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Recommendation to Accept the Annual Review of the Affordable Housing Ordinance and the City’s Affordable Housing Unit/Fee Consistent with Section 27-1 of the Alameda Municipal Code and California Government Code Section 66001, and Accept the Annual Affordable Housing Unit/Fee Fund Activity Report. (Housing 266)
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To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Recommendation to Accept Annual Review of the Affordable Housing Ordinance and the City’s Affordable Housing Unit/Fee Consistent with Section 27-1 of the Alameda Municipal Code and California Government Code Section 66001, and Accept the Annual Affordable Housing Unit/Fee Fund Activity 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 Ordinance authorizes impact fees that 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 that 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 statement of total fees collected, the beginning and ending fund balance, and how the fees were expended during the fiscal year.
This staff report and the attached Affordable Housing Unit Fee/Fund Activity 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, 2016 and to serve as the Annual Report.
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, predevelopment or development loans to develop affordable housing, grants to develop affordable housing, participation leases, or other public/private partnerships and administrative costs to administer related programs. The affordable housing funds may be expended for the benefit of rental or owner-occupied housing.
DISCUSSION
Review of Fee Rates: 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 Housing and Community Development staff 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 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, and the City’s fees are 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.
Affordable Housing Fund Revenues and Expenditures: For the fiscal year ending June 30, 2016, total fund revenues were $40,459. The starting balance was $448,862. The relatively high starting balance was the result of significant permit activity during the prior years. In 2014 and 2015, the City received $403,430 and $92,549, respectively, in new revenue.
Expenditures for the year include $181,030 for program implementation, including predevelopment activities related to affordable housing development, $13,145 for contracted services for the inclusionary housing program, $25,000 for contracted fair housing services, and $30,000 for the contracted services provided by the City Housing Authority. Total expenditures were $259,174 for an ending balance of $230,147.
Senior Housing Discounted Fee: This section of the report discusses a related point that concerns the school impact fees collected by the City on behalf of the Alameda Unified School District. During 2016, staff reviewed a section of State law that requires discounted impact fees for residential housing restricted to senior citizen occupancy. Staff has corresponded with the School District and confirmed that the senior housing impact fee, pursuant to California Government Code Section 65995.1, shall be equal to the non-residential (commercial) fee. The fee schedule for school impact fees is adopted annually by the School District.
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.
RECOMMENDATION
Accept Annual Review of the Affordable Housing Ordinance and the City’s Affordable Housing Unit/Fee consistent with Section 27-1 of the Alameda Municipal Code and California Government Code Section 66001, and accept the attached Annual Affordable Housing Unit/Fee Fund Activity Report.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Victoria Johnson, Housing Authority Director of Housing and Community Development
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Affordable Housing Unit Fee/Fund Activity Report