Title
Recommendation to Conduct the Affordable Housing Ordinance Annual Review Consistent with Section 27-1 of the Alameda Municipal Code and California Government Code Section 66001 and Accept the Annual Report. (Housing 266)
Body
To: Honorable Mayor and Members of the City Council
From: Elizabeth D. Warmerdam, Interim City Manager
Re: Recommendation to Conduct the Affordable Housing Ordinance Annual Review Consistent with Section 27-1 of the Alameda Municipal Code and California Government Code Section 66001 and Accept the Annual Report
BACKGROUND
On December 19, 1989, the City Council adopted the Affordable Housing Ordinance, which was created to mitigate the housing impacts caused by new or expanded non-residential construction. The fees apply to office/research and development, retail, warehouse/industrial, manufacturing, and hotel/motel construction. The Ordinance established the City’s Affordable Housing Unit/Fee (AHUF) requirements as Section 27-1 of the Alameda Municipal Code (AMC) and stated that these requirements can be satisfied either by the provision of housing units affordable to low- and moderate-income households or by the payment of an in-lieu fee.
The AMC mandates that the City Council review the AHUF requirements on an annual basis to determine whether they are reasonably related to the impacts of development and whether the affordable housing units, programs, and activities are still needed. In addition to the requirements of the AMC, the AHUF is also required to meet the provisions of Section 66001 of the State of California Government Code. The Annual Report includes a brief description of the type of fee in the fund, a statement of total fees collected and interest earned, the beginning and ending fund balance, and how the fees were expended during the fiscal year.
This staff report and the attached Annual Report (Exhibit 1) have been prepared to satisfy the annual review requirements pursuant to Section 27-1 of the AMC and Section 66001 of the Government Code for the fiscal year ending June 30, 2015.
Monies in the affordable housing unit fee fund may only be used in accordance with and in support of activities to implement the City's adopted Housing Element. These uses include, but are not limited to, equity participation loans, grants, predevelopment loan funds, participation leases, loans to develop affordable housing or other public/private partnership arrangements. The affordable housing funds may be expended for the benefit of rental or owner-occupied housing.
DISCUSSION
The Affordable Housing Ordinance requires that, at the time of building permit application, a developer of a non-residential project (new construction or expansion) may satisfy the affordable housing requirement either by providing affordable units or by paying an in-lieu fee. The Ordinance provides developers with a process to apply for an adjustment or waiver of the affordable housing requirement if there is no reasonable relationship between a particular project and the need for affordable housing. The application for an adjustment or waiver is reviewed by the Community Development Director and can be appealed to the City Council for a final decision.
Prior to adoption of the Affordable Housing Ordinance, a ‘nexus study’ was conducted in order to establish the fact that construction or expansion of non-residential development was a major factor in attracting new employees to the city, which in turn created a need and demand for additional housing in the city, and specifically for additional affordable housing. This study was reviewed in November 2006, with the conclusion that the demand for affordable housing and associated subsidies is comparable to or greater than the demand calculated at the time of the original study in 1989. The City’s fees were determined to be well within the limits of the maximum fees that could be supported on a nexus basis. Since 2006, land and other housing costs have continued to rise.
On July 1, 2014, the starting fund balance was $598,033. During Fiscal Year (FY) 2014-15, the total fees received were $92,549 and all other revenues, including interest earnings, were $14,319. Expenditures during the year included $159,606 for administrative costs (salaries, benefits, and miscellaneous office costs for housing staff), $14,405 for professional consultant contracts (including legal fees), and $80,000 for two down payment assistance loans. The year-end fund balance was $450,891. The services provided by housing staff include supporting the development of new affordable housing, monitoring existing affordable housing, management and monitoring of the below- market rate for-sale homes, serving as a public information resource, and implementing other policies of the General Plan Housing Element.
The Ordinance establishes a method for increasing the fee annually. The fee increase, if any, is based on the increase in local cost of construction. The California Department of General Services publishes a monthly California Construction Cost Index and reports the annual percentage increase in costs. Between September 2014 and September 2015, average construction costs in the San Francisco Bay Area have increased by approximately 3%. Therefore, for the first time since the recession, staff will be recommending a 3% fee increase effective July 1, 2016, as part of the Master Fee schedule for the upcoming fiscal year.
FINANCIAL IMPACT
There is no financial impact from conducting an annual review of the Affordable Housing Ordinance. Consistent with the Ordinance and Government Code, all funds collected from the City’s AHUF are sequestered in a specific fund (Fund 266) that can only be used for eligible housing purposes specified in the Ordinance.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This Annual Review and the attached Annual Report are consistent with the requirements of Section 27-1 (Affordable Housing Unit/Fee Requirements) of the AMC and State of California Government Code Section 66001.
ENVIRONMENTAL REVIEW
Conducting an Annual Review of the City’s Affordable Housing Ordinance is not a project subject to environmental review under the California Environmental Quality Act (CEQA) because it involves governmental fiscal activities that do not include any commitment to any specific project that may result in a potentially significant physical impact on the environment pursuant to CEQA Guidelines section 15378(b)(4).
RECOMMENDATION
Conduct the Affordable Housing Ordinance Annual Review consistent with Section 27-1 of the Alameda Municipal Code and California Government Code Section 66001 and accept the Annual Report.
Respectfully submitted,
Victoria Johnson, Housing Authority Director of Housing and Community Development
By,
Claudia Young, Housing Authority Housing and Community Development Program Manager
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Affordable Housing Unit/Fee Annual Report