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HomeMy WebLinkAboutcc min 1981/01/10 MINUTES OF AN ADJOURNED REGULAR MEETING OF THE CITY COUNCIL OF CHULA VISTA, CALIFORNIA Held Saturday, January 10, 1981 - 8:00 a.m. Council Conference Room, City Hall ROLL CALL: Councilmen present: Scott, Gillow, Hyde, Cox, McCandliss Councilmen absent: None Staff present: City Manager Cole, Development Services Administrator Robens, City Attorney Lindberg 1. WELCOME BY MAYOR Mayor Hyde welcomed all in attendance and introductions were made. The Mayor noted the purpose of the meeting was to discuss housing issues. 2. DSA Robens gave a few brief remarks stating the purpose of the meeting was to explore the problem of inclusionary housing and determine the course the City of Chula Vista should take. The problem is that housing is no longer affordable for most people and there are reasons why the City must act on this issue: po- litical, social, Federal and State laws and the General Plan. 3. STAFF PRESENTATION Dave Gustafson, Housing Coordinator, using flip charts, discussed the following: 1. The City's involvement with HUD (housing assistance plan); HUD's rental pro- gram involving existing and newly constructed units; Section 202; low-rent public housing and the home ownership program (Section 312). 2. City's involvement with State government: programs for the housing element; rehabilitation loans; homeowner assistance; rental housing construction; California Housing Financing Agency direct loans; and CHFA home ownership/improvement pro- grams. Mr. Gustafson reviewed the main points of the following bills: AB 3150 (Hughes) SB 1960 (Rains); AB 2853 (Roes); and AB 2320 (McCarthy). Director of Planning Jim Peterson reported on the cost of a single-family de- tached home: Land improvements - $34,000 (30%); Labor - $29,800 (26%); Materials - $19,900 (18%); Overhead/Marketing - $9,400 (8%); Developer Finaneing- $9,000 (8%); Profit - $8,400 (7%); Community Amenities - $3,400 (3%); for a total of $115,900. Mr. Peterson noted that in the Community Amenities figures, the sum of $1,440/$750 is attributed to City/School District fees. Mr. Peterson delineated the efforts of the City to address the problem: the housing element of the General Plan; inclusionary housing policy which has been under consideration; zoning text amendment for genior citizens' housing, which allows for density increase and modification of typical zoning requirements. Mr. Gustafson then discussed the use of HUD funds, which encompasses the Community Development Block Grant funds for the rehabilitation and Code enforce- ment programs; Section 8 existing rent subsidy program; the low-rent public hous- ing program and the housing site acquisition programs. Director Peterson discussed the inelusionary housing programs in the County of Orange and in the cities of Pale Alto, Petaluma and .Davis. Orange County has a 25% inclusionary requirement and a mortgage interest subsidy program whereby the interest rate is 8½4. The county will reduce development standards and assist in expeditious processing of plans. Since the initiation of the program in 1979~ 230 low-income units and 1,020 moderate-income units have been built or are under construction. Pale Alto has had a 15% inclusionary program since 1973 which has produced 55 units of moderate-income housing. Petaluma and Davis both have a point system in which developers eompete for the right to build. Points are awarded for the provision of affordable housing and other factors. In Petaluma, 147 low-income units have been provided, and in Davis, 350 low-income and 350 moderate-income units have been built. City Council Meeting -2- January 10, 1981 Mr. Peterson then discussed several approaches to the problem of providing affordable housing: (1) a reduction in development standards either across the board or on a project basis; (2) a demonstration program to waive or reduce development requirements not directly related to public welfare and safety to see what private enterprise can do in a limited geographical area; (3) density bonuses/waiver of fees; (4) mandatory inclusionary housing policy either across the board or on a project basis when the City determines that it can participate by granting density bonus or participate in some other fash£og; (5) an encourage- ment er participation in mobile home park development. Mr. Gustafson dis cussed other approaches involving financial participation by the City, which would include land acquisition and write-down, issuance of mortgage revenue bonds and/or City subsidy of mortgage interest rate or principal amount in exchange for participation in capital gain upon resale. He also discussed continuation of existing programs with perhaps some sacrifice in ideal planning solutions. COUNCIL DISCUSSION AND qUESTIONS Councilman Cox questioned the legal responsibility of the City to provide affordable housing. Director Peterson felt the City could lose Block Grant funds. Principal Planner Pass stated that inclusionary housing is not one of the mandatory require- ments; however, it is one way of meeting the fair share for the City in the region, which is mandatory. It was concluded that the city has no legal responsibility in this area and that we are simply trying to address a serious housing problem. Phil Walling, Building Contractors Association, remarked that there is a new set of rules -- the deadline in the State law is October so he felt the City could not be challenged. Mr. Walling suggested that the City revise its housing element in accord- ance with the new State law and in the course of doing that, the City would find itself addressing many of the options discussed here today. REDUCTION IN DEVELOPMENT STANDARDS Director Peterson stated he would not advise it "across the board" at this point, but it could be considered on a project basis. DEMONSTRATION PROGRAM Director Peterson indicated he liked this idea -- minimum regulations can be stipulated for a parcel three to four acres in size. This would involve not just a reduction in standards, but, say, elimination of density limitations and lot size to see what private enterprise can achieve. City Manager Cole expressed his concerns about cutting way do~n on the regulations as there are basic things that cannot be cut down on, such as the Building Code require- Discussion followed regarding the method of "fast-tracking," in which a developer who wants to speed up his plans will pay for staff's time (and overtime) to accomplish this. Other items in discussion revolved around the number of units proposed by SANDAG for Chula Vista to build in one year as part of its regional fair share (average of 60 units); affordable housing as a community obligation rather than a developer's obligation; option of having the school districts waive their fees; the need to look at the housing figure on an overall basis -- rather than 60 units per year, it should be considered as 300 units by the year 1985; the need to establish a goal; density Mr. Wayne Clark, Bonita Builders, Inc., noted that Orange County has a good deal of large tracts of land and the cost-base is quite low. He added that low-cost homes will be built if there is an incentive for the developers to do it and still make a profit, but that Council may be required to take some political heat in the process, City Attorney Lindberg stated that in talking about inclusionary housing policy as a legally viable solution, one cannot say that it will provide 25% low and moderate income housing because this has not been done either across the board or by communi- ties without some regard for special circumstances. Norma Delaney, Ray Huffman Construction Company, remarked that she is associated with the 186 units developed on Telegraph Canyon Road, and said they are inundated with City Council Meeting -3- January 10, 1981 Chula Vista residents who are purchasing the condominiums because they can now afford a better place to live. As a result, the older facilities in the city proper are being vacated so that they in turn become available to lower-income people. Ms. Dela~.ey suggested increasing the densities in the older sections of the City to assist in the filtering-down process. John Sorenson, South Bay Real Estate Board, indicated that the word "mandatory" hurts -- that everyone agrees there should be an inclusionary housing policy. It is up to the City to make it advantageous for the developer to come in and do some of these social projects everyone agrees needs to be done. Councilwoman McCandliss commented that in discussing the inclusionary housing or affordable housing problem today, it must be realized that they are also talking about the growth management plan as well. In looking at the supply and demand, if you limit the number of units available, you are accentuating the problem and then to have a mandatory inclusionary housing, you are coming into the legislative so- lutions. In lhis way, the City is being impacted on both sides. A general concurrence of those present agreed that the word "mandatory" should be eliminated and the word "incentive" substituted. RECESS was called at 9:55 a.m. and the meeting reconvened at 10:05 a.m. MOBILE HOME SUBDIVISION DEVELOPMENT A general discussion followed regarding development of mobile home parks. Mr. Jerry Valk, Real Estate Broker, discussed the lawsuit pending in Imperial Beach filed when that City tried to rezone an area for such a development. Director Peterson noted a few parks in the City built to 19 units per acre; mobile home parks are normally built at six to eight units per acre, but the denser parks are very accept- able, although they don't accommodate many double-wide units. Mr. Dick Brown, Gersten Companies, indicated that mobile homes today occupy 3,000 square feet considering the outside canopy. CITY'S FINANCIAL PARTICIPATIaN Housing Coordinator Gustafson indicated there may be a lessening of federal funds under the new administration and a move away from categorical housing programs toward a "block grant" approach, which allows more local autonomy. Mr. Phil Walling declared that if the City has a definite commitment -- something specific -- this will inspire confidence and outside money will come in. He cited the case in San Diego where the Mayor invited lenders and builders to come in. The City provided the land and Block Grant funds for the public improvements and proces- sing costs, and they had more lenders than they could use. Mr. Tom Shipe, Crocker Bank, stated that the large banks are always interested in making commitments to community projects once the City has a game plan established. Mr. Bob Rubicaba remarked that savings and loan corporations are allowed to put out a certain amount of their assets for this purpose, If they wanted to go past this incentive, the federal government has given them the incentive to do so if they have a program whereby they will put in a portion of the increased funds for the purposes of participating in low-income projects. REVISION OF HOUSING ELEMENT Mayor Hyde noted that the City is in the process of revising the housing element now, with regard to equity sharing. Councilman Scott discussed the fact that one of the ways people have been able to acquire some wealth in the pagt ig through the gale of their homes, taking advantage of equity interest. Councilman Scott said he would like to see some way to enable people to buy that equity out rather than having to wait until they sell it and then settle for one-half of the profits. Dan Brennan stated that if the City doesn't do it, the lenders will -- they are already investigating the "shared depreciation mortgages." The equity is not kept away from'the participator until the property is sold. It is an either/or situation so that in five or six years, depending on the program, the owner has the option of refinancing the property and providing the equity participant his share for selling City Council Meeting -4- January 10, 1981 the property and going on to new property. Mr. Tom Shipe felt the City could look into some mortgage guarantee program, because in most instances, you are dealing with people of low and moderate incomes who cannot qualify for these loans. ~r. Dick Brown, Gersten Companies, offered the following "truisms": (1) Government can never compete with the private sector in developing housing. Because of the scarcity of developable land, every developer has a problem in finding acceptable sites. (2) Because of the uncertainties, delays, restrictions and lack of clear and concise rules, government is responsible for increasing the cost of housing up to 30%. (3) The developers need a checklist of all the rules and regulations .(per- taining to developments). (4) "If you want something to be done, you make it pos- sible for someone to do it." (5) Accrued liability of the existing Section 8 program (not including 235 or 236) are ranging anywhere from $350 million to $5 billion, and it is impossible to project the accrued liability because there are contracts that guarantee fair market rent. (6) In all the programs presented by the staff today, one thing was missing: What is the cost of doing it? In Orange County, the 25% mandatory requirement costs everyone else in the particular develop- ment $4,000 for their homes. (7) Mr. Brown expressed a desire to see the word "inclusionary" struck; there are social considerations in inclusionary zoning. To put a person affording a $50,000 home in a $100,000 development would do one of two things: that house would either become a blight in the area because the people could not maintain it, or they would become extremely frustrated knowing that they could not keep it up with the neighborhood. (8) What is needed is something vol- untary and not mandatory. The most successful program in this country (one that was not interfered with by government) was home ownerghip. The former success of this program was due to iow interest rates. Mr. Brown offered the following suggestions for achieving low and moderate income housing: (1) Amend the zoning ordinance to allow a 25% increase in density over what the general plan allows; (2) On a quarterly basis, publish the rates for rental and sales for low and moderate housing; (3) Reduce the process time to no more than 30 days. Delegate the approval of tentative maps to the Planning Commission or have the Planning Commission and City Council hearings one week apart (to consider the tentative maps); (4) Waive all fees and offsite require- ments. This can be recovered by Block Grant funds as part of the housing program; (5) Develop a committee of builders developing in the City as well as other places since there are different requirements within the cities. The Committee would look into the interpretation of the Building Code and make suggestions for changes and review this on an annual basis. Director of Planning Peterson asked Mr. Brown if the City did these things, would the developer be willing to accept a lower profit on his development. Mr. Brown responded that the city should not worry about developer profits. Director of Building and Housing Grady noted that the San Diego Chapter of the Building Officials meets once a month and they strive for uniform interpretation of the Building Code as used by all jurisdictions. The goal is to get a Uniform Building Code throughout the County. Mr. Phil Walling said he supports everything said by Mr. Brown except (1) he feels the City should not get committed on sales or rentals -- it must maintain flexibility and not push either one; (2) the City should not try to review this on an annual basis. The first year would be too short a time to give it a viable review. Mayor Hyde asked if there would be any objection to this approach: if the units to be made available were for sale below market rate (which would become a bonanza for somebody) that there be a mechanism to insure that upon reconveyance to some other party, the first buyer does not get the windfall from the change in price. Ms. Norma Delaney said there would be a problem with that. She discussed the "wrap- around" process, one in which the lender does not know you sold your property, so he doesn't raise the interest rate. Mr. Chuck Smith, Real Estate, said he agrees with Mr. Walling and Mr. Brown's remarks. In theory, they are for the equity ownership. He added that any one of the things (discussed by staff) will help in achieving the low and moderate income housing. This City Council Meeting -5- January 10, 1981 will be more effective than any subsidy program. Mr. Smith discussed the rental units which he felt was the most efficient and doesn't have to have the City get involved. The City should commit itself to a program beyond the inclusionary housing (rental units have become ownership units, as is being done today). Mr. Bob Rubicaba, Ray Huffman Company, said he would not limit the entire program to a 25% density bonus -- that all projects should be looked at individually, as some projects could be allowed more than that. Dan Brennan, Human Relations Commission, stated that there is a preconceived notion that the City needs to have low and moderate income housing because it has not provided affordable housing in the past. This is not true, as there have been many condominium conversions and projects and housing projects that, at the time they were built, would fall into this affordable housing category. Mr. Jon Miller, Jon Miller Realty, Inc., agreed, adding it would certainly add up to at least 60 units a year. Mr. Wayne Clark said he is involved in a mobile home park project in Bonita and is working with the County. lie noted the pressures (political and social) involved in the development. Mr. Jerry Valk said he felt the resale is an agitation to the taxpayer. To get a tax break, you have to go outside the City and even to the State to get some help. Norma Delaney said she agrees with the 30-day staff process period. The City should also do some "up-zoning" and make more land available for these units. The up-zoning should be done along the corridors where the amenities exist: transpor- tation, thoroughfares, etc. Ms. Delaney questioned why the low and moderate income families assume they must have a new home. The people that are moving up into the newer units are leaving units that could be renovated and made available for these housing units. She added that National City does not allow construction of any apartments and felt that the City should correlate some things with this city. Mr. Dick Kau, Real Estate, noted that the City does not have a lot of land within its City limits for such projects. The Gersten lands are about the only lands available along with some areas in the Castle Park area. He commended the Council for the "great lengths" they went to to protect the neighborhoods and the change of attitude now being demonatrated. COUNCIL COMMENTS Councilman Gillow noted the following three things that need to be directed and analyzed: (1) Have mn incentive housing policy based on a project basis. The staff should come up with a set of rules that the City would be willing to sacrifice on a case-by-case basis; mandatory would be something you would go to if there are no results. (2) Continue with City financial participation and define better goals (work with RFP-type definitions). Work with developers particularly looking at senior citizen housing. (3) Instead of setting up a committee, use some of the expertise here today along with representatives of the Golden State Mobile Home Organization to work with the staff, on a volunteer basis rather than an ad hoc basis, to look into mobile home developments. Councilman Cox indicated that the solution to the problem will take participation on the part of thc City, but it is also a community obligation and will have to have the cooperation of the developers. Councilwoman McCandliss noted that when projects are proposed for certain areas, there is an outcry from the residents of that area. What is needed is one or two ideal projects (where the City and developer5 work together) and one which can be pointed to and say "it does work." Councilman Scott commented that what has been discussed is one segment of the whole picture. Also to be considered is the budget, growth management policy, east to west development (H Street); financial (what can the City afford to do?); how many houses can the City afford to have built; Proposition 13 legislation. He suggested the Council hold another meeting on affordable housing, taking into consideration the financial impact of the housing policies. City Council Meeting -6- January 10, 1981 City Manager Cole felt the 30-day processing time was idealistic, as there are constraints such as environmental impact reports and legal requirements which must be met. Mayor Hyde's comments on "where do we go from here?" were: (1) a review of the housing element which is now in process; (2) direct staff to prepare a draft on affordable housing policy (not an inclusionary housing policy) in which there would be an attempt to describe goals and mechanisms; from that would be adoption of ordinances and/or modification of existing ordinances for this implementation; (3) form an ad hoc committee that would embrace all the talents and various interests in the community. Councilman Scott said he would like to see separate paper come from the building and financial industry and then have a committee!~ook over both recomm~endations. MSUC (Hyde/Gillow) to refer to and direct the staff to prepare a draft of an afford- able housing policy for the Council to consider. Councilman Scott noted that the growth management policy has a tremendous impact on this program, and it should be considered jointly. Councilman Cox said he would like to see the staff get input from the people here (builders, financial) -- the ones that will make it work. ADDED TO MOTION (Hyde/Gillow): ~e creation of an ad hoc task force to provide input in the preparation of a draft policy. Director Peterson questioned the formation of a formal committee which involves set- ting up meetings, minutes, night meetings, etc. He suggested just a dialogue with the interested parties to get their input. DELETED FROM MOTION (Hyde/Gillow): At this time, it not be a formal organization, but it be understood by staff that close contact with the industries represented here ~ould certainly be expected. THE MOTION AS AMENDED CARRIED UNANIMOUSLY. In answer to DSA's question for additional direction, the Council made the following comments: Have an incentive and not a mandatory policy; address the mobile home de- velopments; continue with the existing financial programs and define better goals; perhaps getting the private secret in rather than relying on HUD; make up a shopping list of rules and regulations. THE GLENN RESTAURANT City Manager Cole discussed the question of continuing the operation of The Glenn Restaurant, noting the problem of finding someone to take it on for the next two or three months. The sum of $5,500 would have to be paid to the Board of Equaliza- tion, the sales tax payment, and the San Diego Gas & Electric deposit. If a new operator came on board, there would be a delay of from 45 to 50 days for the beer and wine license. Mr. Cole said it would be his recommendation not to try to keep the restaurant open but to move as rapidly as possible to get an operator in there to solve the problems. MSUC (Scott/Cox) Accept the City Manager's recommendation. HALFWAY HOUSE City Manager Cole stated that the staff wishes to keep the Halfway House open and the beer and wine license is presently being transferred to Joe Warburton, who has agreed to take over this operation. What is needed from the Council is an approval of an agreement with Mr. Warburton. City Attorney Lindberg stated that ~hat is needed is a motion to approve and to bring back a formal resolution (unanimous consent item) for the next Council meeting. [MUC (C~x/Scott) to bring back a resolution approving the agreement with Mr. ~arburton. City Council Meeting -7- January 10, 1981 PRELIMINARY BUDGET WORKSHOP City Manager Cole submitted a momo for the January 29 budget workshop. PERS ACTUARIAL STUDY Mayor Hyde presented the Council with a list of people who have retired from the City, noting the ages of the various individuals. In answer to the Counc~ query, City Manager Cole said there was a misunderstanding on his part that there was a December 31 deadline. Once the Council makes a determination, it takes about three months to get the plan going. ADJOURNMENT at 12 noon to the meeting scheduled for Tuesday, January 13, 1981 at 7 p.m. Jennie M. Fulasz, C~IC City Clerk