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BACKGROUND Section 65400 of the California Government Code requires the City to file an annual report with the State Department of Housing and Community Development (HCD) addressing the status of the General Plan Housing Element and progress made toward implementing its goals and policies. The General Plan Housing Element for the 2015- 2023 planning period was adopted by the City Council on January 6, 2015. This annual report will be the seventh submitted for this Housing Element cycle, covering calendar year 2021. DISCUSSION The Housing Element Annual Progress Report — 2021 is attached for City Council review (Attachment 1). HCD has specific reporting requirements for the Annual Progress Report, including information contained in a series of standardized spreadsheet tables (completed tables are attached to this report). State housing legislation approved in 2017, requiring more detailed reporting and additional data to be submitted as part of the APR, is now in effect and reflected in this Housing Element APR. Some of the new standardized tables required by HCD, particularly Table A2, are difficult to print in a reader-friendly manner. Staff has attempted to make the tables as clear as possible and a link to PDF (electronic) copies is available upon request, and on the City's website. In the past, HCD only required reporting on the number of housing unit permits issued each reporting year. HCD now requires reporting on the number of applications submitted, housing unit permits issued, and housing permits finaled during the year, including the type of units (single-family, multifamily, etc.), and their affordability categories (very low-, low-, moderate- and above moderate-income). Table B of Attachment 1, shown on the next page, is a summary that tracks building permits issued for each year of the Housing Element's Regional Housing Needs Allocation (RHNA) period (2015-2023). In 2021, the City received nine applications related to the construction of new housing that have been deemed complete and were either approved or are pending approval. These applications included a total of 32 new single family homes and 23 new Accessory Dwelling Units (ADUs). In 2021, building permits were issued for 40 new residential housing units (23 single family homes and 17 ADUs), and 36 residential units under construction were finaled (21 single family homes, 12 ADUs and 3 apartments). The 40 building permits issued in 2021 is similar to the number issued in 2020 (45 units). Based on the existing market demand and approvals/entitlements issued in the past year, staff expects the City will issue a similar number (around 40 permits) in 2022 as in 2021. Projects expected to begin construction include the Spotorno project and projects anticipated to be completed include the Lund Ranch and Austin-Meadowlark subdivisions. In addition, the number of ADUs is anticipated to continue to increase over the next year, with the recent adoption of the City's updated ADU Ordinance that implements recent changes to State law. It is possible the City may see applications for approvals under the recently adopted provisions of Senate Bill 9 (SB 9) which permits up to four units on properties currently zoned for single-family residential development, Page 2 of 4