Agenda Item8
1 DATE: May 5, 2025
TO: Honorable Mayor and Members of the City Council through City Manager FROM: Karen Shimizu, Assistant Director of Community Development Dylan Brady, Assistant City Attorney
SUBJECT: Resolution Approving a Residential Density Bonus Agreement for the 100% Affordable Development Project at 2 Rovina Lane, in Compliance with Petaluma Implementing Zoning Ordinance Section 27.090
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution approving a residential density bonus agreement for the 100% affordable development project at 2 Rovina Lane, in compliance with Petaluma Implementing Zoning Ordinance Section 27.090.
BACKGROUND
The State Density Bonus Law has existed in California for several decades (Gov. Code § 65915 et seq.) and is a commonly used tool that helps developers make affordable housing projects financially viable. The City’s own IZO Chapter 27 codifies this framework, requiring execution of a Density Bonus Housing Agreement (DBHA) as a condition of development approval when density bonuses or concessions and waivers are granted. The requirements of the DBHA are codified in Section 27.090 of the IZO. The Density Bonus Housing Agreement attached to the resolution fully complies with the requirements of IZO Section 27.090. Moreover, the agreement for the 2 Rovina Lane Project follows this established practice and reflects the City’s standard form, ensuring consistency and predictability in the implementation of affordable housing commitments.
The Project qualified for an 80% density bonus under State Density Bonus Law (SDBL) and Petaluma Implementing Zoning Ordinance (IZO) Chapter 27, having proposed that 100% of the units, excluding the manager’s unit, be restricted to households earning 80% of Area Median Income (AMI), per the California Health and Safety Code 50079.5.The Density Bonus Agreement before the Council is the final entitlement action necessary to secure affordability provisions and formalize implementation of the concessions and waivers granted in accordance with State law.
2 The Rovina Lane Apartments project proposes a 32-unit 100% affordable multifamily development on a ±1-acre site at 2 Rovina Lane (Project). The Planning Commission approved the Site Plan and Architectural Review (SPAR) and reviewed the project's eligibility for State Density Bonus concessions and waivers at a public hearing held on April 23, 2024, by a unanimous vote.1
The project description consisted of target affordability levels of 30% to 60% of Area Median Income (AMI), which was included in the project approvals. The developer used an established approach that provides for a broader range of affordability known as income averaging. This approach is commonly used in affordable housing projects financed through the Low-Income Housing Tax Credit program. (LIHTC). Traditionally, LIHTC units were restricted to households earning either 50% or 60% of AMI. However, a 2018 federal policy revision introduced the income averaging option, which permits units to serve households earning up to 80% of AMI, provided that the average income level across all restricted units does not exceed 60% AMI.
This flexibility of this program allows developers to designate units at varying income thresholds—such as 30%, 50%, 60%, and 80% of AMI, which supports deeper affordability for some households while ensuring the project remains in compliance with California Tax Credit Allocation Committee LIHTC program requirements. Income averaging not only improves financial feasibility for affordable housing developments but also increases access to housing for a more economically diverse population of low- and moderate-income residents.
In addition to meeting the City Density Bonus affordability requirements, the developer applied for and was awarded an allocation from the California Tax Credit Allocation Committee in December 2024. This award requires the development to provide an additional level of affordability beyond the city density bonus program requirements. Per the California Tax Credit Allocation Committee award, the development will include a total of 31 deed-restricted affordable units. Following is the unit mix and levels of affordability; Nine units will be reserved for households earning up to 30% of the Area Median Income (AMI), including seven one- bedroom units, one two-bedroom unit, and one three-bedroom unit. An additional three units will be designated for households earning up to 50% AMI, consisting of one one-bedroom unit, one two-bedroom unit, and one three-bedroom unit. Four units will be reserved at the 60% AMI level, including one one-bedroom unit, two two-bedroom units, and one three-bedroom unit.
Finally, 15 units will be affordable for households earning up to 80% AMI. This group includes one one-bedroom unit, five two-bedroom units, and nine three-bedroom units.
In total, 31 units will be deed-restricted and maintained as affordable housing for a period of 55 years, in accordance with the California Tax Credit Allocation Committee (TCAC) program requirements. This long-term affordability ensures housing stability and access for lower-income households.
1 Link to the April 23, 2024, Planning Commission staff report. https://cityofpetaluma.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=da1d5c91- dcc5-4151-aac4-0a5796529684
3 DISCUSSION
The Density Bonus Housing Agreement is a standard City agreement, regularly executed in coordination with qualifying housing developments. It ensures that the affordability commitments and development concessions are enforceable and clearly outlined. This includes the number and income level of the affordable units, their design comparability with market-rate units, duration of affordability (a minimum of 55 years), and tenant verification procedures.
For the Rovina Lane project, the DBHA memorializes:
•The provision of 31 deed-restricted affordable units (plus one manager's unit); •Income targeting for households earning at or below 80% of AMI; •Use of State-allowed concessions and waivers to reduce development costs; •A development schedule aligned with affordability requirements; •Requirements for annual reporting, tenant verification, and property management standards.
These provisions ensure long-term affordability, accountability, and proper administration of the affordable units, safeguarding their availability for income-qualifying households throughout the life of the project.
This action is ministerial in nature and the agreement is consistent with past practice.
Additionally, approval of the Density Bonus Housing Agreement is a critical step in enabling the developer to secure necessary financing from external funding agencies, which typically require formal documentation of affordability commitments as a condition of funding.
PUBLIC OUTREACH
This agenda item was noticed in compliance with the California Brown Act.
COUNCIL GOAL ALIGNMENT
This action supports the City Council’s goals to:
•Promote affordable housing options for all income levels; •Support infill development and reduce suburban sprawl; •Comply with state housing mandates and protect local land use authority; Provide transparency and predictability for developers through consistent implementation of state housing laws.
The project helps advance the 2023–2031 Housing Element by creating deeply affordable rental units, including large family units, in a high-resource area of Petaluma. For a full list of what specific policies and goals this Project is consistent with please see the April 23, 2024, Planning Commission staff report.
CLIMATE ACTION/SUSTAINABILITY EFFORTS
4 The project incorporates climate-conscious design measures including:
•Rooftop solar systems on both buildings (1,400 SF and 900 SF respectively); •Electric vehicle charging infrastructure;
•A walkable infill site with proximity to public transportation; •Fire-hardened construction materials consistent with Wildland Urban Interface regulations;
•On-site water quality and stormwater treatment through a modular wetland system.
Notably, although the project was originally eligible to request a concession to allow gas infrastructure, the developer has voluntarily committed to constructing the entire project as all- electric. This represents a meaningful step toward advancing the City’s climate and sustainability goals and underscores the applicant’s willingness to exceed minimum environmental requirements without relying on regulatory concessions.
These features align with the City’s Climate Emergency Framework and General Plan goals around sustainable development and reduced vehicle miles traveled.
ENVIRONMENTAL REVIEW
The Project, as demonstrated in the CEQA Exemption Memo included as Attachment 2, is exempt pursuant to CEQA Guidelines Section 15194 (Affordable Housing Exemption). As detailed therein, the project meets the eligibility requirements set forth in Section 15192 (Threshold Requirements for Exemptions for Affordable Housing) and is consistent with the criteria set forth in Section 15194. This is the same finding that Planning Commission made on April 23, 2024, and the time to challenge the City's CEQA determination has lapsed. Moreover, the execution of the Density Bonus Housing Agreement is an administrative action undertaken to implement State-mandated affordability requirements and, as such, does not constitute a "project" under CEQA pursuant to Guidelines Section 15378. It falls squarely within the scope of the City’s prior CEQA determination and does not trigger additional environmental review.
FINANCIAL IMPACTS
Approval of the Density Bonus Housing Agreement does not result in direct financial obligations for the City. However, it will ensure that the City can verify that the development is renting their units to residents who qualify as affordable.
ALTERNATIVES
There are no alternatives. This action is ministerial and a condition of the Project and to comply with the City's Density Bonus Ordinance.
ATTACHMENTS
5 1. Resolution
A. Density Bonus Housing Agreement
2. CEQA Memo