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HomeMy WebLinkAbout4a_Mayor's Letter to HCD 04-24-2020Office of the Mayor CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 949 644-3004 | 949 644-3039 FAX newportbeachca.gov Mayor Will O͛Neill Mayor Pro Tem Brad Avery Council Members Joy Brenner Diane Brooks Dixon Marshall ͞DuffLJ͟ Duffield Jeff Herdman Kevin Muldoon April 24, 2020 Mr. Gustavo Velazquez Director California Department of Housing and Community Development 2020 West El Camino Avenue Sacramento, CA 95833 Re: Amended Request for Assistance in Related to the 6th Cycle Housing Element Update and Support for an Extended Housing Element Deadline Dear Mr. Velasquez: On March 3, 2020, the City of Newport Beach submitted a letter to Acting Director Doug McCauley requesting assistance needed to help ensure compliance with the State of California housing goals, including submission of a compliant Housing Element covering the period 2021- 2029 (³6th C\cle HoXVing ElemenW´). Specifically, the City requested HCD: x expedite preparation and dissemination of a guidance memorandum as to how cities may demonstrate substantial evidence criteria to identify adequate sites pursuant to California Government Code section 65583(c)(1); x expedite preparation and dissemination of a guidance memorandum establishing objective standards for cities to identify acceVVoU\ dZelling XniWV (³ADU´) aV adeTXaWe ViWeV and affoUdable units; x aXWhoUi]e YeVVelV XVed foU hXman habiWaWion pXUVXanW Wo a ³liYe - aboaUd´ peUmiW iVVXed b\ Whe CiW\ in accoUdance ZiWh ChapWeU 17.40 (Live-Aboards) of the Newport Beach Municipal to apply WoZaUdV Whe CiW\¶V inYenWoU\ of adeTXaWe ViWeV and affoUdable XniW s; and Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD April 24, 2020 Letter to Housing and Community Development Page 2 of 3 x VXppoUW Whe CiW\¶V UeTXeVW Wo amend CalifoUnia GoYeUnmenW Code Section 65588(e)(3) extending the deadline to submit the 6 th Cycle Housing Element to HCD for two (2) years. We of course understand that world events have created difficult environments throughout our State, so we are following up on the letter to ensure that it was not misplaced. The March 3, 2020, letter is attached for reference. In addition to following up on that letter, this letter notes the greater importance of supporting a request to amend California Government Code Section 65588(e)(3) or request an executive order by Governor Gavin Newson to extend the deadline to submit the 6th Cycle Housing Element to HCD for two (2) years in light of this worldwide crisis associated with COVID-19. Cities throughout the State have shut their city halls to the public, furloughed employees while facing substantial budget crises, sent many employees home to work remotely, and completely revised how they interact with members of the public. Similarly, community development departments have had to completely revise their approach to how they process permits, conduct building inspections, and interact with members of the public and city councils while reviewing code changes. Perhaps nothing that a community development department does has greater impact on the City in which they work than general plan updates. These updates under normal circumstances require significant leg work, public outreach, community involvement, and dozens of meetings in various neighborhoods for buy-in. This is especially true in cities like Newport Beach and our neighbor in Costa Mesa that have voter-initiated provisions in the Charter and municipal code requiring voter approval of certain significant changes. Although housing related planning remains a priority, the financial and staff resources needed to undertake the effort needed to meet the large and overly ambitious regional housing needs targets have been and will be significantly hindered. Additionally, any amendments will need to be prepared and adopted in compliance with the California Environmental Quality Act (CEQA). Preparation of the Housing Element and required programmatic CEQA documents alone will take over twelve months to complete at a cost of over $1,200,000 in Newport Beach. The community outreach and planning efforts needed to increased density and housing capacity are anticipated to take an additional 12 months. Despite the pandemic and severe revenue losses that are expected, jurisdictions cannot simply ignore the October 2021 Housing Element deadline due to the significant financial Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD April 24, 2020 Letter to Housing and Community Development Page 3 of 3 consequences jurisdictions face of up to $600,000 per month for noncompliance pursuant to AB101. As a result, we strongly urge you to support an extension to the Housing Element deadline and possibly reconsider the regional determination given the current economic ciUcXmVWanceV WhaW Zill add VignificanW impedimenWV Wo oXU Uegion¶V abili ty to meet the RHNA. Thank you in advance for your consideration of the requests. It is my belief that they would benefit cities throughout the State of California. If you have any questions or would like to meet discuss in more detail, please do not hesitate to contact Newport Beach Community Development Director, Seimone Jurjis or me. Before I conclude, please know that we in the City of Newport Beach wish all of HCD and your families well during these incredibly difficult times. Thank you for serving our State. Will O¶Neill Mayor CC. City Council Members Grace Leung, City Manager Seimone Jurjis, Community Development Director League of California Cities Attachments: March 3, 2020, letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD ATTACHMENT A Potential Development Constraints Map Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD ATTACHMENT B Proposed recommendations related to Government Code Section 65583.2(g) to provide objective standards for what constitutes “substantial evidence.” Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Proposed recommendations related to Government Code Section 65583.2(g) to provide objective standards for what constitutes “substantial evidence.” Proposed Recommendations for Substantial Evidence Existing conditions that should constitute substantial evidence that the existing use is likely to be discontinued during the planning period: 1. The existing improvement-to-land-value (I/L) ratio is less than 1.0 for commercial and multi-family properties or less than 0.5 for single-family properties according to the most recent available property assessment roll; or 2. The site is designated a Moderate, High or Highest Resource area in the most recent Tax Credit Allocation Committee of the California Treasurer’s office (TCAC) Opportunity Map; or 3. Zoning for the site allows residential development of at least 100 percent additional floor area than existing structures on the site and housing developments in which at least 20 percent of the units are affordable to lower-income households are permitted by-right; or 4. The use of non-vacant sites are accompanied by programs and policies that encourage or incentivize the redevelopment to residential use. Justification One of the most important aspects of Housing Element law is the requirement to demonstrate “adequate sites” with realistic development potential that could accommodate the jurisdiction’s RHNA allocation at each income level (very-low, low, moderate and above-moderate). Recent changes to State law have resulted in much higher RHNA allocations than in past cycles due to the addition of “existing need” to the allocation. For example, HCD’s 6th cycle RHNA allocation to the SCAG region is more than three times the 5th cycle and nearly double the 4th cycle. As a result, many highly urbanized cities will have RHNA allocations that far exceed their capacity for housing development on vacant land, and redevelopment of existing uses on non-vacant (or “underutilized”) sites would be required in order to accommodate their RHNA allocations. Recent amendments to Housing Element law establishes additional criteria for underutilized sites to be considered suitable for “RHNA credit.” Under Sec. 65583.2(g)(2) if a city relies upon underutilized sites to provide 50 percent or more of its capacity for lower-income housing, then an existing use shall be presumed to an impediment to additional residential development, absent findings based on “substantial evidence” that the use is likely to be discontinued during the planning period (emphasis added). Existing statute and HCD guidance have not provided clear, objective criteria regarding what such substantial evidence must include. Further, given that actual, market-driven housing production in recent years has been significantly lower than RHNA Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD growth estimates, the substantial evidence requirement that development is “likely” to occur on all of the underutilized sites in the Housing Element inventory results the inability to demonstrate adequate sites. Essentially, current law provides the standards of measure that cannot be met by most jurisdictions, due to the onerous and non-objective criteria. The combination of much higher RHNA allocations, particularly for cities in highly urbanized areas with little vacant developable land, together with new substantial evidence criteria for underutilized sites, results in a very high level of uncertainty and potential financial risk for many cities. One of the important legislative initiatives for increasing housing production has been to limit local government discretion in the review and approval of housing developments. SB 330, the Housing Crisis Act of 2019, describes the Legislature’s intent to “Suspend certain restrictions on the development of new housing during the period of the statewide emergency” and “Work with local governments to expedite the permitting of housing…” In adopting SB 330 and other recent housing bills, the Legislature has recognized the importance of establishing clear, objective criteria for housing developments to reduce processing time and cost, and increase the certainty of housing approvals. By the same token, demonstration of adequate sites and future housing production would be enhanced with clear, objective criteria for the review and certification of Housing Elements by providing guidance to local governments in the selection of appropriate sites to encourage housing development while minimizing local governments’ administrative time and cost. This approach would be similar to existing law regarding “default density” for lower-income housing. In metropolitan areas, zoning densities of either 20 or 30 units/acre (depending on population) are deemed suitable for lower-income housing, but jurisdictions may use alternative densities in their sites analysis subject to HCD approval (Government Code 65583.2(c)). In short, it is appropriate for cities and counties to have a clear path to achieving a certified Housing Element if they are following objective, simple and market friendly State guidance for implementing reasonable local policies that facilitate housing development. A HCD memorandum providing clear, objective standards to assist cities and counties when identifying underutilized sites to accommodate RHNA goals would contribute substantially to the effectiveness of Housing Elements. Several of the proposed standards build upon on the analysis and recommendations of leading housing experts in California, including University of California researchers and the Tax Credit Allocation Committee of the California Treasurer’s office. References Landis, Hood, Li, Rodgers & Warren (2006) “The Future of Infill Housing in California: Opportunities, Potential, and Feasibility” in Housing Policy Debate, Volume 17, Issue 4, p. 687 (https://repository.upenn.edu/cgi/viewcontent.cgi?article=1038&context=cplan_papers) Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD (This landmark study by University of California, Berkeley researchers identified the metric of “improvement-to-land-value (I/L) as a means of identifying infill development potential of underutilized sites.) California Fair Housing Task Force (2018) “Opportunity Mapping Methodology” (https://www.treasurer.ca.gov/ctcac/opportunity/final-opportunity-mapping-methodology.pdf) (This study, initiated by HCD and the California Tax Credit Allocation Committee (TCAC), was conducted by a group of independent organizations and research centers that would become the California Fair Housing Task Force. The purpose of the study was to provide research, evidence- based policy recommendations, and other strategic recommendations to HCD and other related state agencies/departments to further fair housing goals. TCAC and HCD asked the Task Force to create a statewide opportunity mapping tool that could be adopted into TCAC regulations to accompany regulations to incentivize development of large-family, new construction developments with 9 percent LIHTCs in neighborhoods whose characteristics have been shown by research to support childhood development and economic mobility for low-income families.) Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD ATTACHMENT C Proposed recommendations related to Government Code Section 65583.1 to provide objective standards for counting accessory dwelling units (ADUs) towards RHNA requirements. Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Proposed recommendations related to Government Code Section 65583.1 to provide objective standards for counting accessory dwelling units (ADUs) towards RHNA requirements. Recommendation For the purposes of determining the affordability level of potential accessory dwelling units and/or junior accessory dwelling units that can accommodate a jurisdiction’s RHNA need affordable to lower-income households, the department shall take into account the jurisdiction’s need for these units in the community, the resources or incentives available for their development, and any other relevant factors, justified by a local jurisdiction. At minimum, it shall be presumed that very low- and low-income renter households would occupy accessory units in the same proportion of very low- and low-income renter households to all renter households within the jurisdiction, as determined by the most recently available data from the United States Department of Housing and Urban Development’s Comprehensive Housing Affordability Strategy database. Justification In light of recent changes in state law related to accessory dwelling units that require jurisdictions to now allow up three units per single-family lot (principal unit, accessory dwelling unit, and a junior accessory dwelling unit) or additional ADUs for multi-family development equal to 25 percent of the total number units in the development, the market potential and zoning capacity for development of ADUs has increased exponentially subsequent to the passing of recent statutes. Furthermore, the waiver of parking and owner occupancy requirements has eliminated the most significant barriers to the development of ADUs and increased the realistic development capacity of every jurisdiction. Therefore, it is essential that jurisdictions be allowed to utilize the development potential of ADUs towards accommodating their RHNA. Currently Government Code Section 65583.1 provides HCD full discretion in determining how ADUs count towards RHNA and includes criteria based on past production. In most cities and counties, regulations for ADUs were much more restrictive prior to recent changes in law were adopted. Therefore, past production should not be utilized as the primary factor in estimating future ADU development potential. Revisions to the law are necessary to provide objective standards for HCD to utilize when determining the extent to which future ADUs count towards RHNA site requirements. ADU capacity should be based on the existing site capacities when applying development standards required pursuant to state law. Because the current methodologies used to determine ADU yields do not reflect the considerable increase in ADU potential and the new limitations cities and counties have in restricting new ADU development, a new methodology is justified. In the absence of affordability information, it is recommended that the statute establish reasonable assumptions for determining the percentage of ADUs that count towards a jurisdiction’s lower- income requirements. The suggested method is currently required under SB330 (Government Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD Code Section 66300(d)(2)) and Density Bonus Law (Government Code Section 65915) when reviewing the replacement housing requirements for housing development projects regulated by these laws. The laws state that when any existing dwelling units are occupied by lower-income households, a proposed housing development shall provide at least the same number of units of equivalent size to be made available at affordable rent or affordable housing cost to, and occupied by, persons and families in the same or lower income category as those households in occupancy. If the income category of the household in occupancy is not known, it shall be rebuttably presumed that lower income renter households occupied these units in the same proportion of lower income renter households to all renter households within the jurisdiction, as determined by the most recently available data from the United States Department of Housing and Urban Development’s Comprehensive Housing Affordability Strategy database. Given that this methodology for determining the affordability of households is currently utilized in both Density Bonus Law and SB330, it is recommended that this same methodology be utilized for determining the likely occupancy of ADUs. For example, if a jurisdiction’s realistic capacity for ADUs is determined to be 1,000 new ADUs in the eight-year planning period, for the purposes of determining of many of these units may count towards accommodating the low and very-low income housing needs, a jurisdiction would utilize the percentage of existing very low- and low- income households compared to the jurisdiction’s total renter households based on the HUD database. In the example below, a jurisdiction could count the capacity of up to 260 units towards the very low-income RHNA need and up to 146 units towards the low-income RHNA need. The HUD database can be accessed at the following link: https://www.huduser.gov/portal/datasets/cp.html Example Breakdown of a Jurisdiction’s Renter Household Income Distribution Income Level Renter Households Percentage of Total Renter Households Very Low Income 4,400 26% Low Income 2,400 14.6% Moderate Income 1,100 6.7% Above Moderate Income 8,500 52% Total 16,400 100% Total Determined ADU Capacity ADU Capacity Assumed to Accommodate Very Low- Income Housing Need ADU Capacity Assumed to Accommodate Low-Income Housing Need 1,000 260 (26%) 146 (14.6%) Housing Element Update Advisory Committee - July 1, 2020 Item No. IV(a) - Attachment 3 Mayor's Letter to HCD