Provide a diversity of housing types, responsive to household size, income and age needs.

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1 8 The City of San Mateo is a highly desirable place to live. Housing costs are comparably high. For these reasons, there is a strong and growing need for affordable housing. This chapter addresses the affordable housing potential of the Plan Area based on the issues identified in the Housing and Land Use study of 2008 and the goals set forth in the 2009 Housing Element, as outlined below: Maintain the character and physical quality of existing residential neighborhoods. Provide a diversity of housing types, responsive to household size, income and age needs. Increase housing supply to meet the housing demand caused by future job growth. A. Housing Need as Identified in the San Mateo Housing Element The difference in the inflation of home values and household income levels has resulted in a critical housing affordability gap. 1 The affordability gap is expected to continue as employment in the lower-paying service sectors of the economy becomes more dominant. As is described in Chapter 5, a total of 17,980 new jobs are anticipated to be created in the City of San Mateo between 2010 and 2030, representing a growth rate of 38 percent. The Retail and Health, Education, and Recreational Service categories are expected to retain similar overall percentages of jobs in San Mateo, but will increase along with city-wide growth. Since many of the jobs in these sectors provide low wages relative to housing costs, it is likely that there will be an increase in the demand for affordable housing. The Regional Housing Needs Allocation (RHNA) for San Mateo is as shown in Table City of San Mateo, 2009, Housing Element. 8-1

2 TABLE 8-1 REGIONAL HOUSING NEED ALLOCATION, Income Category Need Allocation Percentage of Total Very Low Income (<50% AMI) a % Low Income (51%-80% AMI) % Moderate Income (81%-120% AMI) % Above Moderate Income (>120 AMI) 1,267 42% Total Projected Need 3, % a AMI = Area Median Income. In addition to the broad projections set forth in the RHNA, the Housing Element identifies the following specific subgroups that require increased study: 1. Seniors The elderly population in San Mateo is increasing. Senior citizens need affordable housing opportunities to allow them to remain in the community while freeing up single-family homes for younger families. Close proximity to transportation and goods and services is critical for older residents who may no longer drive. 2. Moderate Income or Workforce Housing The State and federal governments define lower income as those earning less than 80 percent of the countywide area median income (AMI) level and moderate-income or workforce as earning between 80 percent and 120 percent of the AMI. Workforce refers to the population that is the labor pool in employment, excluding employers or management. Government programs, including individual subsidies and funds for built projects, are often aimed at lower income groups. The production of moderate 8-2

3 income units, especially rental units, is entirely dependent on the market rate private sector which tends to focus on the development of housing for above moderate incomes. The result is that a relatively small number of new units are produced to meet the needs of moderate income households. B. Existing City Programs to Encourage Development of Affordable Housing Current City zoning regulations include three programs intended to encourage the development of mixed income housing: the Below Market Rate (BMR) program, Density Bonus Program, and Secondary Unit Ordinance. For more information on the Zoning Ordinance, see Chapter Below Market Rate Program The BMR program is an inclusionary zoning requirement, initiated in 1996, which applies to all residential development projects of 11 or more units or parcels including new construction of rental or for-sale housing units, subdivisions of single-family or duplex housing developments, and condominium conversions of rental apartments. The program requires provision of affordable units equal to 10 to 15 percent of the number of units in the project. (For projects between 5 and 10 units, a fractional fee is required). BMR units in for-sale projects shall be affordable to moderate income households those earning no more than 120 percent of the AMI. BMR units in rental projects shall be affordable to very low or lower income households - those earning no more than 50 or 80 percent of the AMI. BMR units are required to be substantially the same in exterior design and appearance as market rate units, be distributed throughout the project, be of comparable bedroom count to market rate units, and have access to all on-site amenities. An applicant may propose an alternative means of compliance with the BMR program requirements for comparable bedroom count, size of the BMR units, and provision of off site BMR units. 8-3

4 The wait lists for the existing BMR units are long. Over 500 families are on the rental waiting list, and over 225 are on the first time buyer list. Furthermore, the available units are not always a match for those on the wait list in terms of income or household size. The greatest drawback to the BMR program is that affordable units are produced only when market rate units are developed. In times of economic recession, a limited number of units of any type are developed for the market. As a result, the production of affordable housing declines exactly when it is needed the most. Since the inception of the BMR program in 1996, permits for 2,381 new market rate residential units have been issued, generating 234 affordable units. BMR units represent more than 40 percent of the affordable units constructed during that time, and 58 percent of affordable housing units generated in Housing Element Period. 2 It is important to note that inclusionary zoning practices such as the BMR program have recently been subject to legal challenges in other jurisdictions. As a result, the future of these practices is uncertain. 2. State Density Bonus Law and San Mateo Density Bonus Ordinance Housing developments subject to inclusionary requirements are eligible for incentives under the State Density Bonus Law (Government Code Section 65915) and the City of San Mateo Density Bonus Ordinance (San Mate Municipal Code Section ). These laws provides a unit density increase of up to 35 percent in exchange for the provision of affordable units in the BMR program, plus additional development concessions and incentives depending on the level of affordability of the housing units provided. The City of San Mateo s Below Market Rate Program is designed to comply with State law and provides a density bonus for projects exceeding 5 units in size which meet one or more of the following: 2 City of San Mateo, 2008, Housing and Land Use Study Report. 8-4

5 At least 5 percent of the total units within the project will be provided for very low-income households (50 percent or less of median income level). At least 10 percent of the total units with the project will be provided for low-income households (80 percent or less of median income level). Senior housing development At least 10 percent of units in a condominium development are designated for moderate income households (120 percent or less of median income level), provided all units are offered to the public for purchase. In addition to any density bonus, State law requires that up to three further concessions must be provided which contributes significantly to the economic feasibility of the affordable units within the project. The San Mateo Density Bonus Ordinance identifies incentives and concessions that are deemed not to have adverse impacts. These possible additional incentives include: Reduced setbacks or buffers so long as the project remains consistent with the City s General Plan and any applicable design guidelines Increased maximum lot coverage so long as the project remains consistent with the City s General Plan and any applicable design guidelines Increased maximum Floor Area Ratio (FAR) so long as the project remains consistent with the City s General Plan and any applicable design guidelines Reduction in parking standards beyond that set forth in Government Code Section 65915(p). Allowance of other regulatory incentives or measures which can be shown to result in construction cost reductions, without compromising public policy, such as expedited permit processing. 8-5

6 An applicant requesting a density bonus, incentive or concession, or waiver or modification of development standards must submit the request with a planning application. The body with approval authority for the planning approval sought will approve, deny or modify the incentive or concession as a part of the overall project approval. 3. Secondary Unit Ordinance In 1983, the City of San Mateo adopted an ordinance which allowed for the creation of ancillary rental units on single-family properties. The intent of the program is to allow for owner-occupied properties to include a small rental or in-law unit (maximum size of 640 square feet). This is a worthwhile program, but has limited potential for providing significant amounts of affordable housing. This is particularly true in the Plan Area, given the limited amount of single-family properties and the small size of the single-family residential parcels which limits the ability to provide additional on-site parking spaces required for the secondary units. C. Availability of Resources for Affordable Housing The City of San Mateo supports the development of affordable housing through redevelopment funds and through federal HOME funds. During the fiscal year, the City spent $13.2 million on the purchase or assistance on the purchase of three sites for the development of affordable housing: the Vendome Hotel located downtown, the former police station site at 2000 South Delaware Street, and the former Goodyear tire shop and Immediate Care Medical office sites located within the Station Area on South El Camino Real between 28 th and 31 st Avenues. Redevelopment funds for affordable housing are limited as a result of those expenditures. It is anticipated that in the next five years $3.5 million will be accumulated that could be used to support development of additional affordable units, but finding alternate resources for affordable housing will be a priority in the coming years. 3 The 3 City of San Mateo, 2008, Housing and Land Use Study Report. 8-6

7 City receives an annual award of HOME funds from the federal government; however, this award has been reduced in recent years. A significant portion of affordable housing development relies on State and federal tax credit and grant programs that have specific program criteria. Typically, these programs favor developments that are between 40 and 100 units and at a density of 30 dwelling units per acre (DUA) or higher. Senior housing developments are typically built at higher densities with smaller units, in the range of 60 to 80 DUA. In addition, the tax credit programs favor sites that are in close proximity to services and public transportation, which allow households on limited incomes to spend less on transportation costs. D. Analysis of Regulations on the Hillsdale Station Area 1. Density and Height Restrictions General Plan Initiative Measure P, further described in Chapter 2, established residential density ranges and building heights in order to limit the intensity of development in San Mateo. Overall density ranges are fixed and can only be changed with voter approval. In the Plan Area, under current General Plan and Measure P with the State Density Bonus Law (Government Code Section 65915) the maximum density allowed is 50 units per acre, not including any density bonuses. The maximum height is 55 feet and the FAR maximum is 2.0. The primary zoning districts in the Plan Area include C2 and C3 Regional/Community Commercial; C4 Service Commercial; R2 Two Family Dwellings; R3, R4, R5 Multiple Family Dwellings (Medium and High Density); and Transit-Oriented Development (TOD). Residential development in the C zones would require a special permit under the new General Plan 2030 policy and associated zoning code amendments. The exception is C zone properties within the Residential Overlay Zone, 8-7

8 which applies to the majority of the C zones fronting on the west side of El Camino Real. See the discussion of Residential Overlay District below. The San Mateo Rail Corridor TOD Plan establishes TOD Districts in the vicinity of the Hayward Park and Hillsdale Caltrain Stations. The TOD District provides for mixed-use development at the highest residential densities, encourages lively, transit-oriented and pedestrian-friendly places and allows for reduced parking requirements. a. Open Space and Lot Coverage R-3 zoned areas are required to provide open space at the rate of 200 square feet per bedroom for the first bedroom and 100 square feet per bedroom for additional bedrooms. There is no usable open space requirement for R-4, R-5, TOD, or residential overlay zones. There are no restrictions for the percentage of lot covered in any of the residential zones. b. Parking Standards The parking standards in San Mateo are similar to those in other cities of similar density and character. Reductions in parking requirements are permitted for senior housing. For projects within the Corridor Plan Area, the City s standard parking requirements for multi-family housing do not apply. Per Corridor Plan Policy 7.22, the conditions of approval for the project shall establish the parking standards. A parking study is prepared to analyze probable trip generation, traffic impacts and the anticipated parking demand for the project. It is anticipated that projects in the Plan Area will demand less parking than those of similar multi-family projects since they are located near transit and are required to implement transportation demand management strategies to maximize non-automobile trips. Additionally, projects that request a State Density bonus are eligible to utilize state density bonus parking standards, which does not count as a concession or incentive. In addition, the Density Bonus program allows further reductions in parking beyond that set forth in the State Density Bonus Law as an incentive or concession, though this would not be necessary in the Corridor Plan Area. 8-8

9 The multi-family parking standards are listed below: Multiple Family Dwelling (two-family, townhouse, condominium, apartments and apartment hotels) Resident parking shall include at least one covered stall per dwelling unit. Studio One-bedroom Two-bedroom Three-bedroom or more (or any dwelling unit over 1,400 square feet in floor area) Resident Visitor Total c. Residential Overlay District The Residential Overlay District has been established to encourage residential and mixed-use development in certain zones. In this district, residential use may be permitted as either a principal use or as part of a mixed-use project. In the Plan Area the /R4 designation has been applied on select C3-1 base zoned properties on the western side of El Camino Real. The Residential Overlay district allows residential development to exceed the FAR of the underlying district provided that the maximum FAR, including the residential overlay, in /R4 does not exceed 2.0. The setbacks of the underlying zone shall apply. For projects involving only residential use, the setback requirements in the R3 district still apply. While these properties in a /R4 District may be developed with residential uses only, the El Camino Real Master Plan encourages mixed-use projects, especially on properties near Hillsdale transit station to take advantage of resident ridership. 8-9

10 2. Potential Constraints on Affordable Housing As most affordable housing projects are typically Type V wood-frame construction, which is limited to five stories, the 55-foot height limitation generally does not pose a significant constraint on the development of low- and moderate-income housing. While Measure P does restrict density to below 50 DUA, the Density Bonus program allows for an increase of up to 35 percent above the density limit, or 68 dwelling units per acre, which would accommodate typical densities for affordable housing. E. Potential for New Affordable and Mixed Income Housing in the Plan Area The Plan Area currently accommodates a significant concentration of multifamily housing, in particular along Flores Street and along Hillsdale Boulevard. Within the Plan Area there is one housing project for low-income seniors: the recently completed Rotary Floritas Housing at 27 th Avenue, a 50- unit, low-income senior apartment project with other senior amenities. Peninsula Station, located within the Station Area on the former Goodyear tire shop and Immediate Care Medical office sites at South El Camino Real between 28 th and 31 st Avenues, is currently under construction with a four-story, mixed-use project comprised of 68 units of housing affordable to extremely low, very low and low income households and 2,917 square feet of commercial space. This project received City Redevelopment Agency financial assistance in the form of $5.3 million dollars in acquisition funding. This project also was granted the maximum State density bonus of 35 percent, allowing a total of 68 units on the one-acre site. In 2007 the City Redevelopment Agency acquired the former Police Station site at 2000 South Delaware Street, just north of the Plan Area, using housing-set-aside funds for the development of new affordable housing. The Bay Meadows Phase II Development Agreement requires the project sponsor to provide to the City (or to a public non-profit housing developer of the City s choice), at no cost to the City, approximately one acre of land, lo- 8-10

11 cated in block MU 1, to be developed by the City, or the designated public or non-profit agency, solely for low, very low or moderate income housing. This site is located just outside the Plan Area. The Station Area has the potential to accommodate the development of a significant number of new multi-family units, particularly affordable housing units, because of large parcel sizes along El Camino Real, policy support at the City and state levels, and many vacant or underutilized retail sites. Chapters 3 and 5 further discuss opportunity sites and the potential for housing development in the Plan Area. 1. Tax Credit Allocation Program One of the primary funding sources for new affordable housing is the Tax Credit Allocation program. Award of these tax credits is based in part on proximity to transit; services, such as schools and social services; shopping; and jobs. The goal is to encourage the development of affordable housing in developed areas that offer lower income households alternatives to reliance on the automobile. In all these respects the Plan Area would rank very high in the Tax Credit scoring, as summarized below: Access to transit: The Plan Area includes both the Caltrain station and the major bus routes on El Camino Real and Hillsdale Boulevard. Shopping: There are significant shopping opportunities at both the Hillsdale Mall and on 25 th Avenue. Employment: Job opportunities exist within the Plan Area at the shopping areas, fairgrounds, and in Downtown San Mateo, which is only 2 miles away. Services: Nearby schools and libraries include St. Gregory School, Beresford Elementary School, Laurel Elementary School, Junipero Serra High School, Hillsdale High School, and the San Mateo Public Library. Parks and Open Space: Nearby parks include Hillsdale Park, the Fiesta Grounds, West Hillsdale Park, City of San Mateo Park, Beresford Park, and future parks planned at Bay Meadows Phase II. 8-11

12 Medical Centers: Nearby medical centers include San Mateo Medical Center and Mills-Peninsula Health Services. 2. Walk Score Another measure of the relative convenience of these sites is Walk Score, which measures the walkability of an area based on its proximity to a host of goods and services including parks, schools, restaurants, and shopping. According to walkscore.com, the Station Area has a walk score of 83 points out of a possible 100 points, which is considered very walkable. This indicator suggests that the Plan Area would have significant potential for the development of new moderate income housing, as well as new market rate housing. 3. Housing Element The 2009 Housing Element Appendix A includes an inventory of sites available for new housing development, which includes the following five sites within the Plan Area: 36 th Avenue at Colegrove Street: 1.43 acres zoned as C3/R4 with potential to accommodate 55 units S. El Camino Real: 0.82-acre site zoned TOD identified for 32realistic units. This is adjacent to the planned 28 th Avenue railway underpass and could be impacted by development of that underpass S. El Camino Real: A total of five parcels (under separate ownership) that total 2.11 acres zoned as TOD with potential to accommodate 81 realistic units S. El Camino Real (Peninsula Station): 1 acre zoned as TOD with an affordable housing project (low, very low and extremely low income units) under construction with 68 units by Mid-Peninsula Housing S. El Camino Real: Two parcels (under single ownership) totaling 3.13 acres zoned as TOD with the potential to accommodate 121 units. However, this site is the location of the planned 31 st Avenue underpass which would bisect the site and significantly reduce the development potential. 8-12

13 4. Development of Mixed-Use Affordable Housing Many of the potential housing sites within the Plan Area have frontage on El Camino Real or Hillsdale Boulevard. Ground floor development often presents a challenge. Providing street retail space as part of an affordable housing development is often not financially viable. One alternative to ground floor retail is to allow construction of flex units at the ground floor. These are dwelling units that have a street front space that can be used for retail, office space, and/or living. F. Case Studies Brief case studies of affordable housing projects at the scale and maximum density of 68 units per acre, that would be allowed in the Plan Area under current the General Plan and Measure P with the State Density Bonus Law (Government Code Section 65915), are described below. These case studies include examples of affordable family housing, senior housing and mixed-use housing with ground floor commercial space. 8-13

14 Oak Court Palo Alto, CA Affordable Family 50 Dwelling Units per Acre 3 Stories 35 Maximum Height Partially Below Grade Parking (2 spaces per unit) Emeryville Gateway Emeryville, CA Affordable Family 26 Dwelling Units per Acre 3 Stories 35 Maximum Height Tuck-Under Parking (1.5 spaces per unit) City Center Plaza Redwood City, CA Mixed-Use/Affordable Family and Commercial 46 Dwelling Units per Acre 3 and 4 Stories 45 Maximum Height Partially Below Grade Podium Parking (1.5 spaces per unit) 8-14

15 The Village at the Crossing San Bruno, CA Low Income Senior Rental 117 Dwelling Units per Acre 4 Stories 45 Maximum Height Underground Parking (.87 spaces per unit) 8-15

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