HomeMy WebLinkAboutAgenda Statement 1985/08/06 Item 13a-c COUNCIL AGENDA STATEMENT
Item 13 a—b—c
Meeting Date 8/6/85
ITEM TITLE: Report: Further information regarding density bonus request
by Starboard Investment Company
a. Resolution Approving a density bonus for housing
project providing low and moderate income housing by Starboard
Investment Company and approving a Housing Cooperation
Agreement
b. Resolution Adopting Housing Density Bonus Policy
c. Resolution / A71-- al-' Approving submittal to League of
California Cities of draft resolution calling for amendment to
Government Code Section 65915
SUBMITTED BY: Community Development Director(4/5ths Vote: Yes No X )
REVIEWED BY: City Manager , i
On July 16, the City Council continued a request for a state law density bonus
from Starboard Investment Company for a 53-unit family apartment project at
54-66 Fourth Avenue while further information could be gathered. That
information has been gathered. Additionally, an analysis of the State law has
been made by the City Attorney's Office, a formal density bonus policy has
been drafted, and a resolution for the League of California Cities proposing
amendment to Government Code Section 65915 has been drafted.
RECOMMENDATION: That the Council :
1 . Adopt the resolution approving the density bonus for the Starboard
Investment Company project at 54-66 Fourth Avenue and approving the
Housing Cooperation Agreement; and,
2. Adopt the resolution adopting Housing Density Bonus Policy; and,
3. Adopt the resolution approving for submittal to the League of California
Cities a draft resolution calling for amendment to State Government Code
Section 65915.
BOARDS/COMMISSIONS RECOMMENDATION: On May 23, 1985, the Design Review
Committee recommended approval of the project subject to conditions attached
as Exhibit A to the A-113 of July 16 (attached).
by the City Council of
Chula Vista, Ctornia
"1" -
Dated
/
Page 2, Item 13 a-b-c
Meeting Date 8/6/85
DISCUSSION:
The Council requested continuance in order to receive information to answer
the following questions:
1. What negotiation process is used with developers requesting density
bonuses?
2. What is the maximum number of low and moderate-income units the City can
require?
3. What is the maximum number of years of low and moderate-income unit
commitment the City can require?
4. What is the mix of low and moderate-income units that the City can require?
5. What zoning controls could be imposed which might mitigate the impact of
State law density bonus requests in the R-3 zone?
The City Council also asks that a resolution be prepared for the League of
California Cities addressing the problems with the State Density Bonus Law
(Government Code Section 65915).
A memo from the City Attorney's office which analyzes Government Code Section
65915 is attached as Exhibit 1 . According to the Attorney, the key to
imposing specific requirements beyond those articulated in Government Code
Section 65915 is the establishment of a formal policy. The City can require
significant exactions if they exist in policy form. However, without a formal
policy, the City can only require what the State law requires. In the face of
the current lack of a formal policy, two recommendations are made:
1. Accept a negotiated agreement with Starboard Investment Company
(summarized below).
2. Adopt the proposed Density Bonus Policy (attached) by resolution and
subsequently incorporate that policy by ordinance in the zoning text.
As a formal policy has not been approved, the answer to question #1 is that
negotiations have been conducted with requesting developers in an attempt to
arrive at conditions acceptable to both the developer and the City. Because
the City could only impose the minimal conditions of the State law, we have
attempted to extract greater commitments from the developer in response to the
developer' s desire for a density bonus instead of the alternative of
"incentives of equivalent financial value." Two density bonus requests have
been processed in this manner: Eucalyptus Grove Apartments, which was unique
in that it was an effort by the developer and the City to deliver a project
with significant affordable housing in a City gateway and which involved a
General Plan Amendment, a rezoning, and tax-exempt financing; and the subject
request. The density bonus for Eucalyptus Grove Apartments was structured
around the other actions noted. The Starboard Investment Company request was
negotiated to get as much as possible from the developer beyond the State law.
Page 3, Item 13 a-b-c
Meeting Date 8/6/85
In response to question #2, the City can require of Starboard 25% of the
pre-density bonus units (11 ) as affordable to low and moderate-income
households or ten percent of the pre-density bonus units (four) as affordable
to lower income households. In the former case, the developer can choose the
mix of low and moderate-income units. As the moderate-income units are for
households with incomes at-or below 120% of median income ($33,000 per year) ,
the affordable rents would be substantially over market rate and no benefit
would be realized. Through negotiation, the developer agreed to 20% of the
pre-density bonus units (nine) as being for lower income households ($27,000
per year and $550 per month rent). This is perceived as better than four
units for lower income or 11 units for moderate-income and is recommended as
itemized in the Housing Cooperation Agreement.
In response to question #3, the City cannot require any period of
affordability without a formal policy. Technically, the developer could offer
the affordable units for as little as one month. If a policy is adopted any
term of affordability can be required. Twenty years was negotiated with the
developer on the same basis as the other points of negotiation; the developer
is basically giving 20 years in order to avoid being offered "incentives of
equivalent financial value."
Question #4 pertains to the mix of low-income and moderate-income units that
the City could exact within the 25% low and moderate-income requirement. As
indicated in the answer to question #2, the City has no say without a formal
policy. The developer could provide all moderate-income units which would
provide no housing benefit.
Question #5 has been answered in the form of a memo attached from the Planning
Director (Exhibit 2).
In summary regarding the Starboard proposal , the developer could provide 11
units at moderate-income affordability for one month. We have negotiated for
nine units at low-income affordability for 20 years. We have capped rents at
25% of eligible monthly income. In spite of the lack of a policy, it is felt
that we are getting significant benefit for the density bonus while preserving
all of the City's other development standards for this project.
The requested resolution for the League of California Cities is attached as
Exhibit 3. The resolution calls for Government Code Section 65915 to be
amended to reflect the following:
1. Section 65915 should be enabling, not mandating. Cities should have the
right to choose when and how they will use density bonuses as a tool for
affordable housing. The legislation should remain in order to allow
jurisdictions to increase densities over the General Plan and zoning
designations without requiring General Plan Amendments and rezonings.
However, "shall grant a density bonus" should be changed to "may grant a
density bonus" and the references to other incentives should be dropped.
Other uses of shall in this section should be changed to may.
Page 4, Item 13 a-b-c
Meeting Date 8/6/85
2. Specific reference should be made in the Government Code Section that
jurisdictions may set formal policy regarding the exactions required in
exchange for the density bonus.
A formal policy (Exhibit 4) is proposed by resolution to respond to the law as
it is currently configured. The policy is offered in resolution form to
assure that the City has an adopted policy in case of any upcoming density
bonus request. It is recommended that the policy subsequently be put in the
form of a zoning text amendment. The policy is informed by research into the
practices of other San Diego County jurisdictions, most of whom do not have
formal policies and therefore negotiate density bonuses on a project basis.
In summary, the proposed policy requires the following:
1. Density bonus requests will only be processed for residential rental
projects, as the costs of sustaining and monitoring low and moderate
income affordability of ownership housing obviate the legislative intent
of economic feasibility of low and moderate income housing.
2. The developer make a formal request for density bonus with specified
submittal information, including project pro forma financial information.
3. The developer agree to enter into a Housing Cooperation Agreement which
stipulates the housing benefit to be delivered and the means of insuring
and monitoring that benefit delivery, that Housing Cooperation Agreement
to be recorded against the property.
4. The following affordable housing benefits:
a. Twenty-five percent of the pre-density bonus unit count to be
occupied and affordable to lower-income households (moderate-income
affordability being without benefit in relationship to the foresee-
able market).
b. The affordable units to be committed for a period of 25 years
(consistent with our Senior Housing Development Policy for senior
density bonus projects).
5. If, in the judgment of the City Council , it would be appropriate to
evaluate incentives of equivalent financial value, the developer would pay
the cost of evaluation by the City' s Housing Consultant.
FISCAL IMPACT: The proposed action has no significant fiscal impact aside
from the generation of property tax revenue. If the Council chose to provide
an "incentive of equivalent financial value," expenditures would result from
waivers of fees or possible direct financial contribution to the project. No
specific calculation of financial equivalence has been made, although the
original applicant estimated it to be in excess of $100,000.
WPC 1216X