HomeMy WebLinkAbout03 VOLUNTARY WORKFORCE HOUSING INCENTIVE PROGRAM ORDINANCE AND IN-LIEU FEE DocuSign Envelope ID:9ADBB3AA-2BAD-4E84-8838-2B25D6E5CDF4
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Agenda Item
Reviewed: os
AGENDA REPORT
City Manager
Finance Director N/A
MEETING DATE: NOVEMBER 1, 2021
TO: CITY COUNCIL
FROM: MATTHEW S. WEST, CITY MANAGER
SUBJECT: VOLUNTARY WORKFORCE HOUSING INCENTIVE PROGRAM
ORDINANCE AND IN-LIEU FEE
SUMMARY:
Ordinance No. 1491 was adopted in September of 2018 by adding Chapter 913 to the Tustin City
Code entitled "Voluntary Workforce Housing Incentive Program". The Ordinance and In-Lieu Fee
are applicable only if a developer proposes to"up zone" property using the "Residential Allocation
Reservation" process to add residential units on property not currently zoned for residential uses
within the Downtown Commercial Core Specific Plan and the Red Hill Specific Plan areas.
At its August 17, 2021 meeting, the City Council requested that staff return to the October 5, 2021
meeting for the Council to discuss potential policy direction options regarding the City's Voluntary
Workforce Housing Incentive Program Ordinance and In-Lieu Fee. During that meeting, it was
moved by Mayor Pro Tem Lumbard and seconded by Council Member Gallagher to continue the
item to the October 19, 2021 Council meeting. At the October 19, 2021 meeting, the item was
continued again.
RECOMMENDATION:
Direct staff to do one of the following:
1. Prepare a draft ordinance revision for Council consideration at a future meeting (and
provide specific direction on what the revisions should/should not include); or
2. Prepare a draft temporary moratorium on the current ordinance for Council consideration
at a future meeting (and clarify whether the City should continue to allow "up-zoning" to
residential uses via the Residential Allocation Reservation process while the moratorium
is in effect); or
3. Prepare a repeal of the current ordinance for council consideration at a future meeting; or
4. Take no action; or
5. Provide alternative direction at the pleasure of the City Council.
FISCAL IMPACT:
Not applicable at this time.
DocuSign Envelope ID:9ADBB3AA-2BAD-4E84-8838-2B25D6E5CDF4
City Council Report
November 1 2021
VOLUNTARY WORKFORCE HOUSING INCENTIVE PROGRAM ORDINANCE AND IN-LIEU FEE
Page 2
CORRELATION TO THE STRATEGIC PLAN:
The Voluntary Workforce Housing Incentive Program implements Goal A (Economic and
Neighborhood Development) Strategy 15 ("Create affordable and workforce housing options") of
the City's current Strategic Plan.
BACKGROUND
Table 1 provides an overview of Tustin' s Voluntary Housing Incentive Program Ordinance and
in-Lieu Fee.
TABLE 1
TUSTIN'S VOLUNTARY WORKFORCE HOUSING INCENTIVE PROGRAM
Applicable Applicability Affordable Units In-Lieu Fee Fee per unit Tustin City
Locations Threshold Requirements Methodology Code
Adopted in 2018 Applicable to 15%of the base In-lieu fee $12,946/unit CHAPTER 913 -
development units, of which per unit adjusted VOLUNTARY
Applies to two areas: approvals that 6%VL, 4.5% L, (currently at every year WORKFORCE
include arequest 4.5% M;or $12,946)x''/z HOUSING
• Redhill Avenue to"up-zone" of total base INCENTIVE
Specific Plan property to add 12.5%of the units PROGRAM I
residential uses base units of Code of
• Downtown to property not which 7.5%VL, Ordinances I
Commercial currently zoned Tustin, CA I
Core Specific
for residential 5% M; or Municode
Plan. use via the City's Library
"Residential One of the
Allocation following:
Reservation" 5%of the base
process. units for VL(on-
site or off-site);
or
Less than 20 10%the base
units may pay in- units for L (on-
lieu fees for site or off-site)
affordable units PLUS
not provided on- Payment of In
site or off-site Lieu Fee
More than 20
units must
comply with
affordable units
requirements.
DocuSign Envelope ID:9ADBB3AA-2BAD-4E84-8838-2B25D6E5CDF4
City Council Report
November 1 2021
VOLUNTARY WORKFORCE HOUSING INCENTIVE PROGRAM ORDINANCE AND IN-LIEU FEE
Page 3
The Voluntary Workforce Housing Incentive Program requirements may be satisfied through the
following means:
1. Provide Voluntary Workforce Housing Incentive Program units on-site or offsite as follows:
a. Fifteen percent (15%) of the base units onsite in the residential project 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; or
b. Twelve and one-half percent (12.5%) of the base units onsite in the residential
project 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; or
c. Any residential project providing Voluntary Workforce Housing Incentive units
pursuant to either subsection (i) or(ii) below must also pay an in-lieu fee calculated
by multiplying the Voluntary Workforce Housing Incentive Program In-Lieu Fee by
half the number of base residential units provided on-site. Must provide one of the
following options:
i. Five percent (5%) of base units in the residential project provided on-site
or off-site, and made available to very low income households; or
ii. Ten percent (10%) of the base units in the residential project provided on-
site or off-site, and made available to low income households.
Projects of fewer than 20 total residential units are provided alternative options for compliance.
DISCUSSION:
The Voluntary Workforce Housing Incentive Program Ordinance and In-Lieu Fee becomes
applicable if a developer proposes to "up zone" property to seek residential units on property not
currently zoned for residential within the Downtown Commercial Core Specific Plan and the Red
Hill Specific Plan areas. If the subject property already provides residential zoning, unlike other
cities' ordinances, Tustin does not require inclusionary housing.
Inclusionary Housing vs. Voluntary Workforce Housing Incentive Program:
Most cities' "Inclusionary housing" ordinances require affordable housing to be included in
residential developments on property already zoned for residential uses. This results in an
economic burden on property owners whose property is already zoned for the residential uses.
DocuSign Envelope ID:9ADBB3AA-2BAD-4E84-8838-2B25D6E5CDF4
City Council Report
November 1 2021
VOLUNTARY WORKFORCE HOUSING INCENTIVE PROGRAM ORDINANCE AND IN-LIEU FEE
Page 4
When the Tustin City Council approved the existing "Voluntary Workforce Housing Incentive
Program" in 2018, the Council limited its applicability to those situations where a developer's
property was going to receive the economic benefit of up-zoning to allow residential uses where
the property was not already zoned residential. This means the developer who opts to pursue
the program receives an economic benefit in exchange for the agreement to include some
affordable units. In this respect, Tustin's Voluntary Workforce Housing Incentive Program
Ordinance proposes a voluntary trade of sorts to developers: receive a new and valuable right to
build residential units in exchange for including some affordable units.
THE FUNDS FROM THE IN-LIEU FEES
The funds collected from the In-Lieu Fees are not intended for the City to build affordable housing
projects. The funds are however restricted for uses which facilitate development of affordable
housing for 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, and
• Assistance with funding to preserve affordable units by extending deed restrictions on
applicable units when they expire
To date, the 140 market rate residential units in the Vintage project located in the Downtown
Commercial Core Specific Plan resulted in collection of almost $2 million in In-Lieu fees. The
Vintage project began making In-Lieu payments in April 2018 and the final payment was made in
February 2020.
In addition, the City recently approved a development application within the Red Hill Specific Plan
which is expected to result in six new very low income units and add approximately $730k to the
fund.
In the approximately 18 - months the City has had these funds, there have not been any new
100% affordable housing developments proposed. Typical gap financing required for an
affordable unit costs approximately $80,000 - 100,000/ per unit, with most 100% affordable
housing developments containing at least 50 units.
Attachments:
Attachment A: Ordinance No. 1491
Attachment B: Resolution No. 18-61