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Ms. Seto said in addition to hillside policies, there are issues regarding housing units which is
<br />second part of the report. And then the issues about how the language of the Initiative would
<br />apply to second units, assisted living units, or extended stay hotel rooms. The Initiative tells the
<br />reader to reference the U.S. Census Bureau and State law definitions of a housing unit to help
<br />provide guidance on that area. And when those areas were looked at for their definitions, there
<br />was an emphasis that in those types of housing units, as defined by the Census Bureau and
<br />State law, occupants live separately and have independent living. When taking a look at that
<br />definition and applying it to the City's existing practice, staff realized that it currently counts
<br />single family homes, townhomes, condos, mobile homes, below market rate units, and senior
<br />housing towards the City's housing cap. However, staff does not count second units, because
<br />they are specifically exempted by State law. Therefore, even though the Initiative says that if it
<br />includes a bathroom or a kitchen, State law would still prevail and would pre-empt the Initiative
<br />as to its application to second units.
<br />The City's current practice with regard to assistant living units is that it considers those
<br />commercial types of uses because there are employees and services provided there, such as
<br />medical assistance or meal plans. Similarly, with extended stay hotels, staff has not counted
<br />rooms at those hotels toward the housing cap because those are considered temporary
<br />residences for individuals who are not trying to establish permanent residency. Rather, persons
<br />are there on a temporary assignment, usually business-related.
<br />Overall, if the Initiative's definition of housing cap were interpreted to apply to either assisted
<br />living units or extended stay hotel rooms, this would have an impact on the City's housing cap
<br />by decreasing the total number of units available under the housing cap. As the report indicates,
<br />as of January 2007 there were 26,245 units existing or approved under the City's 29,000 unit
<br />housing cap. If in the future additional units are counted, based on the application of the
<br />Initiative, such as assisted living units or extended stay hotel rooms, this would decrease the
<br />number of units available under the housing cap and that would have fiscal impacts on the City.
<br />Economic Development Fiscal Officer Emily Wagner stated that the Initiative had two elements
<br />to it and, therefore, staff analyzed each one of those separately--the hillside development
<br />restrictions and the definition of a housing unit. Staff analyzed the fiscal impact on the City's
<br />General Fund, the annual net operating revenues, as well as one-time infrastructure fees paid at
<br />the building permit stage which fund the City's capital improvement program. Staff also
<br />analyzed the impact on other public agencies. Staff did not look at the impact on those
<br />agencies' operating budgets but instead only on the one-time infrastructure fees which are paid
<br />at the building permit stage. She noted that the estimates were based on the best available
<br />information.
<br />If hillside development is limited, it shifts somewhere between 119-224 homes from the hillside
<br />area to the valley floor, or the infill areas that Ms. Seto referenced. Such a shift causes the
<br />annual net income to the general fund to be impacted somewhere between a minimum of
<br />$69,000 a year to $183,000 a year. A hillside home (a single unit) which is approximately 8,500
<br />square feet with a market value at $3.4 million generates total revenues of about $10,000 per
<br />year and expenditures of around $9,000 per year. This results in net revenues to the City's
<br />General Fund of about $1,000 annually. These revenues are property taxes and sales taxes,
<br />and the expenditures are for fire, police, park, and street maintenance. When comparing those
<br />homes to single family homes where the average is 3,500 square feet with a market value at
<br />$1.2 million, the total revenues are about $5,000 per year and expenditures are around $4,500
<br />per year, which results in net revenues to the City General Fund of about $500 a year.
<br />Special Meeting Minutes 2 June 26, 2008
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