HomeMy WebLinkAbout09-17-2019 Item 14 - 2018-19 Grand Jury - Response on Affordable Housing
Department Name: Community Development
Cost Center: 4007
For Agenda of: September 17, 2019
Placement: Business Item
Estimated Time: 20 Minutes
FROM: Michael Codron, Community Development Director
Prepared By: Cara Vereschagin, Housing Coordinator
Ryan Betz, Assistant to the City Manager
SUBJECT: RESPONSE TO THE 2018-19 GRAND JURY REPORT ON AFFORDABLE
HOUSING
RECOMMENDATION
Authorize the City Manager to submit a letter of response to the report on behalf of the City
Council, as required by the Grand Jury (Attachment A).
DISCUSSION
On June 20, 2019, the San Luis Obispo County Grand Jury issued a report that analyzed issues
associated with affordable housing in the unincorporated portions of the County of San Luis
Obispo and its seven cities (Attachment B). The report summarizes the challenges of providing
affordable housing options in County populations that are most in need of affordable housing and
how the County and cities are addressing the issue. The report highlights the disproportionate
construction of market-rate housing and recommends alternatives for the County and cities to
consider. Specifically, the report looks at housing tenure (owners and renters), the role of
government in providing housing, and partnerships with non-profits and the business community
as possible solutions.
Grand Jury Findings
The Grand Jury's report includes a number of findings. Most notably the report finds that, “the
unaffordable costs of renting and buying homes on the Central Coast is of crisis proportions for
those defined in the extremely low, very low, and low-income categories.” The report makes a
series of recommendations to address these issues, including streamlining the building and
planning permit process, increase in-lieu fees for affordable housing, and increasing the housing
opportunities through re-zoning for non-traditional housing options, such as modular homes, pre-
fabricated homes and mobile home parks.
As it relates specifically to the City of San Luis Obispo, the Grand Jury report states: "The City
of San Luis Obispo is required to respond to Findings 6 and 7 and Recommendations 1, 2, 4, 5,
and 6."
Packet Pg. 233
Item 14
Response to Grand Jury Findings and Recommendations
Finding 6. Most of the required annual housing element updates are difficult to access by the
public.
Response: Disagree.
The California Department of Housing and Community Development (HCD) requires local
jurisdictions to submit the Housing Element Annual Progress Reports (APRs) directly to them
via their online portal – which is the preferred method of submittal – or via an Excel form. HCD
then publishes a report summarizing the submitted APRs from all 540 California public
jurisdictions, which can be accessed on their website at hcd.ca.gov.
AB 879 and SB 35 of the 2017 Housing Package added new data requirements for the Housing
Element APRs, which went into effect for reports due for calendar year 2018. Currently, HCD is
only accepting Excel forms of the APRs, while they are making the required changes to the
online submittal portal.
Due to the lengthy amount of information in the APRs, the City of San Luis Obispo summarizes
and publishes information reported on in the APRs annually in the General Plan Annual Report,
which can be accessed on the City website at https://www.slocity.org/government/department-
directory/community-development/planning-zoning/general-plan.
Finding 7. The length and cost of the building permitting process is a major barrier to the
construction of all housing, especially low-income housing.
Response: Disagree.
The City of San Luis Obispo has been committed to providing timely and efficient building
permit review times. Staff review submitted building plans to evaluate that proposed structures
are designed in compliance with standard regulations, including the building code, planning
approvals, and engineering standards. It is often the case that lengthy building permit review
processes result when multiple rounds of these reviews occur. In 2018, the City took an average
of 4 weeks to review the first round of submittals for new single family units, and 5 weeks to
review the second round of submittals for new multifamily units. One of the largest barriers to
the production of new deed-restricted low-income housing is the obtainment of the land and
various means of financial support. Land costs are extremely high in San Luis Obispo, which
makes it extremely hard for non-profit affordable housing developers to acquire adequate sites.
There is also a very limited amount of financial resources available for new affordable housing.
In 2018, of the 286 residential housing permits issued, 26% were for affordable housing.1
1 2018 General Plan Annual Report at: https://www.slocity.org/home/showdocument?id=22768
Packet Pg. 234
Item 14
Recommendation 1. Reassess and improve processes to fast-track building and planning permit
approvals within 12 months from date of application. This should be implemented within FY
2019-2020.
Response: The recommendation is constantly being looked at and the City maintains a
Continuous Improvement Team that looks at any opportunities to efficiently analyze project
consistently with federal, state, and local planning and building code requirements. The City of
San Luis Obispo offers two different ways to expedite a permit during the plan check process. A
determinate processing agreement can be developed that assigns responsibilities and deadlines
for applicant submittals and for City plan check comments. This manner of expediting the
issuance of a permit includes responsibilities on both sides. Also available to applicants for a fee
is an expedited plan check process where time is shaved off of each round of plan check.
Recommendation 2. Create, file, and publish the required housing element documents and
reports on time and in a form easily accessible to the public. This should be done by the next
report cycle.
Response: The recommendation will continue to be addressed.
The City is required to submit the APR form that is created by HCD. It is anticipated that HCD
will require all local jurisdictions to submit the APR form via their online portal. The City will
continue to summarize and publish the APR information in April each year in the General Plan
Annual Report.
Recommendation 4. The cities and County should concentrate on promoting rentals for families
earning below moderate incomes by increasing the percentage of required inclusionary housing
units.
Response: The recommendation will be considered once we receive the results of our
Affordable Housing Nexus Study.
The City’s first Inclusionary Housing Ordinance was adopted in 1999 and since that time, the
City has made great strides 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 deed-restricted to guarantee affordability. Further, of the stock of deed-restricted units,
86% are rentals.
The City is currently working on an Affordable Housing Nexus Study to analyze the existing
Inclusionary Housing Ordinance. Recommendations from the Study will influence policy
changes in the upcoming update of the City’s Housing Element, and findings from the Study will
be published as an attachment in the document.
The City has made significant progress towards meeting its’ 5th Cycle Regional Housing Needs
Allocation (RHNA) targets. As of December 31, 2018, 58% of the target had been achieved in
the Extremely Low & Very Low category, 17% complete in the Low category, and 6% complete
in the Moderate category.
Packet Pg. 235
Item 14
Recommendation 5. Increase the opportunities through re-zoning for non-traditional housing
options, such as modular homes, pre-fabricated homes, and mobile home parks. This should be
accomplished within FY 2020-2021.
Response: The recommendation will be considered once we receive the results of our
Affordable Housing Nexus Study and also considered during the development of the 2020-2028
Housing Element.
The recent update of the City’s Zoning Regulations includes new provisions for tiny homes on
wheels in the backyard of a site with an owner-occupied single-family residence. The City
expects that the results of the Affordable Housing Nexus Study will inform any need for the
addition of non-traditional housing options.
Recommendation 6. The cities and County should detail their specific plans to engage the public
in the formulation of the 2020-2028 Housing Plan Update.
Response: The recommendation will be adopted.
The City has included several opportunities to engage the public during the 2020-2028 Housing
Element Update effort. In April 2019, staff conducted a Housing Forum that provided the public
with information about 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.
Staff also made presentations to the City Council and the Planning Commission on these topics.
In July, staff met with one stakeholder group to discuss the Housing Element Update. Staff will
continue to reach out to other key stakeholders and the public through public workshops,
interviews and surveys during the Fall of 2019. Additionally, staff will be sharing the findings of
the Nexus Study with the Planning Commission and Council in Spring 2020. Draft Housing
Element policies and programs will be presented to the Planning Commission in early Spring
2020 in order for staff to receive feedback from the public and the Planning Commission.
The City has also been working with the County and other jurisdictions throughout the region on
coordinating key milestones and engagement efforts. At this time, it has been discussed that a
website will be created to display all relevant information regarding each jurisdictions’ Housing
Element Update, thus allowing for one central place for members of the public to access
information during this individual, but regional effort.
Previous Council and Planning Commission Action
There has not been any previous action on this Grand Jury Report. However, a majority of the
information relayed above was presented to the City Council as part of the Housing Update
Study Session on April 2, 2019, as well to the Planning Commission on April 24, 2019.
Additionally, the Planning Commission reviewed, and the City Council accepted the 2018
General Plan Annual Report in February and March of 2019, respectively.
Packet Pg. 236
Item 14
Policy Context
The authority under which the City is required to respond to the Grand Jury is identified in
sections 933.05 (a-f) of the California Penal Code (Attachment C). The City’s written response
will be sent to Presiding Judge Ginger Garrett and to the Grand Jury (Attachment A).
Public Engagement
As noted above, the City previously engaged the public via a housing community forum on April
2, 2019 and other various public meetings. Additional public outreach opportunities are planned
for Fall 2019 and throughout the year 2020.
CONCURRENCE
City Administration concurs with the review and response to the Grand Jury’s 2018-19 Report.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act 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: No Budget Year: 2019-20
Funding Identified: No
Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other:
Total
There is no fiscal impact to the City resulting from the City’s response to the Grand Jury Report.
ALTERNATIVES
If the City Council does not concur with the above responses, the Council should provide
direction to staff as to how to revise the final response to the Grand Jury.
Packet Pg. 237
Item 14
Attachments:
a - City Manager letter of response to the Grand Jury Report
b - Affordable Housing - An Urgent Problem For Our Community
c - CA Penal Code 933 through 933.05
Packet Pg. 238
Item 14
City of San Luis Obispo, Office of the City Manager, 990 Palm Street, San Luis Obispo, CA, 93401-3249, 805.781.7114, slocity.org
September 19, 2019
Presiding Judge Ginger Garrett
Superior Court of California
1035 Palm Street Room 355
San Luis Obispo, CA 93408
Re: Grand Jury Report entitled “Affordable Housing - An Urgent Problem for our
County”
Dear Judge Garrett:
This letter constitutes the response of the City of San Luis Obispo to the San Luis
Obispo County Grand Jury report titled “Affordable Housing - An Urgent Problem for our
County” (hereinafter the “Report”). This response is submitted in compliance with Penal
Code 933.05. A copy of this response is concurrently being transmitted to the Grand Jury.
The Report sets forth eleven findings and six recommendations. The City of San Luis Obispo
has been required to respond to Findings 6, and 7, and Recommendations 1, 2, 4, 5, and 6.
Response to Grand Jury Findings and Recommendations
Finding 6. Most of the required annual housing element updates are difficult to access by the
public.
Response: Disagree.
The California Department of Housing and Community Development (HCD) requires local
jurisdictions to submit the Housing Element Annual Progress Reports (APRs) directly to them
via their online portal – which is the preferred method of submittal – or via an Excel form.
HCD then publishes a report summarizing the submitted APRs from all 540 California public
jurisdictions, which can be accessed on their website at hcd.ca.gov.
AB 879 and SB 35 of the 2017 Housing Package added new data requirements for the Housing
Element APRs, which went into effect for reports due for calendar year 2018. Currently, HCD
is only accepting Excel forms of the APRs, while they are making the required changes to the
online submittal portal.
Packet Pg. 239
Item 14
Due to the lengthy amount of information in the APRs, the City of San Luis Obispo
summarizes and publishes information reported on in the APRs annually in the General Plan
Annual Report, which can be accessed on the City website at
https://www.slocity.org/government/department-directory/community-
development/planning-zoning/general-plan.
Finding 7. The length and cost of the building permitting process is a major barrier to the
construction of all housing, especially low-income housing.
Response: Disagree.
The City of San Luis Obispo has been committed to providing timely and efficient building
permit review times. Staff review submitted building plans to evaluate that proposed
structures are designed in compliance with standard regulations, including the building code,
planning approvals, and engineering standards. It is often the case that lengthy building
permit review processes result when multiple rounds of these reviews occur. In 2018, the City
took an average of 4 weeks to review the first round of submittals for new single family units,
and 5 weeks to review the second round of submittals for new multifamily units. One of the
largest barriers to the production of new deed-restricted low-income housing is the obtainment
of the land and various means of financial support. Land costs are extremely high in San Luis
Obispo, which makes it extremely hard for non-profit affordable housing developers to
acquire adequate sites. There is also a very limited amount of financial resources available
for new affordable housing. In 2018, of the 286 residential housing permits issued, 26% were
for affordable housing.1
Recommendation 1. Reassess and improve processes to fast-track building and planning
permit approvals within 12 months from date of application. This should be implemented
within FY 2019-2020.
Response: The recommendation is constantly being looked at and the City maintains
a Continuous Improvement Team that looks at any opportunities to efficiently analyze project
consistently with federal, state, and local planning and building code requirements. The City
of San Luis Obispo offers two different ways to expedite a permit during the plan che ck
process. A determinate processing agreement can be developed that assigns responsibilities
and deadlines for applicant submittals and for City plan check comments. This manner of
expediting the issuance of a permit includes responsibilities on both sides. Also available to
applicants for a fee is an expedited plan check process where time is shaved off of each round
of plan check.
Recommendation 2. Create, file, and publish the required housing element documents and
reports on time and in a form easily accessible to the public. This should be done by the next
report cycle.
Response: The recommendation will continue to be addressed.
The City is required to submit the APR form that is created by HCD. It is anticipated that
1 2018 General Plan Annual Report at: https://www.slocity.org/home/showdocument?id=22768
Packet Pg. 240
Item 14
HCD will require all local jurisdictions to submit the APR form via their online portal. The
City will continue to summarize and publish the APR information in April each year in the
General Plan Annual Report.
Recommendation 4. The cities and County should concentrate on promoting rentals for
families earning below moderate incomes by increasing the percentage of required
inclusionary housing units.
Response: The recommendation will be considered once we receive the results of our
Affordable Housing Nexus Study.
The City’s first Inclusionary Housing Ordinance was adopted in 1999 and since that time, the
City has made great strides 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 deed-restricted to guarantee affordability. Further, of the stock of deed-
restricted units, 86% are rentals.
The City is currently working on an Affordable Housing Nexus Study to analyze the existing
Inclusionary Housing Ordinance. Recommendations from the Study will influence policy
changes in the upcoming update of the City’s Housing Element, and findings from the Study
will be published as an attachment in the document.
The City has made significant progress towards meeting its’ 5th Cycle Regional Housing
Needs Allocation (RHNA) targets. As of December 31, 2018, 58% of the target had been
achieved in the Extremely Low & Very Low category, 17% complete in the Low category,
and 6% complete in the Moderate category.
Recommendation 5. Increase the opportunities through re-zoning for non-traditional housing
options, such as modular homes, pre-fabricated homes, and mobile home parks. This should
be accomplished within FY 2020-2021.
Response: The recommendation will be considered once we receive the results of our
Affordable Housing Nexus Study and also considered during the development of the 2020-
2028 Housing Element.
The recent update of the City’s Zoning Regulations includes new provisions for tiny homes
on wheels in the backyard of a site with an owner-occupied single-family residence. The City
expects that the results of the Affordable Housing Nexus Study will inform any need for the
addition of non-traditional housing options.
Recommendation 6. The cities and County should detail their specific plans to engage the
public in the formulation of the 2020-2028 Housing Plan Update.
Response: The recommendation will be adopted.
The City has included several opportunities to engage the public during the 2020-2028
Packet Pg. 241
Item 14
Housing Element Update effort. In April 2019, staff conducted a Housing Forum that provided
the public with information about 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.
Staff also made presentations to the City Council and the Planning Commission on these
topics. In July, staff met with one stakeholder group to discuss the Housing Element Update.
Staff will continue to reach out to other key stakeholders and the public through public
workshops, interviews and surveys during the Fall of 2019. Additionally, staff will be sharing
the findings of the Nexus Study with the Planning Commission and Council in Spring 2020.
Draft Housing Element policies and programs will be presented to the Planning Commission
in early Spring 2020 in order for staff to receive feedback from the public and the Planning
Commission.
The City has also been working with the County and other jurisdictions throughout the region
on coordinating key milestones and engagement efforts. At this time, it has been discussed
that a website will be created to display all relevant information regarding each jurisdictions’
Housing Element Update, thus allowing for one central place for members of the public to
access information during this individual, but regional effort.
Respectfully submitted,
Derek Johnson, City Manager
City of San Luis Obispo
Cc: San Luis Obispo County Grand Jury
P.O. Box 4910
San Luis Obispo, CA 93403
Packet Pg. 242
Item 14
Submitted June 20, 2019 1
“AFFORDABLE HOUSING”
AN URGENT PROBLEM FOR OUR COMMUNITY
The lack of housing and the inability to afford housing has become a national crisis. The
crisis is being discussed by all levels of government, the non-profit community, and in the
media throughout the country. Every month families struggle to pay the rent, buy groceries,
or pay medical bills. This crisis is normally discussed using just one term: affordable
housing. However, “affordable” is a relative term and often misused. The majority of
homes in San Luis Obispo County are affordable to someone, but certainly not by those
supporting our service economy, driving a bus, or teaching in a public school.
There are official terms defining the various levels of “affordable,” but we seldom see them
used, making them unfamiliar, confusing, and even misleading. For example, “workforce
housing” does not refer to housing for most workers who are the backbone of our economy.
Instead, as defined by the government, “workforce” refers to much higher income-earners,
those making above the moderate-income level. Affordable housing according to
government standards, is housing that costs the occupant no more than 30% of their
income, including utilities. But affordable housing in today’s market is often applied
to housing that is affordable to the workforce, as defined above. In order to adequately
address the housing crisis, these official terms all need to be clarified and consistently used
so that everyone is speaking the same language.
SUMMARY
We are very fortunate to be able to live in San Luis Obispo County, one of the most
beautiful areas in California. Our economy is driven by agriculture and tourism, and our
natural beauty draws hundreds of thousands each year to visit and enjoy all that our
communities have to offer. However, the very people who support this economy are
struggling to survive. The cost of housing has made San Luis Obispo County one of the
least affordable places to live in California. Wages paid to workers in our county have not
kept pace with the cost of living, much less the cost of housing. Many minimum wage and
Packet Pg. 243
Item 14
Submitted June 20, 2019 2
lower wage employees are living paycheck to paych eck, often just one paycheck away
from homelessness.
There is an emphasis on housing to meet the needs of those making above the median
income in our county and an embarrassing shortage of housing to meet the needs of those
making extremely low and low-income wages, the very people we depend on to keep our
economy thriving and growing. Developers cite the cost of land, the extreme length of time
needed for the permit process, and profitability as reasons for this discrepancy. Local
governments most often cite that they cannot force building to happen and can only provide
capacity to build. Local developers are allowed to pay nominal fees to avoid building
affordable units that are not as profitable.
In this report the 2018-2019 Grand Jury highlights who is in the most need of affordable
housing and review what the county and cities are doing about it. We define affordable
housing terms as we use them and provide a glossary of the important terms that are used
in conjunction with the discussion of this topic (see the Glossary in Attachments). We
discuss the disproportionate construction of market-rate housing and recommend
alternatives to be considered.
PURPOSE
In exploring the problem of inadequate housing, the 2018-2019 Grand Jury believes it is
critical to share a common understanding of the subject, including the vocabulary and data.
It is too easy for governments to claim action on “affordable” housing when little is being
done to provide lower income housing.
ORIGIN
This investigation/review was self-generated in accordance with government guidelines
for the Grand Jury. Early in the term of the 2018-2019 Grand Jury, many officials were
invited to discuss their various roles, successes, and challenges. The subject of affordable
housing often came up in these briefings. Perhaps not surprisingly, we were presented with
an abundance of new and confusing terms. These terms do not help explain the housing
Packet Pg. 244
Item 14
Submitted June 20, 2019 3
crisis, how we got into it, or what officials are doing to attempt solutions. We therefore
decided to shine a light on the crisis and to provide some clarity to the conversation.
PROCEDURE
We chose to focus our investigation on the three lower levels of income-earners where
there is the most need. These groups are defined later. We researched a number of aspects
of the problem by looking at:
• how the various arms of government create housing projections and report them,
• how these entities actually perform against their projections, and
• how the local and county governments deliver this information to the public.
We interviewed officials from the county and city governments as well as private entities.
Additional research was undertaken through Internet resources.
BACKGROUND
Since 1969, California’s Housing Element Act has required that the General Plan of all
local governments must include a component to meet the housing needs of everyone in
their community, at all income levels. This is also known as the Housing Element Law.
Housing policy in California rests largely on the effective implementation of local housing
elements, which are intended to adequately address the housing needs of each local
community. Local governments are required to report to the state on an annual basis how
they are providing opportunities for housing development by removing barriers and
increasing building capacity.
California law requires the Department of Housing and Community Development (HCD)
to project statewide housing needs and allocate these needs to each region. In consultation
with the San Luis Obispo Council of Governments (SLOCOG), HCD develops the
Regional Housing Needs Allocation (RHNA). SLOCOG then distributes the RHNA to the
County and incorporated cities. This process allocates the number of units needed to be
built for each income level in each jurisdiction and requires a report on their progress each
year. What this means in common language is that the members of SLOCOG work together
Packet Pg. 245
Item 14
Submitted June 20, 2019 4
to determine how the regional housing needs will be distributed among our communities,
allocating the number of housing units needed at each income level for each community.
The median income for a family of three in SLO County is $74,900. The California Health
and Safety Code defines these income levels as follows:
• Extremely Low – up to 30% of the county’s median income, or up to $22,500 for a
household of three
• Very Low – up to 50% of the county’s median income, or up to $37,450 for a
household of three
• Low – up to 80% of the county’s median income, or up to $59,900 for a household
of three
• Moderate – up to 120% of the county’s median income, or up to $89,850 for a
household of three
• Workforce – up to 160% of the county’s median income, or up to $119,840 for a
household of three1
NARRATIVE
When we think of people who can’t afford housing, we often think of people receiving
public assistance and those working at minimum wage or entry level jobs. Yet, in this
county, some of the people who cannot afford housing includes elementary school teachers,
bank tellers, and many government workers. It includes most of the people working in our
largely agriculture and tourist-driven economy. Failure to ensure adequate housing for
these groups of people greatly impacts the quality of life and economic future of the county.
Yet, there continues to be inaction and resistance to efforts to provide housing for the very
workers who enable communities to thrive.
1 Workforce is not defined by the Health and Safety Code. Title 22 of the County Code defines
“Workforce” as up to160% of the county’s median income. Our research shows that most cities default to
the Title 22 definition when planning for workforce housing.
Packet Pg. 246
Item 14
Submitted June 20, 2019 5
What does “affordable housing” actually mean? Generally speaking, housing is considered
“affordable” when the cost (including utilities) of either the mortgage or rent payment is
30% or less of the total household income. For specifics on affordability based on income
and numbers of people in the household, see Attachment Affordable Housing Standards.
Any meaningful discussion on affordability of housing must recognize the basic fact that
affordability depends on the amount of income. The 2018 report from the National Low
Income Housing Coalition shows that housing is out of reach for many in California. A
worker making minimum wage in San Luis Obispo County, earning $11 an hour, must
work 100 hours each week to be able to afford a modest one-bedroom rental at the current
fair market rental rate. A very low income wage earner in San Luis Obispo County, one
who makes 30% of the area median income, can only afford a rent of $605 per month,
which is way below the current $1100 fair market rental rate. The report also shows that in
order to afford a two-bedroom apartment at market rate, a worker must earn $27.44 an
hour.2 A complete picture of the housing and wage discrepancy in San Luis Obispo County
can be seen in the 2018 report linked here: https://reports.nlihc.org/oor/california
Buyers and Renters
San Luis Obispo County is one of the most attractive regions in the entire United States.
Yet, as we have established above, renting, much less owning, a home is out of reach for
most. In June 2018, according to the California Association of Realtors, the median cost
of a home in the County was $638,660. According to Zillow, the median rental price in
2019 is $2,580 per month. Yet, the median income for a family of three is $ 74,900, which
means they may be able to afford a home around $300,000 or pay rent under $2000 a month.
According to these numbers, less than ¼ of the county’s residents can afford to purchase a
median-priced home. The current emphasis is on building homes that are unaffordable to
¾ of the county’s residents, and which only addresses the needs of those with an annual
income of $120,000 and above.
2 National Low Income Housing Coalition Report, 2018
Packet Pg. 247
Item 14
Submitted June 20, 2019 6
According to the July, 2018 edition of the county’s Community Health Assessment, 59%
of the county’s residents reported spending 1/3 or more of their income on housing costs
in 2016. Seventy-six percent of Spanish-speaking renters reported spending over 1/3 of
their household income on rent. The October 9, 2018 edition of the San Luis Obispo
Tribune reported that 52% of renters were cost-burdened, i.e. paid over 30% of their
income on rent in 2017.
The high cost of housing in the City of San Luis Obispo, where a significant number of the
County’s jobs are located, results in a work/housing imbalance. Many of the employees
commute to the city from North or South County (or Santa Maria in Santa Barbara County),
where housing is less expensive. The result is an overloaded Highway 101 during peak
hours.
To put this in perspective, we created this likely scenario that illustrates the difficulties
hard working people face. “Evelyn” is a young single mom with two small children. She
works full-time at a local grocery store where she earns $16/hr. ($33,280 gross), which
puts her in the middle of the Very Low Income category for a household of three.
Affordable rent for her at 30% of her income is under $900 for a two-bedroom apartment.
At the 40% level she would have to pay over $1100 per month. She contacts the Housing
Authority of San Luis Obispo (HASLO) to apply for subsidized housing. She is told that
the waiting list for the voucher program is currently closed. She is advised that the waiting
list for this program can be from one to two years long. She is provided with a list of
affordable rental properties and is told she will need to call the manager of each property
to see if there is a vacancy or to put her name on the waiting list. She does this, but finds
nothing is available.
Because this is the reality for many, families who can’t find housing often double up, living
with more than one family in a single-family unit.
Packet Pg. 248
Item 14
Submitted June 20, 2019 7
Providing Housing and the Role of Government
Developers are not motivated to build low income housing. The challenge for all builders
is the cost and availability of land and the length of the permitting process, which can be
anywhere from three to five years. Labor and materials continually increase in cost.
There are several variables that affect the “affordability” of housing whether it is directed
at the rental or home-buying market:
• Availability and cost of land
• Holding costs while development is approved and construction completed
• Cost of construction, and
• Profit margin.
The reality is that building for the lower income groups is less profitable. Government
entities recognize the need for low income housing, but in our discussions we were often
reminded that they are not in the business of construction. The local government role is to
provide the capacity and the incentives to encourage development for all levels of housing.
However, the capacity is very limited and the current incentives do not appear to work to
accommodate the need of housing for all levels.
Non-profit builders have the ability to tap into affordable housing trust funds held by the
County and in each of our seven cities in order to develop low income housing. The money
from these funds can then be used as seed money by non-profits, such as Peoples Self Help
Housing (PSHH) and Habitat for Humanity, to obtain additional funding through grants.
In the past, PSHH and Habitat for Humanity have specialized in “sweat-equity” homes, i.e.
homes where the potential owners work a required number of hours helping to build the
home in exchange for the down payment. While PSHH still builds a small number of these
homes, their emphasis in today’s market is on rentals. This includes provision of a wide
array of ongoing family services. To supplement their income, PSHH partners with other
developers to manage rental units. In addition, they provide consulting services and
business services to groups and organizations around the country. Organizations such as
Packet Pg. 249
Item 14
Submitted June 20, 2019 8
Habitat for Humanity and San Luis Obispo County Housing Trust Fund 3 contribute to
efforts to provide low-income housing through financing and rehabilitation of existing
homes.
As part of their General Plan, the cities and County must file an annual report on their
progress in building housing across the five income levels. In this report on their five-year
Housing Element they outline their goals and describe the policies and specific programs
utilized to accomplish them. It is very difficult to find all of these annual reports on the city
and county websites. This difficulty identified a problem with both availability and
transparency of policy and reporting.
In reviewing these reports, we found that local governments have a number of incentives
in common to encourage the development of low income units. These incentives increase
significantly depending on the percentage of lower income housing in the project,
including:
• Reducing and deferring permitting fees
• Providing density bonuses, relaxed parking restrictions, setback reductions, and
waivers for required off-site improvements
• Providing direct financial assistance for housing from their affordable housing trust
funds
• Promoting the construction of second residential units on single-family zoned
parcels (referred to as Accessory Dwelling Units or ADU’s), which is a more recent
incentive
A common method used by jurisdictions to encourage affordable housing is to institute an
inclusionary housing ordinance. An inclusionary housing ordinance requires developers to
build a set number of affordable units within a market rate project. Developers are often
allowed to pay a fee instead of building the required affordable units. These fees are called
“in-lieu fees,” and payment of these fees allows the developer to build all units at the
3 All jurisdictions are members of the San Luis Obispo County Housing Trust Fund (HTF), which
operates as a revolving loan fund to finance affordable housing projects.
Packet Pg. 250
Item 14
Submitted June 20, 2019 9
market rate. In-lieu fees are deposited into a local housing trust fund to help finance low
income housing.
In-lieu fees are controversial and can be seen as a loophole for developers. By paying the
fee, which is often well below the cost to build the unit, developers are able to avoid
building any required inclusionary units and maximize their profit by building at market
rate.
Any discussion about encouraging the development or rehabilitation of existing property
for low income housing should include the need to revisit the payment of in-lieu fees. If
utilized as an incentive, in-lieu fees should be set at a level that is realistic to the production
of housing. San Luis Obispo County has instituted a new housing policy which will adjust
in-lieu fees and is described in more detail later in the report.
Unfortunately, the figures reported on the yearly Housing Element reports for 2014 - 2018
indicate that these incentives are not successful in meeting the housing targets for the three
lowest income groups. New construction for these groups for this five-year period is:
• 0% of their targets in Morro Bay,
• 13.4% in Grover Beach,
• 19.4% in Pismo Beach,
• 25.8% in the County’s unincorporated area,
• 31.6% in Arroyo Grande,
• 42.5% in San Luis Obispo,
• 46.25% in Atascadero, and
• 75.0% in Paso Robles.
In contrast, the new housing numbers for the highest income group are:
• 379.9% for Pismo Beach,
• 278.3% of the county’s unincorporated area target,
• 167.6% for San Luis Obispo,
• 166.2% for Morro Bay,
• 152.2% for Grover Beach,
• 150.5% for Arroyo Grande,
Packet Pg. 251
Item 14
Submitted June 20, 2019 10
• 149.8% for Atascadero, and
• 75.1% for Paso Robles.
Five times more housing was produced for the highest income group than for lower income
groups.
There are some positive signs…it’s not all negative
Working with a broad-based coalition, including contractors, non-profit builders, the
Housing Authority of San Luis Obispo (HASLO), the Chamber of Commerce, and others,
the County has revamped its long-established “Title 29 Affordable Housing Fund.”
Beginning in 2019, new single-family construction in excess of 2200 square feet will be
assessed a surcharge. The intent is to grow the Fund from .4 million to 4 million dollars
within three years. These funds will then be awarded to qualified housing projects. The
County is also reviewing a number of options for additional funding revenue, including a
Vacation Rental Impact Fee and increases in sales tax and the Transient Occupancy Tax.
The City of San Luis Obispo (SLO City) has indicated that it is exploring the possibility of
partnering with San Luis Coastal Unified School District to build housing projects on an
unused school site. It has also re-zoned some of its major commercial streets to allow for
increased density and mixed-use structures. These are typically ground floor commercial
and second/third floors residential buildings. This includes the waiving of parking
requirements.
Other programs from SLO City include encouraging the building of smaller residential
units (200-250sq. ft.) as well as the use of tiny homes. SLO City has reported that it is also
working with Cal-Poly to support the university’s completion of its Master Plan for
student/faculty housing by 2035. This could result in moving a large number of students
and faculty from city housing to campus housing.
Grover Beach and Paso Robles have waived ADU Development Impact Fees for FY 2018-
2019. According to the City’s sample fee schedule this means more than a two-thirds
Packet Pg. 252
Item 14
Submitted June 20, 2019 11
reduction in fees paid for securing a building permit for the construction of a second
residential unit on a single-family zoned parcel.
Two major long-term planning efforts are in the works: the next HEU for 2020-2028, as
well as the County initiative to create a Regional Infrastructure and Housing Plan. In terms
of planning for, and actually building housing for lower income residents, this is an
opportunity for the public to become involved in the development of these plans. In
addition to local efforts, the State is increasing pressure on cities and counties to facilitate
the building of more housing by passing legislation with consequences for non-compliance.
Alternatives to consider:
Other options that could bring down the cost of housing are tiny homes, manufactured
homes (mobile homes or trailers), modular homes and pre-fabricated homes. These types
of homes cost less to build than their site-built counterparts and can be built faster, making
them a viable option for low-income families. However, the purchase and costs associated
with holding land during permitting processes remains an impediment to the development
of low income housing.
Across the United States, various companies are taking the lead in building housing
projects as a means of supporting employee retention. We feel that employers in the County
can learn from this example. We recognize that this does not address the issue of low-
income rentals.
CONCLUSIONS
Providing affordable housing has been identified as a very complex problem. California
and local governments have been trying to address the state’s housing crisis since 1969.
The crisis worsens each year, making home ownership unrealistic for the majority of our
residents and rental units unaffordable. With the exception of Paso Robles, all cities and
the County underperformed in the production of low-income housing. In addition, they
significantly overproduced market-rate housing.
Packet Pg. 253
Item 14
Submitted June 20, 2019 12
A May 9, 2019 article in the Tribune, authored by its editorial board, outlined the most
recent calculations from the State for San Luis Obispo County’s housing goals, assigning
a new goal of 10,810 houses for our county.4 The State also provided a breakdown of the
percentage of housing units that should be added, by category:
• Very Low Income: 24.6% (for households of 3, maximum income $37,450/year)
• Low Income: 15.5% (for households of 3, maximum income $59,900/year)
• Moderate Income: 18% (for households of 3, maximum income $89,850/year)
• Above Moderate: 41.9% (no restrictions on income above moderate)
SLOCOG has the responsibility to distribute the number allotted by the State to our County.
The largest allocation is to San Luis Obispo City because it has the largest number of jobs.
It would appear, however, that these new goals continue to reflect the type of building that
occurs in our county, that of overbuilding for those making a great deal of money.
The State’s assignment of the housing goals for our county only requires that counties plan
for this growth, not that they actually build the numbers cited. We question how the State
arrives at these numbers, given that California, and specifically our county, continues to be
the least affordable area in which to live. We encourage the county to examine what our
real needs are: housing for the low and very-low income families that we rely on to support
our economy.
The incentives used by the government have proven to be largely unsuccessful in providing
housing for those most in need. Our tourist, service, and agricultural economies depend on
these workers and support our way of life. It is time to invest in new and innovative
solutions to this crisis. No community can thrive if its workers can’t afford to live there.
4 “SLO County must plan for 10,810 more homes in 8 years. And they can’t all be mansions .”, Tribune
Editorial Board, May 9, 2019
Packet Pg. 254
Item 14
Submitted June 20, 2019 13
FINDINGS
F1. The unaffordable costs of renting and buying homes on the Central Coast is of
crisis proportions for those defined in the extremely low, very low, and low-
income categories.
F2. The lack of “affordable housing” for the three lower categories presents a long-
term threat to the economic vitality and social fabric of the county.
F3. The range of terms being used in the “affordable housing” debate creates confusion
and perhaps misdirection for renters, home buyers and builders.
F4. The supply of rental units available to lower income families is insufficient.
F5. The jobs/housing imbalance places a burden on the transportation infrastructure
and is costly for those who can least afford it.
F6. Most of the required annual housing element updates are difficult to access by the
public.
F7. The length and cost of the building permitting process is a major barrier to the
construction of all housing, especially low income housing.
F8. The overwhelming majority of new housing units in the Housing Element cycle
(2014-2019) have been built for families earning in excess of $89,850 per year
for a family of three.
F9. All cities and the County have “affordable housing” funds which collect and hold
the in-lieu fees, but the fees are not achieving the desired outcome.
F10. All cities and the County have the ability to maximize their “affordable housing”
funds by partnering with non-profit builders.
F11. Housing that costs less, such as tiny homes, pre-fabricated, modular, and
manufactured homes, are underutilized in this county.
RECOMMENDATIONS
R1. Reassess and improve processes to fast-track building and planning permit
approvals within 12 months from date of application. This should be implemented
within FY 2019-2020.
Packet Pg. 255
Item 14
Submitted June 20, 2019 14
R2. Create, file, and publish the required housing element documents and reports on
time and in a form easily accessible to the public. This should be done by the next
report cycle.
R3. Either increase in-lieu fees to realistically support the construction cost of
inclusionary housing units or eliminate the fees altogether and require low-income
housing construction. This should be accomplished within FY 2019-2020.
R4. The cities and County should concentrate on promoting rentals for families earning
below moderate incomes by increasing the percentage of required inclusionary
housing units.
R5. Increase the opportunities through re-zoning for non-traditional housing options,
such as modular homes, pre-fabricated homes, and mobile home parks. This should
be accomplished within FY 2020-2021.
R6. The cities and County should detail their specific plans to engage the public in the
formulation of the 2020-2028 Housing Plan Update.
REQUIRED RESPONSES
The following people are required to respond to the findings and recommendations
within the timeframe shown and in accordance with the California Penal Code Section
933.05:
All San Luis Obispo County City Managers are required to respond to F6, F7, R1, R2,
R4, R5, R6
The County Administrative Officer is required to respond to F6, F7, R2, R4, R5, R6
San Luis Obispo County Director of Planning and Building is required to respond to
F6, F7, R1, R2, R3, R5, R6
San Luis Obispo County Board of Supervisors are required to respond to
F6, F7, R1, R2, R5, R6
Packet Pg. 256
Item 14
Submitted June 20, 2019 15
The responses shall be submitted to the Presiding Judge of the San Luis Obispo County
Superior Court by August 20, 2019. Please provide a paper copy and electronic
version of all responses to the Grand Jury.
AGENCY RESPONSE REQUIREMENTS
The Penal Code Section 933.05 that specifies the format and methodology for agency
responses is listed below. All agency respondents are required to respond to all
findings and recommendations in the following manner:
• If the respondent disagrees wholly or partially with an item, the respondent
must elaborate on the portion of the item that they disagree with, and provide
an explanation.
• If a respondent notes that an item will be implemented in the future, the
response must include a timeframe for implementation.
• If a respondent notes that an item requires further analysis, the agency must
include in the response an explanation of and the scope of what will be studied
and the timeframe needed for the study. The timeframe for follow-up from the
agency cannot exceed six months.
• If the item will not be implemented or is not reasonable, the respondent is
required to provide a detailed explanation.
933.05. Findings and Recommendations
(a) For purposes of subdivision (b) of Section 933, as to each grand jury finding, the
responding person or entity shall indicate one of the following:
(1) The respondent agrees with the finding.
(2) The respondent disagrees wholly or partially with the finding, in which case the
response shall specify the portion of the finding that is disputed and shall include
an explanation of the reasons therefore.
(b) For purposes of subdivision (b) of Section 933, as to each grand jury recommendation,
the responding person or entity shall report one of the following actions:
(1) The recommendation has been implemented, with a summary regarding the
implemented action.
Packet Pg. 257
Item 14
Submitted June 20, 2019 16
(2) The recommendation has not yet been implemented, but will be implemented in the
future, with a timeframe for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope
and parameters of an analysis or study, and a timeframe for the matter to be prepared
for discussion by the officer or head of the agency or department being investigated
or reviewed, including the governing body of the public agency when applicable.
This timeframe shall not exceed six months from the date of publication of the
grand jury report.
(4) The recommendation will not be implemented because it is not warranted or is not
reasonable, with an explanation therefore.
Presiding Judge Grand Jury
Presiding Judge Ginger Garrett
Superior Court of California
1035 Palm Street Room 355
San Luis Obispo, CA 93408
San Luis Obispo County Grand Jury
P.O. Box 4910
San Luis Obispo, CA 93403
Packet Pg. 258
Item 14
Submitted June 20, 2019 17
ATTACHMENTS
GLOSSARY
Accessory Dwelling Unit (ADU): A secondary house or apartment that shares the building
lot of a larger, primary house.
Affordable Housing: Housing which is deemed affordable to those whose income is below
the median household income. Generally understood as housing in which the rent or
mortgage payment is no more than 30% of their income, including utilities.
Affordable Housing Standards: Housing standards set by cities or counties to summarize
the income levels and housing affordability levels. These standards are used to define the
extremely low, very low, low, median, moderate, and workforce levels of income in the
area.
Affordable Housing Trust Funds (AHTF): An affordable housing production program that
complements existing Federal, state and local efforts to increase and preserve the supply
of decent, safe, and sanitary affordable housing for extremely low- and very low-income
households, including the homeless. The funds are distributed by HUD annually according
to a formula.
California Department of Housing and Community Development (HCD): By
administering programs that provide grants and loans from both state and federal housing
programs, HCD creates rental and home ownership opportunities for Californians,
including veterans, seniors, young families, the disabled, farmworkers, and the homeless.
Through long-term monitoring, HCD ensures the developments continue to be safe, w ell
maintained and financially sound.
Community Reinvestment Act (CRA): A federal law designed to encourage commercial
banks and savings associations to help meet the needs of borrowers in all segments of the
communities, including low- and moderate-income neighborhoods.
Commercial Development: Any development or property used solely for business
purposes.
Community Development Block Grant Program (CDBG): An entitlement programs that
provides annual grants on a formula basis to entitled cities and counties to develop viable
urban communities, by providing decent housing and a suitable living environment, and by
expanding economic opportunities, principally for low- and moderate-income persons.
Deed restricted affordable housing: A long-term restriction placed on the deed to a
property, to preserve it as a low- and moderate-income housing unit. The property can only
be sold to a buyer whose household meets certain income requirements and at a price that
is affordable to that household.
Packet Pg. 259
Item 14
Submitted June 20, 2019 18
Density bonus: An incentive-based tool that permits a developer to increase the maximum
allowable development on a site in exchange for setting aside a percentage of units as
affordable housing.
Habitat for Humanity: A global non-profit housing organization that partners with
families and communities to build or improve affordable housing, often through
owner-builds that allow a family to assist with construction in exchange for an
affordable home.
Housing Authority of San Luis Obispo (HASLO): A public housing agency in San Luis
Obispo which provides assistance to the county’s lower income citizens to secure and
maintain long-term housing. Housing Authorities are funded primarily by the U.S.
Department of Housing and Urban Development (HUD), along with rents from
housing, county development block grants, and other grants, tax-credit loans, and
local funding.
Housing Cost Burdened: A situation caused when over 30% of a household’s income is
spent on housing costs. Severe housing cost over-burdened occurs when a household pays
over 50% of their income to housing costs.
Housing Allocation: The total number of housing units (by affordability level) that each
jurisdiction must accommodate in their Housing Element, generally referred to as Regional
Housing Need Allocation.
Housing Element Report: An annual report required by each jurisdiction to report on the
status and progress of its general plan using forms and definitions adopted by HUD.
Impact fees: A fee that is imposed by a local government on a new or proposed
development project to pay for all or a portion of the costs of providing public services to
the new development.
Inclusionary Housing: Municipal and county planning ordinances that require a given
share of new construction to be affordable by people with low and moderate incomes.
Infill Housing: The insertion of additional housing units into an already approved
subdivision or neighborhood as a strategy to accommodate growth.
In-Lieu Fees: Optional fees paid by developers into a housing trust fund, to be used along
with other local funding, to finance low income housing. This is paid as an
fundamental facilities and systems needed to serve a city or alternative to building
inclusionary housing units.
Infrastructure: The government, such as roads, buildings, sewer systems and power
supplies.
Packet Pg. 260
Item 14
Submitted June 20, 2019 19
Low-Income Housing Tax Credit (LIHTC): A tax credit created under the Tax Reform Act
of 1986 to encourage housing investment in affordable housing for low income households.
Commonly called Section 42 credits, which references the IRS tax code, the tax credit
allows for a dollar for dollar reduction in a taxpayer’s income tax based on the investment.
Manufactured home: Manufactured housing is a type of prefabricated housing that is
built under HUD Title 6 construction standards, assembled in a factory and then transported
to the site of use.
Market Rate Housing: Housing built by for-profit developers for households generally
above 120% area median income. The rate charged for the housing is generally the same
rate as that charged for surrounding properties.
Median Income: An income level in a given area, where half of the households earn
income above that level and half earn income below; the middle-income level in an area.
Mixed-use development: A pedestrian friendly development strategy that blends
residential use with commercial, cultural, and or industrial uses to assist with community
design and development, to encourage a live-work relationship, and to strengthen
community relationships.
Mobile home: A large trailer or prefabricated structure that is situated in one particular
place and used as a permanent living accommodation; not built to uniform construction
standards.
Modular home: Prefabricated buildings or houses built to the local state code standards,
constructed in sections or modules in a factory, and then transported to the intended site
and attached permanently to the land.
Off-site improvements: Access roads, sidewalks, curbs, sewers, and utility lines that are
off the land being developed, that add value to the entire development.
National Housing Trust Fund: An affordable housing production program that
complements existing Federal, state and local efforts to increase and preserve the supply
of decent, safe, and sanitary affordable housing for extremely low- and very low-income
households, including homeless.
People’s Self-Help Housing (PSHH): This is a private, non-profit agency that builds
supportive housing for lower income people, which includes site-based services that offer
the opportunity to change lives and strengthen communities.
Pre-fab home: A prefabricated home, built offsite in a factory and then shipped to a
building site in pieces to be assembled on the home lot.
Packet Pg. 261
Item 14
Submitted June 20, 2019 20
Regional Housing Needs Allocation (RHNA): The state-mandated process to identify the
total number of housing units (by affordability level) that each jurisdiction must
accommodate in its Housing Element.
San Luis Obispo Council of Governments (SLOCOG): An association of local
governments made up of the seven cities and the County of San Luis Obispo. Its prime
responsibilities include transportation planning and funding for the region. It prepares the
Regional Housing Needs Allocation (RHNA) and the Sustainable Communities Strategy
as part of the Regional Transportation Plan
Subsidized Section 8 Housing: The Federal government’s major program for assisting very
low-income families, the elderly, and the disabled to afford decent, safe, and sanitary
housing in the private market. Participants are free to choose any housing that meets the
requirements of the program, through housing vouchers administered by the local public
housing agency.
Tax Credits: See Low-Income Housing Tax Credit (LIHTC)
Tiny home: With no real definition established but based on a social movement that
advocates living simply in smaller homes, a tiny home is a residential structure under 400
square feet.
US Department of Housing and Urban Development (HUD): A federal housing agency
created to help Americans meet their housing needs, by increasing home ownership,
supporting community development, and increasing access to affordable housing free of
discrimination through federal housing laws.
Workforce Housing: Housing that can be afforded by those with an income above 160%
of the median income, and located close to their jobs.
Packet Pg. 262
Item 14
Submitted June 20, 2019 21
TABLE 1
Table 1: How the Cities and the County are Incentivizing the Construction of Lower Income Housing Units1
Arroyo
Grande
Atascadero
Grover
Beach
Morro Bay
Paso
Robles
SLO
City
SLO
County
Pismo
Beach
Inclusionary Housing
Ordinance requiring
Low/ Moderate
Income Construction
Policy Policy Policy Ordinance
No
Ordinance
or Policy
Ordinance Ordinance Policy2
Applies at…. 5 units 5 units 5 units 5 units3 12 units 5 units
Option to pay in lieu
fee (with conditions)
Yes Yes Yes Yes Yes
Yes
(All
individual
units pay over
2200 sf)
Yes
If Policy only, allows
paying in-lieu fee Yes Yes Yes Yes
Project Incentives
(typically 5 units or
more)4
• Density Bonus Yes Yes Yes Yes Yes >35% Yes Yes
• Relaxed parking
requirements Yes Yes Yes Yes Yes Yes Yes Yes
• Setback
reductions Yes Yes Yes Yes Yes Yes Yes Yes
• Impact fee
waivers Yes Yes Yes Yes Yes
• Financial
assistance Yes Yes Yes Yes Yes Yes Yes Yes
Second residential
units (ADU’s)5
26 ADU’s
permitted
in 2018
8 ADU’s
permitted in
2018
See Note 5
9 ADU’s
permitted in
2018
See Note 5
See Note 5
Main
incentive: no
additional on
site parking
required
28 ADU’s
permitted in
2018
2 ADU’s
permitted
in 2018
Observations:
5 PUD’s
permitted in
2018
See Note 5
Two parcels
assembled
for 19 unit
project (3 for
low income)
in 2018
4 PUD’s
permitted in
2018
Has active
“Housing
Constraints &
Opportunities
Committee”
See Notes
6 and 7
Completed
map that
identified five
large areas
suitable for
housing8
Appears
that City
will
participate
in next
2020-2028
HEU
1 Based on a review of websites of each jurisdiction. The information recorded derives from published data.
2 Pismo Beach’s Inclusionary Housing Policy has not been amended since 1998.
3 Program Policy 4.6 states: “Consider amending the City’s Inclusionary Housing Ordinance and Affordable Housing Incentives to require
that affordable units in a development be of similar number of bedrooms, character, and basic quality.” The time frame re corded in the
HEU to complete this review was “July 2016.” The 2018 report on the “Status of Program Implementation” indicated: “Not Comple te.”
4 Similar incentives apply for smaller projects 2-4 units (typically “PUD’s), but on a scaled back formula depending on project size.
5 All jurisdictions allow for ADU’s, attached or detached, typically to maximum 1200 sf. Grover Beach and Paso Robles provide f or a 2/3
reduction in development fees. Morro Bay and Paso Robles waive any additional fees for water/sewer connection.
6 2018 Implementation Status for Program 1.1-9 states: “The City is reviewing the Inclusionary Housing Policy and looking at ways to
encourage the development of residential units that are affordable-by-design, including reducing impact fees for smaller units and capping
unit sizes for high density residential projects.” Also noted re Program 1.1-3 is that “14 modular homes have been installed since 2014.”
7 2018 Implementation Status for Program 6.23 notes that the City has completed a Study that identified vacant/under - utilized City land to
assist in the production of affordable housing
8 Drawn from larger 2018 Study “Constraints and Opportunities Analysis for Residential Development.” The initial study identified eight
large land areas around the County. Additionally, for purposes of increasing “Infill Capacity,” this Study identified 3,032 vacant single-
family parcels and a cumulative 113 acres of vacant multi-family parcels in the unincorporated areas.
Packet Pg. 263
Item 14
Submitted June 20, 2019 22
TABLE 2
Table 2: Performance of Housing Element Updates (HEU) projections against actual builds 1/1/2014 – 12/31/181
Projected number
of starts by
income groups2
Target (T)
Permitted (P)
Arroyo
Grande
T P
Atascadero
T P
Grover
Beach
T P
Morro
Bay
T P
Paso
Robles3
T P
SLO
City
T P
SLO
County
T P
Pismo
Beach4
T P
Combined
Five Year
Totals
T P
Group 1 Low
Income 98 31 160 74 67 9 63 0 200 150 464 197 547 141 62 12 1661 614
Group 2Moderate
Income 43 0 69 171 29 0 27 0 87 114 202 13 237 156 27 3 721 457
Group 3 Above
Moderate Income 101 152 164 244 69 108 65 108 205 154 478 801 563 1567 64 243 1709 3377
Grand Total 242 183 393 489 165 117 155 108 492 418 1144 1011 1347 1864 153 258 4091 4448
Percentage of total
built 75.6% 124.4% 70.9% 69.6% 85.0% 88.4% 138.4% 168.6% 108.7%
Percentage of
actual builds
against projected
builds Group 1
31.6% 46.25% 13.4% 0% 75.0% 42.5% 25.8% 19.4% 36.9%
Percentage of
actual builds
against projected
builds Group 2
0% 247.8% 0% 0% 131.0% 6.4% 65.8% 11.1% 63.3%
Percentage of
actual builds
against projected
builds Group 3
150.5% 149.8% 152.2% 166.2% 75.1% 167.6% 278.3% 379.9% 197.6%
1 Source: Extracted from HEU Annual Report(s) or General Plan Annual Report(s) published by each jurisdiction on its website. For
Morro Bay: supplemented with material published in the SLO “Tribune” of 3/31/19.
2 “Extremely Low,” “Very Low” and “Low Income” categories as Group 1. Group’s 2 and 3 record “Moderate Income” and “Above
Moderate” (or “Workforce”) Income categor ies, respectively. Per “Affordable Housing Standards” established by the County of San
Luis Obispo (updated May 1, 2019) annual household income for a family of three for these categories are: up to $59,900 for Group 1,
up to $89,850 for Group 2, and above $89,850 for Group 3.
3 Paso Robles percentages reflect final RHNA allocation.
4 Pismo Beach is not in compliance with State mandated filing of Housing Element Update (2014-2019). Nevertheless, Pismo Beach has
filed annual reports with the State for each of the five years per its RHNA allocation.
Packet Pg. 264
Item 14
Submitted June 20, 2019 23
TABLE 3
Table 3: Review of Monies Held by Local Jurisdictions for Funding Lower Income Housing Projects; includes
“Special” Funds and from Federal Sources, also Other Local Funds for Affordable Housing1
Arroyo
Grande
Atascadero Grover
Beach2
Morro
Bay
Paso
Robles
SLO
City
SLO
County
Pismo
Beach
Title of Special
Fund Account In-Lieu
Affordable
Housing
In-Lieu
Low/
Moderate
Housing
Fund
Unable to
obtain
information
on City’s
Website
Affordable
In-Housing
In-Lieu
Fund
Unable to
obtain
information
on City’s
Website
Affordable
Housing
Fund
Title 29
(Inclusionary
Housing)
Fund
Unable to
obtain
information
on City’s
Website
Fund
Designation 232 232 941 Title 29
Funds Available $625,684
(projected
6/30/19)
$4,610
(projected as
of 6/30/19)
$216,701
(projected
6/30/19)
$1.75
million (as
of 1/2018)
$302,154
(as of
9/4/18)
$3.5
million3
SLO CO Title 29
Funded Projects
(typically in
partnership with
Federal grants)
$48,000
(2018)
$165,286
(2019)
$100,000
(2019) $30,198
(2018)
$56,319
(2018)
$35,012
(2019)
Federal Grants: • CDBG
(Housing
projects)4
$465,116 $294,899 $82,000 $23,112
• HOME $165,286 $100,000 $250,000 $340,000
1 Based on a review of websites of all eight jurisdictions. The information recorded derives from published data.
2 Grover Beach is a “non-entitlement” jurisdiction. It is not a participant in the SLO CO managed Consolidated Plan , but is eligible to
complete for other Federal housing funds on it own through the State directly. In July 2018, $2.5 million in CDBG grants was
awarded to Grover Beach, $465,116 of which is for low income housing programs. The $100,000 HOME grant is admin istered
directly by SLO CO.
3 SLO “Tribune” of February 1, 2019: “City Manager Jim Lewis….Every time I meet with developers, I let them know I’m sitting
on $3.5 million in affordable housing funding….And nobody is taking me up on it.”
4 “Draft numbers as of 1/8/2019” as prepared by SLO CO and included in their “2019 Action Plan ‘Draft.’” On behalf of the County
and six participating jurisdictions, SLO CO prepares a five -year Consolidated Plan as the basis and justification of follow on CDBG
and HOME grants. As indicated, Grover Beach does not participate.
Packet Pg. 265
Item 14
Submitted June 20, 2019 24
AFFORDABLE HOUSING STANDARDS
Packet Pg. 266
Item 14
Submitted June 20, 2019 25
Packet Pg. 267
Item 14
1
California Penal Code Sections 933 through 933.05
Section 933 – Final Reports
(a) Each grand jury shall submit to the presiding judge of the superior court a final report of its
findings and recommendations that pertain to county government matters during the fiscal or
calendar year. Final reports on any appropriate subject may be submitted to the presiding
judge of the superior court at any time during the term of service of a grand jury. A final
report may be submitted for comment to responsible officers, agencies, or departments,
including the county board of supervisors, when applicable, upon finding of the presiding
judge that the report is incompliance with this title. For 45 days after the end of the term, the
foreperson and his or her designees shall, upon reasonable notice, be available to clarify the
recommendations of the report.
(b) One copy of each final report, together with the responses thereto, found to be in compliance
with this title shall be placed on file with the clerk of the court and remain on file in the
office of the clerk. The clerk shall immediately forward a true copy of the report and the
responses to the State Archivist who shall retain that report and all responses in perpetuity.
(c) No later than 90 days after the grand jury submits a final report on the operations of any
public agency subject to its reviewing authority, the governing body of the public agency
shall comment to the presiding judge of the superior court on the findings and
recommendations pertaining to matters under the control of the governing body, and every
elected county officer or agency head for which the grand jury has responsibility pursuant to
Section 914.1 shall comment within 60 days to the presiding judge of the superior court, with
an information copy sent to the board of supervisors, on the findings and recommendations
pertaining to matters under the control of that county officer or agency head and any agency
or agencies which that officer or agency head supervises or controls. In any city and county,
the mayor shall also comment on the findings and recommendations. All of these comments
and reports shall forthwith be submitted to the presiding judge of the superior court who
impaneled the grand jury. A copy of all responses to grand jury reports shall be placed on file
with the clerk of the public agency and the office of the county clerk, or the mayor when
applicable, and shall remain on file in those offices. One copy shall be placed on file with
the applicable grand jury final report by, and in the control of the currently impaneled grand
jury, where it shall be maintained for a minimum of five years.
(d) As used in this section "agency" includes a department.
933.05. Findings and Recommendations
(a) For purposes of subdivision (b) of Section 933, as to each grand jury finding, the responding
person or entity shall indicate one of the following:
(1) The respondent agrees with the finding.
(2) The respondent disagrees wholly or partially with the finding, in which case the response
shall specify the portion of the finding that is disputed and shall include an explanation of
the reasons therefore.
(b) For purposes of subdivision (b) of Section 933, as to each grand jury recommendation, the
responding person or entity shall report one of the following actions:
(1) The recommendation has been implemented, with a summary regarding the implemented
action.
Packet Pg. 268
Item 14
2
(2) The recommendation has not yet been implemented, but will be implemented in the
future, with a timeframe for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope and
parameters of an analysis or study, and a timeframe for the matter to be prepared for
discussion by the officer or head of the agency or department being investigated or
reviewed, including the governing body of the public agency when applicable. This
timeframe shall not exceed six months from the date of publication of the grand jury
report.
(4) The recommendation will not be implemented because it is not warranted or is not
reasonable, with an explanation therefore.
(c) However, if a finding or recommendation of the grand jury addresses budgetary or personnel
matters of a county agency or department headed by an elected officer, both the agency or
department head and the board of supervisors shall respond if requested by the grand jury,
but the response of the board of supervisors shall address only those budgetary or personnel
matters over which it has some decision making authority. The response of the elected
agency or department head shall address all aspects of the findings or recommendations
affecting his or her agency or department.
(d) A grand jury may request a subject person or entity to come before the grand jury for the
purpose of reading and discussing the findings of the grand jury report that relates to that
person or entity in order to verify the accuracy of the findings prior to their release.
(e) During an investigation, the grand jury shall meet with the subject of that investigation
regarding the investigation, unless the court, either on its own determination or upon request
of the foreperson of the grand jury, determines that such a meeting would be detrimental.
(f) A grand jury shall provide to the affected agency a copy of the portion of the grand jury report
relating to that person or entity two working days prior to its public release and after the
approval of the presiding judge. No officer, agency, department, or governing body of a
public agency shall disclose any contents of the report prior to the public release of the final
report.
Packet Pg. 269
Item 14
9/17/2019 Item 14 ‐ Staff
Presentation
RESPONSE TO THE 2018-19 GRAND
JURY REPORT ON
AFFORDABLE HOUSING
City Council
September 17, 2019
San Luis Ranch
Recommendation
Authorize the City Manager to submit a letter of
response on behalf of the City Council, as required by
the Grand Jury.
2
Avila Ranch Avila Ranch
1
2
9/17/2019 Item 14 ‐ Staff
Presentation
Background
3
• The San Luis Obispo Grand Jury issued a
report on June 20, 2019 that analyzed issues
associated with affordable housing throughout
SLO County.
• The report highlights the disproportionate
construction of market-rate housing and
recommends suggestions for the SLO County
jurisdictions to consider.
Report Findings
4
• Streamlining the building & planning permit processes.
• Increase in-lieu fees for affordable housing.
• Re-zoning for non-traditional housing options (i.e.
modular homes, prefabricated homes, and mobile
home parks).
Courtyard of Serra Meadows – 36 Affordable Housing Units
3
4
9/17/2019 Item 14 ‐ Staff
Presentation
City Required Responses
5
• Findings Numbers #6, & 7
• Recommendations #1, 2, 4, 5, & 6
• The City already incorporates a majority of the
recommended actions in the Report
Bishop Street Studios – 34 Affordable Housing Units
Key Response Highlights: Housing APRs
6
• City summarizes &
publishes information
required in the State’s
Housing Element Annual
Progress Report (APR)
into the General Plan
Annual Report
5
6
9/17/2019 Item 14 ‐ Staff
Presentation
Key Response Highlights:
Expedited Building Permit Processes
7
• City works with developers to develop
processing agreements that assigns
responsibilities and deadlines for applicant
submittals & plan check comments
• Developers may pay a fee for an expedited plan
check process
• City Continuous Improvement Team looks at
opportunities to efficiently analyze projects
Key Response Highlights:
Expedited Building Permit Processes
8
New Single Family
Days (includes
weekends)
Avg.
Review:
- 4 weeks to review
1st round of
submittals for new
single family units
7
8
9/17/2019 Item 14 ‐ Staff
Presentation
Key Response Highlights:
Inclusionary Housing Policy Considerations
9
• Results from our Affordable Housing Nexus
Study will shape policy updates in Housing
Element.
•23%of all units constructed in the City since
year 2000 have been deed-restricted
affordable.
•86%of affordable units created by the
Inclusionary Housing Program are rentals
Key Response Highlights:
Non-traditional Housing Considerations
10
• Tiny Homes on Wheels Ordinance passed
in March 2019
• Received 4 Applications to date
• Accessory Dwelling Units
(ADU) Permits per year:
• 2015 – 3
• 2016 – 3
• 2017 – 39
• 2018 – 40
• 2019 – 30
9
10
9/17/2019 Item 14 ‐ Staff
Presentation
Key Response Highlights:
Housing Element Update Public Engagement
11
• 4 Public Engagement Opportunities to date
• Several opportunities planned throughout Fall 2019
and Spring 2020
• Survey on housing preferences in Fall/Winter 2019
• Regional Coordination
City Hosted Housing Forum on April 2, 2019
Recommendation
Authorize the City Manager to submit
a letter of response on behalf of the
City Council, as required by the
Grand Jury.
12
11
12
9/17/2019 Item 14 ‐ Staff
Presentation
13
Finding #6 & Recommendation #2
Finding #6: “Most of the required annual housing element
updates are difficult to access by the public”
Response: Disagree. The City summarizes and publishes this
information annually in the General Plan Annual Report
Recommendation #2: “Create, file, and publish the required
housing element documents and reports on time and in a form
easily accessible to the public. This should be done by the next
report cycle.”
Response: The recommendation will continue to be addressed.
14
13
14
9/17/2019 Item 14 ‐ Staff
Presentation
Finding #7
“The length and cost of the building permitting
process is a major barrier to the construction of all
housing, especially low-income housing”
Response: Disagree. It is often the case that lengthy
building permit review processes result when multiple
rounds of reviews occur.
15
Recommendation #1
“Reassess and improve processes to fast-track building
and planning permit approvals within 12 months from date
of application. This should be implemented within FY
2019-2020.”
Response: The recommendation is constantly being
reviewed. The City maintains a Continuous Improvement
Team that looks at any opportunities to efficiently analyze
project consistently with federal, state, and local planning
and building code requirements.
16
15
16
9/17/2019 Item 14 ‐ Staff
Presentation
Recommendations #4 & #5
Recommendation #4: “The cities and County should concentrate on
promoting rentals for families earning below moderate incomes by
increasing the percentage of required inclusionary housing units.”
Recommendation #5: “Increase the opportunities through re-zoning
for non-traditional housing options, such as modular homes, pre-
fabricated homes, and mobile home parks. This should be
accomplished within FY 2020-2021.”
Response: The recommendation will be considered once the City
receives the results of the Affordable Housing Nexus Study.
17
Recommendation #6
“The cities and County should detail their specific
plans to engage the public in the formulation of the
2020-2028 Housing Plan Update.”
Response: The recommendation will be adopted.
18
17
18