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HomeMy WebLinkAboutMinutes 050703 - Special Mtng Approved May 27,2003 . i9ia a i e . SPECIAL JOINT MEETING CITY COUNCIL / PLANNING COMMISSION WEDNESDAY, MAY 079 2003 7:00 p.m. MINUTES AFFORDABLE HOUSING ISSUES & INCLUSIONARY HOUSING ORDINANCE STUDY SESSION STUDY SESSION: 7:00 P.M. Mayor Clay called the meeting to order at 7:00 P.M. and Council Member O'Malley led the Pledge of Allegiance. ROLL CALL: Present: Council Members O'Malley, Pacas, Scalise, Luna and Mayor Clay Planning Commissioners Beraud, Jones, O'Keefe, Porter, Kelley and Chairperson Fonzi Absent: Planning Commissioner Bentz Staff Present: City Manager Wade McKinney, Community Development Director Warren Frace, Information Technology Director Andrew Fruin, City Attorney Roy Hanley and Recording Secretary Grace Pucci. CC/PC Special Meeting 05/07/03 Page 1 Approved May 27,2003 Mayor Clay welcomed the audience to this special meeting and explained the format for the evening. Mayor Clay commended Community Development Director Warren Frace for the workbook produced for this meeting. STUDY SESSION STAFF REPORTS 1. Discussion of Affordable Housing Issues and an Inclusionary Ordinance Staff Overview Community Development Director Warren Frace gave the staff report and explained staff is seeking direction on how the Council and Commission would like them to move forward on the issue of affordable housing and for some general consensus on how to proceed with an inclusionary ordinance. Expert Speakers Dave Mullinax, League of California Cities, stated that an arm of the League, the Institute of Local Government, has recently produced a primer that will be provided as a tool for local governments to use when drafting inclusionary ordinances. There are over 120 counties and cities in California that have adopted local ordinances for inclusionary housing. The benefits of an ordinance include: 1) it is a tool for the community with which to tailor a program to fit its needs, 2) gives local government a legal cover against litigation, 3) makes it easier to get benefits from Sacramento. Mr. Mullinax reviewed pending legislation for affordable housing and incentives available from the State, and answered questions of the Council and Commission. George Moylan, Housing Authority of the City of San Luis Obispo, indicated that he is not a strong proponent of an inclusionary ordinance, as there have been abuses and bureaucratic issues connected with it. He suggested the following: 1) create an ordinance with input from all factions of the community, utilizing a subcommittee appointed by the Council and given authority to bring back an inclusionary ordinance for consideration, and 2) adopt a commercial component. He reviewed the methods used in San Luis Obispo and their success in raising several hundred thousand dollars for affordable housing. Inclusionary housing ordinances are usually done in larger cities with staff enough to follow up on issues such as resale, etc., this is sometimes difficult in cities such as Atascadero with smaller planning and finance departments. Ordinances create another layer of bureaucracy that can be frustrating for developers and recipients of the assistance. Mr. Moylan answered questions of the Council and Commission. Jerry Bunin, Home Builders Industry Association, gave a PowerPoint presentation covering the following points regarding inclusionary housing: 1) the Home Builders Industry Association generally discourages inclusionary housing, as it is felt it doesn't address the basic problem of supply and demand, 2) it targets only a market segment and doesn't help with work force housing, and 3) poorly structured programs can add to the cost of housing. The Association does feel it is a good goal to providing low-income housing, but would like to see a density bonus equal to the State's voluntary statute (25% density bonus if you provide 10% very low income, CC/PC Special Meeting 05/07/03 Page 2 Approved May 27,2003 20% low income or 50% senior). A density bonus helps the builder to not have to raise costs on the other units. The Association's suggestions for an inclusionary ordinance include: 1) involve everyone, 2) simplify the planning process, 3) maximize land use, 4) promote mixed use, 5) review restrictive regulations, 6) do more area-wide EIR's and traffic studies, 7) increase density, and 8) improve affordability by design (allow smaller units and more of them). Mr. Bunin answered questions of the Council and Commission. (Exhibit A) Anita Robinson, San Luis Obispo County Housing Trust Fund, stated that their goal is to put together dedicated revenue sources from all jurisdictions within the county to be used to facilitate the financing of affordable housing in the county. They want to work with cities that have inclusionary ordinances and have established trust funds or housing in-lieu fees. She spoke about affordable housing trust funds established nationwide, and stated that 28% of those look to inclusionary fees and linkage impact fees as a source of dedicated revenues for those trust funds to facilitate the development of affordable housing. She urged Council and Commission members to realize that the housing trust fund was only one tool and not the only answer to the issue of providing affordable housing; it should work together with multiple tools for it to be truly successful. It takes subsidies to facilitate affordable housing, i.e. levels of incentives that create a form of subsidy to a builder or owner. This starts the process, and with it in place together with inclusionary fees, impact fees, etc., and a tool such as the housing trust fund, the traditional mechanisms can come into play because there has been enough subsidy into a project to get the numbers to where they pencil for that developer. She spoke about leverage factors, supply and demand, workforce and entry level housing and answered questions of the Council and Commission. David Taussig, Taussig and Associates, discussed in-lieu fee calculations with a PowerPoint presentation. He stated that in-lieu fees are very necessary, as developers cannot always build affordable housing in a project with $300,000 homes. The idea of paying an in-lieu fee and building the affordable housing off site, i.e. apartments, etc., is more cost effective. Mr. Taussig discussed the following in-lieu fee pro forma issues: 1) type of affordable housing (rental units are a better way to go), 2) land acquisition costs, 3) wage scale (prevailing wage, etc.), 4) density (25% bonus), 5) development standards, 6) reduced costs, 7) subsidies, and 8) affordable goals (income limits, etc.). Mr. Taussig answered questions of the Council and Commission. (Exhibit B) John Campanella, Bermant Development, spoke about the projects his company is working on, including the Dove Creek project, and how they have incorporated affordable units by working in partnership with a non-profit corporation. He contends that density bonuses on large projects make affordable housing work. His suggestions include: 1) look at what works between in-lieu fees and bonus density, 2) look at a voluntary program such as the one in place at the State level before creating an ordinance, and 3) partner with both profit and non profit developers, non profits have a Federal ID number and are a good source for government funds. Mr. Campanella answered questions of the Council and Commission. Mayor Clay recessed the hearing at 9:40 p.m. Mayor Clay called the meeting back to order at 9:50 p.m. CC/PC Special Meeting 05/07/03 Page 3 Approved May 27,2003 Sara Horne, League of Women Voters, gave a brief background on the League and its interest in affordable housing. She discussed inclusionary housing and the use of "air rights." Ms. Horne spoke of the need for affordable housing in the county and invited all in attendance come to a Celebration of Community Housing on May 315'. This celebration includes a trip around the county with the League to see affordable housing projects. Ms. Horne answered questions of the Council and Commission. Eric Russell, Accept + Mortgage, spoke about financing issues relating to affordable housing. He indicated that some uses are "un-lendable" by traditional lenders, i.e. mixed uses with multifamily residential in a retail district. Regarding the numbers of cities with inclusionary ordinances, Mr. Russell stated that many of those ordinances were done in the last two years when there was ample money available for first time homebuyers. However, at this point, much of this money is no longer available due to budget cuts. He indicated that it is impossible to predict how many affordable homes will qualify for loans, as there are lots of restrictions. Other issues involved in funding include the decrease in interest rates and timelines that are out of lenders control. Mr. Russell discussed loans for rental unit construction and answered questions of the Council and Commission. Public Comment Eric Greening, 7365 Valle Avenue, discussed how one of the biggest obstacles to housing affordability is the intrinsic cost of maintaining an auto-dependent infrastructure. He suggested that one of the ways to promote housing affordability would be to make these costs consequences of auto ownership and driving, rather than of living under a roof. He suggested affirmative ways to overcome dependence on automobiles such as waiving parking requirements to create lower priced units for people who don't need to park. Mr. Greening felt every way available to over come auto addiction must be explored so that density can be increased in ways that will promote affordability but not result in traffic congestion, noise, pollution and blight. David Leipsiger, Los Osos, Member of the Board of Trustees of Habitat for Humanity for San Luis Obispo County, stated that Habitat is a genuine non-profit developer committed to providing very low-income housing all over the county. He indicated that people in the very low-income category want to own, not rent. In order to provide home ownership to these individuals Habitat is building smaller houses on smaller lots, and he stressed the importance of increasing density. Mr. Leipsiger discussed how Habitat for Humanity functions without government subsidies. What they need more than anything is available land, which would require an increase in density factors. He felt low income houses should blend into the neighborhoods where they are constructed. Ray Belgams, Atascadero, encouraged the Council and Commission to utilize the Housing Trust fund and consider very low-income housing. George Moylan clarified that he though he likes the city of San Luis Obispo's inclusionary housing ordinance, he does not particularly like the way it has been implemented. He indicated CC/PC Special Meeting 05/07/03 Page 4 Approved May 27,2003 that inclusionary money could be used for any fee or cost in development of affordable housing as approved by the City Council. Mike Zappas, Atascadero, asked the Council and Commission to consider if an inclusionary fee would stimulate production of affordable housing in Atascadero. If that is the goal, it is important to look at what the funds that have been collected in other towns are being used for and whether they are actually stimulating affordable housing. Anita Robinson suggested the Council and Commission not get hung up on how projects get financed. She would like to see creativity and likes the mixed-use concept and indicated that the banking industry would figure out how to finance them. Mayor Clay closed the Public Comment period. Mayor Clay suggested that staff come back with a summary of issues raised this evening and schedule another joint meeting in two to three weeks on a Wednesday, but at 6:30 p.m., and have a public comment period as well as Council/Commission discussion. ADJOURNMENT: Mayor Clay adjourned the City Council meeting at 10:35 p.m. Chairperson Fonzi adjourned the Planning Commission meeting at 10:35 p.m. MEETING RECORDED AND MINUTES PREPARED BY: Grace Pucci, Recording Secretary The following exhibits are available for review in the City Clerk's office. Exhibit A - Jerry Bunin, Home Builders Industry Association, PowerPoint presentation Exhibit B —David Taussig, Taussig and Associates, PowerPoint presentation CC/PC Special Meeting 05/07/03 Page 5