File #: 2015-1355   
Type: Regular Agenda Item
Body: City Council
On agenda: 3/10/2015
Title: Housing and Transportation Workshop: (1) Presentation on Housing and Density Bonus Policies and Programs; and (2) Provide Direction to Prepare Amendments to the City of Alameda Density Bonus Ordinance. (Community Development 227)
Attachments: 1. Exhibit 1 - Summary Overview of Senate Bill 375 and Assembly Bill 32, 2. PDF of Staff Report (if cannot be viewed online), 3. City Attorney Memo, 4. Presentation, 5. Submittal
Title
Housing and Transportation Workshop: (1) Presentation on Housing and Density Bonus Policies and Programs; and (2) Provide Direction to Prepare Amendments to the City of Alameda Density Bonus Ordinance. (Community Development 227)
Body
 
NOTE: IF YOU HAVE TROUBLE VIEWING THIS REPORT ONLINE, PLEASE OPEN THE REPORT ATTACHED ABOVE AS A PDF (ATTACHMENT 2)
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Housing and Transportation Workshop: (1) Presentation on Housing and Density Bonus Policies and Programs; and (2) Provide Direction to Prepare Amendments to the City of Alameda Density Bonus Ordinance.
BACKGROUND
On January 6, 2015, the City Council directed staff to prepare an analysis regarding:  
1.      Potential amendments to the City's Density Bonus Ordinance to clarify the application and public review process.  
2.      A moratorium on Density Bonus applications to provide time to adopt new regulations and procedures for Density Bonus applications.  
3.      The relationship between the State of California density bonus law, the City of Alameda housing opportunity sites, and traffic congestion.  
The following discussion addresses these issues and will be presented as a part of a joint Housing and Transportation Workshop with the City Council.
DISCUSSION
The City's Density Bonus Ordinance is required by State Law. The people of California, through the State legislature, have established that housing, transportation, and climate change are issues of statewide concern that require a variety of state laws to ensure that all cities and counties in California work together to increase housing opportunities for California's diverse population, combat climate change, reduce greenhouse gas emissions and vehicle miles traveled per person, and improve transportation facilities and services.
Climate Change Law: Through SB 375 (2008) and AB 32 (2006) (Exhibit 1 provides a brief overview of these two bills.),  the State legislature has established direct links between the provision of housing, transportation funding, and the State's ability to combat global warming and climate change.  Through implementation of these statutes, the State of California and the Bay Area regional transportation and planning agencies the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG) have determined that the inner bay area cities located near the major regional transportation infrastructure should accommodate the majority of the future housing growth in the Bay Area to reduce greenhouse emissions and regional transportation congestion caused by sprawl development. The effect of these policies will be to:
·      Reduce vehicle miles traveled per person and regional greenhouse gas emissions;
·      Focus transportation funding on inner Bay Area communities that are urbanizing to accommodate the new growth and focus State and regional funding on alternative modes of transportation that reduce use of fossil fuels and greenhouse gas emissions; and  
·      Increase penalties and disincentives for local jurisdictions that make land use decisions that are contrary to State and regional objectives to reduce greenhouse gases and combat global warming.
At the local level, Alameda residents have been actively engaged in the discussion of climate change.  As a low, flat island, no city in the Bay Area is more vulnerable to the health, safety, economic, and property damage impacts that will occur from rising sea levels and more frequent major storm events associated with global warming and climate change. In 2007, the City Council adopted a Local Action Plan to address climate change.  
Housing Element Law: The State of California legislature has also determined that:  
·      Provision of housing for all segments of California society is a matter of statewide importance;
·      Availability of an adequate supply of housing affordable to all segments of society is critical to the State's long-term economic competitiveness and quality of life; and  
·      Local zoning provisions play an important role in the State's ability to provide housing.  
Per Government Code § 65300 et seq., every city and county in California is required by State law to maintain a General Plan.  The General Plan serves as the local "constitution" for all land use decisions. The statute requires that each city and county in California address issues that are of State-wide importance in the General Plan.  
State law requires that each city and county update its General Plan Housing Element every eight years to accommodate the Regional Housing Needs Allocation (RHNA).  The RHNA is provided to each region by the State.  Each region is then responsible for allocating the region's housing allocation between the region's cities and counties. In the Bay Area, ABAG is responsible for distributing the allocation among the Bay Area's cities and counties. If a city wishes to reduce its RHNA, then ABAG must identify a city or county in the region that will accept the units so that the region will still meet its RHNA.  
The sub-regional allocation process considers a number of factors, but in the recent cycle (2015-2023), the allocation of the regional housing need considered regional and State-wide efforts to address climate change through development policies that locate new housing in close proximity to job centers and existing transportation facilities to reduce commute distances, congestion, and greenhouse gas emissions.   As a result, inner-Bay Area communities such as San Francisco, Oakland, and Alameda are asked to carry large portion of the region's housing need.  
Pursuant to Government Code Section 65583, the Housing Element must include an inventory of land or list of sites that are appropriately zoned to accommodate Alameda's RHNA, provide for a full range of housing types, and provide housing for a full range of household incomes and types.  The land inventory must demonstrate that the City has enough land to accommodate the RHNA and that land on the inventory is zoned in a manner that allows the full range of housing types and densities to facilitate and encourage development of affordable and multifamily housing.   
Pursuant to Government Code section 65583.2 C (3)(A) and (B), the Housing Element must demonstrate that the City has provided land that is zoned with densities that are appropriate to encourage and facilitate development of housing for lower income households, including multifamily rental housing.  Government Code Section 65583.2 (c) (3)(B) states that if a site is zoned for 30 units per acre it shall be presumed to be appropriately zoned to facilitate and encourage housing for lower income households.
After decades of being out of compliance with State law, the City Council adopted a series of Housing Element and Alameda Municipal Code (AMC) amendments in 2012 that brought the General Plan and the AMC into conformance with State Law.  In 2014, the City Council again updated the Housing Element for 2015-2023 as required by State statute.  The updated Housing Element was certified by the State in August 2014.  
Maintaining the 2014 Housing Element certification is important to the residents of Alameda.  Over the years, the State has steadily increased the penalties for not having a legally compliant Housing Element. Failure to maintain a certified Housing Element could cause significant problems for Alameda residents and businesses.  For example:   
·      State and Regional Funds: Senate Bill 375 linked regional long-range transportation plans and investments to regional and local obligations for cities and counties to zone land for housing. Cities and counties that do not have a certified Housing Element will be increasingly ineligible for State transportation funds.  The City of Alameda received State transportation funds for projects such as the Stargell Extension, the Webster Street improvements, and street resurfacing projects. The City continues to aggressively pursue State funds for Estuary Park, Jean Sweeny Open Space Park, the Cross Alameda Trail, and other important public improvements for the community.  Noncompliant communities are increasingly ineligible for certain State park, planning, and housing grant programs. In 2014, the City received a $200,000 grant for Estuary Park, which would not have been possible without the City Council's 2012 actions to approve the 2007-2014 Housing Element.   
·      Lawsuits: Developers and housing advocates can sue jurisdictions if their Housing Element is not compliant with State Law.  Bay Area communities that were successfully sued include Corte Madera, Pittsburgh, Pleasanton, Benicia, Fremont, Rohnert Park, Berkeley, Napa County, and Santa Rosa. If a court of law finds that a Housing Element is not in compliance with State law, there are several potential consequences for the city, including:
Ø      Loss of local control over development - Invalidation of the Housing Element could have dire effects on the City's ability to control local development and pursue economic development initiatives to create jobs and increase revenue to the City.  If a court determines that the Housing Element is not valid, the City would be without a valid General Plan.  If the General Plan is found to be invalid, the Planning Board and the City Council cannot make the required findings that an action or project is consistent with the General Plan.   The City must make the consistency finding to adopt or amend an ordinance, to approve a new project or business, to approve a variance or a use permit, to require dedication of lands for parks, to collect impact fees, and to issue a building permit.  Projects as common as residential additions, new business permits, and other permits that allow Alameda residents and businesses to invest in their properties could be halted or significantly delayed by a court, until such time that the City corrects the deficiencies in its Housing Element.    However, if a court invalidates the General Plan, the Government Code allows a court to approve housing projects that may not be consistent with local community desires and objectives.
Ø      Challenges to Public Works Projects and Other Projects - Government Code §65402 provides that no public building or structure may be constructed or authorized until the City's Planning Board has reviewed the project for conformity with an adopted General Plan.   In the absence of a valid General Plan, the City would not be able to comply with these provisions of the law, thus subjecting proposed public works projects, such as Estuary Park, the Emergency Operations Center, or even infrastructure improvements at Alameda Point, to legal challenge.
Ø      Legal Fees - If a jurisdiction faces a court action stemming from its lack of compliance and either loses or settles the case, it often must pay substantial attorney fees to the plaintiff's attorneys in addition to the fees paid to its own attorneys. Recently, the City of Pleasanton paid over $1 million in attorney fees to the plaintiff's attorneys in addition to its own attorney's fees in a failed effort to defend its Housing Element.
Density Bonuses for Affordable Housing Law:  In 1979, the State legislature enacted the Density Bonus Law, (Government Code Sections 65915-65918) to address the shortage of affordable housing in California.  The statute requires that when a developer offers to construct a certain percentage of the units in a housing development for low- or very low-income households, the city must, upon request of the developer, grant the developer one or more of the following:  
·      A density bonus to help cover the costs of the affordable units.  State law specifies exactly how many additional units must be provided.
·      Incentives and/or concessions from City standards to help cover the costs of the affordable housing.
·      Waivers from City's development standards, such as the AMC Section 30-53 Prohibition on Multifamily Housing,  to enable the project to physically fit on the property.  
The statue also requires that cities enact ordinances and procedures to implement the State statute.    The City cannot adopt local ordinances that are designed to thwart State-mandated density bonuses, incentives or concessions, or waivers. In the absence of such local ordinances, the State statute serves as the default local density bonus regulations.
In 2009, the City Council unanimously voted to adopt a density bonus ordinance (AMC 30-17) to implement State law.   AMC 30-17 identifies a list of specific submittals that must be provided to the City to ensure that the affordable units being offered by the developer are constructed and managed consistent with State and local regulations and objectives and that any concessions, incentives, or waivers being requested are justified under State law. AMC 30-17 also specifies the exact number of bonus units that must be granted under State law in return for a specified number of affordable housing units.    The ordinance provides that a waiver of development standards that would preclude the construction of the project at the densities or with the concessions or incentives permitted is possible and specifically states that one such waiver could be from the requirements of Article XXVI of the Alameda City Charter and Alameda Municipal Code Sections 30-50 through 30-53.4, if shown to be necessary to make construction of the project physically feasible.  Since 2009, the ordinance has been applied to four residential projects in Alameda.  
Through Master Plans and Development Agreements (both of which are adopted by ordinances), the AMC allows the City to phase development of large mixed use projects that will be constructed over the course of several years and provide major public benefits, while preserving discretion over future phases of the project for the Alameda community.  
The phasing of subsequent planning submittals and approvals benefits the Alameda community.  Phasing allows the community to change and improve the final design to reflect current community preferences and current best practices rather than being bound to the community's preferences that might have existed five to 15 years earlier, when the initial approvals for the project were granted.    Affordable housing needs, funding sources, and architectural preferences change over time.  By allowing for phased submittals and final approvals, the Alameda City Council is able to shape a project over the five to 20 years it is being constructed.  For example, in 2011, the City Council played a major role in the design and final internal configuration of the grocery component of the Alameda Landing Target Store, even though the Alameda Landing Master Plan and Development Agreement was approved by a prior City Council six years earlier in 2006.
Responses to January 6, 2015 City Council Requests
1.      Request for potential amendments to the City's Density Bonus Ordinance to clarify the application and public review process.  
On January 6, 2015, the City Council requested that staff identify potential amendments to the AMC that would help the public better understand the relationship between the Density Bonus Ordinance and the other ordinances within the AMC that govern the review and approval of large, mixed use projects.  In response, to the Council's direction, staff has identified the following potential amendments that could be added to the Density Bonus Ordinance to help clarify how the ordinance and other ordinances work together to govern development in Alameda.  
A law, such as the City's Density Bonus Ordinance should be construed in the context of the entire statutory system of which it is a part of in order to achieve harmony amongst the parts (for instance, the City's Master Plan regulations and Development Agreement regulations).  Following this principle of statutory construction, staff's approach since the adoption of the Density Bonus Ordinance in 2009 has been, for long term, phased projects, to allow flexibility in administering the Density Bonus Ordinance.  
To clear any confusion, however, AMC 30-17 could be amended to clarify and improve understanding of the City's existing provisions and procedures with the following text:
1)      "Phased Projects: In the event that construction of a project is to be: 1)  phased over more than two years, and those entitlements are vested by instruments such as a Development Agreement, Master Plan, or other similar instrument, and 2) the vesting document(s) allows for the phased submittal of Design Review plans, then the applicant may be allowed to phase submittal of the floor plans and elevations of all planned structures and buildings until such time that the Design Review plans are submitted pursuant to the vesting documents.
2)      Incentives or Concessions:  Pursuant to Section 30-17.4 Density Bonus Application, subsections 6, any applicant requesting an incentive or concession to provide for affordable housing costs shall include evidence to justify why the concession or incentive is necessary to provide for affordable housing costs.  Specifically, the application shall include a financial report or pro forma consistent with Section 30-17.15, subsection 7.
3)      Waivers: Pursuant to Section 30-17.4. Subsection 7, any applicant requesting a waiver of development standards that physically preclude construction at the densities and/or concessions and incentives permitted shall submit evidence in the form of a site plan, drawing or written explanation describing why the waiver is needed to permit the project.  A financial report or pro forma is not required to justify a waiver."  
Although these changes do not substantively change the requirements of the ordinance or the way that the City implements State and local density bonus requirements, they might help explain to the public how the density bonus section of the AMC works with other sections of the AMC.  
The City Council could direct staff to initiate the review process with the Planning Board and the Alameda community to make a recommendation to the City Council on amendments to AMC 30-17 Density Bonus Ordinance.  Pursuant to the local and State requirements, the zoning amendment public process would include at least one noticed public hearing before the Planning Board, followed by at least two noticed public hearings before the City Council for a first and second reading of any contemplated amendments. Through the public process, the City should also amend the ordinance to comply with new 2015 State legislation (AB 222) regarding rental affordable units provided in density bonus projects. Staff anticipates that the proposed amendments can be presented to the Planning Board in April and be before the City Council in May for a first reading.
2.      Request for a discussion on a moratorium on Density Bonus applications to provide time to adopt new regulations and procedures for Density Bonus applications.  
The State has declared housing to be a statewide concern, and the State strictly regulates the use of local moratoria to stop multifamily and affordable housing.  
Given that density bonuses are required by the State, a local moratorium on density bonus applications is problematic. Pursuant to Government Code Section 65858, an interim urgency ordinance to place a 45-day moratorium on housing development requires a four-fifths vote of the City Council and a clear statement with written findings explaining why 45 days is necessary to study the issue and amend certain land use ordinances to prevent an immediate impact to the "public health, safety or welfare".  
At the end of the 45 days, the Council could not extend the moratorium on housing unless it is able to make at least two written findings that:
·      The continued approval of the development of multifamily housing projects would have a specific, adverse impact upon the public health or safety. ("Welfare" is not a consideration.) A "specific, adverse impact" means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date that the ordinance is adopted by the legislative body.
·      There is no feasible alternative to satisfactorily mitigate or avoid the specific, adverse impact identified as well or better, with a less burdensome or restrictive effect, than the adoption of the moratorium.
Staff does not believe that a moratorium on housing is necessary or feasible for the following reasons:
·      The City's ability to fundamentally change density bonus requirements is limited by State law.  
·      There is no need to study the problem described above relative to AMC Section 30-17.  Clarifying amendments are identified in the discussion, and those amendments would not substantively change how density bonus projects are processed in Alameda.
It will be difficult for the City Council to make the required health and safety findings to a moratorium.  Commute hour traffic delay is not considered a "health and safety impact".  The State Legislature recently passed SB 743 (2014) that states that automobile delay shall not even be considered a significant impact on the environment, for the purpose of the California Environmental Quality Act., Making findings concerning public health or safety standards, rather than public welfare establishes a high bar that will be difficult to meet.  Generally speaking, the vast majority of land use regulations are based upon the City's police power that allows cities to regulate in the interest of the general welfare, for instance, zoning laws establishing lot coverage, minimum setbacks, etc., are rooted in the City's ability to regulate in the interest of the general welfare.  In contrast, public health and safety standards address a different set of issues and traffic congestion is unlikely to rise to the level of public health or safety.  
For these reasons, staff believes it would be exceedingly difficult to make the findings for a moratorium on density bonus projects specifically or housing projects generally. Staff does not recommend that the City Council pursue such a moratorium at this time.
Request for a discussion on the relationship between the State of California density bonus law, the City of Alameda housing opportunity sites, and traffic congestion.  
On January 6, 2015, the Council asked for an analysis of the relationship between State-mandated density bonuses, the City's Housing Element housing opportunity sites, and traffic congestion.
A.      Density Bonus Ordinance
Since adoption of the Density Bonus Ordinance, the ordinance has been applied to four residential projects: two projects requested density bonuses and two projects requested waivers from certain City development standards.  Based upon the City's experience over the last five years, it is apparent that developer requests for density bonuses on housing opportunity sites vary dramatically.  It is also apparent that site-specific conditions and developer objectives make it very difficult to predict the total number of units that might be developed on a housing opportunity site.  For example, since 2009 and the adoption of the Density Bonus Ordinance:
·      One Housing Element opportunity site was developed with no housing at all (Gateway site at Webster and Stargell).
·      Three housing opportunity sites are being developed with less units than permitted by the zoning or anticipated in the Housing Element.  In these three cases, no density bonuses were requested or granted (Marina Shores, Alameda Landing, and Oakmont Senior Living).
·      Developers for two housing sites requested and were granted a 22% density bonus (Boatworks in 2011 and Del Monte in 2014).
·      No developer to date has requested a density bonus over 22%.  (Under the State and Local laws, developers may request up to a maximum 35% density bonus.)
 
B.      New Housing Development
In the twenty years between 1990 and 2010, the number of housing units in Alameda increased from 30,520 to 32,351 for a total of 1,831 new housing units. (Source: US Census).  Between 2010 and 2014, the City added Grand Marina Village with 40 units and Jack Capon Villas with 19 units.   No new units were finished and occupied in 2014.  
However, during that same time period, between 1990 and 2010, the population of Alameda actually decreased by 2,647, from 76,459 in 1990 to 73,812 in 2010. (Source: US Census) Today, the population of Alameda is estimated to be approximately 75,988. (Source: State Department of Finance)
Unfortunately, Alameda's small increase in its housing stock over the last 20 years came at a time that the Bay Area was experiencing significant growth.  Between 1990 and 2010, the Bay Area population grew by 1.1 million people or from approximately 6.1 million people to approximately 7.2 million in 2010.  In combination, the lack of new housing and the increase in Bay Area population has resulted in a growing demand for housing in Alameda and throughout the region.  This growing unmet demand for housing has resulted in dramatic increases in housing prices and rent prices in Alameda.
In the next three years, Alameda will add 286 units at Alameda Landing,  89 units at Marina Shores on Buena Vista Avenue, and 25 senior units at Oakmont Senior Living for a total of 400 new housing units.  (Oakmont includes 25 full housing units and 27 rooms without cooking facilities) The Alameda Landing and Marina Shores projects include a combination of single family housing and multifamily housing, and both projects include annual funding for shuttle and bus services and roadway improvements to improve bicycle, pedestrian and transit access. Oakmont also includes shuttle services.   Assuming the citywide vacancy rate (5%) and citywide average household size (2.4), these projects will likely increase the population of Alameda to approximately the population of the City in 1990.  
If the current strong housing market continues, the Del Monte building may begin construction in late 2016 with the first residents moving in late 2017 and full occupancy by 2020.  With the occupancy of these 380 units, the project may add approximately 865 additional residents to the city's population, bringing the total population in 2020 to approximately 77,600, a citywide increase of approximately 2% in 30 years.  
In addition to the three projects described above, five additional projects are in the "planning pipeline":  800 units at Alameda Point, 182 units at Boatworks, 58 units at 2100 Clement Street, 22 units at Island High, and a proposal to rezone property at 1835 Oak Street for 48 housing units.  None of these current proposals have completed their public review process, so it would be premature to speculate whether they will all be approved, and if approved, when they might be constructed.  For example, the Boatworks project has been in the "planning pipeline" for over 10 years, and the Oak Street project requires a re-zoning, for which the City Council has full discretion to approve or deny without concern about State Housing Element or State Density Bonus requirements. Nevertheless, if all four projects (not including Oak Street) were to be approved by the City Council and all constructed within the next 7 to 12 years, these project in combination with the two under construction would add approximately 1,841 units to the City of Alameda housing stock (or 184 units per year over a 10-year period) and the City will produce enough units to meet the City's RHNA for 2015-2023, which is 1,725 units.)    
Forecasting the size and timing of any other future housing developments that have not yet been submitted to, or approved by the City, would be unwise for the following reasons:
·      The pace and timing of housing projects is highly sensitive to regional and national economic conditions and cycles, and regional economic trends will alter property owners and/or developer's plans for the site.
·      The actual number of units that a site can accommodate may be much less than the maximum allowed under the zoning because of site-specific conditions, such as:
o      Shoreline conditions and Bay Conservation and Development Commission requirements and conditions,
o      State Lands Commission requirements and conditions on adjacent properties,
o      Site-specific environmental, geotechnical, historic, and/or CEQA issues and mitigations,
o      Relocations requirements for existing uses,
o      Amount of non-residential uses required on sites zoned for mixed use,
o      Amount of on-site space required for roadway, circulation, and open space , and
o      The size of any density bonus requested.  
C.      Traffic Congestion
No issue is more widely discussed and studied by the City of Alameda during the planning and development process than the relationship between new development and transportation.  Over the last 10 to 15 years, the City has conducted a wide range of transportation studies, plans, and evaluations.  Every major Alameda project environmental evaluation considers the impact of "cumulative development" on the City roadway network.  Every analysis concludes that the Alameda roadway levels of service (i.e., automobile delay) will worsen with both local and regional growth and city efforts must focus on transportation alternatives for existing and future residents.
However, contrary to the popular opinion Alameda's population has not increased significantly in the last 20 years, and the total number of cars using the Webster and Posey Tubes on a daily basis has also not changed significantly. Furthermore, since the departure of the Navy, the average number of cars leaving the City through the Posey Tubes during the morning commute period has not changed significantly. (Source: City of Alameda Public Works Annual Traffic Counts.)
 
Despite the fact that the number of cars using the Posey Tubes has not increased significantly, traffic congestion has gotten worse.   The Bay Area is growing and becoming more urban as the result of population and job growth and State and regional efforts to combat global warming and climate change.
Between 1990 and 2010, the Alameda population went down, but the Bay Area population grew by 1.1 million people or from approximately 6.1 million people to approximately 7.2 million in 2010.   Between 2013 and 2040, the population of the Bay Area is expected to increase by another 2.1 million people for a total of 9.3 million. (Source: MTC and ABAG)