City of East Palo Alto
2415 University Avenue
East Palo Alto, CA 94303
To the honorable East Palo Alto City Council,
The Housing Leadership Council (HLC) appreciates this opportunity to comment on the city of East Palo Alto’s housing element. HLC works with communities and their leaders to create and preserve quality affordable homes. We were founded by service providers and affordable housing professionals over 20 years ago to change the policies at the root cause of our housing shortage.
Over the prior RHNA cycle, East Palo Alto is the only city in San Mateo County to surpass its extremely low-income housing allocation. With 129 very low- and extremely low-income homes approved in the city from 2015-2021, East Palo Alto surpassed its 64-unit allocation by more than 200%. The city also approved over 80% of its low-income housing target, a testament to the city’s commitment to promoting affordable homes.
Nonetheless, East Palo Alto faces challenges with meeting its 6th RHNA cycle housing goals.
The city’s lower-income housing goals have more than doubled to 365 low- and very low-income units, reflecting the ongoing shortage of homes available at a price East Palo Alto residents can afford. Furthermore, the city entitled a small fraction of its market-rate housing allocation over the 5th RHNA cycle–though the city council’s approval of the Woodland Park Euclid Improvements proposal on November 1, 2022 fulfills a large portion of the upcoming market-rate housing goals.
This letter provides proposals for changes and additions that will enable East Palo Alto to meet its housing obligations for all residents regardless of income. The first part of this letter examines East Palo Alto’s sites inventory and constraints to housing. The second part evaluates East Palo Alto’s goals, policies, and programs, offering recommendations for changes and additions to remove constraints and promote housing for all.
Site Inventory and Constraints
The site inventory requires cities to demonstrate that they have adequate locations with the necessary policies in place to produce the RHNA allocations. Recent changes to state law require cities to meet a higher burden of proof for affordable housing in their site inventories. In particular, sites projected for lower-income housing must meet higher standards than in prior cycles, particularly if more than 50% of sites are non-vacant–as is the case in East Palo Alto. 1 This isn’t a criticism, it’s a statement of fact: Almost all cities in the Bay Area rely primarily on non-vacant sites and therefore need to provide extra evidence to ensure the sites where they plan for affordable housing are realistic.
Overall, East Palo Alto presents an exemplary site inventory analysis. The analysis categorizes sites based on their placement in the pipeline, almost exclusively using sites with some form of developer interest. EPA’s draft housing element presents a strong site-specific analysis for most sites, with appropriate data to justify inclusion in the inventory. 2 However, two classes of sites merit further analysis: publicly owned sites and sites within the Ravenswood Business District. The draft housing element assumes 181 units will be built on 4 publicly owned parcels, each of which would benefit from stronger supporting evidence and clear programs to facilitate development. All publicly owned sites should be rezoned to densities that reflect the housing element’s projected buildout of each site. - 2277 University: As part of the land swap, EPA should commit to favorable development standards to incentivize very low-income housing. 50% very low income and 50% low income, a more accurate projection of realistic development potential for a publicly owned site. 100% very or extremely low-income housing is rarely financially feasible to build. In fact, most affordable housing developments require 10-20% moderate income housing to work financially, but HLC recognizes the unique needs of the East Palo Alto community for housing at lower levels of affordability. - 560 Bell: Commit to rezone to “Mixed-Use High” zoning to match standards of surrounding area and provide predictability for a developer. - Bay Rd. Site: Commit to rezone to the standards of the MUC-1 district to ensure that the school district has predictable rules to facilitate a project proposal on this site.
A number of sites within the Ravenswood Business District would also benefit from stronger supporting evidence and policies to justify inclusion in the housing element, some of which may be addressed as the city updates the RBD Specific Plan. Specifically, the housing element should commit to rezoning the EPA Waterfront, 1103 Weeks St., and 1200 Weeks St. properties to ensure predictability when these sites are developed. The housing element should also reapportion its projected affordability levels on these sites to include a proportion of moderateand above moderate-income housing, which would more accurately reflect realistic development trends on private property in East Palo Alto.
These adjustments will require East Palo Alto to reduce its number of very low- and low-income units that can be counted toward the city’s RHNA allocation. However, because EPA has an exceptionally high count of lower-income units already, this reduction will not fundamentally affect the viability of EPA’s site inventory. However, the city should make additions to its policies and programs to implement the recommended rezonings and ensure the listed sites can be justified for inclusion in the housing element.
2 Draft housing element, pp. 464-486
1 HCD’s Site Inventory Guidebook, p. 27
Addressing a handful of governmental constraints to housing development would help EPA justify its entire site inventory. For the most part, EPA’s zoning code is fairly generous, with relatively low parking requirements, reasonable lot coverage requirements, and heights and densities conducive to new development. However, a handful of unaddressed governmental constraints could serve as barriers to housing on EPA’s selected sites:
- Floor Area Ratio: Low FARs severely limit full utilization of most zoning districts. With no FAR above 2.5, and most FARs ranging from 1-2, it is very difficult to use the full lot size without density bonus concessions.
- Large rear setbacks: Several of EPA’s densest zones have significantly higher rear setbacks than the rest of the city. HLC recommends EPA align its rear setbacks throughout the community.
- Long discretionary approval times: East Palo Alto’s housing element recognizes community concerns that “the development process was too slow and there was too much uncertainty,” posing a constraint to housing.
3 In response, the housing element
offers to “Take reasonable measures to reduce overall processing times for residential development applications” in abstract. However, the housing element does not analyze specific aspects of its approval process as a constraint, nor does it make firm commitments to reduce long timelines in practice. All projects require both Planning Commission approval for the preapplication approval and design review for a completed application.
4, 5 East Palo Alto’s draft housing element estimates the average design review process takes 2-3 months; the city presents no evidence regarding the timeline for planning commission preapplication review or the frequency of council appeals.
Developments that comply with zoning regulations, building codes, and objective standards should generally be exempted from discretionary hearings.
Policies and Programs
In the following section, HLC describes how East Palo Alto can strengthen its Goals, Policies, and Programs to more effectively promote low- and very low-income housing as needed to create a viable site inventory. The city already has a number of strong policies and programs in place. However, several programs that would otherwise be adequate lack clear objectives and deliverables. Some opportunities to promote new homes go unconsidered New state laws have added new requirements to the goals, policies, and programs section of a housing element. Passed in 2018, AB 1397 requires cities to directly connect policies and programs to the identified needs, governmental constraints, and site inventory, among other 5 City Code Title 18, Article 7, Section 18.82.030(A)(2)(a): “All Pre-App projects are required to provide neighborhood notification and a minimum of one [Planning] Commission study session to discuss the proposed project and to document community concerns.” Furthermore, “Within calendar 15 days [sic] of the Commission study session, any member of the Council may request a study session with the Council.”
4 City Code Title 18 Article 2, Section 18.10.020(E): “Design Review is required for new or modified construction activities.”
3 Draft housing element, p. 18
analyses.
6 Another 2018 law, AB 686, implemented Affirmatively Furthering Fair Housing mandates, specifically requiring cities to consider how their goals, policies, and programs can better advance fair housing goals, especially the production of low- and very low-income housing. The specific programs cities implement must include “concrete steps, timelines and measurable outcomes.”
7 East Palo Alto’s unique circumstances as a historically underinvested community makes the city’s Affirmatively Furthering Fair Housing analysis unique within San Mateo County.
Throughout the 1950s, 60s, and early 70s, explicitly racist blockbusting practices and redlining policies segregated East Palo Alto into a predominantly Black community. In recent decades, rising housing prices and gentrification have fueled demographic change and displacement. As a result, East Palo Alto has some of the strongest renter protections in California. Even with recent demographic change, the city’s population is more diverse than most other cities in the county. The estimated 2021 median income is $83,511, just over half the county’s 2021 median income of $149,600. Compared to most other cities in San Mateo County, East Palo Alto has already taken substantial action to affirmatively further fair housing.
Nonetheless, most of EPA’s policies and programs could make stronger commitments, with more actionable language and metrics for success. Several potentially impactful programs do not make a firm commitment to implement policy changes; rather, the programs offer to implement policy changes “If directed by City Council.” This non-commitment undermines the legitimacy of many programs in East Palo Alto’s housing element.
As described in a presentation delivered on May 9, 2022 by HCD staffer Melinda Coy to a group of planners from across San Mateo County, “a housing element is no longer a paper exercise–it’s a contract with the state of housing commitments for eight years.” 8 As part of their
contract with the state, cities are obligated to make firm commitments to implement policy changes, not merely to “study” or “review” them. The current council is responsible for providing direction to city staff and future councils as to how they will meet their obligation to plan for housing that meets the needs of the entire community.
In order to improve its policies and programs, several programs would benefit from revisions, and new actions may be required, as described below:
- Add a new supporting policy for “Objective: Take reasonable measures to reduce overall processing times for residential development applications,” to read as follows:
- Add “Policy: Reduce residential development application processing times by limiting public hearings to 2 planning commission pre application review hearings and eliminating design review entirely for 100% affordable housing proposals.” Affordable housing proposals that comply with objective development standards should not need to go through the cost and uncertainty of design review and should receive more certainty for the pre-application process. While the 8 May 9, 2022 HCD presentation, Housing Elements in the 6th Cycle: Common Shortfalls 7 HCD’s Affirmatively Furthering Fair Housing Guidebook, p. 55 6 See Gov. Code, § 65583, sub. (b), (c); HCD, Building Blocks Ravenswood Business District Specific Plan update has the potential to address many of these issues, the housing element provides the city a good opportunity to make strong commitments to promote housing.
- Revise “Objective: Incentivize affordable housing development” to firmly commit to implementing an affordable housing overlay by the first quarter of 2024 rather than only “if directed by Council.” Specify goals of a new affordable housing overlay to which the city can be held accountable.
- Revise the supporting policies under “Objective: Encourage smaller scale housing that is relatively more affordable, including … ADUs” to provide a clear implementation date for preapproved ADU plans.
- Revise “Policy: Use the opportunity of the RBD Specific Plan Update to study feasibility and desirability of fee waivers or reductions or delayed fee payments for fully affordable projects” to make a firm commitment to implement a reduction or deferral of planning, building, and impact fees for fully affordable housing developments in the RBD by 2024. - Revise policies to support “Objective: Encouraging housing on sites zoned for mixed use in the Ravenswood/4 Corners Specific Plan Area” to:
- Revise “Policy: For sites within the RBD Specific Plan Area, study feasibility and effectiveness of an RBD-specific density bonus and relaxed zoning controls” to specify that the city will rezone to accommodate assumed densities for sites within the RBD Specific Plan Area as described in the housing element’s site inventory. Furthermore, add language to evaluate the impact of the high rear setbacks within the RBD.
- Revise current programs and add new ones for “Objective: Leverage available public lands for affordable housing development” to ensure that public lands are utilized fully for affordable housing.
- Revise “Program: Study and determine feasibility for redevelopment of Senior Center at 560 Bell St. to include affordable housing” to make a firm commitment to pursue housing at 560 Bell St, including a commitment to release an RFP for the site by 2025. As an opportunity site in the housing element’s site inventory, the city is committing to pursue housing on this site and should plan accordingly. - Add supporting language to “Program: Work with County of San Mateo to complete land swap and determine feasibility of the County developing affordable housing at 2277 University” that commits to provide favorable development standards as needed by the county to develop affordable homes on this site, which otherwise is too small to count toward EPA’s lower-income RHNA allocation (the 0.38-acre site is currently projected to host 20 units, 19 very low income).
- Revise “Program: Work with Sequoia Elementary School District to facilitate development of the district-owned parcel at 2450 Ralmar Ave as affordable public school employee housing” to commit to zoning changes that reflect the assumed densities in the site inventory.
- Revise “Objective: Build housing in areas zoned for exclusive retail use, where the market has made retail less feasible” to reflect recently passed AB 2011, meaning EPA may well be legally required to allow housing on its commercially zoned land. 9 The city
will have the most control over new development if it creates a zoning district to reflect state law now.
- Revise “Program: Study feasibility of creating a City rent registry” to make a firm commitment to implement a rental registry. East Palo Alto already has among the strongest renter protections in California; the addition of a rent registry would help the city track the impact of its protections and identify any remaining loopholes.
Several other objectives and programs, including plans to apply to make the East Palo Alto Sewer District a subsidiary district of the city, invest in tenant education, and implement a jobs-housing linkage requirement in the RBD, have high potential to facilitate new homes and support tenants in EPA. Nonetheless, the draft housing element may benefit from adoption or adjustment of other policies as well, which HLC may recommend in the coming months with future rounds of review and revision.
HLC wants to be a partner to the city, sharing our collective knowledge of state law and best practices to facilitate fair housing. Please contact me or other HLC staff if you would like to talk further about how East Palo Alto can identify and implement policies that will best meet the community’s needs.
Thank you for your consideration,
Jeremy Levine
Policy Manager, Housing Leadership Council of San Mateo County 9 AB 2011 Factsheet
Corinne I. Calfee
P.O. Box 2369
Davis, CA 95616
[email protected]
510-809-8001
VIA Electronic Mail
Karen Camacho
Interim Housing and Economic Development Manager
City of East Palo Alto
1960 Tate St.
East Palo Alto, CA 94303
[email protected]
January 25, 2023
Re: Draft 2023-31 Housing Element
Dear Karen:
Opterra Law, Inc., represents Sand Hill Property Co. and Woodland Park Communities. We write today to provide comments on the Housing Element Draft #2. The following letter provides initial feedback on the updated draft Housing Element. My clients reserve the right to provide additional comments as the process proceeds.
As a preliminary matter, the recent process has been unclear and confusing. On the afternoon of January 18, 2023, an email was sent regarding the Housing Element Draft #2. It indicated that there would be a “Formal 7-Day Public Review Period” that started the day before notice was given and in fact only lasted 6 days, from January 17 through January 23. I trust that the public review period is in fact at least 7 days and that it extends from the time that the notice was provided, rather than beginning prior to the notice to the public.
The same January 18, 2023 email indicated that there would be a January 23, 2023 Planning Commission meeting and a January 24, 2023 City Council meeting. No agenda has been posted for any January 24, 2023 City Council meeting, so I trust that notice was in error or that the meeting is no longer scheduled. Nonetheless, as of today, the January 24, 2023 meeting is still listed on the Housing Element website.
I have repeatedly sought additional information and clarification from the City regarding the Housing Element process, and it has not been forthcoming. I have called you multiple times and emailed you, with no response. Instead, there are only the confusing, internally inconsistent public facing communications. I hereby reiterate my request for a copy of the letter from HCD regarding the City’s draft Housing Element.
It should not be so difficult to obtain accurate, clear information about this important public process.
On a substantive note, my client appreciates the significant work that has gone into the Housing Element update process. It is more important than ever, given the new state requirements.
There are a few important issues that we would like to reiterate to the City and to HCD as the Housing Element works through the certification process.
1.) Governmental Constraints to Housing.
We are concerned that the analysis of governmental constraints to housing is incomplete and inaccurate. It does not address the infeasibility of the inclusionary housing ordinance. As we explained when the City adopted the inclusionary housing ordinance, the high level of inclusionary housing and the deep affordability combine to create a huge cost burden that threatens the viability of any market rate rental projects. Indeed, the Euclid Improvements were not able to comply with the conventional compliance mechanism and had to seek alternative compliance in an attempt to make the project feasible. We repeatedly provided an economic analysis to the City indicating the infeasibility of its inclusionary housing requirements. Furthermore, the City is considering increasingly onerous requirements for projects in the Ravenswood/Four Corners Specific Plan.
These will make housing more expensive, if not prohibitively expensive, to construct in the Specific Plan area. These local constraints to housing are not discussed in the Housing Element.
The discussion of governmental constraints is also inaccurate. The “average total processing time for typical residential developments” in Table 3.1.6 vastly understates the processing time for projects. First, the City has not, as a matter of course, regularly approved moderate or large multi-family housing projects so it is not clear how the averages were calculated.
Second, the City took 46 months from the submission of the required pre-application to the entitlements for the Euclid Improvements project. The City required the following 20 public meetings to approve the project:
1. May 6, 2019: Planning Commission Pre-application Study Session http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1227
2. July 30, 2019: City Council Pre-application Study Session
3. December 3, 2019: City Council Discussion of Relocation / OTRM
4. February 25, 2020: City Council Study Session
http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1068
5. September 10, 2020: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1316
6. October 6, 2020: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1284
7. November 19, 2020: City Council Study Session on Infrastructure http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1340
8. February 23, 2021: City Council Study Session on Inclusionary Housing Plan and Fiscal Impact Report
http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1357
9. June 22, 2021: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1403
10. July 26, 2021: Planning Commission Draft EIR Public Hearing http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1369
11. October 5, 2021: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1427
12. November 30, 2021: City Council Study Session on Tenant Relocation Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1458
13. February 15, 2022: City Council Study Session on Tenant Relocation Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1488
14. June 27, 2022: Planning Commission Policy and Action Discussion http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1832
15. July 25, 2022: Planning Commission Public Hearing on Project http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1855
16. September 6, 2022: City Council Hearing re Entitlements
17. September 20, 2022: City Council Hearing re Entitlements (continued)
18. October 4, 2022: City Council Hearing re Entitlements (continued / EIR certified)
19. November 1, 2022: City Council Hearing re Entitlements (continued / entitlements approved)
20. November 15, 2022: City Council Second Reading re Entitlements (second reading approved)
Similarly, my client’s application for the Four Corners project, which is also listed in the Housing Element, has been in process for more than two years. The City continues to refuse to release the DEIR for public review. Our experiences with application processing is far different from the City’s average calculations. We are not clear what other projects were approved that bring the average down from 46 months to 12-24 months. We further note that this draft of the Housing Element reduced the average processing time. We are not clear how that occurred.
Finally, the City’s business license taxes create another substantial governmental constraint on housing. These taxes are not mentioned as constraints. Measure O, adopted in 2016, significantly increased the business license taxes to 1.5% of gross receipts for rental housing providers, taxing housing rather than encouraging it. Importantly, Measure O exempted new construction from the tax for the first 10 years after issuance of a Certificate of Occupancy. In the fall of 2022, the City adopted Measure L, which increased the tax to 2.5% of gross receipts. It also reduced to only 3 years the period of time after new construction during which new homes are exempt. The taxation of housing and the reduction in exemption time are constraints on housing production that make it less likely that new housing will be created.
2.) Feasibility/Likelihood of Development within the Housing Element Cycle.
We note that the Housing Element relies heavily on the Euclid Improvements project to meet the City’s RHNA obligations. State law requires that a City rely upon sites and projects that are expected to be developed during the planning period. See Government Code section 65583.2(a). Here, despite our best efforts, we are concerned that the Euclid Improvements are unlikely to be developed during the planning period.
During the entitlement process, we repeatedly explained that we were concerned about the feasibility of constructing the project. We have continued our analysis in order to expedite development, but to date we have been unable to find a way to make the project feasible. During the entitlement process, through and including the final hearings, the City continued to impose ever more expensive and onerous requirements. The ultimate approval was conditioned on requirements to which my client objected because they made the project infeasible.
Given the current climate of high interest rates and extremely high construction costs, it is not reasonable for the City to rely upon the Euclid Improvements to meet their RHNA obligations as the project as it has been entitled is not likely to be built.
Thank you for your assistance. Please let me know if you have any questions or would otherwise like to discuss these issues.
Sincerely,
Corinne I. Calfee
Ofelia Bello
Youth United for Community Action
2135 Clarke Avenue
East Palo Alto, CA 94303
[email protected]
February 3, 2023
City of East Palo Alto
2415 University Avenue
East Palo Alto, CA 94303
[email protected]
To Whom it May Concern:
On Behalf of Youth United for Community Action (YUCA), I respectfully submit the comments below regarding the City of East Palo Alto’s draft Housing Element. YUCA is a 29 year-old grassroots community organization created, led and run by young people of color, majority of whom are from low income backgrounds. YUCA provides a safe space for young people to empower ourselves and create positive systemic change through grassroots organizing. Over the past decade, YUCA has played a pivotal role in housing justice efforts in the City of East Palo Alto. In 2014, YUCA supported the successful passage of the Affordable Housing Linkage Fee and the Tenant Protection Ordinance. In 2016, YUCA played a key role in passing the East Palo Alto Residential Renter Business License Tax and in passing revisions that strengthened the Rent Stabilization Ordinance and Just Cause for Eviction Ordinance. Our organization has worked tirelessly to advocate for housing-friendly policies while strengthening the base of community members who participate in these efforts to ensure the City’s processes and housing efforts are equitable and just.
The City of East Palo Alto’s Draft Housing Element contains very promising concepts and goals that can prove to be effective for advancing our community’s housing landscape; however, there are a number of areas where more specificity and additional consideration is needed. The outline below details areas where the draft requires improvement or additional attention.
3.1 Governmental Constraints
reference to the sole Low-Barrier Navigation Center (LBNC) in town, WeHOPE. While WeHOPE is an invaluable resource in our community and it technically satisfies government code 65660, it is not a resource that is available to youth who are minors. East Palo Alto has a severe youth homelessness issue that is not hypervisible but is very prevalent. It is necessary to recognize that this threshold of approval does not take into consideration some of the most vulnerable populations who find themselves in dire need of emergency and/or transitional housing shelters. It is appropriate and necessary for the City of East Palo Alto to take this into consideration and explore additional incentives or approaches that may help providers of transitional housing more likely to build in our city.
3.4 Levels of Review
One of the City of East Palo Alto’s biggest strengths is having robust community engagement processes and an accountable, responsive team who takes into serious consideration the concerns of our historically (and currently) largely disenfranchised community members. With our city undergoing rapid gentrification and displacement of majority households of color, it is imperative that the City continues to prioritize fair and lawful review processes that have helped community members be a part of the housing development process. It is because of these processes that community members have had the opportunity to express concerns, make suggestions, and actively participate in ensuring large-scale housing projects are advanced in the most thoughtful way that creates minimal harm to existing, vulnerable residents, while avoiding displacement and producing high-quality proposals by developers.
One example of this process working is demonstrated by the recently approved Euclid Improvement Project by Woodland Properties. The project has been underway for some time but was able to recently gain approval and set a development agreement in place to produce 445 net new units of housing in addition to the 160 rent stabilized units they will be demolishing and renovating. Furthermore, they have committed to building between 75-89 inclusionary units off-site at 851 Weeks St. as cited on page 5-2. Just this week on Wednesday February 1, 2023, Woodland Properties launched a series of meetings designed to inform residents about their relocation process and are encouraging people to select their relocation preference. Woodland also encouraged residents to approach their staff with additional questions or concerns they may have. While this process has been arduous, it is truly a testament to the effectiveness of the City’s housing policies and thorough levels of review.
4. Affirmatively Furthering Fair Housing
Chapter 4 offers a thorough, thoughtful analysis of East Palo Alto’s historic housing challenges as well as the current legacy that continues to pose barriers for advancement. While all of the policies in place to encourage housing development are strong, it is of utmost importance to emphasize that the work to implement these policies is extremely difficult with severely understaffed teams. Page 4-10 cites low staffing capacity in the Building, Code Enforcement, Planning and Housing departments. It is critical that City Council reckon with this significant barrier by prioritizing the hiring of the additional staff on these teams and include it as one of the efforts it will put in place to address local barriers to affordable housing development.
6. Policies and Programs
Goal 2: Create homeownership opportunities for East Palo Alto residents and stability for existing homeowners There is a current policy awaiting further consideration by East Palo Alto’s city council and which is also cited in the City’s 2018 Affordable Housing Strategy. At a recent priority setting session convened by a City consultant, the City Council agreed that they would be further exploring the implementation of the Opportunity to Purchase Act or a variation of it, which would help advance this specific goal. This policy ought to be included in the Housing Element as the City Council indicated it would be continuing to work on this policy.
Goal 6: Promote safe and healthy housing in East Palo Alto While the policies under this goal are strong in concept, further detail is needed to ensure the City’s efforts effectively advance this goal. An additional level of specificity is needed, such as identifying “hot spots”of neighborhoods, and perhaps buildings, with severe or chronic habitability issues. Moreover, the City ought to consider how they will prioritize this work to create a concrete, practical plan for addressing existing habitability issues in our community.
Goal 9: Build Capacity for long-term housing planning and implementation of a range of housing programs and initiatives
As elaborated upon in the section above, Affirmatively Furthering Fair Housing, this goal inevitably calls for additional staff capacity at the City level. Hiring additional staff is not currently included as an approach that would advance this goal but it is perhaps one of the most critical strategies for enabling the City to reach its housing goals. When the City chooses to put resources behind these teams, it is investing in the public safety of our community and helping to truly address a significant number of the barriers that are cited in earlier parts of the draft.
YUCA is pleased to have participated in the development of this promising draft of the Housing Element and is eager to see the next iteration which we hope will include the suggested revisions mentioned above. Should you have any questions regarding the content of this comment letter please let me know via email at [email protected]. We look forward to continuing to monitor this process and provide further input, always keeping in mind our community’s most vulnerable residents.
Thank you,
Ofelia Bello
Executive Director, Youth United for Community Action
Corinne I. Calfee
P.O. Box 2369
Davis, CA 95616
[email protected]
510-809-8001
VIA Electronic Mail
Karen Camacho
Interim Housing and Economic Development Manager
City of East Palo Alto
1960 Tate St.
East Palo Alto, CA 94303
[email protected]
February 13, 2023
Re: 2023-31 Housing Element
Draft Revised February 2023
Dear Karen:
Opterra Law, Inc., represents Sand Hill Property Co. and Woodland Park Communities. We write today to provide comments on the February 2023 Draft Revised Housing Element.
We would like to reiterate that my clients appreciate the significant work that has gone into the Housing Element update process. Given the new state laws, it is more important than ever to get the Housing Element right. A number of issues remain to address the January 19, 2023 HCD letter to the City of East Palo Alto indicating that revisions are necessary in order for the Housing Element to comply with state law.
As the City’s largest housing provider and as an active housing developer, Sand Hill and Woodland Park have relevant information on several of the open issues. We take this opportunity to share this information with both you and HCD. By way of introduction, Sand Hill Property Co., through its affiliate, Woodland Park Communities, owns more than 1,800 rental housing units in East Palo Alto. The overwhelming majority of these homes are rent-controlled and they comprise the majority of the City’s rent-controlled housing stock.
Sand Hill Property Co. is also a housing developer. Their Euclid Improvements Project was recently entitled, to replace 161 existing units with 605 new units, including replacement rentcontrolled units and 444 net new units. The financial feasibility of this new development is in question, due to both market conditions and conditions on the entitlement that increased the costs of development. Sand Hill has also applied to construct 180 apartments at the Four Corners site in a mixed-use development to be located at the corner of University and Bay. This project has been in process for more than two years, but the entitlement process has been significantly delayed.
Sand Hill and Woodland Park take this opportunity to share their experiences as a rental housing provider and as a housing developer in East Palo Alto. Our experiences since 2016 highlight the difficulty of entitling and building housing in East Palo Alto.
1.) Governmental Constraints to Housing.
We continue to be concerned that the analysis of governmental constraints to housing is incomplete and inaccurate. And, we agree with HCD that programs should be added to address the identified constraints. The revised Housing Element has not adequately discussed the governmental constraints or proposed programs to address or lessen those constraints.
Inclusionary Housing. We have repeatedly highlighted the infeasibility of the inclusionary housing ordinance. For rental housing, the City requires 20% on-site inclusionary housing at very deep levels of affordability. Twenty-five percent of the units must be affordable at 35% AMI, 50% affordable at 50% AMI, and 25% affordable at 60% AMI. They must be comparable in appearance and quality of construction and they must not be concentrated within the project. These requirements are expensive and require a large ongoing subsidy, and they also contravene the taxcredit financing rules and so preclude the use of the most common financing tools available for affordable housing.
When the City considered and adopted the inclusionary housing ordinance, we repeatedly explained that the high level of inclusionary rental housing and the deep affordability create a significant cost burden that threatens the viability of any rental housing projects. We provided an economic feasibility study from a qualified entity with demonstrated expertise in the preparation of such studies. It followed best professional practices and was sufficiently rigorous to allow an assessment of whether the inclusionary requirement influenced feasibility. The study confirmed that the inclusionary housing ordinance was not economically feasible. That is, compliance with the inclusionary housing ordinance would make market rate housing projects too expensive to build and they would not get built. A copy of that study is again attached here. Although third parties requested that HCD evaluate the City’s rental inclusionary housing ordinance for economic feasibility when it was adopted, we do not believe that ever occurred.
Since that time, the City’s development pattern has confirmed the infeasibility of the inclusionary rental housing ordinance. No rental projects have proceeded in compliance with the plain terms of the inclusionary housing ordinance. It is not possible to build a market rate rental housing project and comply with those requirements. Instead, developers have had to seek discretionary City Council approval for alternative compliance. Indeed, our own project, the Euclid Improvements, was not able to comply with the conventional compliance mechanism. We were forced to seek alternative compliance in an attempt to make the project feasible. The City Council imposed numerous, ever increasing requirements on the alternative compliance proposal.
The revised Housing Element ignores this problem. It simply states that developers say that the inclusionary housing ordinance is a constraint. The Housing Element offers no analysis of the constraint, no economic feasibility study, and no programs to address this identified constraint.
Indeed, the analysis of inclusionary housing is very thin, and ignores a significant part of the problem, which is the depth of proposed affordability. For instance, Table 3.1.8.B makes no mention of affordability levels even though these contribute significantly to the infeasibility of the ordinance. HCD has said that the Housing Element “must analyze whether this is a constraint and add programs as needed.” The revised Housing Element has not yet done this.
Local Processing, Permit Procedures, and Approval Times. The discussion of local processing, permit procedures, and approval times continues to be inaccurate. The revised “average processing time for ‘typical’ residential developments” in Table 3.1.613.A continues to significantly understate the processing time for projects. It states an average processing time of 12-24 months for “large multiple-family” projects, which is defined as anything over 4 units. That timeframe was shortened in this draft of the Housing Element from the estimate in the original draft of 18-24 months. These “averages” significantly understate the amount of time it takes to process a project.
The City has not, as a matter of course, regularly approved moderate or large multi-family housing projects so it is not clear how the averages were calculated. The City took 46 months from the submission of the required pre-application to the entitlements for the Euclid Improvements project. The City required the following 20 public meetings to approve the project:
1. May 6, 2019: Planning Commission Pre-application Study Session http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1227
2. July 30, 2019: City Council Pre-application Study Session
3. December 3, 2019: City Council Discussion of Relocation / OTRM
4. February 25, 2020: City Council Study Session
http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1068
5. September 10, 2020: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1316
6. October 6, 2020: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1284
7. November 19, 2020: City Council Study Session on Infrastructure http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1340
8. February 23, 2021: City Council Study Session on Inclusionary Housing Plan and Fiscal Impact Report http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1357
9. June 22, 2021: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1403
10. July 26, 2021: Planning Commission Draft EIR Public Hearing http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1369
11. October 5, 2021: City Council Study Session on Inclusionary Housing Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1427
12. November 30, 2021: City Council Study Session on Tenant Relocation Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1458
13. February 15, 2022: City Council Study Session on Tenant Relocation Plan http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1488
14. June 27, 2022: Planning Commission Policy and Action Discussion http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1832
15. July 25, 2022: Planning Commission Public Hearing on Project http://eastpaloalto.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1855
16. September 6, 2022: City Council Hearing re Entitlements
17. September 20, 2022: City Council Hearing re Entitlements (continued)
18. October 4, 2022: City Council Hearing re Entitlements (continued / EIR certified)
19. November 1, 2022: City Council Hearing re Entitlements (continued / entitlements approved)
20. November 15, 2022: City Council Second Reading re Entitlements (second reading approved)
Similarly, the application for the Four Corners project, which is also listed as an opportunity site, has been in process for more than two years. The City continues to refuse to release the DEIR for public review. This project has already exceeded the City’s maximum estimated length of time for planning approval for large multi-family projects and the DEIR has not even been circulated.
These repeated experiences with application processing are far different from the City’s average calculations. We are not clear what other “large multiple-family” projects were approved that bring the average down from 46 months to 12-24 months. Indeed, the Housing Element admits that “[s]o far, the City has approved one multi-family housing project and it took longer than expected. (See Chapter 3, p. 19). The Housing Element should include an accurate average total processing time that reflects the City’s practices and experiences. That average will be significantly higher than 12-24 months.
HCD indicated in its comment letter that with regard to governmental constraints, the Housing Element should address the impacts on housing cost, supply, timing, and approval certainty and should “add programs as appropriate.” Here, the City’s uncertain and lengthy permit processing practices create material uncertainty, which adds to housing cost, delays the production of housing, and reduces the supply of new housing. The Housing Element fails to discuss these effects and it does not propose any modifications to the City’s many discretionary, time-consuming, and uncertain processes that would reduce cost, facilitate approvals, or increase the supply of new housing.
Fees and Exactions. The City’s business license taxes create another substantial governmental constraint on housing by expressly taxing rental housing. These taxes are not mentioned as constraints, even though we commented on this omission in January.
Measure O, adopted in 2016, significantly increased the business license taxes to 1.5% of gross receipts for rental housing providers, taxing housing rather than encouraging it. Importantly, Measure O exempted new construction from the tax for the first 10 years after issuance of a Certificate of Occupancy. In the fall of 2022, the City adopted Measure L, which increased the tax to
2.5% of gross receipts. It also reduced to only 3 years the period of time after new construction during which new homes are exempt.
The taxation of housing and the reduction in exemption time are constraints on housing production that make it less likely that new housing will be created. This fee, which raises are not discussed in the Housing Element, despite HCD’s comment that the Housing Element needs more information and analysis about fees being a potential constraint on a variety of housing types.
2.) Feasibility/Likelihood of Development within the Housing Element Cycle.
State law requires that a City rely upon sites and projects that are expected to be developed during the planning period. See Government Code section 65583.2(a). HCD has commented that the Housing Element must discuss the availability or likelihood that opportunity site units will be built in the planning period, including any barriers to development, market conditions, and other relevant factors. We are very concerned that two of the largest projects on the opportunity sites list may not be constructed in the planning period. The Housing Element does not discuss the barriers to developing these sites.
Progress In Meeting the RHNA. The HCD letter has required additional information regarding “[t]he availability or likelihood the units will be built in the planning period [and] should account for any barriers to development, phasing, anticipated build out horizons, market conditions and other relevant factors.” The Housing Element relies heavily on Sand Hill projects to meet the City’s RHNA obligations—the Euclid Improvements for 445 new units and the Four Corners for 180 new units. Here, despite our best efforts, we are concerned that neither the Euclid Improvements nor Four Corners are likely to be developed during the planning period.
As for the Euclid Improvements, the approval itself is infeasible. During the entitlement process, we repeatedly explained that we were concerned about the feasibility of constructing the project, given the City’s repeated requests for ever more exactions and concessions from the developer. We have continued our feasibility analysis to expedite development, but to date we have been unable to find a way to make the project feasible.
The City imposed obligations for an expensive off-site affordable housing alternative compliance program, a 1.5 million gallon water tank, electric vehicle charging requirements, a comprehensive relocation plan, impact fees, road dedications, park requirements, and other various exactions. During the entitlement process, through and including the final hearings, the City continued to impose ever more expensive and onerous requirements. The ultimate approval was conditioned on requirements to which my client objected because they made the project infeasible.
The City nonetheless insisted upon including these impossible requirements in the entitlements.
Given the City’s requirements, together with the current market conditions of high interest rates and extremely high construction costs, it is not currently feasible for the Euclid Improvements to be built. Therefore, it is not reasonable for the City to rely upon the Euclid Improvements to meet their RHNA obligations as the project as it has been entitled is not likely to be built. This removes 445 units from the sites inventory, including the 271 units that the City assumes as Moderate-Income category and 173 units that the City considers to be Above-Moderate Income.
The City is also relying on the Four Corners site at 1675 Bay Road to provide 36 Very Low Income units and 144 Above-Moderate Income units. This project has been under review for more than 2 years, and the City continues to refuse to circulate the DEIR or otherwise advance the application. Given the City’s significant delays in processing the application, it is not clear whether this will be entitled and at what density. In fact, HCD commented that the City should have a specific implementing action “beyond study” for the specific plan area in which the Four Corners site is located. This has not occurred.
Quantified Objectives. Finally, HCD remarked that the “element must include quantified objectives for construction, rehabilitation, and conservation by income group…” We note that the City added a new section to the Housing Element called “Quantified Objectives” that estimates the number of housing units at each affordability level that would be constructed in the first five years of the planning period. It is not clear how these objectives were calculated.
The document states that they are ½ of the overall objectives, but the math does not align with that calculation so it is not clear how they were calculated. Moreover, to the extent that a single project would provide a fixed number of units at a given affordability level, all of those units should be counted within a single planning period. It would be very unlikely for ½ of a single, unified project to be built earlier, and ½ to be built later, where the project was never proposed to be phased. And as we have explained herein, neither the Euclid Improvements nor Four Corners is on track to be constructed within the next five years. They should be removed from the Quantified Objectives table if they were included.
Thank you for your assistance. Please let me know if you have any questions or would otherwise like to discuss these issues.
Sincerely,
Corinne I. Calfee
cc: Paul McDougall, Senior Program Manager, Department of Housing and Community Development via Anthony Erricheto at [email protected]