ATTACHMENTS - Laserfiche WebLink

Key Challenges Affecting Policies Going Forward As the housing market emerges from the downturn of Jurisdictions in California have generally responded in one the past five years, inclusionary housing policies face of three ways to prohibitions on inclusionary rental units: a new set of challenges - some, but not all, related to the downturn. Below I identify eight pressing issues • No longer applying inclusionary requirements to that confront jurisdictions at the start of 2013.With one rental developments. This appears to be the case exception - the loss of redevelopment in California - for a majority of California jurisdictions with existing each of these issues echoes in various parts of the U.S. inclusionary policies. • Applying rental requirements only to developers 1. The Growing Difficulty that request some form of "assistance," such as of Applying Inclusionary Housing zoning modifications or upzonings. In this case, the to Rental Properties municipality conditions its assistance on voluntary The most significant change to the nation's inclusionary compliance with inclusionary rental requirements. This housing landscape over the past five years was triggered approach is less impactful in places that have recently not by the collapsing market or resulting pressure from upzoned desirable development areas-since developers private developers, but by a California legal decision no longer need special approval for higher density-and rendered in 2009. in places that have made attractive zoning terms available "by right" - for example in the city of Emeryville. No In Palmer/Sixth Street Properties, L.P. vs. the City of rental housing developers have yet sought assistance in Los Angeles, a California appellate court found that an Emeryville because of its already favorable zoning terms, inclusionary requirement requiring affordable rental thereby evading inclusionary requirements altogether units in Los Angeles was inconsistent with state law (and virtually all of the city's development proposals prohibiting rent contro1.30 Since this decision, most currently are for rental housing). California jurisdictions have ceased applying their • Shifting to a fee-based policy (sometimes with the inclusionary policy to market-rate rental developments option to waive out of the fee by providing units). to stay clear of legal trouble. This is significant Rather than require inclusionary units to be built as part because California is home to almost half of the of new market-rate development, several jurisdictions nation's inclusionary policies31 and because most new are instead assessing an affordable housing fee on new development in California is presently being built as rental development.Some jurisdictions offer developers multifamily rentals. Also, the inability to generate the option to produce units on site as an alternative to inclusionary rental units comes at a time when many paying the fee-in essence,the opposite of a traditional California towns and cities are seeing rent levels inclusionary zoning policy with the option to pay a fee nearing all-time highs, and fiscally strapped state and in lieu of including affordablE units. In San Francisco, local governments have cut or fully spent public funds a relatively high fee has riade voluntary, on-site that subsidize affordable rental housing. compliance relatively attractive for many developers as an alternative to paying the fee.San Diego takes a similar The Palmer decision, combined with a slow recovery approach by exempting developers from the fee if they in the new for-sale home market, has elevated the provide 10 percent affordable units on site. In Mountain nationwide importance of finding new ways to address View,the fee is only applicable to rental development. legal impediments to rental inclusionary housing,as the issue affects not just California but other states such as As jurisdictions continue to experiment with workarounds Colorado, Wisconsin, and North Carolina. to the Palmer decision,finding an effective solution has become all the more urgent. The most significant change to the nation's inclusionary housing landscape over the past five years was triggered not by the collapsing market or resulting pressure from private developers, but by a California legal cecision rende-ed in 2009. 6