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HomeMy WebLinkAboutMINUTES - 09211999 - C240 IOC-02 BOARD OF' SUPERVISORS JI FROM: INTERNAL OPERATIONS COMMITTEECosta September 13, 1999 ��e DATE: a�r�c_Wj_�� County SUBJECT, REPORT ON AFFORDABLE HOUSING/INFILL DEVELOPMENT T SPECIFIC REOUEST S)OR.RECOA14MENDAT1ClNM&BACKi#£3v` AND JUSTIFICATION RECOMMENDATIONS; 1, ACKNOWLEDGE receipt of the attached report from Jim Kennedy, Deputy Director - Redevelopment dated August 5, 1999. 2, APPROVE the"Legislative Suggestions"contained in Section IV on page 15 of the attached report and DIRECT the County Administrator to include these elements in the Board's 2000 Legislative Program. 3. ACKNOWLEDGE that the Internal Operations Committee is pursuing some non-traditional financing ideas for infill development which needto be developed in cooperation with cities and other counties, 4. REFER. the attached report to regional entities each as the Inter-Regional Partnership Supervisor DeSaulnier has been working with, the Association of Ray Area Governments (ASAG), the Contra Costa Mayors' Conference, City/County Relations Committee and other groups interested in this subject and encourage thea to review and discuss some of the ideas contained therein. CONTINUED ON ATTACHMENT: YES S;GaN ai"LIRE: -RECOMMENDATION OT COUNTY ADM NISTRATOR ---._RECOIMiMENDATION OF BOARD COMM _APPROIVE -0f SIGNATU'R'E(S), AY E EMA JOHN OIOIA .� dCCT#t'o�I OF BOARD ON eptfe Fidif APPROVED AS 6COtMMENDED OTHER _ VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A RUE . UNANIMOUS(ABSENT ' .. �m} AND CORRECT COPY OF AN ACT:0N TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. See Page 2 ATTESTED �S P t 2it3h2_ g 1 9 Contact PHIL BATCHELOR,CLERK OF THE BOARD OF cc: SUPERVISORS O COUNTY ADI�I<I�fISTRATOR BY � DEPUTY ......................... 10C-02 BACKGROUND: The Internal Operations Committee has had of referral since January 26, 1999 the report from the County Redevelopment Agency dated December 4, 1998 and entitled, "Incentives for Affordable Housing/Infill Development". Our Committee has met March 8, 1999, May 104 1999, July 12, 1999, August 9, 1999 and September 13, 1999. We have requested substantial additional information and policy options from the Community Development staff and want to express our appreciation for all of the additional work Dennis Barry and his staff have gone to in responding to our questions. The most recent is the attached report from Jim Kennedy. We are continuing to explore some of the ideas outlined in this report. We are interested in pursuing some non-traditional financing ideas. As one example, we are interested in determining what can be done to increase the percentage of redevelopment funds that are dedicated to affordable housing. Many of these ideas need to be developed in conjunction with the cities and other counties in the region. In order to implement many of the innovative ideas that are outlined in the attached report it will be necessary to develop a consensus among the jurisdictions that are affected. Among the ideas we have discussed recently are the following: Can you use redevelopment funds outside of a redevelopment area? Could a developer who has an affordable housing requirement obtain money from the redevelopment agency to assist in making housing affordable? Could we have the redevelopment agency sponsor housing for seniors. What are some fiscal incentives the County could use to encourage infill development where the Board wants it to occur? How can we expand the availability of mobile home parks as one type of affordable housing? Basically what we are looking at are mechanisms the Board can use to make housing more affordable and keep it affordable. We will continue to report to the Board as developments indicate a need for additional reporting. cc: County Administrator Supervisor DeSaulnier (for the Inter-Regional Partnership) Peg Kovar (for the Mayors Conference and City/County Relations Committee) ABAG (via Community Development Director) Community Development Director Jim Kennedy, Deputy Director - Redevelopment County Counsel -2- CONTIG CESTA C£3I3NTY COMMUNITY DEVELOPMENT DEPARTMENT DATE: August S, 1999 TO: Internal Operations Committee Supervisor Gayle Uilkema, Chair Supervis ioia. FROM: Zcenti nn y, ep Director - Redevelopment or Infill Development/Smart Growth Infill development has been suggested as an alternative to sprawl development. Infill development is considered one of a nurnber of"Smart Growth" techniques. Smart Growth principles assume a region will experience growth and suggests a variety of approaches that influence the manner and pattern of that growth. The following is in response to the direction of the Internal Operations Committee at its May 10 and July 12, 1999 meetings. The material is highly summarized and includes recommendations that the Committee may wish to consider as it completes its discussion. I. INCENTIVES TO ENCOURAGE INFILL DEVELOPMENT/SMART GROWTH; Incentives for encouraging Infill Housing/Smart Growth :may be grouped into two major categories: L financial incentives, and 2, plannin /regulatory incentives. Each of these will be treated separately. A.) Financial Incentives The County administers three major sources of funding for affordable housing-Community Development Block Grants(CDBG), HOME Partnership Funds and County Redevelopment Agency Funds. The first two are federal funds, administered by the County on behalf of the County and its smaller cities. The annual grant amounts for CDBG and HONE are approximately $3.9 million and $2.6 million respectively. The Redevelopment Agency i-l:\s;;et�os\IE�#lSE<'sth.tiec l ................................. funding is derived from local property taxes. The County currently administers five redevelopment project areas. Each of the five redevelopment projects represents an infill opportunity. The Redevelopment Agency has annual tax increments of approximately $6.5 million, which it utilizes for area infrastructure and community improvements and affordable housing. Approximately$2 million is available for affordable housing purposes.All but three cities in the County also have redevelopment agencies and project areas established. Typically, these affordable housing funds are used to finance development costs (including predevelopment expenses, land acquisition and construction) related to the development of housing affordable to very low and low income households. This financial assistance is typically provided in the form of loans which have accommodating repayment features. The funds may also be used to guarantee or supplement loans from other sources. Most affordable housing projects are financed from multiple sources, of which the local funds (Redevelopment, CBBG/HOME) represent a small portion- typically 25-35%. They Board may wish to cotis�ider adlr�ing affirrrrali9,e encouragement/priority to prajecls in infill vellings Io the allocalh-m criteria for these.fundling sources. The Redevelopment Agency may also indirectly assist the development of infill projects by financing area infrastructure that is not directly related to a specific housing project. Areawide infrastructure improvements, such as that accomplished around the Pleasant Hill BART Station, or in the North Broadway area of Bay Point are examples of the utilization of this technique. With varying degrees of emphasis, this is the standard approach of the County's Redevelopment Agency and most redevelopment agencies. All redevelopment activities undertaken by the County and most by the cities occur in infill locations. The Committee also explicitly mentioned four financing concepts that will be examined more expansively below: I. Land Banking: Land banking is a technique in which public resources are utilized to purchase and hold property for future development purposes. Land banking in its purest sense i.e. purchasing without expectation of development in the foreseeable future, is generally inconsistent with federal regulations or state law. For example, state Redevelopment Law requires properties purchased using redevelopment housing set asides to be utilized for the development of housing within five years. With findings, this five-year period can be extended. The required findings suggest that steps leading to development must occur. The County, as well as the cities, do engage in a form of land banking when they acquire properties in advance of specific development activity. An example includes the acquisition of I:\memos\bAISIG h.dcc 2 . ............................................. Area 4 at the Pleasant hill BART Station, and the Rodeo Senior Housing site. Each of these properties was assembled in advance of'having an identified developer_ A developer was subsequently identified and a plan of finance developed. It is not unusual for a significant time period (five years or more), to fully develop and implement a plan of finance given the complexity of multiple funding sources. The utilization of public funds to land bank sites for developments that are not income-targeted is generally precluded. In some circumstances the County may own or control development sites that may have infill housing potential. An example is the former Oak Park Elementary site in the City of Pleasant Hill. 2. Brownfield Development: A subset of the infill development reale: are those sites that were formerly utilized for industrial purposes that have now become available for alternative uses. To the extent these sites are subject to contamination due to their prior use, they represent a challenged resource. Redevelopment agencies are empowered to utilize their funding for brownfield conversion. The development of brownfield sites is a long-term endeavor and generally entails identification of the responsible party. Some limited amount of brownfield activity is a natural part of infill development in existing communities. Sites that are significantly contaminated should generally be avoided until the property owners have proceeded to clean up activities. A current example of brownfield conversion is the County Redevelopment Agency's negotiated option for the Siino property in Bay Point. This former wrecking yard was cleared approximately ten years ago. A small', amount of residual contaminants exist on the property. The property owner will be asked to clean the sites to the specifications of regulatory agencies prior to the Redevelopment Agency purchasing the property. The underlying General Plan land use designation for the site is residential. The Agency would intend to hold the property, solicit development proposals and ultimately transfer the site to a housing developer. (This is another example of a limited land banking approach.) 3. Financing Through Tax-Exernpt Bonds The County has been among the more active issuers of multi- farily tax-exempt bonds to finance aflordable housing. The current environment for securing the 'limited authority for 3:\}Fetnt�sil�ifiSLCEh.doc 3 _._... _.._. __. .. ......... ......_......._. _. ........... . _....... _ multi-family housing bonds is very competitive. The State Treasurer has suggested that these resources be directed in a fashion that would be supportive of Infill Development/Smart Growth. County staff'has long concurred and publicly stated this to the State Treasurer. The Board may wish to sypport this iiriiiative ref the Treasurer. 4_ Transferring Housing Funds or Obligations Between Jurisdictions: This concept suggests that housing resources may be used in a more optimal fashion if permitted to flow between jurisdictions. The concept also suggests that some locations may be more efficient (cost-effective) to deliver affordable housing in infill housing resources. There are significant regulatory and political limitations associated with this concept. On the regulatory side, State Housing Element Law requires that each jurisdiction affirmatively address its housing needs, including a fair share of the region's needs. Shifting responsibility for this obligation is not possible under current Housing Element Law. Furthermore,jurisdictions that carry a significant portion of the existing affordable housing stock, are reticent to continue to be recipients of additional affordable housing, at least until other more affluent communities exhibit fair share responsibility. Housing rights advocates have severely limited State legislative efforts to accomplish the transfer of housing needs, obligations and resources. B.) Planning and Regulatory Tools I. Areawide P-l Rezonings: The County, through its Redevelopment Agency, has initiated a program of areawide P-I rezonings to facilitate development in these infill settings. The North Richmond Redevelopment Area and the Oakley Redevelopment Project Area have already been subject to the P-I rezoning programs. Bay Point and Rodeo are in line. These rezoning programs include detailed design/developinent standards that"allow conforming projects to proceed to permitting in an expeditious fashion. The program also significantly reduces fees associated with conforming projects. Farther wilization r?f the areaevide P-I rezoning Inogram is occurring arra recommended H:\tnemos�!n115tOth.doe 4 2. Minimum Densities: The County General Ilan does specify l minimum density of development in the absence of overriding considerations This is done to avoid underutilizing the scarce amount of development potential. Not all communities specify such minimums. 3. Development Agreements: The negotiation of vesting development agreements has providedthe County with an opportunity to obtain additional consideration that may facilitate public policy goals. The payment of additional fees for homeless programs, affordable housing or other community projects have been incorporated into negotiated development agreements. General plan Policy does exist to encourage this. Attempting to accomplish too many contractual concessions in negotiated Agreement can limit the effectiveness of such a prograrn by reducing the private incentive. 4. Inclusionary Housing: Inclusionary Housing with an in-lieu fee component has been suggested as a tool for encouraging the development of infill and affordable housing. The 1998 'Internal Operations Committee, after much study, concluded that there was little opportunity for an inclusionary program to be utilized in the unincorporated County at this tune because a.) most housing developments had vesting tentative reaps or approved Development Agreements, therefore would not be subject to the requirement; or b.) would be smaller projects which are generally exempt from inclusionary requirements. The amount of in-lieu fee generation was estimated to be fairly small. A crave"- ide (cities and County) inchisionary progrmn would nacrke the most sense because most Qf the housing growth is occurring in cities. Redevelopment project areas are subject to an inclusionary housing requirement, i.e., 15% of all housing produced in a I :\s��e,7}�s1it�€1Stti?l;.dc�c 5 ..................... ........................... ......... ....._. ......... . ............... . project area must be affordable. Six percent of the requirement is targeted to very low income and 91/o is targeted to moderate income. Most agencies do not require every project to meet inclusionary requirements, but rather measure compliance on an area basis. 5. Density Bonus: State Law requires that jurisdictions provide a density bonus or other equivalent consideration, to developers undertaking housing projects directed to lower income populations. The County has utilized this technique in the past and continues to market its availability. State Density Bonus Law targets very low and low income households. In large part due to this targeting requirement, the density bonus provision tends to employed only in projects where targeting is already occurring due to financial assistance. 6. Mobile Hones: The preservation of existing mobile home parks and the creation of new mobile home developments has been suggested as a methodology for achieving infill/affordable housing goals. The County General Plan does have a land use designation for mobile home parks. Some existing mobile home parks Have an underlying land use designation for an alternative use. A program Jor preserving the existing resource by changing the underlying general land use designation could he purmied. To my knowledge, none of the sites with a mobile home park designation in the General Plan are vacant. The Board may want to consider the designation crf additional vacant properties as mohile home park sites in its General flan discussions. Additionally, the .board may want to encourage neiv mobile home harks by considering exempting there,from the mobile home rent control ordinance. Additionally, discussions about the General Plan could include the designation of additional vacant properties as mobile home park sites. 7. Transfer of Development bights: Oftentimes employed in circumstances where open space preservation is a goal, a Transfer of Development bights Program would permit the sale of development rights from I-I:\inein os\lnilStGyth_m 6 ........................................................................................................................................................................... .............. ............................................................................ ....................................................... properties designated for limited or open space use to be sold to developers of sites where housing is encouraged. This technique has been used in limited settings, It has not been very effective in settings where multiple jurisdictions exist. 8. Transit-Oriented Development: The development of housing in close proximity to transit is a subset of the infill development realm. The County has been a leader in encouraging transit-oriented ;development at the Pleasant Hill BART Station. The emerging transit village at the Pittsburg/Bay Point Station is another example. The County has employed a variety of techniques to encourage transit-oriented development, includingthe utilization of a master planning approach (Specific Plans); by utilizing master environmental documents, using the redevelopment resource to accomplish land assemblage; by financing required public infrastructure upgrades; by financially assisting developers of affordable housing projects;and by helping to resolve conflicts between builders and local interest groups. Such undertakings have not been easy and represent a highly staff intensive approach, which may be a sign of things to come as the shift to infill sites occurs. (See Section III, p.'14). The Board may wi.vh to consider encouraging additional transit-oriented c,i'evelolmient by sa lg)orting amendmenty to a successive Measure i'7 to allrrtvfinancing cif vuch.1 rgjects, e.g.,panting ,wrnctrrres, housing deielolmients. (See discussion in section Il, pp. 13-14.) 9. Mixed Use: Mixed Use Developments are oftentimes used as an example of Smart Growth that should be encouraged in infill locations. The provision of housing in close proximity to commercial services and jobs can be an effective mechanism for reducing trip generation rates and otherwise providing for healthier communities. The Specific Plan's in the County's Redevelopment Project Areas employ the use of mixed land use designations. Financing mixed-use projects can oftentimes be a significant challenge. 103 Housing Element Compliance: The State Department of Housing and Community Development is charged with the task of issuing locality \\€31 iDI\APPL\H0W1-_\TSKAR\menics\3ntiS GOA—doe 7 ............... compliance with State Housing Element Law. The process of determining compliance tends to be skewed to process rather than production. Amendments to State Housing Element Law to make it a more significant tool for actually achieving the production or preservation of affordable housing is to be encouraged. The discussions regarding housing element reform have been going on for at least two decades without meaningful change. The County will, along with other communities in the ABAG Region, be required to update its Housing Element by June 30, 2001. 11. Development Incentives for Infill Development As Suggested by the Development Community: The Building; Industry Association and the Contra Costa Council are currently developing position papers on the Smart Growth issues, Representatives have been invited to your August 9 meeting. The development community has a wide variety of perspectives on what local government can do to encourage infill housing development. Many of the tools suggested above have been suggested by the development community. The Board may wish to consider the development crrmmuf ity's miggestions, which are summarized as follows: a) Create a planning framework that encourages infill development: 0 identifying specific infill sites or districts; 0 specifying design and development standards upfront; 0 address neighborhoods` needs comprehensively; and • localities should collaborate with other agencies whose activities are affected by infill development e.g. school districts, etc. b) Review the regulatory framework to insure that infill housing is encouraged, not discouraged: Provide flexible development standards: Allow development of mixed use; Offer density bonuses, AMCD!WI'i.0 (�)v?T13SKtlIZ\Ft2c��ios\It;t?Sat?f;. cac g ............................................................................................................................................................................................................................................................................................................................ t Flexible interpretation of building codes and housing codes; 0 Pee modifications and waivers; 0 Reduce development standards, e.g. adjust parking requirements; and 0 Development fees that encourages infill and discourages sprawl, e.g. establish a surcharge calculated according to distance from a community cure c) Provide high-priority processing of development approvals and permits for infill development; i Define a separate review process for infill development; Assign people to assist developers in identifying and negotiating approvals; 0 flake the approval process more efficient and certain by designating "by-right zones;"'' 0 Establish thresholds for smaller projects that can be rapidly permitted; Employ self-certification to insure compliance with regulatory requirements; (:grant waivers or otherwise employ flexibility in design and development standards; and Prepare master environmental documents enabling conforming projects to proceed without additional environmental review d) hake public investments and provide public services in neighborhoods' targeted for infill development: Couple infill development strategies with strategies - to promote reinvestment by existing residents and owners including housing rehabilitation and neighborhood infrastructure upgrades; and Deliver adequate public services to infill neighborhoods \ti3ICIe31A''T 1 §t3fiI �3S i�Rl4ziei??aslia?31 tCi E3.dc?c 9 ..................... ................... e) Provide potential developers with current and accurate information on vacant land parcels f) Prepare master environmental impact reports g) Assist infill developers with land acquisition and assemblage h) Gain community acceptance for infill housing projects by: educating the community about the public benefits of infill and the tradeoffs between infill development and sprawl, Disseminate factual information on higher density and affordable housing; Establish strong written policy statements that developers can use to support the approval of controversial infill projects, Help to resolve conflicts between builders and local interest groups; and Work with environmentalists and transit advocates to gain support for infill housing i Help individual projects succeed by leasing space in new projects for city/county offices; helping with funding applications; and sharing studies and market information 12. Housing for Seniors: Developing housing for elderly is expected to be a growing aspect of the development industry over the next two to three decades. Age cohorts, nationally and in this county, suggest an increasingly older population with housing demands attuned to their special needs. From a development perspective, senior housing projects are similar to other housing developments, one major distinction is that development standards for parking can be, and often are, modified to reflect the lower demands of this population. Many of the housing finance programs that exist for affordable housing also can be employed for 10 .................................... ................................................................................................................... ................... . . .... ... . . ...... ............................................................................... .............................................................................................................................................. ..................................... senior housing. There are also unique sources of public financing for affordable seniorhousing. To some developers, this rapidly expanding housing market for seniors may appear to be a potential niche market, however, housing for seniors is unlike other residential development in that it almost always involves some recognition of the health care needs of frail, elderly people. The special services they require, which increase as they age-in-place, introduce a major management component to senior ho=using development. Some specialists compare housing for seniors with hotel development from an administrative and management standpoint. When assessing the housing needs of seniors, one must acknowledge that elderly people are notoriously resistant to moving from their present homes. Addressing scion housing r ee& may be most efficiently addi-essed with strategies that recognize this desire to stay in phice. Sorne elderly people will find it necessary to move for a variety of reasons. This often occurs as their health begins to decline. The develop€rent community has recognized this opportunity and today housing for seniors provides not only living space but support services. Housing for seniors tends to occur along a continuum of care: a.) independent Living Facilities which are apartment projects in which the senior population is capable of caring for their own needs; b.) Congregate Care (lousing allows elderly people in relatively good health to maintain'social and functional independence while having access to common support services such as meals and housekeeping; c.) Assisted'Living Facilities are designed and staffed to provide for residents who require some type of support for daily living, including bathing, dressing, medication, meal preparation and other functions; d.) Nursing Homes provide an extensive package of services, including health maintenance. Specialized knowledge is necessary to deal with,(complex government regulations and multi-party manage€nent requirements frequently encountered in housing for seniors. This has tended to push the development of housing for seniors fray€n the general homebuilding industry to flans and organizations that specialize in, developing and managing housing for seniors. MICL3€ l 1 ........... ...................... ................................. ....... .......... .................... From a planning and siting perspective, the following characteristics are relevant: a.) Community and site characteristics- Developers look for sites in desirable neighborhoods near a variety of facilities and services. Residents will be attracted to areas that are appealing and provide a secure environment. Access to public transit is an asset. Sites where services are within close walking distance are also very desirable. Topography is important - flat sites are preferred. b.) Planning and Design - The site plan and building designs need to appeal to healthy residents who enjoy a variety of indoor and outdoor experiences as well as being supportive of frail residents who can easily become distracted or disoriented. Balancing these needs is both an architectural and operational challenge. Developers strive to achieve a non- institutional appearance while providing for a secure environment. c.) Services - Social activities are needed to avoid isolation and loneliness. Additional services to maintain daily lives are also very desirable aspects. d.) The development of senior housing projects tends to be less subject to community opposition than housing for non-seniors. A balanced program of public financing to address both non-senior and senior housing needs is appropriate. Pursuing only senior housing needs will result in an inability to fully address housing needs as set forth in policy documents that are subject to outside review, such as the Housing Element. HOUSING TRUST FUND CAPITAL SOURCES A housing trust fund would be a new dedicated source of revenue to finance affordable housing projects and programs. In 1992 a report of the Housing Trust Fund Task Force was accepted by the Board of Supervisors. Unfortunately, the recommendations of that Housing Trust Fund Task Force were not implemented because the County and the nation began to suffer from a severe economic and real estate recession. It was not viewed to be prudent to implement a housing trust fund under those sets of conditions. 1BT� 33 APP,. C�MEIISKAI2\i,�et:uysVa€�S€Gth.csec 12 ............... .................................................... .......................................................................................................................................''I'll'-,.......................................................................... ..............................­­��­­­................... ................... .......... Nonetheless, the work of the Housing Trust Fund Task Force is still of value. In evaluating potential sources for funding a housing trust fund, the process employed three types of criteria. First,the source must represent a significant net new source of revenue; second, that it would appear legally feasible to utilize the revenue source; and third, that the impacts of the capital source were appropriate. Attached as Exhibit Ais a further discussion of the evaluation criteria.. Seventeen different revenue sources were evaluated as part of the Housing Trust Fund Task Force work (see Exhibit l3). The'Task Force ultimately recommended that the County pursue establishment of housing trust fund, using three revenue sources: 1) General Obligation Bond. This would be a countywide revenue source with the potential to provide substantial revenue. Implementation requires two- thirds vote of approval, 2) establish an inclusionary housing program with an in-lieu component. Such a program could directly increase the supply of affordable housing and be implemented in the unincorporated area,by action of the Board of Supervisors; 3) Franchise Fees on solid waste. This would represent a countywide revenue source with potentially substantial revenues on an ongoing basis. This revenue source would also likely require two-thirds votes approval. (Subsequent court decisions relegated this revenue source as infeasible for affordable housing purposes.) The recommendations of the Housing Trust Fund Task Force represented a careful balance of countywide revenues and developer-derived revenues. Furthermore, the Housing Trust Fund Task Force Report suggested that the program to be financed include a balance of rental housing, home ownership housing, housing rehabilitation and senior housing. It also suggested administrative and institutional structures for consideration.' The major source of revenue that continues to be discussed is either a General Obligation Bond, or inclusion of affordable/infill housing in the Expenditure plan of a renewal of Measure C. Each of these methods continues to be discussed, albeit, they do present significant challenges. These include 1.) General Obligation Bonds are subject to the two-thirds voter approval. This super majority requirement crakes it very difficult to obtain the necessary authority. There have been discussions by a wine variety of interests who are discussing possible legislation to reduce the super majority requirement to either fifty percent or sixty percent voter approval. The Board may wish to take a po itibn on this super rr aior•ity requirement. 2.) The renewal of Measure C for transportation, open space and affordable housing purposes was suggested by the 1995 Internal Operations Committee. Others have made similar suggestions. SCA \\IsIC£�i\APL\It)IvfEUSKAit\taaes�zc�s�r�7StGtls.dcc 13 ......................... ........................... ............... 3, as it currently exists before the State Legislature, would not permit the renewal of Measure C with the inclusion of direct financing of affordable housing and open space. SCA 3 seems to limit the use of proceeds from a half-cent transportation sales tax to transportation project or mitigation associated with those projects. A more expansive authorization under SCA 3 to allow the direct financing of infill housing and affordahIe housing is.something the Board may wish to consider. To the extent that housing trust funds approaches employ a fee-based system, they would be subject to complying with the statutory fee requirements contained in Government Code Section 66000et seq related to nexus. The statutes require establishing a reasonable, quantifiable relationship between the proposed fees and the need for affordable housing created by the development project. As identified by County Counsel, the analysis would have to precede the actual adoption of an ordinance establishing the fee or the condition of approval for a development project. (A summary of the County Counsel opinion on this matter may be found on page 3, Section Ill of Exhibit C.) In a report to the 1998 Internal Operations Committee, the Community Development Department estimated the cost of a nexus study to range from $15,000 to over$100,000. The Board may wish to pursue anexus study, but should do seg only ul)on determining a preferred aty)roach orfiee requirement. 111. PUBLIC EDUCATION The emphasis on infill development smart growth connotes, can only be accomplished if significant education has occurred at three levels: A. Policy makers and elected officials need to have an understanding of the issues-, B. Technical staff need to both reorient their approaches and implementing ordinances to accommodate an infill/smart growth approach; C. Citizens and neighborhood representatives who will be asked to accept the infill development need to be educated and sensitized to the issues. The process of education will not occur overnight, nor will it occur very efficiently on its own. The Board may wish to consider I)rovidingfitinding for public education firont its discretionary funds in FY 2000 to begin this educational process;first, with the cities and their elected officials; then with technical staff and market I)articil)ants; and third, with citizen groups. No endeavor of this sort should be undertaken unilaterally by the County, but, rather should be accomplished in partnership with the cities. A significant amount of work 11131CD 1 14 ....................................................................................... ............................................................................................................................. .............................................................................................................................................................. ...... . . ...................................... needs to be done to flush out a work scope for such an endeavor. The County could benefit greatly~'rota prior work done in other areas. IV. LEGISLATIVE SUGGESTIONS The foregoing has suggested a variety of ideas that could result in a legislative program.. To recap, the following legis ath le changes might be considered by the Board. A. Reform State Housing Element Law to promote the actual production and preservation ref rxffr3a.fordable housing,ng, rather than its current emphasis era process and l.raper compliance; B. .Sigpficrrt the Stale Treasurer in his e fforls to direct,State Affordable Housing Resources( rivate acti0ty ban s for rr eolti.family housing and single-family housing, low-income housing tax credits)and igfrastructure financing in a wq)) in which it would promote infill development rather than sprawl aei)el€pnient; C. .Support reform of('E0A to facilitate the processing of igfill applications n?eelitig.$l)eci fiedl ,latrcicrrr�s; D. :Support niodc ficalions to SCA 3 to broaden the types ofactivilies that could he directly,fitranced under hal f-cent sales lax prog'rani s•; E. Support c�ffons to niodify the super majority requirement for General Ohligation Bonds to a simple majority vote; arra F. Suppyarl the retwwal of Measure C within the County, with the inclusion ref rip Ytr slrace firrarrcitrg and infill housing/affc�r~dal le hr itsing as direct allowed actNi ties. V. FISCAL REFORMS It has long been understood that an essential aspect of addressing the state's housing needs would come through the State Legislature addressing the need for adequate funding of local government. The state should stabilize local revenues, reduce reliance on sales tax and provide fiscal incentives to encourage balanced land use planning. The Bay Area alliance for Sustainable Develop►nent has suggested the following: A. State Law should be modified to provide local governments with an adequate: and stable tax revenue: \\B'CDIIAPPT,\IIt7It�\,T.SSKI Rt iiie;ii(islltiflSt(itli.doc 15 ........................ ........................... .......... ........... B. Local governments should be encouraged to work together to determine how to allocate and share tax revenues; C. The State Constitution and the State statutes should be revised to insure stability in financing for local governments and schools that realign responsibility with revenues; D. Enact fiscal incentives for local jurisdictions to accommodate affordable Dousing and achieve jobs-housing balance, and decrease the fiscalization of land use decisions by modifying state and local statutes to allow an equitable across jurisdictional boundary sharing of revenues gained from growth, The County Board of Supervisors has had a long-standing interest in the need for structural reform to local government finance in California. The smart growth principles are merely the latest manifestation of the need for such reform. Cotitimthig to ivork with the County 'Yiiperi,is,-ir,v'A.v,vociatioii, Leqgue cif Ofies and other hilerem �7, oul)s to accony)lish this needled structural reform should cotitimie to he part ref the Coutity's/egis/afive agenda. J Cc: Finance Committee Claude Van Marter Dennis Barry Kathleen Hamm Jim Jakel, Contra Costa Council Guy Bjerke, Building Industry Association IOMI---\JSKAIZ\!iieii3os\liiiISI(itli.d(ic 16 ................................................................................................. ..................... . .. . ... ..... .............................. ................ ........................................................1.11,11,1111,................................................................................................................................. .... ................................. Fife` CUA" EVALUATION CRITERIA HOUSING TRUST FUND CONTRA COSTA COUNTY Significant Net New Source of Revenue: 0 Trust Fund revenge mechanisms must not represent a transfer of funds available to support general fund or caber County activities. 8 The mechanism must not limit the County's future ability to support ori-going activities. 0 The mechanism must generate significant levels of revenue to support Trust Fund goads. Legally Feasible revenue Source: 0 The County must have the legal authority to collect the revenue source. i Alternatively, the cities can collect these revenues and dedicate them to a County- wide fund. 0 The revenue mechanism can be legally used for Trust Fund activities, although demonstrating a nexus, or reasonable relationship, between the revenue mechanism and its use might be required. Impacts: 0 The economic sectors that bear the burden of the mechanism and the degree of impact on those sectors is!identified. ® An economically progressive; mechanism shifts the progressivity of the burden towards those with greater ability to pay. A regressive mechanism, on the other hand, farther burdens those populations the Trust Fuad is designed to help. The measure should not negatively impact the competitive position of the jurisdiction, by either discouraging population growth or economic activity. Source: Keyser Marston Associates, Inc. December 1991 11 2M0001.J21 REVENUE SOURCES ELIMINATED IN FIRST PHASE EVALUATION") HOUSING TRUST FUND t. CONTRA COSTA COUNTY Sales Tax: County already collects state-mandated maximum rate. Excess Bond Reserves: Based on a general understanding of recent IRS rulings, future excess reserves, if any, could not be used to fund Trust Fund activities. Sale of County Land Assets: County has dedicated Asset Management Revenues to generate funds for General Fund. Asset base reportedly limited. €#DAG Loam Repayments: Reportedly, no such funds are available. Mousing Preservation/Condominium Conversion No significant amount of ora-going demolition or Fee: conversion activity predicted at this-:me. Special Property Tax Levy: Expressly prohibited by State law without voter approval. 1loluntary Contribution of Mortgage impound By law, these funds must be placed in an interest Account Interest: bearing account to the benefit of the borrower. Voluntary Contribution of Interest on Sale Escrow Judged infeasible due to grooving political awareness and Tenant Security Deposits: that interest on these funds should accrue to the depositors. Also extremely complex to administer. Curren" County !~lousing Funds: Existing Housing Resources such as Corrarxauhity Development Block Grant allocation and HOME Funds do not represent net new housing funds. Tax increment dousing Set Aside Funds: Not net new housing revenue source. Legal (and potentially political) obstacles to pooling CitylCounty funds, without complex distribution scheme. Transient Occupancy Tax: Limited revenue potentia:. sr' Includes revenue sources used in other communities with dousing Trust Funds. Source: Keyser !Marston Associates, Inc. May 1992 11127610041,038 O = M m X ` 24 Co �" Z G9 N m a o as G Lam? -n CL W w " e1� Tri th �' , 0 o Y i v o C) Zn o » ro A 0 m ,, as a. a c tr. m a a t J v:: m pp a, m g � C7 oy eve "» fid} to E4 00 0 0 02 G C C A _. 0 ffi co .w to N { fi fi � •� rm C3 C C � caa w ro 0ro CL ree m i t a a • m CL Q th d Zvs ^y ecu coHcb .ryas rya 10, c Cl r an x 5.m ka n o N O ry O 6 n 69 $ d ry C ro m m m m em r :3 am v n •� m `>° .01 d7 " CL a � Ct. a a ,0) Cr 0 m 44 rn 00 n a a a to h C O a m a s T .t} no w m a < _ �C � 7 ry5 ro -b � Sm {.� N Qi .-r 1.610 q to ya c erns,m » my K 3 B 3 o n o 3 1101 ms: m um+ mea ee y rn 't n Q tG o j ry to 6 r C a7 m a w CL a m a � m m a my is N :D {C !3 CONTRA COSTA COUNTY COMMUNITY DEVELOPMENT DEPARTMENT BATE: March 27, 1998 TO: Internal Operations Committee Supe r Donna Gerber pervi r Jing Rogers FROM: )Progress nnedy, Deputy Director Redevelopment Kathleen K. Hamm, principal planner - Housing SUBJECT: Report on Proposed Co€�nty Policies to Require Developers to vide Affordable Housing or Pay an In-lieu Pee for Affordable Housing evelopment The Board of Supervisors requested that the Community Development Department prepare a report containing the following: o summary of County experience with Development Agreements incorporating an affordable housing requirement; o current assessment of the 1992 recommendations of the Housing Trust Fund Task Force, o identification of procedures to adept and implement a County ordinance ,requiring Developers to include an affordable housing component in proposed developments or gay in-lieu fees to a County mass-transit orientedaffordable housing trustfund; o proposed policies and ordinance to establish an Inclusionary Housing Program in Contra Costa County, and o identification of resources to cover the cost of analysis and report preparation. A cagy of the Board's action on this issue is attached for your information. (Attachment A). The following is an interim report reflecting progress achieved, issues identified, and steps required to meet the intent of the Board's direction. 1. Summary of County experience with Development Agreements with affordable housing components. The County has entered into development agreements containing affordable housing requirements for the following. Stonecastle Homes, Weideman Ranch, Dougherty Valley; and Cypress Lakes. Three of the agreements require developer contributions of$400 to $3,333 per unit developed to a County Affordable Housing Trust Fund. The Dougherty Valley agreement rewires that 25 percent of all units developed must be affordable to very-low, low and: moderate- income households`. To date, no units have been constructed under these agreements and no fees have been paid. (See Attachment B to this report for a summary of each agreement and the current status.) 11. Assessment of the 1992 recommendations of the HousiLig 'Frust Fund 'Task Farce. The 1992 recommendations of the Housing Trust Fund Task Force were not implemented' due to the severe recession that affected the.nationand California. The 1992 recommendations were accepted by the Board of Supervisors on April 21, 1992. A summary of the Task Force Report is included as Attachment D. A copy of the full report is included as Attachment H. The recommendations of the Housing Trust,Fund Task Force represented a carefully crafted compromise approach that, A. balanced the financial responsibilities for contributions to a Housing Trust Fun& by including both "countywide" sources of revenue General Obligation Bonds and Solid Waste Franchise pees) and a narrowly assessed source(inclusionary program with an in- lieu fee componene); and B. balanced the affordable housing needs of households with a range of income levels by recommending the use of trust fund revenues for the development of additional rental housing affordable to very-low/low income households as well as the provision of improved homeownership opportunities for low/moderate income households. The balanced approach that was recommended reflected an assessment that countywide sources requiring water approval (e.g., General Obligation Bonds require 2/3 voter approval) would need to appeal to a broad segment of the population. In addition, all communities could find some element of benefit that could work in their locale. The compromise approach of providing for a wide,breadth of financial responsibility and a wide geographic/programmatic element reflected a politically prudent course at the time. This approach may be equally prudent today. The response to a recant briefing of the City/County `Very-low, low, and moderate income households are defined annually by the State Department of Housing and Community Development in accordance with California Health and Safety Code Section 50079.5 and 53105. Very-low income households are defined as households with incomes at or below 50 percent of the Area Median T_ncome for Contra Costa County adjusted for household size ("AM111), low-income households have incomes at/below 60 percent AMI, and moderate income households have incomes at/below 120 percent Aril. Housing is considered to be affordable so long as the total charges for rent, utilities and related housing services do not exceed 30 percent of a household's gross monthly income at the maximum income levels for eact income category. 2Housing Trust Funds are separate funds established by jurisdictions to provide resources for the development of affordable housing opportunities within a specified geographic area typically coincident with the boundaries of the jurisdiction providing the resources. Examples of financing sources for a housing trust fund include general obligation bond financing, special fees, and taxes. 3An inclusionary housing program is a program which requires all new residential developments to include a specific percentage of housing units affordable to and occupied by very--low, low and/or moderate income households. A provision frequently included in inclusionary housing programs allows developers to pay a specified fee in lieu of producing the required percentage of affordable housing units. Relations Committee by Supervisor Rogers suggests more support for a broad-based collaborative approach such as General Obligation Bonds. lll. Procedures to Adapt and Implement r$Cortrtty Ordinance to requireDevelopers to Include Affordable Housing irr Pro used Developments or Pay In-Lien Fees to a`Court Mass-Transit Oriented A.ff`osrdable Housing Fund. A proposed scope of work required to fully respond to the Board's prior directive to explore procedures required to establish aro inclusionary affordable housing program similar to the Dougherty Valley model with the addition of an in-lieu fee component (the "inclusionary program")is included with this report as Attachment C. Staff has reviewed the County's General Plan and determined that current Plan policies and goals are adequate to support an inclusionary housing programa under which developers would have the option of producing the required affordable housing units or paying specified fees into a County Affordable dousing Trust Fund. Consequently,such a program would'not require a General Plan Amendment. Goals and policies in the Housing Element of the General Plan which are supportive of an affordable housing ordinance with aro in-lieu fee component are contained in Attachment F to this report. In contrast, staff has concluded that current General Plan goals and policies are not adequate to support aro inclusionary program which would require payment of in-lieu fees to a housing trust fund with resources limited to the provision>ofsubsidies for affordable housing development neer mass-transit (e.g., BART). Consequently, such a program would most likely require a General .Plan Amendment. Due to the General Plan issues and additional complexities of aro inclusionary program with in- lieu fees paid into a mass transit oriented trust fund, staff' recommends that the Community Development Department be directed to: oa limit the scope of the current analysis to the more general inclusionary housing programa with in-lieu fees paid into a Housing Trust Fund to support affordable housing development throughout the County and oa continue to consult with Supervisor Rogers and other interested members of the Board concerning issues and options with respect to the development of affordable housing at locations near mass'transit. As previously stated, a detailed work program for the development of an inclusionary ordinance is included as Attachment C to this report. As identified by County Counsel;, analysis of the following issues and questions, including appropriate documentation, must precede the actual adoption of such an ordinance in order to justify the imposition of an affordable housing or in lieu fee condition of approval for development projects. A. Is there the required "nexus" or connection between an identified legitimate government interest and the requirements which would be imposed by a County ordinance implementing an inclusionary ,program with .an in-lieu fee option and is that interest advanced by such an ordinance? [See Nollan v. California Coastal Commission, 483 U.S. 825(1987).] B. If the required nexus exists, is there a "rough proportionality" between the condition to be imposed on the developers (by ordinance) and the development's impact? (See Dolan v. City,of Tigard 512 U.S. 374, (1994).] A response to this issue requires a determination of the specific percentage of affordable housing required for the project and/or a determination of a per unit in-lieu fee amount rased on the project impacts which the inclusionary requirement or fee is intended to mitigate tsee Ehrlich v. City of Culver City (1996) 12 Cal. 4th 854). C. For purposes of in lieu fee requirement, can all the statutory requirements for development fee be met under Government Code Section 66000 et seq? This analysis requires the following determinations. 1. identification of the fee purpose and;use. With respect to an inclusionary program, the fee purpose and use would potentially involve the production of affordable housing to meet the needs of very-low, low and moderate-income households in Centra Costa.. 2. Determination that there is,a"reasonable relationship" between the fee's use and the type of development upon which the fee is unposed. This analysis would require the establishment of a relationship between new housing development and the need for additional affordable housing. 3. Determination that there is a "reasonable relationship" between the amount of.the fee imposed and, the cost of mitigating, the impact of the proposed development. This would require demonstration of a quantitative relationship between the amount of a proposed in-lieu fee and the increased demand or need for affordable housing resulting from new housing development. Based on discussions with County Counsel, to supportt such an ordinance, a nexus analysis and documentation to support the statutory fee requirements(Government Code Section 66000 et seq), which establish a reasonable, quantifiable relationship between the proposed inclusionary requirements and in-lieu fee conditions of approval and the need for additional affordable housing created by new housing development, should be prepared. Attachment G provides a brief summary of inclusionary ordinances enacted by selected jurisdictions in California. IV. BudyelIssues. The proposed initial funding source,for this activity, is $40,000 contributed as a condition of approval by the developer of Subdivision 8000(Kaufman and Broad/CA Meadows'). As directed by the Board, these funds have been paid into a Community Development Department trust account to support the study of affordable housing issues. Approval of Final Development Plan for SD556030 by Board of Supervisors on August 35, 1997 condition number 50.