HomeMy WebLinkAboutAgenda Statement 1985/08/13 Item 14a-c COUNCIL AGENDA STATEMENT /4'
Item •.L3'`a—b—c
Meeting Date 8/485
ITEM TITLE: Report: Further information regarding density- bonus request
by Starboard Investment Company
a. Resolution /-2-4,31 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 /;_43-S Adopting Housing Density Bonus Policy
c. Resolution / 2-/,2--.2 Approving submittal to League of
California Cities of draft resolution calling for amendment to
Government Code Section 65915
SUBMITTED BY: Community Development Directo44/5ths Vote: Yes No X )
REVIEWED BY: City Manager 147 ..
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 a - $
as Exhibit A to the A-113 of July 16 (attached).
, Z: t
d-----,_e ....,,,,,,,,, ___ A,-1r, /6,<-4.4c Ar by the City Council of Cclu\a ' / -�
Chula Vista, California ` /
I' /Dated °6 - .
�y
Page 2, Item _1d a-b-c
Meeting Date 8/.6/85
13
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 e3' a—b—c
Meeting Date 8/,6x/85
f3
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.
/'1-
Page 4, Item .tea-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
fix...
COUNCIL AGENDA STATEMENT
Item a—b—c
/3
Meeting Date 8/6185
ITEM TITLE: Report: Further information regarding density bonus request
by Starboard Invest'meent Company
a. Resolution /42-43 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 / 2-19-5 Adopting Housing Density Bonus Policy
c. Resolution 491 /02.01— Approving submittal to League of
California Cities of draft resolution calling for amendment to
Government Code Section 65915
SUBMITTED BY: Community Development Directo4/5ths Vote: Yes No X )
REVIEWED BY: City Manager . -
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 Jul . 16 (attached).
by the •ity Council of
Chula Vista, California
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"r 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
August 9, 1985
ITEM NO. 14
To: The Honorable Mayor and City Counci
Via: John Goss, City Manager 14e 4
Via: Paul Desrochers, Community Development Director
From: Dave Gustafson, Assistant Community Development Director
Subject: Starboard Investment Company Density Bonus Request and Density Bonus
Policy
The above issues were continued from the Council meeting of August 6 in order
to correct discrepancies in the associated documents. The corrections have
been made and the amended documents are attached to the original resolutions
from the August 6 meeting.
Regarding the first issue, the Starboard Investment Company request, it was
necessary to amend language and add language to the Housing Cooperation
Agreement as it pertained to occupancy of the affordable units. The language
of the Housing Cooperation Agreement provided to the Council at the last
meeting limited the occupancy of affordable apartments as follows:
1 . One-bedroom apartments to be occupied by two-person households.
2. Two-bedroom apartments to be occupied by four-person households.
That language did not reflect the understanding between staff and the
developer and was forwarded to the City Council as a result of inadvertently
using an original draft of the first Housing Cooperation Agreement ever
considered by the City Council .
To make the Starboard Housing Cooperation Agreement consistent with other
Housing Cooperation Agreements approved by the Council , and to make the
requirements consistent with market practices, the language has been changed
to reflect the following: Units shall be occupied by households having annual
gross incomes not exceeding the lower income limit for that household size.
Therefore, one-bedroom units could be occupied by one-person households, and
two-bedroom units could be occupied by three-person households. Additionally,
definitions of the low-income limits for various household sizes were added to
the DEFINITIONS section.
Regarding the issue of a policy for density bonuses, an amended draft makes
corrections recommended by the City Attorney' s office as a result of further
clarification of the issue. The changes are as follows:
/
The Honorable Mayor
and City Council -2- August 9, 1985 _
1. Condition No. 1 : The original draft called for 25% of the predensity
bonus units as being for low-income households. The intent was to
maximize the low-income units, since the moderate-income units would have
rent restrictions way above market rents. However, the Attorney's office
advises that some moderate-income units must be included to respond to the
State law language.- Therefore, Condition 1 of the attached report calls
for 20% of the pre-density bonus units to be for low-income households and
5% of the pre-density units to be for moderate-income households. A
definition of moderate income has been added to Condition 1 .
2. Procedure 2: Language is added to indicate that necessary and appropriate
City development approvals will be based on the standards for the number
of post-density bonus units. Such a policy point will obviate substandard
developments under the State law mandate.
3. Procedure 3c: The phrase ".. .for articulable reasons" is added after
"invalid" to make it clear that a denial will be based on specific
noncompliance with the policy.
Further regarding the policy, a review of City Council minutes on discussions
of Eucalyptus Grove Apartments and a search of Council referral records shows
no Council request for a workshop on density bonuses. Although it is not
perceived as absolutely essential to adopt the density bonus policy at this
meeting, it would be comfortable to have a policy in place as soon as possible
in order to be able to respond to any additional density bonus request. If
the Council wishes to schedule a workshop on this matter, perhaps the policy
could be adopted at this point and a workshop could be scheduled for further
consideration and refinement of the policy prior to converting the policy to a
zoning text amendment.
In summary, the actions before the Council tonight are as follows:
1 . Consider adoption of resolution approving Starboard Investment Company's
density bonus request and approving amended Housing Cooperation Agreement.
2. Consider adoption of resolution approving housing density bonus policy.
3. Consider requesting a Council Conference on the issue of density bonuses.
As the Council will recall , the resolution regarding the State Density Bonus
Law for League of California Cities' consideration was approved at the
August 6 meeting.
DG:nr
WPC 1226X
CITY OF CHULA VISTA
HOUSING DENSITY BONUS POLICY
Adopted by City Council Resolution No. 12 135
on August 13, 1985
OBJECTIVE
To provide a procedure for City response to formal requests by housing
developers for density bonuses under the provisions of California Government
Code Section 65915, which provides for increases in densities of residential
rental units in exchange for the provision of affordable housing units; to
establish the degree of provision of those affordable housing units required
by the City in granting density bonuses under California Government Code
Section 65915.
CONDITIONS
In order to obtain approval of a density bonus or an incentive of equivalent
financial value, the housing developer must commit to the following provision
of affordable housing:
1. A minimum of 20% of the pre-density bonus unit count to be occupied and
affordable to low-income households and 5% of the pre-density bonus
unit count to be occupied and affordable to moderate income
households. Low-income is defined as at or below 80% of the
HUD-published SMSA median income adjusted for family size and moderate
income as between 81 and 120% of the HUD-published SMSA median income
adjusted for family size. Studios shall be assumed to be occupied by
one-person households, one bedrooms by two-person households, and two
bedrooms by four-person households. Affordability shall be defined as
being a monthly rental rate not in excess of 25% of the monthly income
of the appropriate lower income or moderate income family size.
2. Affordable units to be committed to low-income household occupancy for
a minimum of 25 years.
PROCEDURE
1 . An applicant wishing a density bonus shall submit jointly to the
Planning Director and the Community Development Director the following
preliminary information:
a. A letter formally requesting the density bonus and describing the
project, project location, total units allowable under existing
zoning, total density requested, and number, size, and location of
affordable units proposed.
b. Project financial information, including a pro forma and projected
rent schedule.
c. Land use and design details and drawings which in the judgment of
the Planning Director are sufficient in scope and detail to allow
preliminary evaluation of the proposed project's configuration and
impact.
Housing Density Bonus Policy
August 6, 1985
Page Two
2. The housing developer' s request shall be taken to the Planning
Commission and the City Council for preliminary recommendation and
approval or disapproval , subject to all necessary and appropriate City
development approvals based on the standards applicable to the
post-density unit count.
3. The City shall within 90 days of the housing developer' s preliminary
request notify the applicant of:
a. Its intention to allow the requested density bonus, subject to all
necessary and appropriate City development approvals.
b. Its intention to consider incentives of equivalent financial value
in lieu of the density bonus, in which case the City shall inform
the housing developer of the fee for evaluation of those incentives
of equivalent financial value.
c. Its conclusion that the request has been found to be invalid for
articulable reasons.
4. In response to 2a, the housing developer may follow the appropriate
City procedures for housing development approval of the proposed
project including the density bonus.
5. In response to 2b, the developer may submit to the Community
Development Director a letter agreeing to the evaluation of incentives
of equivalent financial value and, in that case, shall submit the
appropriate fee payment. The City shall then submit the project
information to the City Housing Consultant for evaluation and
recommendation to the City Council on appropriate incentives of
equivalent financial value. The City Council shall make its
determination and offer the selected incentives to the developer in
exchange for the appropriate affordable housing provisions.
6. In response to 2a or 2b, the housing developer shall enter into a
Housing Cooperation Agreement with the City Council which identifies
and commits the provision of affordable housing and which is recorded
against the project property.
WPC 1689H