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Home My WebLink About2006/08/01 Item 13 PAGE 1, ITEM NO.: MEETING DATE: /3 8/01/2006 CITY COUNCIL AGENDA STATEMENT RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PLACING A PROPOSED BALLOT MEASURE ON THE NOVEMBER 7, 2006 STATEWIDE GENERAL ELECTION BALLOT REGARDING ARTICLE 34 OF THE CALIFORNIA CONSTITUTION WHICH AUTHORIZES PARTICIPATION IN FUTURE AFFORDABLE HOUSING PROJECTS FOR LOW INCOME RENTERS THROUGHOUT THE CITY OF CHULA VISTA, AND APPROPRIATING FUNDS THEREFOR SUBMITTED BY: ACTING COMMUNITY DEVEL MENT DIRECTOR REVIEWED BY: INTERIM CITY MANAGER 'I ITEM TITLE: 4/5THS VOTE: YES 0 NO D BACKGROUND Article 34 of the State of California Constitution, adopted in 1950, specifies the circumstonces under which public agencies have the authority for construction, development, and acquisition of affordable units for low income renters throughout the City of Chula Vista. The City is nearing the limit of the 400 units previously approved under Article 34 by City of Chula Vista voters on April 11, 1978 and adopted by Ordinance No. 1897, and will require authorization to participate in future affordable housing projects. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. RECOMMENDATION 1. Adopt a resolution which authorizes staff to place a ballot measure as shown in Exhibit A on the November 7, 2006, statewide general election ballot approving the potential development, construction, or acquisition of affordable low income housing rental units, to address Article 34 of the State of California Constitution; and 2. Direct the City Attorney to prepare an impartial analysis of the proposed ballot measure. 13-1 PAGE 2, ITEM NO.: MEETING DATE: /) 8/01/2006 3. Appropriate $25,000 to the Services and Supplies category of the Low/Mod Housing Fund from available fund balance to cover the costs associated with placing this measure on the November 7, 2006 ballot. BOARDS/COMMISSIONS RECOMMENDATION On July 26, 2006, the Housing Advisory Committee voted unanimously to support the Article 34 measure to be placed on the November 2006 ballot. DISCUSSION On November 7, 1950, the voters of the State of California adopted Article 34 of the California Constitution, entitled the "Public Housing Proiect Law," which requires that the maiority of City voters approve the development, construction, or acquisition of affordable "low rent housing" in the City by a state or local public agency. Article 34 defines "low rent housing" as any development for persons of low income, which is financed in whole or part by public funds or which requires another form of assistance from a public agency, such as labor. In addition, if any agency loans money for a project, and the loan is conditioned on typical government agency requirements such as review and approval of plans, project financing, operation and maintenance standards and occupancy, the agency will generally be deemed to have developed or constructed the project. The voter approval requirement of Article 34 does not apply to proiects designed, planned, financed, constructed and owned by a private entity. The California Supreme Court has held that the voter approval required by Article 34 can be satisfied by a vote granting authority for a designated maximum number of housing units. The ballot measure does not approve or deny any specific affordable housing proiects, nor does it have an effect on the City's growth policies. All projects must continue to go through the existing planning and building approval process, regardless of this ballot measure. Of the 400 units approved by Chula Vista voters in 1978, approximately 66 units will remain after the completion of the Seniors on Broadway affordable housing project currently underway. In the next year, it is expected that 40-80 affordable housing units will be brought before City Council for consideration, which would use up the remaining allocation under Article 34. The proposed ballot measure calls for an allocation of 1,600 low income housing units. This is four times the amount of the original allocation of 400 units that was approved in 1978. The reasons for the increased amount are for several reasons: 1) City's Inclusionarv Housinq Policy. To meet the City's Affordable Housing Inclusionary Policy in western Chulq Vista, more proactive City participation will be necessary, than was needed in the past. Previously, developers of large master planned communities in the east, could readily identify land to build housing. In contrast, infill development usually operates with a smaller profit margin and affords fewer options for meeting inclusionary housing obligations on site. As mentioned in the draft Housing Element (Policy 5.1.1 and 5.1.2), the City may need to offer flexible options for infill developments meeting the City's Inclusionary Policy. 13-2 PAGE 3, ITEM NO.: I 3 MEETING DATE: 8/01/2006 For example, if the City collects in-lieu fees and then assists an affordable rental project, Article 34 authorization would be necessary. 2) Housina Element Goals. The draft 2005-2010 Housing Element (Objective H7) calls for a proactive City approach to increasing the supply of affordable housing through planning and processes, and through financial assistance and other incentives. This will require more City/Agency participation in building low income units. Since 1999, the City has included an Article 34 analysis in it's Housing Element policies. Policy 7.2.4 specifically identifies a possible Article 34 ballot initiative to obtain additional authority for affordable housing opportunities. The 1999-2004 Housing Element (Policy 3.4.7) also stated that the City would evaluate the possibility of initiating a referendum to increase the City's ability to participate in affordable housing projects. 3) Redevelopment Aaencv Fundina/lnclusionarv Obliaations. Additional Article 34 authorization will be needed to accommodate the additional housing units that will be created in the near future as the City's Redevelopment Agency strives ta meet the Low and Moderate Income Fund and Inclusionary Housing requirements before project areas expire. Within adopted project areas, redevelopment agencies receive a higher level of property tax revenues that would normally be allocated to the state and other taxing entities. In exchange, the state requires that 20 percent of all of these "tax increment" revenues be set aside (Redevelopment Set-Aside) for the development of affordable housing, and funds are to be expended in proportion to the needs of very low, low and moderate income households. To ensure that these monies are in fact used for the production of affordable housing, the state requires that 15 percent of 011 new residential units built in an adopted project area be restricted to households of very low- and low- and moderate incomes. With the anticipated adoption of the Urban Core Specific Plan, and continued growth of the City's population and redevelopment focus in the City's Urban Core, it is anticipated that new housing construction will increase both the housing fund and inclusionary housing requirement. The Council's/Agency's leadership to proactively plan for affordable housing opportunities in the redevelopment project areas is critical to meeting the Redevelopment Agency's legal obligations. The timely production of affordable units is a priority because of the nearing expiration dates of the various project areas (Bayfront- 20 14, Town Centre 1- 2016, Town Centre 11-2019). In the draft Five-Year Implementation Plan, the Redevelopment Agency anticipates assisting in the new construction of 624 affordable units through FY 2014, of which a significant portion may be subject to Article 34. 4) Need for Affordable Units. It is important to enable the City to create affordable housing as revitalization occurs in western Chula Vista. On February 2, 2006, the City Council held a 13-3 PAGE 4, ITEM NO.: ! 3 MEETING DATE: 8/01/2006 workshop, considered public testimony and discussed policy alternotives regarding western revitalization and potential effects on existing populations as change occurs. Given population forecasts for western Chula Vista and potential displacement, additional affordable housing will be needed in the next five years to address the needs of lower income persons. The City Council considered alternatives under Housing Policy #1: "Creation of adequate supply of affordable units for lower income households within Western Chula Vista," and directed staff to develop viable solutions. For the reasons stated above, City staff must draft a new measure that can be put on the ballot for citizen vote before any additional affordable housing developments can be built with City assistance. The ballot measure would allow the citizens to vote on the creation of up to 1,600 affordable units in future housing projects that are publicly assisted and designated more than 49% affordable. The ballot measure does not approve or deny any specific affordable housing proiects, nor does it have an effect on the City's growth policies. All projects must continue to go through the existing planning and building approval process, regardless of this ballot measure. The measure simply authorizes the City to assist in projects as they are approved, up to the maximum outlined in the ballot measure. FISCAL IMPACT The cost of putting a measure on the ballot is approximately $25,000, as estimated by the County of San Diego Registrar of Voters, and would be paid though available fund balance from Low Moderate Housing Funds. This is an allowable administrative expense for the Low Moderate Housing Fund necessary for the establishment of future offordable housing units (Health and Safety Code 33334.3(e)). The November election is a statewide general election, and therefore the costs for this ballot measure will be less than if it were considered in a special election. The approval or denial of this ballot measure has no direct fiscal cost to the City beyond the cost of the actual election. The measure authorizes the City to participate in additional affordable housing projects. Approval of funding for individual housing projects will be considered by the City Council on a case-by-case basis. ATTACHMENTS Exhibit A - Proposed Ballot Measure Prepared by: Amanda Mills, Housing Manager, Community Development Department J:\COMMDEY\5TAFF.REP\2006\08-01 -06\Articl. 34\51011 Report Articl. 34 8- 1 -06.doc 13-4 .<." RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PLACING A PROPOSED BALLOT MEASURE ON THE NOVEMBER 7, 2006 STATEWIDE GENERAL ELECTION BALLOT REGARDING ARTICLE 34 OF THE CALIFORNIA CONSTITUTION WHICH AUTHORIZES PARTICIPATION IN FUTURE AFFORDABLE HOUSING PROJECTS FOR LOW INCOME RENTERS THROUGHOUT THE CITY OF CHULA VISTA, AND APPROPRIATING FUNDS THEREFOR WHEREAS, pursuant to Article 34 of the California Constitution, a majority of the qualified electors of the City must approve the potential development, construction, or acquisition of affordable low income rental housing units if those units are assisted by a state public body, either financially or by supplying all or part of the labor, or otherwise; and WHEREAS, in Aprill978, the voters approved 400 units of low income rental housing pursuant to Article 34; and WHEREAS, the City has nearly exhausted this allocation; and WHEREAS, staff wishes to place a proposed ballot measure on the November 7, 2006 statewide general election ballot to authorize the City to participate in 1,600 additional low income rental housing projects pursuant to Article 34; and WHEREAS, the cost associated with placing this measure on the November 7, 2006 ballot is approximately $25,000, which is available from Low Moderate Housing Funds and is an allowable administrative expense for these Funds; and WHEREAS, the Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines. Therefore, pursuant to Section l5060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA and no environmental review is necessary. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista authorizes staff to place a ballot measure on the November 7, 2006, statewide general election ballot approving the potential development, construction, or acquisition of affordable low income rental housing units. BE IT FURTHER RESOLVED that the City Council of the City of Chula Vista directs the City Attorney to prepare an impartial analysis of the proposed ballot measure. 13-5 BE IT FURTHER RESOLVED that the City Council of the City of Chula Vista appropriates the $25,000 to the Low Moderate Housing Fund to cover the costs associated with placing the proposed ballot measure on the November 7,2006, statewide general election ballot. Presented by Approved as to form by Ann Hix Acting Director of Community Development ~a.J~ Ann Moore City Attorney ];lAttomeyIELISAIRESOSlArticle 34 reso.doc 13-6