Cotati City Council
Agenda Staff Report
Item type: REGULAR CALENDAR (ACTION)
To: City Council
Subject: PRESENTATION OF THE HOUSING ELEMENT ANNUAL
REPORT
Date: March 11, 2025
Written by: Eli Arreola, Planning Technician
Recommendation
It is recommended the City Council review and accept the Housing Element Annual Progress Report (APR).
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 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 3, 2025, and the City Council on March 11, 2025, and will be submitted to the HCD and OPR ahead of the April 1, 2025, 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 second 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.
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. The City Council has supported a review and update of impact fees as a component of the FY24/25 workplan for the Community Development Department and this update is underway. Staff anticipates final adoption of the fee update in Spring 2025.
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
The above table displays the City’s RHNA allocation for the 6th cycle, distributed by affordability level. As of December 31, 2024, the City has issued entitlements, building permits, and/or certificates of occupancy for approximately 346 total units within this planning period.
Projects in various stages of the development process will contribute units toward the City’s RHNA (upon issuance of Building Permits) as identified below:
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:
36 4 3 303 346
As shown in the table above, Cotati will have issued sufficient entitlements to meet its allocation of above moderate-income units and have made significant progress in meeting its allocation of very low-income units if these project move forward with development. The proposed 100% affordable development at 120 East Cotati Avenue will significantly help with the City’s remaining BMR unit allocations by contributing approximately 44 units between the VLI and MI income categories.
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 distributing portions of the below market rate units across income levels, at a ratio based on the City’s unmet RHNA. 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 restricted for a minimum of 55 years.
Legislative Update Summary
Below staff has provided a short description of the most consequential housing related legislation passed in 2024. This is a partial list of housing legislation affecting the City’s review of housing development projects and applicable regulations. Further, staff has attached a summary of the 2024 housing bills passed by the State legislature, and the most recent changes in mandates to the local review process for housing development. 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 3093 (Ward)-Housing Element Updates
AB 3093 adds two new income categories that jurisdictions must plan for in their 7th cycle housing elements: extremely low-income and acutely low-income households. Extremely lowincome is defined as between 15% and 30% of the area median income, and acutely low-income is defined as between 0% and 15% of the area median income. Effectively, this legislation requires jurisdictions to plan for housing suitable for some percentage of said jurisdiction’s homeless population.
SB 937 (Wiener) Impact Fee Deferrals
SB 937 allows for development impact fees to be paid at building occupancy instead of building permit issuance for “designated residential development projects.” These projects include: 100% affordable projects, low-barrier navigation projects, several types of projects that qualify for streamlined approvals, density bonus projects, and projects with fewer than 10 units. This bill aims to reduce the impact of market fluctuations and high interest rates on housing development by delaying the collection of impact fees.
AB 2729 (Patterson) Entitlement Extensions
AB 2729 provides an 18-month entitlement extension for residential developments that were issued entitlements prior to January 1, 2024, and are set to expire before December 31, 2025.
This bill is a response to economic conditions that have correlated with housing projects not moving forward with development. For the City, this extension will apply to the entitlements issued for the Cotati Station project. Further, this legislation does not preclude the City from issuing its own extensions for any approved entitlements.
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 $700,000 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 was approved by the council on February 11, 2025.
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.