DATE: October 25, 2022
TO: Mayor and City Council
FROM: Assistant City Manager
SUBJECT:
Adopt a Resolution Authorizing the City Manager to Execute an Amendment to the Agreement with Strategic Economics Inc for an Additional $13,710 to Provide Additional Technical Expertise to Support Staff in Refining Policy Recommendations Related to Modifications of the Affordable Housing Ordinance For a Total Agreement Amount Not-To-Exceed $88,620
RECOMMENDATION
That Council adopts a resolution (Attachment II) authorizing the City Manager to execute an amendment to the existing professional services agreement with Strategic Economics Inc for an additional $13,710 to provide additional technical expertise to support staff in refining policy recommendations related to modifications of the Affordable Housing Ordinance (AHO) for a total contract not-to-exceed amount of $88,620.
SUMMARY
In early 2020, with the intention of increasing the supply of affordable housing, Council directed staff to evaluate the existing AHO as part of the adoption of the “Preserve, Protect, Produce Housing for All” Priority in the Strategic Road Map and the Incentives for Housing Production work plan. On June 8, 2022, the City entered into a contract with Strategic Economics Inc (Consultant) for an amount not-to-exceed $74,910 to conduct an analysis of the City’s AHO with the goal of maximizing the production of affordable housing. Based on the preliminary findings and feedback from the Homelessness Housing Task Force (HHTF), staff recommends increasing the contract with the Consultant by $13,710 for a total amount not-to-exceed $88,620 for additional technical support refining the policy recommendations and the findings as well as bringing these forward for further review and feedback from the Planning Commission and the City Council.
BACKGROUND
The AHO was adopted in 2003 to address the need for affordable housing that is created by the development of market rate housing. On November 28, 2017, the Council adopted amendments to the AHO based on feedback from a variety of stakeholders. In early 2020, with the intention of increasing the supply of affordable housing, Council directed staff to evaluate the existing AHO as part of the adoption of the “Preserve, Protect, Produce Housing for All” Priority in the Strategic Road Map and the Incentives to Housing Production work plan.
Effective January 1, 2018, AB 1505 reaffirmed the authority of local governments to include rental units within inclusionary ordinance requirements, as well as added a limited California Department of Housing and Community Development (HCD) review of inclusionary ordinances, under certain circumstances. One of the key provisions includes requiring local jurisdictions to conduct economic feasibility studies to demonstrate that an inclusionary ordinance does not unduly constrain the production of housing. Based on this State legislation, if the City requires 15 percent of the total number of units to be rented by households at or below 80 percent of the Area Median Income (AMI), it will trigger HCD review of the AHO and preparation of a feasibility analysis.
On March 3, 2022, the HHTF reviewed the outcomes and performance of the existing AHO and provided direction to staff regarding the goals and target populations to be served by any future revisions to the AHO. In consideration of the goals established by the HHTF and in order to ensure economic feasibility of any proposed changes to the City’s AHO, as required by AB 1505, the City issued a request for proposals to identify a consultant to complete a feasibility study. Based on the quality of the proposals, the City contracted with Strategic Economics in an amount not-to-exceed $74,910 to conduct a feasibility study.
On September 28, 2022, the Consultant presented the preliminary findings from the feasibility study to the HHTF. Based on the preliminary findings and the need to further refine the policy direction based on further sensitivity analysis, staff recommends amending the contract with the Consultant to support staff in further refining recommendations based on feedback from the HHTF and to continue to work with the Planning Commission and Council until a clear policy direction is reached that both minimizes risk of constraining development and helps to increase the development of affordable housing.
DISCUSSION
On June 8, 2022, the City entered into a contract with the Consultant to conduct an analysis of the City’s AHO with the goal of maximizing the production of affordable housing. The scope included review of relevant reports and policy briefs, development of market assumptions for six housing prototypes to evaluate the feasibility of the existing affordable housing requirements and to propose alternative scenarios with the intention of increasing the supply of affordable housing. The contract also includes formation of a technical advisory committee (TAC) comprised of market rate and affordable housing developer to confirm market assumption and receive feedback on policy recommendations. Additionally, the Consultant will provide the City with materials to conduct community outreach. Lastly, the contract requires the preparation of a final report that includes the feasibility analysis of proposed modifications to the AHO. To date, the Consultant has completed the baseline feasibility analysis, confirmed market assumptions with the TAC, and presented preliminary findings and recommendations to the HTTF.
Based on preliminary HHTF feedback, staff recommends taking additional time to further analyze the feedback from the HHTF and have further discussions with the Planning Commission and Council to identify proposed modifications that both increase supply of affordable housing and ensure continued feasibility of housing development in Hayward. To that end, staff recommends increasing the contract with the Consultant by up to $13,710 for a total contract amount not-to-exceed $88,620 to support staff as technical experts to refine the recommendations to modify the AHO based on additional Planning Commission and Council feedback.
STRATEGIC ROADMAP
This agenda item supports the Strategic Priority of Preserve, Protect, & Produce Housing. Specifically, this item relates to the implementation of the following project:
Project 5, Part 5.b: Evaluate the Affordable Housing Ordinance and hold a work session to discuss potential revisions.
FISCAL IMPACT
There are sufficient funds budgeted in the FY 2023 operating budget to cover the cost associated with this professional services agreement. The total fiscal impact is less than the amount budgeted, and there is no additional impact to the Inclusionary Housing Trust Fund.
NEXT STEPS
If this item is approved, staff will amend the professional services agreement and increase the contract amount by and amount not-to-exceed $13,710, for a total not-to-exceed amount of $88,620. Staff will work with the Consultant to complete the feasibility analysis, present finding to the Planning Commission on December 8, 2022, hold a work session with Council in January 2023 and return with the ordinance for approval in March 2023.
Prepared by: Christina Morales, Housing Division Manager Recommended by: Jennifer Ott, Assistant City Manager
Approved by:
_________________________________
Kelly McAdoo, City Manager
November 28, 2017 Staff Report and Attachments
https://hayward.legistar.com/LegislationDetail.aspx?ID=3215741&GUID=B35757EA-765E-48A0-8B12-F06ED99D87B7&Options=&Search= March 3, 2022 HHTF Staff Report and Attachments
https://hayward.legistar.com/LegislationDetail.aspx?ID=5470275&GUID=26789FFA-7A0A-458F-93A9-03A43C2695A9&Options=&Search= September 28, 2022 HHTF Staff Report and Attachments
https://hayward.legistar.com/LegislationDetail.aspx?ID=5851269&GUID=868B108B-2A12-496C-932E-710FC13CDF6B&Options=&Search=