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HomeMy WebLinkAbout1993-03-23; City Council; 12129 Exhibit 7; Inclusionary Housing ProgramMINUTES EXktH3IT 7 August 19. 1992 PLANNING COMMISSION Page 4 COMMISSIONERS \;( 4) ZCA 91-6 CITY OF CARLSBAD - An amendment to the Carlsbad Municipal Code (Title 21) by the addition of Chapter 21.85 to establish requirements for the reservation and affordability of housing units for moderate and lower income households in residential projects under a Citywide Inclusionary Housing Program and the payment of a In-Lieu Fee or Inclusionary Housing Impact Fee in specified circumstances. Chairman Erwin announced that the Commission would hear the staff report, take public testimony, and then continue their decision until the meeting of September 16, 1992. Dennis Turner, Principal Planner, reviewed the background of the inclusionary housing requirement and stated that on October 22. 1991, the City Council adopted a Revised Housing Element for the City of Carlsbad which includes numerical objectives for the provision of 1,400 lower-income and 1,300 moderate income dwelling units by 1996. The Zone Code Amendment proposed by staff adds Chapter 21.85 to the Carlsbad Municipal Code to implement the affordable housing program by establishing specific inclusionary requirements (i.e. construction of affordable units, payment of in-lieu fees, or payment of inclusionary housing impact fees) for various classes of residential projects or permits. Chris DeCerbo, Senior Planner, assisted Mr. Turner with a slide presentation describing the proposed requirements for the various types of residential projects and how they would be applied. RECESS The Connnission recessed at 7:32 p.m. and reconvened at 7:44 p.m. For the record, Chairman Erwin noted that he had received letters from Hofman Planning, Woodward Homes, Fieldstone La Costa, Aviara. Western National Homes, and Jack Henthome 8 Associates. Chairman Erwin opened the public testimony and issued the invitation to speak. Scott Woodward, 3088 Corte Trabuco, Carlsbad, addressed the Commission and stated that he had written the Commission a letter dated August 18, 1992 requesting clarification on how his Tentative Map would be affected by the ordinance. He requested that subdivisions of less than seven units be exempted from the ordinance due to the extreme burden and financial impact that the additional fees will place on eventual home buyers in small subdivisions and the inability of small projects to qualify for density bonuses. Gary Wayne. Assistant Planning Director, stated that he could not reply to the effect the ordinance would have unless he knew the exact wording on Mr. Woodward's Tentative Map. He stated that the map may contain a specific condition as to whether or not an in-lieu fee is applicable. He invited Mr. Woodward to contact him at his office during the workday and he will attempt to clarify his position. Mr. Turner added that State law requires that we grant a density bonus for developments having as few as five units. MINUTES August 19, 1992 PLANNING COMMISSION Page 5 COMMISSIONERS y Doug Avis, 6670 El Camino Real, Carlsbad. representing the Fieldstone Company, addressed the Commission and stated that a good portion of the vacant land in Carlsbad is currently owned by the Resolution Trust Corporation as a result of the savings and loan debacle. If the proposed ordinance were applied to Fieldstone properties as it is currently written, it would cost them an additional $63 million. Coupled with the other $100 million in costs and the realignment of Ranch0 Santa Fe Road, it would be prohibitive. He doesn't feel all of the costs can be borne by the development community: he believes there also has to be a major commitment on the part of the City. He stated that at the present time it is impossible to reach the growth control point due to the myriad of‘other requirements for open space, etc. The best that Fieldstone has ever been able to achieve is 80%. He appreciates the offer of a 30 day continuance and hopes staff will meet with the development community in an effort to come up with an amicable solution. Dan Shelley, 905 Olive Crest Drive, Olivenhain. addressed the Commission and stated that he owns property next to the Carlsbad boundary line. He is falling short of reaching the growth control point by 30% and this is not due to product type. It is impossible to meet all of the standards and reach the growth control point as well. He pointed out that only 55 districts out of 350 in the State of California are proposing inclusionary housing regulations and he thinks it is unfair to penalize only 16% of the State. He has contacted SANDAG and they agreed that their estimates of housing needs were only estimates. He has a problem with the proposed ordinance and does not feel it is equitable to all concerned. Mike Howes, Hofman Planning, 2386 Faraday, Suite 120, Carlsbad, addressed the Commission and stated that he is thankful for the continuance. He would like to see staff meet with members of the development community and try to work out the problems. He does not feel that the ordinance is workable the way it is presently written. He feels that solutions are possible but they need to be worked out. He cited Bill Hofman's letter to the Commission dated August 19, 1992 which identifies some of the problems and some recommendations. Commissioner Welshons inquired how staff will come back with the new ideas, if any. Dennis Turner, Principal Planner, replied that staff is willing to sit down with the development community. However, if any major changes are to be made, it will require considerable time to develop a staff consensus. He feels that the ordinance being presented tonight is one that is workable for the City. Commissioner Schlehuber advised Mr. Howes and other members of the development community to make sure they get their comments and suggestions in to staff within 14 days, at least, so that staff and the Commission will have sufficient time to evaluate them before the September meeting. If the Commissioners have the information early enough, they can make an informed decision. He urged those in attendance not to wait until the last minute to make suggestions. Chairman Erwin stated that letters to Commissioners can be mailed to home addresses; the home addresses are available to anyone desiring them. MINUTiS August 19, 1992 PLANNING COMMISSION Page 6 COMMISSIONERS y Anthony Griffin, representing George Wimpy, addressed the Commission and stated that he is very concerned about the fee amounts. He currently has mapped units that will cost him $3 million. In effect, he is paying for 66 phantom units because the fees are assessed on the growth control point which he feels is unfair. He hopes that staff will be open and flexible to new ideas when they are received. He cannot pay $3 million to build 199 units. The program will fail as it is presently written. Mario Monroy, 3610 Carlsbad Boulevard, Carlsbad, addressed the Commission and stated that he is concerned that Commissioners only get to vote on one idea--staff's idea. He thinks the City Council should have a choice on what they are going to vote on. He would like to see the proposals that staff turned down. He believes that density bonuses should be restricted to undeveloped zones in each quadrant. He wants to make sure that the $14,900 being collected goes for what it is intended, including the interest. There is nothing in the ordinance which clarifies how the money will be used. He feels that affordable housing is a social issue and should be shared by everyone. He feels the costs being proposed are unbelievable. He is concerned about what will happen to our children. The cost of housing will be exorbitant. Chairman Erwin inquired if Mr. Monroy is suggesting a Citywide tax. He replied that a tax may be the way to go because the costs will be shared by everyone. Commissioner Schlehuber inquired if Mr. Monroy is aware that the City has no choice in this matter because it is being mandated by the State. Mr. Monroy replied that if the density bonus is restricted to undeveloped areas, there is no political involvement. The way the ordinance is written it is tantamount to forcing the poor people out of Carlsbad. John Donaldson, 3425 Adams, Carlsbad, addressed the Commission and stated that he tore down an old home last year with the intention of rebuilding a new home but, as yet, has been unable to do so. He inquired if he would have to pay the $15.000 fee. He understands that this is a State law but he does not feel that it is right to single out a few individuals to pay for low income housing. With the fees being proposed, it will make home ownership impossible in the future. It doesn't sound like the City is sharing the cost. Chairman Erwin inquired if Mr. Donaldson believes there should be a Citywide tax to finance affordable housing. He replied yes. In response to Mr. Donaldson's question of whether he would be subject to the $15,000 fee, Dennis Turner, Principal Planner, replied that the way the ordinance is currently drafted, an existing house taken down or replaced is not subject to inclusionary housing unless you create another unit. Gary Wayne, Assistant Planning Director, clarified Mr. Turner's answer by stating that if the house was tom down the day before the ordinance is adopted, he would be required to pay a fee. If the house exists on the date of the ordinance, he would not be required to pay a fee. Mr. Donaldson could be subject to the $3.250 fee rather than the $14.900 fee. MlNUTiS August 19, 1992 PLANNING COMMISSION Page 7 Chris Kimberly, 7720 El Camino Real, Carlsbad, addressed the Commission and stated that he had a Tentative Map approved last year. He came to the meeting to see if he would be subject to the $3,250 fee. However, after listening to the staff presentation. it appears that, instead, he will be subject to a $14.900 fee. He is currently in the process of having loan documents drawn and it is difficult to make changes on loans this late in the game. Gary Wayne, Assistant Planning Director, stated that staff has not gone forward yet with the ordinance or the fee. What they are recommending is a $14,900 in lieu fee and a $3,250 impact fee. No one is subject to fee as of today. Mr. Kimberly stated that he had planned to pull permits on a staged basis, in other words, complete one house and then start the next one. He feels the fees being proposed are unfair. Mr. Wayne advised Mr. Kimberly that he has the right to oppose the fee issue at a public hearing. Dennis Turner, Principal Planner, inquired how many units he planned'to build in total and how many of them would be low or moderate income affordable. Mr. Kimberly replied that 10 units were originally proposed, two of which were to be for moderate income. However, the existing fees have turned out to be so high that the moderate income units were axed. There being no other persons desiring to address the Commission on this topic, Chairman Erwin declared the public testimony closed and opened the item for discussion among the Commission members. Commissioner Hall sympathizes with the audience because the free enterprise system didn't get a chance to work. He hopes staff understands that he sees no way this ordinance can be approved the way it is proposed today. If it is approved, we will not build even one affordable unit because all building will stop. He thinks the ordinance needs a lot of work. Commissioner Schramm reminded staff about rental units because they cost less to build and they are a good transition home. She hopes staff will meet with the developers. She would like to be at the September 16th meeting but she will be out of town until October 6th. She thinks the public comments were very good and she hopes staff will use the information. Commissioner Noble thinks staff needs to meet with the development community and come up with solutions to make the ordinance workable. He thinks it will take more than 30 days. Commissioner Schlehuber inquired if staff feels they can be ready in 30 days. Gary Wayne, Assistant Planning Director, replied that staff is not on track now and needs to stay on track. If it looks like they cannot meet the September 16 date, they will request another continuance. He is concerned because a commitment has been made to the State Department of Housing and Redevelopment to have certain things in place by year end. He doesn't want to lose that. Staff will meet with the development community and attempt to return in 30 days. MlNUTtS August 19. 1992 PLANNING COMMISSION Page 8 COMMISSIONERS y Motion was duly made, seconded, and carried to continue ZCA 91-6 to September 16. 1992. ADDED ITEMS AND REPORTS: There were no added items for reports. However, Chairman Erwin reminded the Commissioners about the August Christmas Party at Camp Pendleton to be held on Friday, August 21, 1992. ADJOURNMENT: By proper motion, the meeting of August 19. 1992 was adjourned at 9:06 p.m. to 3:OO p.m. on August 21, 1992 at De1 Mar Beach, Camp Pendleton, Structure #210596. Respechfully submitted, Assistant Planning Director BETTY BUCKNER Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE MINUTES ARE APPROVED. Erwin Hall Noble Savary Schlehuber Schramm Welshons Erwin Hall Noble Savary Schlehuber Schramm Welshons 0 $ K I( K K K K K K K K K K - Minutes of: PLANNING COMMISSION Time of Meeting: 6:00 P.M. Date of Meeting: October 28, 1992 Place of Meeting: CARLSBAD SAFETY CENTER .-j \. c (A- CALL TO ORDER: Chairman Erwin called the Special Meeting to order at 632 p.m. PLEDGE OF ALLEGIANCE: The pledge of allegiance was led by Commissioner Hall. ROLL CALL: Present: Chairman Erwin, Commissioners Hall, Noble, Savary, Schlehuber, Schramm, and Welshons Absent: None Staff Present: Michael Holzmiller, Planning Director Gary Wayne, Assistant Planning Director Dennis Turner, Principal Planner Chris DeCerbo, Senior Planner Bobbie Hoder, Senior Management Analyst Karen Hirata, Deputy City Attorney Bob Wojcik, Principal Civil Engineer Martin Orenyak, Community Development Director Evan Becker, Director of Housing & Redevelopment Debbie Fountain, Senior Management Analyst Karen Sauer, Management Analyst Reggie Harrison, Housing Program Manager COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED ON THE AGENDA: There were no comments from the audience. CONTINUED PUBLIC HEARING: 1) ZCA 91-06 - CITY OF CARLSBAD - An amendment to the Carlsbad Municipal Code (Title 21) by the addition of Chapter 21.85 to establish requirements for the reservations and affordability of housing units for moderate and lower income households in residential projects under a Citywide lnclusionary Housing Program and the payment of an In-Lieu Fee or lnclusionary Housing Impact Fee in specified circumstances. Chris DeCerbo, Senior Planner, reviewed the background of the request and stated that ZCA 91-06 was first heard by the Planning Commission on August 19, 1992 and then continued to September 16, 1992 and October 28, 1992, respectively, to allow staff to meet with the development community for purposes of discussing and hopefully resolving any issues of concern associated with the draft lnclusionary Ordinance. Asa consequence of the meetings, staff is recommending several major revisions as follows: * Amending the methodology for calculating the number of required inclusionary units. * Allowing any residential project approved on or before the effective date of the ordinance to satisfy inclusionary requirements through the payment of housing impact fees. MINUTES PLANNING COMMISSION October 28,1992 Allowing developers with a requirement for a fraction of an inclusionary unit to either (i) build the complete unit; or (ii) pay an in-lieu fee equal to the fraction of the unit times the average subsidy of a typical affordable housing unit. Allowing the City to provide financial incentives for affordable housing to the development community. Revising the definition of “assisted unit” to signify any dwelling unit which receives State or Federal assistance as specified by the California Health and Safety Code. Allowing inclusionary for-sale units to be rented to a qualified household if a qualified household cannot be found to purchase the unit or the City does not exercise its option to purchase within 90 days. Dennis Turner, Principal Planner, stated that the City had received a 14 page letter from Fieldstone dated October 22, 1992 with comments on the City’s approach to affordable housing (ZCA 91-05 and ZCA 91-06). He reviewed each of the comments individually and the staff response. Fieldstone’s basic premise is that the proposed programs place the entire responsibility for affordable housing upon the private sector, which is an unfair burden. During the analysis of Fieldstone’s comments, and using visual aids, Mr. Turner reviewed SANDAG’s growth projections and the nexus for demand and construction of affordable units. He concluded his review by stating that staff feels the recommendations made by Fieldstone did not justify additional changes to the proposed ordinance. A copy of the Fieldstone letter, as well as staffs summary and detailed responses to Fieldstone’s comments, are on file with the minutes of this meeting. Chris DeCerbo, Senior Planner, stated that many other letters were also received from the development community; each letter received a staff response and copies were included in the staff report. For the record, Chairman Erwin acknowledged the staff memo dated October 28, 1992 which contained minor revisions to ZCA 91-06 which were necessary after the staff report was issued. He then turned the time over to the Commissioners for questions. Commissioner Hall inquired how the lnclusionary Ordinance will work with growth management and the housing caps which are currently in place. Mr. DeCerbo replied that staff does not perceive a problem since it is felt that there will be adequate units in the bank to offset the density bonus requirements. He believes that after five years additional units will be added to the bank to maintain sufficiency. Commissioner Welshons disagrees with the private sector calculation and inquired if it would be advantageous for staff to go back to SANDAG and request that their figures be revised. Mr. Turner replied that the methodology used by SANDAG is based on the Series 7 growth projections. In 1989, staff reviewed the housing goals set by SANDAG and offered some suggestions to them at that time but believes that no fundamental changes have occurred since then which would justify a recalculation. He stated that SANDAG’s calculations are based on an estimate of the total amount of vacant, developable land within the City, plus potential for employment growth figures. However, when SANDAG prepares the next “Regional Housing Needs Statement” for the next five years (in approximately two years from now) staff does plan to request an adjustment for the airport influence area. Commissioner Welshons inquired if there is any way that constrained land could be excluded. Mr. Turner replied that the current needs estimate couldn’t be modified because the Regional Share and Fair Share goals were officially accepted for planning purposes by resolutions of the City Council in either late 1989 or early 1990. Mr. DeCerbo added that it is the SANDAG Regional Fair Study that establishes the 40% demand for affordable housing for lower income households created by all new development. Commissioner Welshons inquired if there is a provision for the fees to be increased over time. Mr. DeCerbo replied that fees are not being established tonight but will be adopted later by City Council resolution. The fees can be updated on an annual basis and would parallel cost figures provided by the Department of Housing and Community Development. Mr. Turner added that the City must first adopt a formula, although that could be changed. Staff is recommending a formula. MINUTES PLANNING COMMISSION October 28, 1992 PAGE 3 Commissioner Welshons inquired if the affordable housing unit cost figure of $99,000 could decrease to $50,000 or increase to $200,000 or more. Mr. Turner replied that, in the future, theoretically it could. Staff hopes the formula being proposed will be accepted by the City Council. Commissioner Savary inquired if commercial and other industries will also be responsible and what fees they will pay to share the burden for affordable housing. Mr. Turner replied that the commercial sector will ‘also share the cost of affordable housing. Program 4.1 of the Housing Element addresses non-residential impact fees. There will be a study next year of the commercial and industrial development in the City which will result in a staff recommendation for a commensurate fee. Staff hasn’t done the study and, therefore, is not yet prepared to state what what fee will be recommended. Commissioner Noble inquired if the City has the right to negotiate sales or lender prices when they are providing financial assistance. Mr. DeCerbo replied that there are different levels of income in each income class. If a developer is granted more City assistance, they might be required to provide more affordable housing. Commissioner Noble inquired where the other two-thirds of the cost for affordable housing will come from. Mr. Turner replied that it will come from the market. This can occur particularly if the market begins to utilize alternative types of housing such as “granny flats” or other unique housing. Commissioner Noble inquired if 15 affordable homes are needed in a development of 100 homes, and a developer provides 5 of those, where will the other 10 come from. Mr. Turner replied that if that happens, the developer would not meet the required goal. Commissioner Welshons inquired about the nexus between imposing a fee on commercial and other non-residential and used the park mitigation fee in LFMP Zone 5 as an example. Mr. Turner replied that staff will explore all of the options available and cannot make that decision at this time. An extensive study will be conducted. Each sector of the non-residential economy will have to be examined. There could be different fees for different types of non-residential, i.e. a doctor’s office versus a warehouse. The impact fees could be on a sliding scale. Commissioner Welshons stated that she cannot understand why this information is not available tonight; she would like to see a complete package rather than a piecemeal approach. Mr. DeCerbo replied that there are many parts to the overall housing program. New residential, for instance, has a number of components. Other components must still be studied. Last January the City Council and Planning Commission directed staff was to bring the information to the Commission in small pieces because it is too much to digest at one time. Commissioner Hall inquired if the time element for the first preliminary review of project proposals is still 90 days. Mr. DeCerbo replied that if ZCA 91-06 is adopted tonight, 90 days should be the outside limit. Staff has, however, already processed an inclusionary application through hearings in about seven weeks. Staff has built in a buffer to enable them to handle the workload. In a complex project that may be requesting a number of incentives, for instance, staff may need extra time for processing. Commissioner Hall commented that 90 days has a dollar value to a developer; he feels the time frame should be reduced. Commissioner Welshons asked the City Attorney when, and how often, the ordinance could be amended. Karen Hirata, Deputy City Attorney, replied that there is no limit. Commissioner Welshons requested staff to explain the timeline and deadlines. Mr. Turner stated that the Department of Housing and Community Development (HCD) had to approve Carlsbad’s Housing Element and make a determination that the element was in substantial compliance with state law. The Housing Element, together with a work plan, was presented to HCD and a response was received that we would be MINUTES PLANNING COMMISSION October 28, 1992 PAGE 4 in conformance if we maintained the deadlines we had established on the work plan. We told them that three draft ordinances (ZCA 91-05, ZCA 91-06, and an ordinance for managed living units) would be completed by year end. If these are not completed, the State could, at worst case, decertify the element which would, in turn, leave our Housing Element and General Plan at risk to legal challenge. This could result in totally curtailing all development in the City. Commissioner Welshons inquired if the lnclusionary Ordinance were continued, what would be the latest date it could be considered in order to get it to City Council by year end. Michael Holzmiller, Planning Director, replied that if it is continued at all, it might not make it by year end. Commissioner Welshons inquired if the City knows how they plan to meet their fair share. Chris DeCerbo, Senior Planner, replied that staff is currently working on a plan but it is not yet complete. The 15% is already approved policy; the ordinance is the method of how it will be achieved. Commissioner Welshons inquired if we must tell SANDAG how we are going to achieve the City’s portion. Dennis Turner, Principal Planner, replied that the projects we are currently working on are identified in the Housing Element, i.e. farm worker housing, etc. Commissioner Schramm inquired about the time frame for non-residential impact fees. Mr. Turner replied that there is no Planning Department work plan for 1993 yet. That will be done in January. There are some items which need to be completed before that can be started, which is why we must move forward on the items presented tonight. Chairman Erwin inquired why we can’t just make the formula a flat 15% of the total project and not even consider environmental constraints. Mr. Turner replied that the goal was to make sure that the land is utilized according to the General Plan’s designations, i.e. in the most efficient way. Master plans are now required to identify future housing yields, and later to produce that yield. From that yield there is a 15% minimum requirement for affordable housing. Chairman Erwin commented that it looks to him as though we are being pulled by the agreement we made with the State, i.e. that the Housing Element is being held hostage. He inquired if the City Council went along with the State’s agreement. Michael Holzmiller, Planning Director, replied that the City was not commanded to provide tools to start affordable housing. The State felt that the lnclusionary Ordinance was important so that the procedures could be in place. The State would have a problem if we provided an incentive and no tools. They were not concerned about managed living units. It is possible that the State might not do anything if we fail to adopt the ordinance this year, but it would put us at risk. Chairman Erwin commented that many times SANDAG presents something to the Board of Supervisors and they just ignore it. He inquired what makes this situation gospel. Mr. Turner replied that the requirement for affordable housing comes from the State. It is being required of all councils of government throughout the state. Each council must provide methodology for assessing the need and accomplishing the requirement for affordable housing. Chairman Erwin inquired if Carlsbad’s requirement is for 2,500 units of affordable housing. Mr. Turner replied that the demand is 2,509. Chairman Erwin inquired if it is true that we must have a minimum of 1,400 units. Mr. Turner replied that 1,400 is the adopted objective. The law states that each jurisdiction must evaluate the need, prepare objectives to respond to the need, and develop and implement programs to meet the objectives. Our need is 40% but that will be difficult to attain. The City has determined that 1,400 units is a feasible objective. Mr. Holzmiller added that it was also necessary for the City to show the State that we are removing obstacles which would not allow the 40% to be achieved. MINUTES PLANNING COMMISSION October 28,1992 Chairman Erwin inquired if we expect 1 ,100 units to be built through inclusionary housing. Mr. Holzmiller replied that he doesn’t think we can at our present rate of development. Chairman Erwin commented that this works out more like 80%. Mr. Holzmiller replied that if the City were producing at their former rate, we could meet it. Chairman Erwin inquired where the 1 ,100 units figure for inclusionary housing came from. Mr. Turner replied that it came from the 6,000 units projected when the economy was on target. If we built 6,000 units, then 1,400 would be a reasonable objective, even though 40% is the need. Our requirement for private builders is only 15%. Commissioner Welshons requested staff to define “inclusionary” and inquired if one quadrant or all quadrants share the burden and inquired how the vacant land is distributed in the City. Mr. Holzmiller replied that the best explanation is that of all new housing units built in the City, 15% are required to be affordable for low income families. Mr. Holzmiller commented that the Commission needs to understand that the 15% requirement is not going to result in as many units being built in the northwest quadrant as each of the other three, because the northwest quadrant is almost completely built out. However, the amount of vacant land is proportionately the same in each of the other three quadrants. Commissioner Welshons inquired if each quadrant will share the burden equally. Mr. Holzmiller replied that the Housing Element states that affordable housing will be disbursed equally throughout all quadrants. In other words, where there is developable land, it will be equal. Commissioner Schlehuber inquired if it isn’t true that the northwest quadrant already has a disproportionate share of affordable housing. Mr. DeCerbo replied to the affirmative. Chairman Erwin requested the City Attorney to respond to the letter dated October 28, 1992 from Attorney John E. Erickson of Nossaman, Guthner, Knox & Elliott. Karen Hirata, Deputy City Attorney, stated that she would first address the nexus issue. The proposed inclusionary housing ordinance requires an exaction of 15% residential units from new development. Mr. Erickson is saying that we have not provided sufficient facts to prove that new development has created the problem. The Planning Department feels that they do have facts to prove that the need was created by new development. Mr. Erickson’s second issue is that they want the City to guarantee the incentives. If the City makes a promise of incentives, it exposes the City to litigation. Gary Wayne, Assistant Planning Director, added that the City is putting forward an ordinance that requires inclusionary housing in all new developments. The City has finite resources and cannot attract additional resources. We must look at all projects and determine where it is best to place our resources. The way that Attorney Erickson has reworded this paragraph, it would require the City to distribute its limited resources to all projects regardless of need. Some projects may not need help. For example, the Pacific Scene Project (L-l) is projecting an approximately $1 million profit on the Calavera Hills development. Mr. Wayne believes that the way the ordinance is written is much better than Attorney Erickson’s version since not all projects that come in will receive financial assistance. Commissioner Schlehuber likened the incentive process to applying for a scholarship. Each project which comes in has different circumstances. The City will make the award based on need. RECESS The Planning Commission recessed at 7:40 p.m. and reconvened at 7:50 p.m. Chairman Erwin opened the public testimony and issued the invitation to speak. MINUTES PLANNING COMMISSION October 28,1992 PAGE 6 Catherine Rodman, Attorney, Legal Aid Society of San Diego, 216 So. Tremont, Oceanside, addressed the Commission and reiterated the comments in her letter of October 28, 1992. She supports adoption of the lnclusionary Housing Ordinance with the following modifications: . That at least one-third of the 15% requirement be affordable to very-low income households; . That all inclusionary units remain affordable in perpetuity; and . That affordable units be of various types and sizes to address the needs of the community. She thinks the affordable housing issue is a huge task and she is happy to see the City take it one step at a time. There is a tremendous need for affordable housing in the City of Carlsbad and the reason the State made their mandate is because of our poor performance in the past. She noted that the cities of Oceanside and Vista have both had strict affordable housing ordinances on the books for some time and, to her knowledge, no suits have ever been filed. Chairman Erwin inquired about the “in perpetuity” issue because there is some argument that a specific time frame is needed in order to get loans from banks. Ms. Rodman replied that the ordinance could be worded “physical life of the structure but no less than 30 years” if necessary. Otherwise, it could refer to the IRS. depreciation schedule of 27.5 years, although that schedule is subject to change. In any event, the covenants run with the land. She found it amusing that a bank would not loan on low-income housing projects since the Community Reinvestment Act requires that banks meet the lending needs of their community. It would be illegal for a bank to refuse to lend on affordable housing because of a time limit. A copy of Ms. Rodman’s letter is on file with the minutes in the Planning Department. Mike Howes, Hofman Planning Associates, 2386 Faraday, Carlsbad, addressed the Commission and passed out a letter dated October 28, 1992 containing four recommendations to the ordinance as follows: . That the location and phasing of inclusionary units be subject to approval of the Planning Director; . That the formula for inclusionary housing be based on the actual number of units approved for development; * That inclusionary housing may be constructed in another quadrant as long as that quadrant’s cap is not exceeded and there is a fair apportionment in all four quadrants; and . That staff must provide a letter to applicants, within 90 days, which specifically states the incentives and/or financial assistance which they will support and/or recommend. Chairman Erwin inquired who Hofman Planning Associates is representing in making these recommendations. Mr. Howes replied that Hofman represents many landowners but, in this instance, no one in particular. Commissioner Schlehuber inquired if Mr. Howes agrees that these four items are the most critical items needing to be addressed. Mr. Howes replied to the affirmative. A copy of the Hofman Planning Associates letter dated October 28, 1992 is on file with the minutes in the Planning Department. Tom Sheffer, Construction Industry Federation, 6336 Greenwich Drive, San Diego, addressed the Commission and passed out a letter dated October 28, 1992 which itemized their concerns as follows: . The ordinance suggests that 250 inclusionary units could be produced per year, for a total of 1,250. He noted that there are only 52 inclusionary programs currently in place in the entire state of California, out of which the average annual number of units produced per jurisdiction is 38. The only exception is Orange County who produced an average of 491 units in a voluntary program. MINUTES PLANNING COMMISSION October 28, 1992 PAGE 7 * The inclusionary requirement would add $15,355 to the price of market rate homes which only shifts the housing affordability problem from one group of residents to another and will be counterproductive to the goal of enhancing affordable housing opportunities for the City. * The City has the ability to reduce the burden on market rate homes to subsidize affordable housing but staff has not chosen this approach. Furthermore, the ordinance does not commit the City to any incentives, i.e. density bonuses, expedited permit processing, reduced development standards, or impact fee relief. . The lnclusionary Housing Ordinance is not consistent with the adopted Housing Element because it contains no programs or incentives to assist in the production of affordable housing. . Over the past few years the City has adopted numerous programs which worsened the housing affordability program and he cited eight examples. Mr. Sheffer feels that affordable housing should be addressed by all aspects of the community. He noted that over the past seven years, property tax revenues to the City have increased by over $10 million. He recommended that the City consider committing all or a portion of the annual increase in property tax revenues to affordable housing programs to create a pool of funds that could be used to secure bonds and leverage private financing dollars. He concluded his comments by stating that he had had a conversation recently with the Director of HCD and was told that the State is not mandating inclusionary housing. Chairman Erwin inquired if he had that comment by the Director in writing. Mr. Sheffer stated that he did not but seemed confident that he could get it in writing. Chairman Erwin asked staff to describe the worst case scenario if the City does not build 1,400 affordable homes. Dennis Turner, Principal Planner, replied that we have promised the State that we will build 15% of whatever is built. If we build no new homes, then we don’t need to build any affordable units. Commissioner Schlehuber inquired why Orange County has been able to produce affordable housing using a voluntary program and we have had the need for a long time but no developer ever came forward to build anything affordable. Mr. Sheffer replied that Orange County has incentives for developers as well as a credit arrangement with lenders to build affordable housing. Commissioner Schlehuber commented that if some credit is being offered, then there must be some type of program available. A copy of Mr. Sheffer’s letter dated October 28, 1992 is on file with the minutes in the Planning Department. Doug Avis, Fieldstone Co., addressed the Commission and stated that the proposed ordinance lacks an incentive to develop affordable housing. Furthermore, he is unable to see a nexus or anything else which states why the 15% is being assessed. He drew some pie charts on the board and by his calculation indicated that the development community is actually being asked to provide from 78-97% of the affordable units. He cited the newly opened Price Club which sits on 1 O-12 acres and compared it to a residential project on 1 O-l 2 acres. The Price Club generates low income jobs yet they have not had to provide any affordable housing. Fieldstone has recently engaged a non-profit partner out of San Francisco who is experienced in the affordable housing issue. However, even with the best expertise, it comes down to the NIMBY factor, i.e. not in my back yard. Mr. Avis is experienced with the political process and feels that no elected official has the courage to put it through. He believes that affordable housing needs to be structured similar to other facilities, i.e. schools, parks, circulation. He cited the traffic impact fee as an example because everyone pays their fair share. Mr. Avis feels that affordable housing should be fairly shared by all those who create the need, i.e. one square foot of retail should provide $27.51 for affordable housing. He would like to see the ordinance completed buf he feels it should focus MINUTES PLANNING COMMISSION October 28, 1992 PAGE 8 on the whole circle. He would like to know what will happen if the City does not accomplish their objectives. He would like to see a complete program in place and know that it will work. Chairman Erwin disclosed for the record that he had met with Mr. Avis a few weeks ago to discuss the affordable housing issue. Glen Rick, 438 Camino del Rio South, San Diego, addressed the Commission and stated that builders do not create the housing demand but, rather, fulfil1 a need. He feels that the proposed ordinance will tend to raise the cost of market housing. It will take longer to bring a project to market which will also make homes more expensive. Mr. Rick is concerned that the proposed ordinance is nothing more than another tax and will transfer wealth to public entities. Anthony J. Skotnicki, 2668 Sausalito Avenue, Carlsbad, addressed the Commission and stated that he is not a developer, a consultant to a developer, or a planning official. He is just a citizen and is gratified that some suspicion has been raised about the proposed ordinance. The affordable housing law is not new. He was part of the process when he sat on the City Council in the 1970’s. Because the state, county, or city don’t have the gumption to pass taxes, they are adding these fees to the market price of a house and the consumer gets to pay the added cost. It is still a tax. He suggests a simple way out and that is to give staff another shot at the ordinance to make certain that the City does provide some incentives to make up the difference between the $80,000 and the $130,000. He knows of a problem which recently occurred where the developer got stuck with building nine affordable units and the density was not established beforehand. He sees no reason why some stranger should get a windfall or pay additional costs; everyone should share equally. If we want to spend large amounts out of the General Fund, we must ask the voters. It is the law (Proposition H). He thinks someone else should get involved besides the businessman because we are just sticking him with another fee. Next thing you know there will be a health care fee or a day care fee. He cannot support the proposed ordinance as a private citizen. He thinks there needs to be a balance between the market price of a house and the giveaway price. He hopes this ordinance doesn’t get sent to the City Council until the Commission feels it will do what it is intended to do. Commissioner Welshons inquired if he, as a citizen, would be willing to share the burden by paying additional property taxes. Mr. Skotnicki feels that since it is a State mandate, it should be taken up at that level. If it means shutting down development in the City, he thinks we should do it and put it on the ballot. See if anyone will go for it. Additional taxes need a two-thirds vote. If the voters agree, then he could go along with it. Commissioner Welshons asked again if Mr. Skotnicki himself would vote for such a tax. Mr. Skotnicki replied that he would not so vote. Chris Chambers, Continental Homes, 12636 High Bluff Drive, San Diego, addressed the Commission and stated that Continental is a majority landowner in the Carrillo Ranch Master Plan. He did not have enough time to do an adequate analysis of the proposed ordinance and requested that it be continued. On the surface, he feels that more flexibility is needed. The deadline will result in placing the cart before the horse, with the cart going down the wrong side of the road. Many people have the mistaken conception that handouts are the only method available. He feels that business needs to cooperate with the public sector to create a workable solution. Density bonuses in an area with tough topography make it more difficult. Jim Hicks, 2910 Managua Place, Carlsbad, addressed the Commission and requested the definition of a “qualified subdivision.” Chris DeCerbo, Senior Planner, responded that a qualified subdivision means any existing residential lot, or any existing or future residential subdivision of land. Mr. Hicks then presented a hypothetical situation. Assume that an individual owns ten acres for RLM use. He builds 32 units. 15% of that amount would be 4.8 or 5 units. Mr. Hicks inquired what type of units MINUTES PLANNING COMMISSION October 28, 1992 PAGE 9 must be built to fulfil1 the affordable housing requirement. Mr. DeCerbo replied that it is not necessary to build the same product. Mr. Hicks inquired if he could put mobile homes or apartments right next door to large 2,500 s.f. homes. Mr. DeCerbo replied that it would be okay as long as it meets the zoning ordinance. Mr. Hicks commented that prospective buyers go to master planned land rather than deal with individual landowners. The proposed ordinance will create different problems for small landowners. Small landowners won’t be able to do what the ordinance says they must do. He thinks the ordinance needs to treat large developers and small landowners separately. Dan Shelley, 905 Olive Crest Drive, Olivenhain, addressed the Commission and referred to a survey by the entire State which says that only one in ten jurisdictions have affordable housing of any kind. Out of 52 jurisdictions, there are only a total of 21,000 units in the state and 10,600 of those units were created in Orange County. He noted that the affordable housing ordinance in the City of lrvine has only five pages. Most other jurisdictions are only providing 1 O-l 5 units of affordable housing per year. When lrvine created their ordinance, they worked it through using a large task force. He feels that our proposed ordinance will only create additional costs. If you add a 15% surtax to a $100,000 home, how many people will you be forcing out of the market in order to provide this affordable housing. He does not want to see additional costs added to the market rate. Rodney Miles, 29441 Anna Maria Lane, Laguna Niguel, addressed the Commission and stated that he feels the requirements for preliminary reviews are too costly and, instead, should be processed during the requirements of site development plans only. He thinks that a site development plan should be the only preliminary submittal requirement for affordable housing. Mr. Turner replied that a preliminary review is processed using a standard procedure that is the same for all the variety of permit requests. There being no other persons desiring to address the Commission on this topic, Chairman Erwin declared the public testimony closed and opened the item for discussion among the Commission members. RECESS The Planning Commission recessed at 9:lO p.m. and reconvened at 9:15 p.m. Michael Holzmiller, Planning Director, stated that the comments staff have heard tonight are not anything different than they have heard before. For the record, the study done to determine the 40% need was done by SANDAG. That study indicates that of any new development in the City, 40% needs to be for low income households. The question seems to be whether or not it is fair to make developers responsible for about one-third of that amount. Our City Attorney thinks 15% is equitable. Mr. Holzmiller believes there is a disagreement between the City Attorney and the attorneys for the developers. Commissioner Schramm stated that after listening to all of the comments (and she was glad to also hear from private citizens), it still bothers her that the City’s “share” has not been spelled out. It is too open-ended to state only “if” the City can afford to do it. There is no firm date as to when we are going to bring in the non-residential element. She thinks it poses a dilemma for all of the Commissioners. If we pass the proposed ordinance tonight, she would like to know how quickly it can be reopened for additional changes on what the City is willing to do. Commissioner Schramm thinks that something should be done to expedite the non-residential. Mr. Holzmiller replied that the priorities could be looked into. Commissioner Schramm inquired if staff feels that one-third of the cost for affordable housing could ever come from existing property owners, i.e. a citywide tax. Mr. Holzmiller replied that it wasn’t one of the MINUTES PLANNING COMMISSION October 28,1992 PAGE 10 programs which was part of the Housing Element. It was not even a consideration; staff has assumed that sources would come from other than a citywide tax. Commissioner Schramm inquired why the development standards need to be reduced. Mr. Holzmiller replied that a standards waiver ordinance was passed and we have already used it. That ordinance can be used in conjunction with the lnclusionary Housing Ordinance to provide an opportunity for incentives. Commissioner Schramm requested staff to comment about the 15% being set for developers before percentages for other participants have been set. Mr. Holzmiller replied that we are only looking at one piece of the pie. The other two-thirds will be coming from all other programs. Commissioner Noble inquired if there are any incentives right now which developers can apply for. Evan Becker, Director of Housing & Redevelopment, replied that there are a host of programs available. Fieldstone’s new partner, Bridge Housing Corporation, is a very effective affordable housing developer and if they needed to, they could put together the total requirement in one year. There are a number of federal programs which came as a result of the savings and loan bailout. There are also housing block grants and low income grants. Commissioner Noble inquired why we haven’t been able to produce affordable housing in the past. Mr. Holzmiller replied that there are some constraints in the existing ordinance which will not allow us to exceed the growth control point. We haven’t had the authority available to allow us to exceed the densities for affordable housing. Mr. Turner added that the real solution is the other two items on tonight’s agenda--the density bonus ordinance and the revision to the land use element. Both of those proposals will allow us to achieve the density range needed for affordable housing. Commissioner Savary is concerned about the impact of the in-lieu fees on the small builder. She inquired if small builders could be given some assurance that they will not be taxed out of business. Mr. Holzmiller replied that the proposed ordinance does not establish the fee amount and the City Council could reduce the amount of the fee if they think it creates too much of a burden for small builders to bear. Commissioner Welshons inquired about the resale guidelines and referred to line 16 of page 23 of the ordinance. She would like to know if she purchased an affordable unit at $50,000 whether she could sell it at $51,000. Mr. DeCerbo replied that she could not. The resale price would be the sum of the original purchase price plus closing costs. The house cannot be sold for less than she paid for it. The ordinance guarantees that there will be no loss. Commissioner Welshons takes exception to this proposal. She compared the scenario to a pension fund. If she has been guaranteed a 6% pension but the funds are only earning 3%, who would provide the shortfall. She stated that she owns a home too but she has no guarantee that she won’t take a loss if she sells it. Mr. Turner replied that the ordinance assumes that there will always be a need for low income housing. These units will always sell for less than market rate, so there will always be potential buyers. Commissioner Welshons inquired about the deterioration of the units over time. Mr. Turner replied that the ordinance also contains a requirement to educate the residents on their responsibilities of home ownership. Commissioner Welshons inquired what happens after 30 years and if we have to start the whole process over again. Mr. Turner replied that if we have a 30 year tenure, we would have to find something to replace the units with at that time. The ordinance gives the City first option to purchase. Commissioner Welshons responded that we could also lock them into perpetuity. Commissioner Savary referred to the remarks by Attorney Rodman and wondered if we are locked into 30 years, whether it would be ironclad. Mr. Turner replied that staff has heard both sides of the argument. Some critics say it can be done in perpetuity and others say it is not feasible. Staff would prefer to have ‘it MINUTES PLANNING COMMISSION October 28, 1992 PAGE 11 in perpetuity. The ordinance requires a minimum of 30 years, therefore a longer period could also be specified in an individual agreement. Commissioner Welshons disagrees with staff after hearing all of the public comments. She thinks there are some holes in the ordinance which need to be worked out. She doesn’t want to put the City in jeopardy but she thinks Mr. Howes of Hofman Planning Associates had some good recommendations. Mr. Hicks also had some good comments. She would like to see staff look closer at the in perpetuity issue. She is scared by the vision presented by Mr. Hicks about mixed uses which include mobile homes. She is also concerned about’Mr. Shelley’s comment that this will really be another tax. All in all, she would be uncomfortable accepting the proposed ordinance this evening. Commissioner Schlehuber sees no problem on the 30 years since the City has the same right of refusal to purchase the units at the end of the 30 years. The City would have the ability to continue in perpetuity or not. Even if the City has no money in their treasury, they could borrow it from a bank. He thinks the perpetuity issue is a myth and would oppose it. Commissioner Schlehuber inquired if the City has done anything about the processing time. Mr. Holzmiller replied that it is staff policy to expedite projects with affordable units. That policy has already been used in a couple of instances. Commissioner Schlehuber requested staff to respond to the recommendations in Mr. Howes’ letter. Mr. Holzmiller replied as follows: Item #1 - Modifications subject to approval’of the Planning Director. Reply: Staff has no problem with this recommendation but the ordinance was worded according to Planning Commission guidelines. If the Commission is willing to extend this flexibility to staff, that is okay. Item #2 - Base the affordable housing requirement on actual number of approved units. Reply: If the ordinance allows this, a developer could come in and seek a quantity of homes much below the growth control point. Item #3 - Allow the City Council to approve a receiver site in a different quadrant. Reply: Staff has no problem with that flexibility but he (Holzmiller) perceives that there are concerns about equal@ and having a comparable number of units in each quadrant. Item #4 - On an individual development proposal, have staff provide a letter within 90 days stating the specific financial support which staff can support. Reply: Staff could live with this. Commissioner Schlehuber stated that 15% of 6,273 is 940 units. He would like to know where the other affordable units are going to come from. Will the City purchase the land? Evan Becker, Director of Housing & Redevelopment, replied that there are funds available, however we would have to bring in outside sources that we don’t already have. Commissioner Schlehuber asked staff to comment on Mr. Avis’ calculations that the development community would actually be providing 78-97% of the units. Mr. Holzmiller replied that staff does not agree with Mr. Avis’ calculations. Regardless of the methodology he used to produce his pie charts, there is a 40% need for affordable housing and we are only requiring that 15% be provided by the developers. Commissioner Schlehuber stated that regardless of the situation, the affordable housing issue is going to place a great burden on the City Council because of the NIMBY premise. MINUTES PLANNING COMMISSION October 28, 1992 PAGE 12 Commissioner Hall inquired about the staff comment that they are streamlining the process yet they still want to stick to 90 days. Mr. DeCerbo replied that staff would accept a lesser period if the Planning Commission desires that. Commissioner Hall inquired how the City of lrvine does it. Mr. DeCerbo replied that lrvine is the most successful city in California when it comes to affordable housing. They gave staff a lot of help and our ordinance is based on much of k-vine’s input, resulting from their good and bad experiences. Commissioner Hall inquired if Irvine’s ordinance is voluntary. Mr. DeCerbo replied that it is not voluntary. Orange County had many problems and they went to great lengths to tell us the problems they ran into. Mr. Turner added that there are many inclusionary programs out there that don’t work because developers can buy out with a $100 in-lieu fee which was not enough to build an affordable unit. That is why some jurisdictions have built so few units. Commissioner Hall commented that he thinks everyone here wants to get to the same point by doing it on a tax basis. He would like to see the requirement for affordable housing predicated on a profit basis. The ordinance has come a long way since it was first presented to the Commission. He remarked that there were many homes built in the 70’s by Jerry Rombotis and Oakley Parker which were affordable then and are still affordable. Commissioner Hall thinks we still need to rethink some of the details for this ordinance. He appreciated the salient points brought out by Mike Holzmiller but feels the ordinance still creates difficulty for the small business person. He would like to see it simplified because it seems too complicated. For the record, Gary Wayne, Assistant Planning Director, stated that many comments have been made about the SANDAG “Regional Housing Needs Statement.” The complete SANDAG study is on file in the Planning Department. Chairman Erwin advised the gallery that due to the late hour, ZCA 91-06 as well as the other two agenda items would probably have to be continued to the next meeting on November 4, 1992. He then requested staff to consider the possibility of in perpetuity, or at least consider some type of rollover requirement. ACTION: Motion was made by Commissioner Hall, and duly seconded, to continue ZCA 91-06, ZCA 91-05, and GPA 92-08 to November 4,1992 AYES: Chairman Erwin, Commissioners Hall, Noble, Savary, Schlehuber, Schramm, and Welshons NOES: None ABSTAIN: None ADJOURNMENT: By proper motion, the Special meeting of October 28, 1992 was adjourned at 1O:lO p.m. BETTY BUCKNER Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED. MINUTES Minutes of: PLANNING COMMISSION Time of Meeting: 6:00 P.M. Date of Meeting: November 4, 1992 Place of Meeting: CITY HALL COUNCIL CHAMBERS CALL TO ORDER: Chairman Erwin called the Regular Meeting to order at 6:02 p.m. PLEDGE OF ALLEGIANCE: The pledge of allegiance was led by Commissioner Hall. ROLL CALL: Present: Chairman Erwin, Commissioners Hall, Noble, Savary, Schlehuber, Schramm, and Welshons Absent: None Staff Present: Gary Wayne, Assistant Planning Director Robert Green, Principal Planner Dennis Turner, Principal Planner Jeff Gibson, Associate Planner Christer Westman, Associate Planner David Rick, Planning Technician II Bobbie Hoder, Senior Management Analyst Karen Hirata, Deputy City Attorney Bob Wojcik, Principal Civil Engineer COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED ON THE AGENDA: There were no comments from the audience. APPROVAL OF MINUTES: ACTION: Motion by Commissioner Welshons, and duly seconded, to approve the Minutes of the Regular Meeting of October 21, 1992, as submitted. AYES: Chairman Erwin, Commissioners Hall, Savary, Schramm, and Welshons NOES: None ABSTAIN: Commissioners Noble and Schlehuber CONTINUED PUBLIC HEARING ZCA 91~6 - CITY OF CARLSBAD - An amendment to the Carlsbad Municipal Code (Title 21) by the addition of Chapter 21.85 to establish requirements for the reservation and affordability of housing units for moderate and lower income households in residential projects under a Citywide lnclusionary Housing Program and the payment of an In-Lieu Fee or lnclusionary Housing Impact Fee in specified circumstances. - An amendment to the Carlsbad Municipal requirements for the reservation and Households and Senior MINUTES PLANNING COMMISSION November 4, 1992 PAGE 2 GPA 92-08 - RESIDENTIAL DENSITY INCREASES - An amendment to the Land Use Element of the General Plan to add a policy which would allow the city to grant density increases above the maximum residential densities permitted by the General Plan to enable the development of recessing of a Site Development Plan permit. tor, stated that staff is requesting that the Planning Commission ems to the meeting of November 18, 1992. Staff intends to revise respond to the comments made by the Planning Commission, the that before continuing the items, he would reopen public testimony in order to take tion to reopening public testimony because he felt it was out of e City Attorney. Karen Hirata, Deputy City Attorney, replied that en to interpretation. Commissioner Welshons requested an Erwin to poll the Commissioners. A majority of the Commission felt that they would be o accept additional public testimony. Commissioner Hall was concerned that n to November 18th would not allow sufficient time for the public or the development commun nd absorb the updated revision. Gary Wayne, Assistant Planning Director, replied revision would be available to the public at 4:00 p.m. on November 10, 1992. He stated that the ision would not contain major revisions to the ordinance but, primarily, a simplification of Commissioner Welshons suggested the possibility of testimony since this would give staff additional time t Commission more time to make an effective decision. ra meeting in order to hear all of the public changes and would also allow the Commissioner Schlehuber commented that if the updated examination on November 10, 1992, that should allow the representatives ample time to review the revised document. -be available for public development community’s legal Chairman Erwin concluded that he could accept staffs recommend 18th and if more time is needed, it r a continuation to November Chairman Erwin opened the public testimony for Agenda Item #l and issu e invitation to speak. Joe Valenti, 3491 Lawrence Street, Carlsbad, had filed a request to speak but rew his request until after the updated revision of the ordinance becomes available. There being no persons desiring to address the Commission on Agenda Item #l , C the public testimony and opened the public testimony for Agenda Item #2. an Erwin closed There being no persons desiring to address the Commission on Agenda Item #I2, Chairman the public testimony and opened the public testimony for Agenda Item #3. There being no persons desiring to address the Commission on Agenda Item #3, Chairman Erwi the public testimony closed. MINUTES PLANNING COMMISSION November 4, 1992 PAGE 3 ACTION: Motion was made by Commissioner Welshons, and duly seconded, to continue ZCA 91-6, ZCA 91-5, and GPA 92-08 to November 18,1992 with continued public testimony. AYES: Chairman Erwin, Commissioners Hall, Noble, Savary, Schlehuber, Schramm, and Welshons NOES: None ABSTAIN: None - Request for approval of an amendment to a conditional in Local Facilities Management Plan Zone 1. ner, reviewed the background of the request and stated that the applicant is o a conditional use permit to incorporate an existing nonconforming 15 bed CUP 247 and expand the entire facility by adding 10 new beds and 15 parking spaces at 35 ding Street in the R-3 (Multi-family Residential) Zone. Using a diagram on the wes he pointed out some of the special features of the proposed project. He stated that the project site con separate parcels owned by the applicant and both located at the northeast corner of Harding S alm Avenue. On Parcel “A” there is a 27 bed, one-story, residential care facility, and a one- single-family residence occupied by the applicant. On Parcel 2 there is an existing one-story building permission to remodel and enlarge the a dining room, kitchen, and living room. parcels to 37. The exterior of this building and le-family home would be upgraded to match the existing building. In addition, one curb cut on nd two curb cuts along Palm Avenue would be closed, a detached accessory garage would b ed, and leading from Palm Avenue, there would be a 24 foot wide paved driveway leading to 15 new aces for guests, residents, and employees.. The lots would be consolidated to incorporate th within one lot. All of the proposed improvements would bring the facility into confo cal ordinances. Staff recommends approval. Commissioner Welshons inquired how many employees wor parking hours. Mr. Gibson replied that two spaces are requir However, he deferred comment to the applicant on the peak parkin lity and if there are any peak ees, per the Parking Ordinance. Commissioner Welshons inquired about the term “SH&P” shown on the of the proposed expansion. Mr. Gibson deferred response to the applican rints for the interior floor plan Chairman Erwin opened the public testimony and issued the invitation to spe Robert Holmes, 810 Caminita Rosa, Carlsbad, addressed the Commission and sta employees during daylight hours and two employees after 10:00 p.m. None of the vehicle. He stated that the “SH&P” on the blueprint refers to “shelf and pole” in the gave some background on the Harding Guest Home and stated that it was opened The facility was increased to 15 beds in 1962. In 1980, the facility was acquired by and in 1985, another 10 beds were added. At the present time there are 25 beds. If the expa approved, 10 more beds will be added. One of the beds would accommodate a handicapped p can accept the staff recommendation. However, since there has never been a complaint since was built, he requested the Commission to consider granting the CUP for 10 years instead of 5 yea annual review. \ MINUTES PLANNING COMMISSION November 18, 1992 PAGE 14 - A request for an amendment to SDP 80-l 1 to allow the lobby of an existing motel on the northwest corner of mar Airport Road and Paseo Del Norte, in Local Facilities Management Zone 3. uest and stated that the applicant oup Andersen Motel. The use the use of thirteen parking spaces arily oriented toward motel guests, with some customers coming from nearby mendment is required because the proposed use is an intensification of the rently contains 404 parking spaces, 13 of which are in excess of the parking t anticipates storing approximately six rental vehicles per day. Storage of trucks washing and maintenance is to be done off site. As the project satisfies all of the requirements for an S Amendment, staff recommends approval. Commissioner Welshons in about the statement that the use will generate no additional trips. Ms. Blackburn replied that the talc ion on trip generation was so infinitesimal that it equated to almost nothing. Commissioner Welshons inquired if re will be exterior signage. Ms. Blackburn replied that there will only be signage on the parking stalls. Chairman Erwin opened the public testim and issued the invitation to speak. Mr. Brian Britton, applicant, was in the audi but declined to speak unless there were questions which required a response. There being no other persons desiring to address ommission on this topic, Chairman Erwin declared the public testimony closed and opened the item fo ssion among the Commission members. ACTION: Motion was made by Commissioner mm, and duly seconded, to adopt Planning Commission Resolution No. 3463 app g SDP 80-l l(C), based on the findings and subject to the conditions contained ther AYES: Chairman Erwin, Commissioners Hall, avary, Schlehuber, Schramm, and Welshons NOES: None ABSTAIN: None The Planning Commission recessed at 8:32 p.m. and reconvened at 8:37 . CONTINUED PUBLIC HEARINGS: 3) ZCA 91-6 - CITY OF CARLSBAD - An amendment to the Carlsbad Municipal Code (Title 21) by the addition of Chapter 21.85 to establish requirements for the reservation and affordability of housing units for moderate and lower income households in residential projects under a Citywide lnclusionary Housing Program and the payment of an In-Lieu Fee or lnclusionary Housing Impact Fee in specified circumstances. Michael Holzmiller, Planning Director, reviewed the background of the request and stated that staff would only focus on the revisions which have been made. Since the last meeting’s public input, the entire staff has met and made many revisions to the ordinance. He emphasized that none of the revisions affect the PLANNING COMMISSION November 18,1992 PAGE 15 basic mandates of the ordinance as previously proposed. The revisions have more to do with deleting portions of the ordinance which had to do with administrative and operational details that added to the complexity of the ordinance. By deleting those items, staff believes that it gives the city and the development community more flexibility in creating the legal housing agreements that are needed to carry out the basic mandates which are contained in the ordinance. He noted that Evan Becker, the new Director of Housing & Redevelopment, was very much involved in the revisions and was strongly supportive of the changes. Chris DeCerbo, Senior Planner, highlighted the major revisions. Seven changes were made to reduce the complexity of the ordinance and three changes were made to strengthen the city’s commitment as a partner to the development community. Michael Holzmiller, Planning Director, noted that non-residential participation will be a separate part of the Housing Element and will be brought forward at a later date; however, the Commission may want to discuss making a motion to bring it forward sooner than originally planned. Commissioner Welshons inquired if staff has talked to the HCD about the timing to make sure we are not putting the Housing Element in jeopardy. Mr. Holzmiller replied that staff had previously received a letter from HCD accepting the adopted Housing Element which contained a provision for inclusionary housing. Staff told HCD that we would get it done by the end of the year. The state wanted to accomplish the entire affordable housing program by allowing higher density throughout the city. Commissioner Hall requested confirmation from staff that the lnclusionary Housing Ordinance was not mandated by the state but was staff’s method to accomplish the affordable housing. Mr. Holzmiller replied that the state told us we must do it because we included it in the Housing Element. Commissioner Hall inquired why staff felt inclusionary housing was needed. Mr. Holzmiller replied that the city was told that our density was not high enough. HCD wanted us to zone more sites for high density. Because staff didn’t want to do that, we countered with alternatives, one of which was inclusionary housing. Commissioner Hall inquired if density is an alternative. Mr. Holzmiller replied that it is, however we don’t want to accomplish everything with density. Staff felt there are other ways to accomplish affordable housing. If we don’t want to approve an lnclusionary Housing Ordinance, we would have to resubmit the Housing Element to the state.’ Commissioner Welshons inquired why we can’t achieve the 15% through existing and new housing. Mr. Holzmiller replied that the inclusionary ordinance doesn’t pertain to existing housing; it only applies to new development. Commissioner Welshons inquired if we have programs which will also convert existing housing to affordable housing. Mr. Holzmiller replied yes. Chris DeCerbo, Senior Planner, stated that 6,273 new units are required by the year 1996. The existing units do not count towards satisfying the objectives for 6,273 new units. Chairman Erwin had hoped that Section 21.85.130 would be changed to reflect in perpetuity but noted that the change states that at the end of 30 years, an appraisal would be made to determine the fair market value. in the previous version of the ordinance, the sale price of the unit was controlled and the minimum 30 year requirement was changed to a maximum of 30 years unless the city wants to buy it at fair market value. Evan Becker, Director of Housing & Redevelopment, replied that for rental property, a’purchase option after 30 years at a value based on restricted rents is similar to restricting the project in perpetuity at the onset. MINUTES PLANNING COMMISSION November 18, 1992 PAGE 16 Chairman Erwin noted that our minimums tend to be the development community’s maximums. People will read this as 30 years and he thinks we are making a big mistake. Mr. Becker feels that affordability in perpetuity is just fine. Chairman Erwin feels we are only deferring the problem if the units are not maintained in perpetuity. Commissioner Hall inquired about the change on page 25 regarding preliminary staff review of affordable housing proposals. It was reworded from 90 days to 30 days then back to 90 days. He requested staff to explain the change. Chris DeCerbo replied that incentives would have to go before the City Council. Staff has no authority to grant incentives, even during the preliminary review. Mr. Holzmiller commented that the time period was reduced to 30 days in order for staff to review the physical aspects of the project. If the applicant is also requesting financial incentives, it would take 90 days to get the package approved by Council. The development community thought that 90 days was too long for a normal review. Staff cannot respond on the financial incentives in 30 days. Commissioner Hall inquired about Section 21.85.160 on page 26 and whether it is intended to be a concurrent review. Mr. Becker replied that these projects will probably involve land use incentives as well as financial incentives. Mr. DeCerbo added that the affordable housing agreement is necessary prior to approval and recordation of the final map approval. Commissioner Schlehuber inquired if a homeowner buys the unit after 30 years whether or not he would benefit by the increased value. Mr. Becker replied that the units could be valued on market rents or restricted rents. His interpretation is market rents. Homeowners would receive appreciation based on their equity only, and the city would have the greatest share of equity because of the initial subsidy. Commissioner Schlehuber feels there is something wrong with that. If the city doesn’t have the money to pay fair market value at the end of 30 years, we would lose those units. Commissioner Noble noted that at one time we talked about the CPI and wondered when that fell out. Mr. Becker replied that some of these items were deleted from the ordinance and would be built into the Affordable Housing Agreement. That hasn’t really changed. Commissioner Noble referred to his own home and stated that it has appreciated approximately 3,000% since purchase. Mr. Becker replied that a concept of equity would be developed on a for-sale unit to allow the city to purchase the interest of the homeowner. Chairman Erwin opened the public testimony and issued the invitation to speak. Joe Valenti, 3491 Lawrence, Carlsbad, addressed the Commission and stated that he is against higher densities. He feels the proposed ordinance is taking away from the 80% of the citizens and giving to the 20%. He is concerned that the affordable units will not be paying their fair share of property taxes. Government can’t give something away unless it first takes it from somebody else. He is not a developer and is speaking for the 80% who are residents of Carlsbad and who are concerned about the quality of life in Carlsbad. He is totally against tax-subsidized housing because it puts the burden on the remaining citizens. He noted that more people own homes in California than in any other industrialized nation. Adding more burdens on the developers only drives up the cost of homes. It has come to the point that the actual construction of the home is the cheapest cost. The lnclusionary Housing Ordinance will again drive up the cost of homes in Carlsbad. He doesn’t think it is the answer to the problem. Stephen Feher, 990 Highland Drive, Solana Beach, representing Esperanza Housing in Encinitas, addressed the Commission and stated that his firm is a non-profit developer. He supports the proposed ordinance and thinks that the changes move in the right direction to make the ordinance more flexible. Nevertheless, every case will have to be looked at on its individual merits. Even so, non-profit developers MINUTES PLANNING COMMISSION November 18, 1992 PAGE 17 will not be able to make affordable housing work unless they receive adequate incentives. He asked the Commission to vote in favor of the proposed ordinance. Catherine Rodman, 276 So. Tremont Street, Oceanside, representing the Legal Aid Society of San Diego, addressed the Commission and stated that inclusionary housing is not the city’s only option for affordable housing. They could also do it by rezoning. However, the ordinance will accomplish the same thing in a more flexible way. She would like to recommend that the affordable housing units be in perpetuity. If not, she suggested having the 30 year term start anew with each sale. It would avoid a windfall for someone after 29 years. Commissioner Hall inquired about her statement at the last meeting that Oceanside and several other communities already have an affordable housing program in place. Ms. Rodman replied that this was correct. Commissioner Hall inquired about the size of the impact fee as compared to the $15,000 which staff is proposing. Ms. Rodman replied that the impact fee in Oceanside is $8,270. Commissioner Hall inquired if she knows of any other city which has a similar fee. Ms. Rodman replied that Encinitas is comparable but they are presently being sued. She passed out a copy of a newspaper article regarding the lawsuit. She is not personally aware of any other cities. Commissioner Hall inquired where Ms. Rodman resides but she declined to state as she felt it had no relevance to the issue. She stated that she works in Oceanside and is a native of Southern California. Margie Monroy, 3610 Carlsbad Boulevard, Carlsbad, representing the League of Women Voters, addressed the Commission and urged the adoption of the lnclusionary Housing Ordinance. The League supports individual home ownership and the removal of barriers. She proposed that the city immediately take the fees it receives and create a housing trust fund. If we expect the development community to assume part of the burden, they need to know what the city is going to do also. If we must create affordable housing, then we are going to have to bring all members of the community into the process. Commissioner Welshons inquired if the League had looked at the first document as well as the revisions being proposed tonight, Ms. Monroy replied that the League did not review them in great detail. They support the basic concept and the city needs to educate the citizens. People are afraid. Doug Avis, 6670 El Camino Real, representing Fieldstone Co., addressed the Commission and referred to his letter dated November 17, 1992 which states that although the revisions to the ordinance do create some needed flexibility, it still does not justify allocating the overwhelming majority of the burden for providing new affordable housing units through the inclusionary program to new residential development, without any allocation of any portion to non-residential development, and without an acceptance by the city of what could be their very significant responsibility as well. If the city forms a Housing Commission to oversee the creation of affordable housing, he hopes the development community will be represented. Chairman Erwin inquired if he had received the staff response to Fieldstone’s comments. Mr. Avis replied that he had not seen it yet. Commissioner Schlehuber commented on the recent article written by Larry Clemens, General Manager of Aviara and President of BIA, which states that if San Diego adopts a 15% inclusionary housing requirement, it will only provide 3-S% of the affordable housing needs. A copy of the Clemens article will be on file in the Planning Department. Glenn M. Rick, UDC Homes, 438 Camino del Rio South, Suite 112B, San Diego, addressed the Commission and reviewed comments contained in his letter dated November 18, 1992 setting forth his MINUTES PLANNING COMMISSION November 18, 1992 PAGE 18 position regarding the revised ordinance. He stated that the recent revisions do create some flexibility but the ordinance still improperly assesses the impact on the development community. He is concerned that the ordinance does not provide a commitment from the city to provide sources of funds to compensate for the costs associated with production of affordable housing. Commissioner Schlehuber inquired if Mr. Rick agrees that there is a need for affordable housing in Carlsbad. He agrees. Commissioner Schlehuber inquired if Mr. Rick agrees that people who work at McDonald’s cannot presently afford housing in Carlsbad. He agrees. Commissioner Schlehuber inquired if Mr. Rick agrees that new construction creates a demand for affordable housing. He does not agree. Mr. Rick feels that new housing doesn’t create the demand but, rather, provides housing to fill the demand. Chris Chambers, Continental Homes, one of the developers of the Carrillo Ranch, addressed the Commission and delivered a letter dated 11 /18/92 from McDonald, Hecht & Solberg which discusses the nexus issue. He stated that Continental Homes is not a developer of affordable housing and that affordable housing is a whole sub-industry of its own. While some non-profit developers have the know-how in this area, his firm does not. How can they do it? He concurs with the need for affordable housing but feels that the inclusionary ordinance goes too far in placing the burden on one segment of the community. To make the ordinance more equitable to the development community, he recommends that developers only be required to provide the land that the units will be built on. Mike Howes, Hofman Planning, 2386 Faraday Avenue, Suite 120, Carlsbad, addressed the Commission and stated that in his letter dated November 18, 1992, he proposes four changes to the ordinance as follows: (1) Allow the location and phasing of inclusionary units to be modified subject to the approval of the Planning Director; (2) Correct the strikeout in one section which states that the Planning Director will provide a letter within 90 days specifying what incentives and/or financial assistance will be supported; (3) Base the inclusionary housing requirement on the actual number of units approved for development; and (4) Allow the City Council to approve a receiver site in a different quadrant when it can be shown that there is a fair apportionment in all four quadrants. Dan Shelley, 905 Olive Crest, Olivenhain, addressed the Commission and stated that he had attended a meeting of the Housing Commission in San Diego. He thought it was interesting that their conclusion was exactly the opposite of Mr. Clemens’ reported conclusions. The San Diego Housing Commission adopted figures brought forward by their task force. In addition, they concluded that developers would receive adequate concessions to cover the costs of affordable housing. Mr. Shelley is concerned that the 15% impact fee in Carlsbad will ultimately be a surtax on market-rate housing. There being no other persons desiring to address the Commission on this topic, Chairman Erwin declared the public testimony closed and opened the item for discussion among the Commission members. Commissioner Schramm inquired if this item could be continued to the next meeting for a decision. Michael Holzmiller, Planning Director, replied that the Planning Commission could continue it but, as it is, there is no way it can be completed by the end of the year. The city has made a commitment to the state to have the ordinance in place by the end of the year. If it is continued again, it will probably be February before it could become final. We would be putting the Housing Element at risk and subjecting the city to possible disciplinary action. Commissioner Schramm is very concerned about the 30 year issue. She referred to the comments made by Ms. Rodman. PLANNING COMMISSION November 18, 1992 PAGE 19 Chairman Erwin inquired if there are any specific changes that she would like to see made to the ordinance. Commissioner Schramm would like to see something done about the 30 years and would also like to see some financial participation by those who have been long-time residents of Carlsbad, perhaps a real estate transfer charge. She inquired if staff foresees assessing a fee to existing residents, Evan Becker, Director of Housing & Redevelopment, replied that he knew of no easy way to approach an assessment on residents. It can only be done when properties are sold or exchanged. Commissioner Noble commented that there were many questions and comments from the public who think that developers will have to foot the entire bill for affordable housing. In fact, there are many more chapters yet to be completed. Mr. DeCerbo replied that there are a total of 52 programs and 14 incentive programs. Commissioner Noble wants to get the ball rolling. Commissioner Schramm commented that she would like to see the non-residential program accelerated; she feels it would provide a comfort zone for her and many others as well. Commissioner Savary reviewed Mr. Howes’ comments. She has no problem with items #l and #2. She also likes his recommendation in item #3 to assess the 15% only on those units which are approved. Commissioner Hall inquired how staff feels about Mr. Howes’ recommendation #3. Mr. Holzmitler replied that staff can live with Mike Howes’ wording. Staffs proposal was what they felt was the direction received from the Planning Commission. However, staff cannot support his item #4 because the City Council has indicated on several occasions that we can’t cross quadrant boundaries for affordable housing. Commissioner Savary inquired if a caveat could be added, “if approved by the City Council.” Mr. Holzmiller replied that staff cannot recommend it. If the Planning Commission wants to recommend this, staff will go along with it. However, staff has received pretty strong direction from the City Council. Commissioner Savary inquired if it would be acceptable if it accommodated more than one developer. Mr. Holzmiller replied that there are times when it would be advantageous. Commissioner Savary understands the need for affordable housing and that this ordinance is only part of it. She will support it because she knows it is only the first step. Commissioner Welshons reviewed the minutes of the last meeting and thinks that developers should not be the only ones to provide affordable housing. There seems to be some inequities since there is no room left for affordable housing in the northwest quadrant because it is already built out. Evan Becker, Director of Housing & Redevelopment, replied that the northwest quadrant would participate because of the rental assistance program which is focused in the northwest quadrant. Commissioner Welshons noted that the ordinance also mentions fractional units. She inquired if a developer gets any reward for building an extra unit. Chris DeCerbo, Senior Planner, replied no. Commissioner Welshons liked the idea of a transfer fee proposed by Commissioner Schramm. Although she agrees in concept with the way the ordinance is written, she thinks a task force needs to evaluate it. It is still unclear how all the pieces will fit together. If a developer provides the homes and two years later we assess a fee to non-residential, how do we make it all equitable. She cannot support the ordinance the way it is written. Commissioner Schlehuber stated that if the citizens were to vote on this ordinance, it would be defeated. Nevertheless, the City Council went along in order to avoid the heavy densities proposed by the state. He can support the ordinance. He feels the way to defeat it is to continue filibustering. Something has to be MINUTES REVISED PLANNING COMMISSION November 18, 1992 PAGE 20 put on paper to get the ball rolling. The need has been demonstrated. He would also like to see how all the pieces fit together. He does not like the 30 year method proposed by Mr. Becker but gives him the benefit of the doubt because he may have had a good reason for it. He doesn’t like the tenure to be in perpetuity either. However, he did like the comment by Ms. Rodman about the 30 year rollover each time the property is sold. In any event, if we pass it tonight and the City Council doesn’t like the ordinance, they can change it. If it gets defeated and it needs to be changed, it can be changed later. Commissioner Schlehuber likes MfI~Wbke$r~6~/#8 Mr. Holzmlller’s compromise language (for #3 In Mr. Howes’ letter) that Is In the revised ordinance, and that there may also be some good in hw Mr. Howes ' recommendation #4. He could accept #4 if it is only applied to properties which are contiguous. In any event, he thinks we should go ahead and pass the ordinance with our comments going into the record. Commissioner Hall disagrees with Commissioner Schlehuber. He doesn’t see this ordinance working the way it is being presented. We are not building any homes now and this ordinance will only make it worse. We are approaching this issue as a tax and it just won’t work. We can pass the ordinance but it will never get implemented. The ordinance skirts the density issue so we are tying everyone’s hands. We are a long way from making affordable housing work. Commissioner Hall thinks we need to study the ordinance further. He does not feel there is any sense passing an ordinance which won’t work. We can call this a fee if we want to, but whatever it is called, it is still a tax any way you look at it. He thinks we need to take a practical look at the ordinance. Chairman Erwin agrees with Commissioner Schlehuber. He is totally opposed to the 30 year tenure. He wants to see it in perpetuity. Otherwise, he would like a rollover on the for-sales so we can keep the inventory once we get it. We are paying the price up front and we are all going to pay for it. We need a guarantee. He can support the ordinance with that exception. ACTION: Motion was made by Commissioner Schlehuber, and duly seconded, to adopt Planning Commission Resolution No. 3424 recommending approval of the Negative Declaration issued by the Planning Director and adopt Planning Commission Resolution No. 3425 recommending approval of ZCA 91-6, based on the findings contained therein with the following changes: (1) including the changes set forth in staff memo dated November 18, 1992; (2) including recommendations #l and #I2, B&Y/#8 by Mike Howes, and recommendation #4 with the change that the property be contiguous; and (3) amending the term so that at the end of 30 years the city would have to purchase the property at the impeded market value within 90 days and, if not exercised, the developer could sell the property at whatever price he wants to. AYES: Chairman Erwin, Commissioners Noble, Savary, and Schlehuber NOES: Commissioners Hall, Welshons, and Schramm ABSTAIN: None Chairman Erwin requested final comments, if any, to go forward with this ordinance when it goes to Council. Commissioner Schramm would liked to have seen it go back to staff one more time to incorporate some of the recommendations made tonight. Commissioner Welshons would like to have had a task force formed to iron out the details of the ordinance, including balanced representation by the development community, citizens, and staff. She would also like the possibility explored regarding a transaction fee when property is sold or transferred. The proceeds could go towards affordable housing in perpetuity. Finally, she feels very uncomfortable sending this ordinance forward to the City Council the way it is written. 5. ZCA 91-5 - CITY OF CARtSBAD- DENSITY BONUS - An amendment to the Carlsbad Municipal Code (Title 21) by the addition of Ch requirements for the reservation and MINUTES