EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Rachel Horst, Housing and Economic Development Manager Elena Lee, Planning Manager
Karen Camacho, Housing Project Manager
SUBJECT: 2021 Housing Element Annual Progress Report
Recommendation
Adopt a Resolution:
1. Accepting the following annual reports: 2021 Housing Element Annual Progress Report; 2021 General Plan Annual Progress Report; and Housing Successor to the Redevelopment Agency Annual Report;
2. Authorizing the City Manager to submit the above-referenced reports to the appropriate State authorities; and
3. Finding that the acceptance and submittal of the above-referenced reports are exempt from the California Environmental Quality Act (CEQA).
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority No. 6: Create a Healthy and Safe Community
Background
This staff report combines three annual housing and planning progress reports, all of which must be submitted to the relevant State agencies by April 1 of each year:
· Housing Element Annual Progress Report (“Housing Element APR”) · General Plan Annual Progress Report (“General Plan APR”) · Housing Successor Annual Report
The Housing Element Annual Progress Report and the General Plan Annual Progress Report must be submitted to the California Department of Housing and Community Development (“HCD”) and Governor’s Office of Planning and Research (“OPR”).
The Housing Successor Annual Report (Report) regarding the Successor Housing Low and Moderate Income Housing Asset Fund (“LMIHAF”) may be submitted as an accompanying document to the Housing Element APR.
These reports must be presented to the local legislative body for its review and acceptance prior to submittal to the relevant government entity. The Housing Element APR and General Plan APR were presented to the Planning Commission on March 14, 2022.
Housing Element Annual Progress Report
Government Code Section 65400 requires all jurisdictions to prepare a Housing Element APR (Attachment 2) to detail the implementation of their Housing Element. The report must be submitted to HCD and OPR by April 1 of each year for the immediate past calendar year. The Housing Element APR addresses the following topics:
· Progress on achieving the City’s Very-Low (“VLI”) and Low-Income (“LI”) housing goals. · Progress on achieving the City’s Moderate (“MOD”) and Above Moderate-Income housing goals.
· Progress on accomplishing the Housing Element workplan to increase, preserve, and improve the supply of affordable housing; invest in activities to end homelessness; promote equitable development; and create healthy, sustainable, communities and neighborhoods.
The Housing Element outlines the City’s plan to meet its affordable and market rate housing production goals, referred to as the Regional Housing Needs Allocation (“RHNA). This number is determined by HCD, DOF, and the regional Councils of Government (“COG”s). The State agencies calculate statewide housing needs based upon population projections and regional population forecasts used in preparing regional transportation plans.
The Association of Bay Area Governments (“ABAG”)/Metropolitan Transportation Commission (“MTC”) is then responsible for distributing the RHNA to the Bay Area local governments using an allocation methodology that is consistent with development and growth patterns. East Palo Alto’s RHNA for the current 8-year Housing Element is 467 housing units.
The RHNA is divided into four income categories that encompass all levels of housing need.
HCD publishes the income data for all counties each year. Please note that RHNA does not include Extremely Low Income (“ELI”) as a separate category; income levels up to 50% of the Area Median Income (“AMI”) are included in the VLI category. The State Income Limits for San Mateo County for 2021 are shown in Table 1 below:
TABLE 1
State Income Levels for San Mateo County, 2021
Income Level Number of Persons in Household
1 2 3 4 5 6
Extremely Low
(0% - 30% AMI)
$38,400 $48,850 $49,350 $54,800 $59,200 $63,600
Very Low (31% -
50% AMI)
$63,950 $73,100 $82,250 $91,350 $98,700 $106,000
Low (51% - 80%
AMI)
$102,450 $117,100 $131,750 $146,350 $158,100 $169,800
Moderate (81% -
120% AMI)
$125,650 $143,600 $161,550 $179,500 $193,850 $208,200
Above Moderate
(greater than 120%
AMI)
NA NA NA NA NA NA
See San Mateo County Department of Housing:
<https://www.smcgov.org/media/30286/download?inline=>
The East Palo Alto RHNA allocation for each income range is shown in Table 2 below:
TABLE 2
Regional Housing Needs Allocation (RHNA) for East Palo Alto Income Level # of Units % of Total
Extremely Low (0% - 30% AMI) n/a n/a
Very Low (31% - 50% AMI) 64 13.7%
Low (51% - 80% AMI) 54 11.6%
Moderate (81% - 120% AMI) 83 17.8%
Above Moderate (greater than
120% AMI)
266 57.0%
Total 467 100%
The City Council adopted the 2015-2023 Housing Element on January 17, 2017, and HCD certified the Housing Element on March 13, 2017. The Housing Element can be found on the City’s website at the following link: <https://www.cityofepa.org/housing>.
General Plan Annual Progress Report
Government Code Sections 65400 and 65700 mandate that all cities and counties submit an annual report to the Governor’s Office of Planning and Research (“OPR”) on the status of their General Plan. This report is submitted separately from the Housing Element APR and addresses all other components of the General Plan. It is intended to provide an OPR with an overview of statewide trends in land-use decision making and trends in planning and development.
The General Plan is the City’s “constitution” for future growth, providing a comprehensive guide for decision making on land use and other development and planning issues through established goals, policies, and programs. The City adopted its General Plan, VISTA 2035, on October 4, 2016. VISTA 2035 can be found on the City’s website at the following link:
<https://www.cityofepa.org/econdev/page/general-plan-update> The General Plan APR should demonstrate progress on the City’s implementation program, or specific measures associated with the implementation of each section of the General Plan.
The General Plan APR should also contain an overview of any major planning activities undertaken in 2021, such as: specific or master plans or master environmental assessments; General Plan amendments; and major development applications.
Housing Successor Agency Annual Report
The Housing Successor to the Redevelopment Agency Annual Report for Fiscal Year 2020- 2021 (Housing Successor Agency Report) is included as an accompanying document to the Housing Element Annual Progress Report, thus satisfying the requirements of Senate Bill 341, which took effect on January 1, 2014. This report describes how the City (as the Successor to the former Redevelopment Agency of the City of East Palo Alto) has utilized its former Redevelopment Agency funds for housing activities in conformance with the California State Health and Safety Code.
Analysis
Housing Element Progress in 2021
The Housing Element APR requires data reporting on new housing applications, permitting, and construction, but only projects that have received a building permit “count” towards the current RHNA, or reflected in the RHNA unit total shown in Table B of Attachment 2.
In 2021, the City issued building permits for 32 new residential units, including 30 Accessory Dwelling Units (“ADU”s) and 2 single family homes. The City’s overall progress in achieving its RHNA goals from 2015-present is shown in Table 3 below. Note that Extremely Low-Income units are not counted separately in the RHNA or on the Housing Element APR and so are included in the VLI Total.
TABLE 3
RHNA Progress, 2015-Present
Income Level 2015 2016 2017 2018 2019 2020 2021 Totals RHNA Deficit
Extremely Low (0% - 30%
AMI) 16 26 8 50 n/a
Very Low (31% - 49% AMI) 4 68 7 79 -65
Low (50% - 80% AMI) 24 2 3 6 35 19
Moderate (81% - 120%
AMI) 1 5 1 2 2 6 17 66
Above Moderate (greater
than 120% AMI) 50 2 5 3 1 4 5 70 196
Total 91 7 5 4 9 103 32 251 216
The City has met 53% of its cumulative RHNA. By income category, the City has met 27% of its market rate housing target and 88% of its affordable housing target to date.
Projects in the Pipeline - Entitled Units or Units with SB 35 Zoning Clearance While only projects that received a Building permit in 2021 will be counted towards the City’s RHNA progress, the Housing Element APR also accounts for projects at other stages of development, including entitled projects. These are shown in Table A2 of Attachment 2. Please note that the SB 35 projects, as described below, are listed as “entitled” projects for the purposes of the APR.
A total of 88 units from three multifamily residential projects were entitled or received SB 35 Zoning Clearance throughout 2021. Each of these three projects included an inclusionary housing component, for a total of 13 deed-restricted inclusionary units ranging from 35-120% AMI.
SB 35 Projects
California Senate Bill 35 (SB 35) is a 2017 law intended to streamline housing construction to address the state housing crisis. It requires that cities approve housing projects that meet objective zoning standards through a ministerial process.
This requirement applies to jurisdictions that do not issue enough building permits to make progress on their VLI and LI or Above-Moderate RHNA, as determined by HCD. If the jurisdiction also has not made sufficient progress toward its Above-Moderate income RHNA, then it is required to streamline developments with at least 10% affordable units. East Palo Alto is subject to this requirement.
Since SB 35 projects receive ministerial, rather than discretionary, review, they are not “entitled.” Instead, projects are reviewed by the Planning Division for conformance with the City’s existing objective development standards and issued a Zoning Clearance before the project may proceed to the Building permit stage.
Two applications were subject to the streamlined, ministerial review process and received Zoning Clearance in 2021. Both of these projects met the affordability threshold (of 10%) under SB 35 because they complied with the City’s Inclusionary Housing Ordinance:
· 1804 Bay Rd. a 75-unit mixed-use project with 10 inclusionary units: 3 at 35% AMI; 5 units at 50% AMI; and 2 at 60% AMI. This project also utilized the state Density Bonus law to receive 50% additional density in the project and waivers to accommodate the additional units.
· 760 Weeks St., a 10-unit condominium project with 2 inclusionary units, restricted to 80% and 120% AMI. This project likewise utilized state Density Bonus law to utilize two concessions and a waiver for the project (though it did not receive additional density).
Projects in the Pipeline - Under Review
Projects are considered “pipeline” if there is an active Planning application under review, but the project has not been deemed complete and/or the project has not received any Planning approvals. These units are not yet reflected in the Housing Element APR but are important to contextualize the unit counts shown in this staff report and capture housing development trends.
Further progress on VLI, LI, and MOD units is anticipated from these developments due to the City’s Inclusionary Housing program. All residential developments in East Palo Alto that create additional housing units are subject to the City’s Inclusionary Housing Ordinance, which requires 20% of units in any project of five or more units to be provided as deed-restricted affordable housing.
Table 4 below shows the additional housing units in the City’s development “pipeline” against the remaining RHNA. The chart captures the development projects that the Planning Division is most likely to be engaged with in 2022.
Please note that Table 4 includes projects in the pre-application phase, or for which the Inclusionary Housing obligation has yet to be finalized. For these projects, unit estimates are calculated from applying the 20% standard on-site Inclusionary Housing requirement and are only intended for reference. As these are preliminary estimates, they should be interpreted more as an illustration of potential RHNA progress than an exact estimate for 2022.
TABLE 4
Unit Pipeline Estimates by Development
Development Type of Project Status Mkt ELI VLI LI MOD Units Total
547 Runnymede Condominium Under Review 7 1 8
990 Garden Single Family Under Review 6 2 8
717 Donahoe Condominium Under Review 12 1 1 14
2340 Cooley Condominium Under Review 6 1 7
Woodland/ Euclid Rental Under Review TBD 445
EPA Waterfront Mixed use Under Review 208 13 26 13 260
Harvest: The
Landing
Commercial Under Review TBD 95
n/a ADUs Under Review 1 3 3 3 3 13
n/a Single Family Under Review 7 7
Four Corners Rental Under Review 144 9 27 180
Estimated Pipeline Unit Total 1,037
Large Development Projects in Concept Phase
Three large mixed-use or commercial projects listed in Table 4 have expressed an interest in providing housing: Four Corners, EPA Waterfront, and Harvest: The Landing. As reported in prior Housing Element APRs staff reports, the City has seen unprecedented development activity in its Ravenswood/4 Corners Specific Plan area, prompting the City to analyze targeted revisions to the specific plan.
These developments will be subject to the broader RBD Specific Plan update. Some parcels included in these proposals are not currently zoned for housing, and the combined unit count of these proposals would exceed the original housing maximum of 835 units originally studied for the RBD specific plan.
This high level of development interest and activity indicates that the City may be able to meet most of its RHNA goals by 2023, if the City is able to address its significant infrastructure challenges.
Key Impediments to Housing Production
The Housing Element requires that jurisdictions identify any significant impediments to the production of housing units. Prior to 2018, the key impediment in East Palo Alto was the Temporary Water Moratorium (Ordinance No. 399), which was adopted in July 2016 and ended in July 2018. This resulted in the suspension of progress on several housing related projects.
With several developments in the pipeline, the chief impediment to further housing development in East Palo Alto remains infrastructure-related. Pipeline projects are experiencing significant delay as the City and developers of affected projects work with the East Palo Alto Sanitary District to find a feasible solution to the system’s capacity.
In addition, while the City has largely met its water supply needs, water distribution with the current network of pipelines remains a challenge. The City is actively discussing the funding for major capital improvement projects to improve water distribution for the entire city.
The Missing Middle: Moderate-Income Units
Although progress is being made in developing more affordable housing (for ELI, VLI, and LI households) and market-rate housing, many jurisdictions are challenged to develop more housing units for Moderate-Income households, defined as those earning at or below 120% of the County’s Median Income. The City is required to develop 83 ModerateIncome units before the end of the current Housing Element cycle. However, the funding sources to develop Moderate-Income units are limited.
Given the number of market-rate, for-sale residential developments currently in the pipeline, the City’s Inclusionary Housing program is likely to add significantly to the production of Moderate-Income units. There have been several projects since adoption of the Inclusionary Housing Ordinance in 2019 that include for-sale units in the 80-120% AMI range.
In 2020 and 2021, the City implemented multiple initiatives to increase the production of ADUs, which can serve as a source of “naturally” affordable housing for Moderate-Income households. For example, the City and its partners completed their “ADU Streamlining” initiative, funded by an SB 2 Planning Grant, and the City adopted its updated ADU ordinance on November 17, 2020. Further ADU progress is discussed below.
Other Key Accomplishments & Initiatives That Will Increase Housing Production Accessory Dwelling Units (ADUs)
As noted above, the City has invested significant resources into encouraging the production of ADUs as a strategy for adding to the affordable housing stock in East Palo Alto. City staff participate in monthly ADU Technical Working Group meetings with community partners and collaborate with these organizations on multiple ongoing ADU initiatives. This includes the launch of the CalHome grant of $2,000,000, received from HCD in 2020.
As part of the City’s efforts to streamline ADU applications and reflect changes to state ADU law, Planning staff developed a Zoning Clearance Form that has significantly reduced Planning review time. Through the SB 2-funded “ADU Streamlining” initiative, the City’s partners are leading a comprehensive analysis of the full ADU application process, including interviews with City staff and ADU applicants. They are further assisting Planning staff by creating an interactive East Palo Alto ADU website and updated handouts that reflect the City’s updated ADU ordinance.
The number of ADU applications continues to increase: as noted above, in 2021, 30 ADU applicants received a Building permit, while 26 received Zoning Clearance from the Planning Department. This compares to 13 Building permits and 12 Zoning Clearances for ADUs in 2020.
Progress on the City’s Five-Year Affordable Housing Strategy In October 2018, the City approved its Affordable Housing Strategy (“the Strategy”). The Strategy directs limited affordable housing funds into the development of new, deed-restricted affordable housing, with the goal of doubling the number of deed-restricted units and preserving 200 existing affordable units by 2023. The Strategy also outlines potential regulatory changes and other creative approaches that the City and community partners could utilize to increase the production of affordable housing.
The City has made significant progress towards the goals of the Strategy, completing the majority of the items on the workplan. In 2021, this included:
· 965 Weeks - Applied for Affordable Housing and Sustainable Communities (“AHSC”) grant and loan; awarded January 2022
· RV Safe Parking Program - Renewal of program through April 2022 and continued daytime operations due to COVID-19 pandemic
· Coordination on Homelessness - monthly meetings with County partners and service providers on homeless encampments in East Palo Alto
· Inclusionary Housing - processed two SB 35 projects with inclusionary requirement and one project with an alternative compliance option
· Light Tree Affordable Housing Development- Building permits issued for Buildings X, Y, and Z
2021 General Plan Progress
In addition to the Housing Element, the General Plan consists of several distinct sections: Land Use and Urban Design; Economic Development; Transportation, Health and Equity; Parks, Open Space, and Conservation; Infrastructure Services and Facilities; Safety and Noise; and the Westside Area Plan. The table in Attachment 3 shows the status of implementation of each individual section of the VISTA 2035 General Plan.
Key Progress Efforts in 2021
In spite of the challenges of the COVID-19 pandemic and staffing, the Planning Division made progress on a number of different projects in 2021 to address certain General Plan Programs, as identified in Chapter 12 of the General Plan, Implementation Programs. Currently, 20% of the programs are complete, 74% of the programs are in progress, 6% are ongoing, and 24% have not been started. In addition, there were no General Plan Amendments processed in 2021. State law allows General Plan Amendments up to four times a year.
Several of those projects are highlighted below:
Land Use and Urban Design Programs (Table 12-2)
Program 2- Specific Plan Consistency
Beginning in 2020, East Palo Alto has initiated an update to the Ravenswood/4 Corners TOD Specific Plan which is also known as the Ravenswood Business District (“RBD”) area, 350 acres of industrial, residential, commercial, and public uses. This update was initiated following an increase in interest in development in the RBD area, even with the location’s physical constraints, such as environmental contamination, lack of transit and physical isolation due to its location next to San Francisco Bay. This interest in development provides an opportunity to further realize the goals of both the General Plan and the original RBD specific plan for the City’s only Priority Development Area. Previous to this increase, there was little development activity partially due to the temporary water moratorium.
The City held multiple study sessions with Planning Commission and City Council and community meetings throughout 2021. On November 18, 2021, the City Council hosted a study session and provided direction on the growth scenarios to be studied under California Environmental Quality Act (“CEQA”) for the RBD Specific Plan Update and the additional requirements needed to accompany any increase in development capacity for the RBD/4 Corners area. City Council determined it was best to study the following scenarios:
· Scenario 1: 2.82 million sq ft of office and R&D uses · Scenario 2: 3.25 million sq ft of office and R&D uses At the most recent RBD study session held on February 1, 2022, the City Council directed staff to study the addition of up to 1,600 housing units in the area.
The RBD update is an ambitious multi-year effort that includes both in-depth planning and environmental analysis, as well as extensive community outreach. It is an opportunity for the City to capture a greater share of community benefits and to impose stronger design and character standards for the entire Specific Plan area.
Parks, Open Space and Conservation Physical Improvements (Table 12-10) Program 6 Park access
City staff obtained grant funding to improve the track/sports field at Costano Elementary School. This improvement will benefit both the students during school activities and the area residents for community use. Access will be improved for both students and the community, providing valuable recreational area in the neighborhood.
Program 10 Park improvements
City staff also obtained grant funding to improve Joel Davis Park. The improvements include adding benches, replacing playground equipment, installing a bathroom and add fitness equipment. This will enhance an existing park that is already well utilized.
Infrastructure, Services, Facilities Physical Improvements Programs (Table 12-11) Program 3 - Performing Arts Center
The EPA Center Arts project is a 23,815 square-foot building comprised of three components:
1) the Entry/Studio/Café Component, 2) the Theater/Rehearsal Space Component, and 3) the Digital Arts/Workshop Component. Center operations focus on providing educational opportunities for community youth ages 13 to 21 through group classes, private instruction, career training, mentoring, and performance. Programs will focus on three major areas: Visual Arts Training, Music and Performance (digital media production, audio engineering and recording, dance, voice and instrument training, band and ensemble, 2D and 3D visual arts training and production), and DIY (Do It Yourself) maker programs. EPACENTER Arts plans to employ approximately 10-14 core staff members, and part time teaching faculty of approximately 45 instructors. The café and other program areas will employ 15-20 youth and young adults in part time positions as part of leadership training and workforce development.
Special events will include productions in the theater, community festivals, open-mic performances, recitals, community films screening, and guest artist performances, among other events.
Safety and Noise Programs (Table 12-8)
Program 3 - Hazard Mitigation Planning
The Local Hazard Mitigation Plan (LHMP), part of a countywide effort known as the San Mateo County Multi-Jurisdictional Hazard Mitigation Plan, was adopted by City Council at the end of 2021. All participating local jurisdictions have been responsible for assisting in the development of the hazard and vulnerability assessments and the mitigation action strategies for their respective jurisdictions and organizations. The LHMP presents the accumulated information in a unified framework to ensure a comprehensive and coordinated plan covering the entire San Mateo County planning area. Each jurisdiction has been responsible for the review and approval of their individual sections of the LHMP. A ten-member Steering Committee (SC) composed of representative stakeholders was formed to guide the development of the LHMP. In addition, residents were asked to contribute by sharing local knowledge of their individual area’s vulnerability to natural hazards based on past occurrences.
Public involvement has been solicited via a comprehensive public outreach campaign that included two rounds of public meetings, web-based information, a questionnaire, and multiple social media updates. The hazard identification and profiling in the LHMP addresses the following hazards of concern within the planning area:
1. Dam failure
2. Earthquake
3. Flood
4. Landslide
5. Severe weather
6. Tsunami
7. Wildfire
Community Rating System
The Community Rating System (CRS) program is a voluntary program established by the Federal Emergency Management Agency (FEMA) and managed by the Insurance Services Office (ISO) to reduce flood losses, facilitate accurate flood insurance rating and promote the awareness of flood insurance. Certification is required annually, with the most recent in 2021.
Communities participating in the CRS program, including the City of East Palo Alto, earn credit points by implementing floodplain management activities that exceed the minimum requirements established under the National Flood Insurance Program (NFIP). Every 500 credit points that a community earns under the program translates to a higher-class rating and an additional 5% discount on flood insurance premiums for properties in the Special Flood Hazard Area (SFHA), as illustrated in the table below. Currently, the residents of East Palo Alto receive a 15% reduction in flood insurance premiums. The City’s eventual aim is to reach and stay at a Class 6, which would mean a 20% reduction in resident’s flood insurance premiums and also represent the highest level ever achieved by the City of East Palo Alto.
Housing Successor to Redevelopment Agency Annual Report Staff has also attached the Housing Successor to Redevelopment Agency Annual Report (Attachment 4) for Fiscal Year 2020-2021 (“Housing Successor Report”). As mentioned previously, the Housing Successor Report is required to be submitted with the Annual Housing Element Progress Report. The Housing Successor Report provides information on the Successor Housing Low and Moderate Income Housing Asset Fund (LMIHAF). The Housing Successor Report is included as an attachment to the Housing Element Annual Progress Report.
The Successor Agency Report shows that the City had $11,299,418 LMIHAF assets at the end of the fiscal year. Besides information on aggregate expenditures, the document includes several expenditure “tests” that the Successor Agency must meet.
The “Excess Surplus Test” requires that the Agency cannot have unencumbered funds that exceed the aggregate amount deposited into the fund during the preceding four fiscal years or a minimum of $1,000,000. The Report indicates that the aggregate amount during the four prior years is $1,800,042. The unencumbered amount is $2,122,139, which exceeds the maximum amount allowed by the amount of $322,097.
Redevelopment law also places a limit on the amount of funds that can be spent on affordable units for senior citizens. If this percentage exceeds 50% of units funded over the last ten years, the Housing Successor cannot expend future LMIHAF funds on new senior housing until the Housing Successor or City has reduced this percentage to 50% or below. The report indicates that 0% of expenditures over this period went to fund senior housing. Therefore, the Successor Agency meets the “Senior Housing Test”.
Next Steps
If approved, staff will submit these annual reports to the applicable State agencies by April 1, 2021.
Fiscal Impact
There is no fiscal impact to the City associated with this report.
Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. Resolution
2. Housing Element APR (excerpts)
3. 2021 General Plan Program Status Table
4. 2022 HSA Report