Salinas City Council
October 18, 2022

INCLUSIONARY HOUSING ORDINANCE

STUDY SESSION
Megan Hunter, Community Development Director &
Rod Powell, Planning Manager
City Council
September 13, 2022
Background
 Nearly 800 housing units (rental and
ownership)
 1992 – 1st Inclusionary Housing Ordinance
 2005 amendment increased inclusionary
percentages
 No inclusionary units built under 2005
ordinance
 Update to ordinance initiated in 2014
 Technical Advisory Committee (TAC)
formed of stakeholders
 Current ordinance adopted on June 6, 2017

Discussion
 2017 ordinance amendment took 2½ years to complete
 Goal: Support developer-friendly options to facilitate housing production and result in more affordable housing through:
 Flexibility
 Market informed alternatives
 Regulations that encourage on-site development
 Regulations informed by:
 Community Engagement and Input
 Downtown Vibrancy Plan
 2017 Housing Target Market Analysis
On
-
site Inclusionary Options
On-site For Sale On-Site Rental Mixed For-Sale/Rental
Option 1 Option 2 Option 3 Option 4
20% 15% 12% 20%
Very Low 4% not required 8% 4% Rental / Option to pay impact fees Low 8% not required 4% 8% Rental / Option to pay impact fees Median not required 6% not required not required
Moderate 4% 6% not required 4% Ownership
Workforce 4% 3% not required 4% Ownership
Inclusionary Ordinance Provisions
 In-lieu Fees and Rental Housing Impact Fees
 $14.05 per square foot for ownership housing
 $2.40 per square foot for rental housing, plus 12% of units available to Section 8 Housing Choice Voucher Program
 Ordinance applicable to:
 Developments of 10 or more new, for-sale residential units  Subdivision of property into 10 or more lots
 Additions/alterations to existing structure to create 10 or more new units  Requires approval of Affordable Housing Plan
 West Area and Central Area Specific Plans have Development Agreements that lock in the 2017 ordinance
Ordinance Exemptions
 Creating fewer than 10 additional units or lots
 Development Agreements executed prior to June 6, 2017  Monte Bella (Mountain View) followed 1992 ordinance
 Developments with a submitted, complete Planning or Building permit and full payment of application fees prior to June 6, 2017 and compliant with predecessor ordinance
 Developments in the Downtown Area (Central City Overlay District) Downtown Area (Central City Overlay) Exemption
 Adopted Downtown Vibrancy Plan called out exemption for Downtown to promote housing development

395 housing units built in Downtown have restricted rents  Market-rate housing is desirable for retail businesses  Other favorable policies may not be enough to encourage housing development  Absence of a Downtown Area exemption greatly reduces the profitability of developments
 There are few opportunity sites left in the Downtown
 Downtown housing opportunities promoting market rate housing should be a goal in evaluating and modifying all City policies
 Only
24 market rate units built over the last few years
Affordable Housing Units in/near Downtown
SRO S 1B 2B 3B 4B 8B
Extremely
Low
Very
Low
Low Moderate
Plaza Grande 50 E. Market St 95 95 95 0 95 0 0 2003 40 12/1/2043 Forester Building 369 Main St 10 8 2 0 0 0 0 0 2000 20 4/12/2020* Pajaro Triplex 139 Pajaro St 3 3 3 0 0 3 0 1996 30 5/6/2026 Lupine Gradens 118 E. Alisal St 20 20 20 0 20 0 0 2006 30 8/8/2036 California House 436 California St 8 3 5 8 0 8 0 0 2002 30 7/3/2032 Sun Rose Apartments
(Formerly Soledad House)
439 Soledad St 11 7 3 1 10 0 9 1 0 2022 30 2/11/2036
Tynan Village 323 Front St 171 8 25 32 8 106 0 33 73 0 2008 55 12/4/2063 Gateway 25 Lincoln St 52 25 21 6 51 6 24 14 7 2012 55 12/17/2068 401 Monterey Street 401 Monterey St 16 16 2 0 2 0 0 2019 55 1/10/2074 Steinbeck Commons 10 Lincoln 100 99 1 99 0 0 99 0 1999 / 2021 55 1/1/2076 Total 486 131 51 155 41 8 0 1 394 6 191 190 7 * Affordability Period Expired SRO S 1B 2B 3B 4B 8B Extremely
Low
Very
Low
Low Moderate
Haciendas Phase I 201-233 Calle Cebu 53 9 27 14 3 52 38 14 2013 55 1/8/2068 Haciendas Phase II 221, 225, 237, 241 Calle Cebu 46 6 20 17 3 45 2 43 2014 55 6/30/2068 Hacienda Phase III - Hikari 131 E. Rossi Street 50 19 16 15 49 49 2019 30 3/18/2049 Haciendas Phase IV - Dai-Ichi 34-54 Rossi Street 41 41 40 40 2016 30 3/17/2045 Moon Gate Plaza 21 Soledad St 90 81 4 5 88 12 76 2020 55 11/24/2075 Catalyst Apartments 235 Martella St 5 5 5 5 2022 15 11/18/2020 Total 285 81 0 84 68 46 6 0 279 0 52 227 0
Housing Units Near Downtown Between 2013- 2022
Property Name Property Address Total
Units
Bedrooms No. of
Restricted
Units
Income Level Year
Constructed
Affordability
Term
Restricted
Expiration
Income LevelBedrooms
Updated Table 5-1 Housing Units in Downtown (Central City Overlay) Between 1996 - 2022 Property Name Total
Units
Property Address Year
Constructed
Affordability
Term
Restricted
Expiration
No. of
Restricted
Units

Map Legend
Downtown Core Area
Downtown Neighborhood Area 15
City Restricted Projects
CTCAC Restricted Projects
1 Plaza Grande
2 Forester Building*
3 Pajaro Triplex
4 Lupine Gardens
5 California House
6 Sun Rose
7 Tynan Village
8 Gateway
9 Haciendas Phase I

10 9
12 11

13 10 Haciendas Phase II
11 Haciendas Phase III - Hikari
12 Haciendas Phase IV - Dai-Ichi 16
13 Moon Gate Plaza
8 1
14 401 Monterey Street
15 Catalyst Apartments
16 Steinbeck Commons
3 * Affordability Period Expired

4 7

2 14

5 6

Downtown Neighborhood Area
(Continues to the South)
Map of Downtown Area
Affordable Housing Projects
2017 Housing Target Market Analysis
 Demand for ownership and rental residential projects
 Consumer preference for market rate infill housing
 Traction for adaptive reuse projects
 Significant development risks:
 Public safety
 Homelessness
 Lack of open space
 Low school performance
 Traffic
 Untested market
 Housing incentives to reduce costs needed
2022 Housing Target Market Analysis Update
 Inclusionary housing would constrain momentum
 Salinas market has become more expensive since Covid-19  Ownership less affordable, rental more affordable
 Construction costs are extremely high
 Higher density market rate rental and ownership have negative residual value
 Micro-rental units show best project feasibility
 Downtown Area exemption should remain in place
Timing for Inclusionary Housing Update
 Inclusionary Housing Ordinance re-evaluated every 5 years  Review of ordinance due in 2022
 Staff capacity severely limited:
 COVID 19 Funding
 Project Roomkey
 Project Homekey
 Emergency Rental Assistance Program
 6th Cycle of Housing Element
 Scheduled to begin update of ordinance in summer 2023  During update of ordinance, ability to conduct “deeper dive” into Downtown Exemption
Questions?