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HomeMy WebLinkAbout1996-07-23; City Council; 13747; HOUSING IN-LIEU FEESHOUSING IN-LIEU FEES RECOMMENDED ACTION: ADOPT Resolution No. 96-2 6 1 , establishing Inclusionary Housing In-Lieu Fee and grar ITEM EXP LA N AT1 0 N : On April 16,1996 the City Council directed staff to prepare the necessary documents tc Inclusionary Housing In-Lieu Fee which is required by the City’s Inclusionary Housing Ord 21,85, City Council considered a number of options and supported a fee level based on tl Affordable Housing Credit in the Villa Loma affordable housing project . This cost, define Council Policy 58, is an appropriate measure of subsidy cost required to produce a low-incor housing unit. The City Council chose to keep the fee applicable to projects of less than seven The resolution also contains approval of a refund of the difference paid under protest by Pacif 94-02/PUD 94-0 l), approved by the Planning Commission on January 18, 1995, and the am01 FISCAL IMPACT: Although this change reduces the Inclusionary Housing Impact Fee by over 50%, fiscal imI of revenue loss will be minimal because this fee option remains restricted to only very small addition, it is possible that the lower fee level will have less impact on project feasibility resu projects actually using this fee option. I. Resolution No. 96- 3.6 I , Establishing an Inclusionary In-Lieu Fee . 2. Agenda Bill No. 13,6 1 1, dated April 16, 1996 titled “Revision of the Inclusionary Housinj 1 2 3 4 5 6 7 8 9 10 11 12 l3 14 15 16 17 18 19 2o 21 22 23 24 25 26 27 28 0 0 RESOLUTION NO. 9 6 -261 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, ESTABLISHING AN GRANTING A REFUND THEREOF. INCLUSIONARY HOUSING IN-LIEU FEE AND WHEREAS, the City of Carlsbad has adopted an Inclusionary Housing Ordin2 order to enable the achievement of it's Regional Share housing objectives for lower-i units; and WHEREAS, the Inclusionary Housing Ordinance mandates that a minimum of percent (1 5%) of all residential units in any master plan, specific plan or residential subc be reserved and affordable to lower-income households; and WHEREAS, the Inclusionary Housing Ordinance specifies that all residential rate dwelling units resulting from new construction of rental or for-sale units shall be su inclusionary requirements; and WHEREAS, based upon a comprehensive strategy formulated to address th affordable housing needs over the short-mid, and long-term buildout of the City, inchsionary requirements (i.e., construction of affordable units, payment of in-lieu payment of inclusionary housing impact fees} have been identified for various cl residential projects; and WHEREAS, the City Council is authorized by Carlsbad Municipal Code 21.85.050 to establish the amount of the in-lieu fee from time to time by resolution; an( WHEREAS, the in-lieu fee to be paid for each market rate dwelling unit should to fifteen percent (15%) of the subsidy required to make affordable to a lowc household, for a fifty-five (55) year tenure, one newly constructed, typical attachec 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 0 0 unit; and WHEREAS, an appropriate measure of this subsidy is the actual local subsidy rec by the Villa Lorna Affordable housing project to construct lower-income affordable units; WHEREAS, this required subsidy is also the cost of an Affordable Housing Crt defined by the City Council in City Council Policy No. 58; and WHEREAS, this required subsidy is currently approximately $30,100; and WHEREAS, 15% of this required subsidy would currently result in an In-lieu approximately $43 15 per market rate unit; and WHEREAS, pursuant to Carlsbad Municipal Code Section 21.85.050 the In-L will be applicable to and assessed against all market rate residential units which have 1 will be subject to this fee; and WHEREAS, the In-Lieu Fee is required to be paid to the City at the time oft permit issuance or prior to the recordation of a final map and/or issuance of certif compliance for the conversion of existing apartments to air-space condominiums; and WHEREAS, the In-Lieu Fee paid to the City would be deposited in a Housii Fund and used for the purpose of providing funding assistance for the provision of af housing and reasonable costs of administration, in accordance with the City’s Gene Housing Element. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of as follows: 1. That the amount of the Inclusionary Housing In-Lieu Fee, established by h Code Title 21, Section 21.85.050 In-Lieu Fee Contributions, shall be 15% of the c Affordable Housing Credit in the Villa Loma affordable housing project which is th 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2o 21 22 23 24 25 26 27 28 0 requirement to construct a low-income affordable housing unit; and 2. A refund of the In-lieu fee paid by Pacific Pointe (CT 94-02/PUD 94-01) on Ja 18, 1995, under protest is hereby approved in the amount of $41,820 (the difference bel the prior fee and the amount established by this action). 3. The In-Lieu Fee shall hereafter be updated as part of the annual adoption o fees by resolution of the City Council. 4, This action results in a decrease of an existing development fee and shall be eff immediately. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Coun the City of Carlsbad, California, on the ?3rd day of JUJ,Y , 1996, by the following v( wit: AYES: Council Members Lewis, Nygaard, Kulchin, Finnila, Hall NOES: None ABSENT: None ABSTAIN: None ATTEST: &x! kL&AA- 7 ALETHA L. RAUTENKRANZ, City Clerk1 (SEAL) 3 t 4- 4m of4 E+ acd U LtaJ M oa k QO au ua (63 52 +I m UU ac CIOQ c0) dm Y)- 3 -cu om YQ V -c 'r) UO &I ha U .r( a OM Ok E2 0 Uh e m c -4 ua um !v 09) OQ 0)a w Y Ll0) ofc aU Y &Io au oa Ud *of ua nd Uk aa OU u0) 3) -4 W u 4 00) u c 'r) az Y 00 &lo v1 4u 22 \ h g i= 2 =! 0 5 0 0 3a 9 9 3 4 \ OF' OF CARLSBAD - AW 1 BILL AB # u. TITLE: REVISION OF THE INCLUSIONARY HOUSING DEPl MTG. q-lb -9 (0 IN-LIEU FEE CITY CITY DEPT. RECOMMENDED ACTION: CM Direct staff to prepare the necessary documents to modify the Housing In-Lieu Fee Pro ITEM EXPLANATION: In September of 1994 the City Council adopted the Carlsbad General Plan, including a rf Housing Element. This Housing Element provided the City Council with a broad range of and objectives aimed at serving the housing needs of the community. Some of the areas emphasized by the housing element include the following: - Condominiums - Moderate Income Development Standards - Monitoring Establish a housing Trust Fund - Neighborhood Input Farm Worker Housing - Open/Fair Housing - Home Ownership Regional Housing Needs Housing/Jobs Balance - Rehabilitation - Land Banking Rental Stock - Low Income Housing Reporting Mobile Homes - Senior Housing Because the City's ability to accomplish these goals will depend in large part on the of funding sources which may be used to finance the resulting housing programs. funding sources include: ability to secure funding for housing programs, the Housing Element identifies a wide CDBG - Housing Set Aside Developer/Private - Housing Trust Fund Federal - Redevelopment General Fund - State One of the first actions the Council took to implement the Housing Element's goals \ adopt the lnclusionary Housing Ordinance (Section 21.85 of the Municipal Code]. ordinance brings the development community onto the playing field by requiring that b provide for affordable housing in the design of all future projects, or through the payn a fee in-lieu of providing housing. Any fees collected under the ordinance are depositec Housing Trust Fund to be used by the City Council for housing related programs. The lnclusionary Housing Ordinance provided methods for dealing with both large anc large and small projects is based on the point at which a developer is required to crei whole unit of affordable housing. Projects of six units or less are only responsi fractional units. Large Projects are required to construct new housing on-site as part of the market rate F or off-site either as a separate project or as part of a combined project meeting the nc several developers. Small projects are required to pay an In-Lieu fee rather than fractional units of affordable housing. projects. Large projects are those with seven or more market rate units. The division bt Large Projects Small Projects Up to $70,000 per Affordable Unit (depending on ability to attract other subsidies) On Site $70,000 per Affordable Unit paic an in-lieu fee Off Site $20,000 to $30,000 per Affordable Unit (in Combined projects) $28,000 per affordable unit, plus $28,000 per affordable unit, plus interest (available to developers in the interest. (Available to developer: Southern half of Carlsbad) the Southern half of Carlsbad). - method for sale of fractional unit small projects is not addressed ir, Council Policy #58. No Off-Site option Available (‘1 Villa Loma 1 e 0 Page Three of Agenda Bill No. 1'3, (0 11 $70,000 per unit (unless some source of subsidy can be attracted to the project). If tt site option is allowed, the subsidy from the developer is in the neighborhood of $20,( $30,000. This represents a significant cost avoidance for the large developer. The Council has also adopted Council Policy 58, which sets the sale price of the Villa credits. This policy could be applied to both large and small projects in South Carlsbad have an obligation to create one or more units of affordable housing. This policy sets tt price of a Villa Loma credit at $28,000 plus interest, or about $30,000 per affordable I of today. In general, small projects are at a disadvantage in their ability to attract subsidies, or combined off-site projects. This forces the small project to subsidize the affordable h system at a level that is typically higher than the cost to the large project. The In-Li system assumed that a fair and equitable fee could be based on the gap analysis without consideration for other factors. The Council has several options at this time. Which option the Council selects will c largely on what the Council's housing goals are. REQUIREMENTS FOR ESTABLISHING FEES The citizens, lawmakers and courts of the State of California have invested a consic amount of effort to defining the process and establishing the rules that govern the crea development related fees. Article Xlll b of the constitution was one of the first eff define fees and taxes, and to establish the basic guidelines for the creation of user fec 1 600 was later adopted in an effort to more clearly define the need for a connection, or between the fee a developer pays and the service or product the developer receives. the adoption of these laws, the court has taken advantage of several opportunities to cc and test the intent of the law, and to add its guidance to the record. Under the most recent decision on this subject, the California Supreme Court has iss * opinion in EHRLICH V. CITY OF CULVER CITY that says that a fee that has been esta under the guidelines of AB 1 600 is constitutional provided it means that the developme pass the "essential nexus" test and are "roughly proportional" to the impact of the pr project and they are not a disguised means for taking property simply because particular moment the land owner is asking the city for some permit. The City's Housing In-Lieu fee has been established as part of a comprehensive housi that assures that all developers participate in the creation of affordable housing, either 1 the direct construction of new units, or through the payment of a fee that reflects the create new units. In 1991 the City prepared a study of the cost of creating new aff housing (Economics of Developing Affordable Housing) which became the basis existing Housing In-Lieu fee. This study shows that the cost to create a single affordable housing ranged from $63,516 to $92,943. The City's existing Housing In-l is based on an average of the cost to develop both rental and for-sale units of bedroom sizes. The present fee raises about $76,000 per affordable unit. The fee recommended in this agenda bill would set the Housing In-Lieu fee at substantially below the fee allowed under the affordability housing study referenced The recent Ehrlich decision (and the prior Nolan and Dolan decisions) do not preclude 1 e Page Four of Age e '-11 No. 13,611 ,. from establishing a fee that is less than the amount necessary to meet its needs. These c do preclude the City from establishing any fee that would be discriminatory, unreasoi applied, excessive, unproportional, or unrelated to the project paying the fee. 0 PTI 0 N S : 1. If the Council believes the present system provides an adequate method for alloc the burden for the creation of affordable housing: The Council would take no a1 leaving the existing policies and standards in place, 2. If the Council's goal is to place the maximum demand on the market to pr solutions to the housing goals, minimize the City's economic participation in affor projects, and to adjust the housing fees to provide a comparable burden to both and small projects: The Council may wish to consider reducing the fee paid by smaller projects (six or less) to be equal to the Villa Loma fee paid by large projects. Although this wil less money for the housing trust fund, and reduce the City's ability to parti economically in affordable projects, it will provide some equity between the trea of large and small projects. This will also place the largest demand on the free n to fina ways to subsidize affordable projects with a lower level of fiscal suppor the City If the Council's goal is to maximize the amount of money received by the City in to provide a funding source for City sponsored housing initiatives, and to encc the staff to participate in the creation of Affordable Housing Projects: The Council may wish to consider leaving the present fee system in tact. Th assure the maximum in-lieu fee payments from small projects. The Council mz wish to consider increasing the definition of a small project, subject to payment fee from six units or less to something higher. This will create a larger revenue 3 which could be used to support housing programs. 3. Staff is recommending that the Council consider option two. EXHl BITS: 1. 2. 3. 4. Resolution 93-268 establishing an lnclusionary Housing Fee. Section 21 -85.050 if the Carlsbad Municipal Code In-Lieu contributions. Council Policy #57 Affordable Housing - Off-site and Combined lnclusionary H Projects. Council Policy #58 Affordable Housing - Sale of Affordable Housing credits.