REPORT SUMMARY – 119 FEE SERVICES
13 New
Increased (including Deposits/Hourly Rate)
Restructured
No Change (Incl. Legal Limit, Market Sensitive, Surcharge) Decreased
Deleted
3 9
64 23
15 5
Packet Page 504
14 FISCAL IMPACT
TOTAL TOTAL TOTAL POSSIBLE
FEE SERVICE PROFIT/ NEW
SERVICE REVENUE COST (SUBSIDY) ACTUAL SUGGEST REVENUE
[S-001 to S-050] DEVELOPMENT SERVICES $4,501,267 $6,451,616 ($1,950,349) 69.8% VAR. $1,760,800 [S-051 to S-097] PUBLIC SAFETY $91,011 $858,528 ($767,517) 10.6% VAR. $32,700 [S-098 to S-105] RECREATION & COMMUNITY SVCS $2,178,000 $8,451,333 ($6,273,333) 25.8% VAR. $0 [S-106 to S-119] ADMINISTRATION $90,000 $118,375 ($28,375) 76.0% VAR. $25,000 ALL FEE SERVICES $6,860,278 $15,879,852 ($9,019,574) 43.2% $1,818,500
FROM FEES
PCT. RECOVERY
Packet Page 505
COST OF SERVICES STUDY
• DISCUSS METHODOLOGY APPENDIX A – RECOMMENDED FEES FOR ADOPTION • IDENTIFY ALLOWABLE COSTS
• SUMMARIZE FISCAL IMPACT
15 Packet Page 506
COST OF SERVICES STUDY
APPENDIX B – SUPPORTING CALCULATION WORKSHEETS
16 Packet Page 507
CITY COUNCIL DECIDES
FINAL TAX SUBSIDY
• Fee studies should be performed every 4-5 years to identify full cost of city services.
• This study identified the full costs of services using FY 2023 data.
• RCS and City Staff have made fee recommendations based on best practice.
• It is now up to the City Council to decide if fee-based services should be charged the full cost, or should they be subsidized with tax dollars.
17 Packet Page 508
Questions?
Eric Johnson Chu Thai
President Partner
[email protected] [email protected]
(714) 992-9027 (714) 992-9024
Packet Page 509
www.revenuecost.com
Item F. 3.
DATE 02/22/2024
TO Honorable Mayor and City Council Members
FROM Roya Gonzalez, Senior Management Analyst
SUBJECT Presentation of findings from the Facilities Master Plan assessments and community outreach process
SUMMARY AND RECOMMENDATION
Staff recommends that the City Council receive a presentation on the findings from the Facilities Master Plan (Plan) assessments and community outreach process, and receive feedback to be incorporated into the draft Plan.
BACKGROUND
The City owns and maintains 24 structures ranging from a 300 square foot boat house to a 32,000 square foot aquatic center. These structures are maintained within the City’s allocated resources and according to preventative maintenance plans specific to each structure. Staff identified the need for a comprehensive long-term plan to strategically prepare for future growth and proper maintenance of City facilities as well as anticipated future community needs. In July 2022, proposals were requested from qualified consultants to develop a Citywide Facilities Master Plan. In November 2022, the City Council approved a contract with Group 4 Architecture & Planning to develop the Plan.
DISCUSSION/ANALYSIS
Since December 2022, Group 4 Architecture & Planning and their consultants have been conducting a comprehensive process to develop the City’s first Facilities Master Plan. The process included four main tasks. These tasks have informed the options and recommended prioritizations presented to City Council at the Council meeting. The presentation is attached to this staff report.
Task 1: Existing Conditions Evaluation
To determine the condition and maintenance needs of existing buildings, a Facility Condition Assessment (FCA) was completed for each of the City buildings. These assessments document current deficiencies and future maintenance needs. They include the physical condition of building elements including site, exterior envelope, structure, interior elements, visual ADA compliance and mechanical, electrical, and plumbing (MEP) systems. This information has been compiled into an online database Packet Page 510
that will assist the City in developing a long-term maintenance plan and forecasting building maintenance costs. Each facility's FCA will be included in the draft Plan that will be presented to City Council in March.
Task 2: Future Needs Assessment
To develop a comprehensive understanding of the operational needs of the City, the consultant began with department head interviews and staff surveys. Once the surveys were completed, the consultant toured each facility with staff knowledgeable about the current services provided. Several projects were identified to improve operational efficiency and meet the anticipated growth of staff and services. It is important to note that a public safety sub-consultant was retained to evaluate the police department and fire stations. Based on numerous operational deficiencies, extensive maintenance needs and overall building condition, the consultant recommends replacing Fire Stations No. 27 and 29. This recommendation, along with other potential future projects, will be included in the final Plan.
The needs assessment also included a thorough community engagement process to ensure the Plan addresses the most pressing needs of the community.
During the first phase of community engagement, the community was asked to identify the types of spaces they wanted to see in Newark. This information was collected via an online survey and through pop-up events at two of the City's most popular community events, Family Day at the Park and Groovin’ at the Grove. The survey results are included in the attached presentation, and will be incorporated into the draft Plan. In general, the community prioritized several arts and community spaces such as an arts/craft studio and a performance theater. The consultant reviewed industry standards, trends, and best practices in community facilities to make recommendations to meet Newark's specific needs.
Task 3: Facility Options
To meet the arts and community space needs identified by participants in phase one of community engagement, the consultant introduced the idea of a Cultural Arts Community Center with three proposed size options at two potential locations. The size options are listed below:
Option A = 18,000 sf Cultural Arts Center
Option B = 25,000 sf Cultural Arts Center
Option C = 32,000 sf Cultural Arts Center
Each proposed size option includes the spaces identified by the community in phase one community engagement, by priority level. Each of the three proposed size options were evaluated at two sites: Newark Community Park and Civic Center Park. These options along with a set of evaluation criteria were presented to the community during phase two of community engagement. Engagement efforts included pop-up events at Newark Days' Community Resource Fair and the City's annual Tree Lighting Ceremony; a community meeting and open house; and an online survey. While there Packet Page 511
are many different opinions, the majority of the community have identified the Community Park as the preferred location and preferred the largest of the three proposed size options.
Task 4: Implementation Plan
The projects identified in the Facilities Master Plan are broken into three categories:
Preventative Maintenance – These costs will fluctuate year to year and are estimated to be approximately $73 million over twenty years.
Renovations/CIP – These projects have been identified based on community or operational needs. The projects will be recommended and reviewed during the Capital Improvement Program process. The majority of them are future projects.
New or Replacements – These new buildings are being recommended for the short term to meet the needs of the community and fire operations.
The Facilities Master Plan provides a guide for the next 20 years. A general overview of the facility recommendations for each facility over the first five years is shown below.
2024-2029 City Facility Recommendations Summary
Facility Maintain Renovations/CIP Replace Sell/Repurpose/Demo Ash Street Park
Buildings X
Birch Grove
Park Restroom X
Boathouse at
Lakeshore Park X
Community
Center Annex X
Community
Center X
Community
Center Park
Restroom
Building
X
Fire Station 27 X
Fire Station 28 X X
Fire Station 29 X
Old Fire Station X
Old Library X
Clark W.
Redeker Senior
Center
X
Packet Page 512
Second
Chance Shelter X
Service Center X X
George M.
Silliman
Community
Activity Center
X
Mel Nunes
Sportsfield Park
Restroom
Building
X
Watkins Hall X
David W. Smith
City Hall X
Alan L. Nagy
Library X
Police
Department X
The presentation from Group 4 Architecture & Planning will provide an overview of the process, including community engagement, and present significant findings. Following the presentation, the consultant will solicit feedback from City Council.
FISCAL IMPACT
There is no fiscal impact associated with this item.
REVIEW AND APPROVAL
Prepared by - Roya Gonzalez, Senior Management Analyst
Reviewed by - Lenka Hovorka, Assistant City Manager
Reviewed by - Krysten Lee, Finance Director
Reviewed by - Kristopher J. Kokotaylo, City Attorney
Approved by - David J. Benoun, City Manager
Attachments
Presentation
Packet Page 513
CITY OF NEWARK
FACILITIES MASTER PLAN
CITY COUNCIL UPDATE
February 22, 2024
Packet Page 514
AGENDA
2 1. Project Goals and Schedule
2. Facility Conditions Assessment
3. Space Needs
Community, Recreation & Aquatics
Admin, Public Safety & Service
4. Facility Options
5. Implementation Plan
Packet Page 515
3City of Newark Facilities Master Plan
PROJECT GOALS
2. DETERMINE GROWTH | Determine growth and future needs
1. ASSESS | Assess facility needs & conditions
Engage the Newark community about community 3.
program and space needs ENGAGE |
Develop recommendations and options with supporting
cost estimates
4. DEVELOP |
Create an action plan to guide and improve future decisionmaking about programs, services, workflow, and facilities
5. PLAN |
Packet Page 516
4City of Newark Facilities Master Plan
Packet Page 517
4 AGENDA
5 1. Project Goals and Schedule
2. Facility Conditions Assessment
3. Space Needs
Community, Recreation &
Aquatics
Admin, Public Safety & Service
4. Facility Options
5. Implementation Plan
Packet Page 518
6City of Newark Facilities Master Plan
NEWARK FACILITIES MAP
SPORTSFIELD RESTROOM
Packet Page 519
7City of Newark Facilities Master Plan
FACILITY CONDITION ASSESSMENTS
PRE-SURVEY
01 • PRE-SURVEY
QUESTIONNAIRE
• REVIEW EXISTING
DATA
PILOT
• CONDUCT SITE
ASSESSMENT(S)
• SAMPLE REPORT
• DRAFT APPROVAL
02 ASSESSMENT
• BUILDING SYSTEM
INSPECTIONS
• Site and Infrastructure
• Exterior and Building
Envelope
• Roof and Rooftop Systems
• Interiors & Accessibility
• MEP & Life Safety Systems
• INDENTIFICATION OF
DEFICIENCIES
• INVENTORY OF ASSETS
• REPAIR / REPLACE
RECOMMENDATIONS
• COST ESTIMATING /
MAINTENANCE PLAN
03 DELIVERABLE
• FACILITY
ASSESSMENTS
• CAPITAL PLANNING
REPORTS
• PORTFOLIO
PRIORITIZATION
• FACILITY
CONDITION INDEX
(FCI)
04 Packet Page 520
8City of Newark Facilities Master Plan
FACILITY MAINTENANCE COSTS
Long Term TOTAL
(11-20 yrs.)
Mid Term
(6-10 yrs.)
Near Term
(3-5 yrs.)
Short Term
(1-2 yrs.)
Immediate
Total expenditures for ALL $8.15M $4.08M $9.93M $20.41M $57.53M $100.1M facilities
Total expenditures for ALL $500K
facilities for Safety Plan Type
costs
Total expenditures for facilities $1.72M $2.74M $7.38M $15.63M $44.99M $72.46M EXCLUDING Community
Center-Annex-Restroom, Fire
Station 27 and 29, Watkins Hall,
Old Fire Station and Old Library
Total expenditures for facilities $52K
for Safety Plan Type costs
EXCLUDING Community
Center-Annex-Restroom, Fire
Station 27 and 29, Watkins Hall,
Old Fire Station and Old Library
Packet Page 521
AGENDA
9 1. Project Goals and Schedule
2. Facility Conditions Assessment
3. Space Needs
Community, Recreation &
Aquatics
Admin, Public Safety & Service
4. Facility Options
5. Implementation Plan
Packet Page 522
10City of Newark Facilities Master Plan
NEWARK COMMUNITY, RECREATION & AQUATIC FACILITIES
Packet Page 523
11City of Newark Facilities Master Plan
ROUND 1 COMMUNITY NEEDS ENGAGEMENT RESULTS
Packet Page 524
12City of Newark Facilities Master Plan
AQUATIC NEEDS
Splashpad
$$$
To be evaluated in the
Parks Master Plan
25-Yard Pool
$$$$$
For competitive use. To be
evaluated in the Parks
Master Plan
Outdoor Needs
(may not be at the Silliman Center)
Indoor Needs
(improvements to the Silliman Center)
NINJA CROSS
$$
Located over the lap pool.
Requires coordination with
existing structural system.
AQUATIC FITNESS
$
Located within the lazy
river pool side catch area.
Require storage when not
in use.
POOL AMENITIES
$-$$
Improved food service and
seating such as picnic
tables and cabanas for
both general use and
rentals.
SILLIMAN CENTER
Packet Page 525
13City of Newark Facilities Master Plan
AQUATIC NEEDS
POOL AMENITIES
Food service
Seating: picnic tables &
cabanas
IMPROVE CHECK IN
AND STAFF
WORKSPACES
NINJA CROSS
and
AQUATIC FITNESS
SILLIMAN CENTER
Packet Page 526
14City of Newark Facilities Master Plan
PLANNING STANDARDS
Packet Page 527
15City of Newark Facilities Master Plan
PLANNING STANDARDS
Packet Page 528
16City of Newark Facilities Master Plan
PLANNING STANDARDS
Packet Page 529
17City of Newark Facilities Master Plan
COMMUNITY PROGRAM OPTIONS
SF/ Resident
Total SF
Expand
Community
Center
complex
Relocate/
Replace
Senior
Center
Renovate
or Replace
Community
Center
Annex
Renovate
or Replace
Community
Center
Program
Options
+ 15,000 3,000 0 0 18,000 1.63 A
(Base)
B + 15,000 3,000 7,000 0 25,000 1.63
(A+B)
+ 15,000 3,000 7,000 + 7,000 32,000 1.75 C
(A+B+C)
Packet Page 530
18City of Newark Facilities Master Plan
FACILITY CONDITION ASSESSMENTS
3-YEAR FCI: 5.6%
10-YEAR FCI: 11.8%
3-YEAR FCI: 7.5%
10-YEAR FCI: 19.5%
3-YEAR FCI: 2.7%
10-YEAR FCI: 22.9%
3-YEAR FCI: 17.1%
10-YEAR FCI: 22.7%
Packet Page 531
19City of Newark Facilities Master Plan
COMMUNITY
PROGRAM OPTIONS
Packet Page 532
20City of Newark Facilities Master Plan
COMMUNITY PARK OPTIONS
OPTION A OPTION B1 (one-story) OPTION C
OPTION B2 (two-story)
Packet Page 533
21City of Newark Facilities Master Plan
CIVIC CENTER PARK OPTIONS
OPTION A OPTION B1 (one-story) OPTION C
OPTION B2 (two-story)
Packet Page 534
22City of Newark Facilities Master Plan
EVALUATION CRITERIA
FUNCTIONALITY SUSTAINABILITY
BLDG/ PARK
RELATIONSHIP
ACCESSIBILITY
VISIBILITY OPERATIONAL
EFFICIENCY
ENVIRONMENT COMMUNITY
NEEDS
SYNERGY/
CONNECTIVITY
COST
22 Packet Page 535
COMMUNITY CENTER & ANNEX AT
NEWARK COMMUNITY PARK
OLD LIBRARY AT
NEWARK CIVIC CENTER PARK
Base- A
(18k SF)
Base+B
(25k SF)
Base+B+C
(32k SF)
Base- A
(18k SF)
Base+B
(25k SF)
Base+B+C
(32k SF)
Expand
Community
Center
Consolidate:
Relocate/
replace Senior
Center
Replace
Old Library
Renovate
Old Library
Expand
Community
Center
Consolidate:
Relocate/
replace Senior
Center
Replace
Community
Center &
Annex
Renovate
Community
Center &
Annex
EVALUATION
CRITERIA
POOR FAIR EXCELLENT
OPERATIONAL EFFICIENCY
COMMUNITY NEEDS
COSTS
VISIBILITY
SYNERGY/ CONNECTIVITY
BLDG/ PARK RELATIONSHIP
ACCESSIBILITY
ENVIRONMENT
TOP CRITERIA
23 Packet Page 536
24City of Newark Facilities Master Plan
ROUND 2 COMMUNITY NEEDS ENGAGEMENT RESULTS
74%
26%
0 50 100 150 200 250 300 350 400 450
NEWARK COMMUNITY PARK
NEWARK CIVIC CENTER PARK
NUMBER OF PARTICIPANTS = 526
Newark Days 9/17
Tree Lighting 12/01
Community Mtg 10/17
Online Survey
Packet Page 537
25City of Newark Facilities Master Plan
11%
34%
55%
0 50 100 150 200 250
OPTION A (18,000 SF)
OPTION B (25,000 SF)
OPTION C (32,000 SF)
Newark Days 9/17
Tree Lighting 12/01
Community Mtg 10/17
Online Survey
ROUND 2 COMMUNITY NEEDS ENGAGEMENT RESULTS
Packet Page 538
26City of Newark Facilities Master Plan
RECREATION NEEDS SILLIMAN CENTER
GENERAL Improved storage for all
program spaces
GENERAL
Look at underutilized space
for additional program
opportunities
FUTURE NEEDS
Multi use gym and courts
with indoor walk/run track
Packet Page 539
27City of Newark Facilities Master Plan
NEWARK ADMINISTRATION, PUBLIC SAFETY & SERVICE FACILITIES Packet Page 540
28City of Newark Facilities Master Plan
ADMINISTRATION NEEDS CITY HALL
WORKSPACE
Limited vacant workstations
and offices for future staff
growth.
MEETING ROOMS
Meetings rooms have been
reduced to accommodate for
current office needs.
Need for small focus/zoom
rooms
PUBLIC SPACES
Public counters and lobbies
are underutilized.
Security concerns regarding
current public counters.
Packet Page 541
29City of Newark Facilities Master Plan
PUBLIC SERVICE CENTER NEEDS
ADMIN BLDG.
Underutilized office space.
Portables should be replaced
with a permanent facility.
SHOP
Update HVAC.
MAINTENANCE BAYS
Provide new maintenance
bays that accommodate the
current fleet sizes. Provide a
total of 4 bays.
LOCKERS/BREAK ROOM
Provide adequate
locker/changing room for
men and women, separate
from break room.
COVERED PARKING
Provide additional covered
parking that can double as a
more secure perimeter for
the facility.
FILBERT STREET
Packet Page 542
30City of Newark Facilities Master Plan
PUBLIC SAFETY NEEDS
INTERIOR Minor interior improvements
to improve operations and
security.
POLICE STATION
EXTERIOR • Improvements to site security,
vehicle charging capacity
and operations.
• Improve roof and storm
drainage and waterproofing
issues.
Packet Page 543
31City of Newark Facilities Master Plan
FIRE STATION NEEDS
CODE COMPLIANCE
ISSUES
Current facilities do not meet
current ADA as well as other
compliance issues with
egress and ventilation.
FIRE STATION 27 & 29
ESSENTIAL SERVICE ACT
COMPLIANCE ISSUES
Both facilities need seismic
strengthening and
emergency back-up power.
OPERATIONS
Improvements to bring
facilities up to current best
practices for fire operations
and security.
#27
#29
LIFE SAFETY ISSUES
Current facilities need fire
alarm systems.
Packet Page 544
32City of Newark Facilities Master Plan
FIRE STATION OPTIONS FIRE STATION 27 & 29
FIRE STATION #27 FIRE STATION #29
Packet Page 545
33City of Newark Facilities Master Plan
FIRE STATION NEEDS FIRE STATION 28
INTERIOR
Minor interior improvements
to improve life safety, code
compliance, operations and
security issues.
EXTERIOR
Improvements to site security
and operations.
ESSENTIAL SERVICE ACT
COMPLIANCE
Increase emergency power
capacity for the entire facility
and systems.
Packet Page 546
AGENDA
34 1. Project Goals and Schedule
2. Facility Conditions Assessment
3. Space Needs
Community, Recreation &
Aquatics
Admin, Public Safety & Service
4. Facility Options
5. Implementation Plan
Packet Page 547
35City of Newark Facilities Master Plan
FACILITY IMPROVEMENT PROJECTS
Long Term
(11-20 yrs.)
Mid Term (6-
10 yrs.)
Near Term
(3-5 yrs.)
Immediate &
Short Term
Project Costs
$7-9M
($5-6M)
($1-1.5M)
($1-1.5M)
Improvement to Silliman Center
• Updated pool amenities
• Improve Check-in and Staff Workspaces
• Ninja Cross and Aquatic Fitness
AQUATICS
New 18-32k SF Community & Arts Center @ $31-56M
Community Park
COMMUNITY &
ARTS
$3-4M
$23-28M
Improvement to Silliman Center
• Improved Storage
• Evaluate underutilized space for additional
program opportunities
• Evaluate additional gym and courts
w/indoor walk/run track
RECREATION
CITY HALL Minor improvements to City Hall $1.5-2M
$18.5-23M
($3-4M)
($7-8M)
($2-3M)
($.5-1M)
($6-7M)
Improvements to Service Center
• New Admin Building
• New maintenance bays (4)
• Update locker/changing rooms and break
room
• Update HVAC in Shop Bldg.
• Additional covered parking
SERVICE CENTER
$15-19M
$15-19M
$1.5-2M
New ~8k Fire Station 27
New ~8k Fire Station 29
Upgrades to Fire Station 28
FIRE
POLICE Minor improvement to Police $2-2.5M
SAFETY ISSUES $52-500K
$45-
57.6M
$15.7-
20.5M
$4.5- $7.4-10M
12.3M
MAINTENANCE
Packet Page 548
THANK YOU!
36 Packet Page 549
Item F. 4.
DATE 02/22/2024
TO Honorable Mayor and City Council Members
FROM Steven Turner, Community Development Director
SUBJECT Presentation regarding Newark's Transient Occupancy Tax (TOT) and the Newark hotel market
SUMMARY AND RECOMMENDATION
Staff recommends that the City Council receive an informational presentation on Newark’s Transient Occupancy Tax (TOT) and the Newark hotel market.
BACKGROUND
In November 2022, the Council received an informational presentation on Newark’s Transient Occupancy Tax (TOT) and the Newark hotel market. The attached presentation for February 22, 2024, summarizes and updates that information. The 2022 and the 2024 reports are collaborations between the Departments of Finance, Community Development, and the City Manager’s Office with input from the Embarcadero Hotel Group consultants, Sondra Storm and Mark Keller. The consultants maintain a diverse practice in hotel market analysis, hotel development, and hotel operations for both private and public clients.
Both the November 2022 and the February 2024 presentations review: (1) the financial impact of the TOT to the City and the legal basis in State law to collect it; (2) the market factors that contribute to successful hotels and strong TOT revenue with a focus on business recovery following the COVID-19 pandemic; and, (3) TOT rates in cities across the Bay Area including Newark.
Today, the hotel industry is recovering from the COVID-19 pandemic. That recovery remains a critical factor for Newark hotels because of an unprecedented drop in hotel revenue and associated city TOT revenue. The revenue losses started dramatically in March 2020 and are not restored today, almost four years later. City TOT revenue dropped from almost $7 million per year in pre-COVID fiscal year 2019 to slightly under $3 million per year in fiscal year 2021. The presentation will relate this history to present performance and explain the reasons for the recovery and the financial risk for hotels when the recovery is not yet complete.
DISCUSSION/ANALYSIS
Packet Page 550
As a hotel market, Newark is distinctive because it has an unusually large number of competitive, business-serving hotels for a city of its size. Therefore, TOT revenue is also an unusually large contribution for Newark’s size and is critical to the city's budget.
TOT revenue is partly a function of the market: the number of hotels and hotel rooms, the room rate, and the number of rooms occupied. TOT revenue is also a function of the voter-approved TOT rate: the percentage of the room rate that is added to the customer’s bill and paid to the City as TOT.
The presentation will compare the TOT rates approved by voters in Bay Area cities, including Newark. The data indicates that Newark is ‘undercharging’ with its 10% TOT rate, while most Bay Area cities have 14% rates. The consultant will explain how hotel guests perceive TOT in the marketplace, why there is typically widespread voter support for TOT rate increases in the Bay Area, and the revenue Newark would receive at the regionally prevailing 14%.
The report and presentation for the following item on the agenda for this City Council meeting acknowledges that there are several current and future needs of the City - including most significantly the need for capital improvements as identified in the Facilities Master Plan that is currently being developed - and recommends that the Council provide direction to City staff to conduct polling to gauge whether there is community support to increase the TOT rate in order to pay for these needs and improvements.
FISCAL IMPACT
There is no fiscal impact as this is an informational item.
REVIEW AND APPROVAL
Prepared by - Anne Stedler, Deputy Economic Development Director Reviewed by - Steven Turner, Community Development Director Reviewed by - Krysten Lee, Finance Director
Reviewed by - Kristopher J. Kokotaylo, City Attorney
Approved by - David J. Benoun, City Manager
Attachments
Presentation
Packet Page 551
TRANSIENT OCCUPANCY TAX (TOT)
RECOMMENDATIONS TO CITY COUNCIL
1 FEBRUARY 22, 2024
Packet Page 552
1 TOT ORDINANCE OVERVIEW 2 TOT REVENUE UPDATE 3 HOTEL DEVELOPMENT UPDATE 4 NEWARK HOTEL MARKET ANALYSIS 5 NEXT STEPS AGENDA
2 Packet Page 553
TRANSIENT OCCUPANCYTAX (TOT)
3 A tax imposed on occupants for the privilege of occupying rooms in hotels and any structure intended for transient occupancy.
Who pays TOT?
The guest, for each overnight stay
Lessthan 30 days = transient occupancy
Hotel operators collect and remit to the city
Monthly and Quarterly
Packet Page 554
ORDINANCE OVERVIEW
4 California Revenue and Taxation Code 7280-7281
Authorizes general law city to impose a transient occupancy tax
Tax Imposed
Increase, expansion or extension requires voter approval General Tax requires a majority vote
Newark’s current rate = 10%
Packet Page 555
REVENUE UPDATE – FY 2023 RESULTS
TOT 6%
Property
Tax 36% UUT 5%
Licenses,
Permits &
Fees 13%
Other 8%
Measure GG
10%
SalesTax
22%
5 Packet Page 556
REVENUE UPDATE – FY 2023 RESULTS
7%Above
Budget
6 FY 2023
Actual
$4.9m
FY 2023
Budget
$4.6m
Packet Page 557
10-YEAR HISTORICAL & 3-YEAR FORECAST
Projected Fiscal Year 7
Packet Page 558
7 HOTEL DEVELOPMENT UPDATE
HYATT PLACE HOTEL – OPENED JUNE 2023
Packet Page 559
9 9
NEWARK’S HOTEL MARKET – RESILIENCY, RECOVERY
Packet Page 560
THE NEWARK HOTEL MARKET UPDATE – February 2024
10 01 02 03 04
Pre Covid
and Today
Compared to
nearby
markets
TOT rates
compared to
nearby
markets
Next Steps
Packet Page 561
Companies locating and growing in Newark and Fremont, including Tesla, Lucida, med-tech and more.
Tech Giants: Meta (Facebook), Alphabet (Google), Apple, and other tech growing in the greater region.
Convenient location to BayArea cities and its 3 major airports, and proximity to Menlo Park and Palo Alto via Dumbarton bridge. Proximity to San Francisco and the San Jose Convention Center. 11 NEWARK HOTEL MARKET – 10-YEAR TRENDS
Grew faster than most US hotel markets, due to:
Packet Page 562
BAY AREA
HOTEL
MARKET
2023
UPDATE.
POST
COVID
AND THE
FUTURE
In 2023, the regional hotel market still
lags significantly behind the national
market recovery.
SiliconValley is outperforming San
Francisco.
Bay Area tech companies are ramping up
pressure on employees who have been working
remotely to return to company offices
12 Changes in the percentage use of office
space are the greatest drivers of increased
hotel demand in the Bay Area.
Convention visitation, and destination travel
to San Francisco both still lag well behind pre-
covid levels
Packet Page 563
NEWARK BUSINESS CLASS HOTELS COMPARED
13 To selected nearby markets:
• Fremont/Milpitas
• MountainView/Cupertino
• PaloAlto/Menlo Park
Performance Measures:
• Occupancy
• Average Daily Rate (ADR)
• Revenue PerAvailable
Room (RevPAR)
Packet Page 564
OCCUPANCY
2019 – 2023
Occupancy %
*Sources CoStar/STR, Embarcadero Hospitality Group 14
77%
50%
68%
77%
38%
70%
81%
35%
60%
71%
31%
57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2019 2020 2023
Newark Palo Alto/Menlo Park Mt. View/Cupertino Fremont/Milipitas Packet Page 565
AVERAGE DAILY
RATE 2019 – 2023
Average Daily Rate
*Sources CoStar/STR, Embarcadero Hospitality Group 15
$182
$137 $142
$342
$219
$318
$251
$173
$214
$193
$142 $147
$0
$50
$100
$150
$200
$250
$300
$350
$400
2019 2020 2023
Newark Palo Alto/Menlo Park Mt. View/Cupertino Fremont/Milipitas
AVERAGE DAILY RATE
2019 – 2023
Packet Page 566
RevPAR
*Sources CoStar/STR, Embarcadero Hospitality Group 16
$141
$69
$97
$262
$83
$221
$202
$61
$128 $136
$44
$84
$0
$50
$100
$150
$200
$250
$300
2019 2020 2023
Newark Palo Alto/Menlo Park Mt. View/Cupertino Fremont/Milipitas
REVENUE PERAVAILABLE ROOM (REVPAR)
2019 – 2023
Packet Page 567
17 Newark Fremont/
Milpitas
Mt.View/
Cupertino
Palo Alto/
Menlo Park
2020 49% 32% 30% 32%
2021 48% 35% 28% 38%
2022 66% 60% 62% 78%
2023* 69% 62% 63% 85%
Percentage of 2019 (pre-Covid) revenue:
NEWARK POST-COVID HOTEL PERFORMANCE
COMPARED TO OTHER SELECT BAY AREA MARKETS
*2023 includes projection for December
Packet Page 568
In 2019 - 2023,Newark added many new hotel rooms as a percentage, but still outperformed Fremont, Milpitas and many Bay Area hotel markets, due to:
Convenient location.
New and expanded businesses near Newark.
Newark’s hotels cost less.
More of Newark’s hotels have extended-stay features.
Newark is perceived as a nicer,safer place to stay than other BayArea options at similar price-points.
18 NEWARK’S RESILIENCY EVENWITH 2 NEW HOTELS IN 2019
Packet Page 569
NEWARK – POST COVID RECOVERY STRENGTHS
Recent expansion in biotech and EV
industries will generate overnight stays:
Allogene, Atum, Cepheid, Gissing,
FreeWire, Lucid Motors, Meta and
Vector Laboratories
Almost 1.8 million sq ft industrial
building area
Attractive, new hotels 19
Packet Page 570
NEWARK – POST COVID RECOVERY OPPORTUNITIES
Potential to add more industry.
Potential to attract more leisure travelers with
restaurants, strong location, event spaces,
shopping, and proximity to bike trails and Don
EdwardsWildlife Refuge.
20 Packet Page 571
NEWARK – HOTEL MARKET RECOVERY CHALLENGES
21 A surge of New hotel rooms in Newark, Fremont and Milpitas -- based on pre-covid demand -- dilute revenue per hotel.
Several Newark Hotels have been unable to keep up on renovation and update schedules due to loss of revenues per room since 2020 Meta has faced a number of challenges.
Delay of the Dumbarton Railway bridge project.
Dependent on business travel.
Fewer and smaller tech conventions in the Bay Area
Packet Page 572
TRANSIENT OCCUPANCY
TAXES
BENEFITS OF STRONG
HOTEL PERFORMANCE TO
NEWARK
22 Packet Page 573
NEWARK SUPPLY INVENTORY – 10 HOTELS (1,605 ROOMS)
Property Rooms Parent Brand Class
Doubletree by Hilton 315 Hilton 1984
Homewood Suites 192 Hilton 1999
Courtyard 181 Marriott 2002
Aloft 172 Marriott 2000
Residence Inn 168 Marriott 2002
EZ8 Motel 141 Independent 1985
Chase Suites 140 Independent 1986
SpringHill Suites 119 Marriott 2019
Staybridge Suites 104 IHG 2019
Wyndam Garden (formerly Comfort Inn) 101 Wyndam 1986
Hyatt Place 112 Hyatt 2023
*Note the conversion of theTownPlace Suites to residential in 2022 removed 125 rooms from the market. 23 Packet Page 574
City Current Hotel Taxes Rates Selected Bay Area Cities Newark 10%
Menlo Park 14%
Milpitas 14%
Fremont 10%
Oakland 14%
Palo Alto 15.50%
Redwood City 12%
San Carlos 14%
Santa Clara 11.5% and 13.5% (2% CFD near Levi’s Stadium) San Francisco 16.25% (14% city + convention & additional location fees) San Jose 14% (10% city + 4% convention center)
San Leandro 14%
Sunnyvale 12%
Union City 13.54% (As of July 1, 2022)
24 TRANSIENT
OCCUPANCY
TAX RATES
24 Packet Page 575
25 TRANSIENT
OCCUPANCY
TAXES
Three nearby cities adopted TOT
increases through via public approval of
ordinances in November 2022
elections:
Alameda 14% (from 10%)
Belmont 14% (from 12%)
Millbrae 14% (from 12%)
Packet Page 576
Current and Potential NewarkTransient Occupancy
Taxes @ 10% to 14%
26 FY 2019
(pre Covid)
Existing 10% Rate If 12% If 14%
Collected $6,700,000 $8,040,000 $9,380,000
Difference + $1,340,000 + $2,680,000
FY 2023 Existing 10% Rate If 12% If 14%
Collected $4,950,000 $5,940,000 $6,930,000
Difference + $990,000 + $1,980,000
Packet Page 577
ECONOMIC ACTIVITYAND CITY BENEFITS OF HOTELS
Hotels generate TOTs and other economic benefits:
Hotel guests in the U.S.spend an additional $1.22 in the community for every $1 they spend on their hotel bill*.
Great hotels help Newark attract businesses.
Hotels generate construction and ongoing hotel jobs.
Sports tournament and other marketing initiatives possible with increased TOT taxes, incorporating hotel feedback
* 2019 Oxford Economics 27
Packet Page 578
BENEFITS OF STRONG HOTEL PERFORMANCE
TOT REVENUES @ 10% FOR ONE 100-ROOM HOTEL
$257,600 difference:
Strong hotel performance benefits owners and community
Performance Weaker Stronger
Occupancy 60% 80%
Average Rate $120 $180
Annual Revenue $2,680,000 $5,256,000
TOT at 10% $268,000 $525,600
28 Packet Page 579
NEXT STEPS
29 Monitor hotel statistics.
Continued communication with hotels to understand challenges, strengths and opportunities.
Consider submitting to voters a potential increase of theTOT rate to contribute to Newark’s General Fund and update ordinance.
Packet Page 580
QUESTIONS?
30 Packet Page 581
Item F. 5.
DATE 02/22/2024
TO Honorable Mayor and City Council Members
FROM Lenka Hovorka, Assistant City Manager
SUBJECT Motion to direct staff to proceed with a community survey to gauge support for a potential Transient Occupancy Tax (“TOT” and commonly known as the “Hotel Tax”) ballot measure SUMMARY AND RECOMMENDATION
Staff recommends that the City Council proceed with a community survey to gauge Newark voters' support for a potential ballot measure that would increase the Transient Occupancy Tax (“TOT” and commonly known as the “Hotel Tax”) rate. The results of the survey would then be presented at a future City Council meeting and further discussion and action would be needed should City Council desire to place an item on the ballot this November for voter consideration.
BACKGROUND
During tonight’s City Council meeting, under Item F.3, City staff and a consultant will provide a presentation to City Council that provides an update on the development of the City’s first Facilities Master Plan. The presentation will summarize information obtained from recent community engagement and present the findings of building experts who assessed and evaluated the City’s existing buildings for future maintenance needs. The information is summarized as follows:
(1) The City will need to spend approximately $73 million over the next 20 years to maintain and preserve existing City-owned facilities. (This amount assumes replacement of the Community Center buildings and Fire Station Numbers 27 and 29, and no maintenance of the City’s vacant buildings - Watkins Hall, Fire Station 1 and the previous library. If the Community Center buildings and Fire Stations are not replaced, then long-term maintenance costs increase to $87 million.)
(2) Over the next five (5) years, the City can anticipate spending approximately $20 to $25 million on improvements to existing facilities to address the current and future needs of both the City and our community. (3) Fire Station Numbers 27 and 29 have reached their useful life span and should be replaced in the next one to three (1-3) years. The cost of a replacement fire station is estimated to be between $15 and $19 million per station (between $30 and $38 million in total). (4) Our community has identified needs for future building spaces for recreational amenities. This includes, in part, an arts & crafts studio, senior lounge, and community room. When our Facilities Master Plan consultant presented our community with two location options for these amenities, the current site of the Newark Community Center was the most favored location. The consultant estimates that construction costs for a replacement facility would be between $32 and $56 million, depending upon the scope and magnitude of the project.
These costs are substantial, and a significant funding source(s) is needed to maintain and preserve our existing infrastructure and to address the current and future needs of our community.
DISCUSSION/ANALYSIS
There are several options to fund the maintenance and capital improvements identified in the findings related to the Packet Page 582
There are several options to fund the maintenance and capital improvements identified in the findings related to the Facilities Master Plan; however, the costs needed are so high that they cannot realistically be absorbed by the City’s operating budget, nor can they be funded solely by securing grants or paid through any current Capital Improvement Plan funding source.
Viable funding sources include: (1) use of current and future Measure GG revenue (offset by bond debts payments); and (2) a potential future revenue measure that would have to be considered and approved by Newark voters.
Measure GG Revenue
In November 2016, Newark voters approved Measure GG, a 25-year one-half cent Transactions and Use Tax (similar to a Sales and Use Tax). While this is a general tax that can be used for any legitimate government purpose, the Council intended these funds would primarily be used to pay for the construction of the new Newark Civic Center.
In July 2019, the City Council authorized the sale of bonds to pay for the Civic Center and further directed City staff to use revenue from Measure GG to make the bond repayment obligations. In analyzing the financial capacity of the City to pay for the approximate $90 million project (the City’s largest Capital Improvement Project in our history), conservative sales tax projections were utilized and a reasonable interest rate for bond payment was assumed. However, sales tax is growing more aggressively than projected and the City obtained incredibly favorable interest rates at the time of bond issuance (bonds were issued at a net interest cost of 2.54%).
The difference between revenue from Measure GG and the bond repayments is currently at around $2.4 million per year. That difference, as shown in Graph 1 below, is expected to grow over time because: (1) revenue will increase as sales tax, while inherently volatile, will grow over time; and (2) expenditures will decrease because the cost of the annual payments declines over time (the bond repayments are scheduled and thus known). That difference is anticipated to grow to over $4 million by fiscal year 2029.
Graph 1:
The estimated year-end balance as of June 30, 2024, is approximately fifteen million dollars ($15M). As you can see in the above graph, Measure GG fund is expected to grow by approximately three to four million dollars ($3-4M) per year.
Possible Measure for Newark Voters
Use of current and future Measure GG funds in of itself would be insufficient to address all of the future maintenance needs of the City’s current buildings and the needs of our community, as identified in the Facilities Master Plan presentation (item F.3 on the agenda).
Packet Page 583
An additional funding source is needed to address increased maintenance costs over the next twenty (20) years and to fund desired costly capital improvements.
Under item F.4 on tonight’s agenda, the Council will receive a presentation from The Embarcadero Group, the City’s Hotel consultants who will report on the status of hotels in Newark and also provide an analysis of the City’s existing Transient Occupancy Tax (“TOT” and commonly known as the “Hotel Tax”). Their report notes that the City’s TOT is currently at the rate of ten percent (10%), yet surrounding and comparable cities have a TOT Ordinance that contains a much higher rate, often at fourteen percent (14%). Their recommendation is to consider an increase of the TOT as justified by the surrounding market and information provided.
Increasing the TOT rate from ten percent (10%) to fourteen percent (14%) would yield an estimated two and one-half million dollars ($2.5M) per year in General Fund revenue that could be used for any legitimate government purpose, including implementing portions of the Facilities Master Plan.
Graph 2, below, illustrates the expected growth of increased TOT revenue (additional TOT revenue as a result of modifying the ordinance from a 10% TOT rate to a 14% TOT rate) over time should Newark voters approve the measure.
Graph 2:
Use of Measure GG and Increased TOT Revenue
City staff preliminarily conferred with NHA Advisors, the City’s retained financial consultants. The City would be able to spend approximately $120 million dollars in implementing the City’s Facilities Master Plan, taking into account the following:
• Contribution of fifteen million dollars ($15M) from Measure GG Fund, which is the estimated FY 2024 year-end balance.
• Use of future estimated Measure GG revenue to pay new debt obligations. (Staff tentatively proposes a 17-year repayment obligation, which would make it coterminous with the sunset of Measure GG in 2042). • Use of an estimated two and one-half million dollars ($2.5M) per year in increased TOT (assuming the rate is increased from 10% to 14% by Newark voters) that could be used to pay for the new debt obligations.
There are many ways to expend these funds if the above scenario were to occur.
Under one potential option, staff estimates that the City would have sufficient funds to replace two fire stations at the cost of $38 million and replace the Community Center with a new amenity at the cost of approximately $44 million. This would leave a balance of $38 million that would need to be incorporated into the City’s operating budget over the next twenty years to address future maintenance needs. These contributions from the City’s operating budget could be offset from savings resulting from LED streetlight conversion and implementing solar Packet Page 584
operating budget could be offset from savings resulting from LED streetlight conversion and implementing solar projects at City facilities, both of which would lower the City’s utility costs.
Another option would be to replace the two fire stations and spend $56 million for a larger amenity to replace the Community Center. This would leave a balance of approximately $26 million to spend on maintenance costs.
Staff will continue to explore and refine funding options and carefully review the estimated maintenance costs later this year.
Additional Needs of the City
As indicated earlier, a TOT increase would be a General Fund revenue source that could be used to pay for any legitimate governmental purpose. The City has several needs as identified in the various City master plans that are in various stages of development. As plans are completed, they will be presented to City Council and followed by funding requests as needed.
Below is a table that illustrates the various needs of the City along with a notation showing eligible funding sources for each need. This table does not reflect actual available funding.
Any increased TOT revenue could also be applied to any of the projects listed in the above table that could be in addition to the corresponding funding sources.
It would be a policy decision for the City Council to decide whether the funds should be used to implement any of the items under the Facilities Master Plan or for any of the projects identified in the above plans. In addition, any excess funds (similar to the existing excess funds in the Measure GG fund) could be used to implement any projects in the above plans as well.
FISCAL IMPACT
The approximate cost of a community survey consultant contract is $35,000, within the City Manager's signing Packet Page 585
The approximate cost of a community survey consultant contract is $35,000, within the City Manager's signing authority. Should City Council direct staff to begin surveying, then an appropriate funding amount would be included in the mid-year budget update which is expected to be provided to City Council next month.
REVIEW AND APPROVAL
Prepared by - David Benoun, City Manager; Lenka Hovorka, Assistant City Manager; Krysten Lee, Finance Director; Roya Gonzalez, Senior Management Analyst
Reviewed by - Kristopher J. Kokotaylo, City Attorney
Approved by - David J. Benoun, City Manager
Attachments
Presentation
Packet Page 586
Considerations for a
Community Survey
February 22, 2024
Packet Page 587
Estimated Facilities Costs Overview
• Citywide Facility Maintenance
• $73 million over 20 years
• Citywide Facility Improvements
• $25 million over 5 years
• Fire Station 27 and 29 Replacements
• $34 million
• Community Center Replacement
• $44 million (Option B) or $56 million (Option C)
Packet Page 588
Measure GG Fund
Packet Page 589
Potential Increased TOT Revenue
Packet Page 590
Replacement Facilities Funding examples
Example 1: Est. Funding through 2042
• Community Center Option B $44m
• Fire Stations 27 and 29 $38m
• Existing Facilities Maintenance* $38m
Example 2: Est. Funding through 2042
• Community Center Option C $56m
• Fire Stations 27 and 29 $38m
• Existing Facilities Maintenance* $26m
*Excluding buildings currently not in use
Packet Page 591
Staff Recommendation
Staff recommends that the City Council provide
direction to staff to proceed with a community survey
to gauge support for a potential Transient Occupancy
Tax (“TOT” and commonly known as the Hotel Tax”)
ballot measure.
Packet Page 592
Item F. 6.
DATE 02/22/2024
TO Honorable Mayor and City Council Members
FROM Steven Turner, Community Development Director
SUBJECT 2023-2031 General Plan Housing Element- Overview of Non-Substantive Revisions After Adoption
SUMMARY AND RECOMMENDATION
Staff recommends that the City Council receive the informational staff report regarding the non-substantive changes requested by the State of California Department of Housing and Community Development.
BACKGROUND
On October 24, 2023, the Planning Commission adopted Resolution No. 2009, recommending that the City Council adopt the 2023-2031 Housing Element (the “Housing Element”) dated October 3, 2023. On October 26, 2023, the City Council received the Planning Commission’s recommendation, held a public hearing, and adopted Resolution No. 11,575, adopting the 2023-2031 Housing Element. Resolution No. 11,575 includes a provision that the City Manager return to the Planning Commission and City Council with an analysis of recommendations for supplemental text amendments provided by the Department of Housing and Community Development (HCD) within 60 days of Housing Element certification and authorized approval of non-substantive revisions.
Since the October 26 City Council meeting, city staff and staff from HCD met regularly to discuss the remaining issues from HCD’s perspective that needed to be addressed prior to Housing Element certification. On November 1, 2023, the City submitted the Council-adopted Housing Element to HCD for a 60-day review period. City staff and HCD staff continued to discuss the Housing Element and on December 1, 2023, the City released an updated draft Housing Element for a seven-day public review period and submitted it to HCD on December 11, 2023. The December 1 Housing Element contained additional non-substantive revisions requested by HCD. The additional revisions are grouped into three main categories: additional analysis of potential development constraints, additional analysis of sites, and more detailed commitments in programs to address constraints. The revisions are summarized below. On December 21, 2023, HCD notified the City that the Housing Element was in “substantial compliance” with state law and certified.
Packet Page 593
DISCUSSION/ANALYSIS
Consistent with the Resolution No. 11,575, City staff is providing the City Council with an analysis of the Housing Element text amendments since the October 26, 2023 City Council Housing Element adoption action. This discussion does not include the October 26 “slip sheet” revisions, which were considered at the October 26 City Council meeting.
Additional analysis of potential constraints (pgs. 150-155 of the 12/1/23 draft) The revisions to the Housing Element contain a detailed narrative analysis of the city’s existing development standards and requirements and a discussion of the potential for these to constrain residential development:
Minimum Lot Area
Setbacks
Height
Lot Coverage
Parking
Open Space Requirements
Minimum Commercial Component in Mixed-Use Zones
Additional Analysis of Housing Sites
The revisions to the Housing Element contain more information regarding specific sites or groups of sites that, if developed with residential uses, would help meet our Regional Housing Needs Allocation (RHNA) goals.
Table C-3, “Planned and Proposed Sites with Project Status.” New information was added to clearly describe the remaining steps in the entitlement process, known barriers to development, and expected completion dates (pgs. C-12 to C-16 of the 12/1/23 draft).
Added more details to the “Small Sites Analysis” (pgs. C-20, C-46, C-53, C-56, C-57, and C-60 of the 12/1/23 draft), including the lot consolidation potential for specific sites (Sites 16, 20, 23, 24, 27)
“Realistic Capacity Evaluation – Approach and Methodology” (pgs. C-22 to C-25 of the 12/1/23 draft). More context and explanation of the methodology behind the realistic capacity analysis was added.
Program Commitments
The revisions to the Housing Element contain additional commitments within the following proposed programs:
Program H2.3: Four Corners (pg. 216 of the 12/1/23 draft) has an additional commitment to maximize achievable densities (bolded text is new):
1. Packet Page 594
commitment to maximize achievable densities (bolded text is new):
The community-guided plan will include zoning and site development standards that will incentivize the development of multi-unit housing, with a target of 360 units on existing commercial properties in the Four Corners area. As part of the plan, the City will establish or modify development standards to facilitate maximum densities.
Program H2.11: Lot Consolidation (pg. 224 of the 12/1/23 draft) will be adopted by mid-2025 rather than 2026.
2. Program H2.12: Maximum Densities (pg. 224 of the 12/1/23 draft) now includes the following language to remove height limit barriers that may present a constraint to achieving maximum densities (bolded text is new):
3. Review, and amend as necessary, city requirements and development standards in all zones that allow residential development to ensure that maximum densities are achievable. This includes those standards and requirements related to maximum units per building, maximum building coverage, required open space per unit, minimum lot area, setbacks, height limits, parking (also see Program H3.5) and limits on allowable densities. Specifically, remove the MUP requirement for buildings over 35 feet in the RM and RH zones and review whether the 60-foot height limit in the CMU zone (outside of the Old Town Specific Plan area) is a constraint on development and make needed changes, or allowing for flexibility to achieve maximum allowable densities.
Program H3.5: Parking Standards Update and Study (pg. 227 of the 12/1/23 draft) will be completed by mid-2025 rather than the end of 2025.
4. Program H4.10: Special Needs Housing (pg. 233 of the 12/1/23 draft) has been updated to ensure the emergency shelter provisions meet the adoption timeline requirements of AB 2339. The ordinance will be amended by October 26, 2024, or one year from the date of housing element adoption, instead of “by the end of 2024.”
5. Program H7.6 Monitor Annual Progress (pg. 241 of the clean 12/1/23 draft) includes additional language to bolster its commitment to reviewing and making appropriate changes:
6. The City will evaluate planned, approved and pending projects for progress toward completion every other year and if necessary, take alternative actions (e.g., additional sites or rezoning) within one year.
The revisions to Program H2.12 (Maximum Densities, pg. 224 of the 12/1/23 draft) represent a revision worth discussing in that HCD has stated that the MUP requirement for heights above 35 feet in the RM (Residential Medium Density) and RH (Residential High Density) districts may represent a barrier to the production of housing. The maximum heights in the RM and RH districts are 75 feet and 100 feet, respectively, with a 35-foot height limit within 20 feet of the lower-density residential districts (Residential Single Family (RS) and Residential Low Density Packet Page 595
(RL)). The stepped-down maximum height for sites adjacent to RS and RL districts is intended to reduce building mass and create more compatible buildings between adjacent lots. HCD has indicated that the MUP requirement represents a significant issue that must be addressed prior to Housing Element certification.
To address the issue, city staff supports the proposed Program H2.12 revision that would direct the city to remove the MUP requirement for residential building heights greater than 35 feet. The MUP is commonly used as a tool to control use on a site rather than the form of a building. The ability to control and regulate the form and massing of a building can be achieved in other ways. The Housing Element contains a specific program that, when implemented, will assist the city when reviewing new buildings (Program H3.2 (Objective Design Standards)). The stepped-down maximum heights adjacent to the RM and RL are not proposed to be eliminated. As required in Program H2.12, the city would initiate a study to assess site development regulations, including the maximum height regulations in the Commercial Mixed Use (CMU) district to ensure that the maximum densities of each district are achievable. The Planning Commission and City Council would review changes to site development regulations.
The revisions described above are considered by staff to be “non-substantive” pursuant to the City Council-approved resolution, which allows the Community Development Director to make non-substantive changes requested by HCD to achieve certification.
As stated earlier in the report, HCD has accepted these non-substantive revisions and “certified” the Housing Element.
The Housing Element document containing the above revisions can be found at the Housing Element website: www.newarkhousingupdate.org.
FISCAL IMPACT
This is an informational staff report. There is no required action, and therefore there is no fiscal impact.
ENVIRONMENTAL/PLANNING COMMISSION REVIEW
The Planning Commission reviewed the same non-substantive changes to the Housing Element at their regular meeting on January 23, 2024. The Planning Commission's review was informational; no action was taken.
REVIEW AND APPROVAL
Prepared by - Steven Turner, Community Development Director Reviewed by - Krysten Lee, Finance Director
Reviewed by - Kristopher J. Kokotaylo, City Attorney
Approved by - David J. Benoun, City Manager
Attachments
Presentation
Packet Page 596
Packet Page 597
2023-2031 Housing Element
Non-substantive Revisions
City Council Meeting Steven Turner, Community Development Director February 22, 2024 City of Newark
Packet Page 598
Agenda
2 1. 2023-2031 Housing Element Adoption and Certification Timeline
2. Non-substantive Revisions Overview
3. Next Steps
Packet Page 599
Non-substantive Revisions Overview – Three Categories
• Analysis of Development Constraints
• Analysis of Housing Sites
• Additional Program Commitments
The following changes are considered to be non-substantive changes to the Council-adopted Housing Element
3 Packet Page 600
2023-2031 Housing Element Adoption and Certification Timeline • Adopted by City Council on October 26, 2023
• CA Housing & Community Development Review – November 2023 • HCD staff identified required revisions and additional information • Housing Element revised based on HCD comments
• Seven-day public review: December 1
• Resubmitted to HCD on December 11
• HCD “certified” the Housing Element on December 21, 2023, as substantially compliant with state law
Packet Page 601
4 Analysis of Development Constraints
• More detailed analysis of development standards and requirements, including:
• Setbacks and building height
• Lot area and coverage
• Parking and open space
• Minimum commercial space in mixed-use zones
• New discussion for the potential of standards and requirements to constrain residential development
5 Packet Page 602
Analysis of Housing Sites
• New information regarding “in-process” residential projects; steps remaining in the entitlement process
• More detail in the “Small Sites Analysis” section regarding the potential for lot consolidation
• More context and information in the “Realistic Capacity Evaluation” section regarding capacity calculation methodology
6 Packet Page 603
Additional Program Commitments
• Program H2.3- Residential Opportunities in Four Corners – establish or modify development standards to facilitate maximum residential densities.
• Program H2.11- Lot Consolidation Incentive Program – adopt a program by mid-2025 rather than 2026
• Program H3.5 Parking Standards Update – complete the update by mid2025 rather than end of 2025 7 Packet Page 604
Additional Program Commitments
• Program 4.10 – Special Needs Housing, emergency shelters, zoning amendments- complete by October 26, 2024
• Program H7.6- Monitor Annual Progress – review residential development progress every other year and take any necessary actions to encourage residential development within one year of each review 8 Packet Page 605
Additional Program Commitments
• Program H2.12 Maximum Densities:
• Remove the Minor Use Permit requirements for buildings over 35 feet in the Residential Medium and Residential High zones.
• Review whether or not the 60-foot maximum building height in the Commercial Mixed-Use zone is a development constraint to achieve maximum densities Adopted and Certified 2023-2031 Housing Element and Executive Summaries available at www.newarkhousingupdate.org
9 Packet Page 606
Next Steps
• Housing Element Program Implementation
• Affordable Housing Work Plan – Previously Identified Efforts:
• Affordable Housing Local Preference
• First Time Homebuyer and Mortgage Assistance Program
• Inclusionary Housing Requirement for Residential Projects 10 Packet Page 607
Conclusion
Thank You
&
Questions
11 Packet Page 608