COUNTY OF SAN MATEO

Inter-Departmental Correspondence

ENVIRONMENTAL SERVICES AGENCY

DATE:

February 25, 2004

SET TIME:

9:45 a.m.

BOARD MEETING DATE:

March 16, 2004

TO:

Honorable Board of Supervisors

FROM:

Marcia Raines, Director of Environmental Services

SUBJECT:

Consideration of a Zoning Text Amendment to adopt an Inclusionary Program for Affordable Housing.

County File Number:

PLN 2001-00766

RECOMMENDATION

That the Board of Supervisors:

A.

Adopt an ordinance approving the Zoning Text Amendment to adopt an Inclusionary Program for the unincorporated area.

B.

Adopt a resolution directing staff to transmit the Inclusionary Program to the Coastal Commission for certification of conformity with the California Coastal Act.

PROPOSAL

Staff has prepared an Inclusionary Program to promote the production of affordable housing in the unincorporated County. As directed by the Board on December 16, 2003, the Inclusionary Program presented for adoption is the version recommended by the Board-appointed Housing Element Task Force. Revisions to the program that were subsequently recommended by the Planning Commission are also discussed further in this staff report.

BACKGROUND

Inclusionary programs are policies or ordinances requiring that new housing developments include a specific percentage - usually 10 to 20 percent - of all homes at rents/prices affordable to low and/or moderate-income residents. Many local governments throughout California have adopted inclusionary programs, including eight cities in San Mateo County and a number of cities nearby in Santa Clara County. Attachment A summarizes the features of these programs.

The County implemented a 20 percent inclusionary requirement in unincorporated Colma with the adoption of the Colma BART Station Area Plan in 1994. To date, the inclusionary requirement, coupled with the County's Density Bonus Program, has led to the construction of 124 units affordable to very low and low income households, with another 31 affordable units currently under construction. The current Inclusionary Program proposal seeks to extend this successful program to all unincorporated areas.

DISCUSSION

A.

PREVIOUS ACTION/RELATED ACTION

1.

General Plan Housing Element Task Force

During 2002, the Board-appointed General Plan Housing Element Task Force assisted the Planning Division in updating the County's Housing Element. Supervisors Jacobs Gibson and Gordon co-chaired the Task Force, which included members from a broad range of organizations involved in housing and related issues. In January, 2003, the Task Force recommended policies and programs for the Housing Element, including the adoption of an Inclusionary Program. The Inclusionary Program recommended by the Task Force is summarized on Attachment B, and is detailed in the ordinance, Attachment D.

2.

Planning Commission Review and Action

The Planning Commission reviewed the draft Housing Element and the Inclusionary Program at a series of meetings during the fall. On November 12, 2003, the Commission recommended the Housing Element to the Board for adoption. The Commission also recommended adoption of the Inclusionary Program; however, they recommended two changes to the Task Force's version of the Inclusionary Program, as described further in the Key Issues section.

3.

Board of Supervisors Review and Action

At the meeting of December 16, 2003, the Board of Supervisors considered adoption of the Housing Element update and the Inclusionary Program, which included the revisions recommended by the Planning Commission. The Board adopted the Housing Element, but deferred adoption of the Inclusionary Program, directing staff to bring back the version of the Inclusionary Program that was recommended by the Task Force to the Board as soon as possible, and to provide additional information on the changes recommended by the Planning Commission.

B.

KEY ISSUES

Difference Between the Task Force and Planning Commission Versions of the Inclusionary Program

The Planning Commission recommended the following revisions to the Task Force version of the Inclusionary Program:

1.

Application to Single-Family Residential Subdivisions

The Task Force recommended that the 20 percent inclusionary requirement apply only to multi-family and planned unit developments of five or more units. The Planning Commission recommended that the 20 percent inclusionary requirement also be applied to single-family subdivisions of five or more parcels.

The Task Force recommended applying the inclusionary requirement to multi-family or planned unit development primarily for two reasons: (1) the housing needs analysis showed that the County's greatest supply shortage will be in affordable rental housing (typically multi-family housing), while the shortage of ownership housing will be much less severe; and (2) the majority of Task Force members felt that multi-family developers are better equipped due to economies of scale to incorporate affordable units (and any density bonus units) into their projects. In contrast, most new single-family developments in the unincorporated area are typically less than five units and are very expensive to build, since most vacant land available for development even in urban areas is moderately to severely constrained by steep topography, lack of access and/or infrastructure.

The Planning Commission recommended extending the requirement to single-family subdivisions of five or more units because they felt (and studies on inclusionary zoning point out) that imposing the requirement on multi-family developments only encourages single-family development over multi-family development, and misses the opportunity to have all residential development contribute to the affordable housing solution. They felt it would be more equitable to require a contribution to affordable housing from developers of up-scale single-family housing, as well as developers of more modest multi-family housing. Further, including an in-lieu fee option for smaller developments, as recommended, allows sufficient flexibility to make single-family developments feasible, despite the inclusionary requirement.

Attachment C illustrates what would have been the result if the proposed Inclusionary Program had been applied to major single-family subdivisions approved by the County from 1991 to 2001. This is an estimate only, as developers may have adjusted their projects to avoid the inclusionary requirement by reducing the number of lots to four or less. Or, they may have taken advantage of the Density Bonus Program, producing additional lots/units to offset the costs of the inclusionary requirement. Also, the amount of the in-lieu fee calculated for older subdivisions may be overstated, since the cost of construction has risen significantly since 1991.

2.

Affordability Term

The Task Force recommended requiring inclusionary units to be affordable for 55 years. The Planning Commission recommended requiring inclusionary units to be affordable "in perpetuity."

The Task Force recommended a 55-year term of affordability, in part to be consistent with State Community Redevelopment Law and other State and Federal financing programs. There was discussion and some support for requiring permanent affordability among the members of the Task Force, but the legal review had not yet been completed and there were reservations about the requirement.

The Planning Commission recommended requiring inclusionary units to be affordable "in perpetuity," believing that the need for designated affordable housing will continue into the future. Also, with permanent affordability, the displacement/disruption associated with the conversion of units to market rate as affordability contracts expire would be avoided. The Planning Commission also noted that other jurisdictions require affordability in perpetuity, including the Bay Area cities of Berkeley, Half Moon Bay and Pleasanton. County Counsel reported that there appeared to be no successful challenge to an "in perpetuity" term.

Recently, staff consulted with both non-profit and for-profit builders of affordable housing regarding the requirement for permanent affordability. Staff was advised to consider coordinating the affordability term adopted as part of the Inclusionary Program with the terms of State and Federal financing programs, to the extent possible, making it easier for affordable housing developers to use such programs to finance their developments. Fifty-five (55) years is typically the maximum required in connection with such programs.

C.

REVIEWING AGENCIES

County Office of Housing

County Counsel

VISION ALIGNMENT

The Inclusionary Program keeps the commitment of offering a full range of housing choices, and supports Goal Number 9, ensuring that housing exists for people at all income levels and for all generations of families. The Inclusionary Program contributes to this commitment and goal by providing a comprehensive set of policies and implementation programs to promote housing for all income groups in the unincorporated areas of the County.

ATTACHMENTS

A.

Summary of Local Inclusionary Programs

B.

Summary of Inclusionary Program Proposed by Housing Element Task Force

C.

Table: Result of Applying Inclusionary Program to Major Single-Family Subdivisions

D.

Ordinance Adopting Inclusionary Program

E.

Resolution Authorizing Transmittal to the Coastal Commission