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ATTACHMENT 3 ASSOCIA nON OF BAY AREA GOVERNMENTS o Representing City and County Governments of the San Francisco Bay Area ADM MEMO To: From: Date: Subject: Housing Methodology Committee (HMC) ABAG Staff January 4, 2007 Alternative Income Allocation Method Background On November 16, 2006, ABAG's Executive Board authorized the release of the Housing Methodology Committee's draft methodology for the Regional Housing Needs Allocation (RHNA) for 2007-2014. The release of the methodology opened a 60-day public comment period. The comment period will close on January 18,2007. On that date, staff will bring to the Executive Board recommendations for the final RHNA methodology. Several comments received on the draft RHNA method pertain to the income allocation component of the methodology. Some local jurisdictions believe the proposed income allocation methodology does not do enough to alleviate existing concentrations of poverty. There is concern that, because the draft recommendation assigns an "equal share" to each jurisdiction and does not take a jurisdiction's existing income distribution into account, it unfairly burdens jurisdictions with existing high concentrations of poverty. As a result, the draft method is perceived to perpetuate regional social and economic inequities. Staff has developed three alternative income allocation scenarios for consideration by the HMC and the ABAG Executive Board at its meeting on January 18th In contrast to the draft methodology, these alternative scenarios take into account existing income distributions within individual communities and attempt to address existing concentrations of poverty. This staff report describes these alternative income allocations. HMC Recommended Iucome Allocatiou In the recommendation to the ABAG Executive Board, the HMC and ABAG staff proposed that each local jurisdiction plan for income-based housing units in the same ratio as the regional average income distribution. This is deemed an "equal share" approach because each jurisdiction would receive the same proportion of housing units in each affordability category (very-low, low, moderate, and above moderate). Although considered an equitable approach, this income allocation method does not consider existing concentrations of poverty in a community. Based on 2000 Census figures, the regional income distribution is: . Very Low, 23 Percent Households with income up to 50 percent of the county's area median income (AMI) . Low, 16 Percent Households with income between 50 and 80 percent of the county's AMI . Moderate, 19 Percent Households with income between 80 and 120 percent of the county's AMI . Above-Moderate, 42 Percent Households with income above 120 percent of the county's AMI Mailing Address: P.O. Box 2050 Oakland, California 94604-2050 (510) 464-7900 Fax: (510) 464-7970 info@abag.ca.gov Joseph P. Bort MetroCenter 101 Eighth Street Oakland, California 94607-4756