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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 an 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 in Section 27-1 of the Alameda Municipal Code (AMC) and stated that these requirements can be satisfied either by providing housing units affordable to low- and moderate-income households or by paying an in-lieu fee.
The AMC mandates that the City Council review the AHUF requirements on an annual basis to determine that they remain 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 requirements 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 most recent 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, 2017, and to serve as the Annual Report.
Monies in the AHUF 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 also 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 a 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, and the City’s fees are well within the limits of the maximum fees that could be supported on a nexus basis. Moreover, since 2006, land and other housing costs have continued to rise.
Affordable Housing Fund Revenues and Expenditures: For the Fiscal Year 2016-17, the starting balance was $235,820, and a total of $48,387 in fees and $748 in interest revenues were recorded for the Fiscal Year.
Expenditures for the Fiscal Year included $118,913 for program implementation, including predevelopment activities related to affordable housing development and $14,940 for contracted services for the inclusionary housing program. Total expenditures were $133,853 for a balance of $151,102, ending June 30, 2017.
FINANCIAL IMPACT
There is no financial impact from conducting or accepting an annual review of the Affordable Housing Ordinance. Consistent with the Ordinance and the 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 related 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 and accepting 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 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 attached Annual Affordable Housing Unit Fee Fund Activity Report.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Lisa Fitts, Housing Authority Management Analyst
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Fiscal Year 2016-17 Affordable Housing Unit Fee Report