Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: 2022 Housing Annual Production Report (APR) and Informational Update Date: March 28, 2023
Written by: Noah Housh, Director of Community Development Recommendation
It is recommended by the Community Development Department that the City Council receive the 2022 Housing Annual Production Report (APR), provide any comments, concerns or direction to staff and file the report.
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 (Annual Progress Report or APR) 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 adopted Housing Element programs and status of the local government’s compliance with any deadlines in its Housing Element. The Annual Progress Report (APR) 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 was presented to the Planning Commission on March 20, 2023, will be presented to the City Council on March 28, 2023, and will be submitted to the HCD ahead of the April 1, 2023, 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, making this APR the last report for the 5th Cycle.
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). Plan Bay Area 2050 ( https://www.planbayarea.org/ ) is the transportation plan and sustainable community strategy foundational document for all Bay-area community’s Housing Elements.
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 (2023- 2030) RHNA is 234 units, while the 5th Cycle RHNA was 137 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 regional RHNA. In a COG as diverse as the San Francisco Bay Area, it 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). Additional changes under AB 1486 (2019) and AB 1233 (2020) added new data requirements for the APRs.
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. • The APR must also include reporting on the status of any designated “surplus land” owned by the City.
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 is 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. As identified, the City is reporting to close out the current eight-year RHNA cycle which ended Jan. 1, 2023, and has constructed nearly all of its 5th Cycle RHNA allocation (exceeding the RHNA for most income categories).
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 public, Planning Commission, and City Council to Table D for more information on each of these topics. Below is a summary of the housing units constructed as of December 31, 2022, and identifies that the City has permitted adequate units to meet all its’ RHNA allocation for the current cycle (ending December 2022), with the exception of the Very-Low Income allocation.
Income Level RHNA Allocation Total Units to Date
(all years)
Total Remaining
RHNA by Income
Level
Very Low 35 13 22
Low 18 19 0
Moderate 18 25 0
Above Moderate - “Market” 66 86 0
TOTALS 137 143 22
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 income levels; 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.
Legislative Update Summary
Below, staff has provided a summary of some of the most consequential development related legislation passed since 2017. This is a partial list and only touches on the volume of Housing legislation affecting the City’s housing regulations. 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 jurisdictions 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 provides a contemporary perspective on the recent laws affecting the policy direction to be implemented through the programs and policies identified in the pending 6th Cycle Housing Element Update.
AB 68 (2020)-Land Use: Accessory Dwelling Units
Effective from January of 2020, this bill aims to increase the supply of housing units by easing restrictions on Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) by requiring a local planning agency to ministerially approve or deny a permit application for the creation of an ADU (or JADU) within 60 days if the unit(s) proposed meet certain standards.
Additionally, this bill also removes parking requirements for ADU/JADU, and prohibits the local agency from imposing impact fees or connection fees that ADUs/JADUs that are not proportional to the size of the unit. These changes to ADU regulations are in addition to multiple changes in ADU law starting in approximately 2019 and which continue through the 2022 legislative cycle.
AB 2345 (2021)-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 (2020) 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 (2019) “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 (2021) 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 (2021) 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.
SB 35 (2017) and AB 2668 (2022)
Requires ministerial approval of housing and mixed-use development in jurisdictions not meeting their regional housing needs goals. The City of Cotati is currently subject to SB 35 provisions for projects with at least 50% affordable housing, and the determination is reissued each year at the end of June. AB 2668 amends SB 35 clarifying streamlined SB 35 projects are not subject to any non-legislative discretionary approval and that density bonus units are not considered when calculating whether a project satisfies SB 35’s affordability requirements. Further, the bill prohibits cities from denying an application for missing materials if there is enough information to allow a reasonable person to conclude the development is consistent with the applicable objective standards.
AB 2162 (2018) Streamlining Approval of Supportive Housing Requires that supportive housing, defined as “housing intervention that combines on-going rental assistance with supportive services such as health and mental health care for chronically homeless households”, permitted by right in zones where multifamily and mixed-use development is permitted. This bill requires a city to provide a ministerial approval process, removing the requirement for CEQA analysis and removing the requirement for Conditional Use Authorization or other similar discretionary entitlements granted by the Planning Commission.
AB 101 (2021) Low Barrier Navigation Centers
This bill requires cities to create a “by right” process to allow Low Barrier Navigation Center (LBNC) to be a use that is permitted by right in areas zoned for mixed-use and nonresidential zones permitting multifamily uses. A Low-Barrier Navigation Center (LBNC) is a "Housing First," low barrier, temporary, service-enriched shelter that helps homeless individuals and families to quickly obtain permanent housing.
AB 2011 & SB 6 (2022) Additional “By-Right” Housing
These bills combined, require non-discretionary, staff-level (ministerial) approval of 100% residential and mixed-use housing projects in existing commercial zones that allow office, retail, or parking as a permitted use along commercial corridors and within ½ mile of transit when certain labor and affordability requirements are met. AB 2011 & SB 6 provide two avenues for developers; AB 2011 requires higher amounts of affordable housing, and SB 6 requires higher standards for use of skilled and trained labor. These two concurrently adopted bills go into effect on July 1, 2023.
AB 1551 (2022) Concessions for Housing Near Transit
This bill added Section 65915.7 to the Government Code which requires a city to grant a concession to a commercial developer who is also including affordable housing within a project located within ½ mile of a major transit stop. The concession may include, but is not limited to, a 20% increase in density; a 20% increase in floor area; a 20% increase in height; a 20% reduction in minimum parking; a limited use elevator; and/ or an exception to a zoning or land use regulation.
AB 1551 goes into effect January 1, 2023.
AB 2244 (2022) Provides Parking Reduction for Affordable Housing on Religious Properties This bill recasts the provisions related to eliminating parking spaces on religious property by allowing affordable housing development located on a religious property up to a 50% reduction of required religious-use parking spaces, as of January 1, 2023.
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 $2,172,124; however, the account has an outstanding loan to the sewer fund for approximately $772,481 (due in 2038).
Last fiscal year, the City Council provided $250,000 to Burbank Housing to facilitate acquisition and renovation of the Windwood Apartments on E. Cotati Avenue, in exchange for another 55- year deed restriction on the affordability covenants for this property. The Fiscal Year 22/23 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.
CD staff was also successful in obtaining $50,000 in competitive REAP grant to support an update to the Santero Way Specific Plan zoning. A budget request to support this effort has been included in the proposed FY23/24 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:
Copy of Housing-Element-Annual-Progress-Report-NJH (PDF) 2022 Housing Legislation Round-Up - Reuben, Junius & Rose, LLP (PDF)