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HomeMy WebLinkAboutSS6 - Updated Draft of the General Plan Housing Element Update (PA2017-141) - HandoutJUL] 131 2011 ITM 64 Good afternoon Mister Mayor and Members of the Council, My name is Nancy Scarbrough. Most of you know my involvement with Housing issues. One aspect that has been largely ignored are Density Bonuses and incentives for developers who want to take advantage of the legislated enticements for building affordable housing. I have asked whether the tables in the Draft Element included the Density Bonuses allowed by state law on several occasions and I was told they did not. So, I decided to figure it out for myself and see what would happen if one applied different inclusionary rates to the numbers we've been talking about for the last several months. Density Bonuses are incentives the state has required, by law, to entice developers to build more affordable housing. They are based on a developer providing a certain percentage of affordable units in each project. There is a matrix, imbedded in state law, that sets out exactly what the percentage of additional market rate units a developer is entitled to build if they provide the prescribed number of affordable units. This chart starts with the "Table B-1" in tonight's proposed revisions to the housing element and extends it out to calculate the numbers using a 5%, 15% and 20% Inclusionary rates based on the state mandated Density Bonus requirements. The columns under the blue header are from the Table B-1 numbers. The orange columns show the worst-case scenario, if all projects in the city were built at the lowest proportion of affordable units needed for a developer to qualify for a Density Bonus. This is likely what would happen, without an Inclusionary Policy. By including 5% affordable units and 95% market rate units, the developer is granted a 20 % density bonus. That means the developer can build an additional 20% of the total number of units in the project. These additional units can be above market rate units, they are not required to be affordable. You can see toward the bottom of the orange section the number in red is 39,764. That is a big number. The light blue columns show what happens with a 15% to 85% ratio, 24,503 which is better, but still a lot. The green columns show that at 20% to 80% ratio the number drops to 17,441. Which is still a daunting number of new residential units. Obviously, we don't have enough land in Newport Beach to build 40,000 apartments in the next eight years, even if we started converting office buildings and hotels to high density mixed income apartments. The point is, if we don't get out in front of this with an interim immediate inclusionary policy, we could have a rush on the bank and find ourselves overwhelmed with a lot of high density minimally affordable apartments with a lot of luxury apartments (based on 5% - 95% affordability). By the way, the Table B-1 in the Staff report includes a 40% affordability ratio, which we have been told is difficult to achieve. If that is what we are representing to the public, shouldn't our Inclusionary Policy be aligned at a 40% Inclusionary rate so that we can meet the housing numbers reflected in that Table B-1? Staff and the Consultant will explain that this is reason for the "Buffer". This is difficult for the residents to understand. We should provide the public with a better understanding of how this will work. Three things: 1. We all need to fully understand what is allowed by right in State law regarding Density Bonuses, how the law works, and the other incentives allowed for projects at various levels of affordable units. 2. We need to come up with an interim, immediate inclusionary policy. We don't have a year or even six months to get this policy in place. 3. We need to fully understand the ramifications of both Inclusionary Policy and Density Bonuses on projects that will surely start to be proposed, and we need to design our policies that will be included in the Draft Housing Element, before we put a stamp on the envelope and mail it off to HCD. Please consider this as you are directing staff tonight or in the future. This is our collective legacy. Residents may not know this is coming, but they will certainly notice when these projects start to be entitled and built. Thank you for your consideration and for indulging me with a little extra time.