HomeMy WebLinkAbout08 WORKFORCE HOUSING INCENTIVE PROGRAM ORDINANCEAgenda Item 8
Reviewed:
AGENDA REPORT City Manager
Finance Director N/A
MEETING DATE: JUNE 5, 2018
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: ECONOMIC DEVELOPMENT DEPARTMENT
SUBJECT: WORKFORCE HOUSING INCENTIVE PROGRAM ORDINANCE
SUMMARY:
Ordinance No. 1491 proposes to add Chapter 9B to Article 9 (Land Use) of the Tustin City
Code (TCC), relating to Workforce Housing Incentive Program.
RECOMMENDATION:
It is recommended that the City Council:
1. Open and, after public testimony, close the public hearing; and
2. Introduce and have the first reading of the revised Ordinance No. 1491, adding
Chapter 9B to Article 9 Chapter 1, relating to Workforce Housing Incentive
Program; and set a second reading for the next City Council meeting.
FISCAL IMPACT:
Ordinance No. 1491 is a City Council -initiated project, in response to requirements of State
law. There is no direct fiscal impact to the General Fund.
CORRELATION TO THE STRATEGIC PLAN:
The Workforce Housing Incentive Program Ordinance furthers the objective of the Goal
A: Economic and Neighborhood Development, enhancing the vibrancy and quality of life
in the community.
APPROVAL AUTHORITY:
The TCC Section 9295g authorizes the City Council to adopt Code amendments following
a recommendation by the Planning Commission and a public hearing.
Agenda Report
June 5, 2018
Page 2
BACKGROUND AND DISCUSSION:
On April 17, 2018, the City Council unanimously passed the first reading of Ordinance
No. 1491 and set the second reading for June 19, 2018. The Council set a later date for
the second reading in order for staff to meet with the Building Industry Association of
Orange County ("BIA") to discuss concerns raised by the BIA during the public hearing.
On May, 8, 2018, Mayor Al Murray, Councilmember Dr. Allan Bernstein, City Manager
Jeff Parker, Community Development Director Elizabeth Binsack, and Economic
Development Deputy Director Jerry Craig met with the BIA. In discussing BIA's concerns
and recommendations, it was agreed that removing Section B9942(a) of the original
Ordinance No. 1491, allowing the City Council to adopt a monitoring fee and a plan
submittal fee, would be presented to the City Council for consideration. As a result, staff
is submitting the revised Ordinance No. 1491 for a first reading.
PUBLIC NOTICE:
A public notice was published in the Irvine World News on May 24, 2018, informing the
public of the revised code amendment.
CONCLUSION:
The proposed ordinance is a tool for providing more affordable housing, geographically
distributing, and addressing regional housing requirements mandated by SCAG.
Jo n Buchanan Jerry Craig
ector of Economic Developm nt Deputy Dire tofrofE on m'rs evelopment
Attachments:
A. Revised Draft Ordinance No. 1491
B. April 17, 2018 Inclusionary Housing Policy and In -Lieu Fee Agenda Report
DRAFT ORDINANCE NO. 1491
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, ADDING CHAPTER 9B TO
ARTICLE 9 OF THE TUSTIN CITY CODE ESTABLISHING
WORKFORCE HOUSING INCENTIVE PROGRAM.
The City Council of the City of Tustin does hereby ordain as follows:
SECTION I. The City Council finds and determines as follows:
A. That this Ordinance is being adopted pursuant to the City's police power
authority to regulate the development and use of real property within its
jurisdiction to promote the public welfare.
B. That many municipalities have adopted ordinances that require, as a condition
of development of residential units, that the development include a certain
percentage of owner -occupied or rental units affordable to, and occupied by,
extremely low, very low, low, or moderate -income households.
C. That the California Supreme Court has affirmed that adopting such housing
ordinances is a constitutional exercise of the local police power (CB/A v. City
of San Jose, 61 CalAth 435 (2015)).
D. That on September 29, 2017, the Governor Approve Assembly Bill No. 1505
("AB 1505"), adding subdivision (g) to Section 65850 of the Government Code.
AB 1505 provides additional authorization for municipalities to adopt such
housing ordinances.
E. That in support of AB 1505, the Legislature noted that since the 1970s, more
than 170 jurisdictions have enacted housing ordinances to meet their affordable
housing needs. Additionally, the Legislature proclaimed that such housing
ordinances have provided quality affordable housing to more than 80,000
Californians, including the production of an estimated 30,000 units of affordable
housing in the last decade.
F. That the City Council desires to implement a workforce housing incentive
program to enhance the public welfare by establishing policies that foster the
construction of housing affordable to households of extremely low, very low,
low, and moderate incomes, help the City meet the needs of its local workforce,
help meet its share of regional housing needs, and implement the City of Tustin
General Plan Housing Element's goals and policies.
G. That the addition of Chapter 9B — Workforce Housing Incentive Program to
Article 9 of the Tustin City Code is consistent with AB 1505.
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Ordinance No. 1491
Page 2
H. That the addition of Chapter 9B — Workforce Housing Incentive Program to
Article 9 of the Tustin City Code is consistent with the City of Tustin General
Plan Housing Element in that it complies with the following goals and policies:
Goal 1: Provide an adequate supply of housing to meet the need
for a variety of housing types and the diverse socioeconomic needs
of all community residents.
Policy 1.1: Promote the construction of additional dwelling units to
accommodate Tustin's share of regional housing needs identified by
the Southern California Association of Governments (SCAG), in
accordance with adopted land use policies.
Policy 1.5: Promote the dispersion and integration of housing for low -
and very -low income families throughout the community as opposed
to within any particular geographic area, neighborhood, or project.
Policy 1.7: Utilize various resources, where feasible, to assist in
creating opportunities which will expand opportunities for
development of affordable housing in the community.
Policy 3.1: Encourage new housing construction for home -ownership
in a mixture of price ranges.
I. That on March 27, 2018, a public hearing was duly noticed, called, and held on
the addition of Chapter 9B to Article 9 of the Tustin City Code by the Planning
Commission.
J. That on March 27, 2018, the Planning Commission, by a 3-2 vote, denied by
minute order Resolution No. 4358, which if approved would have
recommended that the City Council adopt Ordinance No. 1491 adding Chapter
9B to Article 9 of the Tustin City Code.
K. That on April 17, 2018, a public hearing was duly noticed, called, and held by
the City Council to consider the Planning Commission's action and the addition
of the Workforce Housing Incentive Program to Article 9 of the Tustin City
Code.
L. That on April 17, 2018, the City Council unanimously passed the first reading
of Ordinance No. 1491 and scheduled the second reading for June 19, 2018,
providing staff with enough time between the first and second reading to meet
with building industry officials to review concerns raised in the public hearing.
M. That on June 5, 2018, a public hearing was duly noticed, called and held by the
City Council to consider revisions to Ordinance No. 1491 after the April 17,
1309873.2
Ordinance No. 1491
Page 3
2018 public hearing to the Workforce Housing Incentive Program to Article 9 of
the Tustin City Code.
SECTION II. Chapter 9B — Workforce Housing Incentive Program is hereby added to
Article 9 of the Tustin City Code to read as follows:
CHAPTER 9B - WORKFORCE HOUSING INCENTIVE PROGRAM
PART 1 - GENERAL
B9911 - PURPOSE
The purpose of this Chapter is to enhance the public welfare by establishing policies
which require the development of housing affordable to households of extremely low, very
low, low, and moderate incomes, help meet the needs of the City's local workforce, help
meet the City's regional share of housing needs, and implement the goals and objectives
of the Tustin General Plan Housing Element, by requiring the development of workforce
housing incentive program units within new residential developments.
B9912 - DEFINITIONS
Whenever the following terms are used in this Chapter, they shall have the meaning
established by this Section:
"Affordable housing cost" means the housing cost for dwelling units as defined by
California Health and Safety Code Section 50052.5 for owner -occupied housing and the
affordable rent for rental units as defined by California Health and Safety Code Section
50053, as applicable.
"Applicant" or "developer" means a person, persons, or entity that applies for a
residential project and also includes the owner or owners of the property if the applicant
does not own the property on which development is proposed.
"Density bonus units" means dwelling units approved in a residential development
pursuant to California Government Code Section 65915 et seq. and Tustin City Code
Section 9111 et seq., that are in excess of the maximum residential density otherwise
permitted by the City of Tustin General Plan or Tustin City Code.
"Development approval" means a tentative map, parcel map, conditional use permit,
development agreement, or any other discretionary permit.
"Extremely low-income household" shall have the definition given in California Health
and Safety Code Section 50106.
"For -sale" means and refers to any dwelling unit, including a condominium, stock
cooperative, community apartment, or attached or detached single family home, for which
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Ordinance No. 1491
Page 4
a parcel or tentative and final map is required for the lawful subdivision of the parcel upon
which the dwelling unit is located or for the creation of the unit in accordance with the
Subdivision Map Act (California Government Code Section 66410 et seq.), or any
residential development including such for -sale dwelling units.
"Low income household" shall have the definition given in California Health and
Safety Code Section 50079.5.
"Market rate unit" means a new dwelling unit in a residential project that is not an
workforce housing incentive program unit as defined by Section B9912 of this Chapter.
"Mixed use residential development" means any development that combines
residential land uses with office, commercial, light industrial, or business park land uses.
"Moderate income household" shall have the definition given in California Health and
Safety Code Section 50093(b).
"Rental" means and refers to a dwelling unit that is not a for -sale dwelling unit, and
does not include any dwelling unit, whether offered for rental or sale, that may be sold as
a result of the lawful subdivision of the parcel upon which the dwelling unit is located or
creation of the unit in accordance with the Subdivision Map Act (California Government
Code Section 66410 et seq.), or any residential development including such rental
dwelling units.
"Residential project" means any residential development, including any mixed use
residential development, requiring a development approval for which an application has
been submitted to the City to (1) rezone a property from an industrial or commercial
district, where appropriate, to residential district, (2) change a property's zoning
designation from one lower -density residential district to another higher -density
residential district, or (3) to develop residential uses within any specific plan area through
the utilization of Residential Allocation Reservations, and where the project would create
new, additional, or modified dwelling units by:
(a) The construction or alteration of structures, or
(b) The conversion of a use to residential from any other use.
"Very low-income household" means a household earning no more than the amount
defined by California Health and Safety Code Section 50105.
"Workforce housing incentive program agreement" means an agreement in
conformance with Section B9932 of this Chapter between the City and an applicant,
governing how the applicant shall comply with this Chapter.
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Ordinance No. 1491
Page 5
"Workforce housing incentive program fund" means the fund created by the City in
which all fees collected in compliance with this Chapter shall be deposited pursuant to
Section B9929 of this Chapter.
"Workforce housing incentive program guidelines" means the requirements for
implementation and administration of this Chapter as may be promulgated by the City
Manager pursuant to Section B9942 of this Chapter. .
"Workforce housing incentive program plan" means a plan containing all of the
information specified in and submitted in conformance with Section B9932 of this Chapter
specifying the manner in which workforce housing units will be provided in conformance
with this Chapter and the workforce housing incentive guidelines, and consistent with the
City of Tustin General Plan and Article 9 of the Tustin City Code.
"Workforce housing incentive program unit" means a dwelling unit required by this
Chapter to be affordable to very low, low, or moderate -income households.
PART 2 - APPLICABILITY AND WORKFORCE HOUSING INCENTIVE PROGRAM
UNIT REQUIREMENTS
B9921 - APPLICABILITY
The provisions of this Chapter shall apply to all residential projects, as defined in
Section B9912 of this Chapter, except for any residential project exempt under Section
89922 of this Chapter.
B9922 - EXEMPTIONS
This Chapter shall not apply to any of the following:
(a) Applications for a development approval that include a residential project
for which an application has been deemed complete prior to the effective
date of the ordinance codified in this Chapter.
(b) A residential project that is the subject of a development agreement under
applicable provisions of the California Government Code that expressly
provide for an exclusion to this Chapter or provide for a different amount of
workforce housing incentive program units from that specified by this
Chapter, provided the development agreement was executed by the City
prior to the effective date of the ordinance codified in this Chapter.
(c) A residential project for which a housing incentive agreement has been
approved pursuant to Section 9142 of Article 9, Chapter 1, Part 4 of this
Code, provided that the housing incentive agreement is effective prior to the
effective date of the ordinance codified in this Chapter, and there is no
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Ordinance No. 1491
Page 6
uncured breach of the housing incentive agreement before issuance of a
certificate of occupancy for the project.
(d) A residential project for which a development approval has been approved
by the City by no later than the effective date of the ordinance codified in
this Chapter. Upon expiration of any development approval, and unless
otherwise exempted, the residential project shall be subject to the
requirements of this Chapter, and shall not proceed until such time as an
workforce housing incentive program plan is approved in conjunction with
any other required development approval or amendment thereto. The
exemption set forth in this Subsection shall not apply to any discretionary
extension of a development approval or land use approval beyond its initial
term granted after the effective date of the ordinance codified in this
Chapter.
B9923 - WORKFORCE HOUSING INCENTIVE PROGRAM UNIT REQUIREMENTS
All new residential projects, as defined in Section B9912 and as specified in Section
B9921, shall include workforce housing incentive program units. Calculations of the
number of workforce housing incentive program units required by this Section shall be
based on the number of dwelling units in the residential project, excluding any density
bonus units as defined in Section B9912 of this Chapter.
(a) On-site workforce housing requirement. Unless otherwise exempted from
this Chapter, residential projects shall include workforce housing incentive
program units upon the same site as the residential project as follows:
Fifteen percent (15%) of the total dwelling units in the residential project shall
be made available at an affordable housing cost. Of these affordable housing
units, six percent (6%) shall be made available to very low-income
households, four and a half percent (4.5%) shall be made available to low-
income households, and four and a half percent (4.5%) shall be made
available to moderate -income households. Alternatively, twelve and one-half
percent (12.5%) of the total dwelling units in the residential project shall be
made available at an affordable housing cost. Of these affordable housing
units, seven and one-half percent (7.5%) shall be made available to very low-
income households, and five percent (5%) shall be made available to
moderate -income households.
B9924 - FRACTIONAL UNITS
In computing the total number of workforce housing incentive program units required
in a residential project, fractions shall be rounded up to the next whole number.
B9925 - OPTIONS TO SATISFY WORKFORCE HOUSING INCENTIVE PROGRAM
REQUIREMENTS
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Ordinance No. 1491
Page 7
(a) On-site units. The primary means of complying with the workforce housing
incentive program unit requirements of this Chapter shall be the provision
of on-site workforce housing incentive program units in accordance with
Section B9923. A developer may only satisfy the requirements of this
Chapter by means of an alternative to on-site workforce housing incentive
program units in accordance with the requirements and procedures of this
Section.
(b) Off-site units. The workforce housing incentive program unit requirements
of Section B9923 may be satisfied, in whole or in part, by the construction
of new workforce housing incentive program units, or the conversion of
existing market rate units to workforce housing incentive program units,
offsite within the City's jurisdictional boundary. All workforce housing
incentive program units developed off-site of the residential project in
accordance with this Subsection shall comply with the following criteria:
(1) The off-site location has a general plan designation that
authorizes residential uses and is zoned for residential development
at a density to accommodate at least the number of otherwise
required workforce housing incentive program units within the
residential project;
(2) The off-site location is suitable for development of the
workforce housing incentive program units in terms of configuration,
physical characteristics, location, access, adjacent uses, and other
relevant planning and development criteria;
(3) Environmental review for the off-site location has been
completed for the presence of hazardous materials and geological
review for the presence of geological hazards and all such hazards
are or shall be mitigated to the satisfaction of the City prior to
acceptance of the site by the City;
(4) The construction schedule for the off-site workforce housing
incentive program units shall be included in the workforce housing
incentive program plan and the workforce housing incentive program
agreement;
(5) Any off-site workforce housing incentive program units shall
be constructed and made available for occupancy prior to or
concurrently with the market rate residential project pursuant to
Section B9926;
(6) Any off-site workforce housing incentive program housing
units shall be substantially comparable to the market rate units
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Ordinance No. 1491
Page 8
included in the residential project in terms of quality of design,
materials and finish; and
(7) Any off-site workforce housing incentive program housing
units shall be substantially comparable to the market rate units
included in the residential project in terms of gross floor area of
habitable space and number of bedrooms per unit.
(c) In -lieu fee. The workforce housing incentive program unit requirements of
Section B9923 may be satisfied, in whole or in part, by payment to the City
of a workforce housing incentive program in -lieu fee, as may be established
by resolution of the City Council, provided that such fee is received by the
City after the issuance of the development approval for the residential
project, but prior to the issuance of the certificate of occupancy for the first
market rate unit in the residential project.
All in -lieu fees collected under this Subsection shall be deposited in the
workforce housing incentive program fund.
(d) Alternative option. The workforce housing incentive program unit
requirements of Section B9923 may be satisfied, in whole or in part, by an
alternative option acceptable to the City, which may include without
limitation the dedication of land for affordable housing.
B9926 - STANDARDS
(a) Location within the residential project. All workforce housing incentive
program units shall be:
(1) Reasonably dispersed throughout the residential project;
(2) Proportional, in number of bedrooms, gross floor area of
habitable space, and location, to the market rate units;
(3) Comparable to the market rate units in terms of quality of
design, materials, finish and appearance;
(4) Permitted the same access to community amenities and
recreational facilities, as the market rate units; and
(5) Provided functionally equivalent parking when parking is
offered to the market rate units.
(b) Timing of construction. All workforce housing incentive program units in a
residential project, or any off-site workforce housing incentive program
units, shall be constructed and made available for occupancy prior to or
1309873.2
Ordinance No. 1491
Page 9
concurrently with the market rate units. If the City approves a phased
project, a proportional share of the required workforce housing incentive
program units shall be provided within each phase of the residential project.
(c) General Prohibitions
(1) No person shall sell or rent a workforce housing incentive
program unit at a price or rent in excess of the maximum amount
allowed by any restriction placed on the unit in accordance with this
Chapter.
(2) No person shall sell or rent a workforce housing incentive
program unit to a person or persons that do not meet the income
restrictions placed on the unit in accordance with this Chapter.
(3) No person shall provide false or materially incomplete
information to the City or to a seller or lessor of a workforce housing
incentive program unit to obtain occupancy of housing for which the
person is not eligible.
B9927 - WORKFORCE HOUSING INCENTIVE PROGRAM FUND
(a) All monies collected pursuant to this Chapter shall be deposited into a
separate account to be designated as the City of Tustin workforce housing
incentive program fund.
(b) The monies in the workforce housing incentive program fund shall be
expended exclusively to provide housing affordable to extremely low, very
low, low, and moderate -income households in the City of Tustin, and
administration and compliance monitoring of the workforce housing
incentive program.
PART 3 - CONTINUING AFFORDABILITY
B9931 - CONTINUING AFFORDABILITY
(a) Execution and recording of documents. The Director of Economic
Development or designee may require execution and recording of
documents necessary to ensure enforcement of this Chapter, including but
not limited to promissory notes, deeds of trust, resale restrictions, rights of
first refusal, options to purchase, and/or other documents, which shall be
recorded against the residential project, all workforce housing incentive
program units, and any site subject to the provisions of this Chapter.
Affordability documents for for -sale owner -occupied workforce housing
incentive program units may also include subordinate shared appreciation
documents permitting the City to capture at resale the difference between
1309873.2
Ordinance No. 1491
Page 10
the market rate value of the workforce housing incentive program unit and
the affordable housing cost, plus a share of appreciation realized from an
unrestricted sale in such amounts as deemed necessary by the City to
replace the workforce housing incentive program unit.
(b) Affordability periods. All workforce housing incentive program units shall
remain affordable to the targeted income group for no less than the time
periods set forth in California Health and Safety Code Sections 33413(c)(1)
and (2), as may be amended.
(c) Unless otherwise required by law, all promissory note repayments, shared
appreciation payments, or other payments collected under this Section shall
be deposited in the workforce housing incentive program fund.
(d) Any household that occupies an workforce housing incentive program unit
must occupy that unit as its principal residence, unless otherwise approved
in writing by the Director of Economic Development or his or her designee
for rental to a third party for a limited period of time due to household
hardship, as specified in the workforce housing incentive program
guidelines.
(e) No household may begin occupancy of a workforce housing incentive
program unit until the household has been determined to be eligible to
occupy that unit. Rental workforce housing incentive program units shall
continue to be rented to income eligible households at an affordable
housing cost for the entire term of the workforce housing incentive program
restriction. The workforce housing incentive program guidelines shall
establish standards for determining household income, maximum
occupancy, affordable housing cost, provisions for continued monitoring of
tenant eligibility, and other eligibility criteria.
B9932 - WORKFORCE HOUSING INCENTIVE PROGRAM PLAN AND WORKFORCE
HOUSING INCENTIVE PROGRAM AGREEMENT
(a) Workforce Housing Incentive Program Plan. The developer shall submit an
workforce housing incentive program plan in a form specified by the Director
of Community Development or designee, detailing how the provisions of this
Chapter will be implemented for the proposed residential project. The
workforce housing incentive program plan and its supportive documents,
plans, and details shall be submitted at the same time as the development
approval application materials for the residential project. Upon submittal, the
Director shall determine if the workforce housing incentive program plan is
complete and conforms to the provisions of this Chapter and, if applicable,
the workforce housing incentive program guidelines. No project approval shall
be issued for a residential project subject to this Chapter until an workforce
housing incentive program plan has been approved. Any person may appeal
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Ordinance No. 1491
Page 11
any decision of the Director of Community Development in accordance with
Section 9294 of this Code.
(b) Workforce Housing Incentive Program Agreement. Where the workforce
housing incentive program requirements of this Chapter will be satisfied
through the provision of on-site or off-site workforce housing incentive
program units, prior to the approval of any final or parcel map or issuance of
any building permit or certificate of occupancy for a residential project subject
to this Chapter, the City and Developer shall execute and cause to be
recorded a workforce housing incentive program agreement containing those
provisions necessary to ensure the requirements of this Chapter are satisfied.
The workforce housing incentive program agreement shall be recorded
against the entire residential project property and any other property used for
the purposes of providing workforce housing pursuant to this Chapter.
PART 4 - ADMINISTRATION AND ENFORCEMENT
B9941 - MONITORING OF COMPLIANCE
The workforce housing incentive program guidelines may and each workforce
housing incentive program agreement shall include provisions for the monitoring by the
City of each residential project and each workforce housing incentive program unit for
compliance with the terms of this Chapter, the workforce housing incentive program
guidelines, and the applicable workforce housing incentive program agreement. Such
provisions shall require annual compliance reports to be submitted to the City by the
owner and the City shall conduct periodic on-site audits to insure compliance with all
applicable laws, policies, and agreements. The developer and workforce housing
incentive program unit owners or tenants are required to cooperate with the City in
promptly providing all information requested by the City in monitoring compliance with
program requirements.
B9942 - ADMINISTRATIVE PROCEDURES
The City Manager may promulgate and amend workforce housing incentive program
guidelines for the implementation and administration of all aspects of this Chapter.
B9943 - ENFORCEMENT
(a) Violation. Any violation of this Chapter, any development approval or
entitlement issued pursuant to any provisions of this Code, or the terms of
any workforce housing incentive program agreement entered into pursuant
to this Chapter constitutes a misdemeanor and is deemed a public
nuisance.
(b) Forfeiture of funds. Any individual who sells a workforce housing incentive
program unit in violation of this Chapter shall be required to forfeit any
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Ordinance No. 1491
Page 12
money in excess of the affordable housing cost at such time. Any individual
who rents out a workforce housing incentive program unit in violation of this
Chapter shall be required to forfeit all money so obtained. Recovered funds
shall be deposited into the workforce housing incentive program fund.
(c) Legal actions. The City may institute any appropriate legal actions or
proceedings necessary to ensure compliance with this Chapter, including
actions:
(1) To disapprove, revoke, or suspend any permit, including a
building permit, certificate of occupancy, development approval or
discretionary approval; and
(2) For injunctive relief or damages.
(d) Recovery of costs. In any action to enforce this Chapter, or a workforce
housing incentive program agreement approved hereunder, the City shall
be entitled to recover its reasonable attorney's fees and costs.
SECTION III. Effective Date. This Ordinance shall take effect on the 31St day after its
adoption. The City Clerk or his or her duly appointed deputy shall certify to adoption of
the Ordinance and cause this Ordinance to be published as required by law.
SECTION IV. CEQA Exemption. The City Council finds that this Ordinance is not subject
to the California Environmental Quality Act ("CEQA"; Cal. Pub. Resources Code Section
21000 et seq.). The Ordinance does not commit the City to approve any particular project,
or any aspect of any particular project, now or any time in the future. Any project subject
to the Ordinance will require its own review for CEQA compliance. As a result, the
Ordinance does not have any reasonably foreseeable environmental consequences or
commit the City to a definite course of action. Thus, the Ordinance is not a "project"
subject to CEQA. (Public Resources Code § 21065; CEQA Guidelines § 15378(a); CEQA
Guidelines § 15352(a).) Further, to the extent the Ordinance establishes workforce
housing incentive program fund, the Ordinance is, a government funding mechanism
expressly excluded from CEQA's definition of "project." (CEQA Guidelines §
15378(b)(4).) Even if the Ordinance were construed to be a project, it can be seen with
certainty that there is no possibility that the Ordinance may have a significant effect on
the environment for the foregoing reasons and thus falls within CEQA's "common sense"
exemption. (CEQA Guidelines § 15061(b)(3).)
SECTION V. Severability. If any section, subsection, sentence, clause, phrase or
portion of this Ordinance is for any reason held out to be invalid or unconstitutional by the
decision of any court of competent jurisdiction, such decision shall not affect the validity
of the remaining portions of this Ordinance. The City Council of the City of Tustin hereby
declares that it would have adopted this Ordinance and each section, subsection, clause,
phrase or portion thereof irrespective of the fact that any one or more sections,
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Ordinance No. 1491
Page 13
subsections, sentences, clauses, phrases, or portions be declared invalid or
unconstitutional.
PASSED AND ADOPTED, at a regular meeting of the City Council for the City of Tustin
on this day of , 2018.
ELWYN MURRAY, MAYOR
ATTEST:
ERICA N. RABE, CITY CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF TUSTIN )
CERTIFICATION FOR ORDINANCE NO. 1491
Erica N. Rabe, City Clerk and ex -officio Clerk of the City Council of the City of Tustin,
California, does hereby certify that the whole number of the members of the City Council
of the City of Tustin is five; that the above and foregoing Ordinance No. 1491 was duly
passed, and adopted at a regular meeting of the Tustin City Council held on the _ day
of , 2018, by the following vote:
COUNCILPERSONS AYES:
COUNCILPERSONS NOES:
COUNCILPERSONS ABSTAINED:
COUNCILPERSONS ABSENT:
Erica N. Rabe, City Clerk
Published:
1309873.2
Agenda Item 10
Rev
wed
AGENDA PORT City ger
Cit Mana
Finance Director /
MEETING DATE: APRIL 17, 2018
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: ECONOMIC DEVELOPMENT DEPARTMENT
SUBJECT: INCLUSIONARY HOUSING POLICY AND IN -LIEU FEE
SUMMARY:
Ordinance No. 1491 proposes to add Chapter 9B to Article 9 (Land Use) of the Tustin City
Code (TCC), relating to Inclusionary Housing and Resolution 18-28 adopts an Inclusionary
Housing In -Lieu Fee.
Although on March 27, 2018, the Planning Commission denied Resolution No. 4358,
recommending that the Tustin City Council adopt Ordinance No. 1491, staff is
recommending the City Council adopt Ordinance No. 1491.
RECOMMENDATION:
It is recommended that the City Council:
1. Open and, after public testimony, close the public hearing; and
2. Introduce and have the first reading of Ordinance No. 1491, adding Chapter 9B to
Article 9 Chapter 1, relating to Inclusionary Housing; and set a second reading for
the next City Council meeting.
3. Adopt Resolution 18-28, adopting an Inclusionary Housing In -Lieu Fee that shall
become effective concurrently with the effective date of Ordinance No. 1491.
FISCAL IMPACT:
Ordinance No. 1491 is a City Council -initiated project, in response to requirements of State
law. There is no direct fiscal impact to the General Fund.
CORRELATION TO THE STRATEGIC PLAN:
The proposed Inclusionary Housing Ordinance furthers the objective of the Goal A:
Economic and Neighborhood Development, enhancing the vibrancy and quality of life in
the community.
Agenda Report
April 17, 2018
Page 2
APPROVAL AUTHORITY:
The TCC Section 9295g authorizes the City Council to adopt Code amendments following
a recommendation by the Planning Commission and a public hearing.
SUMMARY OF ORDINANCE:
There is a shortage of affordable housing in the state, county and City. Inclusionary
Housing policies are adopted by cities as one tool to address affordable housing.
Ordinance No. 1491 would add Chapter 96 to the Tustin City Code entitled "Inclusionary
Housing', requiring Incluslonary Housing to occur where an application has been
submitted to the City for the following:
(1) rezone a property from an industrial or commercial district, where
appropriate, to a residential district;
(2) change a propertys zoning designation from one lower -density residential
district to another higher -density residential district; or
(3) to develop residential uses within any specific plan area through the
utilization of Residential Allocation Reservations, and where the project
would create new, additional or modified units.
Residential or mixed-use residential developments that are required to comply can
satisfy the requirement through one of the following four options:
(1) Provide affordable units on-site. 15% of the total units are made.available as
affordable to specific Income levels.' Of these affordable units, 6% must be
available to very low-income households, 4.5% must be available to low-
income households, and 4.5% must be available to moderate -income
households.
Altematively,12.5% of the total dwelling units in the residential project may
be available at an affordable price, provided 7,5% of these units are
available to very low-income households, and 5% are available to moderate -
Income households;
(2) Provide affordable units off-site within City limits;
(3) Pay an in -lieu fee (to be established by separate resolution of the City Council);
or
The proposed ordinance's inahWonary housing requirements mirror those upheld by the California Supreme Court
in California Building Industry Association v City of San Jose, 61 Cal.46 435 (2015) dWussed below.
Agenda Report
April 17, 2018
Page 3
(4) Propose an alternate option deemed acceptable by the .City (e.g., the
dedication of land for affordable housing).
In -lieu fees collected will be deposited into a separate account designated as the City
of Tustin Inclusionary Housing Fund. Monies deposited in the Inclusionary Housing
Fund will be expended exclusively to provide housing affordable to extremely low, very
low, low, and moderate -income households in the City of Tustin, and for administration .
and compliance monitoring of the inclusionary housing program established by the
proposed ordinance.
Rezoning, increasing density, and introducing residential units into commercially zoned
retail properties addresses the concept of "modernizing zoning" as recommended by
Building Industry Association ("BIA") of Orange County and these tools will incentivize
development while allowing the City to address affordable housing through an
inclusionary policy. in short, the ordinance would apply to those projects that
experience the benefit of increased property values as a result of City approvals.
BACKGROUND AND DISCUSSION:
In January 2016 Strategic Plan Workshop, the City Council directed staff to prepare an
Inclusionary Housing ordinance for City Council consideration. The expressed desire
was for a policy that required for -sale residential developers to pay an In -Lieu fee and for
rental developers to provide affordable housing on-site.
Staff has reviewed numerous incluslonary policies in order to prepare an ordinance that
complies with state law while providing the City with an additional tool that is flexible in
addressing affordable housing.
Planning Commission Public Hearing February 13, 2018
On February 13, 2018, the Planning Commission held a Public Hearing on the adoption
of Resolution No. 4358, recommending that the Tustin City Council adopt Ordinance
1491. After a staff presentation, public comments and discussion, the Planning
Commission noted their concerns and moved to continue the item for six weeks and
directed staff to include "tools" that would incentivize development as part of the
Ordinance.
Planning Commission Public Hearing March 27, 2018
On March 27, 2018, the Planning Commission held a Public Hearing on the adoption of
Resolution No. 4358, recommending that the Tustin City Council adopt Ordinance 1491,
After a staff presentation, public comments and discussion, the Planning Commission
Agenda Report
April 17, 2018
Page 4
denied Resolution No. 4358, recommending that the Tustin City Council adopt
Ordinance No. 1491.
During the deliberation, Commissioners expressed the following regarding the
proposed ordinance:
• Inclusion of Tustin Legacy in the ordinance.
• Definition of residential projects In the proposed ordinance was inadequate.
• The Red Hill Specific Pian and Downtown Commercial Core Plan have not been
adopted; therefore, the Residential Allocation Reservation would not ,apply.
• The proposal ordinance is deficient in its language to accomplish the goals.
• Concern that the policy would discourage development.
In response to the concerns raised, staff has revised the Ordinance as follows:.
• Tustin Legacy would not be exempt.
• The definition of residential projects has been refined.
• The proposed Ordinance no longer calls out all Specific Plans but only those that
receive a Residential Allocation Reservation. With the adoption of Ordinance
1491, the Planning Commission and City Council will know when approving a
Residential Allocation Reservation for a Specific Plan area that applicants will be
required to comply with the policy.
Inclusionary Housing in Orange County
Several Orange County cities have adopted Inclusionary Housing requirements and
offered an In -Lieu fee as an option for developers to satisfy the requirement. The
following table lists those cities:
Agenda Report
April 17, 2018
Page 5
Santa Ana
15%
All Development
20 units or more = $15
Very Low (<50%of MFI)
283
23%
square foot; less than 20
195
16%
Moderate Income (80-120% of
MFI)
units = $5 square foot
Huntington
10%
All Development
$16,420 to $51,466/unit,
Beach
1,227
100'x.
depends upon the
number of units
San
15% or 4%
All Development
Conflicting information,
Clemente
currently under review
San Juan
10%
Developments of
Rental fees and
Capistrano
2 units or more
ownership fees are
calculated differently
CONSISTENCY WITH REGIONAL HOUSING NEEDS ASSESSMENT:
The RHNA is mandated by State Housing Law as part of the periodic process of
updating local housing elements of the General Plan. The RHNA quantifies the need
for housing within each jurisdiction during specified planning periods. The most recently
completed RHNA planning period is from October 2013 to October 2021.
The State expects cities to use the RHNA in land use planning, prioritizing local resource
allocation, and in deciding how to address identified existing and future housing needs
resulting from population, employment and household growth. The RHNA does not
necessarily encourage or promote growth, but rather allows communities to anticipate
growth, so that collectively the region and sub -region can grow in ways that enhance
quality of life, Improve access to jobs,'promotes transportation mobility, and addresses
social equity, fair share housing needs.
Below is the City of Tustin share of the RHNA allocation. The specific RHNA number
for a jurisdiction is important because State law mandates that each jurisdiction provide
sufficient land to accommodate a variety of housing opportunities for all economic
segments of the community to meet or exceed this number of housing units.
Table 1
City of Tustin Regional Housing Need
20%2021
Income Level
Number of Units
Percentage
Very Low (<50%of MFI)
283
23%
Low'lncome 50-80% of MFI
195
16%
Moderate Income (80-120% of
MFI)
224
18%
Upper Income (>120% of MFI)
525
43%_
Total
1,227
100'x.
Agenda Report
April 17, 2018
Page 6
As noted in Table 1 above, the Regional Housing Needs Assessment ("RHNA") for
Tustin during the 20142021 Housing Element requires 283 very low-income units,195
low-income units, 224 moderate -income units, and 525 above moderate -income units,
totaling 702 affordable units. Table 2 below indicates what the City achieved in 2006-
2013 and how the City is doing in 2014-2021. To date, 274 affordable units of the 702
affordable units have been produced (39%).
Implications the City consider in complying with RHNA. The City's Housing Element
could be subject the City to:
• Potential lawsuits;
• Disqualification from applying for State grants;
Disqualification from getting State grant funding;
• Suspending the authority to issue building permits or any other related permits
for residential housing;
• Suspending the authority to grant zoning changes, variances, or both;
• Court ordered housing projects over which the City has no control;
• Excessive attorney's fees — If a jurisdiction faces a court action stemming from
its lack of compliance and either loses or settles the case, it often must pay
attorney fees to the plaintiffs attorneys; and
• Carryover unfulfilled .RHNA allocation to the next Housing Element cycle if the
City fails to identify or make available adequate sites to accommodate its RHNA
assignment.
Table 2
City of Tustin RHNA Actual
20142021
Income Level
Goal Actual
% of the Goal
Vely low
283 98
35%
Low
195 74
38%
Moderate
224 102
46%
Total Affordable
702 274---
390,,
Above Moderate
525 1,046
199%
TOTAL
1,227 1,320
Implications the City consider in complying with RHNA. The City's Housing Element
could be subject the City to:
• Potential lawsuits;
• Disqualification from applying for State grants;
Disqualification from getting State grant funding;
• Suspending the authority to issue building permits or any other related permits
for residential housing;
• Suspending the authority to grant zoning changes, variances, or both;
• Court ordered housing projects over which the City has no control;
• Excessive attorney's fees — If a jurisdiction faces a court action stemming from
its lack of compliance and either loses or settles the case, it often must pay
attorney fees to the plaintiffs attorneys; and
• Carryover unfulfilled .RHNA allocation to the next Housing Element cycle if the
City fails to identify or make available adequate sites to accommodate its RHNA
assignment.
Agenda Report
April 17, 2018
Page 7
In addition, HCD may.
• Revoke Housing Element compliance;
• Refer the violation to Attorney General; or
• Require Cities to exercise streamline approval process of projects without CEQA
and public hearings (SB 35).
The City, as the fee owner of Tustin Legacy, can require the development of affordable
housing and insure the City moves in a positive direction towards the RHNA goals. To
date the City has provided affordable housing at Tustin Legacy as noted earlier. In
order to affect development of affordable housing outside of Tustin Legacy, the 15%
Inclusionary Housing requirement will assist the City in meeting these goals, . is
consistent with RHNA, and will encourage the development of affordable housing
outside of Tustin Legacy.
INCLUSIONARY HOUSING IN -LIEU FEE ANALYSIS:
In 2017, the City contracted with Keyser Marston & Associates (KMA) to conduct an
Inclusionary Housing In -Lieu Fee Analysis (attached). The KMA analysis focused on
the in -lieu fee option offered by the Draft Ordinance. To estimate the in -lieu fees
supported under current market and financial conditions, KMA prepared pro forma
analyses of prototype apartment and ownership residential projects based on the City's
draft policy
The KMA in -lieu fee recommendations are based on a conservative set of assumptions
and represent the maximum amounts that can be charged by the City based on current
market and financial conditions. Based on their analysis, KMA recommends an in -lieu
fee of $17,600 per unit or $17 per square foot of GBA. However, the City has the
discretion to set the in -lieu fees at less than the maximum amounts'determined in the
KMA analysis. Staff is recommending the following fee schedule:
of Urptc
1-4
es' tar
$8,000
$10
5-9
$9,000
$11.25
10-14
$10,000
$12.50
15-19
$11,000
$13.75
20 units or more,
$12,000
$15
Staff is recommending the fee be adjusted annually, using the Consumer Price Index
("CPI") published by the U.S. Bureau of Labor Statistics for Los Angeles -Riverside-
Orange County, CA, all urban consumers index. The CPI is typically released 10.15
days into the following month. The previous year's. fee shall apply for any project
Agenda Report
April 17, 2018
Page 8
approved before the CPI calculation is released and the In -Lieu fee adjusted
accordingly.
The fee is to be paid at the time the applicant pulls permits. in the event this index ceases
to be published, the Consumer Price Index shall be another index as determined by the
City Manager that is reasonably comparable to the Consumer Price Index.
ENVIRONMENTAL ANALYSIS:
Ordinance No. 1491 is not subject to the California Environmental Quality Act ("CEQA";
Cal. Pub. Resources Code Section 21000 et seq.).. The proposed ordinance will not
commit the City to approve any particular project, or any aspect of any particular project,
now or any time in the future. Any project subject to the proposed ordinance will require
its own review for CEQA compliance. As a result, the proposed ordinance does not
have any reasonably foreseeable environmental consequences or commit the City to a
definite course of action. Thus, the proposed ordinance, is not a "project" subject to
CEQA. (Public Resources Code § 21065; CEQA Guidelines § 15378(a); CEQA
Guidelines § 15352(a).) Further, to the extent the proposed ordinance establishes the
inclusionary housing fund, the proposed ordinance is, a government funding
mechanism expressly excluded from CEQA's definition of "project." (CEQA Guidelines
§ 1,5378(bX4).) Even if the proposed ordinance were construed to be a project, It can
be seen with certainty that there is no possibility that the proposed ordinance may have
a significant effect on the environment for the forgoing reasons and thus falls within
CEQA's "common sense" exemption. (CEQA Guidelines § 15061(bX3).)
CITY ATTORNEY REVIEW:
The City Attorney has reviewed the content and form of Ordinance No. 1491.
PUBLIC NOTICE:
A public notice was published in the Tustin News on April 5, 2018, informing the public
of proposed code amendment and in the Orange County Register on April 6, 2018,
informing the public of the proposed In -Lieu Fee.
CONCLUSION:
In both Planning Commission meetings, concern has been expressed that the proposed
ordinance will haft or chill development. Based on input received from the Planning
Commission, the proposed ordinance has been modified. The proposed Ordinance will
only apply to projects that benefit financially from the City through a zoning action that
rezones the property for a more intensive use.
Agenda Report
April 17, 2018
Page 9
The proposed ordinance is a tool for providing more affordable housing, geographically
distributing, and addressing regional housing requirements mandated by SCAG.
John Buchanan
for of Economic Development
Attachments:
Jerry Craig
Deputy Dirgeor o c mic Development
A. Draft Ordinance No. 1491
B. Resolution 18-28, Adopting Inclusionary Housing In -Lieu Fee
C. March 27, 2018 Planning Commission Draft Minutes
D. Keyser Marston & Associates Inclusionary Housing In -Lieu Fee Analysis
E. The Legal Authority for Inclusionary Housing Ordinances