HomeMy WebLinkAboutComment Received 07-12-2017 - Avila Ranch (General) (Rioux)
71 Zaca Lane, Suite 130, San Luis Obispo, CA 93401 (805) 543-5970 www.slochtf.org
July 12, 2017
Delivered via email to advisorybodies@slocity.org, ddavidson@slocity.org, xfowler@slocity.org
Planning Commission
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Re: Avila Ranch – Support if Modified
Dear Commissioners and Staff:
I am writing to support the approval of the Avila Ranch project if the terms of approval are modified to
require more housing that is affordable to low and moderate income households. These people comprise
our real workforce and deserve a chance to live in the city in which the work. Unless the project includes
significantly more affordable housing, it does not comply with the Housing Element of the City’s General
Plan. Because it is not consistent with the Housing Element, it is not consistent with the General Plan and
cannot be approved.
When I spoke with you recently, I paraphrased George Carlin and said that “a cynic is a disappointed
idealist.” After reading today’s staff report and digging through the Housing Element and Inclusionary
Housing Ordinance, I was livid.
While last month’s staff report stated that Avila Ranch would have 42 deed restricted affordable units and
Steve Peck increased them to 45 in his presentation, today's staff report states that there will only be 35
affordable units. This decrease was possible because the City worked with the applicant "to maximize the
number of affordable housing units included in the development" and also gave some concessions. The
staff report also states that these 35 units are "the same as if no Table 2A adjustment was made." Absent
Table 2A, Avila Ranch would need to provide 108 affordable units for its 720 housing units plus four
affordable units for its commercial component. To claim that 35 units is the same as 112 units is bureau-
cratic obfuscation at its best.
I calmed down once I read Steve Peck’s July 11, 2017 letter, in which he offers to increase the number of
deed restricted affordable units to 67. He now proposes 32 lower income units (24 of which are on donat-
ed land and eight to be built) and 35 moderate income units which will be built on site. These numbers
are much closer to what is appropriate given Table 2A. However, two issues remain – the four inclusion-
ary units for the inclusionary component of the project and the appropriateness of the land dedication.
The project just needs to provide four additional, probably moderate income, units to satisfy the require-
ments for the commercial component. The land dedication issue is more complicated. It is critically
important for you to understand two things 1) that just donating land for X number of units is not the
same as building those units AND 2) it does not comply with the City’s Inclusionary Housing Ordinance.
Land ≠ Affordable Units. It takes far more than just free land to create affordable units. It takes addi-
tional subsidies. The Iron Works apartments on Broad Street is the most recent affordable housing
San Luis Obispo Planning Commission
July 12, 2017
Page 2 of 2
project in the City. It has 45 units for low income tenants plus a manager's unit. None of its units are for
very low income households, which would have required additional subsidies. Iron Works needed both
$2,980,649 in local subsidies and $5,257,041 in tax credit subsidies to pencil out. The local subsidies
exceeded the land cost by $37,348 per unit. The tax credits were worth $116,823 per unit. Because of
Iron Work's timing, it was able to receive at least 30% more in tax credits than the Avila affordable pro-
ject will be able to receive. The lower tax credit values will require $26,959 or more per unit in additional
subsidies to offset.
My estimate is that if Avila Ranch only donates a site for 24 affordable units, the ultimate developer will
need to secure over $1 million in additional subsidies to actually build the units. This figure assumes that
the Avila project will receive a City Impact Fee Loan in the same amount per unit as did Iron Works.
More Land Needs to be Donated. Because it takes more than just free land to build low income units,
your Inclusionary Housing Ordinance does not allow developers to simply donate the minimum amount
of land needed to build the units in order to satisfy their inclusionary requirements. I have attached
Section 17.91.080 from the City’s Inclusionary Housing Ordinance to my letter. This section set out the
standards for dedicating land rather than providing affordable units or paying in-lieu fees. Please read
and digest it. Unless Avila Ranch complies with this ordinance, it doesn’t comply with the General Plan.
First, accepting a land dedication is at the discretion of the city council – it is not intended as a cheaper
and easier option for the developer. The land must also have “equal or greater in value to the in-lieu fee
which would otherwise be required…” The in-lieus fees are high so the value of the dedicated land must
also be high as I will demonstrate.
In-lieu fees are 15% of the estimated construction valuation for the project less adjustments for Table 2A
and any inclusionary units that are built. Avila Ranch would be required to provide 108 units1 without
Table 2A and will only satisfy 24 units of its inclusionary requirement through the land dedication. This
means that their in-lieu fee is calculated based on 24/108ths of 15%. Their fee would then be 3.333% of
the estimated construction valuation of the whole project. Based on recent land sales for apartment sites,
I estimate that 1 acre in Avila Ranch is worth about $1.25 million. If you divide $1.25 million by 3.333%
and then 720 units, you come up with an average construction valuation of $52,083 per home. Even if the
land is worth $2 million, the average construction valuation is $83,333. Everyone knows that construc-
tion values at Avila Ranch will be much higher than this.
Consequently, the Inclusionary Housing Ordinance requires a much larger land dedication. I think at
least 3 acres is needed to comply with the ordinance is said.
Thank you for your time and consideration.
Sincerely,
Gerald L. Rioux
Executive Director
Attachment
1 This number excludes the four units for the commercial portion of the project.
City of San Luis Obispo
Zoning Regulations June 2008
Page 188
affordable housing and for reasonable costs associated with the development of
affordable housing, at the discretion of the city council.
A. In-Lieu Fees. In-lieu fees collected shall be deposited into the affordable housing
fund, to the satisfaction of the finance director. (Ord. 1458 § 3 (part), 2004: Ord. 1348
§ 2 (part), 1999)
17.91.080 Real property dedication.
A. Irrevocable Offer to Dedicate Real Property. At the discretion of the city council, an
irrevocable offer to dedicate real property equal or greater in value to the in-lieu fee
which would otherwise be required may be offered to the city, or to a housing provider
designated by the city, instead of providing the required number of affordable
dwellings or paying in-lieu fees. In considering an offer to dedicate real property, the
city council must find that the dedication of real property will provide equal or greater
public benefit than constructing affordable units or paying in-lieu fees, based on the
following criteria:
1. Valuation of the land and/or improvements to be dedicated relative to other
methods of meeting the requirement;
2. Suitability of the land and/or improvements for housing, including general plan
conformity, size, shape, topography, and location; and
3. Feasibility of developing affordable housing, including general plan consistency,
and availability of infrastructure.
B. Real Property Valuation. The valuation of real property offered in-lieu shall be
determined by the director, based upon an appraisal made by a qualified appraiser
mutually agreed to by the developer and the city. Costs associated with the appraisal,
title insurance and transfer, recordation and related costs shall be borne by the
developer.
C. Agreement and Timing. The real property dedication shall be by deed or other
instrument acceptable to the city, and shall be com pleted by recordation with the
recorder of the county of San Luis Obispo prior to occupancy release of the first
residential unit or commercial building in the development; or prior to building permit
issuance, for projects for which a certificate of occupancy is not issued; or as
otherwise provided by written agreement between the developer and the city. (Ord.
1458 § 3 (part), 2004: Ord. 1348 § 2 (part), 1999)
17.91.090 Incentives.
A. Eligibility for Incentives. The developer may be eligible to receive or to request
development incentives in return for constructing affordable housing in connection
with a development project, pursuant to the affordable housing incentives (Chapter
17.90), as part of a city planning application. Incentives or other forms of financial
assistance may be offered by the city to the extent that resources are available for
this purpose and to the degree that such incentives or assistance will help achieve the
city’s housing goals.
B. Affordable Housing Agreement. Any incentives provided by the city, beyond those
incentives to which a developer may be automatically entitled to under Chapter 17.90
of this code, shall require city council approval and shall be set out in an affordable
housing agreement. The form and content of such agreement shall be to the approval