HomeMy WebLinkAboutItem 6h. O-1742 Second Reading and Adoption to Establish an Impact Fee Deferral Program for Eligible Affordable For-Rent Residential Projects Item 6h
Department: Community Development
Cost Center: 4008
For Agenda of: 10/1/2024
Placement: Consent
Estimated Time: N/A
FROM: Timmi Tway, Community Development Director
Prepared By: David Amini, Housing Coordinator
SUBJECT: SECOND READING AND ADOPTION OF ORDINANCE NO. 1742 (2024
SERIES) TO ESTABLISH AN IMPACT FEE DEFERRAL PROGRAM FOR
ELIGIBLE AFFORDABLE FOR-RENT RESIDENTIAL PROJECTS
RECOMMENDATION
Adopt an Ordinance entitled, “An Ordinance of the City Council of the City of San Luis
Obispo, California, amending section 4.56.050 (Payment of Fees) of the Municipal Code
to establish a development impact fee deferral program for eligible affordable housing
projects.”
POLICY CONTEXT
The City’s Major City Goal for housing and homelessness states:
Support the expansion of housing options for all, and continue to facilitate
the production of housing, including the necessary supporting
infrastructure, with an emphasis on affordable and workforce housing as
well as accessibly connected development. Collaborate with lo cal non-profit
partners, non-governmental agencies, the county, the state, and federal
governments to advocate for increased funding and implementation of
comprehensive and effective strategies to prevent and reduce
homelessness.
The Goal includes implementation measure no. 5 to implement Below Market Rate
housing best practices.
The City recently received the Prohousing designation from the State Housing and
Community Development Department for innovation in housing policy and a
demonstrated commitment to developing solutions to the state’s housing crisis.
The City’s 6th Cycle Housing Element includes a Goal for Afforda bility, supported by the
following policies and programs:
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Item 6h
Program 2.9 - Assist with the issuance of tax-exempt bonds, tax credit financing, loan
underwriting or other financial tools to help develop or preserve at least 20 affordable
units annually through various programs. The proposed resolution and draft Ordinance
allow for deferral of impact fees in the form of a loan to the project. The financing
mechanism of a loan, rather than a waiver of impact fees, enables projects to leverage
the loan amount as soft funding, adding points to competitive tax credit financing
applications.
Program 6.16 - Incentivize 20 affordable housing developments per year during the
planning period consistent with SLOMC Affordable Housing Incentives. The impact fee
deferral program established by the ordinance will provide a standardized process for
requesting and implementing impact fee deferral. This will incentivize development of
affordable housing.
DISCUSSION
Background
On September 17, 2024, the City Council voted 5-0 to introduce Ordinance No. 1742,
(Attachment A), which amends section 4.56.050 (Payment of Fees) of the Municipal Code
to establish a development impact fee deferral program for eligible affordable housing
projects. No substantive changes have been made to the Ordinance since introduction.
Previous Council or Advisory Body Action
On May 2, 1995, the City Council adopted Resolution No. 8415 (1995 Series) (page 35)
which waived development review fees for affordable housing units at the direction of the
Community Development Director.
On November 21, 2000, the City Council adopted Resolution No. 9131 (2000 Series) for
the purpose of waiving citywide development impact fees for affordable housing units in
excess of inclusionary requirements or developed by non-profit housing corporations.
On June 5, 2007, the City Council adopted Resolution No. 9903 (2007 Series) which
superseded and replaced Resolution No. 9131 (2000 Series), to allow for development
impact fee waivers for voluntary affordable housing units developed by private developers
(such as ADUs) in addition to projects that exceed the number required to meet the City’s
inclusionary requirements and projects by non-profit developers.
Public Engagement
The proposed amendments were discussed with affordable housing developers and
received support. This item was on the agenda for the September 17, 2024 Regular City
Council meeting which also allows for public comment and followed the required postings
and notifications.
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Item 6h
CONCURRENCE
The City Public Works, Finance Department, City Attorney, Parks, Utilities, and
Police/Fire departments reviewed and concurred with the recommended amendments in
the Ordinance.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended
action in this report because the action does not constitute a “project” under CEQA
Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: N/A Budget Year: 2024-25
Funding Identified: N/A
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $0 $0 $0 $0
State
Federal
Fees
Other:
Total $0 $ 0 $ 0 $ 0
There is no financial impact directly associated with updating the development impact fee
deferral program for eligible residential projects. The indirect impact of fee deferrals would
be the delay in availability of impact fee revenue. Over the last 10 years, 8 impact fee
deferral loans have been given to af fordable housing projects, totalling $5 million in
deferred impact fee revenue, with repayment terms ranging from 30 to 55 years at 3
percent interest. The proposed resolution would update the repayment term on all future
deferral loans to 20 years, reducing the indirect impact on the City’s impact fee funds.
Staff anticipates that about one project per year will be given an impact fee deferral loan
under the program.
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Item 6h
ALTERNATIVES
1. Council may decide to modify the Ordinance before adoption. Depending on the
changes proposed, modifications of the Ordinance may require reintroduction and
then adoption during a subsequent public hearing, which will delay implementation of
Ordinance.
2. Council could decide not to adopt the Ordinance and require future impact fee
deferrals to be conducted under the existing 2007 resolution. This is not
recommended by staff, as the Ordinance provides a critical update to the fee deferral
program, clarifying the term and applicability of fee deferrals.
ATTACHMENTS
A - Ordinance No. 1742 (2024 Series)
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O 1742
ORDINANCE NO. 1742 (2024 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AMENDING SECTION 4.56.050 (PAYMENT OF
FEES) OF THE MUNICIPAL CODE TO ESTABLISH A DEVELOPMENT
IMPACT FEE DEFERRAL PROGRAM FOR ELIGIBLE AFFORDABLE
FOR-RENT HOUSING PROJECTS. THE PROJECT IS EXEMPT FROM
ENVIRONMENTAL REVIEW (CEQA) (IMPACT FEE DEFERRAL
PROGRAM)
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo,
California, on November 21, 2000, adopting Council Resolution No. 9131 (2000 Series)
for the purpose of waiving city-wide development impact fees for affordable housing units
in excess of inclusionary requirements; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo,
California, on June 5, 2007, adopting Council Res olution No. 9903 (2007 Series), which
superseded and replaced Resolution No. 9131 (2000 Series); and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo,
California, on September 17, 2024, adopting Council Resolution No. 11521 (2024 Series),
which superseded and replaced Resolution No. 9903 (2007 Series); and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California on September 17, 2024, for the purpose of considering the amendments
amendment to Section 4.56.050 (Payment of Fees) of the Municipal Code to implement
the Development Impact Fee Deferral Program; and
WHEREAS, the City has identified Housing as a Major City Goal; and
WHEREAS, the City’s Housing Element Programs 2.9 and 6.16 supports
incentivization of affordable housing incentives; and
WHEREAS, impact fees are an identified barrier to production of affordable
housing; and
WHEREAS, impact fees for affordable housing projects have been deferred by
the City to help accelerate production of affordable housing; and
WHEREAS, the aforementioned Program formalizes a process for applying for
and receiving impact fee deferrals; and
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Ordinance No. 1742 (2024 Series) Page 2
O 1742
WHEREAS, deferral of impact fees structured as a loan owed to the City provides
defined terms of repayment and ensures no ultimate loss of revenue to cover the ongoing
impacts of the development; and
WHEREAS, the City Council finds that the proposed amendment is consistent
with the General Plan, and other applicable City goals and policies as amended; and
WHEREAS, notices of said public hearing were made at the time and in the
manner required by law; and
WHEREAS, the City Council has duly considered all evidence, including the
deferral program’s consistency with the Mitigation Fee Act and the California
Constitution, the City’s ongoing need to cover the costs of increased residential
development, the input of interested parties, and evaluation and recommendations by
staff.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Incorporation of Recitals. The City Council find that the foregoing
recitals and staff report presented with this ordinance are true and correct and are
incorporated in the ordinance by this reference and adopted as the findings of the City
Council.
SECTION 2. Findings. Based upon all the evidence, the City Council makes the
following additional findings:
1. The proposed amendments to Section 4.56.050 to implement the Impact Fee
Deferral Program will not cause significant health, safety, or welfare concerns
since the amendments are consistent with the General Plan and directly
implement City goals and polices.
2. The proposed amendments to Section 4.56.050 of the Municipal Code are
consistent with the 6th Cycle Housing Element Program 6.18 which states
“Actively seek and collaborate with non -profit housing providers to (jointly)
apply for three revenue sources each year during the planning period, including
State, Federal and private/non-profit sources, and financing mechanisms to
financially assist with the development of housing affordable to extremely low,
very low and low or moderate income households.”
SECTION 3. Environmental Determination. This Ordinance is exempt from the
California Environmental Quality Act (CEQA), because it is not a “project” under Public
Resources Code § 21065 and the CEQA Guidelines §15378 in that the impact fee deferral
program would not cause either a direct or reasonably foreseea ble indirect physical
change in the environment. Every development project subject to a development impact
fee deferral loan would be required to undergo applicable development review, including
CEQA compliance or finding of exemption.
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Ordinance No. 1742 (2024 Series) Page 3
O 1742
SECTION 4. Section 4.56.050, entitled “Payment of fees” is hereby amended to
read as follows:
A. Except as otherwise provided in Section 66007 of the Government Code,
development impact fees shall be paid to the city upon final inspection or the
date the certificate of occupancy is issued, whichever occurs first, unless the
City requires payment of those fees at an earlier time as authorized by
Government Code 66007. In cases where payment of all or part of the required
fee is deferred beyond the earlier date of final inspection or certificate of
occupancy, the community development director may require that the
applicant, at the applicant’s expense, execute a contract with the city to pay all
deferred impact fees in accordance with the provisions of the City’s Impact Fee
Deferral Program, as further described in subsection B of this Section and
further approved and amended through City Council Resolution.
B. Impact Fee Deferral Program
1. In accordance with the provisions and definitions of the City’s Development
Impact Fee Deferral Program Guidelines, an eligible applicant may enter
into a development impact fee deferral loan agreement for a qualifying for-
rent residential development project. The fee deferral agreement shall
explicitly provide for the recordation of a lien against the real property on
which the approved development project is to be located, which shall be
removed upon payment in full of all deferred fees. All costs assessed by the
county for the recordation of the documents set forth herein shall be paid by
the applicant at the time of execution of the fee deferral agreement. Deferral
is at the sole discretion of the City. The Community Development Director
will consider the needs of the City and the feasibility of the deferral request
on a case-by-case basis. The decision of the Community Development
Director (or the Council, if approval is deferred to the City Council by the
Community Development Director) on an impact fee deferral application is
final and not appealable.
2. The development impact fees eligible for deferral shall be limited to the fees
identified in Section 4.56.030. Special district fees, water and wastewater
impact fees shall not be eligible for the Impact Fee Deferral Program.
SECTION 5. Severability. If any subdivision, paragraph, sentence, clause, or
phrase of this Ordinance is, for any reason, held to be invalid or unenforceable by a court
of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or
enforcement of the remaining portions of this Ordinance, or any other provisions of the
city's rules and regulations. It is the city's express intent that each remaining portion would
have been adopted irrespective of the fact that any one or more subdivisions, paragraphs,
sentences, clauses, or phrases be declared invalid or unenforceable .
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Ordinance No. 1742 (2024 Series) Page 4
O 1742
SECTION 6. Implementation. A summary of this ordinance, together with the
names of Council members voting for and against, shall be published at least five (5) days
prior to its final passage in The New Times, a newspaper published and circulated in this
City. This ordinance shall go into effect at the expiration of thirty (30) days after its final
passage.
INTRODUCED on the 17th day of September 2024, AND FINALLY ADOPTED by
the Council of the City of San Luis Obispo on the ___ day of ___, 202 4, on the following
vote:
AYES:
NOES:
ABSENT:
__________________________
Mayor Erica A. Stewart
ATTEST:
_______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
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