HomeMy WebLinkAboutItem 1 - Housing Update PC Staff ReportPLANNING COMMISSION AGENDA REPORT
SUBJECT: Housing Update
PROJECT ADDRESS: Citywide BY: Rachel Cohen, Associate Planner
Phone: 805-781-7574
E-mail: rcohen@slocity.org
FROM: Xzandrea Fowler, Deputy Director
1.0 RECOMMENDATION
Receive an update on the City’s housing programs. No action is being requested from the
Commission.
2.0 SUMMARY
The following report provides detailed information regarding the City’s housing programs,
including a status report on the Housing Major City Goal for FY 2017-19 and 2019-21, State
housing law, Housing Element and required update, housing production and housing affordability.
3.0 DISCUSSION
3.1 Housing Program Overview
The City’s first Inclusionary Housing Ordinance was adopted in 1999 and since that time the City
has made great strides in ensuring that a percentage of all new housing units are affordable to
income eligible households. In fact, since 2000, over 23% of all units constructed in the City have
been affordable (i.e. deed restricted for very low, low, or moderate-income households). The
inclusionary housing requirement is met by either building the required number of deed-restricted
housing units, or by paying an in-lieu fee. The City uses those in-lieu fees to work with affordable
housing developers to deliver new affordable housing projects within the City.
Without an inclusionary housing ordinance, with the exception of State Density Bonus, there
would be no way for the City to guarantee the affordability of housing produced in the city because
the housing market is influenced by a wide variety of external and internal factors that continue to
make San Luis Obispo one of the least affordable locations in the Country based on the ability of
the median income worker to afford a median priced home.
Even as the City has made strides with its inclusionary housing program, the overall housing crisis
has worsened both locally and statewide due to a variety factors and largely attributed to external
market forces outside of the City’s control. To address this, the State of California through its
Department of Housing and Community Development (HCD) has progressively strengthened its
requirements and increased its enforcement mechanisms and capabilities to ensure compliance
with State housing law.
Meeting Date: April 24, 2019
Item Number: 1
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The City of San Luis Obispo produced its first Housing Element to receive certification by HCD
in 2004. The City has maintained a certified Housing Element since that time, which has made it
eligible for grant funding, including over $1 million in grants that were used for its Land Use and
Circulation Element Updates. In addition, the City was eligible to participate in HCD’s BEGIN
program, which provided first-time homebuyers with down payment assistance for 10 units in the
Tumbling Waters Townhomes project off Sacramento Drive. Going forward, California voters
approved two housing-related bond measures that will result in significant funding for affordable
housing that the City will only be eligible for if it maintains a certified Housing Element. The next
Housing Element update must be completed and submitted by December 31, 2020 which in terms
of timing requires a focused effort to essentially produce a draft for Planning Commission review
in Spring 2020.
3.2 Major City Goal Status Report
In recognition of the seriousness of the current housing crisis and the need for the City to focus on
housing production, Housing was identified as a Major City Goal for the 2015-17 and 2017-19
Financial Plans, as well as the 2019-21 Financial Plan.
The City’s 2017-19 Housing Major City Goal states, “Facilitate increased production of all
housing types designed to be economically accessible to the area workforce and low and very low-
income residents, through increased density and proximity to transportation corridors in
alignment with the Climate Action Plan.” This goal includes an action plan to implement policies
and programs from the Land Use Element (LUE), Housing Element (HE), Circulation Element
(CE), and Climate Action Plan (CAP). The following tasks were completed in the two-year time
frame:
•An update of the City’s Zoning Regulations which includes new incentives to encourage
additional housing in the Downtown Core, and alternatives to calculating residential
densities to encourage development of smaller efficiency units.
•Scaling of development impact fees for residential development based on unit size and
type.
On February 4, 2019, Council adopted Housing as a Major City Goal for the 2019 -21 Financial
Plan. The adopted goal language states, “Facilitate the production of housing with an update of
the Housing Element, including an emphasis on affordable housing (including unhoused people)
and workforce housing through the lens of climate action and regionalism.” Staff is currently
working on developing a work scope and action plan to implement this goal statement, which will
focus largely on the completion of an updated Housing Element. Some of the other items that may
be considered as part of this work program include:
1.Complete an Affordable Housing Nexus Study
2.Begin an update to the Safety Element
3.Launch Above Moderate Income and “Missing Middle” housing programs
4.Continue the Affordable Housing Monitoring Program
5.Complete an update of the Subdivision Regulations
6.Implement the housing production goals, policies, and programs in the Housing Element
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7. Prioritize grant funding for housing production for extremely-low to moderate income
households
8. Continue to support and promote the development of additional on-campus housing
9. Continue to support Public/Private/Non-Profit partnerships to increase local housing
opportunities for the local workforce
10. Initiate research on updating the Zoning Regulations to include flexible density options in
the Downtown/Upper Monterey Special Focus Area to support the production of smaller
units.
3.3 State Housing Law
The City has established housing policies in accordance with the General Plan and to comply with
California laws that were established, and recently strengthened, to ensure the production of
sufficient housing to support local, regional and state growth projections. Some of these laws limit
the ability of cities to deny or reduce the scale of housing projects. The City has carefully planned
to accommodate housing within its Urban Reserve Line (URL) to prevent sprawl, ensure adequate
water supplies for projected growth, meet the housing needs of households at various income
levels, achieve environmental and climate objectives and balance land uses to achieve fiscal health.
Key housing legislation affecting the City is provided below.
3.3.1 SB 1069 - Accessory Dwelling Units (ADUs)
The California legislature found and declared that, among other things, allowing accessory
dwelling units (ADUs) in single family and multifamily zones provides additional rental housing
and are an essential component in addressing housing needs in California. SB 1069 addressed
barriers to the development of ADUs and expanded capacity for their development. Provisions that
went into effect on January 1, 2017 include the following: Reducing parking requirements,
eliminating utility connection fees, fire sprinkler requirements, ministerial application approvals,
and prohibits any exclusion ordinance of them. The City of San Luis Obispo updated its permit
requirements for ADU’s to comply with State law (see Table 1 below). The City published an
ADU brochure (http://www.slocity.org/home/showdocument?id=16734) to assist the community
understand key permit requirements of the ordinance.
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Table 1: ADU Standards, Regulations and Fees
Standards,
Regulations and Fees1 Previous ADU Updated ADU
Maximum size 450 s.f.
800 s.f. or 50 % of the existing
SFR2 (whichever is smaller). With
Director approval up to 1,200 s.f.
or more than 50% of SFR.
Allowed Zone R-1, R-2, R-3, R-4, O (where
primary use is an SFR)
R-1, R-2, R-3, R-4, O (where
primary use is an SFR)
Fees Reduced Impact Fees Eliminated City Impact Fees
Ownership ADU or the primary residence
must be owner occupied.
ADU or the primary residence
must be owner occupied.
Parking 1 space No parking required
Lot size Not allowed on non-
conforming lots Allowed on non-conforming lots
Entitlements
Discretionary - Architectural
Review, and Building Permit
Submittal
Ministerial - Building Permit
Submittal only
1. All ADUs must comply with the local Building Code and Zoning Regulations.
2. SFR: Single Family Residence
3.3.2 Housing Accountability Act
In 2017, Governor Brown signed into law two bills – SB 167 and AB 678 – that significantly
reform California’s Housing Accountability Act (HAA or Act), Cal. Gov. Code §65589.5. These
reforms make it illegal for the City to deny qualifying housing projects (any housing development
project, whether market-rate or affordable, that complies with all applicable objective general plan,
zoning, and subdivision standards and criteria, including design review standards) or make
changes that reduce the number of units being proposed unless findings are adopted based on
objective standards that the project would have health and safety impacts if developed as proposed.
More information is provided online at: https://www.hklaw.com/publications/california-governor-
signs-into-law-major-reforms-to-housing-accountability-act-09-29-2017/.
3.3.3 SB 35 – Streamline Approval Process
In 2017, Governor Brown signed SB 35, a new law that created a streamlined approval process for
developments in cities/counties that have not yet met their housing targets, provided that the
development is on an infill site and complies with existing residential and mixed-use zoning.
Participating developments must provide at least 10 percent of units for lower-income families.
All projects over 10 units must be prevailing wage and larger projects must provide skilled and
trained labor. San Luis Obispo is subject to SB 35 and certain affordable housing projects that
comply with this law must be processed by the City as ministerial permits, which means the City
will only have the discretion to implement objective standards and qualifying projects would not
be subject to discretionary review in public hearings. The League of California Cities has provided
a recent article about SB 35 at: https://www.cacities.org/Top/News/News-
Articles/2018/February/SB-35-Determinations-Issued;-What-s-Next-for-Citie.
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3.4 Housing Element
The Housing Element is an element of the City’s General Plan and is the only element that must
be updated on a set schedule and then certified by the State. The City does not construct housing
but is required by the State to plan to demonstrate that it can accommodate a specific number of
units that meet specific income categories within a specific timeframe – our Regional Housing
Needs Allocation (RHNA). The City is starting a new Housing Element update, which is due to
HCD by December 31, 2020. The update process is a tool to modify housing policies and programs
to reflect the changing needs, resources and conditions in the community, and to respond to
changes in state and federal housing law.
3.4.1 Regional Housing Needs Allocation (RHNA) – 5th Cycle, 2014-2019
The RHNA is produced by HCD and identifies the projected housing needs in the region as part
of the periodic updating of local housing elements of the General Plan. The San Luis Obispo
Council of Governments (SLOCOG) is responsible for working with the State mandated RHNA
and distributing the allocation between the cities and the unincorporated county. For the current
housing element cycle (5th Cycle), the City was assigned 1,144 units (28% of 4,090 for the County
as a whole) for the planning period from January 1, 2014 through June 30, 2019. The City must
demonstrate that it can accommodate its RHNA through a variety of programs in addition to having
appropriate land use and zoning capacity.
The graphics below shows the 5th Cycle RHNA distribution for each jurisdiction on the left, and
the City’s RHNA by income category on the right for new housing construction. Table 2 below
indicates the City’s current progress towards meeting RHNA targets. Specifically, as of December
31, 2018, the City met all of the capacity and program requirements in the certified 2014 -2019
Housing Element and 58% of the RHNA has been achieved in the Extremely Low & Very Low
Category; 17% complete in the Low Category; 6% complete for Moderate; and 168% complete
for Above Moderate (aka market-rate) units, which is a factor of market conditions outside the
City’s control. Progress towards meeting RHNA targets is tracked by HCD for all local
jurisdictions, and can be viewed publicly on their website: http://www.hcd.ca.gov/community-
development/housing-element/index.shtml.
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3.4.2 SB 375
During the 5th Cycle, to strengthen the connection between housing and transportation planning,
SB 375 made changes to better align the schedules for RHNA and local -government housing-
element updates with schedules for adopting Regional Transportation Plans (RTPs). This allowed
local governments entering their 6th Cycle (2020-2028) to change their housing element update
schedule from a 5-year housing element planning period to an 8-year planning period. SLOCOG
elected to update its RTP every four years, which automatically changed the housing element
planning period for this region to 8-years (December 31, 2020 to December 31, 2028) for the 6th
Cycle. The County and all seven cities entered their 6th Cycle on December 31, 2018 for a 10-year
production period that ends on December 31, 2028. The 6th Cycle housing element update is due
to HCD by December 31, 2020 but must be adopted by the City at least 120 days prior to the due
date.
3.4.3 Regional Housing Needs Allocation (RHNA) – 6th Cycle, 2020-2028
HCD finalized its RHNA allocation determination for the San Luis Obispo region at 10,810 units
for the 10-year production period (December 31, 2018 to December 31, 2028), and the SLOCOG
Board voted unanimously to accept the distribution allocation projection. S LOCOG hosted several
meetings with working groups to develop and review materials and distribution scenarios over the
course of several months in Fall 2018. Based on the feedback and recommendations from the
SLOCOG Board, Citizens’ Transportation Advisory Committee, Technical Transportation
Advisory Committee, a RHNA Working Team, and the RTP Stakeholder Group, a distribution
methodology was chosen that allocated housing units to jurisdictions largely based on employment
centers.
As the City is in close proximity to several large employers in the County, the number of housing
units allocated to San Luis Obispo has been identified as 3,354. It appears that the City can
accommodate this allocation based on existing land use capacity (largely created through the 2014
LUCE Update) but will be further analyzed in the update of the Housing Element.
Table 2: RHNA Progress
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3.4.4 Climate Action Plan Relation to Housing Element Update
The housing element is a critical tool in implementing policies and programs that lower greenhouse
gas (GHG) emissions and promoting sustainable development. The location and types of housing
affect resource conservation and the City’s ability to adapt and be resilient to climate change. The
housing element must inventory and analyze the opportunities for energy conservation in
residential development such as energy saving features, energy saving materials, and energy
efficient systems and designs for residential development. Maximizing energy efficiency in the
City’s housing stock will contribute to the City’s GHG emissions reduction target.
Development patterns influence GHG emissions. Locating housing near services, transportation
options, and jobs increases the effectiveness of multi-modal transportation systems. When
affordable housing is not available near jobs, people may have to commute long distances,
generating high rates of vehicle miles traveled (VMT) and GHG emissions. The collaboration
between the City’s Climate Action Plan (CAP) update and the housing element update will ensure
identification of sites and programs that direct growth in areas that promote efficient development
patterns and transit use, including alternative modes of transportation such as biking or walking.
The City’s CAP update is currently underway and is scheduled for completion in Fall 2019. All
GHG emissions reduction strategies identified in the CAP, that are directly or indirectly related to
housing production, will be incorporated into the housing element update and will inform the
safety element update.
3.4.5 Safety Element Relation to Housing Element Update
For jurisdictions that have an adopted local hazard mitigation plan (LHMP), the next update of
that plan triggers an update to the safety element of the general plan to address climate adaptation
and resiliency. If a jurisdiction does not have an LHMP, the safety element must be reviewed and
updated each time the housing element is updated, specifically for flood and fire hazards.
Jurisdictions that have an LHMP may choose to review and update their climate change analysis
in the LHMP concurrently or as preparation for the next LHMP update to create consistency and
efficiency in the review and update cycle for both general plans and LHMPSs. The safety element
must be updated no later than January 1, 2022.
Following the adoption of the CAP and the housing element update, the City will undertake the
safety element update to create consistency between policies and programs that are related to
housing production, climate adaptation and resiliency, and protection from hazards and
environmental vulnerabilities.
3.5 Housing Production
The City has carefully planned for future growth. By planning to grow slowly, the City allows for
the gradual assimilation of new residents. There are currently 21,416 dwelling units in the City.
There is a projected buildout capacity of 4,346 additional housing units, which is planned for under
the City’s Land Use and Circulation Plans (LUCE) through the year 2035. Of the 4,346 dwelling
unit capacity available to reach LUCE buildout, 3,129 remain to be built in specific plan areas. An
additional 1,217 units are available via infill development. By limiting growth to specific plan
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areas and infill development, the City is preserving scenic corridors and open space. The figure
below displays the total residential units that have been constructed since 2000:
3.6 Housing Affordability
Standard metrics indicate that housing is affordable if a household can secure the appropriate size
living quarters for approximately 30 percent of the household income.
3.6.1 Subsidized Housing
There are several affordable housing programs in the City that provide subsidized housing (City
Inclusionary, Tax Credit, HUD, HASLO, etc.). Subsidized housing is government sponsored
economic assistance aimed towards alleviating housing costs and expenses for qualifying
households. Forms of subsidies can include direct housing subsidies, non-profit housing, public
housing and rent supplements. The City coordinates with the County, non-profit organizations,
and developers to increase the production of subsidized housing.
3.6.2 Inclusionary Housing
Adopted in 1999, the Inclusionary Housing Program implemented two core housing programs of
the General Plan – that of providing affordable housing for extremely-low, very-low, low, and
moderate-income households, and establishing a housing trust fund. The Program requires that
most new development projects help meet affordable housing needs by: 1) building affordable
dwellings as part of a development project, 2) dedicating real property, improved or not, for
development of affordable housing by the City’s Housing Authority or by a non-profit housing
provider, 3) paying an in-lieu fee which is used to fund affordable housing throughout the City, or
4) Use a combination of the above methods, to the approval of the Community Development
Director.
Since adoption, the Program has generated over 450 deed-restricted or otherwise secured
affordable dwellings, and approximately $10 Million in affordable housing funds from in-lieu fees.
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The Affordable Housing Fund (AHF) has provided approximately $6.5 Million in direct assistance
and leveraged other grant and tax credit financing to various affordable housing projects
throughout the City.
3.6.3 Affordable Housing Incentives
The City uses a combination of regulatory and financial incentives to facilitate affordable housing
development. These include development review impact fee deferrals, grants and loans, density
bonuses, permit streamlining, flexible property development standards, and other incentives. The
City’s General Plan includes policies and standards that encourage housing projects that
incorporate deed restricted units affordable to very low, lower, and moderate-income households.
4.0 NEXT STEPS
On April 2, 2019, staff provided a housing update to City Council. Council confirmed the
following next steps listed below:
• Council will review and approve the work plan for the 2019-21 Financial Plan Housing
Major City Goal (Spring 2019).
• Staff will continue to monitor and report out on State housing laws that affect local policy
and regulations to ensure ongoing compliance, consistent with the City’s legislative
platform.
• Staff will be hosting various community engagement opportunities in the Summer and Fall
of 2019 to identify housing needs, issues and opportunities in the community to help inform
the update.
• Staff will focus on housing production as a part of the 2019-21 Housing Major City Goal
and prioritize projects that include an affordable housing component.
• Staff will develop a Scope of Work for the Inclusionary Housing Nexus Study, including
review of Housing Element Tables 2 & 2A, (Spring 2019).
5.0 ENVIRONMENTAL REVIEW
Since this item is informational in nature and involves no action by the Planning Commission, the
California Environmental Quality Act (CEQA) does not apply to the recommended action because
it does not constitute a “Project” under CEQA Guidelines Sec. 15378.
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