumark Homes), submitted a request for the City
Council's consideration of an alternative method of complying with the Inclusionary Zoning
Regulations and the formation of a Facilities Community Facilities District (CFD) to finance the
construction of public improvements within the East Ranch development project. The City Council
will receive a presentation from the Applicant and provide feedback regarding the affordable
housing proposal and formation of a Facilities CFD for improvements. No formal action will be
taken, nor will approvals be granted, for the project at this meeting.
STAFF RECOMMENDATION :
Receive the presentation and provide feedback on the Applicant's proposal to satisfy the
requirements of the Inclusionary Zoning Regulations and formation of a Community Facilities
District to fund the construction of public facilities.
FINANCIAL IMPACT:
All costs associated with preparing this report are borne by the Applicant. The Applicant's
inclusionary housing proposal includes the payment of in-lieu fees for 25 units to satisfy 35% of
the affordable requirement. Based on the current in-lieu fee of$228,994.42/unit this payment
would be $5,724,860.50. In addition, as a part of the implementation of the East Ranch
development project, a Facilities Community Facilities District (CFD) is proposed for the purpose
of financing the acquisition and construction of public improvements within the development,
including two neighborhood parks.
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DESCRIPTION :
Background
The 165.5-acre East Ranch development project site is an undeveloped parcel located within the
Fallon Village area of the Eastern Dublin Specific Plan (EDSP). The site is located north of
Interstate 580, east of Fallon Road and the Jordan Ranch development, south of the Positano
development, and adjacent to the City's eastern boundary, as shown in Figure 1 below. The project
site generally increases in elevation from south to north with knolls and hilly terrain in the
northeastern portion of the site.
Figure 1.Vicinity Map
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PREMIUM
OUTLETS 4 -
On December 7, 2021,the City Council introduced a Planned Development Ordinance, approved
Vesting Tentative Tract Map No. 8563, and approved a Heritage Tree Removal Permit (Resolution
No. 140-21). On December 21, 2021,the City Council approved a Planned Development Zoning
Stage 2 Development Plan (Ordinance No. 11-21).
On December 23, 2021, pursuant to Elections Code Section 9238, subd. (b)(2)(B), a proposed
summary of a referendum against Planned Development Zoning Ordinance No. 11-21 was
submitted. To qualify,the referendum petition needed to contain signatures of at least 10% of the
registered Dublin voters or a minimum of 3,439 signatures. The referendum petition was
determined to be sufficient for filing and was delivered to the Alameda County Registrar of Voters
on January 27, 2022 for signature examination. The Registrar of Voters determined that the
petition contained the minimum number of valid signatures necessary to qualify the referendum
for consideration by the City Council.
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296
On March 1, 2022,the City Council accepted the City Clerk's Certificate of Petition certifying the
sufficiency of the referendum petition. At the request of TH East Ranch Dublin, LLC,the Applicant,
the City Council also repealed Ordinance No. 11-21 (Ordinance No. 02-22). The City Council took
this action instead of asking the voters to consider Ordinance No. 11-21.
The Applicant has correctly pointed out that the Housing Accountability Act (HAA) (Government
Code Section 65589.5) expressly precludes the City from requiring a rezone when a project is
consistent with the General Plan. This rule applies even when the existing zoning is inconsistent
with the General Plan, as is the case here.
The Vesting Tentative Tract Map No. 8563 was not subject to the referendum and,therefore,
remains in effect. On May 3, 2022,the City Council approved modifications to Condition of
Approval Nos. 6 and 7 of the Vesting Tentative Map (Resolution No. 40-22). The request was
submitted by the Applicant pursuant to the HAA and amended the two conditions of approval to
comply with the objective standards of the City's Inclusionary Zoning Regulations. As a result, the
applicant is able to pursue a project that fully complies with all objective City standards to be
processed under the HAA.
On March 14, 2023,the Planning Commission approved the Site Development Review Permit for
six neighborhoods that includes the construction of 459 conventional single-family homes, 14
zero-lot-line single-family homes, 100 townhomes, and a landscape master plan.
Project's Relationship to State Housing Laws and Policy
The Applicant designed the project under state housing laws which limit the City's discretion on
the project. The HAA,the Housing Crisis Act of 2019 (Senate Bill 330), and various other state
laws prevent or restrict the ability to deny projects that are consistent with applicable, objective
standards in effect at the time when the application is deemed complete. The Applicant designed
the East Ranch development project to be consistent with the applicable objective standards of the
General Plan and Eastern Dublin Specific Plan,the existing Planned Development Zoning Stage 1
Development Plan (Ordinance No. 32-05 and Ordinance No. 45-08), and other policies, as a means
of limiting the City's discretion.
The HAA prohibits the City from denying applications for such projects absent an immediate
threat to public health or safety that cannot be mitigated, as determined by objective standards
that were in place when the application was submitted. In essence,the HAA provides that once a
city designates a site for housing in its General Plan, it must allow that housing to be developed
except in very limited circumstances involving immediate threats to public health and safety.
Current Request
The Applicant requests the City Council consider an alternative method of compliance with the
Inclusionary Zoning Regulations and the formation of a Community Facilities District (CFD) for the
purpose of financing the acquisition and construction of public improvements within the
development (Attachment 1). The Applicant's requests are exceptions to the objective standards
of the City and therefore do not have to be approved under the HAA. These requests are subject to
discretion of the City Council.
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297
Analysis
Inclusionary Zoning
The City's Inclusionary Zoning Regulations (DMC Chapter 8.68) require all new residential
projects of 20 units or more to construct 12.5% of the total number of units as affordable units.
The units shall reflect the range of number of bedrooms provided in the project as a whole but
may be smaller in size. The proposed East Ranch project generates a requirement to provide 72
affordable units (i.e., 573 units x 12.5% = 72 units).
The East Ranch project is currently required to comply with the Inclusionary Zoning Regulations
by conforming to the objective standards in that Ordinance summarized as follows:
• In-Lieu Fee: 40% of the total number of affordable units within the development (29 units)
may be satisfied via payment of an "In-Lieu Fee" as provided by the City's Impact Fee
Schedule.
• On-site Below-Market-Rate Units: 60% of the total number of affordable units within the
development (43 units) shall be developed on site,with 40% of those (17 units) for low-
income households and 60% of those (26 units) for moderate-income households.
• Below-Market-Rate Units shall be dispersed throughout all the neighborhoods, in rough
proportion to the number of market rate units in each neighborhood and constructed
concurrently with the market rate units in the same neighborhood.
• Execution of an agreement imposing appropriate resale controls and/or rental restrictions
on the affordable units shall be required in accordance with DMC Chapter 8.68.
• The Applicant/Developer shall implement and conform to all objective requirements of
DMC Chapter 8.68.
Pursuant to DMC Section 8.68.040.E, a developer may request an exception to the construction of
12.5% of the total number of dwelling units as affordable units.All exceptions require City Council
approval,which shall be obtained at or prior to the last discretionary approval for the project, in
this case the formation of a CFD.
The Applicant has proposed an alternate method of compliance with the Inclusionary Zoning
Regulations. This alternate approach to affordable housing is an exception to the objective
standards of the Inclusionary Zoning Regulations, and thus the HAA does not restrict the City
Council's discretion when considering this exception. The proposed alternate affordable housing
approach is similar to the alternate method of compliance previously reviewed and approved by
the City Council with the adoption of Ordinance No. 11-21 in December 2021. The Applicant
affordable housing proposal is summarized as follows:
• Payment of in-lieu fees for 18 units (to satisfy 35% of the affordable requirement). Based
on the current in-lieu fee of$228,994.42/unit,this payment would be $5,724,860.50.
• Construction of 18 deed-restricted units at the moderate-income level. These units would
consist of 14 zero-lot-line single-family units and 4 townhomes (to satisfy 25% of the
affordable requirement).
• Dedication of the two-acre Semi-Public site for a future affordable housing project to satisfy
the requirement for 36 units (to satisfy 40% of the affordable requirement).
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• Construction of 50 deed-restricted accessory dwelling units at the low-income level.
Staff had recommended approval of the similar proposal in December 2021.
Community Facilities District
A CFD is a special financing district that provides a mechanism for funding specific facilities and
services as authorized through the Mello-Roos Community Facilities Act of 1982 (Gov. Code,
Section 53311 et seq.). The Act allows any county, city, special district, school district, or joint
powers authority to establish a CFD in order to levy special taxes for the purpose of financing
public facilities and services. The special taxes can then be used to pay off any bonds issued to
fund facilities and improvements, or as an ongoing revenue source to pay for certain services.
A"Facilities CFD" can be used to fund a range of public facilities and is generally applicable for any
real or other tangible property with an expected useful life of five or more years that will be
owned and operated by the local agency. Examples of authorized improvements include but are
not limited to parks, roads, bridges, and utility systems.A Facilities CFD is typically financed
through the issuance of bonds,which are repaid over time by the property owners within the
district.
A"Services CFD" can be used (even in conjunction with a Facilities CFD) to fund certain ongoing
services like police protection, fire protection and suppression, ambulance and paramedics,
maintenance and lighting of parks, parkways, roads, and open space, flood and storm protection,
and environmental cleanup and remediation. The creation of both CFDs requires approval of the
local agency. Revenue to operate a Services CFD is generated through assessments levied on the
properties within the district.
The Vesting Tentative Tract Map Condition of Approval No. 127 (Resolution No. 140-21) notes
that the Applicant cannot object to the formation of any CFD. The Applicant is now seeking
approval of the first final map and has started the Services CFD formation process by providing an
initial financing proposal for Staff review. The Services CFD will fund maintenance of the public
streets,two public parks, and the storm drain systems within the East Ranch development. Based
on the City's current maintenance costs for similar items throughout the City, a contingency, and
administration costs, the proposed assessment on each unit within the district is approximately
$1,119 per year for maintenance of public infrastructure (Attachment 2). The adjusted property
tax to include the Services CFD will equal approximately 1.43% of the estimated home price.
The Applicant is requesting the City Council's consideration of the formation of a Facilities CFD to
fund construction of certain public infrastructure and development impact fees associated with
the project, including grading, street improvements, storm drain,water, and sewer facilities. The
inclusion of water and sewer facilities within the Facilities CFD will require a separate Joint
Community Facilities Agreement between the Applicant,the City, and Dublin San Ramon Services
District. The Applicant's proposed annual CFD special tax rate (Services CFD and Facilities CFD),
when combined with all other property taxes would, on average, equal approximately 1.70% of
the estimated home price. The bonding capacity of the Facilities CFD is estimated to yield
approximately$38.5 million in net proceeds based on the special tax rate, assuming annual
escalation of 2% per year and an interest rate on the bonds of 5.50% (net of typical costs for
underwriter discount, reserve funds, capitalized interest, and incidental expenses). The proposed
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Facilities CFD would be structured to consist of six special tax zones, one for each of the various
lot/product types, as shown in the following table.
Zone # Product Type Annual Special Tax (per unit)
Zone 1 65' x 100' lots $7,955
Zone 2 55' x 95' lots $6,039
Zone 3 50' x 110' lots $6,388
Zone 4 49.5' x 80' lots $4,776
Zone 5 Cluster lots $3,959
Zone 6 Townhome units $1,904
For additional context, the City of Dublin currently has two CFDs, Dublin Crossing CFD No. 2015-1
and Dublin Crossing CFD No. 2017-1,which were established as part of the Boulevard
development to fund the acquisition and construction of infrastructure and to fund the
maintenance of a portion of the infrastructure costs constructed in the development. The Dublin
Crossing Facilities CFD (No. 2015-1) is funding eligible improvements constructed by the
developer, including backbone street improvements, storm drain improvements, sewer and water
improvements, landscaping, fencing, as signage, as well as various development-related fees. The
Dublin Crossing Services CFD (No. 2017-1), on the other hand, is limited to only maintenance of
landscaping within public street medians and maintenance of streetlights within the public street
rights-of-way in the Boulevard development. Typical per-unit assessments for Fiscal Year 2022-23
for the Dublin Crossing Facilities CFD range from $3,760 to $5,603, and for the Dublin Crossing
Services CFD range from $46.24 to $69.34, depending on product type and unit square footage. It
is difficult to compare CFD tax rates between projects as a variety of factors can impact this rate,
such as property value, property type, use of property, number of units within the district
boundary, capital improvement scope, maintenance scope, duration of tax, and changes to tax
rates over time,which all come together to determine assessment rates within a district.
Conclusion
The City Council is asked to receive a presentation and provide feedback regarding the Applicant's
proposal for an alternative method to satisfy the requirements of the Inclusionary Zoning
Regulations and the formation of a Facilities Community Facilities District for the construction and
acquisition of improvements.
ENVIRONMENTAL REVIEW :
The City Council is receiving a presentation and providing feedback on the Applicant's affordable
housing proposal and the formation of a Facilities CFD and no formal action will be taken at this
time. This discussion is not subject to the requirements of the California Environmental Quality
Act (CEQA) as it does not have the potential to result in a direct physical change in the
environment or a reasonably foreseeable indirect change in the environment and,thus, does not
meet the definition of a project under CEQA Guidelines Section 15378.
STRATEGIC PLAN INITIATIVE:
None.
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NOTICING REQUIREMENTS/PUBLIC OUTREACH:
A copy of this Staff Report was provided to the Applicant and the City Council Agenda was posted.
ATTACHMENTS:
1) Trumark Letter dated March 31, 2023
2) Maintenance Cost Estimate
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301
Attachment I
TRUMARK
ODaiwa House Group®
March 31, 2023
Linda Smith
City Manager
City of Dublin
100 Civic Plaza
Dublin,CA 94568
Re: Croak (Francis Ranch) Project
Items for Consideration: Maximum Tax Rate for Formation of Community
Facilities District (CFD) &Affordable Housing Proposal
Dear Ms. Smith:
Trumark would like to request the City's consideration at a study session for the following two items:
1.) Community Facilities District(CFD)
2.)Affordable Housing: Alternate Approach
ITEMS FOR CONSIDERATION
1.) Community Facilities District(CFD): Condition of Approval 127 in Resolution 140-21 provided
a guideline to the mechanism of a potential formation of an improvement and maintenance CFD.
Trumark has been diligently working with the City to derive a total tax rate analysis that
contemplates installation of public improvements and maintenance of over 5 miles of City right of
way, over 1 million square feet of street repair, 11.5 acres of open space/parks. The tax rate
analysis for consideration is commensurate with recent CFD approvals of neighboring masterplans
such as Dublin Crossing. The installation of facilities by Trumark would provide a critical
infrastructure and life safety benefit to not only the Croak project but to that of Jordan Ranch and
Positano housing developments.
2.) Affordable Housing: Trumark would also like to propose an alternate affordable housing
approach consistent with a previously approved program by City Council in December 2021,
created as a result of numerous studies in addition to public study sessions held on October 15,
2019, and May 4,2021. The alternate affordable housing approach is a response to the concerns
noted by Mayor and Council at the study sessions, and derived as such to satisfy Chapter 8.68
Inclusionary Zoning Regulations as follows:
• In-Lieu Fee: 35%to be satisfied via payment of the"In-Lieu Fee". The In-Lieu Fee
amount is currently$228,994.42 per unit(25 units x$228,994.42=$5,724,860.50).
• Onsite Below Market Rate Units: 25%(18 Units)to be satisfied by providing 18
"moderate"AMI units(14 zero-lot single family and 4 townhomes)with a portion
dispersed throughout the various neighborhoods
• Land Contribution: 40%to be satisfied by providing(2 acres)of stand-alone land
to allow 77 units of affordable rental housing by Eden/Sunflower.
Onsite Accessory Dwelling Units/Second Units: 50 deed restricted attached
ADU'S with projected rents at low 80%AMI(low income category).
Page 1 of 2
3001 Bishop Drive,#100 P 925.999.3951 TRU MAR KHOMES.CC'"
San Ramon,CA 94583 F 925.648.3130 NEWPORT BEACH SAN RAMON OENb302
TRUMARK
ODaiwa House Group®
Trumark looks forward to working with City on the aforementioned items of consideration.
Sincerely,
TRUMARK
Pamela(Salas)Nieting
cc: Tony Bosowski,Trumark,Division President
Page 2 of 2
3001 Bishop Drive,#100 P 925.999.3951 TRUMARKHOMES.CC'"
San Ramon,CA 94583 F925.648.3130 NEWPORT BEACH SAN RAMON DENb303
Attachment 2
Exhibit C
Croak Property-Trumark
Maintenance Cost Estimates
Development Maintenance Areas
Per City of Dublin 3.17.23
Maintenance Item Description of Use Unit Quantity Unit Price2 3 Estimate
Parcel D Northern Park Acres 4.50 $30,970 $ 139,366
Parcel D-Light Maintenance Hillside' Northern Park Acres 1.00 $3,000 $ 3,000
Parcel O Southern Park Acres 6.01 $30,970 $ 186,132
Street A Public Road Miles 0.3404 $5,158 $ 1,756
Street B Public Road Miles 0.3775 $5,158 $ 1,947
Neighborhood 1 -Streets Public Road Miles 0.7426 $5,158 $ 3,830
Neighborhood 2-Streets Public Road Miles 0.7853 $5,158 $ 4,050
Neighborhood 3-Streets Public Road Miles 0.4652 $5,158 $ 2,400
Neighborhood 4-Streets Public Road Miles 0.6210 $5,158 $ 3,203
Neighborhood 5-Streets Public Road Miles 0.4750 $5,158 $ 2,450
Neighborhood 6-Streets Public Road Miles 0.4680 $5,158 $ 2,414
Croak Rd Public Road Miles 0.6100 $5,158 $ 3,146
Central-Croak Intersection to Kevin St Public Road Miles 0.2400 $5,158 $ 1,238
Current Central terminus to Central-Croak Public Road Miles 0.0800 $6,000 $ 480
Slurry&Base Repair Public Road SF 1,003,420 $0.21 $ 208,210
Subtotal $ 563,623
Contingency and Administration Costs
Contingency and Repair/Replacement(10%) $ 35,541
City Administration $ 15,000
County Administration(1.7%) $ 6,646
Subtotal Contingency and Admin Costs $ 57,188
Total Project Annual Maintenance Cost Summary
Subtotal Annual Maintenance $ 563,623
Subtotal Contingency and Admin Costs $ 57,188
Total Annual Maintenance Costs $ 620,810
Per Unit4 $ 1,119
Footnotes:
[I]Assumes one net acre of Parcel D is hillside,of which,less maintenance will be required.
[2]Unit price per acre comparable to other DPFG projects for the greater Bay Area.
[3]Unit price per mile comparable to other DPFG projects for the greater Bay Area.
[4]Per Unit estimate does not include AM!units.
Prepared by DPFG 3/17/202 304
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Background
• December 7, 2021 - Resolution No. 140-21
— Planned Development Rezone
— Vesting Tentative Tract Map
— Heritage Tree Removal Permit
• December 2 I , 2021 Ordinance No. I I -21
• March I , 2022 Ordinance No. 02-22 (repealing No. I I -21 )
• March 14, 2023 Resolution No. 23 -02
— Site Development Review Permit
. uivi 307
Proposed Request
• Affordable Housing Proposal
• Formation of Community Facilities District
— Maintenance
— Improvements
Affordable Housing Proposal
• In - Lieu Fee
— 25 units ($5,724,860.50)
• Onsite Below Market Rate Units
— 18 deed restricted (moderate income category)
• Land Contribution
— Two-acre Public/Semi- Public site
• OnsiteADUs
— 50 deed restricted (low-income category)
. uivi 309
Community Facilities District
• What is a CFD ?
- Special financing district that provides a mechanism for funding
specific facilities and services as authorized through Mello-Roos
Community Facilities Act of 1982.
— Mello-Roos Act allows the local jurisdiction to establish a CFD in
order to levy special taxes to finance public facilities and services.
� 310
Community Facilities District
• Facilities CFD
— Fund construction or acquisition of public facilities which includes
any real or other tangible property with an expected useful life of
five or more years that will be owned and operated by the local
agency.
— Parks, roads, bridges and utilities.
— Financed through various methods, one of which is issuance of
bonds which are repaid over time by property owners within the
district.
� 311
Community Facilities District
• Services CFD
— Fund on going services: police, fire protection, ambulance and
paramedics, maintenance of parks, roads and open space, flood and
storm protection, and environmental cleanup and remediation.
— Revenues are generated through assessments levied on the
properties within the district.
— Consistent with Strategic Plan Objective 3D: Explore use of funding
mechanisms like CFD for capital and on-going maintenance needs.
312
Community Facilities District
• East Ranch Services CFD
— Trumark has started working with staff on initial steps on the
formation of the Services CFD.
— Services CFD will fund maintenance of public streets, two public
parks and the storm drain system within the project.
— Approximate assessment on each unit within the district will be
$ 1 , 119 per year.
— Base tax rate (Ad Valorem) 1 .26%; adjusted tax rate including the
Services CFD and other special assessments 1 .43%.
313
Community Facilities District
• East Ranch Facilities CFD
— Trumark is requesting City Council's consideration of the formation
of a Facilities CFD.
— Facilities CFD will fund construction of public infrastructure and
development impact fees associated with the project including
grading, street improvements, storm drain, water and sewer
facilities.
— CFD special tax rate to include both Services and Facilities CFD
will be capped at 1 .70%.
� 314
Community Facilities District
• East Ranch Facilities CFD
— Bonding capacity of the Facilities CFD is estimated to yield $38.5
million in net proceeds; 2% annual escalation; interest rate 5.50%.
— Special Assessments vary between lot/product types and range from
$ 1 ,904 - $7,955 (Facilities CFD only).
315
Community Facilities District
• Dublin Crossing CFDs
— Dublin Crossing CFD No. 2015- I (Facilities) and No. 2017- I (Services).
— Facilities CFD includes backbone street improvements, storm drain
improvements, sewer and water improvements, landscaping and
development related fees.
— Services CFD includes maintenance of median landscaping and
streetlights within the public right-of-way.
— For FY 2022-23, Facilities CFD assessments are between $3,760-$5,603
and Services CFD assessments are between $46.24 - $69.34.
� 316
Recommendation
Receive the Applicant's presentation and provide
feedback on the proposal to satisfy the
requirements of the Inclusionary Zoning
Regulations and formation of a Facilities
Community Facilities District to fund the
construction of public facilities
317