City °JArts &Innovation
Housing and Homelessness
Committee Memorandum
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII TO: HOUSING AND HOMELESSNESS
COMMITTEE MEMBERS
DATE: FEBRUARY 28, 2022
FROM: OFFICE OF HOMELESS SOLUTIONS WARD: ALL
SUBJECT: UPDATE ON INCLUSIONARY HOUSING PROGRAM STUDY FOR THE CITY OF
RIVERSIDE
ISSUE:
Receive a presentation on updates related to the City of Riverside Inclusionary Housing Program study and preliminary recommendations for inclusionary requirements.
RECOMMENDATION:
That the Housing and Homelessness Committee:
1. Receive an update on the Inclusionary Housing Program Study for the City of Riverside, including preliminary recommendations on inclusionary housing program requirements; and
2. Provide staff with direction on how to proceed with the Inclusionary Housing Program Study.
BACKGROUND:
In recent years, the State of California has identified the shortage of housing, particularly affordable housing, as a legislative priority. A housing shortage impacts the State' s economy, contributes to homelessness, and results in long commutes, increasing production of greenhouse gas emissions, air pollution, and poor public health. Affordable housing is defined as rent/ utilities or mortgage/ taxes/ insurance/ utilities that cost 30% or less of the gross household income and are available to persons who earn at or below 80% of the Area Median Income (or $ 63,200 for a family of four in 2021). The State further delineates affordability levels for " low-income" households, earning between 50% and 80% of the Area Median Income; and for " very -low income" households, earning between 30% and 50% of the Area Median Income. The State also defines households earning " moderate incomes," between 80% and 120% of Area Median Income.
Facing a rise in local rents and housing costs, a steady rise in homelessness, and a decrease in homeownership associated with the high cost of housing, on May 18, 2021, the City Council and Housing Authority Board authorized the award of an Agreement with Economic & Planning Systems, Inc., ( EPS) to explore the possibility of implementing an inclusionary housing policy in the City of Riverside. By definition, inclusionary housing policies are local policies that could Attachment 2
1 1
i
Update on Inclusionary Housing Program Study for the City of Riverside • Page 2 require developers to sell or rent a percentage of new residential units to lower- income residents or pay an in -lieu fee to support the development of such units. To offset the cost of providing affordable housing in all new projects, an Inclusionary Housing Program can offer incentives to developers in the form of zoning concessions such as reduced parking, density bonuses, or tax abatements. Developers can also be given an option to choose an alternative to providing the affordable units in the form of in -lieu fees or providing affordable units at an alternate location.
Inclusionary Housing Programs can include both for -sale and rental units and are often implemented through the jurisdiction' s zoning code.
On September 28, 2021, City staff and EPS presented to the Housing and Homelessness Committee on the initial analysis of the development feasibility impacts of a range of inclusionary policy alternatives on new market -rate residential development. At that meeting, the Committee directed Housing Authority staff and EPS to proceed with the next steps of the Study, including stakeholder and community outreach.
DISCUSSION:
Survey of Comparable Jurisdictions
Inclusionary housing requirements are common throughout California, with over 170 jurisdictions imposing such requirements on new residential construction. Communities have considerable flexibility regarding the components of their inclusionary programs, in terms of what percentages of units must be affordable, the income levels required, whether they apply to both rental and for - sale housing, what sizes and types of projects may be exempt, whether they allow fees in lieu of providing units, and other components. A small sample of selected jurisdictions with geographic or economic similarities to Riverside indicates that communities have adopted a wide range of inclusionary programs, as shown below:
Figure 1: Selected Sample of Inclusionary Standards for For -Sale Housing 16%
14%
12%
10%
8%
6%
4%
2%
0%
1 I
I
I
IFontana Calimesa Montclair Highland Irvine Irvine San Luis San Luis Option# 1) ( Option# 2) Obispo Obispo
Option # 1) ( Option # 2)
Very Low 50% AMI _.. Low 60% AMI Low 80% AMI • Moderate 120% AMI Note: Fontana and Calimeso do not have inclusionary requirements for rental residential projects.
Figure 2: Selected Sample of Inclusionary Standards for Rental Housing Update on Inclusionary Housing Program Study for the City of Riverside • Page 3 16%
14%
12%
10%
8%
6%
4%
2%
0%
1 1
1 Montclair Highland Irvine Irvine San Luis Obispo San Luis Obispo Option 41) ( Option 42) ( Option441) ( Option 42)
Very Low 50% AMI Low 60% AMI Low 80% AMI • Moderate 120% AMI As shown in Figures 1 and 2, it is common for communities to require as much as 15 percent inclusionary units and with a mix of income levels. However, some communities require lower percentages of units and at a single income level. These findings inform the preliminary recommendations for Riverside' s inclusionary program, discussed below.
More data regarding other communities' inclusionary standards can be found at the following website: California Inclusionary Housing Programs Searchable Database ( arcgis. com) Stakeholder and Community Outreach:
Following the September 28, 2021, Housing and Homelessness Committee meeting, EPS engaged in several stakeholder and community outreach meetings to present the initial feasibility study findings and solicit feedback on the potential inclusionary program. These meetings are summarized below:
EPS hosted two virtual stakeholder meetings in November 2021. The first stakeholder meeting took place on November 5, 2021, and included seven participants involved in housing advocacy work and/ or development of affordable residential properties. Primary feedback from this workshop included:
Importance of including affordable units in market -rate developments, to avoid clustering of affordable units in existing low- income areas of City.
Some but not unanimous support for consideration of in -lieu fee option, as it can result in more affordable units in the long -run through funding leverage.
Program should include option for land donation and/ or collaboration with nonprofit builders for separate buildings to meet inclusionary requirement — would be relevant for larger projects.
Encouraging City to explore other tools for developing permanent/ long- term affordable housing, including co-ops and community land trusts, and other funding sources such as transient occupancy tax ( TOT).
Update on Inclusionary Housing Program Study for the City of Riverside • Page 4 The second stakeholder meeting took place on November 16, 2021, and included 16 participants involved in developing and operating market -rate residential projects. Representatives from the Riverside Chamber of Commerce and Building Industry Association attended this workshop.
Primary feedback from this workshop included:
Desire for flexibility from City in negotiating on a project -by -project basis, to reflect that every project has unique cost factors.
Concern that feasibility models may underestimate development costs, in which case financial returns are overestimated and projects may be less able to absorb the costs of inclusionary requirements.
Interest in having incentives that will reduce costs elsewhere in a project, although higher density allowances do not always improve project feasibility because construction costs can increase.
Combined with other City policies that are adding costs to development, such as VMT reduction and electrification policies, the addition of inclusionary requirements can push many projects into infeasibility.
Better option to get affordable units is to support the building of 100% affordable projects on City -owned land; alternately, City should share in cost of inclusionary requirements somehow.
On January 12, 2022, EPS and City staff hosted a virtual community webinar on the Inclusionary Housing Program Study. Approximately 50 individuals signed on to the meeting. EPS provided a presentation on the Study, and EPS and City staff took written and oral questions and comments from attendees. Primary feedback from this meeting included:
Overall support for an inclusionary housing policy.
Preference to require units on- site rather than allow in -lieu fee; fee should be higher than cost of providing on-site units to discourage the fee option.
Questions about other means of encouraging development of affordable units, such as density bonuses ( which the City and State do have).
Stated need for provision of affordable housing that serves special needs population.
On January 25, 2022, EPS staff provided a consolidated version of the community webinar at a meeting of the Riverside Chamber of Commerce' s Economic Development Council.
Review of Feasibility Findings
Since presenting to the Housing and Homelessness Committee on September 28, 2021, EPS made some refinements and additions to its feasibility analysis. One refinement includes an adjustment in maximum rents and sale prices affordable to very -low, low-, and moderate - income households. While the State defines the upper limit of these affordability levels at 50%, 80%, and 120% of Area Median Income, respectively, EPS has found that it is a best practice to set the upper limit for low- and moderate - income households at 70% and 110% of Area Median Income, respectively. This approach, which is used by many California jurisdictions, allows more households to qualify for and afford the inclusionary units, but does lower the revenue from those units and thus affects feasibility. Table 1 shown in Attachment 1 summarizes the maximum incomes and associated maximum rents and sale prices used in the feasibility analysis.
One addition to the analysis is the preliminary calculation of affordable housing in -lieu fee levels for various inclusionary requirements. The fee levels reflect the financial subsidy needed to build the affordable units that the development is not providing on- site. Payment of such a fee can be Update on Inclusionary Housing Program Study for the City of Riverside • Page 5 offered as an alternative option to providing on- site units, although some cities do limit the option to specific conditions ( e.g., to cover fractional units required, or only for projects below a certain size). The City would collect fee revenues in a dedicated fund to utilize in support of producing and preserving affordable housing units in Riverside. Examples of potential uses include providing local matching funds to support 100% affordable projects, purchasing land for affordable housing development, or purchasing existing units and requiring/ extending affordability.
EPS applied a range of inclusionary scenarios, including payment of the in -lieu fee, to the five housing prototypes identified in the preliminary feasibility analysis. These prototypes include for - sale single- family detached homes ( 10 units per acre) and attached townhomes ( 15 units per acre), as well as rental apartments at different densities reflecting their locations in the Downtown 100 units per acre), Downtown- and transit - adjacent areas ( 60 units per acre), or other neighborhoods of the City ( 30 units per acre). EPS updated its feasibility analysis to compare development costs and revenues under the inclusionary requirements to determine whether they met common investment thresholds for feasibility. For the for -sale housing, the feasibility threshold is a 15% profit margin ( values exceed costs by at least 15 percent). For rental properties, the feasibility threshold is a " return on cost" of 5. 25%, meaning that the expected net operating income of the project ( total rents received less operating expenses) would equal at least 5.25% of the project' s total development costs.
For rental housing, EPS tested the following inclusionary requirement scenarios: 1) 15% of units affordable to low- income households; 2) 10% of units affordable to low- income households; and 3) 10% of units affordable to very -low income households. EPS also estimated that if the inclusionary requirement were for 10% of units to be affordable to low- income households, the associated in -lieu fee needed to support the development of the required units elsewhere would be approximately $ 13, 000 per market - rate unit built. EPS found that rental projects developed at 30 units per acre outside of the Downtown and nearby areas could feasibly include affordable units in all of the scenarios. However, rental projects developed at 60 or 100 units per acre in and around Downtown would have higher development costs per unit and could not feasibly include affordable units in any of the scenarios. Therefore, it would be feasible for these higher -density projects to pay the estimated in -lieu fee.
For for -sale attached townhomes, EPS tested the following inclusionary scenarios: 1) 10% of units affordable to low- income households; and 2) 5% of units affordable to very -low income households. EPS also estimated that if the inclusionary requirement were for 10% of units to be affordable to low- income households, the associated in - lieu fee needed to support the development of the required units elsewhere would be approximately $ 17, 000 per market - rate unit built. EPS found that for -sale attached townhome projects are forecast to have strong profit margins and could feasibly provide affordable units under both inclusionary scenarios, and that paying the estimated in -lieu fee rather than providing on-site units would be feasible for such projects as well.
For for -sale detached single- family homes, EPS tested the following inclusionary requirements:
1) 5% of units affordable to moderate income households; and 2) 2% of units affordable to low- income households. EPS also estimated that if the inclusionary requirement were for 5% of units to be affordable to moderate - income households, the associated in -lieu fee needed to support the development of the required units elsewhere would be approximately $ 7, 000 per market - rate unit built. EPS found that under current cost and value expectations, for -sale detached single- family developments are forecast to have marginally feasible profit margins even if they are all market - rate units and that such projects would face feasibility challenges whether they provide affordable units on-site under either inclusionary scenario or pay the estimated in -lieu fee.
Update on Inclusionary Housing Program Study for the City of Riverside • Page 6 Preliminary Recommendations
Given the findings of the feasibility analysis and the feedback received from stakeholders and community members, EPS has compiled a preliminary set of recommendations for an Inclusionary Housing Program in Riverside for the Committee' s consideration:
1) Inclusionary requirements
Multifamily – 10% of units affordable to low- income households ( 70% AMI)* Townhome - 10% of units affordable to low- income households ( 70% AMI)* Single- family – 5% of units affordable to moderate - income households ( 110% AMI) These requirements would automatically qualify projects for the use of State density bonus 2) Develop an in -lieu fee to align with the above requirements. Allowance for payment of fee should be based on City priorities ( e.g., encouraging on- site units/ mixed- income properties vs. maximize local support for affordable projects).
3) Consider a phased - in approach for requirements to allow markets to adjust and a set timeline for revisiting requirements in light of evolving market conditions.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 2: Community Well - Being and Goal No. 2. 1 Facilitate the development of a quality and diverse housing supply that is available and affordable to a wide range of income levels. It also supports Action 2. 1. 4, Prepare creative land use regulations that include Adaptive Reuse Ordinance, Inclusionary Zoning, Density Bonus Ordinance, and Infill Ordinance to create incentives for housing development.
This item aligns with each of the five Cross -Cutting Threads as follows:
1. Community Trust — The initiative to explore an inclusionary policy merges best practices in policy development with intensive outreach and communication with both the development community and public to be transparent and make decisions based on sound policy, and inclusive community engagement based on timely and reliable information.
2. Equity — Inclusionary Housing promotes the integration of affordable housing into the City' s market rate stock which allows people of different races, backgrounds, and economic circumstances to live throughout Riverside, lessening the concentration of poverty and broadening the experiences of those who live in affordable/ market mixed units.
3. Fiscal Responsibility — By using local development resources to ensure a balanced housing market, Riverside is a prudent steward of public funds and ensures responsible management of the City' s financial resources while providing quality of life to all residents.
4. Innovation — Exploring inclusionary housing potentially creates a development tool to address changing needs and prepares for the future through collaborative partnerships and adaptive processes in consultation with the public and development community.
5. Sustainability & Resiliency — By creating a balanced housing market, Riverside is ensuring a balanced economy that serves all income levels of city residents but does not sacrifice growth.
Update on Inclusionary Housing Program Study for the City of Riverside • Page 7 FISCAL IMPACT:
There is no fiscal impact associated with the report.
Prepared by: Michelle Davis, Housing Authority Manager
Certified as to
Availability of funds: Edward Enriquez, Chief Financial Officer/ Treasurer Approved by: Lea Deesing, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
1. Table 1: Affordability Standards for the City of Riverside
2. Presentation
Attachment 1
Table 1: Affordability Standards for City of Riverside
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CITY OF RIVERSIDE
INCLUSIONARY HOUSING
PROG RAM STUDY
Housing and Homelessness
Committee Meeting Update
February 28, 2022
Economic & Planning Systems, Inc.
The Economics of Land Use
949 South Hope Street, Suite 103 • Los Angeles, CA 90015 213. 489. 3838 • www. epsys. com
0 IAGENDA
Study ProcessProcessTo - Date
Review of Inclusionary Housing Policies in Other Cities Review of Feasibility Analysis
Overview of Stakeholder and Community Outreach To - Date Preliminary Recommendations for City Program
Discussion
Economic & Planning Systems EPS PPT Presentation 1
1 1
ISTUDY PROCESS TO - DATE
2021May pmt
EPSengaged by City
June - Au • ust 202
EPSpreliminary technical analysis
Septembe
Presentation of preliminary findings to Housing and Homelessness Committee
November 2021
Meetings with targeted stakeholder groups
Januar 202
Community town hall presentation
Economic & Planning Systems EPS PPT Presentation 2
2 AFFORDABLE HOUSING CONTEXT FOR RIVERSIDE
Riverside Affordable Housing Standards for 2021
Multifamily Rental Units For - Sale Townhome Units Single Family For -Sale Units Affordability Category 6th Cycle RHNA
Allocation
2021 Max Income
3 person Maximum Rent
household)[ ( 2 -bedroom unit) 2
2021 Max Income
4 person Maximum Sale Price
household)[ ( 3 -bedroomhome)3'4
2021 Max Income
5 person Maximum Sale Price
household)[ ( 4 -bedroom home)a
Extremely Low Income ( ELI)- 30% AMI
Very Low Income ( VLI) - 50% AMI
Low Income ( LI) - 70% AMI
Moderate Income ( MOD) - 110% AMI
Above Moderate Income - > 120% AMI
Typical Market Rates [ 5]
2431
2, 430
2064
3, 139
7, 394
21, 960 $ 549
35, 550 $ 889
49, 802 $ 1, 245
76, 725 $ 2, 238
N/ A N/ A
2, 571
6] [ 6]
39, 500 $ 114, 440
55, 335 $ 202, 498
85, 250 $ 423, 481
N/ A N/ A
400, 000
6] [ 6]
42, 700 $ 147, 845
59, 762 $ 239, 779
92, 070 $ 478, 887
N/ A N/ A
625, 000
1] Income levelsare basedoff the median household income for RiversideCounty, as reported by CAHCD. 2] Maximum rent for each income level 4 based on 30% of maximum income for ELI, VLI, and LI; and 35% of maximum income for MOD. 3] Maximum sale price for each income level assumes mortgage payment equal to 30% of maximum monthly income for ELI, VLI, and LI, and 35% of maximum monthly income for MOD ( minus taxes and insurance), on a 30 -year mortgage with a 3.5% annual interest rate and 10% down payment.
4] The maximum sale price for four -person households at moderate income is higher than the estimated market -rate price for townhome products in Riverside. Therefore, EPS's analysis does not include moderate -income inclusionary requirements for townhomes.
5] Basedon EPSmarket research. Estimated rates are for 2 -bedroom, 850 sq. ft. rental unit; 3 -bedroom, 1,500 sq. ft. for -saletownhome; and4 -bedroom, 2,500 sq. ft. singlefamily home. 6] Inclusionaryprogramsdo not typically include ELIrequirementsfor -salehousing.
Sources: State of CANCO; City of Riverside; COStar; Zillow; EPS Economic & Planning Systems EPS PPT Presentation 1 3
3 2
IINCLUSIONARY HOUSING POLICIES IN CALIFORNIA
Riverside
Economic & Planning Systems
e
gib
Riverside
Over 1 70 cities and counties in California
have inclusionary housing policies
Source: Grounded Solutions Network
EPS PPT Presentation 4
4 IIHP IN COMPARABLE JURISDICTIONS - FOR SALE
1Fontana Calimesa Montclair Highland Irvine Irvine San Luis San Luis Option 41) ( Option # 2) Obispo Obispo
Option # 1) { Option # 2}
Very Low 5096AM • Low 6095 AMI • Low MOM] • Moderate 120% AMI Note: Fontana and Cal (mesa do not haw Induslonaryrequirements for rental residential projects.
Economic & Planning Systems EPS PPT Presentation 5
5 3
IIHP IN COMPARABLE JURISDICTIONS - RENTAL
16%
14%
12%
10%
8%
6%
4%
2%
0%
Economic & Planning Systems
1 1 1Montclair Highland Irvine Irvine San Luis Obispo San Luis Obispo Option # 1) ( Option# 2) { Option f41) ( Option# 2)
Very Low 50%AMI • Low 60% AMI • Low 80% AMI • Moderate 120% AMI EPS PPT Presentation 6
6 1FEASIBILITY ANALYSIS
Developed prototype rental and for - sale market - rate products that the City might see developed in the future.
Tested feasibility of several scenarios of developing on- site affordable units, using typical return metrics
5. 25% return on cost for rental projects
15X, profit margin on for - sale projects
Also estimated an in -lieu fee and assessed the feasibility impacts of paying fee as compared to building on- site units
Fee calculated as subsidy needed to support development of affordable units off- site ( Unit value at affordable levels - Cost of building unit) EPScalculated fees for select inclusionary requirements - if City opts to include fee option, calculation will be updated to reflect preferred requirement
Economic & Planning Systems EPS PPT Presentation 7
7 4
PROTOTYPE PRODUCTS
Downtown Multifamily
100 units/ acre)
Economic & Planning Systems
Infill Multifamily
60 units/ acre)
Mid - Density Multifamily
30 units/ acre)
Single Family Homes
N10 units/ acre)
EPS PPT Presentation 8
8 INCLUSIONARY SCENARIOS - RENTAL
Scenarios for multifamily rental include:
1 5% and 10% of units for low- income households
10% of units for very low- income households
In - lieu fee on 10% low- income requirement (-$ 13, 000 per market rate unit)
6. 00%
5. 00% —
4. 00%
3. 00%
2. 00%
1. 00%
0. 00%
5.65%5.51%5.52%
5.26%507%507% 5.39%5.21%5.22%
Return
Threshold:
5.25% 5.43%5.33%5.34% 5.26%5.11%5.12%
II. iI I I I
II II I
II
1111
I
No Inclusionary 15% Low 10% Low 10% Very Low
Mid - Density • Infill Downtown
In - Lieu Fee
Higher density projects
achieve lower return on
cost, and options for
including affordable
units are limited
Mid - density projects
have more room to
feasibly include
affordable units
Payment of in - lieu fee is
a feasible option
Economic & Planning Systems EPS PPT Presentation 9
9 5
IINCLUSIONARY SCENARIOS - FOR SALE TOWNHOMES
Scenarios for for - sale townhomes include: Scenarios for for - sale townhomes include:
10% of units for low- income households
5% of units for very low- income households
In - lieu fee on 10% low- income requirement (-$ 17, 000 per market rate unit)
25. 0%
20. 0%
15. 0%
10. 0%
5. 0%
0. 0%
21. 6%
15. 6%
17. 2%
16. 3%
No Inclusionary 10% Low 5% Very Low In - Lieu Fee
Economic & Planning Systems
Townhome projects achieve
yield on cost well above
threshold without affordable
units
Both inclusionary scenarios
and payment of in - lieu fee
would still produce a feasible
yield on cost
EPS PPT Presentation 10
10 1INCLUSIONARY SCENARIOS - FOR SALE SINGLE FAMILY
Scenarios for single family detached homes include:
5% of units for moderate - income households
2% of units for very low- income households
In - lieu fee on 5% moderate - income requirement ($ 7, 000 per market rate unit)
20. 0%
15. 0% — — —
10. 0%
5. 0%
0. 0%
Return
Threshold:
15. 7% 15%
14. 4%
No Inclusionary 5% Moderate
14. 5%
2% Low In - Lieu Fee
Single family projects just barely
achieve profit margin threshold
without affordable units
Both affordable scenarios and
payment of the in - lieu fee would
produce a barely feasible profit
Economic & Planning Systems EPS PPT Presentation I 11
11 6
1SUMMARY OF FEASIBILITY RESULTS
For -sale single family home products are limited in feasibly providing inclusionary units
For - sale townhomes products appear able to support inclusionary requirements, but are a less common product
Multifamily rental products at - 30 units/ acre appear to feasibly support inclusionary requirements, and are a common product Higher - density multifamily rental products in and near Downtown tend to have higher costs, and providing affordable units is less feasible
Payment of in - lieu fee yields a higher return than providing on- site units
Economic & Planning Systems EPS PPT Presentation 12
12 1STAKEHOLDER FEEDBACK
EPS hosted two stakeholder workshops in November 2021, and presented to the Riverside Chamber of Commerce' s Economic Development Council in January 2022
Workshop # 1 included housing advocates and developers of affordable housing projects. Seven stakeholders attended the meeting, and provided following primary feedback:
Importance of including affordable units in market - rate developments, to avoid clustering of affordable units in existing low- income areas of City Some but not unanimous support for consideration of in - lieu fee option, as it can result in more affordable units in the long - run through funding leverage Program should include option for land donation and/ or collaboration with nonprofit builders for separate buildings to meet inclusionary requirement - would be relevant for larger projects
Encouraging City to explore other tools for developing permanent/ long- term affordable housing, including co- ops and community land trusts, and other funding sources such as transient occupancy tax ( TOT)
Economic & Planning Systems EPS PPT Presentation I 13
13 7
1STAKEHOLDER FEEDBACK
Workshop # 2 included developers of market - rate residential projects. Sixteen stakeholders attended the meeting and provided following primary feedback:
Desire for flexibility from City in negotiating on a project - by -project basis, to reflect that every project has unique cost factors
Concern that feasibility models may underestimate development costs, in which case financial returns are overestimated and projects may be less able to absorb the costs of inclusionary requirements
Interest in having incentives that will reduce costs elsewhere in a project, although higher density allowances do not always improve project feasibility because construction costs can increase
Combined with other City policies that are adding costs to development, such as VMT reduction and electrification policies, addition of inclusionary requirements can push a lot of projects into infeasibility
Better option to get affordable units is to support building of 100% affordable projects on City - owned land; alternately, City should share in cost of inclusionary requirements somehow
Economic & Planning Systems EPS PPT Presentation 14
14 1COMMUNITY FEEDBACK
EPSand City hosted a community webinar on January 12, 2022 Approximately 50 individuals signed on to meeting
Primary feedback included:
Overall support for an inclusionary housing policy
Preference to require units on- site rather than allow in - lieu fee; fee should be higher than cost of providing on- site units to discourage the fee option Questions about other means of encouraging development of affordable units, such as density bonuses ( which the City and State do have)
Stated need for provision of affordable housing that serves special needs population Economic & Planning Systems EPS PPT Presentation I 1 5
15 8
IELEMENTS OF AN INCLUSIONARY HOUSING POLICY
Cities have wide latitude in structuring inclusionary policy - Cities have wide latitude in structuring inclusionary policy - there is no " one size fits all"
Inclusionary Requirement: Proportion of new units that must be affordable
Affordability Levels: Income levels that are served by affordable units Included/ Exempted Developments: Can include a minimum project size or particular project types
Requirements for rental vs. for - sale units
District - based Requirements
In - Lieu Fee Option
Economic & Planning Systems EPS PPT Presentation I 16
16 1PRELIMINARY RECOMMENDATIONS
Given EPS's research and analysis, and the stakeholder and community feedback, we would make the following preliminary recommendations to the City in developing an inclusionary housing program:
1. Inclusionary requirements
a. Multifamily - 10% of units affordable to low- income households ( 70% AMI)* b. Townhome - 10% of units affordable to low- income households ( 70% AMI) c. Single family - 5% of units affordable to moderate - income households ( 110% AMI) These requirements would automatically qualify projects for use of State density bonus
2. Develop an in - lieu fee to align with the above requirements y Allowances for payment of fee should be based on City priorities ( e.g. encouraging on- site units/ mixed- income properties vs. maximize local support for affordable projects)
3. Consider a phased - in approach for requirements to allow markets to adjust, and set timeline for revisiting requirements in light of new market conditions Economic & Planning Systems EPS PPT Presentation I 17
17 9
1 Questions/ Discussion
Economic & Planning Systems EPS PPT Presentation 18
18 1TOPICS FOR DISCUSSION / FEEDBACK
Questions/ concerns/ feedback regarding recommended
inclusionary requirements
Changes to requirements? Exemptions for any uses?
City questions/ preferences regarding use of in - lieu fee What are the priorities?
Timeline for program implementation
Economic & Planning Systems EPS PPT Presentation I 19
19 10
1COMMITTEE RECOMMENDATIONS
Receive an update on the Inclusionary Housing Program Study for the City of Riverside, including preliminary recommendations on inclusionary housing program requirements; and
Provide staff with direction on how to proceed with the Inclusionary Housing Program Study.
Economic & Planning Systems EPS PPT Presentation I 20
20 11
Housing and Homelessness Committee - Art Pick Council ChamberNirtual Meeting Time: February 28, 2022 at 3:30 p.m.
eComments Report
Meetings Meeting Agenda Comments Support Oppose Neutral Time Items
Housing and Homelessness Committee - 02- 28- 22 10 5 3 0 1 Art Pick Council ChamberNirtual 15: 30
Sentiments for All Meetings
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Overall Sentiment
Support( 66%)
Oppose{ 0% 1
Neutra1126%y
No Response( 26%)
Housing and Homelessness Committee - Art Pick Council Chamber/ Virtual 02- 28- 22 15: 30
Agenda Name Comments Support Oppose Neutral
1. To comment on any matters within the jurisdiction of the Committee, 1 0 0 1 you are invited to participate in person or call at ( 669) 900- 6833 and enter Meeting ID: 926 9699 1265. Press * 9 to be placed in the queue to speak.
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2. Inclusionary Housing Program Study update ( All Wards) ( 10 -minute presentation)
Julie Cooper, Economic & Planning Systems, Inc.
4 3 0 0
Sentiments for All Agenda Items
The following graphs display sentiments for comments that have location data. Only locations of users who have commented will be shown.
Overall Sentiment
Support( 60%)
Oppose( 0%)
Neutral( 20%)
No Respoose( 20%)
Agenda Item: eComments for 2. Inclusionary Housing Program Study update ( All Wards) ( 10 -minute presentation) Julie Cooper, Economic & Planning Systems, Inc.
Overall Sentiment
Support( 75°. 6)
Oppose{ 044,)
Neutra114Hy
No Response( 25%)
vonya queries
Location: 92506, Riverside
Submitted At: 1:29pm 02- 28- 22
I am in support of the city continuing to move forward with a plan for an inclusionary housing policy, preferably with some additional adjustments that would ensure we are moving towards housing opportunities for those in our community faced with additional housing barriers. With market -rate units remaining unaffordable to over 60% of our residents according to average rent and median income data, our community residents need as much access to affordable housing as possible. Our ability to actually address the current housing crisis and overall homelessness depends on it. Even with housing vouchers people are unable to get housing because of the voucher amounts, the desired rental requirements, and the barriers related to conviction histories ( no matter how old), crime free housing ordinances, eviction histories, or income thresholds that many of our people are unable to meet. Thank you for your service!
Dan Hoxworth
Location: 92506, Riverside
Submitted At: 1: 08pm 02- 28- 22
Dear Riverside City Housing and Homelessness committee:
This is Dan Hoxworth, Riverside Ward 3 resident. I am submitting my public comments on Agenda item # 2 Inclusionary housing. My comments on each of the Inclusionary staff/ consultants 3 recommendations follow.
Staff Recommendation # 1) Inclusionary requirements
Multifamily — 10% of units affordable to low- income households ( 70% AMI)* Townhome - 10% of units affordable to low- income households ( 70% AMI)* Single- family — 5% of units affordable to moderate - income households ( 110% AMI) Comment:
Given the size of the affordable housing crisis we face, the percentage for multi -family, townhome, and single family affordable units percentage is very low. It needs to be much higher to encourage the development of a few affordable housing units.
Staff recommendation # 2) In - lieu fees
Develop an in -lieu fee to align with the above requirements. Allowance for payment of fee should be based on City priorities ( e.g., encouraging on-site units/ mixed- income properties vs. maximize local support for affordable projects).
Comment:
Increase the in -lieu fee to encourage development of affordable units. The fee should be high enough to create a strong disincentive to developers creating housing without affordable units.
The City must develop more revenue solutions for the housing trust. First, any in -lieu fees that are paid should go to the housing trust. In addition, the City should look for other revenue sources to bolster the housing trust to raise funds for affordable housing projects.
Staff Recommendation 3) Phased In Requirements
Consider a phased -in approach for requirements to allow markets to adjust and a set timeline for revisiting requirements in light of evolving market conditions.
Comment: Do not phase in the requirements. We have an affordable housing crisis so the recommendations must be implemented immediately.
Thank you for your time and consideration.
With gratitude,
Dan H. Hoxworth
Riverside Ward 3 Resident
Maribel Nunez
Location: 92501, Riverside
Submitted At: 11: 34am 02- 28- 22
1) Inclusionary requirements
Multifamily — 10% of units affordable to low- income households ( 70% AMI)* Townhome - 10% of units affordable to low- income households ( 70% AMI)* Single- family — 5% of units affordable to moderate - income households ( 110% AMI) The multi -family, townhome, and single family affordable units % are very low and that will encourage the development of a few affordable housing units. For example, if 18,000 RHNA and they are all apartments and townhomes, would account only 1,800 affordable units. In 6th Riverside' s housing element, out of Riverside' s 18,000 total RHNA, you need to zone for 7,907 total for Very Low Income/ Low Income Area Median Income # of units)
2) Develop an in -lieu fee to align with the above requirements. Allowance for payment of fee should be based on City priorities ( e.g., encouraging on-site units/ mixed- income properties vs. maximize local support for affordable projects).
Our comments/ recommendation: if a developer doesn' t want to build affordable housing, make the in -lieu fee high like 25% to encourage the development of affordable units.
Also adding that the city develop housing trust and advocate for more revenue solutions ( cannabis tax, tot tax and etc) Any in lieu fees that are paid should go to the housing trust. In lieu fees won' t be enough to help raise funds for off site affordable housing projects.
3) Consider a phased -in approach for requirements to allow markets to adjust and a set timeline for revisiting requirements in light of evolving market conditions.
Our comments/ recommendations: No phase in approach. We need affordable housing now.
Damien OFarrell
Location: Riverside
Submitted At: 11: 30am 02- 28- 22
I am in support of the city continuing to move forward a plan for an inclusionary housing policy, preferably with some adjustments. With market rate units remaining unaffordable to over 60% of our residents according to average rent and median income data, our community residents need as much access to housing that is affordable as possible. Our future depends on it. Additionally, as a result of our housing crisis even efforts that are proven to provide housing stability ( such as the voucher program) are faltering. Case in point: according to the data I've been provided by HUD, only one household has been leased up out of nearly 400 available vouchers since the beginning of the emergency voucher program for those in homeless situations in Riverside County in 2021. Only one! And this is with vouchers that guarantee full fair market rents paid on time every month! The lack of available units is the main cause of this. All this said, I request that you also ask the staff and consultants to try to make the following items work and include them in their suggestions for the policy: 1) Increase the percentage levels of the requirements by identifying additional sources of possible subsidies to make this work for the developers ( such as taxes received from cannabis operations if that ends up moving forward), 2) Ensure that the In Lieu fee program is design in such a way that it actually produces the revenue needed for the city to build the other units; and/ or 3) include a requirement that a certain percentage of units ( in addition to the affordable requirement) be reserved for exclusive rental to voucher holders and/ or participants of other subsidized rental programs ( such as rapid rehousing) - doing so could produce a win- win situation in which voucher holders and program participants can find housing while landlords receive full fair market rents. I am happy to provide more information on everything that I have mentioned in this comment. Thank you for your service! r.
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