CITY COUNCIL NOVEMBER 7, 2016 NEW BUSINESS REVIEW AND UPDATE THE CITY'S AFFORDABLE HOUSING DENSITY BONUS LAW MAYOR LAUREN MEISTER

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1 CITY COUNCIL NOVEMBER 7, 2016 NEW BUSINESS SUBJECT: INITIATED BY: PREPARED BY: REVIEW AND UPDATE THE CITY'S AFFORDABLE HOUSING DENSITY BONUS LAW MAYOR LAUREN MEISTER Andi Lovano, Project Development Administrate*' STATEMENT ON THE SUBJECT: The City Council will consider directing the City Attorney to prioritize working with the Community Development Department to amend the City's Zoning Code to bring it into compliance with state affordable housing law effective January 1, 2017 and to review the City's density bonus concessions. RECOMMENDATIONS: 1. Direct the City Attorney to: a. Work with the Community Development Department to amend the Zoning Ordinance to be consistent with recently approved changes to the state affordable housing density bonus law, Government Code Section , which is effective January 1, b. Clarify that affordable housing density bonuses, incentives and concessions shall apply solely to the residential component of a mixeduse project, in accordance with California state law, and they should not be included as part of calculations to provide additional density to any commercial component. c. Review concession "menu" options and provide City Council with alternatives. 2. Direct the Community Development Department to: a. Include information on the recent changes to state affordable housing density bonus law in the R2, R3, R4 Zoning Districts Study and community discussions. b. Schedule a Study Session for interested members of City Council and Planning Commission to explain the recent changes to the state's affordable housing density bonus law and how the changes impact projects in the City of West Hollywood. Page 1 ofs AGENDA ITEM 5.E.

2 BACKGROUND I ANALYSIS: In order to encourage the construction of affordable housing to low and moderate income households, the City's Zoning Code provides density bonuses, incentives and concessions for specified housing projects. The City's inclusionary housing and density bonus requirements were established in 1985, prior to the adoption of SB the state legislation (codified as Government Code Section ) that requires mandatory density bonuses and concessions for projects in California that provide affordable housing. In 2007, the City amended its Zoning Code to bring the City's density bonus requirements into compliance with SB 1818 and has continued to amend the code over the years as Government Code Section has been amended. Recently Approved Legislation In the legislative session, several bills were adopted that will bring changes to the implementation requirements of Government Code These bills include: - AB 2501 (Bloom): This legislation will require a local government to adopt procedures and timelines for processing a density bonus application, provide a list of documents and information required to be submitted with the application in order for it to be deemed complete, and notify the applicant whether it is complete. The legislation will prohibit a local government from requiring additional reports or studies to be prepared as a condition of an application. It will also require each component of any density bonus calculation that results in fractional units to be rounded up to the next whole number. Existing law allows local governments to make written findings that a requested concession or incentive is not required in order to provide affordable housing. AB 2501 will, instead, provide that the local government is required to provide the requested concession or incentive unless it finds that the concession or incentive does not result in identifiable and actual cost reductions. The Assembly floor analysis of the bill, and respective changes, is attached (Attachment 1 ). - AB 2556 (Nazarian): If housing is demolished for a new development, Government Code currently requires any units that were previously occupied by low and very-low income households to be replaced with affordable housing units in the new development. AB 2556 clarifies that if a new development is required to replace units that were previously under a local rent control ordinance with affordable housing units, the replacement units must be either: 1) made available at affordable rent or affordable housing cost to, and occupied by, low-income persons or families with a recorded affordability restriction for at least 55 years, or 2) replaced with units that will be in compliance with the jurisdiction's rent control ordinance. Page 2 of 5

3 AB 2442 (Holden): This legislation required local governments to grant a density bonus when an applicant for a housing development agrees to construct housing for transitional foster youth, disabled veterans, or homeless persons. AB 7 44 (Chau): This legislation provides that if a development is 100% affordable to lower income households, then upon the request of a developer, the local government shall reduce the minimum parking requirements for the development to 0.5 spaces per unit if it is within one-half mile of a major transit stop or 0.3 spaces per unit if it is a special needs housing development. For projects that are not 100% affordable, but provide the maximum number of very low- or lowincome units under Density Bonus Law and are within one-half mile of a major transit stop, the parking ratio shall not exceed 0.5 spaces per bedroom. At this time, the City's affordable housing density bonus law must be amended to remain consistent with the recent changes to state law and to avoid confusion or misunderstanding in implementation. It is important that the Zoning Code be up to date so that City staff has correct information when applications are processed and so Planning Commission and City Council can make informed decisions. Concessions Menu for Eligible Projects The City's Zoning Code outlines the following available concessions for eligible projects: a. An additional story, not to exceed 10 feet of total project height; or b. Ten percent reduction in the minimum rear yard setback; or c. Ten percent reduction in the minimum front yard setback; or d. Ten percent reduction in the minimum side yard setback on one side; or e. Ten percent reduction in total common open space required; or f. Ten percent reduction in private open space for up to 50 percent of the units. g. Other regulatory concessions that result in identifiable, financially sufficient, and actual cost reductions. As described above, AB 2501 will change the approval process for concessions. Rather than a local government being allowed to deny a concession if it is not required in order to provide for affordable housing costs, local governments will be required to provide the requested concessions unless it finds that the concession does not result in identifiable and actual cost reductions. This change in state law is an opportunity for the City to review its current list of concessions and determine if other options should be updated or amended. Staff should take into consideration what other cities provide as a "menu" of concessions in this analysis. Page 3 of 5

4 Multifamily Development in R2-R3-R4 Zoning Districts On July 20, 2015 the City Council directed staff to undertake a study to evaluate multifamily development in the City to address concerns expressed in the community regarding new multifamily housing developments in R2, R3, and R4 Zoning Districts. The study includes an effort to engage in a dialogue with the community to identify issues around multifamily development and prepare a report summarizing key findings and actionable recommendations. The City is currently working with Raimi & Associates to produce a community-based, action-oriented report that will help the City prioritize implementable policy amendments relating to multifamily housing development. Considering that the recent amendments to Government Code Section will have impacts on density of multifamily developments, it is important for the current study to take the affordable housing law into consideration. CONFORMANCE WITH VISION 2020 AND THE GOALS OF THE WEST HOLLYWOOD GENERAL PLAN: This item is consistent with the Primary Strategic Goal(s) (PSG) and/or Ongoing Strategic Program(s) (OSP) of: PSG-2: Affordable Housing. In addition, this item is compliant with the following goal(s) of the West Hollywood General Plan: H-2: Maintain and enhance the quality if the housing stock and residential neighborhoods. H-5: Provide for a government environment that facilitates housing development and preservation. EVALUATION PROCESSES: N/A. ENVIRONMENTAL SUSTAINABILITY AND HEAL TH: N/A COMMUNITY ENGAGEMENT: N/A Page 4 of 5

5 OFFICE OF PRIMARY RESPONSIBILITY: COMMUNITY DEVELOPMENT DEPARTMENT I LONG RANGE & MOBILITY PLANNING DIVISION FISCAL IMPACT: None. ATTACHMENT: 1. AB 2501 Assembly Floor Analysis, August 30, 2016 Page 5 of 5