AGENDA REPORT - Laserfiche WebLink

BACKGROUND The City's IZO was adopted to establish a clear and attainable plan for using the limited remaining developable land in a manner that is consistent with City housing policies. To that end, the IZO establishes that 15% of all units in a new residential multi-family rental development in excess of 15-units shall be rent-restricted to very low (50% of the Area Median Income or AMI; currently $44,600 for a four person household) and low income households (80% of the AMI; currently $71,350 for a four person household) and that 20% of all units in a new residential ownership development be made available to very low, low income households and/or moderate income (120% of the AMI; currently $105,050 for a four person household) households. In addition while the IZO is clear in stating that its goal is to obtain affordable inclusionary units, it does recognize that this may not always be practical and as such, it lists alternatives including: . Provide for inclusionary units at a location within the City other than the project site . Dedication of land to a non-profit housing developer for development of affordable units . Credit transfers that allow one unit with an excess in the number of affordable units to make them available to another development . Other alternatives approved by the City In addition to the above, upon City approval, an applicant may pay the City's Lower Income Housing Fee (LIHF) which is currently $2,655/unit for rental developments and single family homes under 1,500 sf in lieu of providing affordable units. The fee for single family homes in excess of 1,500 sf is currently $10,713/unit and the fee for commercial development is $2.83 per sf. It should be noted that in accordance with long term practice, the fee option is considered only after all other options are determined to be impractical. In addition to these alternatives, the IZO also outlines incentives the City may offer to assist with obtaining inclusionary units including, fee waivers, design modifications such as reduced setbacks and landscaping, second mortgages and other City financial assistance, and priority permit processing. In addition to the IZO, in July 2010, the City Council adopted Resolution 10-390 which states in part, the City will act affirmatively to promote development of well designed affordable housing for families with children and the construction of affordable three bedroom units for large families (Attachment 3). Current IZO Environment In general, the most significant issue regarding the IZO is that there is currently a "disconnect" between the requirement that 15% of all units in a new residential multi- family rental development be rent-restricted and the Palmer case which held that local inclusionary requirements requiring rent restricted units violate the Costa-Hawkins Act that allows landlords to set the initial rent for a new unit and to adjust rents to market levels whenever a unit is vacated (so-called "vacancy decontrol"). Page 2 of 9