DRAFT MEMORANDUM To: From: Perkins+Will James Musbach and Rebecca Benassini Subject: Affordable Housing Need and Supply, Downtown Concord Specific Plan, addendum to Existing Conditions Report; EPS #121118 Date: April 24, 2013 Background and Purpose This memorandum is an addendum to an Existing Conditions report for the Downtown Concord Specific Plan project. The City of Concord retained a consultant team led by Perkins + Will to develop a Specific Plan for a 617-acre area around the City s Downtown Concord BART station. Eighty percent of this project is funded through a Priority Development Area (PDA) Planning Program Grant provided by the Association of Bay Area Governments (ABAG)/ Metropolitan Transportation Commission (MTC) and the rest is funded by the City. This memorandum evaluates the need for and supply of affordable housing in the Downtown Project Area (Study Area). The findings of the memorandum will be used to devise an Affordable Housing Strategy for the Study Area. Study Area Key Findings Current Need. About 62 percent of households in the Study Area 2,700 households earn 80 percent or less than the Area Median Income, compared to 47 percent of the City as a whole. Current Supply, restricted units. The City supports about 685 income-restricted affordable units; 30 percent are in the Study Area totaling about 200 units. Current supply, market rate affordable rental. The median rent in the Study Area in 2010 was $1,150 for a two bedroom, one bath unit, affordable Low income households (51-80 percent of Area Median Income).
Draft Memorandum April 22, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 2 Current supply, market rate affordable for-sale. With single-family homes priced at $275,000 and townhomes/condominiums averaging about $100,000, mortgage payments for townhomes/condominium units are affordable to Extremely Low and Very Low (30 percent and below and 31-50 percent of AMI) and mortgage payments for single-family homes are affordable to Low income households. Study Area has proportionally more low income households than City and County. Because the Study Area has a higher concentration of lower income residents than the City or the County, the need for affordable units in the Study Area is significantly higher than in other parts of the City. Overpaying. 55 percent or about 2,350 households in the Study Area paid more than 30 percent of their incomes towards housing costs. Future need. The Study Area is projected to add about 3,300 households through 2040. Of these, between 1,600 and 2,100 new households are expected to fall in the Low income category or below. Future supply, identified. Vacant and underutilized sites in the Study Area could accommodate 2,400 units in the near term. Because zoning for these sites is for highdensity units, about 90 percent, or 2,200 of these units could be affordable to Very Low or Low income households based on State-defined Housing Element classifications of land available for affordable housing. However, the cost of high-rise and high-density development often means that relatively high-rents or sale-prices are needed to justify new development. While the City has inclusionary requirements requiring that between 6 and 10 percent of ownership units be income restricted (depending on the type of project), additional policies or funding (to replace Redevelopment affordable housing funding) may be required to meet the affordable housing need. Future supply, to be identified. The near-term identified land supply is about 900 units short of the 2040 projection for the Study Area. It is likely that the additional units may be accommodated on other sites as demand for units spurs property owners to consider more intense development, a topic that will be explored more fully in subsequent tasks of the Downtown Concord Specific Plan study. Context By 2040, ABAG projects that the Bay Area will add 1.1 million jobs, 2.1 million residents, and 660,000 new homes. About 88,000 of new households expected in the Bay Area between 2010 and 2040 are projected to be located in Contra Costa County. Table 1 below summarizes how those households are expected to be distributed by income levels in the County and throughout the Bay Area and Table 2 defines Area Median Income (AMI) and the categories used to describe household income. In Contra Costa County, more than 60 percent of new households are projected to earn less than 80 percent of Area Median Income, which for a family of four would translate into a household income of not more than $66,250 for Contra Costa County. This projection translates into a need for more than 55,600 additional housing units affordable to Low and Very Low income households.
Draft Memorandum April 22, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 3 Table 1 Projected Households by Affordability Level, Contra Costa County and Bay Area Geography Household Growth Households 2010-2040 VLI Low Inc Mod Inc Above Mod 31-50% of AMI (1) 51-80% of AMI 81-120% of AMI 120%+ of AMI Contra Costa 87,989 29,916 24,637 12,318 21,117 % 100% 34% 28% 14% 24% Rest of Bay Area 612,098 194,112 150,385 99,695 174,907 % 101% 32% 25% 16% 29% Total SF Bay Area (1) 700,087 224,028 175,022 112,014 196,024 % 101% 32% 25% 16% 28% P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]HHbyIncomeBA (1) AMI = Area Median Income, as defined by County. Note that projections for other income categories like Extremely Low Income were not available. (2) Note that the Plan Bay Area estimate 660,000 new housing units. The above total is 700,000 households which accounts for households that will move into existing vacant units. Sources: DRAFT - Housing the Workforce in the Bay Area, Regional Policy Background Paper - Fall 2012 (ABAG/MTC); EPS Table 2 Contra Costa County Household Income Definitions Household Size Extremely Low Very Low Low Inc Mod Inc >30% AMI 31-50% of AMI 51-80% of AMI 81-120% of AMI 2 $22,450 $37,400 $53,000 $89,750 3 $25,250 $42,100 $59,600 $101,000 4 $28,050 $46,750 $66,250 $112,200 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]Incomes Source: California Department of Housing and Community Developmnt ; EPS While there is a significant projected need for affordable housing, ABAG and MTC have also analyzed Census tracks in the Bay Area where existing lower-income neighborhoods may be displaced by new growth. These communities are identified based on resident attributes and the location of these types of residents within PDAs. Attributes include low-income, minority, non- English speakers, seniors over 75, disabled, or single-mothers, among other attributes. Communities of concern located in PDAs risk displacement as public and private investment is directed to these areas, potentially increasing median home prices and rental rates and pricing current residents out of the areas. Figures 1 and 2, which illustrate the MTC Communities of Concern, show the dispersion of the communities in the Bay Area and show that Downtown Concord is a Community of Concern.
Draft Memorandum April 22, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 4 Figure 1 MTC Communities of Concern 2011. By Census Tract Source: http://geocommons.com/maps/118675 accessed on April 12, 2013 Figure 2 MTC Communities of Concern 2011. By Census Tract, Zoom to Downtown Concord Source: http://geocommons.com/maps/118675 accessed on April 12, 2013
Draft Memorandum April 22, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 5 Affordable Housing Need and Supply Existing City Policies Concord has several existing policies supporting affordable housing including: Housing Element, 2007-2014 (November 2010). A State-certified Housing Element which provides 5 goals and 22 policies to create and maintain housing for all income levels. Development Code adopted-july 2012. The code includes less restrictive development standards for affordable housing in order to implement the following policies: Density Bonus Ordinance provides increased density beyond the code-maximum for eligible affordable housing projects. Inclusionary Housing Ordinance requires developers to construct affordable housing as part of a new development or pay an in-lieu fee. Affordable Housing Incentive Program provides incentives to affordable and mixed income developments for increased density and floor area and greater flexibility relative to lot dimensions, lot coverage, open space and parking. In addition to these policies which include provisions targeting affordable housing development, the City has other policies that generally encourage new development in the Downtown area. These are important from an affordable housing perspective because building new types of housing will broaden the housing supply for all income groups and ensure a range of housing choices. These policies include: A Downtown Mixed-Use and a Downtown Pedestrian designation which allows higher density development (up to 100 units per acre) near the Downtown BART station. A Transit Station Overlay District requiring fewer parking spaces for projects within one-half mile of the BART station. While the City has a robust set of policies related to affordable housing, residential growth in the City has lagged behind the Regional Housing Needs Allocation (RHNA) for 2007-2014 as the great recession has slowed or stopped projects and the economic downturn pushed many households into foreclosure. Concord has approved 342 residential units during the period with 2,701 units remaining in the allocation (see Table 3).
Draft Memorandum April 22, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 6 Table 3 Regional Housing Needs Allocation for Concord, 2007-2014 Household Income Category Allocation Concord Units Approved Remaining Need Very Low 639 0 639 Low 426 1 425 Moderate 498 5 493 Above Moderate 1,480 336 1,144 Total 3,043 342 2,701 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]RHNA Source: General Plan Annual Progress Report, March 26, 2013; EPS Current Affordable Housing Need and Supply There are currently about 4,200 households in the Downtown Project Area, divided roughly into fifths among five income categories (see Table 4). About 62 percent of households (2,700 households) in the Study Area earn 80 percent of AMI or less, while that figure is 47 percent of households in the City and 39 percent of households Countywide. Because the Study Area has a higher concentration of lower income residents than the City or the County, the need for affordable units in the Study Area is significantly higher than in other parts of the City. The higher concentration of lower income households in the Study Area when compared to the City is also shown in Table 5 (see Figure 4 for locations), which lists many of the incomerestricted affordable units in Concord. As shown, the Concord Housing Successor Agency supports through regulatory agreements about 685 income-restricted housing units. While the Study Area has about 9 percent of the City s housing units, it has almost 30 percent of all income-restricted affordable units, totaling nearly 200 units. The number of households in the Study Area earning below median income is significantly larger than the number of locally-supported income-restricted affordable units in the Study Area (about 2,700 households compared to 200 units). Residents of lower income households in the Study Area must therefore (1) live in market rate units which are priced below the median home price or rental rate or (2) they are likely paying a significant portion of their incomes towards housing costs or (3) share space with one or more households. 1 (1) Market rate, low-priced housing. Table 6 reports the average rents in Concord and the average reported rent in the Study Area. Both indicate rents of roughly $1,200. This rental rate is generally affordable to Low and Moderate (50 to 120 percent of AMI) income households. It is important to note that the total supply of multifamily rental units in the Study Area totals only about 1,500 units and, since 2010 the occupancy rate of apartments has been about 96 percent. In addition to the multifamily rental units, the Study Area has a substantial number of singlefamily homes for rent, though consistent data is not available for that property class. 1 Residents also may participate in federally-assisted units either in public housing projects or with Section 8 housing vouchers, administered through the Contra Costa County Housing Authority. Roughly 1,200 households in Concord received Section 8 vouchers in 2007.
Draft Memorandum April 22, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 7 For-sale housing prices in the Study Area (like in the rest of the City) have declined since the start of the recession and average about $275,000 for single-family units and about $100,000 for townhomes/condominium units (see Table 7). These prices are affordable for Low and Very Low income households. However, the supply of for-sale housing is constrained, with only about 200 sale transactions in the Study Area since 2010. (2) Overpaying for housing. Households paying more than 30 percent of their gross income for rent or mortgage payments are considered to be overpaying meaning that household members may have difficulty affording other basic necessities. About 60 percent of households in owner-occupied units overpaid and about 54 percent of renters in the Study Area overpaid for housing in 2010 (see Table 8). This translates into about 2,350 households in the Study Area paying more than 30 percent of household income to housing costs in 2010. Table 4 Households by Income Category, 2010 Income Category Concord Project Area (1) Concord Contra Costa County # hhs % of total # hhs % of total # hhs % of total Extremely Low 935 22% 7,319 16% 53,254 14% Very Low 932 22% 6,636 15% 45,814 12% Low 838 20% 7,195 16% 48,702 13% Moderate 936 22% 9,941 22% 76,887 21% Above Moderate 563 13% 13,979 31% 146,269 39% Total 4,204 100% 45,069 100% 370,925 100% P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]HHbyIncome (1) Census income categories do not match categories exactly. Census data has been interpolated to fit the income categories for summarizing purposes. (2) Data from ACS Census updated in 2011 and includes the PDA geography within Census block groups. Total block groups geography is slightly larger than the Project Area. Source: 2010 Census; EPS
Draft Memorandum April 22, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 8 Table 5 Current Supply, Restricted Units Property Name Address Total Units Affordable Units (1) Affordable Units in the Study Area % of all Affordable Units in the Study Area Housing Type Extremely Low Very Low >30% AMI 31-50% of AMI Low Inc 51-80% of AMI Mod Inc 81-120% of AMI 1750 Diane Court Apartments 1750 Diane Court 10 4 Family 0 0 4 0 1751 Diane Court Apartments 1751 Diane Court 12 4 Family 0 0 4 0 Caldera Place Apartments 2401 Bonifacio Street 12 11 11 Dev. Disabled 0 5 0 6 Californian Apartments 1621 Detroit Ave. 35 9 9 Family 0 0 9 0 Camara Circle Apartments 2501 & 2266 Camara Circle 52 51 Family 3 45 3 0 Chateau on Broadway 1700 Broadway Street 153 31 31 Senior 0 31 0 0 Concord Residential 2141 California Street 20 10 10 Dev. Disabled 0 10 0 0 El Sol Apartments 1890 Farm Bureau Rd. 25 10 Family 0 0 10 0 Jordan Court II Apartments 2248 & 2250 Almond Ave 5 4 4 Family 0 2 2 0 Lakeside Apartments 1897 Oakmead Dr. 124 122 Family 10 27 85 0 Las Casitas 1181 Detroit Ave 10 4 Family 0 0 4 0 Phoenix Apartments 3720 Clayton Road 11 11 Dev. Disabled 0 0 0 0 Plaza Tower Apartments 2020 Grant St. 96 95 95 Senior 0 0 95 0 Riley Court Apartments 2050, 2051, & 2061 Riley Court 48 47 Family 8 39 0 0 Victoria Apartments 1650, 1670, & 1680 Detroit Ave. 12 12 12 Family 4 0 8 0 Vintage Brook Apartments 4672 Melody Drive 148 147 Senior 15 60 72 0 Virginia Apartments 1140 Virginia Lane 91 89 Family 8 69 12 0 Windsor Park Apartments 1531 & 1611 Adelaide St. 96 24 24 Family 0 0 24 0 Total, 18 total project sites 960 685 196 29% 48 288 332 6 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]CitySupply (1) Includes locally assisted affordable units. In addition, the City has a number of housing projects which are federally assisted (Section 8). One Section 8 project, The Heritage with about 121 units, is located in the Study Area. Italics formatting indicates project located within the Study Area. Source: City of Concord compliance monitoring report; EPS
Draft Memorandum Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Figure 3 April 22, 2013 Page 9 Locally Assisted Affordable Housing Locations in Concord (2010) Green circle indicates housing sites in the Study Area.
Draft Memorandum April 23, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 10 Table 6 Market Rate Rents and Affordability Item Household Size 2 3 4 Concord Avg. Rents, 2012 Q4 Concord $1,095 $1,201 $1,501 1bd/1bth 2bd/1bth 3bd/2bth Census Reported Median Rent for Study Area -- $1,149 -- Income Limits by Household Size (1) Extremely Low $22,450 $25,250 $28,050 Very Low $37,400 $42,100 $46,750 Low $53,000 $59,600 $66,250 Moderate $89,750 $101,000 $112,200 Affordable Monthly Household Rent Extremely Low $561 $631 $701 Very Low $935 $1,053 $1,169 Low $1,325 $1,490 $1,656 Moderate $2,244 $2,525 $2,805 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]AffRents (1) Per income limits for Contra Costa County defined by the State of California Housing and Community Development Department. Shading indicates household income categories for whom the average Concord apt rental rate is unaffordable. Unaffordable is defined as average rental rates that exceed 30% of the household's monthly incomes. Source: RealFacts, Census 2010, California Housing and Community Development Department, EPS
Draft Memorandum April 23, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 11 Table 7 Sale Prices and Affordability Item Calculations/ Results Market Information Median Price (1) Est. Mortgage (2) Single-Family $275,000 $1,400 Attached or Multifamily $100,000 $510 Affordable Mortgage Household Income Category for 3-person HH Payment (3) Extremely Low $631 Very Low $1,053 Low $1,490 Moderate $2,525 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]AffPrice (1) Based on Census 2010 household information for the Study Area based on reported home value. While reported value is sometimes different than values based on recent sales, Concord's median home value Citywide was $275,000 at the end of 2012 which is consistent with the Census 2010 information for the Study Area. (2) Estimate from two sources: i. Census 2010 does not report "median" value but rather allows respondents to estimate their home value, within a value ranges (generally in $50,000 to $100,000 increments). ii. Sales in the zip codes (which include the Project Area and outside of the boundaries, but contiguous to the Project Area). (3) Assumes 10% down and 5.5% interest on 30 year mortgage. Note that while many income levels could afford the mortgages calculated above, the median priced units are not restricted to these income groups. Higher income households likely compete for some of these lower cost units. Sources: City of Concord Housing Element, 2010; Concord AB 987 list; Census 2010; Zillow; EPS Table 8 Project Area Households Overpaying for Housing Project Area, by Tenure Total Households % of Households Spending more than 30% of Incomes on Mortgage or Rent (1) Est. Number of Households Overpaying Owner-occupied 1,174 60% 710 Renter-Occupied 3,030 54% 1,639 Total 4,204 56% 2,348 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]OverPay (1) Estimated from Census 2010 for Census blocks approximating Project Area; includes some areas outside of Project Area Source: Census 2010 ; EPS
Draft Memorandum April 23, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 12 Projected Affordable Housing Need and Supply Between 2010 and 2040 the City of Concord is expected to add 18,000 households and the Study Area is expected to grow by 3,300 households. 2 Roughly 3,000 new jobs are also expected in the Study Area. While the income levels of future households in the Study Area are difficult to predict, projected local job growth is one indicator of future incomes. Almost 40 percent of the new jobs in the Study Area are projected to be in the Professional Services industry while Financial/Real Estate, Health/Education Art/Recreation/Leisure industries are expected to have 15-20 percent of the growth in each industry. The remaining 10 percent of jobs are expected in all other industries (see Figure 4). Figure 4 Distribution of Projected New Jobs in Study Area, 2010-2040 Source: Draft Plan Bay Area Two factors have been used to estimate household income for projected households in the Study Area: (1) the current distribution of incomes by household and (2) the types of industries projected to grow in the Study Area. Based on a review of these factors, new households are expected to include more households in Moderate to Above Moderate income categories and fewer lower income households than currently reside in the Study Area (see Table 9). The projected range estimates 1,600 to 2,100 new households in the Low income category or below. On the supply side, the Concord Housing Element (last updated in 2010) estimates that vacant and underutilized sites in the Study Area could accommodate 2,400 units in the near-term, all in projects with densities of between 33 and 100 units per acre (see Table 10). The Housing Element calculates that about 90 percent or 2,200 of these units could be developed as Very Low 2 All projections are based on the Draft Plan Bay Area for Downtown Concord PDA.
Draft Memorandum April 23, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 13 or Low income households (meaning that the density level is consistent with State requirements for Housing Element-supply calculations for accommodating affordable housing). The near-term identified land supply is about 900 units short of the 2040 projection for the Study Area. Given that the Near-Term land supply can accommodate about 70 percent of the total estimated projection of new households through 2040, it is likely that the additional units may be accommodated on other sites as demand for units spurs property owners to consider more intense development. This will be explored more fully in subsequent Downtown Concord Specific Plan studies. Table 9 Range of Projected Incomes for New Households in Study Area Income Category # hhs Study Area % of total Current, 2010 Data (1) Extremely Low 935 22% Very Low 932 22% Low 838 20% Moderate 936 22% Above Moderate 563 13% Total 4,204 100% Projected New Households, 2040 (2) Extremely Low 392-738 12% - 22% Very Low 483-737 15% - 22% Low 740-662 22% - 20% Moderate 445-981 13% - 30% Above Moderate 445-981 13% - 30% Total 3,321 Total Projected Households, 2040 Extremely Low 1,327-1,673 18% - 22% Very Low 1,416-1,669 19% - 22% Low 1,577-1,499 21% - 20% Moderate 1,381-1,917 18% - 25% Above Moderate 1,008-1,544 13% - 21% Total 7,525 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]Demand (1) Census income categories do not match categories exactly. Census data has been interpolated to fit the income categories for summarizing purposes. (2) Job growth by industry were analyzed for the Study Area to estimate the incomes of new workers. Projected household income ranges are based on these estimates while also taking account of the existing household income distribution in the Study Area. Source: 2010 Census; Draft Plan Bay Area; EPS
Draft Memorandum April 23, 2013 Downtown Concord Existing Conditions: Affordable Housing Demand and Supply Page 14 Table 10 Near-Term Identified Supply of Land For Residential Units and Longer Term Need Income Category Avg Density Units (Dwelling Units per Acre) Near-Term (1) Downtown Mixed Use 65 2,386 Downtown Pedestrian District 50 50 Near-Term Total 2,436 Additional Need, 2014-2040 (2) 885 P:\121000\121118ConcordSP\Model\[121128AffordHous.xlsx]FtrSpply (1) Units accommodated on sites in these two districts in the Study Area from Housing Element for 2007-2014 period. Note that 90% of these units are identified in the Housing Element as available to meet the housing needs of Very Low and Low income households. (2) Indicates difference between the projection for roughly 3,300 new households in the Study Area and the "Near-Term" supply of land for residential units. Source: Concord Housing Element, 2010; Draft Plan Bay Area; EPS