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HomeMy WebLinkAbout15 TEMPORARY SUSPENSION OF AFFORDABLE HOUSING IN LIEU FEEDocuSign Envelope ID: FEB221 E4-DB85-410A-94CA-4DD2CBB8D33F 1�Y O AGENDA REPORT MEETING DATE TO: FROM: SUBJECT: SUMMARY: MARCH 5, 2024 Agenda Item 15 Reviewed: DS City Manager nB Finance Director N/A HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL COMMUNITY DEVELOPMENT DEPARTMENT TEMPORARY SUSPENSION OF AFFORDABLE HOUSING IN -LIEU FEE This report is a follow-up to the December 5, 2023 City Council meeting where the City Council directed staff to prepare resolutions for applicable policy options identified in the Mayor's Economic Development Ad -Hoc Committee's recommendation list. This item is the implementation of the policy option to, for a period of 36 months, temporarily suspend the affordable housing in -lieu fee for residential projects located in the Downtown Commercial Core Specific Plan (DCCSP) and Red Hill Avenue Specific Plan (RHASP) areas. The City Council will be asked for direction in April for review of the current Voluntary Workforce Housing Program's (mid-term goal) effectiveness and feasibility analysis to optimize rules consistency with the Housing Element, evolving State laws, and economic consideration. RECOMMENDATION: It is recommended that the City Council adopt Resolution No. 24-14, temporarily suspending the affordable housing in -lieu fee for 36 months for residential projects located in the DCCSP and RHASP areas. ENVIRONMENTAL REVIEW: The Community Development Department has evaluated the project pursuant to the California Environmental Quality Act ("CEQA") and determined it to be exempt pursuant to Section 15061(b)(3) of the State CEQA Guidelines (Cal. Code of Regs., Title 14, Section 15061(b)(3)), as it can be seen with certainty that there is no possibility that the project will have a significant effect on the environment. FISCAL IMPACT: Staff anticipates that the recommended actions will result in a positive impact on the General Fund, as they implement policy recommendations intended to encourage residential development in the DCCSP and RHASP areas. Not implementing the recommended actions could potentially result in a loss of otherwise attainable development activity. DocuSign Envelope ID: FEB221E4-DB85-410A-94CA-4DD2CBB8D33F March 5, 2024 Page 2 CORRELATION TO THE STRATEGIC PLAN: The proposed project furthers the objectives of Neighborhood Development, through implementin DISCUSSION: g An analysis of the DCCSP and RHASP was initiated in 2022 to identify potential plan revisions that align development regulations with the real estate market. On December 5, 2023, the City Council was presented with the findings and recommendations of this assessment and subsequently directed staff to prepare resolutions for applicable policy options identified by the Mayor's Economic Development Ad -Hoc Committee. As directed, staff has prepared one of the near -term policy recommendations for implementation: temporarily suspending the affordable housing in -lieu fee for projects in the DCCSP and RHASP areas. Pursuant to Tustin City Code (TCC) B9923, between 12.5 and 15 percent of residential units proposed as part of a project within the DCCSP and RHASP areas must be affordable. As an alternative, developers can provide a lesser number of units (five (5) or 10 percent) that are affordable to Very -Low or Low -Income households, respectively, in which case the developer must also pay an affordable housing in -lieu fee. This initiative would still require the developer to provide the affordable units on site but will waive the payment of affordable housing in -lieu fees; thereby encouraging the direct provision of affordable housing. To date, the City has collected approximately $2,136,000 of in -lieu fees and interest. On November 7, 2023, the City Council approved a $2,000,000 Grant Agreement between Families Forward and the City of Tustin and Tustin Housing Authority to construct six -to -eight affordable rental units serving at -risk homelessness or homeless families. The grant was used as a match by Families Forward in successfully applying for a $2,500,000 grant from CalOptima. With the temporary suspension of collecting in -lieu fees, future matching requirements for affordable housing grant funding will need to come from other City funding sources. The effectiveness of this suspension will be monitored, and if no significant development occurs within the suspension period, the insights gained will inform future updates to the City's affordable housing policies. Attachment: 1. Resolution No. 24-14 2. Recommended Policy Option Implementation Progress Table DocuSign Envelope ID: FEB221 E4-DB85-410A-94CA-4DD2CBB8D33F March 5, 2024 Page 3 DocuSigned by: Prepared by: �ew� for pERoF,4 Jorge Maldonado Associate Planner DocuSigned by: DocuSigned by: c� Approved by: Ot. Justina L. 1N111kom Jerry Craig Community Development Director Deputy Director of Economic Development DocuSign Envelope ID: FEB221 E4-DB85-410A-94CA-4DD2CBB8D33F ATTACHMENT 1 RESOLUTION NO. 24-14 DocuSign Envelope ID: FEB221 E4-DB85-410A-94CA-4DD2CBB8D33F RESOLUTION NO. 24-14 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, SUSPENDING AFFORDABLE HOUSING IN -LIEU FEES FOR CERTAIN TYPES OF RESIDENTIAL DEVELOPMENT PROJECTS IN THE DOWNTOWN COMMERCIAL CORE SPECIFIC PLAN AND RED HILL AVENUE SPECIFIC PLAN AREAS The City Council of the City of Tustin does hereby resolve as follows: WHEREAS, the results of an assessment initiated in 2022 of the Downtown Commercial Core Specific Plan (DCCSP) and Red Hill Avenue Specific Plan (RHASP) intended to align development regulations with current real estate market conditions were presented to the City Council on December 5, 2023 and revealed that inclusionary housing requirements may hinder development in these areas; WHEREAS, in accordance with Tustin City Code (TCC) B9923, residential developments within the DCCSP and RHASP areas must allocate a portion of units as affordable housing; WHEREAS, residential developments may provide five (5) or 10 percent of units as affordable to Very -Low Income or Low -Income households, respectively, at which point an affordable housing in -lieu fee must be paid; and WHEREAS, to stimulate development and address findings from the 2022 assessment, a temporary suspension of affordable housing in -lieu fees is recommended for residential projects located in the DCCSP and RHASP areas. NOW, THEREFORE, the City Council of the City of Tustin DOES HEREBY RESOLVE as follows: SECTION 1. This Resolution, while in effect, hereby suspends the affordable housing in - lieu fee otherwise required pursuant to TCC B9923 for new residential developments in the DCCSP and RHASP areas. SECTION 2. This action is not subject to the California Environmental Quality Act ("CEQA") and determined to be exempt pursuant to Section 15061(b)(3) of the State CEQA Guidelines (Cal. Code of Regs., title 14, Section 15061(b)(3)), as it can be seen with certainty that there is no possibility it will have a significant effect on the environment. SECTION 3. This Resolution shall go into effect immediately upon its adoption and shall continue in effect for 36 months from the date of adoption. Resolution 24-14 Page 1 of 2 DocuSign Envelope ID: FEB221E4-DB85-410A-94CA-4DD2CBB8D33F PASSED AND ADOPTED by the City Council of the City of Tustin, at a regular meeting on this 5th day of March 2024. AUSTIN LUMBARD, Mayor ATTEST: ERICA N. YASUDA, City Clerk APPROVED AS TO FORM: FDocuSigned by: ,: y - DAVfIDIIE13jI14DIG, City Attorney STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) CERTIFICATION FOR RESOLUTION NO. 24-14 I, Erica N. Yasuda, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do 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 Resolution No. 24-14 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 5th day of March, 2024, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: COUNCILMEMBER RECUSED: ERICA N. YASUDA, City Clerk Resolution 24-14 Page 2 of 2 DocuSign Envelope ID: FEB221E4-DB85-410A-94CA-4DD2CBB8D33F ATTACHMENT 2 RECOMMENDED POLICY OPTION IMPLEMENTATION PROGRESS TABLE DocuSign Envelope ID: FEB221E4-DB85-410A-94CA-4DD2CBB8D33F Near/Mid/Long Term Goat Program Policy Option Policy Option Description Date Completed Preliminary residential Reduce Plan Area residential parking ratios from 2.25 to Near Term 1.1 parking standards update 1.75 per unit for SP Areas. Create administrative rule to use'market' land value Set all residential Park equal to $2.5 million per acre for park fee calculation Near Term 1.2 Fees in DCCSP equal to 2/20/2024 based on already established land value for non - RHASP rate subdivision projects in RHASP. Temporarily suspend Introduce City Council motion to temporarily suspend Near Term 1.3 affordable housing in -lieu inclusionary housing in -lieu fees for all SPA projects for fee 18-24 months. On going Adjust administrative rules to allow developers to pay all (to benegotiated via Near Term 1.4 Expand fee deferral impact fees at Certificate of Occupancy rather than at Development Agreement permit -issuance. and/or project's Conditions of Approval) Construction to Commence construction of parklets on El Camino Real commence Commence public realm Near Term 1.5 and Main Street, and commence gateway signage and FaU 2024 (following improvements streetscape improvements on Main Street. completion of pipeline improvements) Continue efforts to streamline permitting. Implement a one -stop -shop on the Citywebsite for relevant info (i.e. Expand developer services Mid -Term 2.1 affordable housing requirements, fee schedule, density and educational materials bonus) and improve development project process for clarify. Conduct program review and feasibility analysis to Revisit voluntary workforce Mid -Term 2.2 optimize rules consistent with the Housing Element, housing program evolving state laws, and economic considerations. ID key nodes and allow residential only if sufficient Modify retail and parking ground floor retail is provided. Consider relaxing parking Mid -Term 2.3 requirements rules for smaller, vertical mixed -use projects, refine/promote in -lieu policy. Eliminate long, discretionary review/allocation process Mid -Term 2.4 Eliminate FAR Program for residential to provide developers with more certainty. Increase allowable heights where historic resource Mid -Term 2.5 Modify height restrictions protection is not a concern. Relax requirement for private on -site storage for every Relax residential private Mid -Term 2.6 unit (i.e. remove entirely, set as a percentage of units, or storage requirements match neighboring cities). Develop an official schedule or brief (posted on website) Mid -Term 2.7 Clarify residential density to specify how state density bonus is determined under bonus approach the plan area. Staff to develop educational materials. Update the EIR for the Specific Plan Areas with higher Long Term 3.1 Increase residential unit counts OR implement administrative waiver program capacity for compliant residential projects. Implement strategies to manage parking demand and Refine parking strategies supply. Long Term 3.2 and pursue supply Modify non-residential parking alternatives. investments Refine or eliminate certain parking standards. Complete construction of parklets on El Camino Real & Main Street. Complete/expand public Complete gatewaysignage and streetscape Long Term 3.3 realm improvements and improvements on Main Street. 'place -making' initiatives Explore complementary'place-making' programs that engage with businesses, property owners, and the public. Evaluate potential for targeting projects or partnerships Explore economic that catalyze private investments. Develop marketing Long Term 3.4 development site materials to highlight investment opportunities and marketing efforts future projects within the specific plan areas. Implement carrot/stick options (i.e. waivers, Implement policies to concessions, taxes, code enforcement measures). Long Term 3.5 accelerate redevelopment Explore public -private partnerships at key sites, staff of vacant sites outreach &coordination efforts.