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Home My WebLink About09 INCLUSIONARY HOUSING ORDINANCE INFO AND COMPARISON DocuSign Envelope ID: 1329BDA6-63C6-4222-8A36-123CE92404B2 • Agenda Item: 9 D AGENDA REPORT Reviewed: 5W City Manager MEETING DATE: AUGUST 17, 2021 TO: MATTHEW S. WEST, CITY MANAGER FROM: JUSTINA L. WILLKOM, COMMUNITY DEVELOPMENT DIRECTOR SUBJECT: INCLUSIONARY HOUSING ORDINANCE INFO AND COMPARISON SUMMARY: At its May 18, 2021 City Council meeting, Council asked staff to provide information regarding the City's Voluntary Inclusionary Housing program and survey neighboring cities on their respective inclusionary housing ordinances. A request was also made for similar information regarding development impact fees. That information is still being gathered and will be provided at a subsequent City Council meeting. RECOMMENDATION: Receive and file the survey information. FISCAL IMPACT: Not applicable. CORRELATION TO THE STRATEGIC PLAN: The report is consistent with Goal A, which conveys the City's desire to remain informed in order to create affordable and workforce housing options. DISCUSSION: To facilitate the production of affordable housing, the State of California has enacted several laws since 1980, including the Inclusionary Housing provision. In general, "Inclusionary" zoning policies ensure that set percentages of new for-sale and rental housing units built in a city are provided to households of very low to moderate income. While inclusionary housing ordinances are not mandatory under state law, they can provide cities with an effective tool to facilitate and encourage the construction of affordable housing units in the community and help satisfy state-mandated affordable unit production requirements under Regional Housing Needs Assessment (RHNA). DocuSign Envelope ID: 1329BDA6-63C6-4222-8A36-123CE92404B2 City Council Report August 17, 2021 Inclusionary Housing Ordinance Info and Comparison Page 2 Inclusionary Housing Ordinances — Survey of Cities Staff reviewed a sampling of fifteen (15) other Orange County cities, and of those, nine (9) do not have an inclusionary housing ordinance, and six (6) cities have a mandatory affordable housing requirement which allows the payment of in-lieu fees under certain circumstances (Attachment A: Table 1 — Survey Result). Unlike the other OC cities, Tustin's Inclusionary Housing Ordinance is voluntary. This means it only becomes applicable when a developer makes the voluntary election to request the discretionary and valuable benefit of adding residential units to an area not currently zoned for residential. If the subject area already provides residential zoning, unlike other cities' ordinances, Tustin does not require inclusionary housing. Table 2 (Attachment B) provides an overview of Tustin's Voluntary Inclusionary Housing Ordinance which was adopted in 2018. To date, 140 market rate units have been built and the City has collected over$1 ,979,600 in In-Lieu fees in the Downtown Commercial Core Plan. The Fund is to be expended exclusively to provide housing to extremely low, very low, low, and moderate-income households in the City of Tustin, along with administration and compliance monitoring of the voluntary workforce housing incentive program which includes the following: • Assistance with affordable housing projects with "gap" financing • Assistance with extension of affordable deed restrictions on applicable units In addition, the City is currently reviewing a pending development application which is expected to result in six new very low-income units and add approximately $730k to the fund. DocuSigned by, �( u u c-4. In,iR,Q, o m ED45 DA2623814A5.., Justina L. Willkom Community Development Director Attachments: Attachment A: Table 1 — Inclusionary Housing Survey Attachment B: Table 2 —Tustin's Voluntary Housing Ordinance Summary DocuSign Envelope ID:1329BDA6-63C6-4222-8A36-123CE92404B2 TABLE 1 INCLUSIONARY HOUSING RESEARCH ORANGE COUNTY CITIES Inclusionary Affordable In-Lieu Fee Allowed? Applicability Resources Link City Housing Threshold Units In-Lieu Fee Ordinance Requirements La Habra Mandatory Projects with 15%of total Yes TBD;Payment of per unit cost not http://www.lahabracity.com/DocumentCenter/ 10 or more units provided on-site(based on the View/11435/Ord-1833?bidld= units valuation of per unit) Example: Assumed valuation per unit is$200,000 30 units proposed 15%required to be affordable(5 units) $200,000 x 5=$1 million Huntington Mandatory Projects with 10%of total Yes for Projects with 9 or • Three Units$9,430/unit https://huntingtonbeach.legistar.com/View.ashx?M=F Beach 3 or more units(Rental or fewer units • Four Units$10,600/unit &ID=7228132&GUID=F3A37144-5D68-4CD1-AE1C- units For-Sale) • Five Units$11,780/u nit 8F0329DOB361 Fee is based on sliding scale . Six Units$12,960/u nit • Seven Units$14,140/unit • Eight Units$15,330/unit https://www.acode.us/codes/huntingtonbeach/view.i) • Nine Units$16,500/unit hp?topic=zoning code-23-230-i-230 26&frames=on Irvine Mandatory Project with 15%of total Yes for project with 50 or $17,000 per unit prior to 2007, CHAPTER 2-3.-AFFORDABLE HOUSING 50 or more units less units TBD based on formula. IMPLEMENTATION PROCEDURE I Zoning I Irvine,CA I units Municode Library Santa Ana Mandatory Project with 5 For Sale:10% Yes • Projects with 5 to 20 units:$5 per SF *potential lots/units or of total units of habitable space changes in more for moderate • Projects with 20+units:$5 per SF of progress income habitable space For Rent:15% • Effective October 1,2021 cost shall of total units be reverted to$15 per SF of for low-income habitable space OR 10%Very low- income DocuSign Envelope ID:1329BDA6-63C6-4222-8A36-123CE92404B2 TABLE 1 INCLUSIONARY HOUSING RESEARCH ORANGE COUNTY CITIES San Juan Mandatory Projects with 10%of total Yes Rental Units: http://www.gcode.us/codes/sanivancapistrano/view.p Capistrano 2 or more units (Mean Monthly Market Rent-Mean hp?topic=9-5-9 5 103 units Alternative to the adopted Monthly Affordable Rent)x 10 year formula,developer can affordability Covenant=A negotiate with the City A x 10%—Obligation Per Unit provided that the amount Obligation Per Unit-(10%x Obligation is equitable to what Per Unit)=Housing In-Lieu Fee Per developer would have been Unit required to provide. For Ownership Units: Market Sales Price-Affordable Sales Price=A A x 10%=Developer's Obligation Developer's Obligation-(10%x Developer's Obligation)=Housing In- Lieu Fee Per Unit San Mandatory Projects with Zoning Code: In lieu of fee is negotiated $7.63 per square foot Clemente 6 or more 15%of total $7.63 per square foot per ShowDocument(san-clemente.org) units units market rate unit 637568566323670000(san-clemente.org) Rental: 7.5%VL+7.5%L 17.24.120-Inclusionary Housing Requirements.I Code For Sale: of Ordinances I San Clemente,CA I Municode Library 3%VL+4%L+4% M 1+4%M II Housing Element Inclusionary Housing Program: 2%VL Costa No requirement Ordinance draft in progress;expected late 2021 Mesa DocuSign Envelope ID:1329BDA6-63C6-4222-8A36-123CE92404B2 TABLE 1 INCLUSIONARY HOUSING RESEARCH ORANGE COUNTY CITIES Newport No requirement Interim inclusionary policy being considered Beach Fullerton No requirement Being discussed Orange No requirement Garden No requirement Being discussed Grove Anaheim No requirement Resolution Affordable Housing Policy 2018 Fountain No requirement Being discussed:More Info. Valley Lake Forest No requirement Yorba No requirement Linda DocuSign Envelope ID:1329BDA6-63C6-4222-8A36-123CE92404B2 TABLE 2 TUSTIN'S VOLUNTARY WORKFORCE HOUSING INCENTIVE PROGRAM VOLUNTARY Applicability Affordable Units In-Lieu Fee Methodology Fee per unit Housing Incentive Threshold Requirements Ordinance Adopted in 2018 Applicable to all 15%of the base In-lieu fee per unit(currently $12,946/unit adjusted every year CHAPTER 913- development units,of which at$12,946)x%of total base VOLUNTARY WORKFORCE Applies to two areas: approvals that 6%VL,4.5%L, units Less than 20 units HOUSING INCENTIVE • Redhill Avenue include a 4.5%M;or 1—4 units $8,630/unit PROGRAM I Code of Specific Plan residential Affordable Unit 5-9 units $9,709/unit Ordinances I Tustin,CA I • Downtown project. 12.5%of the Requirements automatically 10—14 units $10,788/unit Municode Library Commercial Core base units of qualify the developer for 15—19 units $11,867/unit Specific Plan. 20 units or more: which 7.5%VL, additional market rate units developer must 5%M;or (density bonus units)and comply with relief from regulatory affordable unit One of the requirements requirements. following: 5%of the base Less than 20 units for VL(on- units:developer site or off-site); either provides or off-site 10%the base affordable units units for L(on- or pays in-lieu site or off-site) fees on a sliding PLUS scale Payment of In Lieu Fee