Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: PRESENTATION OF THE HOUSING ELEMENT ANNUAL
REPORT
Date: March 26, 2024
Written by: Eli Arreola, Planning Technician
Recommendation
It is recommended the City Council review the provided information, identify any concerns or direction for staff, and file the report for future discussion.
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 implement the City’s adopted Housing Element programs. The Progress Report must also detail the actions taken by the local government towards completion of the other adopted Housing Element programs and the status of the local government’s compliance with any associated 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 is being presented to the Planning Commission on March 18, 2024, and the City Council on March 26, 2024, and will be submitted to the HCD and OPR ahead of the April 1, 2024, 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. Jurisdictions must update their housing elements on a set schedule, with most following an eight-year cycle. Like most cities, the City of Cotati is on an eight-year cycle, with the current “6th Cycle” being from 2023-2031, making this APR the first report for the 6th Cycle.
These housing cycles have historically partially aligned with the schedule that the local council of governments/metropolitan planning organizations (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). These two organizations merged in 2016 and Plan Bay Area 2050 is the combined transportation plan and sustainable community strategy, the foundational document for all Bay-area communities’ 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, gathering input from the individual communities within the COG to further refine their projections. Each COG then coordinates with HCD — considering additional factors which may not have been captured in the calculations — to arrive at a final figure. This final figure is the regional housing needs assessment (RHNA) for the region.
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 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. Cotati’s 6th Cycle RHNA is 234 units.
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.
• The APR must include a report on any local tenant preference ordinance. • Local Early Action Planning (LEAP) Reporting is now required in the APR. Jurisdictions must include updates on the status of proposed uses listed in their application for funding and the corresponding impact on housing within the region.
New or amended Housing Element and Reporting 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 and 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 a 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, however an analysis and update to the City’s Development Impact Fees are included in the proposed FY 24/25 budget.
Analysis/Discussion
As identified, the current eight-year 6th cycle “RHNA”, runs from 2023 to 2031. The number of housing units constructed during this timeframe provides 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 begin the current eight-year RHNA cycle which began Jan. 1, 2023. 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, and 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 by income level required to be constructed by December 31, 2031, in compliance with the City’s RHNA allocation.
Income
Level:
Very Low
Income
(<50% of Area
Median Income)
Low Income
(50-80% of Area
Median Income)
Moderate
Income
(80-120% of Area
Median Income)
Above
Moderate
Income
(>120% of Area
Median Income)
Total
RHNA
Allocation:
60 34 39 101 234
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, or the developer applies a “concession on incentive” allowed under state density bonus law. 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 2020. This is a partial list and only touches on the volume of Housing legislation affecting the City’s review of housing development projects and applicable regulations. Further, staff has attached a summary of the 2023 housing bills passed by the State legislature, and the most recent changes in mandates to the local review process for housing development. As has been the case for several years, the trends continue to move housing development toward a “by-right” and CEQA exempt process, which is often not public or discretionary. 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 programs to implement the 6th Cycle Housing Element Programs.
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 1287 (Alvarez) Density Bonus
AB 1287 amends the Density Bonus Law to provide an additional density bonus and concession/incentive for projects that provide very low or moderate-income units. For a project to qualify for the additional density bonus and incentive under AB 1287, a project must provide the required percentage of on-site affordable units to obtain the maximum density bonus established by AB 2345. The project must also provide an additional 5-10% of units affordable at the very low-income level or an additional 5-15% of units affordable at the moderate-income level. A project that provides both set-asides will be eligible for a density bonus of up to 100% and three to four incentives/concessions. This bill also clarifies that jurisdictions are not prohibited from requiring an applicant to provide reasonable documentation to establish eligibility for a requested density bonus and parking ratios.
Staff Note: With the City’s requirement that 15% of a project’s units be deed restricted as affordable, it is likely a majority of residential projects in the future will be density bonus.
Contrary to the current Cotati Municipal Code (CMD) which identifies that the City Council grants the density bonus, recent changes in State Density Bonus law and a clarifying technical advisory from HCD identify that a density bonus (and the related concessions and incentives) is “by-right” for projects providing the required amount of affordable housing (15% at the VLI level). This means the Council will no longer be “granting” the density bonus as part of a project approval.
AB 602 (Grayson) Impact Fees
AB 602 imposes new requirements on jurisdictions regarding development impact fees. This bill requires jurisdictions to post and maintain updated information on the agency’s website about impact fees. Any member of the public is also allowed to submit evidence to challenge the agency’s compliance with the Mitigation Fee Act. AB 602 shifts the focus to conducting nexus studies to calculate impact fees in order to develop a fee that is proportional to the square footage of the development. If a jurisdiction does not utilize this approach to calculating fees they must make findings to explain why square footage is not an appropriate metric to calculate the fees.
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.
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 time frames 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 423 (Wiener) Streamlined Housing Approvals
SB 423 extends and expands the provisions in SB 330 by expanding the applicability of SB 35 to jurisdictions that have not adopted a housing element that has been found in substantial compliance with housing element law by the California Department of Housing and Community Development. This bill also extends SB 35 applicability to the Coastal Zone. SB 423 extends the provisions of SB 35 to a new sunset date of January 1, 2036.
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, the 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 with 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.
AB 1033 (Ting) Separate Sale or Conveyance of ADUs (Optional) AB 1033 creates an optional process for local jurisdictions to pass ordinances allowing accessory dwelling units (ADUs) to be bought and sold as condominiums, separate from the primary dwelling.
AB 68 (Ting)-Land Use: Accessory Dwelling Units
Effective January 1, 2020, this bill sought 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. AB 68 allows property owners to develop two additional units (one ADU and one JADU) on any residential property, so long as that property meets size and setback requirements. Additionally, this bill removes parking requirements for ADU/JADU, and prohibits the local agency from imposing impact fees or connection fees for ADUs/JADUs that are not proportional to the size of the unit.
AB 894 (Friedman) Shared Parking
AB 894 allows entities to enter into a shared parking agreement if the applicable parking is “underutilized.” Parking is considered “underutilized” if at least 20% of the spaces in a development are vacant during the shared parking time. Jurisdictions are mandated to allow the shared parking plans if the entities submit the shared parking agreement and an explanation of the benefits of the proposal. If a shared parking plan includes a parking analysis based on “peerreviewed methodologies” and ensures long-term parking the plan must be approved by the local agency. If the analysis is not included in the submittal, approval is discretionary. AB 894 also requires local agencies to count shared spaces toward parking requirements for existing or proposed uses and development(s) if parking meets local requirements.
Financial Considerations
The City maintains an Affordable Housing Fund intended to support the 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 City recently utilized approximately $1,650,000 of this fund to purchase 120 E. Cotati Avenue and the account has an outstanding loan to the sewer fund for approximately $1,000,000 Separately, the City has committed approximately $620,000 to support the affordable housing units of the Cotati Station apartment project. The Fiscal Year 24/25 budget will reflect these commitments (as appropriate). Staff anticipates the remaining fund balance will support implementation of the City’s 6th Cycle affordable housing programs.
CD staff was also successful in obtaining $415,000 in Priority Development Grant funds, in addition to the $50,000 in competitive REAP grant previously received to support an update to the Santero Way Specific Plan. The project is underway and is anticipated to be completed in late Summer/early Fall 2024.
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.