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DISCUSSION Amendment to Annual Unit Allocation Key to first component is the fact that while the GMO establishes a 350 unit allocation limit, it also provides that the number will increase, if necessary, to meet the City's RHNA allocation. The RHNA allocation process, which occurs every seven years, includes the Association of Bay Area Governments developing a methodology that assigns housing units to greater Bay Area municipalities and counties in an amount equal to the number of units assigned to each of the state's planning regions by the State Department of Finance. This assignment of units is also separated into income categories including very low, low, moderate and above moderate. The current planning period runs through June 30, 2014 and the new planning period commences July 1 of that year. Listed below are the approved RHNA numbers for the current planning and the draft/tentative numbers for the upcoming seven year cycling beginning July 1, 2014. REGIONAL HOUSING NEEDS ALLOCATION RHNA Cycle Very Low Low Moderate Above Total (50% AMI) (80% AMI) (120% AMI) Moderate Current RHNA 1,076 728 720 753 3,277 Draft RHNA 713 389 405 551 2,058 (Commencing 7/1/2014) Based on the above, the existing RHNA, which has a term of seven years, requires an annual unit allocation of at least 468 units (3,277 units/ 7 years = 468). As a result, the current 350 allocation would need to be adjusted to reflect this higher number. As a result of the potential confusion that may develop with the current 350 unit number versus what the actual number is based on RHNA, the subcommittee and staff are recommending that the GMO be amended to include a mechanism to develop the annual unit allocation number at the start of each RHNA period. Based on the draft RHNA numbers above, based on the methodology included in the recommended amends, the annual unit allocation commencing July 1, 2014 would be 294 units (2,058/ seven years = 294 annual units). To implement this change, the amended ordinance contains a provision requiring the City Manager to provide a report to the City Council detailing the new annual unit allocation for the upcoming RHNA period within 90 days after it has been adopted by the Association of Bay Area Governments. Based on this report, the City Council would adopt the new unit allocation limit and memorialize in a City resolution. At the start of the subsequent RHNA cycle in 2021, the process would be repeated resulting in a new annual unit allocation limit. Also note that in the event the current seven year RHNA cycle is changed by the state to some other number of years at some time in the future, the City Manager's report would reflect this change. Page 3 of 5