TAHOE REGIONAL PLANNING AGENCY DEVELOPMENT RIGHTS WORKING GROUP Tahoe Regional Planning Agency May 22, 2018

Transcription

1 TAHOE REGIONAL PLANNING AGENCY DEVELOPMENT RIGHTS WORKING GROUP Tahoe Regional Planning Agency May 22, 2018 Stateline, NV 10:00 a.m. All items on this agenda are action items unless otherwise noted. Items on the agenda, unless designated for a specific time, may not necessarily be considered in the order in which they appear and may, for good cause, be continued until a later date. All items on this agenda are action items unless otherwise noted. Items on the agenda, unless designated for a specific time, may not necessarily be considered in the order in which they appear and may, for good cause, be continued until a later date. All public comments should be as brief and concise as possible so that all who wish to speak may do so; testimony should not be repeated. The Chair of the Development Rights Working Group Committee shall have the discretion to set appropriate time allotments (3 minutes for individuals and 5 minutes for group representatives). No extra time for speakers will be permitted by the ceding of time to others. Written comments of any length are always welcome. So that names may be accurately recorded in the minutes, persons who wish to comment are requested to sign in by Agenda Item on the sheets available at each meeting. Teleconference locations for Working Group meetings are open to the public ONLY IF SPECIFICALLY MADE OPERATIONAL BEFORE THE MEETING by agenda notice and/or phone message referenced below. In the event of hardship, TRPA DRWG members may participate in any meeting by teleconference. Teleconference means connected from a remote location by electronic means (audio or video). The public will be notified by telephone message at (775) no later than 6:30 a.m. PST on the day of the meeting if any member will be participating by teleconference and the location(s) of the member(s) participation. Unless otherwise noted, in California, the location is 175 Fulweiler Avenue, Conference Room A, Auburn, CA; and in Nevada the location is 901 South Stewart Street, Second Floor, Tahoe Hearing Room, Carson City, NV. If a location is made operational for a meeting, members of the public may attend and provide public comment at the remote location. TRPA will make reasonable efforts to assist and accommodate physically handicapped persons that wish to attend the meeting. Please contact Marja Ambler at (775) if you would like to attend the meeting and are in need of assistance.

2 AGENDA I. CALL TO ORDER AND DETERMINATION OF QUORUM II. PUBLIC COMMENT All comments may be limited by the Chair. Any member of the public wishing to address the Development Rights Working Group on any item listed or not listed on the agenda may do so at this time. TRPA encourages public comment on items on the agenda to be presented at the time those agenda items are heard. Individuals or groups commenting on items listed on the agenda will be permitted to comment either at this time or when the matter is heard, but not both. The Development Rights Working Group is prohibited by law from taking immediate action on or discussing issues raised by the public that are not listed on this agenda. III. APPROVAL OF AGENDA IV. APPROVAL OF MEETING SUMMARY (February 27, 2018, DRWG Meeting #6) Page 3 V. CHAIR WELCOME VI. DEVELOPMENT RIGHTS STRATEGIC INITIATIVE MATTERS A. Background, Work Program Status Report, and Approach for Completing the Development Rights Strategic Initiative Informational Only Page 23 B. Presentation and Discussion of the Technical Code Team s recommended amendments on conversion exchange rates, eliminating local approval for transfers and severing developing rights from a sending site. (Including revised conversion exchange rates.) C. Presentation and Discussion of Expanding Eligibility for Residential Bonus Units Discussion and Possible Direction To Staff Discussion and Possible Direction To Staff Page 37 Page 65 D. Presentation of Expanding Role of Local Land Banks Informational Only Page 87 E. Review Next Steps & Action Items Informational and Possible Direction To Staff VII. VIII. IX. WORKING GROUP MEMBER COMMENTS PUBLIC COMMENT ADJOURNMENT

3 MEMORANDUM Date: To: From: Subject: Development Rights Working Group TRPA Staff Draft Meeting Summary February 27, 2018, Meeting #6 (Agenda Item IV) Meeting Attendees Development Rights Working Group (DRWG) Members: Clem Shute (Regional Plan Implementation Committee RPIC, Chair), Mark Bruce (RPIC, Co Chair), Shelly Aldean (RPIC), Jim Lawrence (RPIC), Bill Yeates (RPIC), Austin Sass (RPIC/City of South Lake Tahoe), Melanie Shasha (Advisory Planning Commission APC, El Dorado County), Brendan Ferry (El Dorado County), Jennifer Merchant (Placer County), Jesse Patterson (League to Save Lake Tahoe), Patrick Wright (CA Tahoe Conservancy CTC), Nicole Rinke (CA State Attorney General s Office), Lew Feldman (community developer affiliate, Feldman, McLaughlin, Thiel), and Elizabeth Kingsland (Nevada Division of State Land NDSL) Absent DRWG Members: Charlie Donahue (Nevada Division of State Land NDSL) and Roger Trout (APC, El Dorado County) Tahoe Regional Planning Agency (TRPA) Staff: Joanne Marchetta, John Marshall, John Hester, Ken Kasman, Jennifer Self, and Alyssa Bettinger Consulting Team: Charlie Knox and Ashley James (PlaceWorks) Meeting Purpose & Goals Development Rights Strategic Initiative s (DRSI) mission is to consider alternatives to the current development rights system (a.k.a., commodities system) that better manage growth, support environmentally beneficial and economically feasible redevelopment, and improve the effectiveness and predictability of the current development rights system within the Lake Tahoe Basin. DRSI employs a stakeholder and working group process to clarify issues, formulate strategic approaches, and develop a recommended alternative that aligns with the Lake Tahoe Regional Plan. The goals of the February DRWG meeting include: Present a status report of tasks and accomplishments for DRSI s phase three. Present and discuss refinements of the recommended alternative. Initiate policy, code, and procedural amendments related to the recommended alternative. Page 3 DRWG Meeting #7 Agenda Item IV

4 Present an informational overview of policy analysis and recommendations developed by the Mountain Housing Council for workforce (or local achievable ) housing. Meeting Outcomes The project team (TRPA staff & PlaceWorks) presented a status report of tasks and accomplishments for DRSI s phase three. A full report can be found in the February DRWG meeting packet, Agenda Item VI.A. The DRWG approved the September Meeting #5 Summary with revisions. The project team presented refinements for the recommended alternative. Topics of the recommended alternative covered in the meeting included: 1) conversion exchange rates, 2) eliminating the local jurisdictional transfer approval, and 3) severing development rights from the sending site. The DRWG discussed the refinements and provided direction to the project team to move forward with TRPA policy, code and procedural amendments related to the topics above. The DRWG requested additional analysis action items listed in the Meeting Summary section below. The project team presented an informational overview of policy analysis and recommendations developed by the Mountain Housing Council for workforce (or local achievable ) housing, as well as planning considerations for applying the same methodology to the Lake Tahoe Basin and expanding the eligibility of residential bonus units for local achievable housing. The DRWG provided input on expanding the eligibility of residential bonus units. Refinements for this topic will be covered at the May DRWG meeting. Meeting Summary I. Call to Order and Determination of a Quorum Quorum reached, and meeting commenced. II. Public Comment No public comment received at the beginning of the meeting. III. Approval of the Agenda Agenda approved, no changes. IV. Approval of the Meeting Summary (September 27, 2017, DRWG Meeting #5) Chair asked DRWG for approval of the DRWG September 2017 meeting summary (Meeting #5). DRWG approved the meeting summary with revisions from Nicole Rinke indicating that her approval of the recommended alternative was for further study, not final approval. Page 4 DRWG Meeting #7 Agenda Item IV

5 V. Chair Welcome Chair welcomed the DRWG and members of the public and provided an overview of the meeting purpose. VI. Development Rights Strategic Initiative Matters A. Background and Work Program Status Report The project team provided an update on the DRSI work program, accomplishments of the initiative thus far, and the objectives for the meeting. In September of 2017, the DRWG agreed to move forward on recommended alternative, which concluded phase two of the initiative. The alternative selected by the DRWG consists of five main components: (1) Establish exchange rates between commercial floor area (CFA), tourist accommodation units (TAU), and residential units of use (RUU); (2) Eliminate local jurisdictional approval of development right transfers; (3) Increase development right inventories at local land banks to better implement the Regional Plan; (4) Implement process improvements to streamline the development right system (including banking and transfer activities) and make it more user friendly; and, (5) Expand eligibility criteria for workforce housing bonus units. B. Approach for Completing DRSI DRSI is now in phase three, which includes refining the components of the recommended alternative for approval, adoption, and implementation; completing environmental review of the recommended alternative; and drafting code, policy, and procedural amendments related to the recommended alternative. The project team presented the goals of meeting and the proposed 2018 Meeting Calendar. (See Attachment A of this summary for the calendar.) 2018 DRWG Meeting Topics Topics of the recommended alternative to be covered in the meeting included: 1) conversion exchange rates, 2) eliminating the local jurisdictional transfer approval, and 3) severing development rights from the sending site. The project team will also present an informational overview of policy analysis and recommendations developed by the Mountain Housing Council for local achievable housing. The May DRWG Meeting (Meeting #7) will focus on the following components of the recommended alternative: 1) land bank MOUs to increase development right inventories, 2) expanding eligibility for local achievable housing bonus units, and 3) process improvements for the development rights system. (Tentatively scheduled for May 22, 2018.) Page 5 DRWG Meeting #7 Agenda Item IV

6 The August DRWG Meeting (Meeting #8) will focus on environmental review and draft amendments for the recommended alternative. (Tentatively scheduled for August 21, 2018.) Public hearing review and adoption of the DRWG recommended alternatives is scheduled for September Advisory Planning Commission (APC) and Regional Plan Implementation Committee (RPIC) meetings and the October TRPA Governing Board meeting. Please also see the Next Steps section at the end of this summary. C. Presentation and Discussion of the Development Rights Conversion Exchange Rates The project team presented conversion exchange rates planning considerations and recommended refinements. Benefits of conversion exchange rates and the alignment of this component of the recommended alternative with DRWG s goals are summarized within the meeting packet and were discussed at the 2017 DRWG meetings and within the Options Evaluations report completed in Existing Development Right 450 sq. ft. Commercial Floor Area (CFA) 1 Tourist Accommodation Unit (TAU) 1 Single Family Detached Dwelling Unit (SF) 1 Multi Family Attached Dwelling Unit (MF) Recommended Conversion Exchange Rates Equivalent Development Rights CFA TAU SF MF 450 sq. ft sq. ft sq. ft sq. ft PlaceWorks developed the above recommended conversion exchange rates for existing development rights that could be applied consistently to existing development rights within the Lake Tahoe Basin. The exchange rates are intended to present an environmentally neutral conversion system. Metrics considered for the exchange rates included average daily trips (ADT), vehicle miles traveled (VMT), and localized trip generation. Trip generation was the recommended metric because it accounts for floor area differences and VMT. In addition, trip generation was previously approved by the TRPA Governing Board as a sound methodology for determining conversion rates through the pilot programs. The project team noted corrections to the exchange rate table sent to the DRWG prior to the meeting. The correction included the bottom row of the table for converting one Multi Family Dwelling to CFA (correct rate is 1 MFD : 300 sq.ft. CFA) and converting one Multi Family Dwelling to TAU (correct rate is 1 MFD : 0.7 TAU). Page 6 DRWG Meeting #7 Agenda Item IV

7 The project team also presented inventories of existing development rights and provided a hypothetical inventory of each land use type if all existing development rights were converted to a single type of development right. These inventories reflect development rights currently in use on developed properties, banked development rights, and development rights within each local government s and TRPA s allocation pools. At the September 2017 DRWG meeting, members of the group requested that the project team consider mixed use development exchange rates. Findings from nationwide comparable studies indicate that, to implement mixed use conversions, exchange rates could not be applied consistently throughout the basin and would need to be determined on a project by project basis. Metrics for mixed use conversion exchange rates would need to include trip generation and site specific information (site design, proximity to transit and services, nearby infrastructure, etc.) Having a project specific exchange rate for mixed use would create too much variability, and loss of predictability for applicants. Mixed use exchange rates were therefore not recommended. DRWG discussed planning considerations and recommended refinements of the conversion exchange rates. For a full record of this discussion, please see Attachment B: DRWG Discussions. Several DRWG members revisited the potential benefits and challenges of transitioning to a single currency development rights system. Ultimately, it was decided by the DRWG that a single currency system could not be achieved within the desired timeframe of this initiative and that conversion exchange rates are a step in the right direction. Future initiatives to simplify the development rights system should reconsider moving towards a single currency. ACTIONS: DRWG approved the proposed exchange rates based on trip generation. DRWG directed the project team to prepare additional justification for the 450 sq.ft. conversion ratios and a report of environmental benefits from projects approved under the existing conversion pilot programs. Further justification and the pilot program report will be provided to the Technical Code Team and the DRWG. D. Presentation and Discussion of Eliminating the Local Jurisdictional Transfer Approval The project team presented planning considerations and recommended refinements for eliminating the local jurisdictional transfer approval. Benefits of eliminating overlapping multijurisdictional processes and the alignment of this component of the recommended alternative with DRWG s goals are summarized within the meeting packet and were discussed at the 2017 DRWG meetings and within the Options Evaluations report completed in While the exchange rate component of the recommended alternative would only apply to CFA, TAUs, and RUUs, this component would apply to all development rights, including residential development rights, residential allocations, and land coverage. This component would eliminate all so called veto power of the jurisdictions for development transfers under the TRPA Code. Page 7 DRWG Meeting #7 Agenda Item IV

8 At the September DRWG meeting, Steve Gunnells (PlaceWorks) suggested the DRWG could consider an automatic reinstatement of the local approval if a certain amount of existing development rights were to transfer out of a jurisdiction. At the request of the DRWG, the project team considered options for a reinstatement trigger and analyzed the existing inventory of available development rights within each jurisdiction. (An inventory of development rights was included in the meeting packet.) The project team recommended allowing a local jurisdiction to come before the TRPA Governing Board at any time to request reinstatement of the local transfer approval. With this recommendation the project team proposed (1) no set time duration for which a local jurisdiction could come forward to request reinstatement of the transfer approval and 2) no strict quantitative parameters that would have to be met by the local jurisdiction to request the reinstatement. Justification of need would include demonstrating a significant adverse fiscal or economic impact directly related to the transfer of existing development rights. With this recommendation, TRPA would continue to monitor development right transactions and report such transactions on LTInfo.org. DRWG discussed planning considerations and recommended refinements for eliminating the local jurisdictional transfer approval. For a full record of this discussion, please see Attachment B: DRWG Discussions. The DRWG agreed that the authority granted by TRPA for local jurisdictions in the Lake Tahoe Basin to approve transfers of development rights should be eliminated subject to the following refinements of the recommendation above: Local jurisdictions will have the option the come before the Governing Board to reinstate the local jurisdictional transfer approval if there is a net loss of 5% of the existing development rights over a two year period. Total net loss would be measured by an average net loss of each type of development right. The existing development rights total amount to be used in the net loss calculations would include the amount of existing development rights on the date the recommended alternative is adopted by the TRPA Governing Board. Code amendments should include a numerical amount of the existing development rights, rather than including 5%. An annual report on the total net losses of development rights for each jurisdiction over the previous two years will be prepared by the TRPA staff every year and presented to the Governing Board starting on the effective date of the adoption of the recommended alternative. ACTION: DRWG directed the project team to move forward on policy, code, and procedural amendments for the elimination of local jurisdictional transfer approval subject to the refinements listed above. Page 8 DRWG Meeting #7 Agenda Item IV

9 E. Presentation and Discussion of Severing Development Rights from a Sending Site The project team presented planning considerations and recommended refinements for eliminating the requirement to have an approved project on a receiving site prior to transfer approval. This topic is part of the process improvement component of the recommended alternative. Other process improvements to the development rights system will be presented at the May DRWG meeting. Benefits of allowing development rights to be severed from a sending site and the alignment of this topic with DRWG s goals are summarized within the meeting packet and were discussed at the 2017 DRWG meetings and within the Options Evaluations report completed in The project team presented the existing transfer approval process in comparison to the recommended process. As part of the existing process, a receiving site must have an approved project for which the development rights are required before a transfer is approved. Because of this process, property owners often enter into private legal agreements to secure needed development rights. Under the recommended process, a property owner would no longer be required to have an approved project prior to transferring development rights. A project proponent would be able to acquire and transfer development rights at any time with TRPA approval up until the point of permit acknowledgment. Transfers of development rights would still be required to comply with site restoration standards of the sending site, site development standards of the receiving site, and may be eligible for existing transfer incentives. Transfers will not be approved without authorization from all interested parties of both the sending and receiving sites. Under the existing system, land banks and local governments that have an approved Memorandum of Understanding (MOU) with TRPA can sever development rights from a parcel upon site restoration and hold those rights without assigning the rights to a receiving site. Further discussion of land bank roles and recommended actions will be presented at the May DRWG meeting. The project team recommended allowing private individuals to sever development rights from a property and hold or sell those rights without assigning the rights to a receiving site. The DRWG expressed concerns of hoarding if a person or entity could hold development rights unassociated with a parcel. Furthermore, the DRWG expressed concerns regarding proper site restoration as part of the banking process with individual holdings. ACTION: DRWG agreed land banks (CTC, NDSL, local governments, and philanthropic non profits) that have an approved MOU with TRPA can severe development rights from a parcel. DRWG agreed that individuals (i.e., those not defined in 1, above) can transfer development rights from a parcel upon completion of site restoration and transfer those rights to another parcel without an approved development or redevelopment project. Under this scenario, a development right must be associated with a sending or receiving site. DRWG directed the project team to move forward on policy, code, and procedural amendments to eliminate need for project approval prior to a transfer. Page 9 DRWG Meeting #7 Agenda Item IV

10 F. Update on Mountain Housing Council s Policy Recommendations on Local Achievable Housing The project team presented an informational item on local achievable housing bonus units. At the September DRWG meeting, group members expressed interest in expanding the eligibility of the TRPA residential bonus unit pool to incentivize workforce housing. The Mountain Housing Council in the Tahoe Truckee region recently recommended that their partner jurisdictions adopt an local achievable housing definition of up to 195% of the area median income (AMI). As part of the Development Rights Strategic Initiative, the project team recommends using the same methodology as the Mountain Housing Council to define local achievable housing and determine an appropriate AMI specific to the Lake Tahoe Basin. The project team would develop a recommendation for defining local achievable based on AMI and housing cost specific to each jurisdiction. The project team will present a recommendation(s) at the May DRWG meeting. As the project team develops a recommendation related to local achievable housing bonus units, there are several assumptions the team is considering, including (1) additional bonus units awarded would be deed restricted to adhere to AMI occupant specifications and (2) bonus units could not be used for vacation rentals. The project team is also evaluating several considerations to limit local achievable residential bonus units to (1) multi family dwellings only and (2) town centers. Consistent with DRWG discussions at the September meeting, the project team recommends only one half of the residential bonus unit pool be made available for (tobe defined) local achievable and moderate income (currently defined as 120%) housing. This limitation is intended to reserve one half of the remaining residential bonus units for the lower AMI levels, or affordable housing (i.e., 80% and 50% of AMI). The DRWG provided the following direction for the local achievable residential bonus units recommendation(s): The residential bonus unit pool should not be limited to town centers; Incentives for proximity to both existing and planned transit (e.g., ¼ mile, ½ mile) should be considered; Criteria for those who both live and work in the same area (e.g., school district) should be considered; and In addition to the changes in AMI for bonus units, changes in the requirement for residential allocations should be considered. Page 10 DRWG Meeting #7 Agenda Item IV

11 NEXT STEPS Action Items The following action items will be completed by the project team in preparation of the May DRWG meeting: In coordination with the Technical Code Team (see Technical Code Team below), draft policy, code, and procedural amendments for conversion exchange rates, eliminating local jurisdictional transfer approval, and eliminating the requirements for an approved project prior to a transfer. Develop recommendation for local achievable housing and expanding the eligibility of residential bonus units. Continue coordinating with the Mountain Housing Council and Tahoe Prosperity Center on workforce or local achievable housing related topics. Continue community outreach for DRSI to inform interested groups and the development community of the recommended alternative. Develop a policy resolution(s) and MOU proposed language to expand the capacity of land banks to increase development right inventories and retire sensitive parcels. Meet with the development community to discuss process improvements to the development rights system. (See Development Customers User Group below.) Technical Code Team The project team will facilitate Technical Code Team meetings to recommend redline changes or amendments and specific language to be incorporated into TRPA s Regional Plan Goals and Policies and Code of Ordinances as part of the implementation of the recommended alternative. The TRPA Executive Director appointed Lew Feldman, Marissa Fox, Nicole Rinke, and John Marshall to serve on this team. Recommendations provided by the Technical Code Team will be reviewed by TRPA staff and the DRWG prior to the public hearing process. The team will meet three times between February and August. Development Customer User Group (Optional) In 2017, TRPA formed a Development Customer User Group under the Welcome Mat initiative to receive input from the local business and development community and help the agency improve our permitting processes. The group is comprised of six to ten community members from the real estate, development, consulting, and community revitalization sectors. The DRSI team will facilitate a workshop with the Development Customer User Group in April 2018 to (1) identify process improvements for the transfer of development right and allocation systems and (2) prioritize process improvements moving forward. Land Bank Funding & Strategic Study (Optional) During the September Working Group meeting, representatives from California Tahoe Conservancy (CTC) and Nevada Division of State Lands (NDSL) were both in favor of identifying specific goals and priorities for each land bank in the Lake Tahoe Basin as those relate to the development rights system. Between November 2017 and January 2018, the DRSI Team met with the local land banks to better understand their interests and the existing capacity and demand of the land banks. A complete Page 11 DRWG Meeting #7 Agenda Item IV

12 discussion of the land banks role in the Development Right System and their Memorandums of Understanding with TRPA will be covered at the May Working Group meeting. While NDSL supported expanding the role of land banks in the Development Rights system moving forward, NDSL does not currently have the need, demand, or resources for an expansion. On the other hand, CTC expressed a strong interest in expanding the role of their land bank with a focus on acquiring and restoring existing developed parcels on sensitive lands and transferring development rights into Town Centers. This would help to increase the supply of available development rights to meet the goals of the Regional Plan. During this discussion, CTC noted two key challenges in making their expanded role a success: (1) funding to acquire additional lands and existing development and (2) being bound by state law to sell development rights at market value. CTC also expressed an interest in establishing a set of priorities that align with both the Regional Plan and Statewide goals to guide management decisions of the land bank. The project team and CTC agreed it would be beneficial to complete a study in consultation with PlaceWorks to examine potential funding sources, determine potential impact or outcomes based on a range of potential funding amounts, and develop a strategic approach for legislative changes. Environmental Review Between June and August, the DRSI team will complete environmental analysis for the recommended alternative selected by the DRWG. The intent is to complete an expanded initial environmental checklist (IEC) for this analysis in compliance with TRPA Code of Ordinances and the Lake Tahoe Regional Plan. Attachment A: Attachment B: 2018 Meeting Calendar DRWG Discussions Page 12 DRWG Meeting #7 Agenda Item IV

13 Attachment A: 2018 Meeting Calendar Date Group Topic Feb. 27 Mar. 27 Apr. TBD May 22 Jun. 26 Working Group Technical Code Team TRPA Development Customer User Group Working Group Technical Code Team Meeting #6 Exchange Rates Remove Jurisdictional Veto, Severe from Sending Site (Holdings/Banking) (Optional) Mountain Housing Council Update on Workforce Housing Policy, Code, and Procedural Amendments Exchange Rates Remove Jurisdictional Veto, Severe from Sending Site (Holdings/Banking) TDR Process Improvements Meeting #7 Land Bank MOUs Workforce Housing Bonus Units Process Improvements Amendment Recommendations (Exchange Rates, Veto Removal, and Severe from Sending Site) Policy, Code, and Procedural Amendments Land Bank MOUs Process Improvements & Monitoring Workforce Housing Bonus Units Jul. 24 Technical Code Team Review proposed policy, code, and procedural draft amendments prior to DRWG Meeting #8 recommendations. Aug.21 Working Group Meeting #8 Environmental Analysis (IEC) & Monitoring Amendment Update (Land Banks, Workforce Housing Bonus Units) Sep. 12 APC Approval/Adoption Sep. 26 RPIC Approval/Adoption Oct.24 GB Approval/Adoption Page 13 DRWG Meeting #7 Agenda Item IV

14 Page 14

15 Attachment B: DRWG Discussions The following provides a record of DRWG discussions specific to agenda topics notated by the project team during the February 2018 meeting. Discussion on Agenda Item VI.C. Conversion Exchange Rates Austin Sass asked if the land bank agency s such as California Tahoe Conservancy (CTC) inventories were captured in these tables. Ken Kasman explained that the banked development rights are being tracked in Lake Tahoe Info (LT Info) and while it is not comprehensive, it includes the most up to date information available to TRPA. The inventories include agencies like CTC, the local jurisdictions, as well as publicly and privately owned parcels. It does not include TRPA or existing uses that are actively being used today. There are times when a development right has been banked as a result of the project, and we may not have fully captured all those transactions. We have everything tracked that was done through a banking and verification system. The banked development rights inventory is not exhaustive but has the most current data available to TRPA. Jennifer Merchant mentioned Placer County has about 146 banked TAUs. Austin Sass wondered if the price of development rights would increase as the pool decreased. John Hester noted that this is supply and demand, and that price of units would be responsive to the market. Patrick Wright noted the conversion exchange rate system was a step forward in making the development rights system more flexible, however is concerned over the tracking complexity of the proposed system for land banks specifically. He suggested continuing the conversation of moving to a single currency. Clem Chute clarified that under the proposed system, you can exchange any unit, and asked for clarification on why this would add complexity. Patrick Wright replied stating that the prices for every development right would be around what is the price for that one unit. Charlie Knox noted that the exchange rates are based on market value. Clem Chute stated that the group has two different opinions about how the system would work. The single currency option would make it easier to track but setting the price wouldn t consider market value. Lew Feldman clarified that the harvest of resources is what drives the value of the units. For example, if an old motel with X amount of TAUs is being demolished, the existing value of those TAUs will drive the value of the conversion. Shelly Aldean supports the conversion exchange rate system as it provides multiple ways to get from point A to point B. Mark Bruce noted that the conversion exchange rate system allows individuals to look at what they have and figure out what they need. It is a very practical system. Page 15 DRWG Meeting #7 Agenda Item IV

16 Patrick Wright stated that the conversion exchange rate system does not simplify the system, but it does make it more flexible. When we started this initiative, we wanted simplification. With the current system, a developer has to be knowledgeable, or hire someone knowledgeable of the system to build. John Hester noted that in the September DRWG meeting, there was discussion about using square feet as the single currency conversion factor. We would still need to have an exchange rate even if it were a single currency system. Shelly Aldean noted that having one development right would be terrific, but it wouldn t be equitable. Jim Lawrence understands Patrick Wright s concern about complexity. From a land bank perspective, having one unit and being able to appraise that unit would be simpler as opposed to exchange rates. However, he agreed this would be difficult and supports the exchange rates system. He would like to establish the exchange rates and work towards flexibility and continue to have the conversation around a single currency, or perhaps two. John Hester replied saying this would require going back to change the system. It would not be feasible to do this by the August DRWG meeting. Jim Lawrence agreed that it is not feasible to move to a single currency system by August. Patrick Wright agreed that it would be a year or two processes to move to a single currency system, but the group should keep this in mind if the goals is ultimately to simplify the system. If all development rights are transferrable, the prices should stabilize. Charlie Knox explained that the perception of the market is going to be less constrained, and fluctuations in the market may diminish. The commercial appraisal process will fluctuate by location or type of development. Buyers will always want to buy low, and sellers will always want to sell high. If more development rights available, it should open the door to development of more workforce type housing. Austin Sass noted that other factors such as density requirements would have to change to develop more workforce type housing. Nicole Rinke asked why trip generation is the means to achieve environmental neutrality and what was learned from the pilot programs. Charlie Knox gave an overview of the CEQA process and explained that using trip generation in the pilot programs was the most legally defensible means to achieve environmental neutrality. Carrying forward the same indicator that was used in the pilot programs and the Regional Plan Update will save time. A few of the DRWG members asked if the pilot programs had been used. Jennifer Self noted that there are tables showing conversions that have happened since 2013 in the meeting packet. TRPA has a list of projects that have used the pilot programs. Jesse Paterson asked how this indicator would impact VMT or environmental neutrality. Jennifer Merchant noted that trip generation was the middle of two choices. Page 16 DRWG Meeting #7 Agenda Item IV

17 Clem Chute mentioned that the goal through this initiative was not to reduce VMT, but instead not to increase it. Lew Feldman stated that the DRWG was trying to create incentives to redevelop legacy developments. The conversion is not supposed to be mitigation, the redevelopment is the mitigation. The result of the initiative is the benefit from redevelopment, not the exchange rate table. Jennifer Self noted that the intent behind trip generation was to create environmental neutrality but also to make sure that this exchange rate can be applied across the basin. There were other metrics we evaluated, but they would be different based on location. For example, VMT differs in Tahoma and South Lake Tahoe and we are trying to apply this to the basin as a whole. John Hester noted that Shelly Aldean had asked TRPA to look into incentives for mixed use developments at the September DRWG meeting. Staff looked into how this would work, and it ties into what Jennifer just mentioned. It would add too much complexity to apply a mixed use exchange rate across the board when studies show there are many different factors that influence trip reduction, location being one of them. Nicole Rinke asked how this relates to existing caps on development. For example, what would happen if everything is converted to residential bonus units? John Marshall replied explaining that the existing caps for each pool would be added up to get the overall development cap for the basin. We would use this number, but it wouldn t increase from what it is today. The market will drive the conversions. Jennifer Self gave an overview of the projects that had used the pilot programs. She explained that the 2012 pilot program allowed conversion between TAU and RUU. The 2016 pilot program allowed conversion between CFA, TAUs, and RUU. We would need to do an additional analysis to pull projects under each program out. Jesse Patterson asked if any of the projects converted under the pilot programs were environmentally beneficial. Ken Kasman noted that the Peak Ten project included mitigations for water quality, best management practices (BMP) monitoring, and scenic monitoring plans. The Wood Vista and Tahoe Vista projects will also have the water quality and inspection plan requirements. Jesse Patterson asked if those benefits would have happened without the conversion. John Hester responded that the Peak Ten project would not have happened. Lew Feldman guessed that there were major environmental improvements to removing lakeside blight. Nicole Rinke preferred to have more detailed information about the pilot program and more time to analyze it. Jennifer Merchant explained that three of the projects converted under the pilot program were in Placer County. The Peak Ten project was a dilapidated hotel and was a redevelopment project. If the pilot program didn t exist, Placer County wouldn t have been able to complete the project by buying development rights off another site. The other project has agreed to Page 17 DRWG Meeting #7 Agenda Item IV

18 contribute to our transit program. The Wood Vista project was also a dilapidated motel that was redeveloped. Tahoe City Lodge will work with the adjacent golf course on BMPs, and unitizing development rights to allow for higher density. This is one of the most dilapidated lots in Tahoe City. These projects have made improvements in most of TRPA s thresholds. Charlie Knox mentioned a new project will treat the storm water much better than old projects. Nicole Rinke expressed that some of her concerns may be addressed in the environmental document. She is comfortable moving forward but directed information on the source of the 450 square feet and environmental benefits from the three pilot programs be provided to the Technical Code Team and the DRWG at their next meeting. Clem Chute suggested moving forward and accepting TRPA staff s recommendation on exchange rates. The DRWG agreed to move forward. Discussion on Agenda Item VI.D. Eliminate Local Jurisdictional Transfer Approval Austin Sass asked for clarification on adverse impact. Jennifer Merchant noted that it would be more settling if the group had more criteria defining adverse impact. Lew Feldman is concerned with developments being demolished and not repurposed. Jurisdictions would lose Transient Occupancy Tax (TOT) and be left with a vacant lot. Austin Sass does not see the benefit of this system. Jim Lawrence asked at what point is the snapshot of adverse impact taken. Jennifer Merchant is concerned about the timing of the Governing Board meeting and how jurisdictions would demonstrate adverse impact. Clem Chute suggested adverse impact would need to be a net loss of development rights. John Hester explained that staff and consultants analyzed 5% of the development rights flowing into and out of a jurisdiction, but it is difficult to say that is the right trigger. If the DRWG feels like we should stick with a metric, we may not have solid basis for a set percentage. Clem Chute agrees that there should be a numerical threshold. John Hester suggested a 5% net loss in a jurisdiction over a two year period. Once the two years are up, TRPA would report it annually. Clem Chute asked if there was an option to reinstate after the two year period. Charlie Knox explained that it would be measured by development right. The concern from the city is losing TAU. We could report both transfers in and transfers out. Austin Sass supports a using a metric. Jesse Patterson supports using a metric and single currency so adverse impact could be measured in one unit. Page 18 DRWG Meeting #7 Agenda Item IV

19 Lew Feldman supports using a metric, and once it is exceeded you can come back to the Governing Board. Ed Mosur (public comment): The City of South Lake Tahoe has had a goal of reducing the number of TAUs, and the other jurisdictions can take handfuls of them. If you re going to talk about development rights, you need to discuss vacation home rentals. As rents are raised on cheaper motels, the vacation home rentals are becoming more popular. The Knights Inn motel was demolished and lost about one hundred rooms. Jennifer Merchant asked if this applies only to sales of existing on the ground development rights. Jennifer Self responded saying this applies only to existing development rights. Clem Chute asked why this doesn t apply to banked development rights and suggested they should. Jennifer Merchant asked if that meant they could be taken from the jurisdiction s bank. Shelly Aldean responded saying that the jurisdictions have complete control over banked development rights, and they won t be transferred unless you authorize it. Lew Feldman noted that there is a large amount of TAUs banked in the City of South Lake Tahoe. He suggested banked development rights be available for transfer as they would likely be the first to be transferred. John Hester asked if banked development rights would be included in the trigger. Clem Chute asked what kind of negative effects a transfer of banked development rights could have. John Marshall answered explaining the jurisdiction s future development potential could be a negative effect. Mark Bruce suggested that it might add simplicity to have a number that approximates 5%. Jennifer Merchant asked if there were specific numbers in the Regional Plan that could be used. John Marshall suggested using 5%. Shelly Aldean asked what the effective date was. John Hester answered explaining that this would be effective once the code is adopted with the updated language. The DRWG advised TRPA staff to move forward on drafting policy, code and procedural amendments using the 5% trigger. Discussion on Agenda Item VI.E. Severing Development Rights from a Sending Site Jennifer Merchant asked if there is a downside to allowing property owners to bank development rights. Clem Chute replied that yes, this would allow individual hoarding of development rights. Page 19 DRWG Meeting #7 Agenda Item IV

20 Lew Feldman suggested that the proposed concept is a free enterprise and it would be hard to control that. John Marshall explained that in current TRPA rules, the unit must be banked on the sending site, so we know the characteristics of the site. Often, the sending site is not owned by the person that owns the rights. This has caused problems in the past, and we must have some system that preserves the origin of the sending site. Jennifer Self noted that TRPA has the capacity and feels comfortable tracking development rights even if they are not tied to a property. Shelly Aldean is concerned about hoarding and that tracking will be difficult if development rights are not tied to an APN. Jesse Patterson is also concerned about hoarding and mentioned that in the September DRWG meeting the group discussed only allowing land banks and non profits to sever development rights from a parcel. John Marshall noted that with the proposed system, TRPA would allow a land bank or private individual to bank development rights. It s only when they go to bank the unit that it would come off the property. Ken Kasman explained that LT Info allows us to track where the development rights are held, and we could do this even if they are not tied to a parcel. LT Info can track deed restrictions and whether or not the right as been transferred off the sending site. Larry Sevison suggested a timeframe from use of development rights not tied to a parcel. Shelly Aldean reminded the group of the problem with the recession when projects couldn t be completed. If the project is not completed in a certain amount of time, holders shouldn t have to forfeit those rights. Clem Chute asked for clarification on hoarding. John Marshall explained that if an individual wants to bank the development rights, they wouldn t have to do anything. The severance notion does not help individuals hoard. Mark Bruce clarified that it is not any easier to get to the next project, and therefore there is no benefit to hoarding. John Marshall clarified no. Nicole Rinke asked if this conversation was expanding to let private entities act as land banks. John Hester clarified that the real question is when we amend the code, do we allow for individuals to hoard or own development rights. We ve established that this is OK for nonprofits and land banks. Shelly Aldean supports staff s recommendation. Clem Chute suggested that sever is a confusing term if you cannot transfer without restoring land. He is concerned that will happen but is comfortable with the fact that individuals would have to restore the land to transfer development rights off a property. Page 20 DRWG Meeting #7 Agenda Item IV

21 John Marshall explained that this is different than what CTC or other land banks would do with these rights. Essentially, there wouldn t be an APN attached to the development right, they wouldn t exist except in a spreadsheet. It is similar to the current system, but with better tracking and no power of attorney. John Hester clarified that what the group was OK with individuals transferring development rights off as long as the land is restored on the sending site. Jennifer Self clarified that unless you are a land bank with an MOU with TRPA, the development right always must be tied to an APN. The group agreed that individuals can transfer development rights from a parcel upon completion of site restoration and transfer those rights to another parcel without an approved development or redevelopment project. A development right must be associated with a sending or receiving site. To sever a development right completely from a parcel, a person or entity must have an MOU from TRPA. Discussion on Agenda Item VI.F Update on Mountain Housing Council s Policy Recommendations on Local Achievable Housing Austin Sass asked what the deed restriction would look like. Alyssa Bettinger replied saying it would be the same as our current deed restriction system for affordable and moderate income housing. John Hester noted that TRPA would continue to reserve a pool of bonus units for affordable and moderate income housing. Austin Sass suggested that the group can learn from Vail, Aspen, Breckenridge, and other mountain towns that have made similar recommendations. Lew Feldman complemented the direction and noted that there had been virtually no success with the existing bonus unit allocation. He suggested not limiting it to town centers, and to identify the areas where there is vacant land available. Jim Lawrence agrees that town centers are too restrictive. Jennifer Merchant suggested limiting bonus units to within a quarter mile of transit. Shelly Aldean noted that El Dorado County is limited because there is only one town center. Bill Yeates suggested looking at funding for transit oriented development so the Tahoe Transportation District (TTD) could expand infrastructure to locations where workforce housing could be built. Jennifer Merchant supports the deed restriction of no vacation rentals. Lew Feldman suggests limiting these units to full time residents only. John Hester mentioned that Truckee has zoning for locals only. Charlie Knox explained that residents had to show proof of being a local employee to qualify for Telluride s local employee housing system in the 90 s. The result was an employee village built Page 21 DRWG Meeting #7 Agenda Item IV

22 close to town with walking and biking, and employees travelling shorter distances. A high retention rate created a second free market with people in the community. Shelly Aldean asked what would happen if someone wants to sell if they no longer are working in the community or wants to rent out their property. [DRWG member or member of the public, unknown] suggested looking at Eagle Creek Community in Aspen. Charlie Knox explained that the development became self policing. Larry Sevison suggests allowing for higher density or more bonus units. Austin Sass mentioned that the city would be interested in distributing bonus units if the development was close to the bus like and in town centers. Workforce housing and taking care of the senior population is two separate priorities. He suggests residents would have to show proof of local employment to qualify. Jennifer Merchant explained that the term achievable used in the Mountain Housing Council was not targeting only the workforce, it expanded to include the senior population. Clem Chute supports multi family and single family. Jennifer Merchant suggested that it would not likely be feasible to build single family units, but not to limit it. Mark Bruce and Lew Feldman suggested focusing on the environment, economy and transit aspects of workforce housing. John Marshall suggested looking at the population in need. Charlie Knox mentioned that the boundary for workforce housing in Telluride were the school districts. Ed Mosier (public comment): Suggests looking at lots ideal for affordable housing projects, places like the mobile home behind Azul. Look into raising real estate transfer tax and use that to help subsidize workforce housing projects. John Hester summarized the discussion: do not limit bonus units to town centers, look at incentives for transit oriented development, and look into live work concepts including deed restricting the units to locals only and address allocations. Page 22 DRWG Meeting #7 Agenda Item IV

23 Date: To: From: Subject: Requested Action Development Rights Working Group TRPA Staff MEMORANDUM Background, Work Program Status Report, and Approach for Completing the Development Rights Strategic Initiative (Agenda Item VI.A) No action is required. This is an informational item. Purpose The purpose of this memo is to provide: (1) background on the Development Rights Working Group (aka Working Group) recommendations, (2) an update on the work program, (3) an update of research and analysis (i.e. action items) requested by the Working Group during the last meeting, and (4) next steps for completing the Development Rights Strategic Initiative s (DRSI) work program. The three companion memos provide an overview of DRSI team implementation strategies and planning considerations for the land bank and residential bonus unit recommendations selected by the Working Group. Background In August of 2017, the DRSI team (i.e., TRPA staff and consultants) completed economic and planning analysis of five options (i.e., Options A E) developed by the Working Group. Each option and the features, or components, within each option reflected different strategic approaches to improve the existing development rights system. The DRSI team further evaluated those options using the goals and criteria created by the Working Group specifically for this initiative (Factsheet #8, Goals and Criteria for Evaluating Alternatives). Based on the analyses and stakeholder input, the Working Group selected recommendations in September of 2017, which was a hybrid of the five options, for further analysis and consideration. (Meeting Summary #5, September 26, 2017; Agenda Item IV). The DRSI team presented the results of the analyses and the recommendations to the TRPA Advisory Planning Commission on October 11, 2017 and the TRPA Governing Board on October 25, The recommendations selected by the Working Group include: (1) establish exchange rates between commercial floor area (CFA), tourist accommodation units (TAU), and residential units of use (RUU); (2) eliminate local jurisdictional approval of development right transfers; (3) partner with local land banks in their efforts to increase the supply of development rights and accelerate the goals of the Lake Tahoe Regional Plan; Page 23 DRWG Meeting #7 Agenda Item IV.A

24 (4) implement process improvements to streamline the development right system (including banking and transfer activities) and make the system more user friendly; and, (5) expand eligibility criteria for residential bonus units to encourage workforce housing. The approval and adoption of the recommendations (including any necessary Regional Plan and Code of Ordinance amendments) and the expanded Initial Environmental Checklist (IEC) is scheduled for TRPA Advisory Planning Commission (APC) September 12, Regional Plan Implementation Committee (RPIC) September 26, and the Governing Board October 24, (For a complete 2018 meeting calendar, see Attachment B.) Work Program Status Report TRPA staff will present a status report of Work Program tasks and accomplishments at each Development Rights Working Group (DRWG) meeting. The TRPA Governing Board approved the Work Program on July 27, The mission of the DRSI is to consider alternatives to the current development rights system (a.k.a., commodities system) that better manage growth, support environmentally beneficial and economically feasible redevelopment, and improve the effectiveness and predictability of the current development rights system within the Lake Tahoe Basin. The DRSI employs a stakeholder and working group process to clarify issues, formulate strategic approaches, and develop recommendations that aligns with the Lake Tahoe Regional Plan. The approved DRSI Work Program includes four key phases to be completed by the end of 2018: DRSI WORK PROGRAM SUMMARY Phases Schedule Tasks Phase 1 Phase 2 Phase 3 Oct 2015 Aug 2016 Aug 2016 Oct 2017 Nov 2017 Oct 2018 Completed stakeholder assessment. Developed work program and process. Formed a working group and outreach strategy. Developed educa onal materials. Updated online development rights data. Documented exis ng condi ons and policies. Defined scope of the ini a ve. Iden fied desired system behavior. Completed assessment of best prac ces. Iden fied and evaluated preferred alterna ves. See below. Phase 4 TBD TBD (contingency) The DRSI now in Phase 3. The goals of Phase 3 are to refine criteria for the adoption and implementation of the Working Group s recommendations identified in Phase 2, complete environmental review, and ensure these recommendations adhere to the overall DRSI mission. Page 24 DRWG Meeting #7 Agenda Item IV.A

25 Phase 3 specific tasks as outlined within the work program include: 3.1 Develop policy, code, and procedural amendments. 3.2 Complete environmental review. 3.3 Gain formal approval for proposed alternatives and amendments through a public hearing process. 3.4 Secure funding, if needed, to implement alternatives and amendments. To aide in the development of policy, code, and procedural amendments (Task 3.1), the DRSI team prepared a memo series for the Working Group to better understand planning considerations and implementation strategies for each recommendation. These considerations and strategies will be presented and discussed during three Working Group Meetings scheduled for February, May, and August. The desired outcome for each meeting is to set forth a final implementation strategy for the recommendations, refine each component, and provide specific direction on necessary planning considerations. The project team presented the first of this memo series at the February 27 meeting on the following topics: Conversion Exchange Rates (Recommendation #1) Removal of the Local Jurisdictional Approval for Transfers (#2) Severing Development Rights from a Sending Site (part of #4) The Working Group discussed the refinements of each topic and provided direction to the project team to move forward with TRPA policy, code and procedural amendments specific to these. Phase 3 Action Items At the February 2018 meeting, the Working Group identified six action items to be completed by the DRSI Team between March and April Technical Code Team Action Item: In coordination with the Technical Code Team, draft policy, code, and procedural amendments for conversion exchange rates, eliminating local jurisdictional transfer approval, and eliminating the requirements for an approved project prior to a transfer. Update: For information on this item, please refer to Technical Code Team Recommendations memo in this packet. (Agenda Item VI.B) 2. Local Achievable Housing & Residential Bonus Units Action Item: Develop recommendation for local achievable housing and expanding the eligibility of residential bonus units. Update: For information on this item, please refer to Local Achievable Housing & Residential Bonus Units memo in this packet. (Agenda Item VI.C) 3. Local Initiatives related to Workforce and Local Achievable Housing Page 25 DRWG Meeting #7 Agenda Item IV.A

26 Action Item: Continue coordinating with the Mountain Housing Council and Tahoe Prosperity Center on workforce or local achievable housing related topics. Update: TRPA has coordinated with the Mountain Housing Council and the Tahoe Prosperity Center to define local achievable and workforce housing for the Lake Tahoe Basin and better understand local initiatives underway to encourage this type of housing. TRPA staff participated in the Tahoe Prosperity Center s kickoff meeting for a housing demonstration project on April 16, Community Outreach Action Item: Continue community outreach for DRSI to inform interested groups and the development community of the recommendations. Update: In partnership with TRPA s Communication & External Affairs Division, the DRSI project team presented DRSI updates and the Working Group s recommendations to local realtor groups, community groups, and Chamber of Commerce on the South and North Shore. 5. Land Bank MOU & Policy Resolution Action Item: Develop a policy resolution(s) and MOU proposed language to expand the capacity of land banks to increase development right inventories and retire sensitive parcels. Update: For information on this item, please refer to Partnering with Local Land Banks memo in this packet. (Agenda Item VI.D) 6. Development Customers User Group Action Item: Meet with the development community to discuss process improvements to the development rights system and examine opportunities to streamline the bonus unit delivery process, or allocations, by adding clarifications and revisions to the TRPA Code of Ordinances. Update: TRPA facilitated a customer user group to help staff identify a comprehensive list of desired process improvements that would help ensure the success of the recommendations and the transfer of development right system. Key take aways from the meeting include: There is not a shared, reliable source to learn where available development rights are located and if the holders of those rights are willing to sell. The process for acquiring and transferring development rights is unclear to applicants. Upfront costs and process timing for project approval is unclear to applicants. User group participants are in favor of the recommendations developed by the Development Rights Working Group and agree the recommendation is a step in the right direction ; especially, (1) conversion exchange rates and (2) eliminating the local jurisdictional transfer approval. Page 26 DRWG Meeting #7 Agenda Item IV.A

27 Work Program Status Update Tasks Status Date Task Discussed at DRWG Meeting and Stakeholder preparation, interviews, presentation to APC and GB, and distribution of final stakeholder assessment report Prepare work program, present work program and obtain GB approval Identify working group membership, GB approval of working group members, APC selection of two working group members Enhance online development rights data and prepare report on current development rights inventories Outline development rights policies, programs, regulations, permitting process; compare original intent to current situation; and identify areas for potential improvements. Present information sheets. Add website improvements and materials to rights/ based on and as new information is released. Provide updates to project list and as new information is released Work group will determine sideboards and APA PAS inquiry specifications, staff will contact schools and post a Request for Proposals (RFP) for consultants Document existing policies and code, and present to working group Working group will determine criteria for selection of best alternative(s) Complete Complete Complete Complete Complete Ongoing (two list updates were sent prior to DRWG meetings, another to be sent prior to meeting) Complete: Revised Factsheet #6 includes the approved scope of work and mission, staff submitted inquiry and received information, and staff hired a consultant team after interviews and posting an RFP. Complete: Factsheet #7 provides this information. Complete: Factsheet #8 provides the results of the working group s decision on goals and criteria , , , , Ongoing , , & Page 27 DRWG Meeting #7 Agenda Item IV.A

28 2.3.2 Present best practices research plan to working group Complete: This was presented at the DRWG meeting Engage California and Nevada university planning programs in research Engage consultant or consultants (e.g., planning, legal, development economics, and/or financing) to synthesize APA PAS, universities, and original research, and to prepare best practices findings and alternatives Present best practices findings and preliminary alternative ideas, and solicit feedback from working group, APC, and GB Identify and present the range of alternatives and solicit feedback from working group, APC, and GB Complete: Staff engaged and did not acquire adequate participation to implement this activity. Complete: Staff posted RFP, panel interviewed 3 consulting teams, and hired the topranking candidate. Present and discuss at the DRWG meeting. Present to APC on and GB on Complete: Presented and discussed at the DRWG meeting and June 2017 APC and GB to to , , & , , & Evaluate alternatives using results from Complete Present alternatives to working group for their recommendation with changes, if any Present working group recommendation on alternatives to APC and GB for feedback and approval (GB) Completed a crosswalk of policy, code, and procedural changes. Complete: Presented at the DRWG meeting. Complete: Presented to APC on and GB on Complete and & Refine criteria and analyze planning considerations for the recommendations Met with land banks to discuss coordination and TRPA support. In progress , & Complete , , Page 28 DRWG Meeting #7 Agenda Item IV.A

29 3.1.4 Presented the recommendations to local realtor groups and Chambers of Commerce Received direction to move forward on amendments for conversion exchange rates, elimination of local jurisdictional approval, and severing from a sending site DRSI Technical Code Team completed first round of redline code changes Met with Development Customer User Group to discuss transfer of development rights process improvements , , Complete , , , , , & Complete Complete Complete Met with local developers and community groups planning workforce housing projects on the South Shore and North Shore Participate on the Mountain Housing Council. On going Complete , & Initiated environmental review process with DRWG, PlaceWorks, and TRPA legal staff. Complete Present status update to APC and GB. Upcoming & May Working Group Meeting The DRSI Team recommends covering the following topics at the May 22, 2018 Working Group meeting: Revised conversion exchange rates (Recommendation #1) Technical Code Team recommended amendments for Recommendations # 1, 2, and 4 (topics covered at the February Working Group meeting) Land bank MOUs and policy resolution (Recommendation #3) Process improvements for the transfer of development rights system and allocation of bonus units (Recommendation #4) Defining local achievable housing for the Lake Tahoe Basin and expanding eligibility criteria for residential bonus units (Recommendation #5) The attached companion memos discuss Components 1, 3, 4, and 5 of the Working Group s recommendations, as well as the recommended amendments of the Technical Code Team. Page 29 DRWG Meeting #7 Agenda Item IV.A

30 Next Steps To aide in the development of policy, code, and procedural amendments, the DRSI team will need Working Group direction on the final implementation strategy for each recommendation. Each recommendation, planning and implementation considerations, and criteria or recommendations were presented by the DRSI team at the Working Group meetings in February and May. Date Feb. 27 May 22 TBD Aug.20 or Aug.23 Topics Meeting #6 Exchange Rates (Component 1) Remove Jurisdictional Veto (Component 2) Severe from Sending Site (Holdings/Banking) (part of Component 4) (Optional) Mountain Housing Council Update on Workforce Housing (part of Component 5) Meeting #7 Land Bank MOUs (Component 3) Process Improvements (Component 4) Workforce Housing Bonus Units (Component 5) Amendment Update (Exchange Rates, Veto Removal, and Severe from Sending Site) Meeting #8 Environmental Analysis (IEC) Monitoring Requirements (Components 1 5) Amendment Update (Land Banks, Workforce Housing Bonus Units) In addition to these Working Group meetings, the Technical Code Team is scheduled to meet in June and July to recommend additional redline changes and specific language to be incorporated into TRPA s Regional Plan, Code of Ordinances, and Rules of Procedure. Between June and August, the DRSI team will complete environmental analysis for the recommendations selected by the Working Group. The intent is to complete an expanded initial environmental checklist (IEC) for this analysis in compliance with TRPA Code of Ordinances and the Lake Tahoe Regional Plan. To date, PlaceWorks and TRPA have reviewed rules and procedures for completing the expanded IEC, initiated the process with legal staff, and completed an analysis of potential impacts that may result from implementation of proposed revisions to the exchange rates under worse case scenarios. (See revised exchange rate memo for discussion on the scenarios.) PlaceWorks is now drafting the project description, impact analyses and conclusions, as well as identifying any necessary mitigation measures for the recommendations. The next Working Group meeting in August will cover the environmental review, mitigation and monitoring requirements, and Technical Code Team recommended amendments. Land Bank Funding & Impact Study (Optional) During the September Working Group meeting, representatives from California Tahoe Conservancy (CTC) and Nevada Division of State Lands (NDSL) were both in favor of identifying specific goals and priorities for each land bank in the Lake Tahoe Basin as those relate to the development rights system. Between November 2017 and Page 30 DRWG Meeting #7 Agenda Item IV.A

31 January 2018, the DRSI Team met with the local land banks to better understand their interests and the existing capacity and demand of the land banks. (A complete discussion of the land banks role in the Development Right System and necessary action items is covered in Agenda Item VI.D.) While NDSL supported expanding the role of land banks in the development rights system moving forward, NDSL does not currently have the need, demand, or resources for an expansion. On the other hand, CTC expressed a strong interest in expanding the role of their land bank with a focus on acquiring and restoring existing developed parcels on sensitive lands and transferring development rights into Town Centers. This would help to increase the supply of available development rights to meet the goals of the Lake Tahoe Regional Plan. During this discussion, CTC noted two key challenges in making their expanded role a success: (1) secure funding to acquire additional properties; and (2) legislative direction that provides the flexibility to sell development rights at less than market value. TRPA views CTC as a key partner to help accelerate implementation of the Lake Tahoe Regional Plan and fully supports the expansion of capacity within the development rights system. The DRSI team and CTC agreed it would be beneficial for CTC to complete a study with a third party consultant to (1) identify the best available sources of funding to acquire developed parcels and expand their development right inventory and (2) determine the potential impact or outcomes based on a range of potential funding amounts (i.e. how many sensitive parcels and development rights could be obtained at different funding levels). This study may also include identifying additional mechanisms to increase CTC s inventory of development rights. Contact Information If you have questions regarding the work program, please contact Jennifer Self, Senior Planner, at (775) or jself@trpa.org or John Hester, AICP, Chief Operating Officer, at (775) or jhester@trpa.org. Attachment A: Attachment B: DRSI Work Program Schedule Proposed 2018 Meeting Calendar Page 31 DRWG Meeting #7 Agenda Item IV.A

32 Page 32

33 Page 33 Attachment A: DRSI Work Program Schedule Completed Tasks Phase 3 Tasks DRWG Meeting #7 Agenda Item IV.A

34 Page 34

35 Attachment B: Proposed 2018 Meeting Calendar Date Group Topic Feb. 27 April 10 Apr. 9 May 22 Working Group Technical Code Team TRPA Development Customer User Group Working Group Meeting #6 Exchange Rates Remove Jurisdictional Veto, Severe from Sending Site (Holdings/Banking) (Optional) Mountain Housing Council Update on Workforce Housing Policy, Code, and Procedural Amendments Exchange Rates Remove Jurisdictional Veto, Severe from Sending Site (Holdings/Banking) TDR Process Improvements June 13 APC Phase 3 Update Meeting #7 Land Bank MOUs Workforce Housing Bonus Units Process Improvements Amendment Recommendations (Exchange Rates, Veto Removal, and Severe from Sending Site) June 27 GB Phase 3 Update Jun. 26 Technical Code Team Policy, Code, and Procedural Amendments Land Bank MOUs Process Improvements & Monitoring Workforce Housing Bonus Units Jul. 24 Technical Code Team Review proposed policy, code, and procedural draft amendments prior to DRWG Meeting #8 recommendations. TBD Aug.20 or Aug.23 Working Group Meeting #8 Environmental Analysis (IEC) & Monitoring Amendment Update (Land Banks, Workforce Housing Bonus Units) Sep. 12 APC Approval/Adoption Sep. 26 RPIC Approval/Adoption Oct.24 GB Approval/Adoption Page 35 DRWG Meeting #7 Agenda Item IV.A

36 Page 36

37 MEMORANDUM DATE TO FROM SUBJECT Requested Action Development Rights Working Group John Hester, Jennifer Self, and Alyssa Bettinger, TRPA Ashley James and Charlie Knox, PlaceWorks Techncial Code Team Recommended Amendments (Agenda Item VI.B) The DRSI team requests that the Development Rights Working Group approve the recommended policy and code amendments as part of the Development Rights Strategic Initiative s recommendations and provide direction on questions from the Technical Code Team. Summary TRPA s Executive Director appointed a six member team to advise staff of necessary policy, code and procedural amendments for the implementation of the Working Group s recommendations. The Technical Code Team met on April 10, 2018 to discuss recommended redline changes and specific language to be incorporated into TRPA s Regional Plan Goals and Policies, Code of Ordinances, and Rules of Procedure. 1 This team consisted of Working Group members Nicole Rinke (California Attorney General s Office), John Marshall (TRPA), Lew Feldman (community developer affiliate), and Marissa Fox (League to Save Lake Tahoe), and DRSI team members John Hester, Jennifer Self, Alyssa Bettinger (TRPA), and Charlie Knox (PlaceWorks). Recommendations provided by the Technical Code Team will be reviewed by TRPA staff and the Working Group prior to the public hearing process. Recommended Amendments & Clarification Questions The attached document shows the redline changes recommended by the Technical Code Team related to (1) conversion exchange rates, (2) eliminating the local jurisdictional transfer approval, and (3) severing development rights from a sending site. Recommended amendments 1 The DRSI Team was completing additional analysis on the conversion exchange rates at the time of the April 10, 2018 Technical Code Team meeting. Proposed revisions to the conversion exchange rates will be discussed at the May Working Group meeting and have not been reviewed by the Technical Code Team. (Section ) Page 37 DRWG Meeting #7 Agenda Item VI.B

38 for other components of the Working Group s recommendations will be drafted by the Technical Code Team in June and July and presented to the Working Group in August. During the meeting, the following questions and planning considerations arose that the Team agreed to bring back to the Working Group for discussion and direction: 1. Should residential units of use (RUUs) used for either single family or multi family use that are verified and banked as of the effective date of the Working Group recommendations be treated as a single family RUU under the new conversion exchange rates? (Section ) 2. Should conversions be limited to existing CFA, TAU, and RUU? Can development rights held in allocation pools (i.e. potential development) by the local jurisdictions be eligible for conversions? (Section ) 3. Are bonus units awarded to a project eligible for conversion? (Section ) 4. Can bonus units be awarded at time of transfer outside of a project approval? (Section 51.2) 5. Can someone receive a bonus unit from a development right that was previously banked prior to effective date of the Lake Tahoe Regional Plan or effective date of Working Group s recommendations? (Section ) (Hypothetical: A development right was removed and banked and the site restored years ago. Could that development right holder transfer and take advantage of bonus unit incentives for moving development to a Town Center.) Additionally, as part of the code amendment package, the DRSI project team is proposing revised conversion exchange rates. These revisions resulted from environmental analysis completed in response to questions received from a Working Group member. The revised exchange rates are included in Attachment A Draft policy and code amendments, and further details are included in Attachment C Revised conversion exchange rates. Other Considerations The following considerations were discussed as part of the code amendment discussions with the Technical Code Team: Staff should consider reviewing dates throughout the Code of Ordinances for consistency and accuracy. (e.g. Goals and Policies section LU 2.1 has a date of August 17, 1986 for legally existing parcels, whereas section of the Code of Ordinances Page 38 DRWG Meeting #7 Agenda Item VI.B

39 has a date of July 1, 1987 for legally existing parcels) It is unclear to users how these dates relate to one another. Staff should consider an alternative term to describe a residential development right (such as a residential parcel right or residential buildable right). It is confusing for users to differentiate between development rights, which refer to requirements needed to develop a parcel for a variety of uses, and residential development rights, which refer to a specific authorization tied to eligible vacant parcels needed to construct a residential unit. For permit streamlining and ease of administration, TRPA staff recommends calculating the net change from development right transfer using existing built development rights and existing banked development rights. (Code of Ordinances Section 51.7) During the February meeting, the Working Group agreed the local jurisdictions shall have the option to come before the Governing Board to reinstate the local jurisdictional transfer approval if there is a net loss of 5% of the existing development rights over a two year period. Existing development rights generally refer to both built on theground development and banked development rights. For tracking and administrative purposes, it may be challenging for staff to determine if a development right was banked or built at the time the DRSI code amendments are adopted. (See Attachment B for Estimated Existing Built & Banked Development Rights Inventory.) Attachment A: Attachment B: Attachment C: Draft policy and code amendments Estimated Existing Built & Banked Development Rights Inventory Revised conversion exchange rates Page 39 DRWG Meeting #7 Agenda Item VI.B

40 Page 40

41 Attachment A: DRAFT Recommended Amendments from the Technical Code Team This document presents draft recommended amendments prepared for and agreed upon by the Technical Code Team on April 10, The following document contains draft recommended amendments related three of the five components of the Working Group recommended alternative (1) conversion exchange rates, (2) eliminating the local jurisdictional transfer approval, and (3) severing development rights from a sending site. Recommended amendments for other components of the DRWG recommended alternative will be drafted by the Technical Code Team in June and July and presented to the Working Group in August. (1) EXCHANGE RATES Goals & Policies Table of Amendments [Insert summary of amendments as needed.] LU-2.1 THE REGIONAL PLAN ADOPTED BY THE AGENCY SHALL SPECIFY THE TOTAL ADDITIONAL DEVELOPMENT WHICH MAY BE PERMITTED WITHIN THE REGION, NOT TO EXCEED THE LIMITATIONS SET FORTH BELOW. Residential: Each undeveloped legal parcel existing on August 17, 1986, unless otherwise restricted, has a residential development right of one residential unit, except where additional development rights are acquired pursuant to the Implementation Element. The status of residential development rights that existed on August 17, 1986 is outlined in the table below: Residential Development Rights Inventory (as of October 24, 2012)* Residences Developed before ,865 Total Residential Development Rights in ,690 Residential Development Rights Acquired Retired Residential Development Rights Developed or Allocated to Jurisdictions ,360 6,087 Total Residential Development Rights Remaining 4,243 Remaining on Buildable Parcels 2,791 Remaining on Marginal Parcels 765 Remaining on Unbuildable Parcels 535 Banked Residential Development Rights 152 Page 41

42 DP-3.7 TOCs TRANSFERS AND CONVERSIONS OF DEVELOPMENT RIGHTS, OTHER THAN LAND COVERAGE, SHALL BE ENVIRONMENTALLY NEUTRAL LIMITED TO EQUIVALENT USES WITH NO INCREASE IN THE PARAMETERS BY WHICH THE USES ARE MEASURED BY THIS PLAN (E.G., FLOOR AREA, UNITS, PAOT) PLUS BONUS UNITS AWARDED IN ACCORDANCE WITH THE REGIONAL PLAN AND CODE OF ORDINANCES. EQUIVALENT USES SHALL BE DEFINED BY ORDINANCE. DEVELOPMENT IMPACTS DUE TO THE RESULTING PROJECTS SHALL BE ADDRESSED AS PART OF THE PROJECT REVIEW PROCESS. [Any change to the code will also include change to Table of Contents at the beginning of the code and each chapter.] A Chapter 50: Allocation of Development The rules governing the rate and timing of growth within the region, including standards for awarding and distributing residential allocation units and the conversion of development rights; 1.8 CODE AMENDMENTS [Insert summary of code amendments and final ordinance number as needed.] PROJECT REVIEW [No changes needed. Per TCT, conversions will not be treated the same as transfers in terms of project review and shall be reviewed at staff level. Environmental review will occur at the conversion, transfer, and project stage. Whether or not an activity is elevated beyond staff level (i.e. Hearings Officer or Governing Board review and approval) is determined by the development project proposal as set forth in the existing Code.] A. Projects Exempt From Preparation of Environmental Impact Statement 3. Transfers or conversions of development rights and residential allocations (does not include construction of new units) F Number of Residential Development Rights Number of residential development rights assigned to the parcel A Residential Uses On parcels where residential uses are permissible, each parcel shall be entitled to one residential unit. Higher densities, up to the limits in Table or as established in the applicable plan area statement or adopted plan, whichever is most restrictive, may be developed by conversions of use, transfer of development rights, transfer of existing development, transfer of allocations, or multi-residential incentives in accordance with Chapter 50: Allocation of Development, Chapters 51: Transfer of Development, and 52: Bonus Unit Incentive Program. Page 42

43 B Tourist Accommodation Uses On parcels where tourist accommodation uses are permissible, density up to the limits in the Table or as established in the applicable plan area statement or adopted plan, whichever is most restrictive, may be developed by conversion of development rights or transfer of existing development in accordance with Chapter 50 or Chapter 51 or by obtaining tourist accommodation bonus units in accordance with Chapter PURPOSE This chapter sets forth the requirements for regulating the rate and timing of growth within the region. In conjunction with other provisions of this Code and the Goals and Policies, this chapter is intended to award and distribute allocations for growth and development in an orderly fashion in order to meet and maintain the environmental thresholds. This chapter also sets forth requirements for the conversion of existing development. An Conversion of use approved or an allocation issued pursuant to this chapter does not give the recipient a right to develop a project APPLICABILITY No person shall construct a project or commence a use or activity that requires a development rightan allocation unlessunless: A. An allocation is obtained in accordance with this chapter or a development right is obtained in accordance with this chapter on conversion of use or Chapter 51: Transfer of Development; B. The parcel is eligible to use an allocation; and C. The project is approved by TRPA RESIDENTIAL DEVELOPMENT RIGHTS Development Residential development, as defined in Chapter 90: Definitions, shall be assigned and utilized in accordance with the following provisions: Assignment of Residential Development Rights Parcels legally existing on the effective date of the Regional Plan, July 1, 1987, shall be assigned a residential development right except as set forth below: A. Parcels which are located in Land Capability Districts 4, 5, 6, or 7, are within a community plan area, or within Centers in a Conforming Area Plan, and are eligible for tourist accommodation or commercial uses, shall not have a residential development right. Parcels that are removed from community plan areas and Page 43

44 included in Area Plans shall not receive a residential development right with the change. B. Parcels that contained one or more of the primary uses listed in the Section 21.4 under Residential, Tourist Accommodation, Commercial, or Public Service, on the effective date of the Regional Plan, shall not have a residential development right, except as otherwise provided in subsection C. Parcels that contained one or more of the primary uses listed in Section 21.4 under Recreation, on the effective date of the Regional Plan, shall not have a residential development right, except that parcels with only dispersed outdoor recreation as a primary use shall have a residential development right. D. Parcels that contain one or more of the following uses in Section 21.4 under Resource Management, on the effective date of the Regional Plan, shall not have a residential development right E. Littoral parcels that contain one or more of the primary uses listed in Section 81.3, on the effective date of the Regional Plan, shall not have a residential development right, except that parcel with the primary use of dispersed water-oriented outdoor recreation, salvage operations, or safety and navigation facilities shall have a residential development right Transfer of Residential Development Rights Transfer of residential development rights shall comply with the density limitations set forth in this chapter and the transfer provisions set forth in Chapter 51: Transfer of Development Construction of Residential Unit A residential development right or multi-residential bonus unit shall be required for each additional residential unit approved in accordance with Chapter 50: Allocation of Development ALLOCATION AND ACCOUNTING OF COMMODITIES AND ACCOUNTING DEVELOPMENT RIGHTS Total Allocations of Commodities and Accounting of Development Rights Additional Allocations TRPA shall release land use commodities development rights in four-year cycles up to a maximum of 20 percent of the 2013 additions identified in Table LOS and VMT Monitoring Two years after each release, TRPA shall monitor existing and near-term LOS to evaluate compliance with applicable LOS policies. Should LOS projections indicate that applicable LOS Page 44

45 policies will not be met, TRPA shall take action to maintain compliance with LOS standards. TRPA shall also monitor VMT and only release development rights allocations upon demonstrating, through modeling and the use of actual traffic counts, that the VMT Threshold Standard shall be maintained over the subsequent four-year period B Definition of Additional Residential Unit Residential unit is defined in Chapter 90: Definitions. For purposes of this chapter, a residential unit is considered "additional" if it is to be created pursuant to a TRPA approval issued on or after January 1, The conversion of an existing nonresidential use to a residential use constituting a residential unit is an additional residential unit requiring an allocation under this chapter or conversion of an existing development right pursuant to Section Election of Conversion of Use Requirement of Allocation No person shall construct a project or commence a use that creates additional commercial floor area without first receiving an allocation approved by TRPA or obtaining necessary developments rights pursuant to Section Election of Conversion of Use or Chapter 51: Transfer of Development. In order to construct the project or commence the use to which the allocation pertains, the recipient of the allocation shall comply with all other applicable provisions of this Code Requirement of Allocation No person shall construct a project or commence a use that creates additional tourist accommodation units without first receiving an allocation approved by TRPA or obtaining necessary developments rights pursuant to Section Election of Conversion of Use or Chapter 51: Transfer of Development. In order to construct the project or commence the use to which the allocation pertains, the recipient of the allocation shall comply with all other applicable provisions of this Code ELECTION OF CONVERSION OF USE General Conversion Standards 1 Existing commercial floor area may be converted to tourist accommodation units or residential units of use; existing tourist accommodation units may be converted to commercial floor area or residential units of use; and existing residential units of use may be converted to commercial floor area or tourist accommodation units or commercial floor area, and existing tourist accommodation units may be converted to residential units or commercial floor area if the conversion complies with subsections , and 3, 4, 5, 6 or 7 and with the following conversion standards: 1 The DRSI Team was completing additional analysis on the conversion exchange rates at the time of the April 10, 2018 Technical Code Team meeting. Proposed revisions to the conversion exchange rates will be discussed at the May Working Group meeting and have not been reviewed by the Technical Code Team. (Section ) Page 45

46 A. Commercial floor area shall be converted to tourist accommodation units at a ratio of 300 square feet of commercial floor area to one tourist accommodation unitthe proposed conversion shall be evaluated for adverse impacts using the Initial Environmental Checklist (IEC) and the addenda developed by TRPA for conversions and shall not be permitted if adverse impacts cannot be mitigated; B. Commercial floor area shall be converted to single-family residential at a ratio of 300 square feet of commercial floor area to one residential unit of useresidential and tourist accommodation units shall be converted on a ratio of one unit for one unit; C. Commercial floor area shall be converted to multi-family residential at a ratio of 300 square feet of commercial floor area to one and one-half (1.5) residential units of use.residential and tourist accommodation units shall be converted to commercial floor area at a ratio of one square foot of existing floor area to one square foot of commercial floor area, using the subsection criteria for measurement of floor area; and D. Tourist accommodation units shall be converted to commercial floor area at a ratio of one tourist accommodation unit to 300 square feet of commercial floor area;a maximum of 200 residential units and 200 tourist accommodation units may be converted within a calendar year for the region. E. Tourist accommodation units shall be converted to single-family residential at a ratio of one tourist accommodation unit to one residential unit of use; F. Tourist accommodation units shall be converted to multi-family residential at a ratio of one tourist accommodation unit to one and one-half (1.5) residential units of use; G. Residential units of use used for single-family residential shall be converted to commercial floor area at a ratio of one residential unit of use to 300 square feet of commercial floor area; H. Residential units of use used for single-family residential shall be converted to tourist accommodation units at a ratio of one residential unit of use to one tourist accommodation unit; I. Residential units of use used for single-family residential shall be converted to multifamily residential units of use at a ratio of one single-family residential unit of use to one and one-half (1.5) multi-family residential units of use; J. Residential units of use used for multi-family residential shall be converted to commercial floor area at a ratio of one residential unit of use to 200 square feet of commercial floor area; Page 46

47 K. Residential units of use used for multi-family residential shall be converted to tourist accommodation units at a ratio of one residential unit of use to seventy-five hundredths (0.75) of one tourist accommodation unit; and L. Residential units of use used for multi-family residential shall be converted to singlefamily residential units of use at a ratio of one multi-family residential unit of use to seventy-five hundredths (0.75) of one single-family residential unit of use. Existing Development Right 300 sq. ft. Commercial Floor Area (CFA) 1 Tourist Accommodation Unit (TAU) 1 Single Family Detached Residential Unit of Use (SF RUU) 1 Multi-Family Attached Residential Unit of Use (MF RUU) Table Conversion Exchange Rates Equivalent Development Rights CFA TAU SF RUU MF RUU 300 sq. ft sq. ft sq. ft sq. ft Conversions to Multi-family Units Requirements Prior to Conversion or Banking of Existing Commercial Floor Area, Tourist Accommodation Units, or Residential Units of Use Prior to conversion, the commercial floor area, tourist accommodation units, or residential units of use shall comply with the following requirements: A. All commercial floor area, tourist accommodation units, or residential units of use shall be verified as legally established. B. Conversion shall be approved by TRPA. A.C. Conversion shall comply with Section Restriction of Parcels. B.D. The proposed conversion shall be evaluated for adverse impacts using the Initial Environmental Checklist (IEC) and the addenda developed by TRPA for conversions and shall not be permitted if adverse impacts cannot be mitigated; Transfer From Sensitive Lands Remaining Square Feet and Fractions of Units Resulting from a Conversion of Use If a conversion executed consistent with and results in remaining square feet of commercial floor area, or whole or fractions of tourist accommodation units or residential units of use, those square feet or units may be banked on the parcel from which Page 47

48 they were converted (sending site) provided all requirements of Chapter 6: Tracking, Accounting, and Banking are met, or on a different parcel provided all requirements of Chapters 6: Tracking, Accounting, and Banking and 51: Transfers of Development are met. Conversion of an existing residential or tourist accommodation unit to a residential, tourist, or commercial use may be permitted when a residential or tourist unit is transferred from a parcel classified as land capability districts 1, 2, 3, or 1b (Stream Environment Zone), and the parcel is restored Restriction of Parcels Restriction of parcels for the purposes of conversions set forth in this Code shall comply with the following requirements: Existing Development Conversion For parcels which units of existing development will be converted, the structures or facilities accounting for that use shall be removed or modified, consistent with the conversion, as to eliminate the existing units and use Conversion and Banking of All Existing Development From Sensitive Lands Parcels in Land Capability Districts 1a, 1c, 2, 3, or 1b (stream environment zone) from which all units of existing development have been converted and banked shall be restored pursuant to subsection and shall be permanently restricted to open space by a deed restriction or other covenant running with land, recorded by the owner Conversion and Banking of Some Existing Development From Sensitive Lands Parcels in Land Capability Districts 1a, 1c, 2, 3, or 1b (stream environment zone) from which less than all units of existing development have been converted and banked shall be permanently restricted by deed restriction or other covenant running with the land, recorded by the owner for that parcel from developing within that portion of land capability districts 1a, 1c, 2, 3, or 1b unless as otherwise set forth in Chapter 30: Land Coverage Conversion and Banking of Existing Development From Non-Sensitive Lands TRPA shall track and account for parcels located in Land Capability Districts 4, 5, 6, or 7 from which units of existing development have been converted and banked as set forth in Chapter 6: Tracking, Accounting, and Banking Payment of Bonds and Freedom From Nuisance The parcel from which units are converted or banked shall be free of nuisance and hazard. All bonds, assessments, back taxes, fees, and liens affecting the parcel shall be paid in full or the applicant shall receive authorization to convert development rights from those interested parties to whom the bond, assessment, back taxes, fees, or liens are owed. Page 48

49 Conversions to Multi-family units, A pilot program is created under this subsection that allows for the conversion of no more than 200 TAUs to ERUs for multi-unit projects, subject to the following conditions: A. Each TAU can be used for a maximum of 1,250 sq. ft. of residential floor area; B. The conversion must happen on the same parcel; and C. TRPA shall monitor the impacts to thresholds of pilot program Removal of a Nonconforming Use Conversion of an existing residential or tourist accommodation unit to a residential, tourist, or commercial use may be permitted in conjunction with a project approval if the conversion results in the elimination of the unit of nonconforming use. The structures containing the converted use shall meet TRPA standards for new construction Uses Modified to Meet Development Standards for New Projects Conversion of an existing residential unit of use to a tourist or commercial use or an existing tourist accommodation unit of use to a commercial use, or a residential use when it is certified to meet the local jurisdiction health and safety standards for residences, not to include single family residential, may be permitted onsite or for transfer in conjunction with a project approval if all structures and uses within the project area are modified to meet the TRPA standards applicable for a project proposed on an undeveloped project area Uses Linked to an EIP Project Conversion of residential unit of use to a tourist or commercial use or an existing tourist accommodation unit of use to a commercial use or a residential use when it is certified to meet the local jurisdiction health and safety standards for residences, not to include single family, may be permitted onsite or for transfer if the converted use is included as part of a project that has linked status pursuant to Chapter 15: Environmental Improvement Program Uses to Provide Deed-Restricted Affordable Housing Projects Conversion of existing tourist accommodation units of use to residential may be permitted onsite if the converted units will be used for deed-restricted affordable housing, the converted units are certified by the local jurisdiction that they meet their public health and safety standards for residences, and the project area meets TRPA standards applicable for modifications on a developed project area Commercial Floor Area/Tourist Bonus Unit Conversion Pilot Program Notwithstanding any other contrary provisions of Chapters 50 and 51, this pilot program allows for the reservation, conversion, allocation, and transfer of Commercial Floor Area (CFA) and tourist bonus units. Page 49

50 A. Reservation of Bonus CFA or Tourist Bonus Units. 1. Potential applicants may submit letters of intent to apply for bonus CFA or tourist bonus unit reservations upon TRPA Governing Board approval of this pilot program until March 27, All reservation letters received during this period shall be reviewed and ranked according to the criteria below by the Governing Board. The applicants with the highest ranked letters of intent will be allowed to reserve bonus units to the extent bonus units are available from TRPA. TRPA shall rank the letters of intent on the following criteria: a. Amount of nutrient and fine sediment pollutant reduction and stream environment zone and other sensitive land restoration; b. Additional Threshold or community benefits; and c. Status of land acquisition and likely maintenance of restoration benefit. Successful potential applicants shall complete their reservation applications pursuant to Section B below within 18 months of Governing Board action on their letter of intent. 2. If the letter of intent process does not exhaust the available supply of bonus CFA or tourist bonus units, additional reservation applications may be submitted after March 27, 2016 and considered by the Governing Board under the criteria of Section A.1 (a)-(c). 3. Sending site project areas for reservation requests shall be limited to contiguous parcels and requests shall describe the number of CFA and/or tourist bonus units that could be feasibly earned as a result of the sending site restoration according to Section 51.5: Transfer of Existing Development. B. All applicants for CFA and tourist bonus units either reserved per A.1 or submitted per A.2, above, shall provide the following within 18 months from the date of reservation approval per A Submit a complete application for a TRPA permit for any demolition and restoration of the sending site project area; and 2. Include proof of ownership or control of the sending site project area, which, at a minimum, shall be an option to purchase the site. C. Applicants shall restore and permanently restrict all or part of the sending site, as appropriate, pursuant to the provisions of Section 51.6: Restriction of Parcels, no later than 12 months after the approval of an application submitted per B, above, or three years from the effective date of this ordinance, whichever comes later. Page 50

51 Chapter 90 DEFINITIONS D. The Governing Board may grant one extension of up to 12-months to applicants diligently pursuing the approved restoration project. E. CFA and tourist bonus units may be converted into either commodity at a ratio of one TAU to 450 square feet of CFA and vice-versa. F. No more than 80,000 square feet of CFA from the TRPA-Special Project and CEP Pool and no more than 61 tourist bonus units remaining from the 1987 Regional Plan (provided for in Table : Allocation and Development Rights Accounting of this Code) may be used under this pilot program. G. TRPA shall allocate the CFA or tourist bonus units when the sending site has been deed restricted, and when the applicable conditions of approval for the demolition and restoration plan have been satisfied or a security has been posted in an amount equaling 125% of the amount needed to ensure the unsatisfied conditions of approval for the restoration will be satisfied. H. Bonus units can be earned and held by either a public or private party. I. This pilot program shall remain in effect from March 27, 2016 through March 27, If CFA or tourist bonus units are reserved during the time that the pilot program is in effect, TRPA may issue CFA or tourist bonus units following the termination of the pilot program if all of the criteria in this section have been met. Development Right A land use entitlementunit of use which must be obtained prior to the construction of a project and commencement of use or activity on a property and be verified as legally existing by TRPA.The right to potential residential use that is attached to certain parcels in the region in accordance with Section A development right is not a vested right. Development rights include residential units of use, residential development rights, residential allocations, commercial floor area, tourist accommodation units, land coverage, people at one time (PAOTs), and restoration credits. Residential Development Right The Pright to potential residential use that is attached to certain parcels in the region in accordance with Section A residential development right is not a vested right. To construct a new residential dwelling, the property must comply with Section 50.3 to be eligible for a residential development right and the property owner must obtain a residential allocation from the respectiveed local jurisdiction or transfer a residential unit of use to the property from an eligible sending site. A residential development right with an exercised residential allocation is abecomes an existing residential unit of use upon construction.see Development Right. Page 51

52 Residential Development Right + Residential Allocation = Residential Unit of Use (ability to develop a lot) (permission to build) (upon construction) Vacant Residential lot Residential Allocation Residential Unit One or more rooms containing one or more bedrooms, with not more than one kitchen, designed to be occupied permanently as an independent housekeeping unit by one family or one collective household with facilities for living, cooking, sleeping and eating. See Residential Development Right. Residential Unit of Use 2 A residential unit of use is an existing residential unit constructed (1) prior to the adoption of the Regional Plan, or (2) as a result of a TRPA permit to construct an additional residential unit from the combination of a residential development right and a residential allocation.prior to developing a residential parcel, a residential development right and residential allocation or a transferred residential unit of use must be obtained. Once a single-family dwelling is built on the parcel, it no longer has a development right or an allocation. The residence is now considered a Residential Unit of Use. At a minimum, an existing residential unit of use shall contain cooking facilities, bathing and toilet facilities, and living and sleeping areas. Residential Development Right + Residential Allocation = Residential Unit of Use (ability to develop a lot) (permission to build) (upon construction) Vacant Residential lot Residential Allocation 2 The Technical Code Team requested that the project team include a new definition for a residential unit of use with an associated graphic. The Technical Code Team has not yet reviewed or approved this definition as of May 8, Page 52

53 (2) ELIMINATION OF LOCAL GOVERNMENT APPROVAL OF TRANSFERS 6.9. REGIONAL DEVELOPMENT RIGHT ACCOUNTING TRPA shall prepare regional development right reports for each local jurisdiction, land bank, plan area statement, community plan, area plan, and specific or master plan. The report shall include: A. Total number of existing development rights being used within each local jurisdiction, landk bank, plan area statement, community plan, aarea pplan, and specific or master plan. B. The net change of existing development rights being used within each local jurisdiction, landk bank, plan area statement, community plan, aarea pplan, and specific or master plan C. Total number of banked development rights within each local jurisdiction, land bank, plan area statement, community plan, aarea pplan, and specific or master plan D. Total number of banked or potential development rights transferred out of each local jurisdiction, landk bank, plan area statement, community plan, aarea pplan, and specific or master plan by development type and location. E. Total number of banked or potential development rights transferred into each local jurisdiction, land bank, plan area statement, community plan, aarea pplan, and specific or master plan by development type and location. F. Total number of development rights converted by development type and quantity within each local jurisdiction, landk bank, plan area statement, community plan, aarea pplan, and specific or master plan LAND BANK [Change number sequence in these sections to reflect the add section for Regional DR Accounting.] CUMULATIVE ACCOUNT [Change number sequence in these sections to reflect the add section for Regional DR Accounting.] 51.3 TRANSFER OF RESIDENTIAL RIGHT Local Approval For an inter-county transfer, the approval of affected local governments shall be obtained. Page 53

54 51.4 TRANSFER OF RESIDENTIAL ALLOCATIONS Local Approval For an inter-county transfer, the approval of affected local governments shall be obtained TRANSFER OF EXISTING DEVELOPMENT Requirements E. The approval of affected local governments shall be obtained Transfer of Existing Development to Centers Transfers of existing development to Centers shall receive the approval of the affected local governments and shall comply with the following: 51.7 LOCAL GOVERNMENT APPROVAL 3 No local government approval is necessary to transfer development rights. Local governments can request Governing Board to instate a local approval process if tthe net change of development rights resulting from transfers over the prior two-year period is equal to or greater than five percent of the total existing built development rights for each type of land use (e.g. commercial floor area, tourist accommodation units, and residential units of use) within that jurisdiction as enumerated in Table , below. The net change shall be calculated for each jurisdiction as follows: A. Calculate the percent net change of CFA as (as CFA transferred into the jurisdiction- CFA transferred out of jurisdiction)/cfa from Table ) x 100 B. Calculate the percent net change of TAUs as (as TAUs transferred into jurisdiction- TAUs transferred out of jurisdiction)/tau from Table ) x 100 C. Calculate percent net change of RUUs as (as RUUs transferred into jurisdiction-ruus transferred out of jurisdiction)/ruu from Table ) x 100 D. Add the total percent net change from A, B, and C above. Table Figures to be Used as the Base Against Which to Measure Net Change in Commercial Floor Area, Tourist Accommodation Units, and Residential Units 1 3 For permit streamlining and ease of administration, TRPA staff recommends calculating the net change of development right transfer using existing built development rights and existing banked development rights. (Code of Ordinances Section 51.7) During the February meeting, the Working Group agreed the local jurisdictions shall have the option to come before the Governing Board to reinstate the local jurisdictional transfer approval if there is a net loss of 5% of the existing development rights over a two-year period. Existing development rights generally refer to both built on-the-ground development and banked development rights. For tracking and administrative purposes, it may be challenging for staff to determine if a development right was banked or built, on-the-ground at the time the DRSI code amendments are adopted. Page 54

55 Commercial Floor Area Tourist Accommodation Units Residential Units of Use Carson City City of South Lake Tahoe Douglas County El Dorado County Placer County Washoe County 0 2,967, , ,044 1,331,923 1,253, ,513 2, , ,548 4,349 8,688 11,257 7,411 1 The figures presented in this table represent the total amount of existing, built, on-theground and banked commercial floor area, tourist accommodation units, and residential units of use when this code section was adopted, xx-xx-xxxx. (3) TRANSFERRING AND BANKING Transfer or Relocation Onsite of Commercial Floor Area Related to a Public Service Use Transfer or relocation of commercial floor area from an existing commercial use may be permitted when a public service use is approved that displaces commercial floor area. The transfer shall be subject to the standards of Chapter 51, and the following standards: APPLICABILITY This chapter applies to the transfer of residential development rights, residential allocations, and existing development. All such transfers require TRPA approval. Transfer of a residential development right, or residential allocation, or existing development shall not constitute approval of the underlying associated project. Transfers of existing development shall occur only in conjunction with a project approval Transfer or Relocation Onsite of Commercial Floor Area Related to a Public Service Use Transfer relocation of commercial floor area from an existing commercial use may be permitted when a public service use is approved that displaces commercial floor area. The transfer shall be approved only in conjunction with a project approval at the receiving site. The transfer shall be subject to the standards of Chapter 51, and the following standards: Transfer of Existing Development to Centers; Bonus Unit Incentive Transfers of existing development to Centers shall receive the approval of affected local governments and shall comply with the following: Page 55

56 E. Allocation of a bonus unit shall occur only in conjunction with a project approval Transfer of Allocated Bonus Unit within Centers Limitations The following limitations apply to transfers of previously allocated Bonus Units: A. Bonus Units shall remain within the same use category at the time the units were awarded (i.e. residential, commercial, and tourist accommodation) and are not eligible for conversion per Section 50.10; B. Bonus Units shall only be transferred within or between TRPA- approved Town Centers; Transfer of Existing Development Limitations The following limitations apply to transfers of existing development: A. Units of use transferred shall have been legally established; and B. Transfers of units of use shall not be permitted for development that has become derelict. GENERAL NOTES: 1. Did not change as map not essential for operation of the Code. JS 2. No changes required to Rules of Procedure. JS 3. After the DRWG meeting staff became aware that there is actually no allowance for land banks to bank without a parcel. What is allowed is for them to keep their own tracking and accounting system without TRPA approval of transfers which essentially creates the same flexibility (see 6.3.2). Hence, the only change to the Code is removing the requirement for a project approval. Land banks are designated by TRPA (see 6.9.1). JH 4. Assignment of a bonus unit per Chapter 52 and shall occur only in conjunction with a project approval. JS 5. No provision requiring an application was included in the original text for conversion exchange rates, so none is included in the revised text. JH 6. The text in B.2 is based on the text in JH 7. Exchange rates proposed as part of the DRWG recommended alternative would only impact TAU, CFA, and RUU development rights. Other development rights (such as, coverage, residential development rights, allocations, PAOT, etc.) would not be eligible for exchange rate conversions under the proposed alternatives. JS Page 56

57 Page 57 Attachment B: Estimated Existing Development Rights 2018 Totals* Jurisdiction Estimated Existing CFA Agency Total Built CFA Banked** Total Built & Banked 5% of Built CFA 5% of Banked CFA 5% of Built CFA and Banked CFA Carson City City of South Lake Tahoe 2,887,659 79,728 2,967, ,383 3, ,369 Douglas 702,263 9, ,552 35, ,578 El Dorado 329, ,044 16, ,452 Placer 1,304,931 26,992 1,331,923 65,247 1,350 66,596 Washoe 1,204,467 48,750 1,253,217 60,223 2,438 62,661 TOTALS 6,428, ,759 6,593, ,418 8, ,656 Jurisdiction Estimated Existing TAUs Agency Total Built TAUs Banked** Total Built & Banked 5% of Built TAUs 5% of Banked TAUs 5% of Built TAUs and Banked TAUs Carson City City of South Lake Tahoe 5, , Douglas 2, , El Dorado Placer 1, , Washoe TOTALS 10, , Jurisdiction Carson City City of South Lake Tahoe 15, , Douglas 4, , El Dorado 8, , Placer 11, , Washoe 7, , TOTALS 47, ,254 2, ,363 *Estimated existing inventory as of April 13, Estimated Existing ERUs Agency Total Built ERUs Banked** Total Built & Banked 5% of Built ERUs **Banked includes development rights that may have been transferred from a sending site and not yet built on a receiving site. 5% of Banked ERUs 5% of Built ERUs and Banked ERUs DRWG Meeting #7 Agenda Item VI.B, Attachment B

58 Page 58

59 Attachment C: Revised conversion exchange rates Summary As part of the Development Rights Strategic Initiative (DRSI), the Development Rights Working Group (aka Working Group) recommended establishing an exchange rate for converting development rights between different land use types in a manner that can be consistently and feasibly implemented across the Lake Tahoe Basin. Allowing the conversion, or exchanging, of one type of development to another provides greater flexibility, significantly simplifies the system, and expands the available supply for needed development rights while still maintaining the overall development cap set forth in the Lake Tahoe Regional Plan. The development rights system is a central part of TRPA s growth management system and an important strategy used to attain multiple environmental thresholds. Therefore, the key objective in establishing conversion exchange rates is to determine appropriate exchange ratios that are environmentally neutral. In 2015, the TRPA Governing Board approved the CFA/TAU pilot program discussed in the Pilot Program Reporting section above. The goal of the pilot program was to develop a conversion ratio based on regional variations rather than project level differences in hypothetical projects. As part of this program and analysis, TRPA staff considered comparative differences of VMT, development size (or floor area) differences, differences in localized trip generation rates, and occupancy rates related specifically to CFA and TAU conversions. TRPA found the most feasible common metric among the environmental thresholds was localized trip generation. The table below is from the analysis for that pilot program. Examination of Regional Impact Differences Between Bonus CFA and Tourist Bonus Units and Representative Indicators by Threshold Category Threshold Category Type of Impact Indicator (Examination Notes) Indicators with a Potential Regional Difference, Not Addressed through Project Level Permitting/Mitigation Air Quality Emissions from additional vehicle trips Localized Trip Generation (Mitigated through Air Quality Mitigation Fee) _ Noise Noise from additional trips Localized Trip Generation Localized Trip Generation Recreation Indirect effects on recreation quality or access from additional vehicle trips for redevelopment in close proximity to recreation facilities Localized Trip Generation (Depends on project) Localized Trip Generation Page 59 DRWG Meeting #7 Agenda Item VI.B, Attachment C

60 Water Quality Stormwater runoff from impervious surfaces Stormwater Best Management Practices (BMPs) Certificate (Required for new projects), Localized Trip Generation* (Mitigated through the Water Quality Mitigation Fee) _ Soil Conservation Vegetation Fisheries Wildlife Scenic Coverage associated with each commodity Indirect effects on vegetation from coverage Indirect effects from stormwater runoff Indirect effects on habitat from coverage Indirect effects on scenic quality associated with the size of each commodity Building Footprint (Coverage is mitigated, commodity size can vary) Building Footprint (Same as above) BMP infrastructure Certificate (required), Localized Trip Generation* Building Footprint (Coverage is mitigated, commodity size can vary) Building Setbacks, Building Height, and Site Design (new project requirements mitigate these impacts) Commodity Size Commodity Size Localized Trip Generation Commodity Size *Both commercial and tourist uses fall in the same TMDL pollutant loading land use category (Lake Tahoe TMDL Technical Report, 2010, California Regional Water Quality Control Board, Lahontan Region and NDEP). In general, these uses are assumed to have comparable pollutant loading. The proposed exchange rates presented to the Development Rights Working Group in February 2018 applied these Board approved, localized CFA/TAU rate to all development rights and rounded values for ease of administration as shown in the table below. Existing Development Right 450 sq. ft. Commercial Floor Area (CFA) 1 Tourist Accommodation Unit (TAU) 1 Single Family Detached Dwelling Unit (SF) 1 Multi Family Attached Dwelling Unit (MF) Proposed Exchange Rates (February 2018) Equivalent Development Rights CFA TAU SF MF 450 sq. ft sq. ft sq. ft sq. ft As part of the environmental analysis, TRPA in consultation with PlaceWorks, analyzed the potential and relative impact of the proposed conversions under worst case scenarios. (i.e. if all development rights were converted to a single form of development right) Staff first calculated the existing and potential trips from existing development and total development potential as allowed under the Lake Tahoe _ Page 60 DRWG Meeting #7 Agenda Item VI.B, Attachment C

61 Regional Plan. This analysis used nationally recognized trip generation figures for each type of development. Existing Development Existing & Potential Trips Est. Total Existing Trips Total Potential Development Est. Total Potential Trips CFA SF 6,428, ,651 7,149, ,509 TAU Units 10, ,935 12, ,560 Residential Units SF (Assume 80%) 37, ,279 40, ,155 MF (Assume 20%) 9,409 62,567 10,219 67,959 Total Existing Trips 727,432 Total Potential Trips 799,183 SF= Single Family Dwelling; MF = Multi Family Dwelling Then, using the total development potential and estimated total potential trips in the table above, staff analyzed potential trip change if all development rights were converted to a single development type under the proposed exchange rates. Estimated Trip Change Using Proposed Exchange Rates (Feb 2018) Percent Change from Scenarios Total Est. Trips (799,183) Converted all to CFA 34,010,659 CFA trips 1,077,458 35% increase Converted all the TAU 75,579 TAU Trips 727,828 9% decrease Converted all to SF 76,066 SF trips 724,147 9% decrease Converted all to MF 109,592 MF trips 728,786 9% decrease In reviewing the calculations and the data used in the 2015 pilot program, TRPA recognized two key adjustments built into the CFA/TAU conversion pilot program were causing the discrepancy in trips when applied to the entire system. The first adjustment was to capture the unique mix of commercial establishments vis à vis the mix used to create the Institute of Transportation Engineers (ITE) trip generation rates (i.e. eliminating intermodal truck terminal, automobile racetrack and other land uses that do not exist nor would be permitted in the Lake Tahoe Basin). The other adjustment was to reflect the significantly lower occupancy rate for hotels and motels in the Basin compared to the occupancy rates underlying the ITE trip generation rates. Page 61 DRWG Meeting #7 Agenda Item VI.B, Attachment C

62 Recommendation TRPA staff and PlaceWorks recommend keeping the commercial establishments adjustment as it better reflects the unique characteristics of the Tahoe Basin. However, we propose removing the occupancy adjustment because that rate is not stable (i.e., it will change with the market and conversions) and to be consistent for all conversions we would need to include occupancy rates and their inherent instability for the other types of development rights if their rates were different than those underlying the ITE trip generation rates. The recommended rates are in the following table. Land Use Trip Generation by Land Use Type ITE Est.Trip Generation Unit of Measure Single Family Detached Housing 9.52 per unit Multi Family Detached Housing 6.65 per unit Commercial Floor Area* per 1,000 sq.ft. Tourist Accommodation Unit 9.63 per room/unit * Adjusted to reflect commercial land uses specific to the Lake Tahoe Basin. Using these trip generation rates, TAUs generate effectively the same number of trips as single family dwellings, but more than multi family dwellings. That is the basis for distinguishing between single and multi family residential units. Staff then developed revised exchange rates using the worst case scenarios (i.e., all development converted to a single type) as a starting point and with the constraint that the difference in trips being negligible (i.e., 5% or less). To result in no change (i.e., 0%) in trips using these extreme scenarios, the revised exchange rates would be the following: Existing Converted to CFA Existing Converted to TAU 1 TAU CFA SF SF MF MF 1.45 Existing Converted to SF Existing Converted to MF 1 CFA CFA TAU 0.99 TAU MF 1.43 SF 0.69 For ease of administration, TRPA rounded these numbers to whole integers or to the nearest tenth to develop the revised exchange rate table below. These revised rates result in a negligible impact under the worst case scenario as shown in the next table. These revised rates are proposed for inclusion in the Development Rights Working Group recommendation and the Technical Code Team s amendments. Page 62 DRWG Meeting #7 Agenda Item VI.B, Attachment C

63 Existing Development Right 300 sq. ft. Commercial Floor Area (CFA) 1 Tourist Accommodation Unit (TAU) 1 Single Family Detached Dwelling Unit (SF) 1 Multi Family Attached Dwelling Unit (MF) Revised Exchange Rates (April 2018) Equivalent Development Rights CFA TAU SF MF 300 sq. ft sq. ft sq. ft sq. ft Estimated Trip Change Using Revised Exchange Rates (Apr 2018) Percent Change from Scenarios Total Est. Trips (799,183) Converted all to CFA 25,057,079 CFA trips 793,808 1% decrease Converted all the TAU 83,524 1% increase TAU Trips 804,332 (negligible) Converted all to SF 83,524 SF trips 795,145 1% decrease Converted all to MF 116,472 MF trips 774,542 3% decrease It is important to note that the revised exchange rates are based on a very conservative approach that reflects the maximum theoretical number of trips to ensure the exchange rates are neutral in terms of environmental impact. However, recent traffic analysis demonstrates the actual trips resulting from the built development in the Basin are roughly half of those estimated using this approach. 1 The main reason for these differences is lower than average occupancy rates for residential (i.e., high rate of absentee ownership) and lodging properties in the Tahoe Basin. The Working Group s recommendations do not include changes to the Code that would conflict with the assumptions and analysis, including the total possible build out or development cap, of the Final EIS for the 2012 Regional Plan Update. Hence, it is not anticipated that potential impacts would be considered significant, requiring the preparation of an EIS. It is also important to note that the environmental analysis used to develop the exchange rates would not replace project level environmental review and mitigation that would be required for projects that have any additional development or a change in use. 1 The 2014 VMT monitoring and 2016 traffic volumes analysis suggest actual trips may be closer to 388,000, rather than the 727,000 trips estimated from ITE standards. Page 63 DRWG Meeting #7 Agenda Item VI.B, Attachment C

64 Pursuant to the TRPA Code of Ordinances, any additional development or change in use that would result in a significant increase in daily vehicle trips (200 daily trips) is required to have a technical analysis of potential traffic and air quality impacts. Any project that would result in 100 additional daily trips is required to be reviewed and approved by a Hearings Officer with public notice. And, any project that would result in 200 additional daily trips is required to be reviewed and approved by the Governing Board with public notice. For these reasons, TRPA and PlaceWorks anticipate that an expanded Initial Environmental Checklist (IEC) will be adequate to address potential impacts from the proposed Code amendments, similar to the Commercial Floor Area /Tourist Bonus Unit Conversion Pilot Program IEC. Page 64 DRWG Meeting #7 Agenda Item VI.B, Attachment C

65 MEMORANDUM DATE TO FROM SUBJECT Development Rights Working Group Alyssa Bettinger, Jennifer Self, and John Hester, TRPA Charlie Knox, Ashley James, and Steve Gunnells, PlaceWorks Expanding Eligibility of the Residential Bonus Units Program (Agenda Item VI.C) Requested Action The Development Rights Strategic Initiative team requests that the Working Group provide comments and direction on a recommendation to the Governing Board for expanding eligibility for residential bonus units, including establishing a definition of Local Achievable Housing. Background As part of the Development Rights Strategic Initiative (DRSI), the Development Rights Working Group (aka Working Group) recommended expanding the eligibility of the residential bonus unit pool. Specifically, this recommendation included increasing the allowed income level for bonus unit occupants due to the significant gap between wages and housing costs in the Lake Tahoe Basin. Today, the average median price of a single family home in the Basin is $720,000, whereas the area median income is only $63,800. The affordability gap between the existing housing prices and what households earning the median income can actually afford is roughly $475,000. Furthermore, there is a significant unmet need for housing supply for the local workforce and lower income individuals. Regional partners in Truckee and North Tahoe estimate an unmet need of about 12,160 housing units in that area. 1 Given the geographical area, high percentage of in commuters (33% of the total workforce) and reliance on the tourism and service industry in the Lake Tahoe Basin, the regional need could be similar to, or exceed, this figure. 2 Due to high construction and land acquisition costs, certain types of desired redevelopment may be limited or occur at a slower pace compared to market driven development. This includes moderately priced workforce housing, development in town centers including mixed use development, removal or redevelopment of aging buildings, and other development that provides the greatest community and environmental benefits. The economic analysis shows that in many cases prevalent rents and land values are more limiting than the burden of development rights from a financial perspective. TRPA may have limited ability to spur these types of development with development rights tools. However, 1 Mountain Housing Council, Policy #1 Recommendation: Achievable Local Housing, Feb. 20, 2018, 2 Stantec, Linking Tahoe: Corridor Connection Plan, August 2017, pg.9. DRWG Meeting #7 Agenda Item VI.C Page 65

66 development rights are a cost, and TRPA s ability to provide incentives that reduce that cost are important. The recommendations set forth by the Working Group, including the expansion of the residential bonus unit pool, have been hailed by the local development community as a step in the right direction ; however, affordable housing and smart redevelopment, like many community challenges, require a collective approach that goes beyond the bounds of the Development Rights Strategic Initiative and there is no silver bullet. The recommendations presented in this memo are premised with the understanding that these relate specifically to the scope of this initiative and the development rights system. The purpose of this memorandum is to provide a summary of the TRPA bonus unit allocation system, the methodology used to determine the housing affordability gap, and a recommendation to the Working Group for expanding the eligibility of bonus units to address that gap. Existing TRPA Incentives for Affordable and Moderate Income Housing Consistent with national standards, affordable housing is currently defined in the TRPA Code of Ordinances as accommodating households earning below 80 percent of the respective county s area median income (AMI), and the Code defines moderate income as between 80% and 120% of AMI. Code section designates up to 1,400 residential bonus units that may be awarded by TRPA to multi family residential projects that are considered affordable or moderate income. The units are awarded at no cost and replace otherwise required development rights either wholly or in part. To further incentivize affordable housing (below 80% AMI), TRPA does not require residential allocations for these types of units, as shown in Table 1. TABLE 1. EXISTING BONUS UNIT INCENTIVES FOR AFFORDABLE AND MODERATE INCOME DEVELOP MENTS Residential Bonus Unit + Allocation = Residential Unit of Use Bonus Unit Development Right Affordable < 80% AMI Moderate Income 80% 120% AMI Allocations Exempt DRWG Meeting #7 Agenda Item VI.C Page 66

67 For example, as shown in Table 2, a proposed 20 unit mixed income housing development on vacant land with 25% affordable units, 25% moderate income, and 50% market rate units would need to obtain the following development rights: TABLE 2. DEVELOPMENT RIGHTS NEEDED FOR HYPOTHETICAL HOUSING DEVELOPMENT Housing Type per Unit Number of Units Number/Type of Development Rights Needed Affordable 5 0 Moderate Income 5 5 Residential Allocations Market Rate Residential Units of Use (Probably 9* Residential Development Rights + 10 Residential Allocations) Total *Most parcels in the Tahoe Basin have one associated residential development right. (TRPA Code Section ) To date, TRPA has awarded more than 150 multi family residential bonus units (or 10% of the total pool) to both single family 3 and multi family housing developments under this incentive program. Table 3 lists a few examples of affordable multi family housing developments that have taken advantage of this incentive program: TABLE 3. EXAMPLES OF AFFORDABLE HOUSING DEVELOPMENTS IN THE LAKE TAHOE BASIN Project Name Location Number of Affordable Units The Aspens 3541 Pioneer Trail, City of SLT 55 Kelly Ridge Senior Housing 1447 Herbert, City of SLT 32 Aspen Grove 172 Michelle Drive, Douglas County 39 Domus Various Locations, Placer County 44 The Aspens, City of South Lake Tahoe Domus, Kings Beach, Placer County Source: housing Source: 3 TRPA awarded one residential bonus unit to a single family residence in the City of South Lake Tahoe in accordance with the City s Moderate Income Housing Program, previously certified by TRPA. DRWG Meeting #7 Agenda Item VI.C Page 67

68 Beyond Affordable & Moderate Income Sometimes referred to as the missing middle, many local households earn too much to qualify for traditionally defined affordable and moderate income housing (80% and 120% of area median income, or AMI, respectively), but too little to afford the median priced multi family or single family home. The Mountain Housing Council (MHC) of the North Tahoe Truckee Region is a collaborative of 29 diverse stakeholders who are developing policy recommendations and solutions related to housing availability, variety, and affordability. MHC put forward their first policy recommendation earlier this year. This recommendation encourages local jurisdictions to adopt an expanded definition of affordability Local Achievable Housing that would include missing middle households earning up to 195% of AMI. Adopting the new definition and developing specific implementation strategies is left to jurisdictions to serve housing needs where state and federal funding falls short. According to a report completed by Wendy Sullivan, a planning consultant specializing in affordable housing market research and strategies, mountain resort communities often have upwards of 60% of housing units owned by second homeowners or otherwise occupied by visitors. These communities are susceptible to becoming ghost towns during times of low tourism activity and to losing businesses and amenities necessary to support resident households. This affects not only the quality of life for existing residents, but can adversely affect the visitor experience and second homeowner investment in an area 4 Common reasons for promoting affordable and below market priced housing in resort communities range from: 5 Boosting the resident base and increasing household diversity to build and maintain a sense of community; Housing essential workers healthcare, emergency services and education to improve the quality of such services for residents and visitors; Decreasing seasonal fluctuations in the local economy by providing a local resident base that can support local businesses throughout the year; and Improving employee satisfaction, decreasing job turnover and reducing commutes by allowing workers to reside in or near the community in which they work. While some communities use the term workforce housing to describe programs that promote affordability among moderate and middle income residents, MHC recommends using a more 4 Wendy Sullivan, The Impact of Affordable Workforce Housing on Community Demographics, Economies, and Housing Prices and Options, Jan Ibid. DRWG Meeting #7 Agenda Item VI.C Page 68

69 flexible term, Local Achievable Housing, to include retirees, or persons who earn their incomes locally in non traditional formats or are unable to work full time or at all. Workforce housing is typically defined as ownership or rental units that are considered affordable to the moderate and middle income residents of a community (e.g., public employees, young professionals, construction, retail and service workers) who earn 60% to 120% AMI and are located in close proximity to their jobs. 6 The Department of Housing and Urban Development (HUD) sets income limits that determine eligibility for assisted housing programs based on AMI estimates and Fair Market Rent area definitions at the county level and by metropolitan area. 7 In the Tahoe Basin, these areas are: Placer, El Dorado, Douglas and Washoe counties. HUD sets income limits by family size and percent of AMI and provides Federal assistance at the three income levels within the affordable category shown below. Households earning above 80% AMI are eligible for limited state and local assistance, while households earning above 120% do not receive government assistance. According to HUD, a household that spends more than 30% of its gross monthly income on housing is considered cost burdened. 8,9 MHC estimated a family of four would need to make 195% AMI to purchase a home within the North Tahoe Truckee Region without becoming cost burdened. The MHC methodology consisted of (1) multiplying the annual area median income of a family of four by a buying power value of to calculate the affordable home price, then (2) subtracting that number from the median home price to determine the affordability gap. 6 Urban Land Institute, ULI Land Use Policy Forum Report, Workforce Housing: Barriers, Solutions, and Model Programs, prepared by Richard M. Haughey, 7 U.S. Census Bureau American Community Survey. 8 Cost burdened implies the household may have difficulty affording necessities (e.g., food, clothing, transportation, medical care). 9 U.S. Department of Housing and Urban Development (HUD), Program Offices, Community Planning and Development, Affordable Housing, 10 The 3.79 multiplier assumes 3.5% down payment, a 30 year fixed rate mortgage at 4.0 percent interest rate, which would require payment of mortgage insurance (upfront and annual). It applies standard assumptions regarding property taxes and homeowner s hazard insurance, and no more than 30% of household income dedicated to housing costs. DRWG Meeting #7 Agenda Item VI.C Page 69

70 Other Mountain Resort Communities Similar to MHC, four other peer resort communities Aspen, Breckenridge, Park City, and Vail have already expanded their definition of the maximum AMI needed to qualify for affordable housing programs. 11 As shown in Table 4, the high cost of housing in these regions justifies subsidies for households earning more than the HUD maximum of 120% AMI, with qualifying households in Aspen as high as 235% AMI. These programs have lent support to MHC s recommendation for 195% AMI within the North Tahoe Truckee Region and likewise support application of a similar methodology to the Lake Tahoe Basin 12 which is presented in this memo. PlaceWorks staff additionally reviewed existing deed restrictions and enforcement mechanisms in Telluride, Colorado, Park City, Utah, and Summit County, Colorado to evaluate potential applicability for policies in those programs to the Tahoe Basin. Findings from this research are discussed in the Recommendations section of this memo. TABLE 4. PEER COMMUNITY AFFORDABLE HOUSING PROGRAM ELIGIBILITY INCOME LEVELS Peer Community Aspen Park City Vail Breckenridge Maximum AMI 235% 195% 160% 160% Source: Mountain Housing Council, Draft October 17, Policy Brief Case for Expanding the Definition of Affordable Housing to Include Missing Middle Needs in the Tahoe Truckee Region, page 3. Positive Impact of Workforce Housing in Breckenridge, CO (Summit County) In 2014, the town of Breckenridge, Colorado partnered with Wendy Sullivan to complete a study to examine the impact that targeted workforce housing development had on the community s demographics, local economy and housing affordability. Affordable housing began being constructed in 1997, with the majority of deed restricted ownership housing being built since A summary of her findings is shown below and demonstrates the positive impact workforce housing development can have on a community s well being and environmental thresholds. The provision of housing affordable to the workforce in Breckenridge shows that workforce housing programs can have a significant impact on the demographics, economy and housing affordability in a community. For example, in Breckenridge, households residing in workforce units are more likely to have children, be younger on average, have resided in the area less than 10 years and report that their homes are in better condition than those in market rate housing. Between 2000 and 2010, the development of workforce housing: Helped increase the number of families with children within town, accounting for 60% of the growth in these households; Helped the town address second homeowner pressures and increase local occupancy of homes from 25% in 2000 to 28% in 2010; Significantly helped essential workers purchase homes in town (healthcare, emergency services, education and childcare); 11 Using HUD affordability standard (30% gross income/housing cost ratio) to their respective median home price) 12 Mountain Housing Council of Tahoe Truckee, December 15, Draft Policy Brief: Case for Expanding the Definition of Affordable Housing to Include Missing Middle Needs in North Tahoe Truckee Region, page 5. Page 70 DRWG Meeting #7 Agenda Item VI.C

71 Decreased in commuting by potentially 100,000 vehicle miles each week; Increased local area expenditures by potentially $15 million per year by increasing the number of year round occupants in town; and Provided locals with a variety of housing options and price points that, overall, held their value better during the housing recession and were much less susceptible to foreclosure than market rate units. 13 Regional Housing Need by Household Income Level in the Lake Tahoe Basin To formulate a recommended definition of Local Achievable Housing for the Lake Tahoe Basin, the DRSI team gathered data on household income levels, median single and multi family home price, and median rent within the Basin, which is presented in Tables 5 through 9. The team then applied the same framework and calculations used by MHC and peer resort communities to determine the affordability gap in the Basin, or the difference between what a household earning the median income could afford and the actual median home price. This data helps to define the missing middle income level for each county in the Basin. The City of South Lake Tahoe is included in the El Dorado County data. 14 To illustrate how the Mountain Housing Council s framework was applied to the Basin, the example below shows the affordable home price at various income levels for El Dorado County. The buying power shown is consistent with the MHC recommendation, and assumes several factors including down payment, mortgage interest rate, taxes and fees, and cost burden. A household earning the median income in El Dorado County ($51,491) could afford to pay $195,151 for a home 15 ; however, the median single family home price in the county is $439,000, an affordability gap of $243,849. The affordability gap in El Dorado County for buying a multi family home at the median price of $330,000 is estimated at $134,849. To afford a single family home in El Dorado County, a family of four would need to earn 225% of the area median income. 13 Wendy Sullivan, The Impact of Affordable Workforce Housing on Community Demographics, Economies, and Housing Prices and Options, Jan Population characteristics are similar in El Dorado County and the City of South Lake Tahoe, as compared with other counties in the Basin. In addition, grouping the City of South Lake Tahoe with El Dorado County will streamline the data collection process. 15 Applying the framework described in the Mountain Housing Council Report. Page 71 DRWG Meeting #7 Agenda Item VI.C

72 TABLE 5 & FIGURE 6. BUYING POWER FOR SINGLE FAMILY HOME BY INCOME LEVEL (EL DORADO COUNTY) Income Level for Family of 4 Annual Income Buying Power Affordable Home Price Median Multi Family Home Price Median Single Family Home Price Affordability Gap (single Family) 80% AMI $41, $156,121 $330,000 $439,000 ($282,879) 100% AMI $51, $195,151 $330,000 $439,000 ($243,849) 169% AMI $87, $330,000 $330,000 $439,000 ($109,000) 225% AMI $115, $439,000 $330,000 $439,000 $0 Source: ESRI Business Analyst 2017 forecast, CoreLogic Listsource Tables 7, 8, and 9 below illustrate the affordability gap between area median income and housing prices for each county. The Local Achievable row lists the percent of AMI a household would need to earn to afford the median priced multi family and single family home. The percentage of AMI is much higher in counties like Washoe County, where the median single family home price of $1,097,500 is significantly higher than what can be afforded by a family earning the median income of $70,706 a year. TABLE 7. REGIONAL AFFORDABILITY GAP BY COUNTY FOR SALE MULTI FAMILY UNITS Douglas, NV El Dorado, CA Placer, CA Washoe, NV Area Median Income $68,359 $51,491 $64,642 $70,706 Median Multi Family Unit Sale Price Affordability Gap $318,450 $330,000 $343,750 $430,000 ($7,553) ($134,849) ($98,757) ($162,024) Local Achievable AMI Percentage 123% 169% 140% 160% Source: ESRI Business Analyst 2017 forecast, CoreLogic Listsource Page 72 DRWG Meeting #7 Agenda Item VI.C

73 TABLE 8. REGIONAL AFFORDABILITY GAP BY COUNTY FOR SALE SINGLE FAMILY UNITS Area Median Income Median Single Family Home Sale Price Affordability Gap Douglas, NV El Dorado, CA Placer, CA Washoe, NV $68,359 $51,491 $64,642 $70,706 $812,500 $439,000 $530,000 $1,097,500 ($553,419) ($243,849) ($285,007) ($829,524) Local Achievable AMI Percentage 314% 225% 216% 410% Source: ESRI Business Analyst 2017 forecast, CoreLogic Listsource As shown in Table 9, median rent is affordable to households earning the area median income only in Douglas County; the affordability gap ranges from $313 per month in El Dorado County to $369 in Placer County. TABLE 9. REGIONAL AFFORDABILITY GAP BY COUNTY RENTAL UNITS (SINGLE & MULTI FAMILY) Douglas, NV El Dorado, CA Placer, CA Washoe, NV Area Median $68,359 $51,491 $64,642 $70,706 Income (AMI) Median Rent $1,700 $1,600 $1,985 $2,100 Maximum Affordable Monthly Rent a $1,710 $1,287 $1,616 $1,768 Affordability Gap $10 ($313) ($369) ($332) Local Achievable AMI Percentage 99% 124% 123% 119% Source: 2018 Craigslist sample, ESRI Business Analyst, 2017 forecast a Affordable Rental Rate is based on HUD affordability standard: 30% of gross monthly income; rent does not include utility costs. According to data gathered from the U.S. Census, about one half of regional households are currently eligible for the TRPA Residential Bonus Unit Incentive Program (those earning up to 120% AMI). Another 28% of local households which earn between 121% 220% AMI may also experience lack of available, achievable housing. Table 10 shows the number of households among a range of income categories (between less than 30% to more than 220% AMI) per county within the region. Page 73 DRWG Meeting #7 Agenda Item VI.C

74 TABLE 10. HOUSEHOLD INCOME IN THE TAHOE BASIN BY COUNTY a Qualify for Existing TRPA Bonus Unit Incentives Household Income Category Extremely Low b ( 30% AMI) Very Low b (>30% 50% AMI) Low b (>50% 80% AMI) Moderate b (>80% 120% AMI) Above Moderate b (>120% 150% AMI) Local Achievable c (150% 190% AMI) (190% 220% AMI) Douglas, NV El Dorado, CA Placer, CA Washoe, NV Percent of Total Households in the Basin 225 1, % 420 1, % 340 2, % 355 1, % 255 1, % 285 1, % % (>220% AMI) 395 1, % TOTAL NUMBER OF 2,435 11,580 3,345 3, % HOUSEHOLDS Source: U.S. Census ACS 5 Year Variable B Notes: a. The data in this table is an estimate. It is collected at a Census tract level and does not provide enough detail to represent the precise number of households in each income category. b. HUD defined income level c. MHC proposed income level Recommendation on Local Achievable Housing for the Lake Tahoe Region The DRSI team recommends adopting the term local achievable to refer to the missing middle in the Lake Tahoe Basin and expanding the eligibility of residential bonus units to higher income brackets for each county. Using eligibility criteria specific to each county accounts for the unique affordability gap in each county. Dwelling units restricted to rent or purchase by households earning up to the recommended AMI per county would be eligible to use residential bonus units. Table 11 shows the recommended percentages for Local Achievable Housing for each county in the Basin. This recommendation was calculated using the average AMI percentages for single and multi family homes, shown in Table 7 and 8. By using the average of the single and multi family percentages, there will essentially be a greater incentive for multi family units. Page 74 DRWG Meeting #7 Agenda Item VI.C

75 TABLE 11. RECOMMENDED MAX. PERCENTAGE FOR LOCAL ACHIEVABLE BONUS UNITS BY COUNTY County Douglas, NV El Dorado, CA Placer, CA Washoe, NV Local Achievable AMI Percentage 220% 195% 190% 275% Further recommended eligibility criteria and conditions of approval are discussed in the subsections below. Bonus Units and Residential Allocations Under the existing incentives, affordable units are awarded a bonus unit development right at the time of the project 16 and are exempt from a residential allocation. Moderate income units are awarded a bonus unit development right at the time of the project and must obtain the necessary residential allocations from the local jurisdiction or by retiring a sensitive lot. According to local developers and project proponents, it is challenging to achieve a return on investment of greater than 10% for moderate income development projects due to the competition for residential allocations, below market rental or sales rates, and lack of federal or state subsidies for this type of residential development. (Typically, an ROI of 15% is considered the minimum.) Furthermore, there is a limited supply of residential allocations from local jurisdictions. The City of South Lake Tahoe for example has implemented a program to designate a certain percentage of their residential allocations to multi family. Today, the City only has approximately 50 residential allocations available for multi family projects. One proposed workforce housing development project estimates they may need as many as 76 units to make the project financially feasible. Consistent with the direction from the Working Group and based on the analyses above, the DRSI team recommends expanding the eligibility for residential allocations in addition to the residential bonus units from the existing TRPA residential allocation pools. It is important to note this would not change the overall development cap set forth in the Lake Tahoe Regional Plan. Table 12 shows the current and proposed requirements to obtain a residential unit of use under the Residential Bonus Unit Program. Under the proposed system, developers of moderate income units would be required to obtain half of the needed allocations from the local jurisdiction, and TRPA would match the remaining half from the existing residential allocation pool at no cost. This incentive would decrease costs for developers of moderate income housing, while still providing a greater incentive at the affordable housing level. Additionally, local governments would only need to provide half of the necessary allocations for moderate income housing projects to be constructed in their jurisdictions. If implemented, these incentives together would consist of awarding a bonus unit at all affordability levels and tiered incentives for residential allocations. 16 TRPA Code of Ordinances, Section , Requirement of Residential Allocation. Page 75 DRWG Meeting #7 Agenda Item VI.C

76 TABLE 12. AFFORDABLE AND MODERATE INCOME HOUSING BONUS UNIT INCENTIVES Residential Bonus Unit + Allocation = Residential Unit of Use Affordable < 80% AMI Moderate Income 81% 120% AMI Local Achievable 121% 275% AMI Bonus Unit Development Right Allocations The Residential Bonus Unit Incentive Program reserves a total of 1,400 multi residential bonus units, with 200 units (14% of the total) currently designated for moderate income (80% to 120% AMI) housing projects. 17 As directed by the Working Group at the September 2017 and February 2018 meetings and consistent with the analyses above, half of the bonus unit pool (or 700 bonus units) should be reserved for affordable housing development (up to 80% AMI) as shown in Table 13. This targets the greatest need in the community today roughly 40% of households in the Basin meeting the standards for low, very low, or extremely low income (<30 80% AMI). This reservation is intended to continue incentivizing lower income housing development. The remaining 700 bonus units should be used for either moderate income or local achievable local households. TABLE 13. RECOMMENDED BONUS UNIT INCENTIVES Percent of AMI Affordability Level Recommended Incentives Up to 80% Affordable Bonus unit awarded No allocation required Bonus unit awarded % Moderate Income 50% local jurisdiction match / 50% TRPA Maximum Number of Bonus Units Available Bonus unit awarded %* Local Achievable Residential allocation required Total 1,400 *Table represents maximum AMI in the Basin. Washoe County is at the highest AMI (275%), other counties have a lower AMI. Source: TRPA Code of Ordinances, Section 52.3, Multi Residential Incentive Program. 700 match needed residential allocations TRPA Code of Ordinances, Chapter 52, Bonus Unit Incentive Program. Page 76 DRWG Meeting #7 Agenda Item VI.C

77 Enforcement According to subject matter experts who work within the field of affordable housing and planning, enforcement of housing programs for lower income individuals is the number one challenge in ensuring local attainable housing program success and effectiveness. Many mountain resort communities the DRSI team researched for this policy memo have a designated housing authority, development corporation, or housing task force that assist communities or individuals with housing financing and loan assistance, long term housing solutions, education, program development, monitoring, and enforcement. Most of these housing authorities are governmental or non profits operating at the county level. Absent of a housing authority in the Lake Tahoe Basin, it is important that the appropriate enforcement mechanisms are put in place to ensure compliance with the residential bonus unit program and that housing developments receiving incentives from the program are using them as intended. In addition, TRPA should continue to support and complement ongoing housing programs within the local jurisdictions. As part of the Working Group s recommendation to expand eligibility of the residential bonus unit pool, the DRSI team recommends the following enforcement strategy comprised of four main components: deed restrictions, disclosure forms, guidelines and education, and compliance reporting. Deed Restrictions The most common enforcement mechanism used to ensure compliance with affordable housing programs in peer resort communities is a deed restriction to be recorded against the property or residential unit. In Summit County, Colorado for example, a residential housing restrictive covenant and notice of lien is recorded between the property owner and local jurisdiction and remains on the title to the property. (See Attachment B for Summit County restriction.) Such deed restrictions clearly articulate the intent of the local housing program, limitations and restrictions on the use of the property (including ownership, occupancy, sale and rental restrictions), specific resale requirements, enforcement, and other general provisions. The Regional Plan states that residential units developed using residential bonus unit incentives must remain permanently within the program. 18 Under the existing program, project applicants agree to sell or rent at rates that are appropriate to accommodate the applicable income level by acknowledging the permit and recording a deed restriction against the property. 19 The approval for use of the bonus unit and deed restriction are binding and remain in place even if the property or unit changes ownership. The DRSI team recommends the bonus units provided through this new expanded definition of local achievable and higher AMIs also be subject to this deed restriction. Additionally, the team recommends adding language to the deed restriction template for affordable, moderate income, and local achievable bonus units that further articulates the intent of the program limitations and restrictions on the use of the property (including ownership, occupancy, sale and rental restrictions), specific resale requirements, enforcement, and other general provisions. 18 TRPA Regional Plan, adopted December 12, Policy HS TRPA Code of Ordinances Section B Page 77 DRWG Meeting #7 Agenda Item VI.C

78 Real Estate Transaction Disclosure Forms Beginning in 2000, TRPA required owners of properties for sale to disclose to the purchaser the property s stormwater infiltration (or BMP) status. 20 The disclosure form educates the new owner on stormwater requirements under the TRPA Code of Ordinances and warns that non compliance could be met with substantial fines. These disclosure forms are signed by the purchaser and submitted to TRPA. The DRSI teams recommends requiring a bonus unit disclosure form at the time of sale for any property that is sold to make the purchaser aware of property restrictions and use of the affordable, moderateincome or local achievable residential unit(s). The disclosure form should include a fine, like the BMP disclosure form, to warn property owners of non compliance and help ensure compliance. Since the objective of the bonus unit program is to make housing available at the income levels described above, it is recommended that an annual fine be imposed that will act to deter violation of the deed restriction in the first place and incentivize compliance with it if the restriction is violated. If the average length of time a first time buyer stays in a home is used (i.e., 11 years), and the penalty for that period is equal to the cost of a residential unit of use (RUU) development right (i.e., residential development right plus an allocation), the annual fine would be 1/11 of the RUU cost. Assuming the RUU cost is $35,000, the annual non compliance fine would be $3,182 (i.e., $35,000/11 = $3,182). The DRSI team recommends an annual fine that would automatically adjust to reflect the change in the cost of a RUU. The annual fine would be 1/10 of the current RUU cost so the cost would be recovered within the 11 year period. Additionally, the proceeds should be limited to purchasing additional development rights to replace those in the bonus unit pool plus administrative costs not to exceed 20% of the fine. Using the example $35,000 figure from above, a violator would be fined $3,500 per year. The fine would be levied annually as long as the unit is rented to, or owned by, a family that does not meet the income requirement. Guidelines & Education Code Section B also provides limitations on sales or rental rates for deed restricted properties. Projects must be reviewed by TRPA Certified Local Jurisdiction Moderate Income Housing Programs to determine the appropriate income and sales price limit. If there is not a Program in place, the Code assigns a buying power of 4.2 X 120% of median household income to calculate the maximum allowed sales price; rental rates are restricted to a maximum of 30% of gross monthly income. The Working Group should consider simplifying and making the rental or sale price controls for the bonus unit program more user friendly. According to those we have spoken to in the development community, the preference is to have TRPA set clear guidelines for appropriate rental and sales prices for affordable, moderate income, and achievable units. The DRSI team recommends removing price controls within the code and maintaining a website or other publicly accessible tool that would educate the public on the intent of the program and help developers and property managers determine fair sales and rental prices for affordable residential units. This website or tool should be updated on an annual basis. The example below (Table 14) shows fair sales and rental prices for affordable, moderateincome, and local achievable residential units in El Dorado County using area median income. Providing transparent guidelines as to the appropriate sales and rental prices of deed restricted units should also 20 TRPA Code of Ordinances C BMP Retrofit Program Disclosure Requirements Page 78 DRWG Meeting #7 Agenda Item VI.C

79 help with self policing of these types of units. If the community is informed of how much these units should be selling or renting for it should induce more community vigilance. TABLE 14. EXAMPLE OF MAXIMUM ALLOWED SALES AND RENTAL PRICE (EL DORADO COUNTY) Income Level for Family of 4 Affordable 80% AMI Annual Income Attainable Home Price Attainable Housing Costs Per Month* $41,193 $156,121 $1, % AMI $51,491 $195,151 $1,287 Moderate Income 120% AMI $61,789 $330,000 $1,545 Local Achievable 195% AMI $100,408 $439,000 $2,510 Source: ESRI Business Analyst 2017 forecast, CoreLogic Listsource *Approx. 30% of monthly income. Attachment A includes a second example of a housing price index for the maximum affordable monthly rent and maximum sales price for Summit County, Colorado. Real estate and financial markets are in constant flux and to adjust to that on a real time basis requires monitoring, evaluating and updating household buying power on a regular basis. Another option that avoids this issue is to remove the price ceiling on deed restricted affordable units all together and let the market determine reasonable prices for the designated income levels. In San Miguel County, Colorado (Telluride), the sale price of an affordable housing unit is calculated by a real estate appraiser base on the development s individual deed restriction rather than by the County. 21 For example, the Lawson Hill Affordable Housing Subdivision does not stipulate a monthly rental rate or sale price for deed restricted units because the units are income restricted instead. 22 In Park City, Utah, deed restricted units must be sold or rented at a price that is affordable to those earning Workforce Wage, which there equates to 60% AMI. 23 TRPA could similarly leave the determination of monthly rental and sale prices to the real estate market, while other existing income restrictions remain in place. This would require implementing some sort of process to verify income levels when they are rented or leased. Affirmative Compliance Reporting Many best practices the DRSI team analyzed required income and/or employer certification when a deed restricted affordable property changed hands (i.e. during the sale of a property or under a new lease term). These certification forms are typically reviewed by a local housing authority or local government housing department or division. Lacking such an organization or organizations in the Tahoe Basin, the DRSI team recommends that TRPA require annual affirmative compliance reports for all residential 21 Telluride Affordable Housing Guidelines, September 18, Section 105.3, Allowed Sales Price, 22 County of San Miguel, Colorado. Amended and Restated Deed Restriction and Covenant, Lawson Hill Subdivision/PUD. 23 Workforce Wage is calculated annually based on the median annual wage plus six percent to account for other income such as tips, multiplied by 1.5 (average number of workers per household). Page 79 DRWG Meeting #7 Agenda Item VI.C

80 units in the Lake Tahoe Basin that have received residential bonus units for low, moderate, or achievable housing. It would be the responsibility of the property owner (or their representative) to submit a compliance form with specified information to TRPA on an annual basis. This could be provided online and those properties not in compliance could be identified automatically. The fine amount described above for non compliance would be levied for failure to provide the annual compliance report. The penalty should be substantive enough to persuade compliance but not enough to create an undue burden for staff and the TRPA Governing Board. It will be important for TRPA to coordinate with the local jurisdictions to assist with this compliance reporting and any associated actions. The success of local achievable housing will ultimately help local jurisdictions in California achieve their housing needs allocations mandated by the state and these partners are often more attuned to local development and enforcement activities within their jurisdiction. Additional Bonus Unit Eligibility Criteria Although the Bi State Compact does not specifically mandate goals and policies related to local attainable housing nor do the environmental thresholds address this topic, the Lake Tahoe Regional Plan sets forth housing goals and policies to address housing issues on a regional scale. Specifics of housing implementation are typically addressed in local general plans or area plans. The Regional Plan encourages housing opportunities specifically for full time and seasonal residents who are employed within the region. These goals and policies recommended lower income households be in close proximity to employment centers and government services and should not be used for vacation rental purposes. 24 This section recommends additional bonus unit eligibility criteria in keeping with the Regional Plan to further incentivize affordable, moderate income, and local achievable housing development. Transit The DRSI team analyzed the number of parcels that could be developed within ½ mile of existing transit and in proximity to town centers and employers with more than 50 employees. This analysis did not factor in parcels that could be redeveloped or that may be retired 25. The results show that about 65% of vacant parcels basin wide are located within ½ mile of existing transit stops 26. Figure 15 shows a localized map of the Tahoe Valley Area Plan in the City of South Lake Tahoe to illustrate these concepts. The current TRPA bonus unit allocation program designates 600 of the 1,400 residential bonus units for use only in Centers 27, yet many of the existing affordable housing developments are located outside of town centers. This could be due to larger parcel sizes needed to build larger housing complexes being located outside of concentrated commercial cores. Additionally, restricting a percentage of the bonus unit allocation pool to town centers does not take into account residential development potential on otherwise developable or vacant land outside of these areas. Figure 15 shows, for example, the number 24 Lake Tahoe Regional Plan Goals & Policies HS 1.4, HS 2.2, and HS Retired parcels include parcels owned by land banks that have had development potential retired. 26 Figure 15, TRPA GIS analysis, April TRPA Code of Ordinances, Chapter 52, Bonus Unit Incentive Program. Page 80 DRWG Meeting #7 Agenda Item VI.C

81 of vacant parcels that could be eligible for residential bonus units are located outside of the green town center boundary. Rather than limit a portion of the residential bonus unit pool to town centers, the DRSI team recommends amending the current designation of 600 of the 1,400 residential bonus units from only Centers to projects, regardless of income level, within ½ mile of existing 28 transit stops. This would help to incentivize transit oriented development and make sure that bonus units are only awarded to those housing developments accessible to nearby employment centers. 28 GIS data on proposed transit stops is not readily available. This data will be updated as new transit routes are added. Page 81 DRWG Meeting #7 Agenda Item VI.C

82 Figure 15. Vacant Parcels in Proximity to Transit, Town Centers and Employers Page 82 DRWG Meeting #7 Agenda Item VI.C