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HomeMy Public PortalAbout13) 10B_RHNA_Staff ReportAGENDA ITEM 10.B. COMMUNITY DEVELOPMENT DEPARTMENT MEMORANDUM DATE: October 6, 2020 TO: The Honorable City Council FROM: Bryan Cook, City Manager By: Scott Reimers, Interim Community Development Director SUBJECT: TEMPLE CITY’S SIXTH CYCLE REGIONAL HOUSING NEEDS ASSESSMENT (RHNA) ALLOCATION RECOMMENDATION: The City Council is requested to direct staff to formulate and file an appeal with the Southern California Association of Governments for Temple City’s Sixth Cycle (2021- 2029) RHNA Allocation. BACKGROUND: 1. In October of 2019, the Southern California Association of Governments (SCAG) received from the State of California Housing and Community Development Department (HCD) its final regional determination of 1,344,740 housing units. 2. In March of 2020, SCAG adopted a method for disbursing the final regional determination among its constituent local jurisdictions. 3. In September of 2020, Temple City received notice of its draft RHNA allocation. 4. SCAG set October 26 as the due date for jurisdictions to appeal their allocations and will hear appeals in December and January before finalizing allocations. ANALYSIS: To promote sufficient construction of housing at rates affordable to Californians, the State of California has developed an elaborate process which involves HCD, regional councils of governments (in this case SCAG, not the San Gabriel Valley Council of Governments), local jurisdictions, the public at large, general plan housing elements, and numerical City Council October 6, 2020 Page 2 of 6 housing goals (called “allocations”). The process begins with HCD developing draft housing allocations for each regional council of governments. SCAG is the regional body designated to receive the allocation for most of Southern California. After taking comments from its member jurisdictions, SCAG provides a unitary set of comments to HCD on its regional determination. HCD considers SCAG’s input and develops a final regional determination. On a separate track and before the regional determination is finalized, SCAG develops a method for distributing its regional determination among the local jurisdictions in the several counties it covers. While SCAG takes input from local jurisdictions during the development of this methodology, it is constrained by certain requirements of State law. During the methodology process, City staff sent a letter to SCAG dated September 15, 2019 (Attachment “A”) and a second on November 7, 2019 (Attachment “B”) in which staff supported a methodology that would have placed more emphasis on planning housing growth around areas with more transit and in job rich areas. Had that methodology been adopted, it would have resulted in a smaller RHNA allocation for Temple City. Once SCAG receives input from its local jurisdictions, it makes final decisions and forwards its proposed method to HCD for review and approval. HCD reviews and approves the chosen method if is consistent with State law, then SCAG takes its regional determination and uses the approved methodology to develop a draft RHNA allocation to each of its member jurisdictions. Criteria Used to Determine RHNA Allocation: The factors that SCAG chose to influence each local jurisdiction’s allocation include household growth, job accessibility, and transit accessibility. To breakdown the total RHNA into affordable housing categories, SCAG added a “social equity adjustment based on household income and access to resources.” The resource indicator for the current cycle is based on a variety of factors such as educational attainment, low income job access, reading proficiency, and pollution levels. This methodology is different from prior cycles in that prior cycles only used projected household growth, not job or transit accessibility to make allocations, and only used household income to determine social equity in calculating the income-based categories of housing. One of the primary objectives of State housing law is to ensure that there is not an overconcentration of households by income group in one jurisdiction compared to the county overall. With the additional factors listed above, the result is that high income jurisdictions are required to plan for fewer market rate units and more affordable units, while lower income jurisdictions plan for more market rate units and fewer affordable units. For instance, 29 percent of the City’s total RHNA allocation is within the very low- income category. In the previous RHNA cycle, only 12 percent of the total allocation was within the very low-income category. The City’s RHNA allocation for the upcoming sixth cycle is shown in Table 1. City Council October 6, 2020 Page 3 of 6 Table 1: Temple City’s Sixth Cycle (2021-2029) RHNA Allocation Very Low- Income Low - Income Moderate- Income Above Moderate- Income Total 628 350 369 835 2,182 *See Attachment “C” for information on the definition of each income category. Comparison of Prior RHNA Cycles: Temple City’s total RHNA allocation has increased dramatically from prior years, and its allocation of restricted-income units has increased even more. The changes reflect the above-referenced changes in methodologies as well as changes in State law and economics. For instance, in the most recent cycle, allocations for most jurisdictions were abnormally low given inflated vacancy rates due to the Great Recession’s mass of foreclosures. Table 2 provides a comparison of the draft RHNA allocation for the sixth (current) cycle with the City’s prior two cycles. Table 2: Comparison of Temple City’s RHNA Allocations Very Low- Income Low- Income Moderate- Income Above Moderate- Income Total Sixth Cycle 628 350 369 835 2,182 Fifth Cycle 159 93 99 252 603 Fourth Cycle 118 156 165 417 987 *See Attachment “C” for information on the definition of each income category. Sites Inventory: To meet the City’s RHNA allocation, the City needs to demonstrate that it has the zoning capacity to meet that allocation. (Although legislation has been proposed that would result in penalties to cities for not constructing sufficient housing to meet the RHNA allocation, none of these bills have become law). The City is required to perform a site by site analysis to demonstrate capacity to meet the RHNA allocation. The sites inventory cannot assume complete buildout of a parcel that has capacity, but instead must look at the density of recently-approved projects and provide a realistic analysis of projected buildout. To determine if a site is a good candidate for listing in the sites inventory, staff needs to include within its analysis information on: • Maximum floor area ratio versus the existing floor area ratio • The existing ratio of the “improvement” (buildings) to the land • Building age and condition • Date property last sold • Vacancy rates • Lease terms and timing City Council October 6, 2020 Page 4 of 6 • Property owner interest in selling • Developer interest in buying • Examples and rates of turnover of nearby or similar properties For in-fill sites, the City will need to include in its inventory a letter from the owner stating that he or she intends to develop the site. ADUs and RHNA: The City can use potential future demand for accessory dwelling units (ADUs) to meet a portion of its RHNA allocation through the sites inventory. However, HCD has given direction to jurisdictions that any ADU-based assumptions must be reasonable. For instance, staff can look at ADU trends in prior years and assume similar future growth. Staff cannot assume that the City’s entire allocation will be met through ADUs solely because there is sufficiently zoned land. Crossroad Specific Plan: The sites inventory will also likely rely upon many of the parcels in the Crossroads Specific Plan (CSP) to meet the RHNA allocation. In Temple City, an important decision was made early in the General Plan process to plan for future housing growth by focusing growth away from residential neighborhoods and toward the Crossroads Specific Plan (CSP). At the time, the City’s RHNA allocation was 603 housing units. The CSP provided a buildout of 1,837 net-new dwelling units, enough to cover at least two cycles of RHNAs. This area could still make up a substantial portion of the sites inventory. No Net Loss: If the sites in the CSP are listed in the sites inventory, then the City might face complications arising from Government Code 65863. That law requires jurisdictions to continue to provide a sufficient inventory of sites to meet the jurisdiction’s remaining unmet share of the regional housing need for low- and moderate-income households. In particular, if a jurisdiction allows development of any parcel with fewer units by income category than identified in the jurisdiction’s housing element for that parcel, the city must make a written finding as to whether or not remaining sites identified in the housing element are adequate to meet or accommodate the jurisdiction’s share of the regional housing. If the City uses the CSP as the main source of sites within the site inventory and subsequently approves projects that do not meet the number of units expected in the sites inventory, the City will need to do one of two things: 1. Modify the remaining allocation of units within the sites inventory, or 2. If sufficient other sites do not exist, the City will need to up-zone additional properties accordingly. City Council October 6, 2020 Page 5 of 6 Housing Element Update: The City’s RHNA allocation is the pivotal piece of the City’s Housing Element, which will need to be updated by October of 2021 to meet State law. To achieve this, staff has published a request for proposals for a consultant to assist with the work. In the coming months, staff will review the proposals and seek the City Council’s approval of a contract for the City’s Housing Element consultant. With approval of the contract, the City will be begin preparing the Housing Element. The Housing Element will assess the City’s housing needs relying on demographic data and the City’s RHNA allocation and sites inventory. The Housing Element will then provide an analysis of existing resources to meet the needs and develop a list of constraints that impede public and private sector efforts to meet those needs. It will then provide a list of goals, objectives and policies regarding construction, rehabilitation, conservation, and preservation of housing. Lastly, the Housing Element will provide a detailed implementation program with a schedule of actions that the City is undertaking or will undertake to implement the policies and achieve the goals and objectives of the Housing Element. Appeals: Given the herculean effort that will be required to plan for the City’s RHNA allocation and the negative results if the City approves projects not in compliance with the sites inventory, the City Council may have an interest in appealing the RHNA allocation. Appeals cannot be based on arguments that the allocation is infeasible based on historic trends or is not in line with prior allocations. Appeals may be based solely on the following: 1. Local planning factors and information on affirmatively furthering fair housing; 2. Application of the final methodology; and 3. A change in circumstance. The standard for applying for an appeal is high and successful appeals are rare. In the fifth cycle, 13 appeals were filed but none were successful. Some potential avenues of appeal include the City’s jobs-housing balance, the availability of suitable land for urban development, and maximizing the use of public transportation as per SCAG’s general policies. In addition, an appeal must argue why the revision is necessary to further the objectives of RHNA law and must be supportive of SCAG’s sustainable communities strategy. The appeal process is shown in Table 3. Table 3: RHNA Appeals Process Time Activity October 26 Appeals due to SCAG October 26 to December 10 SCAG reviews appeals December through January SCAG holds appeal hearings City Council October 6, 2020 Page 6 of 6 Time Activity Mid-January RHNA Appeals Board concludes its determinations and issues a final RHNA allocation February 4, SCAG Regional Council adopts the final RHNA allocation plan. The final allocation plan will include redistributing units from successful appeals to other local jurisdictions. Should an appeal be directed, City staff would work with the City Attorney’s office to craft the most compelling case and would submit it to SCAG within the required timeframe. STRATEGIC GOALS: This action furthers the City Strategic Goals of Good Governance and Economic Development. FISCAL IMPACT : There are no budget consequences to the City’s Fiscal Year 2020-2021 City Budget to file an appeal. ATTACHMENTS: A. Letter to SCAG Dated September 15, 2019 B. Letter to SCAG Dated November 7, 2019 C. Definition of Income Levels ATTACHMENT A Temple City Comment Letter on RHNA Methodology September 13, 2019 Page 2 of 3 very low property taxes, are not willing to sell, and therefore potential new development allowed under these plans cannot occur. Furthermore, built out cities often have historic resources and mature trees that must be preserved, by law. • The housing allocations for Temple City are unprecedented. Planning for the construction of these units over a longer time frame may be possible, but the amount of growth over such a short time frame in a fully developed city is inconceivable. Based on HCD's most recent allocation for SCAG, Temple City would receive a total regional housing allocation of 2,069 housing units. To put this in perspective, the California State Department of Finance estimates that Temple City has approximately 12,321 housing units. This would equate to planning for a 17 percent increase in growth in an 8-year period. To further put this in perspective, in a 30-year span, from 1990 to 2019, the City grew by approximately 745 housing units. The proposed methodologies would result in well over 30 years' worth of growth in an 8-year time frame. Additionally, the City's allocation of very low-income housing units in Option 1 — 770 — is 167 more units than the City's total housing unit allocation in the last cycle. • Planning for the additional growth in housing will be a herculean task. The City recently underwent a three year, one -million -dollar comprehensive general plan and zoning code update. Seeking to act in a responsible manner the City reviewed historic growth patterns, existing SCAG projections, and RHNA allocations. The City approved a General Plan with more capacity than would be required by the most recent RHNA figures. However, it was expected that these units would be constructed not over an 8-year cycle, but over multiple RHNA cycles. This would be a reasonable pace of growth. It should be noted that many of the sites in the General Plan's modelling would not meet the requirements of AB 1397. Furthermore, the City seems to be penalized for planning for growth. Without updating the General Plan, the City would have a lower capacity and therefore the inputs and results in Options 1 and 3 would be much lower. In a built -out city with infrastructure constructed more than 70 years ago, it is important to phase in growth over a longer time frame to allow the expansion of very costly infrastructure. Pressing 30 years' worth of growth into such a short span will place a heavy burden on the City's infrastructure. • Temple City's concerns are heighted in light of recent and proposed legislation (for example SB 35, SB 166, AB 1397, AB 1568 and SB 592). In the previous RHNA cycles, the City needed only to demonstrate the potential for the construction of dwelling units. However, recent and proposed legislation suggest that local jurisdictions may soon be required to actually construct the number units within the RHNA allocation or face penalties. The City appreciates the difficult position that SCAG is in and is grateful for the time and attention that is being demonstrated in balancing the State's goals and the realities at the local jurisdiction Temple City Comment Letter on RHNA Methodology September 13, 2019 Page 3 of 3 level. Should you have any questions regarding this matter, please do not hesitate to contact me at (626) 285-2171, or sreimers@templecity.us. Sincerely, � r Reimers Planning Manager ATTACHMENT B Temple City Comment Letter on RHNA Methodology November 7, 2019 Page 2 of 3 • The housing allocations for Temple City are unprecedented. Planning for the construction of these units over a longer time frame may be possible, but the amount of growth over such a short time frame in a fully developed city is inconceivable. Based on HCD's most recent allocation for SCAG, Temple City would receive a total regional housing allocation of 2,648 housing units. To put this in perspective, the California State Department of Finance estimates that Temple City has approximately 12,321 housing units. This would equate to planning for a 21 percent increase in housing units in an 8-year period. To further put this in perspective, in a 30-year span, from 1990 to 2019, the City grew by approximately 1,062 housing units. On average, that is 35.4 housing units per year. Given historical growth rates, that is 74 years of growth in an 8-year period. Additionally, the City's allocation of very low-income housing units — 771 — is 167 more units than the City's total housing unit allocation in the last cycle. • Planning for the additional growth in housing will be a herculean task. The City recently underwent a three year, one -million -dollar comprehensive general plan and zoning code update. Seeking to act in a responsible manner the City reviewed historic growth patterns, existing SCAG projections, and RHNA allocations. The City approved a General Plan with more capacity than would be required by the most recent RHNA figures. However, it was expected that these units would be constructed not over an 8-year cycle, but over multiple RHNA cycles. This would be a reasonable and realistic pace of growth. It should be noted that many of the sites in the General Plan's modelling would not meet the requirements of AB 1397. Furthermore, the City seems to be penalized for planning for growth. Without updating the General Plan, the City would have a lower capacity and therefore the inputs and results would be much lower. In a built -out city with infrastructure constructed more than 70 years ago, it is important to phase in growth over a longer time frame to allow the expansion of very costly infrastructure. Pressing decades of growth into such a short span will place a heavy burden on the City's infrastructure that will create unanticipated consequences and financial burdens for the City and property owners. • Temple City's concerns are heighted considering recent and proposed legislation (for example SB 35, SB 166, AB 1397, AB 1568 and SB 592). In the previous RHNA cycles, the City needed only to demonstrate the potential for the construction of dwelling units. However, recent and proposed legislation suggest that local jurisdictions may soon be required to actually construct the number units within the RHNA allocation or face penalties. We are by our actions trying to meet the State's objectives of providing more housing, but this new standard is not realistic or achievable even with our best efforts. The City appreciates the difficult position that SCAG is in and is grateful for the time and attention that is being demonstrated in balancing the State's goals and the realities at the local jurisdiction level. Should you have any questions regarding this matter, please do not hesitate to contact me at (626) 285- 2171, or sreimers@templecity.us. Temple City Comment Letter on RHNA Methodology November 7, 2019 Page 3 of 3 Sincerely, Scott Reimers Interim Community Development Director ATTACHMENT C Affordable housing income categories are based on the average median income (AMI). •Extremely low income: 0-30% of AMI •Very low income: 30% to 50% of AMI •Lower income: 50% to 80% of AMI; the term may also be used to mean 0% to 80% of AMI •Moderate income: 80% to 120% of AMI 2020 Los Angeles County Income Limits