Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: 2021 Housing Annual Production Report (APR) and Informational Update Date: March 22, 2022
Written by: Noah Housh, Director of Community Development Recommendation
It is recommended that City Council consider the 2021 Annual Production Report (APR) and accompanying staff report, direct staff to submit it to the State Department of Housing and Community Development (HCD), and file the information for consideration on future policy and development proposals.
Background
All cities and counties in California are required to have a General Plan and among the required elements of a General Plan is the “Housing Element”. A Housing Element provides an analysis of a community's housing needs for all income levels and identifies strategies to respond to and provide for those housing needs. In 1980, the State began requiring scheduled Housing Element updates and (pursuant to Government Code Section 65400) General Law Cities are required to submit an annual report on Housing Element progress (Progress Report) to the Office of Planning and Research (OPR) and the Department of Housing and Community Development (HCD), outlining the progress made towards implementing the City’s Housing Element.
Specifically, the Progress Report is required to detail local efforts to remove governmental constraints to the maintenance, improvement, and development of housing. The Progress Report must also detail the actions taken by the local government towards completion of the programs and status of the local government’s compliance with any deadlines in its Housing Element. The Annual Progress Report is to be considered at a public meeting before the legislative body where members of the public shall be allowed to provide oral testimony and written comments. This report is being presented to the City Council on March 22, 2022, and will be submitted to the HCD ahead of the April 1, 2022, deadline.
California Department of Housing and Community Development The California Department of Housing and Community Development (HCD) reviews every local government’s housing element to determine whether it complies with state law and then submits written findings back to each local government. HCD’s approval is required before a local government can adopt its Housing Element. Jurisdictions must update their housing elements every four years or every eight years, with most using the eight-year schedule (the four-year cycle is a penalty process reserved for egregious jurisdictions). Like most cities, the City of Cotati is on an eight-year cycle, with the current “5th Cycle” being from 2014-2022.
These housing cycles have historically partially aligned with the schedule that the local council of governments/metropolitan planning organization (or COGs/MPOs) use to update their Regional Transportation Plans (which are updated every four years). Additionally, the Regional Transportation Plans are now mandated to align with housing plans in Regional Sustainable Communities Strategies. In the Bay Area, the COG is commonly known as the Association of Bay Area Governments (ABAG) and the MPO is known as the Metropolitan Transportation Commission (MTC).
Calculating the Housing Need in Each Region
HCD is responsible for determining the regional housing needs assessment (RHNA), segmented by income levels, for each COG. HCD starts with demographic population information from the Census and California Department of Finance and uses a formula to calculate a figure for each region/COG. Each COG uses its own demographic figures and growth projections to calculate what it believes the regional housing need is. Each COG then coordinates with HCD — taking into account factors not captured in the calculations — to arrive at a final figure. This final figure is the regional housing needs assessment (RHNA) for the region. Cotati’s 6th Cycle RHNA is 234 units.
Regional Housing Needs Assessment Allocation
Once HCD and the COG have agreed to the region’s assessment figure (the amount of housing that must be planned for), the COG is responsible for allocating the housing need amongst all of the jurisdictions (cities/counties) within that region. The COG does this in a Regional Housing Need Allocation Plan (RHNA Plan) created with input from a Housing Methodology Committee (HMC), made of elected and staff representatives from individual communities, and based on individual input and statutory requirements. This methodology is then used to allocate individual communities their “share” of the RHNA. In a COG as diverse as the San Francisco Bay Area, this can be challenging to meet all of the various needs and individual characteristics of each jurisdiction within the COG (for example Cotati is very different from Oakland, but both communities are under the ABAG/MTC COG). Both the methodology and individual RHNA allocations are ultimately approved by HCD before they are formally approved for each community within the COG.
Changes under AB 879
Until 2018, all California cities (and Counties) submitted annual housing production reports to HCD annually, no later than April 1 (CRC Title 25, Section 6202). The intent of the housing report is to report on the jurisdiction’s status and progress implementing its housing element and RHNA. In 2018, a change went into effect (AB 879, Greyson) which modified the reporting requirements (and moved the applicable reporting requirements to Government Code Section 65400).
New Reporting Requirements:
• The annual Progress Report must additionally include the number of housing development applications received in the prior year, units included in all development applications in the prior year, units approved and disapproved in the prior year, and a listing of sites rezoned to accommodate that portion of the city’s or county’s share of the regional housing need for each income level that could not be accommodated on specified sites.
New or amended Housing Elements Requirements:
• Include an analysis of governmental constraints (including any locally adopted ordinances) that directly impact the cost and supply of residential development. • Include an analysis of nongovernmental constraints to also include the requests to develop housing at densities below those anticipated in a specified analysis. Also include the length of time between receiving approval for a housing development and the submittal of building permits for that housing development.
• Require the analysis of nongovernmental constraints to demonstrate local efforts to remove nongovernmental constraints that create a gap between the locality’s planning for the development of housing for all income levels and the construction of that housing. • Require the program to also address and remove nongovernmental constraints to the maintenance, improvement, and development of housing.
Finally, HCD was also mandated to evaluate the reasonableness of local fees charged to new developments, as defined. This study is required to include findings and recommendations regarding potential amendments to the Mitigation Fee Act to substantially reduce fees for residential development. The results of this study could affect how communities throughout the State structure their development fees. No direction on fee changes has been received to-date.
Analysis/Discussion
As identified, the current eight year “RHNA” cycle runs from 2014 to 2022, and the process to update the next cycle housing element us currently underway. The number of housing units constructed during this timeframe provide one metric for how HCD assesses a jurisdiction’s progress toward meeting the assigned RHNA numbers for that cycle. The Annual Production Report (attached) provides the basis for this assessment. This is also the basis by which HCD may exercise its’ new authority to refer jurisdictions to the State Attorney General for enforcement due to lack of progress in housing production.
The attached APR is a template report required by HCD to demonstrate progress on the current housing element. As such, it includes both accounting metrics on the number of homes approved and constructed within the City. However, the report also includes a progress summary for each of the programs in the current housing element. Staff directs the Council to Table C and Table D for more information on each of these topics. Below is a summary of the housing units constructed as of December 31, 2021, and identifies that the City has permitted adequate units to meet all of its’ RHNA allocation for the current cycle (ending December 2022), with the exception of the VeryLow Income allocation.
Income Level RHNA Allocation Total Units to Date
(all years)
Total Remaining
RHNA by Income
Level
Very Low 35 11 24
Low 18 19 0
Moderate 18 24 0
Above Moderate
“Market”
66 82 0
TOTALS 137 136 24
City Affordable Housing Requirements
In accordance with Chapter 17.31 of the Cotati Municipal Code, all housing developments of 10 or more units must deed restrict 15% of their housing units as designated affordable housing.
Developments of 9 or fewer units may pay a “Housing in-lieu” fee. Generally, affordable housing must be built providing a minimum of 30% Very Low, 30% Low with the remaining units at Moderate; alternatively the percentages of unit types are based on the City’s remaining RHNA allocations by income level. Affordable housing must be similar to the market rate units within the development, and must be distributed throughout the project, unless a housing plan has been approved by the City Council allowing the affordable units to be built elsewhere in the City. All affordable units are typically restricted for a period between 30-55 years.
Entitled Projects and Projects under Review
As identified, the City is seven-years into the current eight-year RHNA cycle and has constructed nearly all of its RHNA allocation (exceeding the RHNA for most income categories). The information summarized below identifies additional projects in the City’s development review pipeline that would contribute to the Cotati 6th Cycle RHNA, if approved and constructed.
Cotati Village-New Project
An updated Cotati Village project application has been filed proposing a mixed-use project with 170 apartment homes combined with retail spaces at the corner of Alder Avenue and Hwy 116, under the allowances of SB 330. The specific affordability mix of the project has not been determined but will provide a minimum of 15-percent of the units as deed restricted affordable housing. The developer has indicated the previously approved project (43 single family homes and three commercial buildings) is not profitable and that they do not intend to construct it. The relatively low number of homes and the cost of required improvements (primarily related to the widening of Highway 116), combined with the uncertainty in the commercial real estate market, all contributed to this perspective.
Cotati Station
Another developer has engaged on this project and has proposed a new Cotati Station project which would reconfigure some of the units in the approved design, making many of the 3- bedroom units into 1- and 2-bedroom units, thereby increasing the total unit count to 98. The revised project also proposes additional affordable housing units to be included with the increased unit count. Construction of a public park adjacent to the train depot, City owned parking lot and widening of Santero Way all remain elements of the newly proposed project. This project is anticipated to be present to the Planning Commission for review and action in April 2022 and a Notice of Application was sent to the neighboring residents to inform them of the proposed changes.
As currently entitled, Cotati Station is a market rate multi-family project totaling 74 units, approximately 20 of which would be deed restricted below market rates (BMR). Since approval, the project owner has sought numerous avenues to finance the project including development of the project as 100% affordable in an effort to gain additional financing sources. Unfortunately, even with a $750,000 commitment from the City Council to off-set the project construction costs, these financing efforts to construct the approved project have not been successful. 2020 Legislative Update Summary
Below staff has provided a summary of some of the most consequential development related legislation passed since 2020. This is a partial list and only touches on the volume of Housing legislation affecting the City’s housing regulations. Further, staff has attached a summary of the 2021 housing bills passed by the State legislature, providing further requirements and mandates to the local review process for housing development. To summarize, the trends of this recent legislation continue to move housing development toward a “by-right” and CEQA exempt process, which is often not public or discretionary. This has generally been accommodated by limiting the ability of local decision makers to influence the design and size of certain housing projects to “objective” standards, put in place well before individual projects are submitted for review. This summary is brief and incomplete but is intended to provide a contemporary perspective on the recent laws affecting the development review process and the policy direction to be recommended by staff in the coming months and years, including affecting the pending 6th Cycle Housing Element Update.
AB 2345 (Gonzalez)-Density Bonus Changes
AB 2345 amends Density Bonus Law to increase the maximum density bonus from thirty-five percent (35%) to fifty percent (50%). A ‘qualifying’ project must set aside at least fifteen percent (15%) of total units for very low income households, twenty-four percent (24%) of total units for low income households, or forty-four percent (44%) of for-sale units for moderate income households. Levels of bonus density between thirty-five percent (35%) and fifty percent (50%) are granted on a sliding scale.
Further, these amendments provide that, upon a developer’s request, a locality must utilize statemandated amended parking ratios (inclusive of handicapped and guest parking) which decrease the parking required for two and three bedroom units for qualifying projects, as shown in the table below.
Maximum Parking Requirements
Rooms Number of spaces required
Studio / 1 bedroom 1 space
2 bedroom / 3 bedroom 2 spaces → 1.5 spaces
4 bedroom 2.5 spaces
AB 725 (Wicks) Missing Middle Housing
AB 725 is intended to address the current “housing crisis”, by requiring that many jurisdictions across the state plan for moderate-density housing (e.g., duplexes, fourplexes, garden apartments, townhomes, etc.) through their general plan housing elements. AB 725 requires that qualifying jurisdictions allocate at least 25% of their Regional Housing Needs Allocation (RHNA) for moderate and above-moderate income units to housing sites zoned for at least four units, with moderate income sites being capped at a density of 100 units per acre. These sites must be identified in the Housing Element inventory of land suitable for residential development. Accessory dwelling units or junior accessory dwelling units do not count towards the 25% requirement. AB 725 only applies to housing elements due after January 1, 2022.
SB330 (Skinner) “Housing Crisis Act” & New GC Section 66300 Development Process Changes SB 330 makes numerous changes to the Permit Streamlining Act and the Housing Accountability Act (many of which expire Jan. 1, 2025) and establishes the Housing Crisis Act. Under the new rules, cities and counties will be limited in the ordinances and policies that can be applied to housing developments. “Housing development” is now defined to include residential projects, mixed-use projects with 2/3 of the square footage dedicated to residential units and transitional or supportive housing projects. With limited exceptions, housing developments will only be subject to those ordinances and policies in effect when a newly created “preliminary” application is submitted. To facilitate the preliminary application process, all public agencies must compile a checklist that specifies what is required to complete a development application. The application checklist must now be made available in writing and on the public agency’s website.
The Housing Accountability Act was amended to prohibit more than 5 hearings when reviewing a project that complies with the general plan and zoning code objective standards in place when the application was deemed complete. “Hearing” is broadly defined to include any workshop or meeting of a board, commission, council, department or subcommittee. Additionally, a housing development cannot be required to rezone the property if it is consistent with the objective general plan standards for the property. The public agency may require the housing development to comply with adopted objective zoning code standards applicable to the property, but only to the extent they facilitate the development at the density allowed by the general plan.
SB 330 also shortens the timeframes for housing development approval under the Permit Streamlining Act. Local agencies now have 90 days (instead of 120 days), following certification of the environmental impact report to approve a project. For low-income projects seeking tax credits or other public funding, that time frame is further shortened to 60 days.
SB 9 (Atkins) Ministerial Lot Splits of Single Family Parcels SB 9 also allows for ministerial approval of qualifying lot splits of existing single-family properties. Qualifying generally means in an urbanized area, surrounding be development and that does not disrupt existing tenants. A proposed SB9 subdivision must ensure each new parcel be a minimum of forty (40%) percent of the original parcel size and be at least one thousand two hundred (1,200) square feet. The new parcels are limited to residential uses, and each new lot is limited to two units (single family home + ADU). A local agency may impose objective zoning standards, subdivision standards, and design standards unless they would preclude either of the two units from being at least 800 square feet in floor area.
SB 10 (Wiener) Upzone In-Fill Parcels in Transit Areas (Optional) SB 10 creates a voluntary process for local governments to pass ordinances prior to January 1, 2029, to zone any parcel for up to ten (10) residential units if located in transit rich areas and urban infill sites. Adopting a local ordinance or a resolution to amend a general plan consistent with such an ordinance would be exempt from review under the California Environmental Quality Act (“CEQA”). This provides cities, an increased ability to upzone property for housing without CEQA review. However, if the new housing authorized by the upzoning would require a discretionary approval to actually build the housing (for example, a subdivision map or design review), CEQA review is required for those subsequent approvals. Moreover, in contrast to SB 9, each individual city or county must affirmatively pass an ordinance authorizing the up zoning.
Financial Considerations
The City maintains an Affordable Housing Trust Fund intended to support development of affordable housing within Cotati. Affordable housing in-lieu payments are remitted to this account for residential development projects which are allowed to pay in-lieu fees (generally those which are less than 10-units in size) and commercial projects paying the linkage fee. The current balance of this trust fund is approximately $3,100,000; however, the account has an outstanding loan to the sewer fund for approximately $1,000,000 and the city Council has supported a $250,000 request from Burbank Housing to facilitate their acquisition and renovation of the Windwood Apartments on E. Cotati Avenue. The Fiscal Year 21/22 budget will reflect these commitments (as appropriate) when presented. Staff anticipates requests to utilize a majority of the remaining funding to support projects striving to meet the City’s 6th Cycle RHNA allotment.
Separately, the City has been approved for an SB2 grant of $160,000 and has been utilizing these funds to off-set the cost of responding to housing related State mandates, some of which are mentioned above. This grant was previously utilized for policy projects such as the Accessory Dwelling Unit, Cottage Housing ordinance and creation of the Objective Design Guidelines. Staff anticipates this grant to be fully expended by the June 2022 deadline. Separately, the City has received an additional $60,000 grant under Local Early Action Planning (LEAP) program and $20,000 through the ABAG/MTC Regional Early Action Program (REAP) grant. These additional funds are anticipated to assist with the costs associated with updating the housing element under the new state mandates. Finally, CD staff was also successful in obtaining $50,000 in competitive REAP grant to support an update to the Santero Way Specific Plan. A budget request to support this effort has been included in the proposed FY22/23 budget.
Environmental Issues
The action of receiving the annual housing report does not constitute a project as defined by California Environmental Quality Act Guidelines Section 15378; therefore, no further environmental review is required.
Attachments:
Housing 2021 APR (PDF) Summary-of-2021-Legislative-SessionHousing-Bills (PDF)