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HomeMy WebLinkAbout07/15/2003, C4 - BUDGET REAPPROPRIATIONS AND STATUS REPORT ON THE HOUSING ELEMENT UPDATE counat M«6,D.m 7-15-03 j Ac,EnbA nEpont C4 CITY OF SAN LUIS O B I S P O FROM: Bill Statler, Director of Finance John Mandeville, Director of Community Development Mike McCluskey, Director of Public Works SUBJECT: BUDGET REAPPROPRIATIONS AND STATUS REPORT ON THE HOUSING ELEMENT UPDATE CAO RECOMMENDATIONS 1. Reappropriate $155,000 related to the Housing Element update for environmental review ($120,000) and fiscal impact analysis ($35,000); and authorize the CAO to issue the request for proposals (RFP) for this work and award the contract if it is within the budget. 2. Reappropriate $25,000 for the Pedestrian Transportation Plan. 3. Receive a report on the status of the Housing Element update. DISCUSSION Housing Element Reappropriation As part of the 2002-03 Mid-Year Budget Review, the Council appropriated $155,000 for the Housing Element update on February 18, 2003` $120,000 for environmental review and $35,000 for fiscal impact analysis. As discussed in greater detail below under the status of the Housing Element update, we have not yet selected consultants to do this work. Accordingly, since no contractual commitment exists as of June 30, 2003, the appropriation for 2002-03 lapsed and these funds became part of the un-appropriated General Fund balance. To proceed with this work, the Council must reappropriate the funding into 2003-04. Given the importance of keeping this work on track, we recommend authorizing the CAO to issue the RFPs and to award contracts to the best overall proposer if it is within budget. We have successfully used this more flexible approach in the past in selecting consultants, and it is an essential part of the overall strategy for completing the update in a timely fashion. Pedestrian Transportation Plan Reappropriation Background. The 1994 Circulation Element calls for the preparation and adoption of a number of supplementary plans that address particular transportation modes. For example, the City has already adopted the Short-Range Transit Plan, Access and Parking Management Plan and Bicycle Transportation Plan. The Pedestrian Transportation Plan is one of two remaining supplementary plans called for by the Circulation Element that have not yet been adopted. (The other one is a Long-Range Transit Plan). The purpose of the Pedestrian Transportation Plan is to a4 - i Budget Reappropriati_ons and Status Report on the Housing Element Update Page 2 establish consolidated policies, standards and programs in guiding the construction of pedestrian facilities in the City. Completing this work emerged as a Council priority as part of the 2003-05 goal-setting process. However, because staff reported that work on this was already underway and near completion, the Council did not "formally" consider this as a goal for 2003-05. Funding Status. Transportation planning staff completed approximately 75% of the draft plan before the Principal Transportation Planner retired. In finalizing the draft plan and managing the public and environmental review process, we planned on using savings from this and other vacancies in Public Works in the amount of $25,000 for consultant assistance. However, the fiscal year ended before the consultant could be selected. As such, the funding available in 2002- 03 lapsed, and these funds became part of the un-appropriated General Fund balance. To complete this work in 2003-04, the Council must reappropriate the funding. Plan Completion Schedule. The following summarizes the schedule for completing the plan: Task, . . - I. Select consultant. 8/03 2. Complete administrative draft and environmental review (see note below), working 12/03 closely with stakeholders. * 3. Hold Planning Commission hearings. 1/04 4. Hold Council hearings and adopt plan. 3/04 Based on our experience with similar plans (such as the Bicycle Transportation Plan), we anticipate that a mitigated negative declaration will be issued by the Director of Community Development. Status of Housing Element Update Overview. Preparation of the Housing Element update is proceeding, although at a slower pace than envisioned when the Housing Element Update Task Force was established in January 2003. The first rough draft of the update was completed at the end of June 2003. It is currently under review at the staff level, with a draft expected to by ready for public review and referral to the State by the end of July. To keep the work program moving, parts of the effort are being done on parallel tracks. The Task Force recommendations are being developed into a report as the Housing Element public review draft is being completed. Both of these documents will be presented to the Planning Commission, along with Task Force comments on the draft update. Relationship of the Draft Plan and Consultant Selection. Preparation of a draft Housing Element is a critical part of preparing the RFD's and hiring consultants: it provides the project description and, along with the results of the environmental scoping, defines the work to be preformed by the consultants. The reason the funds could not be encumbered before July 1 is directly related to the delay in getting the draft prepared. 1 Budget Reappropriations and Status Report on the Housing Element Update Page 3 Work To-Date. In 2002, a significant part of staff's time was spent on the Regional Housing Needs Allocation (RHNA) process. As a result of those efforts, the City's original allocation of 5,720 housing units was reduced to 4,383 units. Using those numbers, and based on a recent, citywide land inventory, it now appears that there is sufficient zoned land, including proposed expansion areas, to technically accommodate our RHNA numbers, although infrastructure, public service and other physical or environmental constraints will likely preclude the City from fully accommodating this need within the updated Element's planning period from January 1, 2001 to July 1, 2008. Most of our time on the Housing Element update in Spring 2003 was devoted to developing information on the existing situation in the City and working with the Task Force. The Task Force has reviewed the 1994 Housing Element, discussed issues that can lead to new policies and programs, and is now working on the final report to the Planning Commission. Staff has been working with the draft information prepared by the Task Force in developing the first draft of the Housing Element Update. The Task Force is still discussing their recommendations and may have suggestions that will increase densities in some areas, but it is unlikely they will suggest much change in the R-1 areas. Next Steps. An environmental scoping hearing is scheduled for the August 13, 2003 Planning Commission meeting. This hearing will determine the range of environmental issues to be dealt with, including if environmental review can be satisfactorily accomplished with a Negative Declaration (ND) or if an environmental impact report(EIR) will be needed. With the information staff now has, an ND may be appropriate: at a preliminary level, it appears the updated element's policies will be consistent with current General Plan residential growth policies. The following summarizes the most optimistic schedule for completing the environmental review (which assumes an ND) and adopting the Housing Element update by December 31, 2003. Date 1. Complete and distribute draft Housing Element update to the public and the State; 7/31 begin preparing the workscope for the environmental review and fiscal impact analysis RFP's. 2. Hold Planning Commission hearings on EIR workscope. 8/13 3. Issue RFP's. 8/14 4. Select consultants. 9/15 5. Complete administrative draft environmental review and fiscal impact reports. 10/20 6. Hold Planning Commission hearings (ND may not be ready to adopt). 11/5 7. Hold Council hearings and adopt plan with completed ND. 12/17 As reflected above, even under the most favorable circumstances, it will be very challenging to adopt the updated Housing Element by the end of December 2003. Budget Reappropriations and Status Report on the Housing Element Update Page 4 Due to statutory timeframes for public review and comment, it will not be possible to adopt the Housing Element by the State's December 31, 2003 deadline if an EIR is required rather than an ND. However, in this case, we will still have made substantial progress towards achieving a certifiable Housing Element by then. State Housing and Community Development staff have stated they have a strong interest in seeing the City achieve certification and carry-out a successful housing program, and that they would continue to work with the City after December 31 as long as necessary to achieve these objectives. In short, while it is still our goal to meet the State's December 31 deadline, it is more important for us to ensure that we have meaningfully analyzed the impacts of any changes, and meaningfully involved the community and stakeholders in this process. FISCAL IMPACT These funds were appropriated in 2002-03 and accounted for in the General Fund balance projections in the 2003-05 Financial Plan. As such, in the context of the 2003-05 Financial Plan, there is no fiscal impact related to reappropriating these funds. On the other hand, since no contractual obligations yet exist for these funds, the Council has the option of not going forward with this work, and saving $180,000. The following highlights the impacts of not reappropriating these funds. Environmental Review. As a practical matter, the Council has limited flexibility in funding the environmental review work: under California law, Housing Element updates require environmental review. As noted above, the type and scope of environmental review will be determined by the Planning Commission when the preliminary draft update is ,completed. However, even with a ND, out assistance for environmental review will be needed; and since an EIR may be required, we recommend reappropriating the full $120,000. Fiscal Impact Analysis. The fiscal impact analysis component of the update ($35,000) is discretionary on the City's part, and could be deleted from the workscope if the Council decides, in light of other workload priorities and the City's fiscal situation, not to go forward with this study. In further support of this option, it is unlikely that the updated Housing Element will result in a significant change in fiscal impacts from the current one; and even if it did, given other priorities in achieving the City's housing goals, it is unlikely that adverse fiscal impacts alone would affect the decision-making process. On the other hand, we have not evaluated the overall fiscal impact of the City's General Plan since 1994, and the Housing Element update presents a reasonable window of opportunity to revisit this analysis. However, since this would largely result in better information rather than a change in direction, this could just as easily be done at another time. It should be noted that we envisioned that this analysis would also include a qualitative assessment of the economic implications of any significant housing policy changes, especially those affecting inclusionary housing requirements or overall growth targets. If these are issues of particular interest to the Council, then this workscope could be narrowed to just this issue. This reduced workscope is estimated to cost between $7,500 and $15,000. Budget Reappropriations and Status Report on the Housing Element Update Page 5 Pedestrian Transportation Plan. Similarly, the Council could decide to defer completion of the Pedestrian Transportation Plan until after 2003-05. This would save $25,000 and free-up transportation planning staff to work on other projects during the next two years. ALTERNATIVES 1. Do not reappropriate funds for some or all for the projects. This would result in deferring completion of planned work until after 2003-05. While this is a viable option for the Housing Element fiscal impact analysis and completion of the Pedestrian Transportation Plan, it is less so for the environmental review component if we are to adopt a Housing Element in compliance with State law. 2. Do not authorize the CAO to issue RFP's related to the Housing Element and award contracts if within budget. In this case, it will not be possible to complete the update by December 2003 even under the best of circumstances. 3. Approve a different approach in completing the Housing Element update than presented in the status report. Depending on the nature of the changes, completion of the Housing Element update may be faster or slower, and at a lower or higher cost in terms of staff resources and consultant assistance. G:Budget Folders/2003-05 Financial Plan/Reappropriation Requests/Council Agenda Report,July 15,2003