SPECIAL PROVISIONS
SPECIAL PROVISIONS
6 The lump sum price for Curb Ramp Edge Grind shall include full compensation for furnishing all labor, materials, tools, equipment, personnel, and incidentals, and for doing all the work involved with existing curb ramp edge grinds and no additional compensation therefor.
Add Section 15-2.03 Remove Traffic Stripes and Pavement Markings After existing traffic stripes and pavement markings have been removed, temporary striping tabs must be installed and remain in place until slurry operations have begun.
The lump sum price paid for “Temporary Striping and Pavement Markings” include payment for the following:
• Temporary striping and pavement markings to match proposed lane configuration after existing traffic stripes and pavement markings have been removed. • Temporary striping and pavement markings to match proposed lane configuration after the application of slurry sealing.
DIVISION III EARTHWORK AND LANDSCAPE
20 LANDSCAPE AND IRRIGATION
Add to Section 20-1.01 General:
There are two types of landscape areas on this project:
1. Stormwater treatment areas
2. Conventional landscape areas
Bioretention areas receive a special soil mix and compost mulch not bark mulch, per plans and specifications.
All other landscape areas that do not receive bioretention soil mix shall be amended with compost per the specifications.
Add to Section 20-1.02 MATERIALS:
TREE WATERING BAGS:
1. Trees not served by irrigation to be installed with manual tree watering bags, Treegator 20-gallon slow-release watering bag, or approved equal.
Replace Section 20-1.02D Organic Soil Amendments with:
FINE COMPOST
1. Compost for soil amendment and preparation to be a well decomposed, stable, weed free organic matter source derived from waste materials including yard
SPECIAL PROVISIONS
SPECIAL PROVISIONS
7 debris, wood wastes or other organic materials. Compost to have a dark brown color and a soil like odor. Compost exhibiting a sour or putrid smell, containing recognizable grass or leaves, or is hot (120f) upon delivery or rewetting is not acceptable.
2. Compost facility and compost material must meet the following requirements:
Inspected and regulated by the local enforcement agency for CalRecycle. The past 3 inspection reports to be submitted verifying compliance with title14 requirements of the process to further reduce pathogens (pfrp), fecal coliform and salmonella testing and pathogen and epa, 40 cfr 503 regulations.
Certified through the uscc seal of testing assurance (sta) program (a compost testing and information disclosure program).
Analyzed by a laboratory that is enrolled in the us composting council’s compost analysis proficiency (cap) program and using approved test methods for the evaluation of composting and compost (tmecc).
Facility must provide proof of compost testing within 120 calendar days prior to delivery of material to project site.
Apply a four-inch lift of compost during cultivation.
Replace Section 20-1.02E Fertilizer:
AMENDMENTS AND MYCORRHIZAL FUNGI INOCULANT
Apply to all new planting holes, including bioretention areas:
Granular Tri-c myco Revival Plus applied at the manufacturer’s recommended rates based on plant material container size.
Revise Section 20-1.03C(2) Remove Existing Plants:
Revise to increase removal depth: Removal of existing plants includes removing their stumps and roots 2 inches or larger in diameter to a minimum depth of 24 inches below finished grade.
Revise Section 20-1.03D Cultivation:
All planting areas, except bioretention areas to be cultivated.
Revise to increase cultivation depth: Repeat cultivation until the soil is loose to a minimum depth of 12 inches.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
8 Add: Remove native soil as needed prior to adding amendments, to allow for addition of compost amendment and mulch to achieve final grades.
Place compost amendment and till to a depth of twelve inches. Provide additional amendments or adjust soil preparation if directed per the soil analysis (per 10.3.3 Soils Management Report) recommendations and approved by owner/owner’s representative.
Roll compact soil to achieve compaction of 85% of dry weight density in areas where plantings are located.
After natural settlement and light rolling, the complete work to conform strictly to the lines, grades and elevation indicated, under the contract without additional cost to the City.
Finish grading of landscape areas: fine grade all prepared planting areas to lines and grades shown on plans and as specified within this section. Finish grade to account for placement of specified mulch.
Top of finished mulch surface to be 1/2” below adjacent pedestrian or bicycle paths unless otherwise specified on civil grading plans.
Add to Section 20-1.04 PAYMENT:
Trees to be paid as each regardless of species.
Add to Section 20-3.01B(2) Plants:
1. Contractor to submit proof of acquisition of plant material within 60 days of signed contract.
2. Any requests for plant material substitutions must be accompanied by documentation of inability to locate plants, including a list of plant nurseries contacted (minimum of three).
Substitutions may be denied if plant material is available at regional wholesale nurseries.
Remove Section 20-5.03A(3)(c) Treatment of Soils:
Do not apply pre-emergent herbicide for weed control.
Contractor to carry out manual removal of weeds prior to planting.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
9 Add to Section 20-5.03 INERT GROUND COVERS AND MULCHES:
3. Mulch to be applied to all planting areas.
4. Mulch varies by area type:
Bioretention areas: 3” depth fine compost as specified in addition to Section 20-
1.02D.
All other planting areas: 3” depth walk on bark – fir bark mulch, 1” pieces and smaller.
Submit samples approval.
Mulch to be free of weed seeds, or substances injurious to plant growth.
DIVISION V SURFACINGS AND PAVEMENTS
37 BITUMINOUS SEALS
Add to Section 37-3.02A General
Slurry seal must be Type II. Use Polymer Modified Asphaltic Emulsion with 2% latex additive.
Add to Section 37-3.03A General
Not all frames, covers, grates, or manholes are shown on the Plans. The Contractor is responsible for examining the site of work. A submission of a bid is conclusive evidence that the bidder has investigated the local conditions to be encountered.
Add to Section 37-3.03(D)(2)(a) General
Locations of bike lane edge grind are identified on plans. The Contractor is responsible for examining the site of work. A submission of a bid is conclusive evidence that the bidder has investigated the local conditions to be encountered.
Payment shall be as described in Section 15-2.02B(7).
Replace Section 37-3.03D(4)(a)(i) General with:
Roll all seal material with a pneumatic tire roller, a minimum of three coverages, prior to allowing traffic on the surfaced roads. After placement of seal material surfaced roads must be opened to traffic no later than 3 hours after the seal material has been placed and no later than 4:00 p.m. in the evening. Quantities of seal placed daily must be adjusted to accommodate road-opening schedule.
A coverage must consist of the number of passes a roller needs to cover the width. A pass must be 1 roller movement parallel to the slurry seal application in either direction.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
10 Overlapping passes are part of the coverage being made and are not part of a subsequent coverage. Do not start a coverage until completing the previous coverage.
Add to Section 37-3.03D(4)(b) Slurry Seal
Thru-traffic lanes must be spread in full lane widths only. Slurry seal must be spread at a rate within the ranges shown in the following table for pounds of dry aggregate per square yard:
Slurry Seal Type Location Spread Rate
(lb of dry aggregate/ sq yd)
Type II1 Full Lane Width 14+/-1
Notes:
1. For slurry seal over asphalt concrete pavement.
During slurry seal operations, You are responsible for:
1. Verifying that the slurry seal emulsion being used will allow for rolling within the specified time frame.
2. Adjusting the mixture for changes in weather conditions, as appropriate.
3. Sweeping the surface approximately 24 hours and 30 days after placement and as directed by the Engineer. See section 13-7.02 Street Sweeping.
4. Sweeping in such a manner as to remove loosened or shed aggregate particles without damaging the new surface.
39 ASPHALT CONCRETE
Add to Section 39-1.0A Summary
Contractor must phase milling and pavement operations such that public traffic is not directed to traverse milled surfaces, including remaining asphalt or base material.
Contractor must submit phasing plan for review and approval.
Add to Section 39-1.02B MATERIALS, Tack Coat
All vertical edges to be paved against shall be tack coated. These include, but are not limited to, curb faces, gutter lips, swale edges, cross gutter edges, and asphalt concrete edges.
Replace Section 39-1.02F MATERIALS, Reclaimed Asphalt Pavement (RAP) of City Specifications with:
Maximum of 15% RAP may be used in the pavement mix for the 3/4" HMA Mix base course of paving operations. The final lift of 1/2" HMA Mix surface course and 3/8” HMA Mix leveling course must use virgin asphalt concrete.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
11 Add to Section 39-1.03 HOT MIX ASPHALT DESIGN REQUIREMENTS Mix voids to be targeted at 4.0%. TSR to be minimum 70 in accordance with CTM 371.
Replace the first and second sentence of Section 39-1.04F Density Cores with: To determine density for Standard and QC/QA construction process projects, 4- or 6-inch diameter density cores may be required by the Engineer at random locations up to 5 calendar days after placement. Frequency of density cores are at the discretion of the Engineer.
Add to Section 39-6 Payment
The contract price paid per square foot of Remove and Replace AC (Detail I, Sheet 24) patch repairs shall include full compensation for all labor, materials (including hot mix asphalt), tools, equipment and incidentals for completing AC patch repairs to the length, depth, and width shown on the plans. Work includes, but is not limited to, saw-cutting, grinding, removal and disposal of existing pavement, compaction of underlaying materials, tack coat, and placement and compaction of asphalt.
DIVISION VII DRAINAGE FACILITIES
71 EXISTING DRAINAGE FACILITIES
Add to Section 71-1.03 Construction
Contractor shall remove existing storm drain frame and cover and install new custom dimension frame and custom dimension Type 18-8S/24-10S storm drain grate per Caltrans Standard plans D77A & D77B to fit existing infrastructure. Contractor shall modify the existing storm drain inlet to allow for the new frame and cover to fit flush with the finished surface.
Add to Section 71-1.04 Payment
The contract each item price for “Modified Type 24-10S Storm Drain Grates” shall include full compensation for furnishing all labor, materials, tools, equipment, personnel, modifying existing drain inlet, removal of existing storm drain frame and cover, adjusting new frame and grate to finish surface, incidentals, and for doing all the work involved with the installation of the storm drain grate and no additional compensation therefor.
DIVISION VIII MISCELLANEOUS CONSTRUCTION
73 CONCRETE CURBS AND SIDEWALKS
Add to Section 73-1.03 Construction
You must meet with the Engineer for an average of 1.5 hours total per ramp to complete the following coordination tasks:
1. Before saw-cutting to agree on the limits of demolition and removal.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
12 2. After formwork is set, to verify that grades meet those stated on the Plans.
3. Upon completion of new curb ramp installation to verify finished grades.
Curb ramps have been designed to comply with the current Caltrans Standard Plan detail RSP A88A and City Std. 4440. Field modifications to the design plans, if approved by the Engineer, must meet the dimensional and slope requirements of Standard Plan RSP A88A. When measuring the ADA facility’s dimensions and slopes, consider the required dimension or slope to have been met if the recorded individual measurements comply with the following:
• Dimensional measurement does not exceed ½-inch from the dimension shown, i.e. ½-inch less than a minimum dimension, or ½-inch greater than a maximum dimension.
• Slope measurement does not exceed 0.2 percent from the slope shown.
You must give the City a 24-hour notice for inspection of formwork before pouring the concrete.
You must calibrate all levels used in construction at the beginning of each workday. You must ensure that new ramp flowlines do not create any "ponding" areas.
You cannot saw-cut and demolish more than 2 corners at any given intersection in order to allow pedestrian travel.
Curb ramp spandrel design may vary from Engineering Standards, as directed by the Engineer, in order to accommodate ramp landing.
You are responsible for storing existing signs and boxes for reuse.
Add to Section 73-1.04 Payment
As shown on the bid item list, each new curb ramp will be paid in lump sum for all work shown on the plans for the individual corner, The lump sum price includes all work shown on the Plans, as specified in the Standard Specifications and these Special Provisions.
For all corner curb ramps (not including those with a new bulbout), bid item shall include all the work between curb returns within ramp area. For all new bulbouts, bid item shall include all the work in the bulbout detail indicated. For all Case C type ramps, bid item shall include all the work in the curb ramp detail indicated.
Lump sum for these items also includes work for:
1. public notices
2. layout
3. elevation control
4. tree protection
SPECIAL PROVISIONS
SPECIAL PROVISIONS
13 5. protection of existing utilities and improvements
6. saw-cutting
7. demolition
8. removal and disposal of demolished material
9. formwork
10. curb painting
11. temporary cold mix
12. relocation of signs
13. furnishing and installation of new signs, post and sleeves
14. furnishing and installation of new pull boxes
15. installation of curbs, curb & gutter, cross gutter spandrel, sidewalk
16. reinstalling existing utility boxes, pull boxes, and mailboxes
17. furnishing and installing tree grate frames
18. adjustment of existing utility manholes, pull boxes, vaults, etc.
19. reinstalling sidewalk underdrains
20. adjustment of fire hydrant spools
21. landscape replacement, if applicable
22. repair of existing irrigation systems, if damaged & modifications as needed
23. protection of existing utilities and restoration of existing improvements
24. protection and restoration of existing benchmarks
25. cleanup
Payment for varying widths of “paveouts” per plans required by City Standards are included in the applicable curb ramp replacement lump sum price.
Full compensation for concrete cross gutters is paid on a square footage basis as shown in the bid item list and is identified as the portion of the cross gutter between gutter spandrels.
Bid items 2, 3, 4, 6, 7, 8, 9, 11, 12, 18, 20, 21, 22 and 23 are measured outside of Curb Ramp and Bulbout limits as described above.
77 LOCAL INFRASTRUCTURE
Add to Section 77-1.01 EXCAVATION AND RESTORATION, GENERAL; Protection and restoration of survey monuments and benchmarks must comply with Section 5-1.26 and 5-1.36.
Add Section 77-4.02 MATERIALS:
Honeycomb CalTrans 18-8S or 24-10S to be used to replace existing storm drain inlets where called out by plan. New grate shall be installed per CalTrans standard D77B,
SPECIAL PROVISIONS
SPECIAL PROVISIONS
14 dimensions per plan. Install Filterexx Stormexx clean catch basin inlet filter, or approved equal.
Add Section 77-7 MISC GRADING AND LANDSCAPING WORK:
Add Section 77-7.01 GENERAL:
If the elevations at the back of newly constructed sidewalk, driveway or curb ramp differ from the existing grade by more than 1”, the contractor shall temporarily remove the existing landscaping, irrigation systems or ground cover, grade to match to back of new construction to the satisfaction of the engineer, then replace the landscaping, irrigation or ground cover.
Any plantings, irrigation systems, ornamental ground covers or other items on private property shall be protected or restored during these activities.
Temporary Easement Area (bike path area, Appendix F): The Contractor’s restoration responsibilities shall include, but not be limited to: (i) removal of all improvements, equipment or materials within the Temporary Easement Area;· (ii) mounding of the same topsoil which was originally removed in the excavation process, in all areas excavated by the Contractor such that the mounded areas shall settle to the approximate depth of the surrounding surface after the construction activities; (iii) the filling in and repairing of all other portions of the private property which are damaged, rutted or otherwise disturbed as a result of the Contractor’s operations with the same topsoil existing prior to said construction activities as necessary such that all disturbed areas are ready for revegetation; (iv) compacting the soil after it is backfilled to a density acceptable to property owner; (v) grading the areas in which the soils were removed and relocated; and (vi) leaving the private property and the Temporary Easement Area in a condition which is clean, free of debris and hazards which may be caused by the Contractor’s activities, and subject to neither, environmental hazards, nor liens caused by the Contractor’s activities.
Add Section 77-7.04 PAYMENT:
The price per square foot of grading and landscaping work shall include the protection of existing facilities, the grading activities and restoration of existing facilities once the grading activities are complete. This item also includes the replacement of landscaping and irrigation features as needed to complete work.
Add Section 77-8 MISC GRADING AND HOT MIX ASPHALT:
Add Section 77-8.01 GENERAL, Summary:
If the elevations at the back of newly constructed sidewalk, driveway or curb ramp differ from the existing grade by more than 1”, and the adjacent material is a hot mix asphalt driveway or alley, that material shall be removed and replaced to the satisfaction of the engineer.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
15 At least 5 foot of the existing hot mix asphalt facility must be sawcut and removed. The contractor shall then grade between the existing facility and new construction, ensuring slopes do not exceed 15%. Next, prime and place the hot mix asphalt per City standards, ensuring a minimum of 5 inches of HMA.
Add Section 77-8.04 PAYMENT:
The price per square foot of grading and HMA work shall include sawcutting and removal of the existing facilities, grading to ensure the finished slope between the existing facilities and driveway does not exceed 15%, as well as the placement of new HMA.
Add Section 77-9 MISC GRADING AND CONCRETE:
Add Section 77-9.01 GENERAL:
If the elevations at the back of newly constructed sidewalk, driveway or curb ramp differ from the existing grade by more than 1”, and the adjacent material is concrete, that material shall be removed and replaced to the satisfaction of the engineer.
At least 4 foot or the first construction joint of the existing concrete facility must be sawcut and removed. The contractor shall then grade between the existing facility and new construction, ensuring slopes are reasonable for the connecting facility. Concrete shall be Class 3 and 4 inches thick while conforming to City sidewalk details.
Add Section 77-9.04 PAYMENT:
The price per square foot of grading and concrete work shall include the removal of the existing facility, re-grading to ensure reasonable slope between the new and existing facility, as well as the placement of the concrete needed to re-connect these facilities.
Add Section 77-10 MISC GRADING AND CONCRETE DRIVEWAYS:
Add Section 77-10.01 GENERAL:
If the elevations at the back of newly constructed sidewalk, driveway or curb ramp differ from the existing grade by more than 1”, and the adjacent material is a concrete driveway, that material shall be removed and replaced to the satisfaction of the engineer.
At least 4 foot or the first construction joint of the existing concrete facility must be sawcut and removed. The contractor shall then grade between the existing facility and new construction, ensuring slopes are reasonable for the connecting facility. Concrete shall be Class 3, 6 inches thick with reinforcement, and conform to City driveway details.
Add Section 77-10.04 PAYMENT:
The price per square foot of grading and concrete work shall include the removal of the existing facility, re-grading to ensure reasonable slope between the new and existing facility, as well as the placement of the concrete needed to re-connect these facilities.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
16 DIVISION IX TRAFFIC CONTROL DEVICES
84 MARKINGS
Add to Section 84-2.01A Summary,
Traffic Striping to be applied shall be per Caltrans Standard Plans 2015.
Contractor shall install temporary reflective tape to crosswalks near schools and for markings in speed bumps prior to opening to traffic.
New crosswalk markings shall not be installed until all crosswalk warning signage and flashing beacon systems (if applicable) are installed and operational. Otherwise, temporary signage must be installed to convey “CROSSWALK CLOSED” to the satisfaction of the engineer.
Add to Section 84-2.03C Application of Stripes and Markings:
All striping requiring pavement markers (i.e. Detail 9, Detail 37B, etc.) on one-way streets shall be Type C RED-CLEAR RETROREFLECTIVE per Caltrans Revised Standard Plans 2015.
Add to Section 84-2.04 Payment
Bike lane buffer is measured along the linear foot and accounts for all striping and cross hatching regardless of width of buffer.
Green bike lane coating is measured by the square foot for the area applied.
Details containing white pavement markings and green pavement paint (greenback sharrow, greenback chevron, etc.) will be paid per detail and no additional compensation will be allowed.
Green bike lane markings (Case 1, 2 & 3) paid by the linear foot include bike lane symbol, green paint, white markings and striping and no additional compensation will be allowed.
Preformed thermoplastic will be allowed only when approved by the Engineer. Preformed thermoplastic will not be allowed for lane line markings.
Add Section 84-6 BIKE LANE MARKINGS
84-6.01 Bike Lane Coating:
Bike lane coating must be SealMaster Color Safe (Appendix D) or approved equal.
Prior to installation of green bike lane coating, contractor is responsible for noticing adjacent properties to provide advance warning of planned work and potential odors during installation and while the coating cures.
SPECIAL PROVISIONS
SPECIAL PROVISIONS
17 84-6.04 PAYMENT
Payment must comply with section 84-2.04.
DIVISION XIII APPENDICES
Add 100-1.01
Refer to Appendix A: Form of Agreement
Refer to Appendix B: Caltrans Encroachment Permit (PENDING) Refer to Appendix C: School Zones
Refer to Appendix D: Bicycle Lane Coating
Refer to Appendix E: Project Soils Report
Refer to Appendix F: Temporary Construction Easement Exhibit (PENDING)
APPENDIX
APPENDIX
APPENDIX A - FORM OF AGREEMENT
THIS AGREEMENT, made on _____________, by and between the City of San Luis Obispo, a municipal corporation and charter city, San Luis Obispo County, California (hereinafter called the Owner) and COMPANY NAME (hereinafter called the Contractor).
WITNESSETH:
That the Owner and the Contractor for the consideration stated herein agree as follows:
ARTICLE 1, SCOPE OF WORK: The Contractor shall perform everything required to be performed, shall provide and furnish all of the labor, materials, necessary tools, expendable equipment, and all utility and transportation services required to complete all the work of construction of
CERRO SAN LUIS GREENWAY, SPEC NO. 1000036
in strict compliance with the plans and specifications therefor, including any and all Addenda, adopted by the Owner, in strict compliance with the Contract Documents hereinafter enumerated.
It is agreed that said labor, materials, tools, equipment, and services shall be furnished and said work performed and completed under the direction and supervision and subject to the approval of the Owner or its authorized representatives.
ARTICLE II, CONTRACT PRICE: The Owner shall pay the Contractor as full consideration for the faithful performance of this Contract, subject to any additions or deductions as provided in the Contract Documents, the contract prices as follows:
Item
No.
Item Unit of
Measure
Estimated
Quantity
Item Price
(in figures)
Total
(in figures)
1. 2.
3. BID TOTAL: $ .00
Payments are to be made to the Contractor in compliance with and subject to the provisions embodied in the documents made a part of this Contract.
Should any dispute arise respecting the true value of any work omitted, or of any extra work which the Contractor may be required to do, or respecting the size of any payment to the Contractor, during the performance of this Contract, said dispute shall be decided by the Owner and its decision shall be final, and conclusive.
APPENDIX
APPENDIX
ARTICLE III, COMPONENT PARTS OF THIS CONTRACT: The Contract consists of the following documents, all of which are as fully a part thereof as if herein set out in full, and if not attached, as if hereto attached:
1. Notice to Bidders and Information for Bidders
2. Standard Specifications and Engineering Standards
3. Special Provisions, any Addenda, Plans and Contract Change Orders
4. Caltrans Standard Specifications and Standard Plans 2015
5. Accepted Bid and Bid Bond
6. List of Subcontractors
7. Public Contract Code Sections 10285.1 Statement
8. Public Contract Code Section 10162 Questionnaire
9. Public Contract Code Section 10232 Statement
10.Labor Code Section 1725.5 Statements
11.Bidder Acknowledgements
12.Qualifications
13.Non-collusion Declaration
14.Agreement and Bonds
15.Insurance Requirements and Forms
ARTICLE IV INDEMNIFICATION: The Contractor shall indemnify, defend with legal counsel approved by City, and hold harmless City, its officers, officials, employees and volunteers from and against all liability, loss, damage, expense, cost (including without limitation reasonable legal counsel fees, expert fees and all other costs and fees of litigation) of every nature arising out of or in connection with the Contractor’s negligence, recklessness or willful misconduct in the performance of work hereunder or its failure to comply with any of its obligations contained in this Agreement, except such loss or damage which is caused by the sole or active negligence or willful misconduct of the City. Should conflict of interest principles preclude a single legal counsel from representing both the City and the Contractor, or should the City otherwise find the Contractor’s legal counsel unacceptable, then the Contractor shall reimburse the City its costs of defense, including without limitation reasonable legal counsel fees, expert fees and all other costs and fees of litigation. The Contractor shall promptly pay any final judgment rendered against the City (and its officers, officials, employees and volunteers) with respect to claims determined by a trier of fact to have been the result of the Contractor’s negligent, reckless or wrongful performance. It is expressly understood and agreed that the foregoing provisions are intended to be as broad and inclusive as is permitted by the law of the State of California and will survive termination of this Agreement.
The Contractor obligations under this section apply regardless of whether such claim, charge, damage, demand, action, proceeding, loss, stop notice, cost, expense, judgment, civil fine or penalty, or liability was caused in part or contributed to by an Indemnitee.
However, without affecting the rights of the City under any provision of this agreement, the Contractor shall not be required to indemnify and hold harmless the City for liability attributable to the active negligence of City, provided such active negligence is determined by agreement between the parties or by the findings of a court of competent jurisdiction. In
APPENDIX
APPENDIX
instances where the City is shown to have been actively negligent and where the City’s active negligence accounts for only a percentage of the liability involved, the obligation of the Contractor will be for that entire portion or percentage of liability not attributable to the active negligence of the City.
ARTICLE V. It is further expressly agreed by and between the parties hereto that should there be any conflict between the terms of this instrument and the bid of said Contractor, then this instrument shall control and nothing herein shall be considered as an acceptance of the said terms of said bid conflicting herewith.
IN WITNESS WHEREOF, the parties to these presents have hereunto set their hands this year and date first above written.
CITY OF SAN LUIS OBISPO
A Municipal Corporation
__________________________________
Derek Johnson, City Manager
APPROVED AS TO FORM CONTRACTOR:
Name of Company
________________________________ By:________________________________ J. Christine Dietrick
City Attorney
Name of CAO/President
Its: CAO/PRESIDENT
(2nd signature required if Corporation):
By:________________________________
Name of Corporate Officer
Its: ____________________
APPENDIX
APPENDIX
APPENDIX B – CALTRANS ENCROACHMENT PERMIT
APPENDIX
APPENDIX
APPENDIX C – SCHOOL ZONES
APPENDIX
APPENDIX
APPENDIX D – BICYCLE LANE COATING
APPENDIX
APPENDIX
APPENDIX E – PROJECT SOILS REPORT
APPENDIX
APPENDIX
APPENDIX F – TEMPORARY CONSTRUCTION EASEMENT EXHIBIT
R ______
RESOLUTION NO. _____ (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, RENAMING THE ANHOLM NEIGHBORHOOD
GREENWAY AS THE CERRO SAN LUIS NEIGHBORHOOD
GREENWAY
WHEREAS, on September 4, 2018, the City Council adopted the Anholm Bikeway Plan; and
WHEREAS, on February 5, 2019, the City Council adopted Resolution No. 10978 amending the name of the Anholm Bikeway Plan to be the Anholm Neighborhood Greenway; and
WHEREAS, on November 24, 2020, the City Council adopted Resolution No. 11191 to promote awareness and facilitate the ability of property owners throughout the city to remove racist covenants that may exist in their property deeds; and WHEREAS, the City of San Luis Obispo prioritizes the commitment to make San Luis Obispo a welcoming, inclusive, and safe community for everyone, and to promote free thought and speech, while condemning racism, hate speech, bigotry, violence, and prejudice; and
WHEREAS, the Anholm neighborhood historically included restrictive covenants limiting property ownership for non-white individuals; and WHEREAS, the greenway route is along the base of Cerro San Luis Mountain; and
WHEREAS, the Cerro San Luis Mountain is one of the most prominent natural landmarks to San Luis Obispo; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as that:
SECTION 1. The Anholm Neighborhood Greenway is now titled “Cerro San Luis Neighborhood Greenway.”
Resolution No. _____ (2022 Series) Page 2
R ______
SECTION 2. Resolution Number 10978 (2019 Series) is hereby superseded to the extent inconsistent herewith.
Upon motion of Council Member ___________, seconded by Council Member ___________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _______________ 2022. ___________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________
Teresa Purrington
City Clerk
R ______
RESOLUTION NO. _____ (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING USE OF CAPITAL PROJECTS
RESERVE FUND AND INFRASTRUCTURE INVESTMENT FUND TO
SUPPORT CERRO SAN LUIS NEIGHBORHOOD GREENWAY,
SPECIFICATION NO. 1000036
WHEREAS, in June of 2021, the City Council approved 2021-23 Financial Plan – Capital Improvement Program, which identified the Anholm Neighborhood Greenway Phase 2 with a total budget of $3,085,455 to support implementation of the Anholm Neighborhood Greenway; and
WHEREAS, to provide funding to support curb ramp construction work for the Project, staff is recommending the City Council approve use of $1,000,000 from the Capital Projects Reserve Fund and $1,223,000 from the Infrastructure Investment Fund; and WHEREAS, a balance of approximately $2,901,708 is available from the Capital Projects Reserve Fund; and
WHEREAS, a balance of approximately $1,223,000 is available from the Infrastructure Investment Fund for the Cerro San Luis Greenway Project or other Active Transportation Projects consistent with action taken with the 2021-23 Financial Plan (City Council Resolution No. 11251); and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:
Resolution No. _____ (2022 Series) Page 2
R ______
SECTION 1. The City Council authorizes staff to transfer $1,000,000 from the Capital Project Reserve Fund and $1,223,000 from the Infrastructure Investment Fund to Cerro San Luis Neighborhood Greenway, Specification No. 1000036.
Upon motion of _______________________, seconded by
_______________________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2022. ___________________________
Mayor Erica A. Stewart
ATTEST:
__________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
__________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ___________________________. ___________________________
Teresa Purrington
City Clerk
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Mileage Combined Routes
Anholm Neighborhood Greenway
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Entire map and project is in an AB1550 area Page 587 of 783 North Santa Rosa
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Bikeway Designations & Pedestrian Facilities
Total Project Mileage: 1.7 Miles
C A L P O LY
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Enhanced Hi-Visibility Crosswalk Intersection
Pedestrain Hybrid Beacon (Completed October 2019)
Mission San Luis Obispo de Tolosa
Class 3 On-Street Bike Route 3000 Feet
Class 4 Separated Bike Lane 8800 Feet
Class I Bike Path 550 Feet
Future Neighborhood Greenway
Railroad
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New Park
Schools
Parks
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Concept Images
Class 1 Bike Path (550 Feet)
Class 3 On-Street Bike Route (3000 Feet)
Class 4 Separated Bike Lane (8,800 Feet)
Self-Watering Planter Boxes (Approx. 66)
Bioswale
City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: July 19, 2022
TO: Mayor and Council
FROM: Michael Codron, Director of Community Development Tyler Corey, Deputy Director of Community Development
Rachel Cohen, Senior Planner
VIA: Derek Johnson, City Manager
SUBJECT: Item # 7b – REPEAL AND REPLACE THE CITY OF SAN LUIS OBISPO’S MUNICIPAL CODE CHAPTER 17.138 (INCLUSIONARY HOUSING
REQUIREMENTS) TO UPDATE REGULATIONS FOR CONSISTENCY
WITH THE 6TH CYCLE HOUSING ELEMENT, AMEND TITLE 4 OF THE CITY OF SAN LUIS OBISPO MUNICIPAL CODE TO ADD CHAPTER 4.60
TO ESTABLISH A COMMERCIAL LINKAGE FEE, AMEND
INCLUSIONARY HOUSING IN-LIEU FEES IN ACCORDANCE WITH
CHAPTER 17.138 OF TITLE 17, ESTABLISH THE AMOUNTS OF
COMMERCIAL LINKAGE FEES IN ACCORDANCE WITH CHAPTER 4.60 OF TITLE 4 OF THE SAN LUIS OBISPO MUNICIPAL CODE, AND AMEND
THE COMPREHENSIVE FEE SCHEDULE
A Council Member has asked staff to respond to the following questions and proposed changes provided by community members. The questions are below with staff’s response shown in italics:
1) Tiered in lieu fees, by reducing cost/SF for smaller units and increasing for larger units, rather than the flat $25/SF. Consider tiered fees for commercial development as well.
The affordable housing requirements and in-lieu fee amounts are based on a detailed analysis prepared by the City’s consultant, EPS. There is alignment between the affordable housing percentage requirements and the corresponding in-lieu fees. If an adjustment is made to the in-lieu fees then an adjustment would need to be made to the affordable housing percentage requirements. It should be noted that the in-lieu fees are assessed on a per square foot basis, so the fees are already tiered in a way that results in lower fees for smaller units and higher fees for larger units.
Tiered in-lieu fees and commercial linkage fees are not recommended because tiering of these fees would result in applicants paying the fees in almost every circumstance.
In-lieu fees and the Inclusionary Housing percentage requirements are designed to be commensurate with one another. Therefore, lowering or tiering of fees would result in the City under-realizing affordable housing units, which is similar to the current situation with Table 2A.
Item # 7b: Inclusionary Housing Ordinance and Commercial Linkage Fee Page 2 2) An alternative to the current Fractional Numbers proposal (17.138.080– Procedures) to provide more parity with projects that are greater than 10 units (and/or further explanation and examples of the current proposal achieving IHO goals).
If a majority of City Council would like parity for projects larger than 10 units then the proposal to allow fractional units to pay in-lieu fees for projects less than 10 units could be expanded to all projects, regardless of size. This alternative would ensure that all projects are meeting the Inclusionary Housing Requirement at the same rate, whereas rounding up can skew a project’s requirement. By allowing all projects to blend the provision of affordable housing units and in-lieu fees to meet the Inclusionary Housing Requirement, the City would ensure parity across all project types.
For example, under the alternative an 11-unit for-sale project would have an Inclusionary Housing Requirement of 10% or 1.1 units. This requirement could be met by providing one affordable housing unit at the Moderate-Income level, and paying a fractional in-lieu fee for the .1-unit remainder. This would equate to a $2.50 per square foot fee, instead of a $25 per square foot fee, for the 11th unit.
A 19-unit for-rent project would have an inclusionary housing requirement of 6% or
1.14 units. To meet the requirement, the project could include one affordable housing unit at the Low-Income level and pay a fractional in-lieu fee for the .14-unit remainder.
This would equate to a $2.80 per square foot fee, instead of a $20 per square foot fee. 3) Allow flexibility in style and location of inclusionary units (17.138.050 – Standards for Inclusionary Units) to emphasize equitable access and amenities but more options if delivering more units.
If a majority of the City Council would like more flexibility in the application of these standards, changes can be proposed or direction can be provided to the Community Development Director to approve proposals that meet the intent of this section. The Director’s authority to interpret the code is provided in Zoning Regulations Section
17.04.020.A.
4) Expand the exemptions in Sec. 17.138.020 to encourage ADU’s, JADU’s and Missing Middle housing on lots with existing housing to remain, (and/or clarify the timing and goals of the Missing Middle housing program).
Draft Ordinance Section 17.138.020.A(2) includes an exemption for ADUs and this exemption can be expanded to include JADUs (see proposed revision below). As part of the agenda report (PDF packet page 598) staff has asked for Council direction regarding the missing middle and flexible density programs and whether staff should consider exemptions or adjustments from the IHO as part of these programs as they move forward for consideration.
Section 17.138.020.A
2. The addition or inclusion of Accessory Dwelling Units (ADUs) or Junior Accessory Dwelling Units (JADUs) associated with an existing or proposed residential or mixeduse development;
City of San Luis Obispo, Council Memorandum Council Agenda Correspondence DATE: July 18, 2022
TO: Mayor and Council
FROM: Michael Codron, Director of Community Development Tyler Corey, Deputy Director of Community Development
Rachel Cohen, Senior Planner
VIA: Derek Johnson, City Manager
SUBJECT: Item # 7b – REPEAL AND REPLACE THE CITY OF SAN LUIS OBISPO’S MUNICIPAL CODE CHAPTER 17.138 (INCLUSIONARY HOUSING
REQUIREMENTS) TO UPDATE REGULATIONS FOR CONSISTENCY
WITH THE 6TH CYCLE HOUSING ELEMENT, AMEND TITLE 4 OF THE CITY OF SAN LUIS OBISPO MUNICIPAL CODE TO ADD CHAPTER 4.60
TO ESTABLISH A COMMERCIAL LINKAGE FEE, AMEND
INCLUSIONARY HOUSING IN-LIEU FEES IN ACCORDANCE WITH
CHAPTER 17.138 OF TITLE 17, ESTABLISH THE AMOUNTS OF
COMMERCIAL LINKAGE FEES IN ACCORDANCE WITH CHAPTER 4.60 OF TITLE 4 OF THE SAN LUIS OBISPO MUNICIPAL CODE, AND AMEND
THE COMPREHENSIVE FEE SCHEDULE
This agenda correspondence is intended to respond to two written comment letters that were recently submitted. One is from Donna Lewis (Attachment A) and the other is from the Chamber of Commerce (Attachment B). The issues raised in these letters are summarized and consolidated to ensure a clear response on each topic. 1) Public Engagement Process (noted as Comment #1 in the attached letters). “I do wish that staff had more fully engaged the building, real estate, and business community on the Inclusionary Housing ordinance. There were a couple of presentations done, but I personally feel that more active and dynamic engagement could have and should have occurred far earlier on with the professionals that are most directly affected by changes to this ordinance.” Staff Response: As discussed in the Council Agenda Report (PDF packet page 599), public outreach regarding the Inclusionary Housing Ordinance began in 2020 with the presentation to City Council on April 21st about the completed Nexus Study. On June 2, 2020, staff submitted a Memo to the Planning Commission about the Nexus Study. The Nexus Study was used to inform new programs within the 6th Cycle Housing Element Update. The Council Agenda Report identifies a wide variety of other outreach performed to engage the community on the IHO update.
Inclusionary Housing Ordinance – Staff Agenda Correspondence Page 2 Fundamentally, staff sees its work on the Inclusionary Housing Ordinance as part of a continuum of housing program implementation tied to the 2020 Housing Element Update. It is important to remember that as part of the Housing Element update, staff facilitated eight presentations, meetings, online surveys, and a public workshop (details of the public outreach are provided in Appendix G of the 6th Cycle Housing Element). Participants of the community workshop and the online survey were invited to answer the following questions: “What type of housing is needed most in our community?” and “What housing issues exist in the community?” Approximately 100 individuals participated in the in-person workshop and online survey and identified affordable housing as the type of housing needed most and the biggest housing issue of the community.
More recently, City staff has had the opportunity for substantial engagement with a Chamber of Commerce task force that has provided valuable input for consideration. This input has helped staff develop an important alternative for Council consideration regarding the appropriate balance to strike regarding the amount of inclusionary housing required through the IHO update. 2) Table 2A has been effective and should be retained (noted as Comment #2 in the attached letters).
“I simply don’t agree with the idea that Table 2A should be eliminated as it’s perceived to have not produced the outcomes originally intended related to the production of affordable housing.”
“Table 2A has been effective. The assertion that our community has ‘missed out’ on a tremendous number of Affordable units because of 2A does to consider the number of projects that would not have come to fruition at all, would have included fewer total units - and thus fewer Affordable units - or would have taken many more years to make it to market; Table 2A should be modified, not eliminated.” Staff Response: As discussed in the Council Agenda Report (PDF packet page 596) the purpose of the IHO update is to produce more affordable housing. Table 2A was established as an amendment to the original IHO to encourage the creation of projects with higher density and smaller unit sizes, which would be considered affordable-by-design within the City. The intent was for these smaller units to sell or rent at prices affordable to moderate- or low-income households.
This concept has not produced affordable housing in practice. Table 1 below provides a snapshot of recent projects that have utilized Table 2A and shows how many affordable, deed-restricted units were not built in lieu of Table 2A units.
Unfortunately, if the results of Table 2A are smaller homes on smaller lots, those homes are still not affordable to households earning 120% or less of Area Median Income (AMI). As a result, the elimination of Table 2A is recommended to increase the production of affordable housing, while other initiatives are being pursued to implement Housing Element programs, consistent with the Major City Goal work program.
Inclusionary Housing Ordinance – Staff Agenda Correspondence Page 3 While it is possible that some of these projects may not have moved forward without Table 2A, the issue should not be looked at in isolation. The projects listed below include “expansion area” projects where the requirement is currently 15% (5% low AND 10% moderate). These projects (identified with an *) show a bigger gap between the number of affordable units provided with or without Table 2A. The recommendation before the Council is for a lower percentage requirement in these areas, and a higher requirement in other parts of the City to accomplish a single standard that all projects subject to the IHO can adhere to. The policy decision for the City Council is about how much affordable housing the City should require as a percentage of market-rate housing development. The feasibility analysis that the current recommendation was based on indicates that development would be financially feasible with the proposed affordable housing percentage requirements.
However, if this amount is considered too high by a majority of Council Members, then an alternative is provided to help the Council find the right policy balance with its decision.
Table 1 - Recent projects that have utilized Table 2A
Year
Approved Project Name Number of Units
Number of
Affordable
Units
Income Level
Number of
Units w/out
Table 2A
2019 Terraza 28 1 Moderate 2
2021 Bullock Ranch* 192 7 2 Low, 5 Mod 29
2017
West Creek
(Vintage & Noveno)* 172 10 Moderate 26
2018 The Connect 78 1 Moderate 4
2020 Laurel Creek 100 1 Moderate 5
2016 The Yard 43 1 Moderate 3
2005 Avivo 161 2 Moderate 9
2018 Twin Creeks 94 3 2 Low, 1 Mod 5
2020
Orcutt Road
Apartments 10 1 Moderate 1
Total 878 27 84
* Projects located within Expansion Areas have an Inclusionary Housing Requirement of 15% 3) State Density Bonus Law Option (noted as Comment #3 in the attached letters) “…produce an example of how State Density Bonus Law would replace Table 2A…” Staff Response: The Council Agenda Report (PDF page 597) provides a discussion about how a new housing project can utilize the State’s Density Bonus Law (DBL). The DBL provides incentives for developers in the form of an increased number of market-rate units, concessions to standards (such as parking, setbacks and building height) where necessary, and incentives that could include an additional density bonus to allow for more market-rate housing. DBL projects are exempt from the IHO.
Inclusionary Housing Ordinance – Staff Agenda Correspondence Page 4 A developer who meets the requirements of the state law is entitled to receive these benefits as a matter of right. In the case of a project that provides at least 20% low-income units, the project would be automatically entitled to move forward to the building permit phase if designed to meet the City’s Objective Design Guidelines. There are a number of ways that a project can qualify for a density bonus. Even dedication of land to a qualified affordable housing developer under the Density Bonus Law can provide for a 15% density bonus for the entire project, and additional density bonuses would be available for the affordable housing site. 4) Support more market rate units and less inclusionary units, particularly low income, for-sale units (noted as Comment #4 in the attached letters) “Requiring 5% low-income units & 5% moderate income for sale units in a new development I fear will literally stop some projects from happening all together or will force the production of higher end housing to offset the cost of providing the affordable units.”
“When considering for sale units, a requirement of 5% low and 5% moderate is unreasonable and gets in the way of our goal to create more housing of all types.” “… require 10% of for-sale units at the moderate, not low, level. Another approach could be to lower the total for-sale requirement to 7.5% with 5% moderate and
2.5% low.”
“To truly get the most Affordable housing built, there should be flexibility in the style and location of Affordable units if a market rate developer proposes including more than the required amount of Affordable Housing in a project.” Staff Response: As one of the alternatives in the Council Agenda Report (PDF packet page 601) staff discusses that the affordable housing requirements and inlieu fee amounts contained in the IHO are based on a detailed analysis prepared by the City’s consultant, Economic & Planning Systems, Inc. (EPS). Reducing these requirements is not recommended, however, the City Council’s decision is a pure policy choice, and the Council has plenary authority to make revisions as long as they comply with applicable State and Federal housing law.
If the Council majority decides that a reduced affordable housing requirement best balances all policy considerations, then staff would recommend reducing the forsale percentage requirement from 10% to 8% (3% low and 5% moderate). It must be noted that there is alignment between the affordable housing percentage requirement contained in the proposed IHO update and the corresponding in-lieu fees. As a result, if this alternative is pursued the change should be made together with a reduction in the in-lieu fee amount from $25 per square foot, to $20 per square foot to maintain consistency with the feasibility analysis. Incidentally, the alternative and resulting in-lieu fee would bring the rental and for sale requirements into alignment and this is noteworthy given that the Chamber of Commerce Task Force has indicated that they believe the rental requirements are reasonable.
Inclusionary Housing Ordinance – Staff Agenda Correspondence Page 5 If a developer provides more than the inclusionary requirement, they likely qualify as a density bonus project and therefore are no longer subject to the IHO standards.
See the response under Comment #3 for more information on Density Bonus Law. 5) Support non-profit housing developers (noted as Comment #9 in the attached letters) “While we appreciate the proposed fractional approach to smaller developments, imposing a flat $25/SF fee for larger developments is not feasible. Fees should be calibrated to a proportionate share of what a non-profit developer needs to secure state and federal funds - as our original proposal does.” “Non-profit builders are an essential part of our housing community and, unlike market-rate developers, non-profits have access to programs that maximize output of Affordable units. The Inclusionary Housing Ordinance should be structured in a way that supports them, not tilts the balance so far in the favor of market-rate developers building Affordable units.”
Staff Response: Each affordable housing project is not created equal, meaning that depending on the location, builder, affordability targets, demographic target, each project requires a range of support to make it feasible. The cost of the project and need for local subsidy could be very different depending on the non-profit or for-profit developer that is constructing the affordable housing. The City has contributed close to $100,000 per unit for projects constructed by Habitat for Humanity, and much less for projects that also leverage tax credits and other funding sources. The proposed in-lieu fees are designed to provide a reasonable trade-off for a developer between paying the in-lieu fee and building the affordable housing units. If the fee is too low, then the developer will always pay the fee. If it is too high, the fee will never be paid.
As a result, the fees should not be considered as a policy item separate from the percentage of affordable housing required by the IHO – the fees and percentage requirements work together and should stay in alignment.
Staff agrees that non-profit builders are an essential part of developing additional affordable housing within the community. However, it must be noted that a core purpose of the IHO is to “include” affordable housing in every development.
Specifically, the Housing Element includes policies 4.1 and 4.2 that call for affordable housing to be intermixed within neighborhoods and comparable in size, appearance, and basic quality to market rate units.1 The IHO update accomplishes these policy objectives. Additionally, when new housing units are constructed, the IHO requires that the affordable housing units are constructed at the same time. Often, units constructed by non-profit housing developers are not constructed until well after a new housing project has been completed.
1 HE Policy 4.1: Within newly developed neighborhoods, housing that is affordable to various economic strata should be intermixed rather than segregated into separate enclaves. The mix should be comparable to the relative percentages of extremely low, very-low, low, moderate and above-moderate income households in the City’s quantified objectives.
HE Policy 4.2: Include both market-rate and affordable units in apartment and residential condominium projects and intermix the types of units. Affordable units should be comparable in size, appearance, and basic quality to market-rate units.
Inclusionary Housing Ordinance – Staff Agenda Correspondence Page 6 Separately, in-lieu fees and the commercial linkage fees will be utilized to support non-profit development projects. In addition, State Density Bonus Law allows developers to dedicate land to qualified affordable housing developers, which would exempt the project from the IHO. There are numerous examples in the City of affordable housing projects constructed in this manner. In addition to the fees, Staff agrees that the City should seek out additional funding sources to support more affordable housing discussed further in Comment #8 below. 6) Less fees for commercial development (noted as Comment #10 in the attached letters)
“The commercial linkage fee is close but based on intensity of use, $2.50/SF for industrial and warehouse uses, and $5/SF for all other non-residential uses makes more sense.”
Staff Response: The proposed commercial linkage fee is in alignment with the fees that commercial projects are currently paying.
7) Owner occupancy requirement (noted as Comment #5 in the attached letters) “If table 2A were to be kept in some form, consider options for deed restricting units for Owner Occupancy for a period of up to 5 years in lieu of mandating deed restricted units be built.”
Staff Response: Second homes and investor homes that remain vacant much of the time may impact the community housing supply, and there are some City regulations that address this in limited circumstances, including no net housing loss in the Downtown and a prohibition on vacation rentals, as well as state laws including SB 1079 that limits investors ability to buy up foreclosed properties, and SB9 (the California HOME Act) applicable to new lot splits in single-family zones.
However, the need for below market rate units is critical, and in order to meet the City's Regional Housing Needs Allocation (RHNA), such a trade-off to increase owner occupied deed restrictions for market rate homes that impacts the increase of affordable homes is not recommended. Administering and enforcing a covenant that requires market rate units that are built under Table 2A is questainable. 8) Pursue additional funding sources to support more affordable housing (noted as Comment #6 in the attached letters)
“It is imperative that we consider additional ways to produce Affordable Housing including Enhanced Infrastructure Financing Districts, project-specific Community Financing District, a regional housing bond, and/or dedicating a portion of existing TOT- not just the Inclusionary Housing Ordinance and fees.”
Inclusionary Housing Ordinance – Staff Agenda Correspondence Page 7 “We should be immediately brainstorming supplementary funding sources to provide for Affordable Housing such as a bond measure, recording fee on purchase transactions (currently only on refinance transactions), transfer tax, sales tax, etc. so that all members of our community are contributing to the solution. We will never achieve the numbers we are mandated by the State to provide until we look for more ways to create an ongoing and steady revenue stream vs. over burdening those that are trying to build the housing we so desperately need.” Staff Response: Staff agrees that additional funding sources should be sought out to support more affordable housing. The Council Agenda Report (PDF packet page 598) notes that there is a strong interest in pursuing other revenue streams that could create even more affordable housing, including through a downpayment assistance program. Staff is recommending that the City Council provide direction to staff to investigate a variety of Federal, state, and local grant opportunities and other options for creating revenue to support expanded affordable housing programs. Dedicating already forecasted increases in sales tax or General Fund revenues is not recommended as the City has already elected to reduce Development Impact Fees (DIF) by 25% for new development and if General Fund revenues are allocated for the construction of housing, potentially significant policy and tradeoffs would need to be identified. 9) Operational issues associated with the IHO and other housing programs (noted as Comment #7 in the attached letters)
Staff Response: It is important to note that these operational issues are relevant to the City’s Affordable Housing Program practices but not dictated by the IHO.
As a result, these responses are intended to be informational. a. Update purchase guidelines and administration of the Affordable Housing Program.
Staff Response: Purchase Guidelines have been updated by staff as of July 1, 2022 including equity interest in property and homeownership, and staff is currently working with Housekeys on additional updates regarding occupancy standards, in addition to rental compliance programs in compliance with state law.
b. Locals first program may be not working out as well as hoped (not accounting for all locals).
Staff Response: The locals first program is included for existing projects through Development Agreements but will be limited city-wide due to potential conflicts with state fair housing laws. For both Avila Ranch and San Luis Ranch, the policy is resulting in more intra county residents moving to SLO to be closer to jobs.
Inclusionary Housing Ordinance – Staff Agenda Correspondence Page 8 c. Deed restricted units and an equity share units should not be in the same project.
Staff Response: Long-term affordability agreements and equity-share agreements accomplish very different outcomes. For inclusionary housing, the goal is for the affordable housing to remain affordable in perpetuity. This is also an explicit aspect of units produced under the Density Bonus Law.
As a result, long-term affordability is required in these cases. The City has other programs, such as Development Agreements, Planned Development or other rezoning requests, and Specific Plan requirements where additional affordable housing may be required (PD rezoning requires 25% affordability for example). In these cases, staff believes that an equity-share agreement would be appropriate. Equity-share agreements give the homeowner the ability to recover more equity upon sale of the unit at a market price, while providing the City with funding that can be used to create more affordable housing elsewhere.
d. Improve management of the affordable housing program through Housekeys.
Staff Response: Staff is continuing to onboard and engage with Housekeys to improve management of the affordable housing program, including reducing processing times, additional communication and education, and improved registration processes. Housekeys is a consultant under contract to perform as the City’s Below Market Rate (BMR) administrator. If the conclusion after the initial contract term with Housekeys is that they are too expensive, or not performing to the community’s satisfaction, then a new RFP can be published to determine if there are better options available for BMR administration. As an alternative, the City could hire in house staff funded through IHO program or General Fund. It is important to note that nearly three (3) FTE are already funded to support the City’s complex housing program.
For those of you that don’t know me well, my name is Donna Lewis and I live and work in the City of SLO. I am a lender and the Branch Manager of Guaranteed Rate here in SLO and have been in the mortgage business for nearly 30 years. I’ve had the pleasure over my career of serving first time homebuyers of all types as well as every other type of client you might imagine. Over the past few years, I’ve worked closely with the City and have handled financing on the majority of deed restricted, for sale, low and moderate income units, including handling all of the new construction affordable units at Moylan Terrace, Avivo, 9 on Rockview, South Morros, etc. I’ve been fortunate to finance a number of homes in the Righetti Ranch area and will be the preferred lender for the low- and moderate-income units at Avila Ranch.
With all that said, I am writing to you on a variety of topics related to the Inclusionary Housing Ordinance and Affordable Housing in general. Sorry in advance, this is a long one, but I believe a worthwhile read in anticipation of your review of staff’s recommendations related to the Inclusionary Housing Ordinance.
I would start off by saying that I do wish that staff had more fully engaged the building, real estate, and business community on the Inclusionary Housing ordinance. There were a couple of presentations done, but I personally feel that more active and dynamic engagement could have and should have occurred far earlier on with the professionals that are most directly affected by changes to this ordinance. As a result, the Chamber put together a task force, of which I am a member, and really got into the weeds on this. Staff & the task force will finally meet Friday, the 8th, but it’s my understanding that this is also the date the Staff Report is due to Council, so I don’t hold out hope that the Task Force will have much impact or influence on the way information is ultimately presented to you.
So here are my thoughts…
Table 2A vs. State Density Bonus
I simply don’t agree with the idea that Table 2A should be eliminated as it’s perceived to have not produced the outcomes originally intended related to the production of affordable housing. Noveno is just one example of a project that benefited from Table 2A and produced great outcomes in providing what I consider to be “affordable workforce housing”, even though it may not have been restricted for low- and moderate-income buyers. These homes sold in the mid to high $700,000 range and were affordable, by conventional underwriting standards, to moderate & workforce homebuyers (most homes of similar size that were resale units across town were selling nearly at or over $1 million while this development was being built out).
Of the 9 households I helped in this development,
• 5 were First Time Homebuyers & 1 was a move up buyer, and all lived in the City or County
• The professions of the above individuals included…
o Non-Profit fundraiser
Comment #1: Public
engagement process
Comment #2:
Table 2A has
been effective
and should be
retained
Commented [CR1]: Comments have been numbered and
color coded to correspond with topic areas addressed in the Agenda Correspondence
Attachment A
o Cal Poly employee & Sheriff’s Dept employee
o Biotech Engineer & Planner for Cal Trans
o PG&E Field Clerk
o Software Engineer & Housewife
o Self-employed Graphic Designer
Moderate income as defined by the City is in the $117k-$131k range so let’s call that $10k per month…5 out of 9 of the families we assisted were in fact in a moderate income range or JUST barely above it, while two more would be considered in a “workforce” range. These families opted to jump into market rate housing at higher monthly payments with the idea that if they own the home without a deed restriction, they will have a greater upside opportunity to gain equity in the future. It’s possible, that without Table 2A, this project would not have been built due to the number of inclusionary units that would have otherwise been required to be built.
The point here is that in most cases, workforce housing, that might not otherwise have been made available without Table 2A, was made available. The smaller lot size and more compact units, work for a wide range of people, and in providing it, it frees up other housing that will be affordable for someone else. It’s important to note that staff has indicated that they are working on a “Workforce” program, but we have yet to see what that means outside of the currently inclusionary housing ordinance and proposed elimination of Table 2A, which is the only mechanism currently to stimulate the production of smaller lot size, smaller unit, workforce housing, without a heavy Inclusionary burden. Staff has indicated that State Density Bonus Law already addresses incentives for density if a builder chooses to amp up the amount of affordable housing it provides in a development. Table 2A, by contrast, reduces the number of low- and moderate-income units a builder is required to provide, if the builder develops a denser project with smaller lots & smaller units – i.e., more affordable by design. While it’s clear that both the Council and Staff would prefer to see more affordable units be built to meet the City’s RHNA goals, the unintended consequence of removing Table 2A may create a scenario where projects are built with larger more expensive homes to offset the cost of providing the mandated affordable units, eliminating the middle class/workforce product that our city so desperately needs. We need ALL types of housing and FLEXIBILITY in the promotion and production of affordable housing is key.
It should be noted that I strongly encouraged Staff to produce an example of how State Density Bonus Law would replace Table 2A if it were to be eliminated and I would encourage you to do the same. I am not a developer, nor an expert on State Density Bonus Law (I’ve read quite a bit), but I do feel if Staff could show that it’s possible to build a project like Noveno or any other project that used Table 2A with State Density Bonus Law, that this would go a long way in aiding the conversation on this topic.
Comment #3:
Density Bonus
Law options
Attachment A
Deed Restricted Low & Moderate Income units – allow flexibility in how Low Income units are produced
Requiring 5% low-income units & 5% moderate income for sale units in a new development I fear will literally stop some projects from happening all together or will force the production of higher end housing to offset the cost of providing the affordable units. Currently, the Lowincome sales price limit for a 3-bedroom home is $244,200, whereas the Moderate-income limit is $427,175. That’s a difference of $182,975 per unit, and a difference of $405,800 as compared to the $650,000 cost to build a moderate/workforce unit as sited in the EPS study. Producing Low Income for sale units is a significant impact to a developer and may make a project financially unfeasible which is contrary to the goal of providing not just affordable housing but more housing in general. Additionally, while attempting to create “equity” in housing, we are creating a “lottery” which benefits very few households at the expense of all other households in a development and in our community, where other buyers, who may be of moderate-income means, are qualifying at a higher payment threshold and paying far more monthly than their neighbor who scored one of only a very few low- or moderateincome units in town.
I’d add, that in my experience, clients in a low category very often struggle to qualify to purchase a home, even if deed restricted, for a host of reasons including very little credit or poor credit, no savings for a down payment, debt obligations, or all of the above in some cases. Those that can qualify are often pushing the limit of what they can afford. Based on my experience in the affordable arena, for every qualified low-income buyer, we might have had 10-15 applicants that do not qualify. By contrast, for every qualified moderate-income applicant, we might have had 3-4 applicants that do not qualify. I’d love to see every person on the planet own their own home, but not all families and individuals are ready to own a home, and this percentage is far larger in the Low-Income category.
I’d encourage as much flexibility in how low-income units are delivered and would encourage not requiring 5% low income for sale units in new development (if 10% inclusionary is the requirement, give the builder the option to provide all moderate for sale units or the low units in a rental product, etc.). Making low-income units available in a rental product may be more financially feasible to develop and is often more practical for a low-income family to transition into, with the idea that they may then be able to ready themselves for ownership in the future.
Deed Restricting Market Rate for Owner Occupany for 5 years as a Tradeoff to other Deed Restrictions
If table 2A were to be kept in some form, consider options for deed restricting units for Owner Occupancy for a period of up to 5 years in lieu of mandating deed restricted units be built. This would ensure that people purchasing are not investors, and the units would more than likely be occupied by people who live and work here already. By limiting 2nd home buyers and investors, the pool of buyer is thereby limited, creating less demand which in turn will keep prices lower and more stable/affordable for those who wish to occupy.
Comment #4:
Argument for more
market rate and
less inclusionary,
particularly low
income for-sale.
Comment #5: Owner
occupancy requirement
recommendation. Does
not address inclusion of
targeted households
Attachment A
Look for ways to have more of the Community contribute to the Affordable Housing solution
Putting the burden solely on development to provide Affordable Housing seems so counterintuitive to stimulating the production of the variety of housing types we need in our community. We should be immediately brainstorming supplementary funding sources to provide for Affordable Housing such as a bond measure, recording fee on purchase transactions (currently only on refinance transactions), transfer tax, sales tax, etc. so that all members of our community are contributing to the solution. We will never achieve the numbers we are mandated by the State to provide until we look for more ways to create an ongoing and steady revenue stream vs. over burdening those that are trying to build the housing we so desperately need.
SLO Worker First – consider tweaking this
This has turned out to be a bit more complex than anyone first considered. In speaking with San Luis Ranch, they are having to hold out for 30 days to make sure a unit is exposed to a buyer who is a SLO worker, before they can then move on to open the same home up to those who work in SLO County for another 30 days, and then I believe after 60 days the unit can be made available to anyone else interested. This may severely delay the time it takes to sell a unit and time is money, which translates into the pricing of a home. With the market slowing down, this could prove very burdensome to a builder to follow such a process rather than simply requiring owner occupancy for a period. Additionally, the SLO Worker First idea didn’t consider those who live and work here remotely (employed by a company out of area but living here), and those who live here and are retired. These individuals should not be excluded if they are already in the area and have established residency. Hopefully, this has already been addressed.
Shared Equity vs. Long Term Deed Restriction – don’t put both in the same project
The recommendation in the IHO is to allow a builder to sell some units with an Equity Share deed restriction if the builder provides more than the minimum allotment of affordable units. I don’t think this is a good idea. With neighbors living in the same neighborhood and in close proximity, it makes far more sense to treat deed restrictions the same in any one neighborhood, so as to not create a situation where one neighbor is deed restricted over the longer term, and one is given an equity share agreement. And the way the Equity Share agreement is being rewritten, there isn’t really any great benefit to a buyer under that agreement that really separates it much from the Long Term Affordability agreement anyway, at least as it was last proposed (in a meeting with Michael & Derek). Lastly, there is no material benefit to a builder in having the Long-Term vs Equity Share agreement…the only benefit is that Equity Share has been more accepted by the market vs. the Long-Term Affordability agreement and in a tough market, anything that is more favorable to a buyer is a good thing.
Comment #6:
Recommendation to
pursue additional
funding sources to
support more affordable
housing.
Comment #7: Comments
regarding operational
issues associated with
ordinance and other
housing programs.
Attachment A
Down Payment Assistance vs. Deed Restrictions (or some combo thereof) We’ve got to find a way to allocate affordable housing funds for the creation of a more robust down payment assistance program. This would be particularly beneficial to Moderate and Workforce buyers, allowing them to purchase not only inclusionary units but Market Rate Units as well. I’d recommend setting aside some of the in-lieu fees for this purpose rather than ONLY subsidizing Affordable for Rent Projects. Down Payment assistance continues to recycle over time and can be used with any property so long as the buyer fits the definition of a Moderate or Workforce buyer. When the home sells, the DPA is paid back with interest and can be reused rather than being property dependent. Adding to “for sale affordable housing stock” adds to the management of the units under the Cities purview, requiring more maintenance and oversight. DPA funds simply get recycled and can be used by many and on any property so long as the buyer meets the moderate or workforce criteria. Lastly, many first-time homebuyers struggle putting together a down payment given that they are spending a fortune on rent and other expenses. Having a down payment assistance program would allow them to enter the housing market sooner than they might have otherwise been able to do. What if a developer, instead of providing affordable units and instead of paying an in-lieu fee to the City, contributed to a DPA fund that then subsidized down payments for any moderate-income buyer in their project? Just trying to think outside the box here to reach the widest number of moderate and workforce buyers in the community while at the same time creating some benefit for the developer who is parting with a significant chunk of change to subsidize affordable housing opportunities.
Update to SLO City’s Purchase Guidelines
Staff has been working on “updating” the guidelines for way too long. I’ve offered to pow wow with Staff on this based on my experience with the program and at Moylan Terrace specifically, but nothing has ever changed. There are a variety of things to clean up in the current purchase guidelines including -
- # of household members based on bedroom count; currently a 1 person household can purchase a 3 bedroom home and this has happened over and over again. Larger homes with more bedrooms should go to a minimum household size, i.e. a 1 bedroom goes to a 1-2 person household, a 2 bedroom goes to a 2-4 person household, and a 3 bedroom goes to a 3-5 person household. It should be a high priority to define and change this. - Retirement income; guidelines need to consider and make accommodation for someone whose income comes solely from assets in retirement. There are some cases where a borrower shows assets which exceed the asset limitation (no more than 50% of the purchase price of the home), but they rely on that asset to pay themselves in many cases with no other source of income, so in my opinion these assets should not be counted toward the asset limitation.
- Occupancy 10 mos out of year; I heard Housekeys say that occupying a home is defined by someone who occupies 10 out of 12 months in the year. This should be in the guidelines so it’s clear.
- Asset inclusions should be more clearly defined (see above example re retirement) and consider not allowing someone whose already owned a home to sell that home and Attachment A
purchase an affordable unit with those proceeds unless they are already in the affordable housing program…in other words, the buyer should be a first-time homebuyer or seller of a smaller affordable unit, and this is not the case currently. I’ve seen people who have tons of equity, move that to an affordable unit because sale proceeds are excluded from the asset inclusion which doesn’t seem to meet the intent of the program unless they have relocated for a job here locally and meet all other criteria.
- Income projected for next 12 months. – I heard housekeys say they “project” what someone will earn over the next 12 months and would like clarity on what this means exactly and would recommend an example of this in the City’s guidelines so people applying understand the approach.
- Refi process and cash out; this is the biggest travesty in my mind. The City currently disallows an owner of an affordable unit to refinance their home and pull equity back out, even if it’s equity they’ve accumulated by paying down their mortgage. At the very least, a homeowner should have the opportunity to pull out their own equity – up to the original acquisition indebtedness. This allows the homeowner to make improvements to the home, maintain the home, and to consolidate debts so that they may remain financially stable while owning the home. I’ve seen numerous make sense requests be denied in this regard which is unfortunate for the homeowner.
Housekeys
Finally…Housekeys. I congratulate staff and the Council for moving on the hiring of a consultant to help organize, shore up and help manage the City’s Affordable Housing program. It’s been a long time coming and we’ve needed a way for those interested in Affordable Housing to easily find access to information and to continue to be made aware of it’s availability. With that said, I have concerns with what we’ve experienced so far, even though I know that it’s all still getting set up and I am sure much of this will improve over time. I’d propose that the City use Housekeys to help shore up the program, and put systems in place to run the program, but would encourage the City to stay engaged in the management of the program. - Adminstrator is expensive; the administrator is acting as the City’s “agent” and as such, on a resale they wish to charge 6% of the sale price, of which they will pay out 2% to a listing agent and will keep the remainder; the City gets none of this fee. Note that customary listing fee’s in SLO are 5% currently. Up to now, these units have been sold in a traditional way, in the MLS, with a listing agent contracting with the seller to sell the home and a buyer’s agent working to represent a buyer who may be interested in the home (customarily 5% to the listing agent who then pays the selling agent 50% of that with nothing going to the City in that case either). The buyer has always been required to be “certified” as an affordable buyer and the fee for this has been $350 paid to HASLO or People’s Self-Help Housing Corp. What I believe the City really wants and needs is for the Administrator to certify a buyer in a compliant way, and to make sure a new construction or resale unit is sold in a fair manner, giving the greatest exposure of that unit to the local market. I am just not sure that 4% of the sales price should be diverted to Housekeys as the Administrator in addition to fees they will charge the buyer for the certification, etc. and would prefer to see buyers represented by a local Attachment A
agent who can walk them through this process. Maybe there is a way to have the Administrator act as the City’s agent for a fee of 5-6%, with 2% paid to a listing agent, and another 1.5-2% going to the buyer’s agent that represents the buyer, with the Administrator keeping the remainder. Low- and Moderate-income buyers NEED representation and hand holding in a way that a remote Administrator simply won’t be able to provide.
- Time to process an Affordable Unit. Housekeys has sited that it may take 60-90 days for them to work through the process of holding a drawing, then holding a lottery, and finally getting down to selecting an eligible buyer for a unit. THEN that seller and buyer must go through the escrow process which no doubt may take another 30-45-60 days. I’m concerned that they will operate too slowly for most sellers or builders, and this will be VERY frustrating. Something to keep an eye on. - Selection of eligible buyers. A prospective buyer registers on their site, is then notified of an “Opportunity Drawing” for which they can register interest. Assuming they register for the drawing, they will then be placed in a “Lottery” for the unit. Because there are so few units, and no doubt will continue to be very few units available, a prospective buyer could literally be ready and waiting indefinitely, while never getting an opportunity to purchase a unit. This is frustrating to me because I see certain individuals do all the right things and work hard to get a unit, while others show up at the last minute, can register, enter the drawing, and win the lottery. It just doesn’t seem fair that there isn’t a better “cue” for those who take all the necessary steps to be ready & get in line.
- Communication is key. This is concerning right out the gate. My hope is that Housekeys will have a dedicated staff member that handles the City of SLO’s for sale units so that the local Real Estate community and Lenders dealing with the program have good support and prompt communication & can leave staff at the City alone. - Concerned that we are adding an additional layer of bureaucracy…while the intention is to organize and simplify the process, it may ultimately become far more complicated, especially given that an out of area Administrator is being given a significant degree of oversight. The City loses it’s ability to be nimble, flexible, and make quick decisions where time is often of the essence.
- Housekeys registration process is very clunky…I am sure this will improve over time, but I would encourage a staff member to create a profile on the Housekeys website. I’ve had multiple clients call me back after I’ve encouraged them to register on the site, and most are confused and unclear if they’ve followed the necessary steps to be notified if a unit comes up. I created a profile myself and understand now why people are getting confused. Really, all a buyer needs to do is get an applicant ID to ready themselves for an opportunity and that should be the first step on their website. Instead, it encourages first doing online homebuyer training and lays out many other steps beyond getting an Applicant ID, which it seems is all that’s needed to get “in the system” to be notified of opportunities.
I’ll stop there and thanks for reading. I appreciate all of you and your service. I wore myself out on this one email and I realize you ready many, in addition to all the staff reports and Attachment A
information that goes along with them. I don’t know how you all do it! Please feel free to reach out to me on my cell if you wish to discuss any of these points further…happy to chat.
Attachment A
July 10, 2022
Dear Mayor Stewart and SLO City Councilmembers,
The SLO Chamber of Commerce has appreciated the many conversations we have had with your staff over the past few weeks and are writing today to provide additional context to our original letter regarding the proposed changes to the Inclusionary Housing Ordinance.
Through these conversations, it has become clear that we share the same ultimate goal of creating a regulatory framework that results in many types of housing built to serve the varied needs of our community. There are many elements of the proposed update that will work toward those ends, including:
● The shift to one standard citywide approach rather than separate standards for expansion areas. ● Creating a separate pathway for projects that choose to work within the State Density Bonus Law.
● Including all homes, not just multi-unit developments, in the Inclusionary Housing Ordinance. ● When considering for-rent units, 6% is a fair amount of affordability to require and it is appropriate that for-rent be targeted to the low and very low income levels.
However there are also elements of this ordinance that will, if not amended, result in a failure to meet the goal of creating more housing of all types, including Affordable. In light of the approximately 25% raise in impact fees on July 1, it is particularly important the the changes proposed below be considered:
● When considering for sale units, a requirement of 5% low and 5% moderate is unreasonable and gets in the way of our goal to create more housing of all types. As reflected in the City’s study, very low and low income units can be produced more efficiently as rental housing or by non-profit developers - we should follow that recommendation and require 10% of for-sale units at the moderate, not low, level. Another approach could be to lower the total for-sale requirement to 7.5% with 5% moderate and 2.5% low.
● While we appreciate the proposed fractional approach to smaller developments, imposing a flat $25/SF fee for larger developments is not feasible. Fees should be calibrated to a proportionate share of what a non-profit developer needs to secure state and federal funds - as our original proposal does.
● Table 2A has been effective. The assertion that our community has ‘missed out’ on a tremendous number of Affordable units because of 2A fails to consider the number of projects that would not have come to fruition at all, would have included fewer total units - and thus fewer Affordable units - or would have taken many more years to make it to market; Table 2A should be modified, not eliminated. The Planning Commission showed interest in including 2A-style modifications down the road, however, to have a complete policy, those modifications should be in the IHO from the start.
Attachment B
Comment #4:
Argument for more
market rate and
less inclusionary,
particularly low
income for-sale.
Comment #9:
Support of nonprofit housing
developers
Comment #2:
Table 2A has
been effective
and should be
retained
Comments have been numbered and
color coded to correspond with topic
areas addressed in the Agenda
Correspondence
● Non-profit builders are an essential part of our housing community and, unlike market-rate developers, non-profits have access to programs that maximize output of Affordable units. The Inclusionary Housing Ordinance should be structured in a way that supports them, not tilts the balance so far in the favor of market-rate developers building Affordable units. ● The commercial linkage fee is close but based on intensity of use, $2.50/SF for industrial and warehouse uses, and $5/SF for all other non-residential uses makes more sense. ● To truly get the most Affordable housing built, there should be flexibility in the style and location of Affordable units if a market rate developer proposes including more than the required amount of Affordable Housing in a project.
● It is imperative that we consider additional ways to produce Affordable Housing including Enhanced Infrastructure Financing Districts, project-specific Community Financing District, a regional housing bond, and/or dedicating a portion of existing TOT- not just the Inclusionary Housing Ordinance and fees.
Thank you for your consideration. Please don’t hesitate to reach out if you have any questions or would like to discuss further.
Sincerely,
SLO Chamber Inclusionary Housing Task Force
Aaryn Abbott | Abbott|Reed Inc.
LeBren Harris | Hampton Inn & Suites/
TownPlace Suites San Luis Obispo
Rachel Kovesdi | Kovesdi Consulting
Donna Lewis | Guaranteed Rate
Damien Mavis | CoVelop
Kerry Morris | Morris & Garritano
Stephen Peck | Peck Planning & Development
Ken Triguero | People’s Self Help Housing
Attachment B
Comment #9:
Support of nonprofit housing
developers
Comment #6:
Recommendation
to pursue
additional funding
sources to support
more affordable
housing.
Comment
#10:
Argument for
less fees for
commercial
development
Comment #4:
Argument for
more market
rate and less
inclusionary,
particularly low
income for-sale.
Item 7b
Department: Community Development
Cost Center: 4003
For Agenda of: 7/19/2022
Placement: Public Hearing
Estimated Time: 90 minutes
FROM: Michael Codron, Community Development Director
Prepared By: Rachel Cohen, Senior Planner
SUBJECT: REPEAL AND REPLACE THE CITY OF SAN LUIS OBISPO’S MUNICIPAL CODE CHAPTER 17.138 (INCLUSIONARY HOUSING REQUIREMENTS) TO UPDATE REGULATIONS FOR CONSISTENCY WITH THE 6TH
CYCLE HOUSING ELEMENT, AMEND TITLE 4 OF THE CITY OF SAN LUIS OBISPO MUNICIPAL CODE TO ADD CHAPTER 4.60 TO
ESTABLISH A COMMERCIAL LINKAGE FEE, AMEND INCLUSIONARY
HOUSING IN-LIEU FEES IN ACCORDANCE WITH CHAPTER 17.138 OF TITLE 17, ESTABLISH THE AMOUNTS OF COMMERCIAL LINKAGE
FEES IN ACCORDANCE WITH CHAPTER 4.60 OF TITLE 4 OF THE SAN
LUIS OBISPO MUNICIPAL CODE, AND AMEND THE COMPREHENSIVE
FEE SCHEDULE
RECOMMENDATION
Planning Commission recommends the following actions:
1. Introduce a draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, approving the repeal and replacement of the City of San Luis Obispo’s Municipal Code Chapter 17.138 (Inclusionary Housing Requirements) to update regulations for consistency with the 6th Cycle Housing Element with an exemption from Environmental Review (CEQA); and
2. Introduce a draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Title 4 of the City of San Luis Obispo Municipal Code to add Chapter 4.60 to establish a Commercial Linkage Fee with an exemption from Environmental Review (CEQA)”; and
3. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, amending Inclusionary Housing In-Lieu Fees in accordance with Chapter 17.138 of Title 17 and establishing the amounts of Commercial Linkage Fees in accordance with Chapter 4.60 of Title 4 of the San Luis Obispo Municipal Code and amending the Comprehensive Fee Schedule”; and
4. Direct staff to develop new incentives for housing developers to ensure the success of Housing Element Programs such as Flexible Density Downtown, Missing Middle Housing, and SB9/Subdivision Regulations Update; and
5. Direct staff to investigate grants and other options for funding of additional affordable housing programs, such as a First-Time Homebuyers Program.
Item 7b
POLICY CONTEXT
The purpose of this item is for the City Council to consider an update of the City’s Inclusionary Housing Ordinance (IHO). The recommendation is in support of the City Council’s policy to increase the amount of affordable housing production in the City. Work to complete this task started in 2019 and benefitted from the public outreach process conducted during the update of the 2020 Housing Element. This project, along with several other important initiatives to increase affordable housing production, are included in Community Development’s work program in support of the 2021-23 Financial Plan Major City Goal for Housing and Homelessness.
The City’s Major City Goal states, “The City will prioritize new and ongoing Housing Element policies and programs that focus on facilitating the increased production of affordable and workforce housing, in addition to market rate housing; …” In order to increase the development of additional deed restricted, affordable housing units, the Housing Element update included Program 2.13 – “Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs Allocation, per Policy 2.4.”
Goal 2 in the 6th Cycle Housing Element is “Affordability: Accommodate affordable housing production that helps meet the City’s Quantified Objectives.” The City’s Quantified Objectives are the number of housing units that will be planned, built, rehabilitated, and preserved during the Housing Element’s planning period. Importantly, Housing Element Policy 2.41focuses on housing production for all financial strata of the City's population, as allocated in the Regional Housing Needs Allocation (RHNA). Very low-, low-, and moderate-income housing units account for 58% (1,948 units) of the City’s total RHNA.
The best way to provide for these units is through an effective Inclusionary Housing Ordinance that includes deed-restricted affordable housing within new housing developments. The IHO also provides for a funding stream that enables the City’s nonprofit partners to construct a variety of affordable housing types that the market does not produce on its own.
The update of the Inclusionary Housing Ordinance, together with ongoing implementation of the Major City Goal work plan listed in the following table, are designed to work in concert to accomplish the vision for housing in our community, as expressed in the City’s General Plan.
1 Encourage housing production for all financial strata of the City's population, as allocated in the Regional Housing Needs Allocation, for the 6th cycle planning period. The number of units per income category are:
extremely low and very low income, 825 units; low income, 520 units; moderate income, 604 units; and above moderate income, 1,405 units.
Item 7b
Table 1: 2019-2023 Major City Goal Work Plan
REPORT-IN-BRIEF
HE
Program
No.
Housing Work Program Implementation
Status
6.22 Objective
Design
Standards
Update the City’s municipal code to expand objective
design standards within one year of the adoption of
the Housing Element Update.
Completed
2.17 Objective
Design
Standards
Allowance of developments that include at least 20%
low income affordable units by-right. Completed
2.18 Objective
Design
Standards
Utilize objective design standards to allow residential uses by-right for developments that include at least
20% low income units
Completed
5.5 Zoning
Code
Update
Update the Zoning Regulations to allow mixed-use
development within Service Commercial (C-S) and
Manufacturing (M) zones
Completed
6.23 Zoning
Code
Update
Update the development review process and expand
the thresholds of each review level (minor,
moderate, and major) to eliminate or reduce the
number of public hearing required for housing
projects within one year of adopting the Housing
Element.
Completed
2.13 IHO
Update
Update the Inclusionary Housing Ordinance,
including Table 2A, based on findings and
recommendations in the 2020 Affordable Housing
Nexus Study and conduct further feasibility analysis
in order to evaluate the City’s ability to provide
affordable housing in the proportions shown in the
Regional Housing Needs Allocation, per Policy 2.4.
In Process.
4.6 IHO
Update
Amend the City’s Inclusionary Housing Ordinance to
require that affordable units in a development be of
similar size, number of bedrooms, character and
basic quality as the non-restricted units in locations
that avoid segregation of such units, including
equivalent ways to satisfy the requirement. Also
evaluate adjusting the City’s allowable sales prices for deed-restricted affordable units per a variety of unit
types.
In Process.
2.15 Flexible
Density
Update of the Zoning Regulations and Community
Design Guidelines to incorporate flexible density
development options in Downtown Core and portions
of Upper Monterey and Mid-Higuera Special Focus
Areas.
In Process.
Anticipated to
be completed by
June 2023.
Item 7b
The City Council has tasked the Community Development Department with updating the Inclusionary Housing Ordinance (IHO) as part of the 2021-23 Major City Goal work program to increase the production of affordable housing. The IHO requires a specified percentage of deed restricted, moderate- and lower-income housing units to be provided in new residential developments and establishes a commercial linkage fee so that commercial development can contribute to addressing the related housing demand.
The City is required to accommodate 3,354 residential units as a part of its 6th Cycle Regional Housing Needs Allocation (RHNA). By 2021, the City met 100 percent of its total allocation for “Above Moderate” housing units (1,411 units), but only has met 11 percent (208 units) of the total number of needed affordable units. The housing market is not producing housing that is affordable to moderate- and lower-income households, and as a result, the City’s IHO is being updated to increase affordable housing in the community to help achieve quantified objectives related to affordable housing.
In 2019 the City hired consultant David Paul Rosen and Associates (DRA) to complete an Affordable Housing Nexus Study. The Study confirmed that both market-rate residential and commercial development are inducing demand for affordable housing that is not being met by the current housing market. Information from the Nexus Study was utilized to develop Program 2.132in the City’s 6
th Cycle Housing Element (adopted on
November 17, 2020).
After the Nexus Study was completed and presented to the City Council, Economic & Planning Systems, Inc. (EPS) conducted a Feasibility Analysis in 2021 of the City’s proposed affordable housing requirements and in-lieu fees and commercial linkage fees.
EPS provided a preliminary recommendation that was presented to City Council on March 1, 2022 (details of the Nexus Study and Feasibility Analysis recommendations are provided in Attachment G). Council provided the following comments:
1. Supported the removal of Table 2A (Inclusionary Housing Adjustment Factors).
2. Agreed that inclusionary housing requirements be based on project type, rather than zoning or location.
2 Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs Allocation, per Policy 2.4
6.20 Subdivision
Update
Evaluate and update the Subdivision Regulations,
within three years of Housing Element adoption, to
support small lot subdivisions, ownership bungalow
court development and other alternatives to
conventional subdivision design.
In Process.
Anticipated to
be completed by
June 2023.
5.4 Missing
Middle
Housing
Evaluate and implement “missing middle” housing
types (e.g. duplex, triplex, quadplex, cottages, etc.)
to increase housing options in the City within three
years of adopting the Housing Element.
In Process.
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3. Supported an increased Commercial Linkage fee.
4. Agreed with the list of duties of a BMR Administrator, and provided further guidance to work with the BMR Administrator to establish the following:
a. Local preference for San Luis Obispo residents or employees, or others who often commute to the city; and
b. Long term affordability (maintaining deed-restricted units as long as possible).
5. Directed staff to continue outreach with various stakeholders and the community.
Staff released a draft of the proposed amendments to the IHO for public review on May 11, 2022 on the City’s Inclusionary Housing Ordinance Update website. The public was invited to provide comments on Open City Hall, through e-mail, or by telephone.
Presentations were made to the SLO Chamber of Commerce, Economic Development Committee, and members of the Developer’s Roundtable. On June 8, 2022, the Planning Commission (PC) reviewed the draft IHO and unanimously recommended the City Council adopt amendments to the IHO (see Table 2 for a summary of the amendments).
Table 2: Summary Key Requirements of the Inclusionary Housing Ordinance Proposed Amendments
Where the IHO applies Citywide
Table 2A Adjustments Remove (requirement no longer adjustable) Shared Equity Purchase
Program
Available for residential development projects that include affordable housing units for sale in excess of the inclusionary housing requirement for the project.
Residential*
For Sale 10% (5% low-income units and 5% moderate income) For Sale In-lieu Fee** $25 per square foot
For Rent 6% (3% very low-income and 3% low-income)
For Rent In-lieu Fee** $20 per square foot
Commercial***
Commercial
Development
Office, service, hotel, and retail uses: $6 per square foot Industrial and Institutional Uses: $5 per square foot
*IHO would be applied to all market rate residential units. **Residential projects of 10 units or less would have the ability to pay a fraction of the in-lieu fee or provide one Moderate income unit to meet their inclusionary requirement. *** All commercial square footage would be required to pay the Commercial Linkage fee. Projects that contain less than 2,500 square feet of new gross floor area of commercial space would no longer be exempt.
Based on public comment, the PC made a separate motion recommending the City Council give direction to staff to work on identifying exemptions to IHO requirements for key Housing Element programs, such as Missing Middle and Flexible Density, as they are brought forward for consideration. These are projects that are expected to enable the production of a wide variety of housing types downtown and in that may be affordable to Workforce Income and other above-moderate income households. Appropriate
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adjustments to the IHO could help ensure the success of these creative, new housing programs.
In addition, public feedback indicates a strong desire to pursue other revenue streams that could create even more affordable housing, including a down-payment assistance program. Staff recommends that the City Council provide direction to staff to investigate a variety of Federal, state, and local grant opportunities and other options for creating revenue to support expanded affordable housing programs. If existing revenues are explored (i.e. general fund), then expenditure offsets will need to be identified for corresponding reductions.
DEFINITIONS AND TERMS USED IN THIS REPORT
Affordable Housing - Housing which can be purchased or rented by a household with very low- , low-, or moderate- income, as described in the City’s affordable housing standards. By law, the upper income limit for “extremely-low income” households is 30 percent of the area median income; the upper income limit for "very-low income" households is 50 percent of the area median income; the upper limit for "lower income" households is 80 percent of the area median income; and the upper limit for "moderate-income" households is 120 percent of the area median income.
Regional Housing Needs Allocation (RHNA) – The City’s projected housing need during the Housing Element planning period is determined through the Regional Housing Needs Allocation (RHNA) process, which is based on projected Statewide growth in households as determined by the California Department of Housing and Community Development (HCD). HCD distributes the Statewide projected housing need among the regions in the State, where each regional council of government allocates the projected regional growth to local jurisdictions within the region. The total housing need for each jurisdiction is distributed among income categories, requiring each jurisdiction to plan to meet the need for housing for households at all income levels.
Nexus Study – An established methodology to determine the nexus between market-rate residential development and nonresidential development and the need for affordable housing in the City. The study identifies the maximum nexus-based affordable housing impact fees and commercial linkage fees needed to cover the affordability gap.
Feasibility Analysis – An evaluation of the maximum nexus-based affordable housing impact fees and commercial linkage fees calculated to determine the financially feasible level of impact fees and linkage fees that can be absorbed by new development.
Inclusionary housing unit - A dwelling unit required under the provisions of Chapter 17.138 of the Municipal Code, and which is priced to be affordable to households that qualify as moderate, low, very-low or extremely-low income under the City’s Affordable Housing Standards.
Market rate - The highest price a willing buyer would pay and a willing seller would accept, both being fully informed and in an open market, as determined by an appraiser.
Workforce Income Household - A household with an income that exceeds 121% but does not exceed 160% of the area median income (AMI).
Missing Middle Housing – Describes a range of multi-family housing types that are house-scale and architecturally compatible within existing neighborhoods.
DISCUSSION
Background on the Local Zoning Ordinance – the Inclusionary Housing Ordinance The City’s first Inclusionary Housing Ordinance (IHO) was adopted in 1999. The purpose of an IHO is to require new housing development projects to include a specified
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percentage of deed restricted, moderate- and lower-income3 housing units (otherwise referred to as affordable housing in this report) in new residential developments or pay a fee. More than 1,200 deed-restricted or otherwise secured affordable dwellings have been planned for, entitled, or built since the City’s adoption of its IHO in 1999. The City has granted, loaned, or committed over $10,750,000 of affordable housing in-lieu funds to assist with the development of over 500 of these deed-restricted affordable housing units during this same time period
The Need for More Affordable (Moderate and Lower Income) Housing The City’s Housing Element includes a Regional Housing Needs Allocation (RHNA), set by the State, that the City must work towards achieving. For the 5th Cycle RHNA (2014- 2019), the City saw 1,272 housing units permitted. 1,052 of the units (over 200 percent of the RHNA number) were above moderate and the City only met 33 percent of the allocated affordable housing units (see Table 3 below) required by the State.
Table 3: Progress Towards 5th Cycle Quantified Objectives (1/1/14 to 6/30/19) Income Level
(% of County
Median
Income)
5th Cycle
RHNA
Allocation
Building Permitted Units Issued by Affordability Total
Units
by
Income
Level
Total
Units
Remaining
by Income
Level
Year
1 (2014)
Year
2 (2015)
Year
3 (2016)
Year
4 (2017)
Year
5 (2018)
Year 6a
(01/01/19 -
06/30/19)
Extremely Low
& Very Low 285 35 1 19 41 70 0 166 119
Low 179 16 1 1 9 4 4 35 144
Moderate 202 8 2 3 0 0 6 19 183
Above
Moderate 478 146 168 111 164 212 251 1,052 -574
Total Units 1,144 205 172 134 214 286 261 1,272
Total Remaining for RHNA Period: 446
Source: Community Development Department, 2019
In 2019, the City received its RHNA as a part of the 6th Cycle Housing Element update (see Table 4). Quickly, by 2021, the City had already met its total allocation for “Above Moderate” housing units. Unfortunately, the City’s housing market is producing housing that is not affordable to moderate- and lower-income households. Within the same time period, the City has only permitted 10.7 percent of the needed affordable housing units and the proposed IHO update is intended to improve this outcome.
With the exception of ADUs (Accessory Dwelling Units)4, the City can only meet affordable housing targets through its requirement that a percentage of all new housing units be
3 These Standards are updated annually by the Community Development Department and remain in effect per each corresponding fiscal year (July 1 - June 30). The Standards show income limits for the City and County of San Luis Obispo, as published by the State Department of Housing and Community Development (HCD). https://www.slocity.org/government/department-directory/community-development/affordablehousing/affordable-housing-standards/-fsiteid-1 4 Section 65583.1 of State housing element law allows local governments to identify realistic capacity for ADUs in addressing a locality’s share of the regional housing need. The identification of realistic capacity
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deed-restricted for affordability. The IHO is supported by nexus and feasibility analyses and is a best practice to ensure that affordable housing units are constructed within, or concurrent with “Above Moderate” income category housing units. Ultimately, inclusionary housing policies will ensure that new City neighborhoods are inclusive of the full range of household incomes represented in the City’s workforce.
Table 4: Progress Towards 6th Cycle Quantified Objectives, 2019-2028 Income Level
(% of County Median
Income)
6th Cycle
RHNA
Allocation
Building Permitted Units Issued by
Affordability Total
Units by
Income
Level
Total Units
Remaining
by Income
Level
Year
1 (2019)
Year
2 (2020)
Year
3 (2021)
Years 4 – 10
(2022 -
2028)
Extremely
Low & Very
Low
Deed
Restricted
825
0 14 35 - 49
776 Non-Deed
Restricted 0 0 0 - 0
Low
Deed
Restricted 520
6 0 56 - 62
382 Non-Deed
Restricted 0 30 46 - 76
Moderate
Deed
Restricted 603
8 5 8 - 21
582 Non-Deed
Restricted 0 0 0 - 0
Above
Moderate 1,406 523 416 472 - 1,411 0
Total Units 3,354 537 465 617 - 1,619
Total Remaining for RHNA
Period: 1,735
Source: Community Development Department, Building Permits Issued, 2021 Previous Council or Advisory Body Action
April 21, 2020: City Council received the Affordable Housing Nexus Study that determined that both residential and commercial development are inducing demand for affordable housing that is not being met by the housing market. The Nexus Study included the maximum justifiable nexus fees the City could implement to meet the affordable housing demand incurred by current development. However, the Study recommended that the City adopt fees less than the maximums because fees at these high levels would affect the financial feasibility of development as well as the competitiveness of development in the City.
should be based on the development trends of ADUs in the previous housing element planning period and other relevant factors. The County of San Luis Obispo conducted a market study for ADUs, including information from the City of San Luis Obispo, and found that approximately 50 percent of the ADUs constructed meet low-income housing rental costs.
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The Study’s findings verify that there is a nexus that justifies the City having an Inclusionary Housing Ordinance that applies to both residential and commercial development (4.21.20 Council Report and Meeting Minutes).
March 1, 2022: City Council conducted a Study Session for the purposes of providing background information and analysis of the City’s current affordable housing requirements, a preliminary recommendation5 on updates to the City’s Inclusionary Housing Ordinance, a commercial linkage fee recommendation, and an overview of progress of onboarding the City’s Below Market Rate (BMR) Housing Administrator (3.1.22 Council Report and Meeting Minutes). Council provided the following comments and direction to staff:
1. Supported the removal of Table 2A (Inclusionary Housing Adjustment Factors).
2. Agreed that inclusionary housing requirements be based on project type, rather than zoning or location.
3. Supported an increased Commercial Linkage fee.
4. Agreed with the list of duties of a BMR Administrator, and provided further guidance to work with the BMR Administrator to establish the following:
a. Local preference for San Luis Obispo residents or employees, or others who often commute to the city; and
b. Long term affordability (maintaining deed-restricted units as long as possible).
5. Directed staff to continue outreach with various stakeholders and the community.
The recommendations in this report directly respond to the March 1, 2022 direction.
June 8, 2022: The Planning Commission (PC) reviewed the draft IHO and unanimously recommended the City Council adopt the ordinance with staff’s proposed modifications.
The modifications included the elimination of the exemption of residential projects of less than five units. The draft Ordinance (Attachment A) includes the recommended modifications. There was public comment during the public hearing concerning potential impacts the recommended draft IHO may have on the development of smaller, compact market-rate development. One specific concern was that requirements of the IHO for affordable housing may burden small infill housing projects that would otherwise support missing middle housing. In order to provide opportunities to address this concern, the PC also made a motion recommending the City Council give direction to staff to work on identifying exemptions to Inclusionary Housing requirements for key Housing Element programs, such as the pending Missing Middle and Flexible Density programs, when they are brought forward for consideration. (6.8.22 PC Report and Meeting Minutes).
5 The preliminary recommendations provided as a part of the Study Session were derived from a Feasibility Analysis completed in 2022 that tested the feasibility of a range of inclusionary requirements and affordable housing fee levels and compared those costs to the revenues that could be generated given the various mixes of market-rate and affordable housing and/or fee levels. Based on this analysis, the preliminary recommendation included several revisions to the City’s existing affordable housing inclusionary program for new residential and mixed-use development and introduced a nexus-based commercial linkage fee for non-residential uses.
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Public Input on the Elimination of Table 2A and Staff Response Preceding the PC hearing on June 8, 2022, staff received public comment as agenda correspondence on the draft IHO, including a letter from the SLO Chamber of Commerce.
Staff provided a response to key issue areas raised by the Chamber in PC agenda correspondence.
The key issue discussed in the letter and reiterated during public comment at the PC meeting was the elimination of Table 2A. The Chamber’s letter states, “We recognize that 2A needs to be updated, however, the risks of eliminating it all together are too great. The demand for larger, more expensive housing is significant and without incentives like Table 2A, missing middle housing will be even less likely to be produced.” As previously stated, the purpose of the IHO update is to produce more affordable housing. Table 2A was established as an amendment to the original IHO to encourage the development of projects with higher density and smaller unit sizes, which would be considered affordable-by-design within the City. The intent was that these smaller units would sell or be rented to households that meet moderate- or lower-income standards.
This concept has not produced affordable housing in practice. The Feasibility Analysis found that the development that meets the size and density criteria established by Table 2A is still not affordable at any income level other than above moderate, which the City is already over-producing. Some examples of new, smaller units for rent and for sale are provided below:
Vintage (an apartment complex in the Orcutt Area Specific Plan), a studio unit (500 square feet) rents for $2,385 per month, where the maximum allowed rent for a moderate-income studio unit is $1,426, which is based on a household income threshold of 80–120% of the Average Median Income (AMI). Harvest Lofts, at San Luis Ranch, where (according to their website) a onebedroom 436 square foot unit is for sale starting at $404,900; low-income threshold for purchase is $187,800 and $328,650 at the moderate-income threshold. Heirloom, at San Luis Ranch, provides a three-bedroom, 1,564 square foot unit, for sale, starting at $786,385; low-income threshold for purchase is $244,200 for a three-bedroom and $427,175 at the moderate-income threshold.
Table 5 below provides a snapshot of recent projects that have utilized Table 2A and shows how many affordable, deed-restricted units were lost. Unfortunately, if the results are smaller homes on smaller lots, those homes are still not affordable to households earning 120% or less of Area Median Income (AMI). As a result, the elimination of Table 2A is recommended to increase the production of affordable housing while the City works to implement a variety of other programs that are targeted to provide housing for households earning above 120% of AMI.
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Table 5: Recent projects that have utilized Table 2A
Year
Approved Project Name Number of Units
Number of
Affordable
Units
Income Level
Number of
Units w/out
Table 2A
2019 Terraza 28 1 Moderate 2
2021 Bullock Ranch* 192 7 2 Low, 5 Mod 29
2017
West Creek
(Vintage & Noveno)* 172 10 Moderate 26
2018 The Connect 78 1 Moderate 4
2020 Laurel Creek 100 1 Moderate 5
2016 The Yard 43 1 Moderate 3
2005 Avivo 161 2 Moderate 9
2018 Twin Creeks 94 3 2 Low, 1 Mod 5
2020
Orcutt Road
Apartments 10 1 Moderate 1
Total 878 27 84
* Projects located within Expansion Areas have an Inclusionary Housing Requirement of 15% Additional Tools that Accomplish the City’s Housing Objectives The evolution of density bonus law (DBL) in recent years provides developers with an opportunity to provide more affordable housing in exchange for relaxed development requirements.6In addition, the City can grant an additional density bonus as a further incentive to help projects with affordable housing to pencil out.
A developer who meets the requirements of the state law is entitled to receive density bonuses and other benefits as a matter of right. In the case of a project that is at least 20% low income, the project would be automatically entitled to move forward with building permits.
Most importantly, projects that qualify for DBL are not subject to IHO requirements.
Developers also benefit from waivers or concessions that allow the City to grant deviations from development standards such as reduced setbacks, increased height, or reduced parking. These relaxed standards along with density bonuses allow more market rate units on the site than the zone would otherwise allow, which makes development of affordable housing more economically feasible.
6 The Density Bonus Law (found in California Government Code Sections 65915 – 65918) provides developers with tools to encourage the development of affordable and senior housing, including up to a 50% increase in project densities for most projects, depending on the amount of affordable housing provided, and an 80% increase in density for projects which are completely affordable. The City’s regulations contained in Chapter 17.140 of the Municipal Code exceed state standards.
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In addition to density bonuses, the City supports several other tools to increase production of a variety of housing types including:
Streamlined development review process for housing projects. Objective Design Standards that allow eligible residential projects to be reviewed through a ministerial process.
Mixed-use development allowed by right in all Service-Commercial and Manufacturing zones.
Existing tools that incentivize smaller infill development include:
As proposed, the IHO in-lieu fee is based on square footage- smaller units will have lower fees;
Density bonus provisions in Chapter 17.140 of the Municipal Code (higher density development with the inclusion of affordable units);
Ministerial review and reduced fees for ADUs and JADUs; Tiered fee structure that provides substantial reductions in cost for smaller residential units for water, sewer and transportation impact fees; Fractional density allowances based on unit size and number of bedrooms; Minimum density allowances based on Zoning designations; and Implementation of SB 9 (California H.O.M.E Act).
Creative New Market-Rate Housing Options in the Works
Currently, the City is seeing the most significant production upswing in market-rate housing in the past twenty years. The vast majority of planned housing production in the City (in the Orcutt Area, Margarita Area, Avila Ranch, San Luis Ranch and Froom Ranch) will not be impacted by the proposed changes to the IHO. This includes over 3,000 units of newly entitled housing. This new housing is serving the community well. New homes in Avila Ranch or San Luis Ranch, for example, prioritize sales to current SLO residents and employees, and these homes are selling.
Future projects are in the works to ensure that the City continues to provide a diverse set of housing opportunities for residents. The City’s Downtown Flexible Density program will remove density limits for downtown housing units of 600 square feet or less. The Missing Middle Housing Program will enable duplex, tri-plex, bungalow court, and other housescale, multi-family housing projects to be developed in qualifying R-1 locations throughout the City. Together, these projects would have the capacity to enable production of over 1,000 units of market-rate housing to serve the workforce and a variety of other local housing needs.
As part of the Planning Commission and staff recommendation, the Council is being asked to direct staff to consider appropriate exemptions or adjustments from the IHO when these programs move forward for consideration. In addition, public feedback to staff and the Planning Commission indicates a strong interest in the City pursuing other revenue streams that could create even more affordable housing, including through a down-payment assistance program.
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Staff is also recommending that the City Council provide direction to staff to investigate a variety of Federal, state, and local grant opportunities and other options for creating revenue to support expanded affordable housing programs.
Public Engagement
Public outreach regarding the Inclusionary Housing Ordinance began in 2020 with the presentation to City Council on April 21st about the completed Nexus Study. On June 2, 2020, staff submitted a Memo to the Planning Commission about the Nexus Study. The Nexus Study was used to inform new programs within the 6th Cycle Housing Element Update.
As a part of the Housing Element update, staff facilitated eight presentations, meetings, online surveys, and a public workshop (details of the public outreach are provided in Appendix G of the 6th Cycle Housing Element). Participants of the community workshop and the online survey were invited to answer the following questions: “What type of housing is needed most in our community?” and “What housing issues exist in the community?” Approximately 100 individuals participated in the in-person workshop and online survey and identified affordable housing as the type of housing needed most and the biggest housing issue of the community.
Figure 1: A word cloud created from the comments received from the 6th Cycle Housing Element workshop and online survey participants.
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With the completion of the Feasibility Analysis in January 2021, staff presented the preliminary IHO recommendation to Council on March 1st as part of a Study Session. On March 2, 2022, staff presented the to the Chamber of Commerce. On May 11, 2022, City staff released the draft IHO amendments for public review. The proposed amendments were made available to the public through the City’s Website with opportunities for public feedback via email, phone, mail and Open City Hall. In May 2022 staff presented the draft IHO to the Chamber of Commerce and the members of the Developer’s Roundtable. Staff has continued to engage with interested individuals and the Chamber of Commerce (which created a Task Force to work directly with staff on this topic).
Public notice of this hearing has been published in a widely circulated local newspaper, and hearing agendas for this meeting have been posted at City Hall, consistent with adopted notification procedures. Email notices have been provided for each public meeting to those on the interested parties list.
CONCURRENCE
Staff from the Housing and Homelessness Division of Community Development concur with the proposed changes to the Inclusionary Housing Ordinance.
ENVIRONMENTAL REVIEW
The proposed amendments to the Municipal Code Title have been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the state CEQA Guidelines, and the environmental regulations of the City. Specifically, the proposed amendments have been determined to be exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption, because the proposed actions will have no possibility of a significant effect on the environment and will not cause impacts as all projects subject to the Inclusionary Housing Ordinance will be required to comply with all relevant City standards, codes, and regulations, including environmental review.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2022-23
Funding Identified: Yes
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Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $N/A $ $ $
State
Federal
Fees
Other:
Total $ $ $ $
The implementation of Housing Element Programs was adopted as a part of the 2021 - 2023 Financial Plan. Funding was provided as a part of the Community Development Department budget appropriation for staff resources to implement Housing Element programs such as Program 2.13.
The City’s applicable fee schedule will be updated according to City Council action and incorporate the fees as approved.
ALTERNATIVES
1. The City Council could direct staff to conduct further outreach and return with a revised IHO and recommendation. This alternative is not recommended because the Community Development Department work program includes a significant number of additional projects that should be completed before June 30, 2023. Further work on the IHO would forestall these efforts. Therefore, staff is hopeful that changes to the recommendation directed by the City Council can be incorporated into an action during the public hearing.
2. The City Council could change the percentage of affordable housing required by the IHO and/or the amount of in-lieu fees. The affordable housing requirements and in-lieu fee amounts contained in the IHO are based on a detailed analysis prepared by the City’s consultant, EPS. There is alignment between the affordable housing percentage requirement contained in the proposed IHO update and the corresponding in-lieu fees. Reducing these requirements is not recommended, however, the City Council’s decision is a pure policy choice, and the Council has plenary authority to make revisions as long as they comply with applicable state and Federal housing law. If the Council majority decides that a reduced affordable housing requirement best balances all policy considerations, then staff would recommend reducing the for-sale percentage requirement from 10% to 8% (3% low and 5% moderate). In addition, this change should be made together with a reduction in the in-lieu fee amount from $25 per square foot, to $20 per square foot to maintain consistency with the feasibility analysis.
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ATTACHMENTS
A - Draft Ordinance repealing and replacing the City of San Luis Obispo Municipal Code Chapter 17.138 (Inclusionary Housing Requirements)
B - Draft Ordinance amending Title 4 of the City of San Luis Obispo Municipal Code to establish a commercial linkage fee
C - Draft Resolution for Inclusionary In-lieu and Commercial Linkage Fees D - Legislative Draft of the Inclusionary Housing Ordinance E - PC Resolution No. PC-1061-2022 recommending Council repeal and replace IHO and review In-lieu Fees and Commercial Linkage Fees
F - Effect of CCCI Increase and Implications for the Inclusionary Housing Ordinance Update
G -Affordable Housing Analysis and Recommendations
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ORDINANCE NO. _____ (2022 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE REPEAL AND
REPLACEMENT OF THE CITY OF SAN LUIS OBISPO’S MUNICIPAL
CODE CHAPTER 17.138 (INCLUSIONARY HOUSING REQUIREMENTS) TO UPDATE REGULATIONS FOR CONSISTENCY WITH THE 6TH
CYCLE HOUSING ELEMENT WITH AN EXEMPTION FROM
ENVIRONMENTAL REVIEW (CEQA)
WHEREAS, on January 5,1999, The City adopted its first Inclusionary Housing Ordinance contained in Ordinance No. 1346; and
WHEREAS, on June 13, 2007, and update was made to the Inclusionary Housing Ordinance regarding resident selection process for inclusionary housing contained in Ordinance No. 1508; and
WHEREAS, a Nexus Study was reviewed by Council on April 21,2020 to determine the feasibility of increasing the required amount of affordable housing in housing projects and implementing that into the City’s Inclusionary Housing Ordinance; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a webbased public hearing via teleconference on November 17, 2020, for the purpose of final adoption of the sixth cycle update to the General Plan Housing Element that included Program 2.13 that states, “Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs Allocation, per Policy 2.4”; and
WHEREAS, in April 2021, the City hired Economic & Planning Systems, Inc. (EPS) to conduct a feasibility analysis based on the findings and recommendations included in the Nexus Study and current market information and provide preliminary recommendations for updates to the City’s existing Inclusionary Housing Ordinance; and WHEREAS, the State of California Office of Housing and Community Development, on September 3, 2021, certified the City of San Luis Obispo’s 6th Cycle General Plan Housing Element as in full compliance with State Law; and WHEREAS, a Study Session was held by City Council on March 1, 2022, to review the preliminary recommendations of the feasibility analysis; and WHEREAS, on May 11, 2022, the City published a draft of the proposed amendments to Municipal Code Chapter 17.138 for public review; and
Ordinance No. ______ (Series 2022) Page 2
O _____
WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California on June 8, 2022, for the purpose of recommending amendments to implement programs of the 6th Cycle Housing Element by updating the Inclusionary Housing Ordinance; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California on July 19, 2022, for the purpose of introducing an ordinance to repeal and replace Chapter 17.138 (Inclusionary Housing Requirements); and WHEREAS, notices of said public hearing were made at the time and in the manner required by law.
WHEREAS, the City Council has duly considered all evidence, including the testimony of the applicant, interested parties, and the evaluation and recommendations by staff, presented at said hearing.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:
SECTION 1. Findings. Based upon all the evidence, the City Council makes the following findings:
1. The proposed amendments to Title 17 of the Municipal Code are consistent with the 6th Cycle Housing Element Program 2.13 which states, “Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs Allocation, per Policy 2.4.”
2. The proposed amendments to Title 17 of the Municipal Code are consistent with the 6th Cycle Housing Element Program 4.6 which states, “Amend the City’s Inclusionary Housing Ordinance to require that affordable units in a development be of similar size, number of bedrooms, character and basic quality as the non-restricted units in locations that avoid segregation of such units, including equivalent ways to satisfy the requirement. Also evaluate adjusting the City’s allowable sales prices for deed-restricted affordable units per a variety of unit types.”
3. The repeal and replacement of Chapter 17.138 of the Municipal Code for qualifying development projects will not alter the character of the City or cause health safety or welfare concerns because the amendment is consistent with the General Plan and directly implements City goals and policies.
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SECTION 2. Environmental Determination. The proposed amendments to the Municipal Code Title have been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the state CEQA Guidelines, and the environmental regulations of the City. Specifically, the proposed amendments have been determined to be exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption, because the proposed actions will have no possibility of a significant effect on the environment and will not cause impacts. In this case, the proposed repeal and replacement of the Inclusionary Housing Ordinance is consistent with State Law and the City’s 6th Cycle Housing Element and will not have an significant effect and project specific environmental review will be required.
SECTION 3. Action. The City Council hereby repeals and replaces, in its entirety, Chapter 17.138, entitled “Inclusionary Housing Requirements”, of the San Luis Obispo Municipal Code as set forth and incorporated herein.
Chapter 17.138: Inclusionary Housing Requirements
Sections:
17.138.010 – Purpose
17.138.020 – Applicability and Exclusions
17.138.030 – Definitions
17.138.040 – Inclusionary Housing Requirements
17.138.050 – Standards for Inclusionary Units
17.138.060 – In-Lieu Housing Fee
17.138.070 – Inclusionary Housing Proposal
17.138.080 – Procedures
17.138.090 – Eligibility Requirements
17.138.100 – Shared Equity Purchase Program
17.138.110 – Administration, Management, and Monitoring
17.138.120 – Enforcement
17.138.010 – Purpose
The purpose and intent of this Chapter are: 1) to promote the public welfare by increasing the production and availability of affordable housing units; 2) to establish an inclusionary housing requirement which implements General Plan policies guiding land use and housing development; and 3) to ensure that affordable housing units established pursuant to the provisions of this Chapter are located in a manner that provides for their integration with market rate units.
17.138.020 – Applicability and Exclusions
A. This Chapter shall apply to all residential development projects. Residential projects that have been deemed complete in the planning entitlement process or have submitted a complete building permit application the time the replacement ordinance goes into effect, are subject to the prior Inclusionary Housing Ordinance.
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The following types of residential projects are exempt:
1. Residential additions, repairs, or remodels, provided that such work does not increase the number of existing dwellings;
2. The addition or inclusion of Accessory Dwelling Units associated with an existing or proposed residential or mixed-use development;
3. Affordable housing projects in which 100 percent of the dwellings to be built will be sold or rented in conformance with the City’s Affordable Housing Standards (excluding any on-site manager unit);
4. Housing projects that include a density bonus.
5. Emergency projects or projects which the Council determines are necessary to protect public health and safety;
6. Development projects which the Director determines are essentially noncommercial or nonresidential in nature, which provide educational, social, or related services to the community and which are proposed by public agencies, nonprofit agencies, foundations, and other similar organizations;
7. Projects which replace or restore a structure damaged or destroyed by fire, flood, earthquake, or other disaster within three years prior to the application for the new structure(s) (see Chapter 17.92 Nonconforming Structure).
17.138.030 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the meaning set forth below. For all other definitions, the provisions of Article 9 (Definitions) of this Title shall apply.
A. “Administrator” means Below Market Rate Program Administrator which may either be the City itself or a third-party administrator acting as an agent for the City in connection with all aspects of the operation of the City's Below Market Rate program pursuant to an Agreement entered into between the City and the Administrator, as such agreement may be amended or replaced from time to time.
B. “Affordable” means housing which can be purchased or rented by a household with very low-, low-, or moderate- income, as described in the City’s affordable housing standards.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit is below the cost of what a current market rate unit would be and is affordable to extremely low-, very low-, low-, or moderate-income households.
D. “Borrower” shall be defined as one who meets the eligibility requirements for purchasing an inclusionary affordable unit.
E. “Commercial Linkage Fee” means the fee paid by the applicant of commercial development projects to mitigate the impacts that such developments have on the demand for affordable housing in the City (see Municipal Code Chapter 4.60).
F. “Density bonus” means a density increase over the maximum density otherwise allowable under the Zoning Regulations, Chapter 17.140.
G. “Early resale” shall mean the sale, lease, or transfer of property within seven years of the initial close of escrow for Equity Share Inclusionary Units.
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H. “Equity Share” shall mean the shared equity of appreciation between the City and the Borrower on inclusionary units when agreements specifically allow for affordable units to be sold at market-rate after a 7-year period.
I. “Fee Schedule” means fees that for-sale and for-rent units are subject to and are paid to either the City or the Administrator for associated costs related to but not limited to eligibility screening, income verification, marketing of affordable units, and the close of escrow or completion of new lease agreements for affordable units.
J. “Inclusionary housing unit” means a dwelling unit required under the provisions of this Chapter, and which meets the City’s affordable housing standards.
K. “Low-” or “lower-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families shall not exceed 80 percent of the median income within the City as published and periodically updated by the State Department of Housing and Community Development.
L. “Market rate” shall mean the highest price a willing buyer would pay and a willing seller would accept, both being fully informed and in an open market, as determined by an appraiser.
M. “Moderate-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families exceed 80 percent but are less than or equal to 120 percent of the median income within the City as published and periodically updated by the State Department of Housing and Community Development.
N. “Commercial development project” shall mean development projects which result in the construction or conversion of structures for the purpose of conducting business, including but not limited to retail sales, restaurants, offices, gas stations, manufacturing, etc.
O. “Residential development project” shall mean development projects which result in the construction or conversion of structures, including, but not limited to, singleunit attached or detached homes, apartments, condominiums, live/work units, mixed-use, mobile homes, transitional housing or supportive housing, and group housing.
P. “Very low-income” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families shall not exceed 50 percent of the median income within the City as published and periodically updated by the State Department of Housing and Community Development.
17.138.040 – Inclusionary Housing Requirements
A. General Requirements. All non-exempt residential development projects shall include inclusionary units as required by this chapter. If the calculated number of units results in a fraction, the number shall be rounded as described in Section
17.138.080(A).
1. Construct the required number of inclusionary units for Residential or Mixed-Use projects;
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2. Pay an in-lieu fee for Residential or Mixed-Use projects; or
3. Pay a commercial linkage fee (see Municipal Code Chapter 4.60) for new NonResidential or Non-Residential portions of Mixed-Use project(s).
B. Residential Requirements
1. Ownership Dwelling Units. Ten (10) percent of the dwelling units (see Section
17.138.080.A) shall be made available for sale to eligible households with five (5) percent for low-income households (fractional units may be rounded down to the next whole number) and five (5) percent for moderate-income households (fractional units may be rounded up to the next whole number). See Section
17.138.080.A for more information regarding fractional numbers.
2. Rental Dwelling Units. Six (6) percent of the dwelling units (see Section
17.138.080.A: Fractional Numbers) shall be made available for rent to eligible households with three (3) percent for very low-income households (fractional units may be rounded down to the next whole number) and three (3) percent for low-income households (fractional units may be rounded up to the next whole number).
3. In-Lieu Housing Fees. An applicant may pay in-lieu fees to the City rather than construct inclusionary units on site for residential projects (see Section
17.138.060: In-Lieu Housing Fee).
C. Non-Residential Requirements
1. Commercial, Office, Service, Hotel, Retail, Industrial, and Institutional Uses. An applicant shall pay a commercial linkage fee based on the gross square footage of the non-residential space in accordance with Municipal Code Chapter 4.60.
D. Mixed-Use Development Requirements
1. Dwelling Units & Commercial Space. For mixed-use development, the inclusionary housing requirement is determined in accordance with subsection B of this Section for all dwelling units in addition to subsection C of this Section for all new commercial square footage within the development project. For example, a for-rent mixed-use project includes twenty (20) residential units and 5,000 square feet of commercial space: the inclusionary requirement would be two (2) affordable units (20 x 6% = 1.2 rounded to 2) and a commercial linkage fee would be applied to the 5,000 square feet of commercial space.
17.138.050 – Standards for Inclusionary Units
A. Standards. Inclusionary units must meet the following standards:
1. Inclusionary units shall be dispersed throughout the residential development projects to prevent a concentration of affordable units within the development project.
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2. Inclusionary units shall be consistent with the design of market rate units in terms of exterior appearance, materials, and finished quality.
3. The applicant may reduce square footage of inclusionary units as compared to the market rate units as long as the minimum square footage of the affordable units are no less than seventy-five percent of the average size of all market rate units in the residential development project with the same bedroom count. For the purpose of this subsection, the “average size” of a unit with a certain bedroom count equals the total square footage of all market rate units with that bedroom count in the residential development project divided by the total number of market rate units with the same bedroom count in the residential development project.
4. For residential development projects with multiple market rate unit types containing differing numbers of bedrooms, inclusionary units shall be representative of the market rate unit mix. For example, a for sale, residential project includes fifty (50) dwelling units; ten (10) three-bedroom units, twenty (20) two-bedroom units, and twenty (20) one-bedroom units. To represent the units within the residential project, the five (5) required inclusionary units would be one (1) three-bedroom, two (2) two-bedrooms and two (2) one-bedrooms.
5. The required inclusionary units shall be constructed concurrently with market rate units, unless an alternative development schedule is otherwise stipulated by the applicable Review Authority of the residential development project.
6. Inclusionary units shall be subject to the City’s and/or the Administrator’s Fee Schedule in accordance with Section 17.138.110.
17.138.060 – In-Lieu Housing Fee
A. Payment of In-Lieu Fee. The developer may, at their discretion, choose to pay a fee, as established by a resolution of the City Council, to the City in lieu of constructing affordable units to meet their inclusionary housing requirement.
B. In-Lieu Fee Calculation. In-lieu fees shall be calculated using the new, habitable square footage, as defined by California Building Code, included within the residential development project.
C. Affordable Housing Fund. All in-lieu fees collected shall be deposited into the Affordable Housing Fund. The fund shall be administered by the Finance Director and shall be used exclusively to provide funding for the provision of affordable housing and for reasonable costs associated with the development of affordable housing, at the discretion of the Council.
D. Timing. In-lieu fees shall be paid prior to building permit issuance. For projects constructed in phases, in-lieu fees shall be paid in the proportion that the phase bears to the overall project.
17.138.070 – Inclusionary Housing Plan
A. Application Requirements. An applicant proposing a project for which inclusionary housing is required shall submit a statement with their planning application or building permit (whichever applies), describing the project’s inclusionary housing plan. The statement shall include:
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1. A project description that includes details regarding the proposed residential development project such as, but not limited to total number of dwelling units, number of bedrooms per dwelling unit, square footage of all units (both residential and commercial), type of project (rental or ownership), etc.;
2. A description of the inclusionary housing plan for each construction phase, including the method chosen to meet the inclusionary housing requirement and including all of the following information including but not limited to:
a. Whether the unit is for sale or rental;
b. The number, location, unit type, tenure, number of bedrooms and baths, floor plan, construction schedule of all inclusionary units;
c. Preliminary calculation of in-lieu fees or commercial linkage fee as applicable;
d. Other information which the Director determines necessary to adequately evaluate the proposal.
17.138.080– Procedures
A. Fractional Numbers. In determining the number of dwellings that are required to be built pursuant to Section 17.138.040.B fractional units shall be rounded up to the next higher whole number unit. If a project contains 10 units or less and the number of required inclusionary dwellings results in a fractional unit, an applicant may pay the in-lieu fee for the fractional unit or provide one Moderate affordable unit in the project.
For example, a residential project proposes to construct six (6) dwelling units for rent.
Per Section 17.138.040, the project would have an inclusionary housing requirement of 0.36. The applicant may pay an in-lieu fee for the fractional amount or deed restrict one of the six (6) dwelling units for Moderate-income households.
B. Affordable Housing Agreement. The applicant shall complete and sign an Affordable Housing Agreement.
1. Submittal of an Affordable Housing Agreement. Applicants of residential development projects subject to this Chapter shall submit an affordable housing agreement on forms provided by the City and pay a processing and recordation fee.
2. Timing. All building permits for inclusionary units in a residential development project shall be issued concurrently with, or prior to, issuance of building permits for the market rate units.
3. Construction Schedule. The inclusionary units shall be constructed concurrently with, or prior to, construction of the market rate units, unless otherwise stipulated by the applicable Review Authority of the residential development project. Occupancy permits and final inspections for inclusionary units in a residential development shall be approved concurrently with, or prior to, approval of occupancy permits and final inspections for the market rate units.
4. Review and Approval. The draft agreement shall be reviewed by the Director and City Attorney for compliance with project approvals, City policies and standards, and applicable codes. Following approval and signing of the agreement by the parties, the final agreement shall be recorded, and relevant terms and conditions shall be recorded as a deed restriction on those lots or
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affordable units subject to affordability requirements. The affordable housing agreement shall be binding to all future owners and successors in interest.
5. Term. The affordable housing agreement shall ensure that affordability is maintained for the longest period allowed or required by State law, but not less than 45 years for ownership and 55 years for rental.
6. Exemption for In-Lieu Fee Payment. An affordable housing agreement shall not be required for projects which meet their inclusionary housing requirement through the payment of in-lieu fees.
17.138.090 – Eligibility Requirements
A. Program Requirement. Only households qualifying as extremely low-, very low-, lowor moderate income, pursuant to the affordable housing standards, shall be eligible to rent, purchase, or occupy inclusionary units developed or funded in compliance with this requirement. For-sale inclusionary housing units shall be owner-occupied for the term of the affordable housing agreement.
B. Eligibility Screening. The City or an Administrator designated by the City shall screen prospective renters or buyers of affordable units. Buyers of affordable units shall enter into an agreement with the City. Occupants must be selected by means of an open, public process which ensures that individuals of a group of interested participants are selected in accordance with the City’s BMR Ownership and Rental Housing Guidelines. Private selection of individuals by project owners is not permitted for any affordable units.
17.138.100 – Shared Equity Purchase Program
When a residential development project includes affordable housing units for sale in excess of the inclusionary housing requirement for the project, the additional units may be offered under the Shared Equity Purchase Program.
A. Under this program, the qualified buyer of a designated affordable dwelling unit shall enter into a shared equity agreement with the City. Said agreement shall be recorded as a lien against the purchased property, at no interest, securing and stating the City’s equity share in the property. The City’s equity share shall be calculated by the Director, and shall be the decimal percentage of the property’s value resulting from:
1. The difference between the property’s market value and the actual price paid by the homeowner, divided by the market value; and/or, when applicable
2. The amount of subsidy provided by the City to the homeowner to purchase the property, divided by the
property’s market value.
B. Upon sale, the City’s equity share shall be repaid to the City from the proceeds of the sale, less the City’s percentage share of title insurance, escrow fees, and documentary transfer taxes, at the close of escrow. The proceeds from the sale shall be deposited into the City’s Affordable Housing Fund and shall be used for the purposes set forth in Health and Safety Code § 33334.2(e).
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C. In the event of “early resale,” owners of properties subject to the Shared Equity Purchase Program shall either: (1) pay an equity recapture fee to the City as described in the schedule below, in addition to the City’s equity share, or (2) sell the property to another eligible household. If the owner chooses to pay the equity recapture fee, the recapture fee shall be paid to the City upon resale at close of escrow, based on the following schedule:
Table 8-1: Percent of Equity Build-up
Recaptured Year % of Equity Build-up
Recaptured 0 – 3 100%
4 75% + City’s Equity Share
5 50% + City’s Equity Share
6 25% + City’s Equity Share
7 and after 0% + City’s Equity Share
The recapture amount shall be determined prior to the calculation of escrow closing costs.
17.138.110 –Administration, Management, and Monitoring
Inclusionary rental and owner units shall be managed and operated by the property owner, or the owner’s agent, for the term of the affordable housing agreement. Sufficient documentation shall be submitted to ensure compliance with this Chapter, to the satisfaction of the Director.
A. Duties of Program Administrator. The City may either handle in-house or contract for administration of the BMR Ownership Housing Program and monitoring compliance with the requirements of this Chapter to a program Administrator pursuant to an agreement executed between the City and the Administrator in accordance with the approved fee schedule. At a minimum, the Administrator shall perform the following services:
1. Maintain and administer the City’s BMR Ownership and Rental Housing Guidelines and Affordable Housing Standards.
2. Screen and select qualified buyers and renters according to the City’s Ownership and Rental Housing Guidelines and Affordable Housing Standards and maintain qualified owner and renter eligibility list;
3. Maintain a list of eligible mortgage lenders for financing the purchase of inclusionary units in accordance with the BMR Ownership Housing Guidelines;
4. Market new and vacant BMR for-sale and rental units within the City’s affordable housing inventory.
5. Monitoring compliance with terms and conditions of the occupancy and sale restrictions.
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17.138.120 – Enforcement
A. Enforcement. No building permit shall be issued, nor shall any other development entitlement be granted for a residential development project subject to this Chapter that does not meet these requirements. No inclusionary unit shall be rented or sold except in accordance with these requirements and the affordable housing standards.
INTRODUCED on the ___ day of _________, 2022, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ___ day of ________, 2022, on the following vote:
AYES:
NOES:
ABSENT:
__________________________
Mayor Erica A. Stewart
ATTEST:
_________________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
__________________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. __________________________
Teresa Purrington,
City Clerk
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ORDINANCE NO. _____ (2022 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING AMEND TITLE 4 OF THE CITY
OF SAN LUIS OBISPO MUNICIPAL CODE TO ADD CHAPTER 4.60
TO ESTABLISH A COMMERCIAL LINKAGE FEE WITH AN
EXEMPTION FROM ENVIRONMENTAL REVIEW (CEQA)
WHEREAS, the City of San Luis Obispo (“City”) aims to provide sufficient levels of affordable housing for its residents; and
WHEREAS, development of new commercial projects encourages new residents to move to the City, and some of the employees needed to meet the needs of new commercial development earn incomes only adequate to pay for affordable housing; and WHEREAS, because there is a need for additional affordable housing within the City, these employees might otherwise be forced to live in less-than-adequate housing within the City, pay a disproportionate share of their incomes to live in adequate housing within the City, or commute ever-increasing distances to their jobs from housing located outside of the City, thereby harming the City’s ability to attain goals articulated in the City’s General Plan; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a webbased public hearing via teleconference on November 17, 2020, for the purpose of final adoption of the sixth cycle update to the General Plan Housing Element that included Program 2.13, which provides, “Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs Allocation, per Policy 2.4”; and
WHEREAS, on April 21, 2020, City Council reviewed a Nexus Study prepared by David Paul Rosen and Associates (DRA) which confirmed that both market-rate residential and commercial development are creating demand for affordable housing that is not being met by the current housing market; and
WHEREAS, pursuant to Government Code Section 66001, the Nexus Study establishes that there is a reasonable relationship between the commercial linkage fees and the commercial development on which it is imposed and between the need for affordable housing and the commercial development projects against which the fee is charged; and
WHEREAS, in April 2021, the City hired Economic & Planning Systems, Inc. (EPS) to conduct a feasibility analysis of the City’s inclusionary housing requirements based on the findings and recommendations included in the Nexus Study; and
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WHEREAS, the City may adopt and impose commercial linkage fees to mitigate the impact of commercial development projects on available affordable housing in the City under the authority of Sections 66000 et seq. of the California Government Code (“Mitigation Fee Act”); and
WHEREAS, the commercial linkage fees will be placed in the City’s Affordable Housing Fund and the fees will be used solely to increase the supply of housing affordable to extremely low, very low, low, and moderate-income residents; and WHEREAS, the State of California Office of Housing and Community Development, on September 3, 2021, certified the City of San Luis Obispo’s 6th Cycle General Plan Housing Element as in full compliance with State Law; and WHEREAS, A Study Session was held by City Council on March 1, 2022, to review staff’s recommended amendments to Chapter 17.138, that were derived from the Nexus Study and the EPS financial analysis; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California on July 19, 2022, for the purpose of introducing an ordinance to implement commercial linkage fees; and
WHEREAS, notices of said public hearing were made at the time and in the manner required by law.
WHEREAS, the City Council has duly considered all evidence, including the testimony of the applicant, interested parties, and the evaluation and recommendations by staff.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:
SECTION 1. Findings. Based upon all the evidence, the City Council makes the following finding:
1. All recitals are true and correct and are incorporated herein by reference.
2. The proposed amendments to Title 4 are also consistent with the 6th Cycle Housing Element and implements program 2.13.
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SECTION 2. Environmental Determination. The proposed amendments to the Municipal Code Title have been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the state CEQA Guidelines, and the environmental regulations of the City. Specifically, approval of fees and/or charges is not a “project” for the purposes of CEQA, pursuant to CEQA Guidelines, Section 15378(b)(4); and even if considered a “project” under CEQA, would be exempt from CEQA review pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption, because the proposed ordinance will have no possibility of a significant effect on the environment and will not cause impacts.
SECTION 3. Action. The City Council hereby adds Chapter 4.60, entitled “Commercial Linkage Fees”, to the San Luis Obispo Municipal Code as set forth and incorporated herein.
Chapter 4.60: Commercial Linkage Fees
Sections:
4.60.010 – Purpose.
4.60-020 – Definitions.
4.60.030 – Fees to be set by resolution.
4.60.040 – Payment of fees.
4.60.050 – Exemptions.
4.60.060 – Disposition and use of fees.
5.60.070 - Enforcement
4.60.010 – Purpose
A. Encourage the development and availability of housing affordable to a broad range of households with varying income levels within the city as mandated by State law, California Government Code Section 65580 and following.
B. Offset the demand for affordable housing that is created by new development and mitigate environmental and other impacts that accompany new commercial development by protecting the economic diversity of the City’s housing stock; reducing traffic, transit and related air quality impacts by allowing more residents to live near their workplace; promoting jobs/housing balance; and reducing the demands placed on transportation infrastructure in the region.
C. Promote the City’s policy to provide an adequate number of affordable housing units to the City’s housing stock in proportion to the existing or projected need in the community, as identified by the Housing Element.
D. Support the Housing Element goal of assisting in the development of new housing that is affordable at all income levels and the policies and actions that support this goal.
E. Encourage the production of the very low, low, and moderate income units planned for in the Housing Element of the General Plan.
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4.60.020 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the meaning set forth below.
A. “Administrator” means Below Market Rate Program Administrator which may either be the City itself or a third party administrator acting as an agent for the City in connection with all aspects of the operation of the City's Below Market Rate program pursuant to an Agreement entered into between the City and the Administrator, as such agreement may be amended or replaced from time to time.
B. “Affordable housing agreement” means a written agreement between a builder and the City as provided by Section 17.138.080.B.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit is below the cost of what a current market rate unit would be and is affordable to extremely low-, very low-, low-, or moderate-income households.
D. “Commercial development project” shall mean development projects which result in the subdivision of land and/or the construction or conversion of structures for the purpose of conducting business, including but not limited to hotels, retail sales, restaurants, offices, gas stations, research and development uses and manufacturing.
E. “Commercial linkage fee” means the fee paid by applicant of commercial development projects to mitigate the impacts that such developments have on the demand for affordable housing in the City.
F. “First approval” means the first discretionary approval to occur with respect to a commercial development project or, for commercial projects not requiring a discretionary approval, the issuance of a building permit.
G. “Inclusionary housing plan” means a plan for a residential development project submitted by an applicant as provided by Section 17.138.070.
H. “Planning permit” means any discretionary approval of a residential or mixed use project, including but not limited to a comprehensive or specific plan adoption or amendment, rezoning, tentative map, parcel map, conditional use permit, variances, or architectural review.
4.60.030 – Fees to be Set by Resolution
The amount of commercial linkage fee imposed on applicants of commercial development projects shall be determined by resolution adopted by the City Council and may be adjusted annually by the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U). Commercial linkage fees shall not exceed the cost of mitigating the impact of the commercial development projects on the availability of affordable housing in the city.
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4.60.040 – Payment of Fees
A. A commercial linkage shall be applied to commercial development projects involving new construction and additional gross square footage to existing commercial buildings. If a development is exempt from the fee at initial construction, but later converts to a commercial development project, the converted square footage will be subject to the fee.
B. Any commercial linkage fee shall be paid in full prior to the issuance of the first building permit for the commercial development project subject to the fee or at a time otherwise specified by Council Resolution. If no building permit is required, the fee shall be paid before a conversion of use may take place. The fee shall be calculated based on the fee schedule in effect at the time the building permit is issued as adopted by the City Council.
4.60.050 – Exemptions
A. The following commercial projects are exempt from the provisions of this chapter.
1. City buildings and facilities and those public facilities entitled to an exemption under state law.
2. Schools, places of public assembly, cultural institutions, childcare facilities, nursing homes, residential care facilities, and skilled nursing facilities.
3. Projects which replace or restore a structure damaged or destroyed by fire, flood, earthquake, or other disaster within three years prior to the application for the new structure(s) (see Chapter 17.92 Nonconforming Structure).
4.60.060 – Disposition and Use of Fees
Commercial linkage fees collected shall be deposited into the Affordable Housing Fund.
The fund shall be administered by the Finance Director and shall be used exclusively to provide funding for the provision of affordable housing and for reasonable costs associated with the development of affordable housing, at the discretion of the Council.
4.60.070 – Enforcement
A. Payment of the commercial linkage fee is the obligation of the builder of a commercial development project. The City may institute any appropriate legal actions or proceedings necessary to ensure compliance herewith, including, but not limited to, actions to revoke, deny, or suspend any permit or development approval.
B. The City Attorney and Community Development Director shall be authorized to enforce the provisions of this chapter and all affordable housing agreements, regulatory agreements, by civil action and any other proceeding or method permitted by law.
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C. Failure of any official or agency to fulfill the requirements of this chapter shall not excuse any builder or owner from the requirements of this chapter. No permit, license, map, or other approval or entitlement for a commercial development project shall be issued, including without limitation a final inspection or certificate of occupancy, until all applicable requirements of this chapter have been satisfied.
D. The remedies provided for in this chapter shall be cumulative and not exclusive and shall not preclude the City from any other remedy or relieve to which it otherwise would be entitled under law or equity.
INTRODUCED on the ___ day of _________, 2022, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ___ day of ________, 2022, on the following vote:
AYES:
NOES:
ABSENT:
__________________________
Mayor Erica A. Stewart
ATTEST:
_________________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
__________________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. __________________________
Teresa Purrington,
City Clerk
R _____
RESOLUTION NO. _____ (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN LUIS OBISPO, CALIFORNIA, AMENDING INCLUSIONARY
HOUSING IN-LIEU FEES IN ACCORDANCE WITH CHAPTER 17.138 OF TITLE 17 AND ESTABLISHING THE AMOUNTS OF COMMERCIAL
LINKAGE FEES IN ACCORDANCE WITH CHAPTER 4.60 OF TITLE 4 OF
THE SAN LUIS OBISPO MUNICIPAL CODE AND AMENDING THE
COMPREHENSIVE FEE SCHEDULE
WHEREAS, the State of California has found that local governments have a responsibility to use the powers vested in them to facilitate the development of housing and to make adequate provision for the housing needs of all economic segments of the community (Government Code Section 65580(d); and
WHEREAS, on August 16, 2022, the City Council of the City of San Luis Obispo adopted an ordinance amending inclusionary housing requirements, including inclusionary housing in-lieu fees, as codified in Chapter 17.138 of Title 17 of the San Luis Obispo Municipal Code (“Inclusionary Housing Ordinance”); and WHEREAS, on August 16, 2022, the City Council of the City of San Luis Obispo adopted an ordinance establishing a Commercial Linkage Fee on Non-Residential development as codified in Chapter 4.60 of Title 4 of the San Luis Obispo Municipal Code (the “Commercial Linkage Ordinance)”; and
WHEREAS, the purpose and findings supporting the adoption of the Inclusionary Housing In-Lieu Fee are set forth in the Inclusionary Housing Ordinance; and WHEREAS, the purpose and findings supporting the adoption of the Commercial Linkage Fee are set forth in Commercial Linkage Fee Ordinance; and WHEREAS, the Council desires to establish herein the amount of the Inclusionary Housing In-Lieu Fees for residential development and Commercial Linkage Fees for specified non-residential land uses in the City; and
WHEREAS, the Comprehensive Fee Schedule will be updated to reflect all new and updated fees; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Luis Obispo as follows:
SECTION 1. Recitals. The recitals set forth above are hereby adopted as the findings of the City in adopting the policies herein.
Resolution No._______ (2022 Series) Page 2
R _____
SECTION 2. Environmental Determination. Amending the inclusionary in-lieu housing fee and establishment of a commercial linkage fee is not considered a project subject to the California Environmental Quality Act (“CEQA”) pursuant to Section 15378(b)(4) of the CEQA Guidelines, which excludes the following from the definition of projects: the creation of a government funding mechanism or other government fiscal activities which do not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment.
SECTION 3. Inclusionary Housing In-Lieu Fee. Applicants opting to pay an inclusionary housing in-lieu fee in accordance with Chapter 17.138 of the San Luis Obispo Municipal Code shall pay the fee based on the habitable square footage of space within the residential development project as follows:
Residential unit type Fee per square foot
New for-sale housing $25.00
New rental housing $20.00
SECTION 4. Commercial Linkage Fee. The Commercial Linkage Fees adopted in Chapter 4.60 of the City of San Luis Obispo Municipal Code are hereby established in the following amounts and shall be computed as follows:
All Commercial Development Projects and all Non- Residential portions of a project subject to Chapter 4.60 shall pay the commercial linkage fee based on the gross square footage of each use included in the proposed project as follows:
Non-Residential Use Fee per square foot
Office, Service, Retail, Hotel $6.00
Industrial, Manufacturing $5.00
Resolution No._______ (2022 Series) Page 3
R _____
SECTION 5. Effective Date. This Resolution shall take effect upon the effective date of both the Inclusionary Housing Ordinance and the Commercial Linkage Fee Ordinance.
Upon motion of _______________________, seconded by
_______________________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2022. __________________________
Mayor Erica A, Stewart
ATTEST:
___________________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
____________________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on _______________________. __________________________
Teresa Purrington,
City Clerk
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Chapter 17.138: Inclusionary Housing Requirements
Sections:
17.138.010 – Purpose
17.138.020 – Applicability and Exclusions
17.138.030 – Definitions
17.138.040 – General StandardsInclusionary Housing Requirements
17.138.050 – ProceduresStandards for Inclusionary Units
17.138.060 – In-Lieu Housing Fee
17.138.070 – AffordableInclusionary Housing Fund EstablishedProposal
17.138.080 – Real Property DedicationProcedures
17.138.090 – IncentivesEligibility Requirements
17.138.100 – Project Application
17.138.110 – Required Agreements
17.138.120 – Program Requirements
17.138.130 – Eligibility Screening
17.138.140 – Affordability Restrictions
17.138.150 – Shared Equity Purchase Program
17.138.160 – Early Resale of Shared Equity Properties
17.138.170 –17.138.110 – Administration, Management, andMonitoring
17.138.180120 – Enforcement and Appeals
17.138.190 – Severability
17.138.010 – Purpose
The purpose and intent of this Chapter are: 1) to promote the public welfare by increasing the production and availability of affordable rental housing units; 2) to establish an inclusionary housing requirement which implements General Plan policies guiding land use and housing development; and 3) to ensure that affordable housing units established pursuant to the provisions of this Chapter are located in a manner that provides for their integration with market rateunits.
17.138.020 – Applicability and Exclusions
A. This Chapter shall apply to development all residential development except projects consisting of five or more residential lots or new dwelling units, and to commercial development projects consisting of 2,500 square feet or more of gross floor area.
Tthe following types of residential development projects are excludedexempt:
1. Residential developments of four units or less;
2. New commercial developments of less than 2,500 square feet of gross floor area;
3.1. Residential and commercial building additions, repairs, or remodels, provided that such work does not increase the number of existing dwellings by four or more units or result in an increase in commercial gross floor area of 2,500 square feet or more;
2. The addition or inclusion of Accessory Dwelling Units associated with an existing or proposed residential or mixed-use development;
4. The conversion of less than five dwelling units to condominiums within any five-year period;
5.3. Commercial condominium conversions which do not result in the creation of newdwellings;
6.4. Affordable housing projects in which 100 percent of the dwellings to be built will be sold or rented in conformance with the City’s aAffordable hHousing sStandards (excluding any on-site manager unit);
5. Housing projects that include a density bonus.
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7.6. Emergency projects or projects which the Council determines are necessary to protect public health and safety;
8.7. Development projects which the Director determines are essentially noncommercial or nonresidential in nature, which provide educational, social, or related services to the community and which are proposed by public agencies, nonprofit agencies, foundations, and other similar organizations;
9.8. Projects which replace or restore a structure damaged or destroyed by fire, flood, earthquake, or other disaster within three years prior to the application for the new structure(s) (see Chapter 17.92 Nonconforming Structure);
10. Projects for which an approved tentative map or vesting tentative map exists, or for which a construction permit was issued prior to the effective date of the ordinance codified in this Chapter and the permittee has performed substantial work and incurred substantial liabilities and which continue to have unexpiredpermits.
17.138.030 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the meaning set forth below. For all other definitions, the provisions of Article 9 (Definitions) of this Title shall apply.
A. “Administrator” means Below Market Rate Program Administrator which may either be the City itself or a thirdparty administrator acting as an agent for the City in connection with all aspects of the operation of the City's Below Market Rate program pursuant to an Agreement entered into between the City and the Administrator, as such agreement may be amended or replaced from time to time.
A.B.“Affordable” means housing which can be purchased or rented by a household with very low-, low-, or moderateincome, as described in the City’s affordable housing standards.
B. “Building valuation” shall mean the total value of all construction work for which a construction permit is required, as determined by the Chief Building Official using the Uniform Building Code.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit is below the cost of what a current market rate unit would be and is affordable to extremely low-, very low-, low-, or moderate-income households.
D. “Borrower” shall be defined as one who meets the eligibility requirements for purchasing an inclusionary affordable unit.
E. “Commercial Linkage Fee” means the fee paid by the applicant of commercial development projects to mitigate the impacts that such developments have on the demand for affordable housing in the City (see Municipal Code Chapter 4.60).
C.F.“Density bonus” means a density increase over the maximum density otherwise allowable under the Zoning Regulations, Chapter 17.140.
D. “Development project” shall mean an activity for which a subdivision map or constructionbuilding permit is required, including new buildings and building additions or remodels, but not including changes in ownership, occupancy, management, or use.
E. “Expansion area” means a land area proposed for annexation to the City or annexed after the adoption date of the ordinance codified in this Chapter.
F. “Housing Authority” refers to the Housing of Authority of San Luis Obispo (HASLO).
G. “Early resale” shall mean the sale, lease, or transfer of property within seven years of the initial close of escrow for Equity Share Inclusionary Units.
H. “Equity Share” shall mean the shared equity of appreciation between the City and the Borrower on inclusionary units when agreements specifically allow for affordable units to be sold at market-rate after a 7-year period.
I. “Fee Schedule” means fees that for-sale and for-rent units are subject to and are paid to either the City or the Administrator for associated costs related to but not limited to eligibility screening, income verification, marketing
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of affordable units, and the close of escrow or completion of new lease agreements for affordable units.
G.J.“Inclusionary housing unit” means a dwelling which is builtunit required under the provisions of this Chapter, and which meets the City’s affordable housing standards.
H.K.“Low-” or “lower-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families shall not exceed 80 percent of the median income within the CountyCity as published and periodically updated by the State Department of Housing and Community Development.
I.L. “Market valuerate” shall mean the highest price a willing buyer would pay and a willing seller would accept, both being fully informed and in an open market, as determined by an appraiser or other qualified professional. fully informed and in an open market, as determined by an appraiser.
J.M.“Moderate-income households” shall include those have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families whose incomes exceed 80 percent but are less than or equal to 120 percent of the median income within theCountyCity as published and periodically updated by the State Department of Housing and Community Development.
K. “Real property” shall mean land and improvements, if any, including anything permanently affixed to the land, such as buildings, walls, fences, and paved areas.
N. “Non-residentia Commercial developmentl project” shall mean development projects which result in the construction or conversion of structures for the purpose of conducting business, including but not limited to retail sales, restaurants, offices, gas stations, manufacturing, etc.
L.O.“Residential development project” shall mean development projects which result in the subdivision of land and/or the construction or conversion of dwellingsstructures, including, but not limited to, single-unit attached or detached homes, apartments, condominiums, live/work studiosunits, mixed-use, mobile homes, transitional housing or supportive housing, and group housing.
M.P. “Very low-income” shall have the meaning set forth in Health and Safety Code Section 50105, defined as “50079.5; provided the income of such persons and families whose incomes doshall not exceed the qualifying limits for very low-income families as established and amended from time to time in compliance with Section 850 percent of the United States Housing Act of 1937, and median income within the City as published in the California Administrative Code.”and periodically updated by the State Department of Housing and Community Development.
17.138.040 – General StandardsInclusionary Housing Requirements A. Methods of Meeting Requirements. New development projects shall satisfy the inclusionary housing requirements, as specified in Tables 2 and 2A of the General Plan Housing Element (also included below) which require that all nonexempt development projects shall contribute toward the production of affordable housing by constructing at least one affordable dwelling unit or paying an in-lieu fee. To meet the requirements, the developer shall comply with one or more of the following methods:
A. 1. General Requirements. All non-exempt residential development projects shall include inclusionary units as required by this sectionchapter. If the calculated number of units results in a fraction, the number shall be rounded as described in Section 17.138.080(A).: Fractional Numbers, unless otherwise specified.
1. Construct the required number of affordable dwelling units, as specified in Table 2 of the Housing Element, as adjusted by Table 2A of the Housing Element; orinclusionary units for Residential or Mixed-Use projects;
2. Pay an in-lieu fee as described in Table 2, as adjusted by Table 2A. For development projects in which the adjustment factor under Table 2A equals zero (“0”), the minimum adjustment factor shall be 0.25 (resulting in a minimum in-lieu fee of 1.25 percent of the building valuation for development projects and commercial developments in expansion areas, and 3.75 percent of building valuation for residential developments in expansion areas); or
3. Dedicate real property for affordable housing; or
4. Provide for the rehabilitation of existing housing units that are vacant and in poor physical condition or are
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otherwise uninhabitable; or
5. Use a combination of the above methods, to the approval of the Director.
Housing Element Table 2 – Inclusionary Housing Requirement Type of Housing Development
Residential – Adjust Requirements per Table 2A below Commercial Location
In City
Limits
Build 3% low5 or 5% moderate income Affordable
Dwelling Units (ADUs2), but not less than 1 ADU per
project; or3
pay in-lieu fee equal to 5% of building valuation.4
Build 2 ADUs per acre, but not less
than 1 ADU per project; or3
pay in-lieu fee equal to 5% of
building valuation
In
Expansio
n Area
Build 5% low5 - and 10% moderate income ADUs, but
not less than 1 ADU per project;
or pay in-lieu fee equal to 15% of building valuation.
Build 2 ADUs per acre, but not less
than 1 ADU per project; or
pay in-lieu fee equal to 5% of
building valuation.
Notes:
1. Residential developments of four or less dwellings, and commercial developments of 2,500 gross square feet of floor area or less are exempt from these requirements.
2. Affordable Dwelling Units must meet City affordability criteria listed in Goal 2.1 of the Housing Element.
3. Developer may build affordable housing in the required amounts, pay in-lieu fee based on the above formula, or dedicate real property, or a combination of these, to City approval.
4. "Building valuation" shall mean the total value of all construction work for which a permit would be issued, as determined by the Chief Building Official.
5. Low income includes the subsets of extremely low and very low-income categories.
Housing Element Table 2A – Inclusionary Housing Adjustment Factors Project Density
(Density
Units/Net Acre)1
Inclusionary Housing Requirement Adjustment Factor2
Average Unit Size (square feet)
Up to 1,100 1,101 – 1,500 1,501 – 2,000 2,001 – 2,500 2,501 – 3,000 >3,000 36 or more 0 0 0.75 1.0 1.25 1.5
24 – 35.99 0 0 0.75 1.0 1.25 1.5
12 – 23.99 0 0.25 1.0 1.25 1.5 1.75
7 – 11.99 0 0.5 1.0 1.25 1.5 1.75
<7 0 0.5 1.25 1.5 1.75 2.0
Notes:
1. Including allowed density bonus, where applicable.
2. Multiply the total base Inclusionary Housing Requirement (either housing or in-lieu percentage) by the adjustment factor to determine requirement. At least one enforceably restricted affordable unit is required per development of five or more units.
B. Affordable Housing Standards. Affordable dwelling units constructed must meet City affordable housing standards and must be consistent with affordability policies in the General Plan Housing Element.
C. Concurrent Development. The required inclusionary units shall be constructed concurrently with market value units unless the developer and the Director agree within an affordable housing agreement to an alternative development schedule.
17.138.050 – Procedures
A. Fractional Numbers. In determining the number of dwellings that are required to be built pursuant to Table 2, fractional units shall be rounded up to the next higher whole number unit.
B. Determining Adjustment Factor Using Project Density and Average Unit Size. To determine the adjustment factor in Table 2A, project density shall be calculated by dividing the total number of density units proposed (including density bonus where applicable) by the development project site’s net area. Average floor area shall be calculated by dividing the total gross floor area of all dwellings (excluding garages) within the development project by the total number of dwellings. Dedicated open space shall not be included in a site’s net area.
2. Pay an in-lieu fee for Residential or Mixed-Use projects; or
3. Pay a commercial linkage fee (see Municipal Code Chapter 4.6056: Development Impact Fees) for new NonResidential or Non-Residential portions of Mixed-Use project(s).
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B. Residential Requirements
1. Ownership Dwelling Units. Ten (10) percent of the dwelling units (see Section 17.138.080.A: Fractional Numbers) shall be made available for sale to eligible households with five (5) percent for low-income households (fractional units may be rounded down to the next whole number) and five (5) percent for moderate-income households (fractional units may be rounded up to the next whole number). See Section
17.138.080.A (Fractional Numbers) for more information regarding fractional numbers.
2. Rental Dwelling Units. Six (6) percent of the dwelling units (see Section 17.138.080.A: Fractional Numbers) shall be made available for rent to eligible households with three (3) percent for very low-income households (fractional units may be rounded down to the next whole number) and three (3) percent for low-income households (fractional units may be rounded up to the next whole number).
3. In-Lieu Housing Fees. An applicant may pay in-lieu fees to the City rather than construct inclusionary units on site for residential projects (see Section 17.138.060: In-Lieu Housing Fee).
C. Non-Residential Requirements
1. Commercial, Office, Service, Hotel, Retail, Industrial, and Institutional Uses. An applicant shall pay a commercial linkage fee based on the gross square footage of the non-residential space within the development project that result in an increase in gross floor area of 2,500 square feet in accordance with Municipal Code Chapter 4.60.
D. C. Mixed-Use Development Projects Requirements
1. Dwelling Units & CommercialNon-Residential Space. For mixed-use development projects with five or more dwellingsor 2,500 square feet or more of new non-residential square footage, the inclusionary housing requirement is determined by: (1) using Table 2 to calculate the base inclusionary requirement for the commercial use, and (2) using Table 2A to adjust the base requirement based on project density and average unit size, as described inin accordance with subsection (B) of this Section.B of this Section for all dwelling units in addition to subsection C of this Section for all new commercial square footage within the development project. For example, a for-rent mixed-use project includes twenty (20) residential units and 5,000 square feet of commercial space: the inclusionary requirement would be two (2) affordable units (20 x 6% = 1.2 rounded to 2) and a commercial linkage fee would be applied to the 5,000 square feet of commercial spacetimes the commercial linkage fee.
17.138.050 – Standards for Inclusionary Units
A. Standards. Inclusionary units must meet the following standards:
1. Inclusionary units shall be dispersed throughout the residential or mixed-use development projects to prevent a concentration of affordable units within the development project.
2. Inclusionary units shall be consistent with the design of market rate units in terms of exterior appearance, materials, and finished quality.
3. The applicant may reduce square footage of inclusionary units as compared to the market rate units as long as the minimum square footage of the affordable units are no less than seventy-five percent of the average size of all market rate units in the residential development project with the same bedroom count. For the purpose of this subsection, the “average size” of a unit with a certain bedroom count equals the total square footage of all market rate units with that bedroom count in the residential development project divided by the total number of market rate units with the same bedroom count in the residential development project.
4. For residential development projects with multiple market rate unit types containing differing numbers of bedrooms, inclusionary units shall be representative of the market rate unit mix. For example, a for sale, residential project includes fifty (50) dwelling units; ten (10) three-bedroom units, twenty (20) two-bedroom units, and twenty (20) one-bedroom units. To represent the units within the residential project, the five (5) required inclusionary units would be one (1) three-bedroom, two (2) two-bedrooms and two (2) one-bedrooms.
5. The required inclusionary units shall be constructed concurrently with market rate units, unless an alternative development schedule is otherwise stipulated by the applicable Review Authority of the residential
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development project.
6. Inclusionary units shall be subject to the City’s and/or the Administrator’s Fee Schedule in accordance with Section 17.138.110.
D. Timing. The inclusionary housing requirement shall be met prior to issuance of a certificate of occupancy for the first unit in a building, or the first building in a complex to be constructed or remodeled; or for subdivisions, prior to Final Map approval; or prior to building permit issuance, for projects for which a certificate of occupancy is not issued; or as otherwise agreed to by the Director as part of tentative map, rezoning, Minor Use Permit, Conditional Use Permit, or other development approval.
E. Affordable Housing Agreement. To meet the requirement, the developer may enter into an agreement with the City, the Housing Authority of San Luis Obispo (HASLO), nonprofit housing provider, or other qualified housing provider approved by the Director to construct, refurbish, convert, operate, and maintain the required affordable housing. Such affordable housing agreements shall be to the approval of the Director and shall be in a form approved by the City Attorney.
17.138.060 – In-Lieu Housing Fee
A. A. Payment of In-Lieu Fee. The developer may, at his or hertheir discretion, choose to pay a fee, as established by a resolution of the City Council, to the City in lieu of constructing affordable dwellingsunits to meet thistheir inclusionary housing requirement.
B. Amount and Method of Payment. The dollar amount and method of payment of the in-lieu fee shall be as described in Table 2 of Appendix N of the General Plan Housing Element, and where applicable, as adjusted by Table 2A in Appendix N of the General Plan Housing Element, to the approval of the Director. For subdivisions in which the construction valuation is not known, the Director shall estimate the average construction valuation based on lot area, land value, and applicable City development standards. The developer shall use the estimated average construction valuation to determine the amount of in-lieu fees.
B. C. In-Lieu Fee Calculation. In-lieu fees shall be calculated using the total square footage of new, habitable square footage, as defined by California Building Code, included within the residential development project. In-lieu fees shall be calculated using the new, habitable square footage, as defined by California Building Code, included within the residential development project. In-lieu fees for Final Maps or Parcel Maps which are subject to Inclusionary Housing Requirements,
Timing. In-lieu fees shall be paid prior to release of occupancy of the first dwelling within a residential development; or for residential subdivisions to be built out by others, prior to final subdivision map approval; or prior to occupancy for new commercial buildings or remodels; or prior to building permit issuance, for projects for which a certificate of occupancy is not issued; or as otherwise provided by written agreement between the developer and City, to the approval of the Director. For mixed-use developments, these regulations shall apply to whichever occupancy release is first issued.
B. 17.138.070 – Affordable Housing Fund Establi shed
C. The City hereby establishes an . All in-lieu fees collected shall be deposited into the Affordable Housing Fund. The fund shall be administered by the Finance Director and shall be used exclusively to provide funding for the provision of affordable housing and for reasonable costs associated with the development of affordable housing, at the discretion of the Council. In-lieu fees collected shall be deposited into the Affordable Housing Fund, to the satisfaction of the Director of Finance.
C.
D. Timing. In-lieu fees shall be paid prior to building permit issuance. For projects constructed in phases, in-lieu fees shall be paid in the proportion that the phase bears to the overall project. release of occupancy of the first dwelling within a residential development; or for residential subdivisions to be built out by others, prior to final subdivision map approval; or prior to occupancy for new commercial buildings or remodels; or prior to building permit issuance, for projects for which a certificate of occupancy is not issued; or as otherwise provided by written agreement
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between the developer and City, to the approval of the Director. For mixed-use developments, these regulations shall apply to whichever occupancy release is first issued.17.138.080 – Real Property Dedication A. Irrevocable Offer to Dedicate Real Property. At the discretion of the Council, an irrevocable offer to dedicate real property equal or greater in value to the in-lieu fee which would otherwise be required may be offered to the City, or to an affordable housing provider designated by the City, instead of providing the required number of affordable dwellings or paying in-lieu fees. The City shall have the option of negotiating with the applicant regarding dedications of properties with greater value that the in-lieu fee to achieve an equitable dedication. In considering an offer to dedicate real property, the Council must find that the dedication of real property will provide equal or greater public benefit than constructing affordable units or paying in-lieu fees, based on the following criteria and additional criteria set forth in Government Code Section 65915(g)(2)(A-H):
1. Valuation of the land and/or improvements to be dedicated relative to other methods of meeting the requirement;
2. Suitability of the land and/or improvements for housing, including General Plan conformity, size, shape, topography, and location; and
3. Feasibility of developing affordable housing, including General Plan consistency, and availability of infrastructure.
B. Real Property Valuation. The valuation of real property offered in lieu shall be determined by the Director, based upon an appraisal made by a qualified appraiser mutually agreed to by the developer and the City. Costs associated with the appraisal, title insurance and transfer, recordation, and related costs shall be borne by the developer.
C. Agreement and Timing. The real property dedication shall be by deed or other instrument acceptable to the City and shall be completed by recordation through of the Office of County Clerk-Recorder prior to occupancy release of the first residential unit or commercial building in the development; or prior to building permit issuance, for projects for which a certificate of occupancy is not issued; or as otherwise provided by written agreement between the developer and the City.
17.138.090 – Incentives
A. Eligibility for Incentives. The developer may be eligible to receive or to request development incentives in return for constructing affordable housing in connection with a development project, pursuant to Chapter 17.140 (Affordable Housing Incentives), as part of a City planning application. Incentives or other forms of financial assistance may be offered by the City to the extent that resources are available for this purpose and to the degree that such incentives or assistance will help achieve the City’s housing goals.
B. Affordable Housing Agreement. Any incentives provided by the City, beyond those incentives to which a developer may be automatically entitled to under Chapter 17.140 (Affordable Housing Incentives) shall require approval by the appropriate review authority and shall be set out in an affordable housing agreement. The form and content of such agreement shall be to the approval of the City Attorney and the Director. Developers are further encouraged to utilize other local, State or Federal assistance, when available, to meet the affordable housing standards.
17.138.070 – Inclusionary Housing Plan
17.138.100 – Project Application
A. A. Method of Application. Requirements. An applicant/developer proposing a project for which affordableinclusionary housing is required shall submit a statement with the standardtheir planning application, or building permit (whichever applies), describing the project’s inclusionary housing proposalplan. The developer’s statement shall include:
1. 1. A briefproject description of the proposalthat includes details regarding the proposed residential development project such as, but not limited to total number of dwelling units, number of bedrooms per dwelling unit, square footage of all units (both residential and commercial), type of project (rental or ownership), etc.;
2. A description of the inclusionary housing plan for each construction phase, including the method chosen to meet the inclusionary housing requirement; and including all of the following information including but not
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limited to:
a. Whether the unit is for sale or rental;
b. The number, type and location of affordable, unit type, tenure, number of bedrooms and baths, floor plan, construction schedule of all inclusionary units; term of affordability; preliminary a.c. Preliminary calculation of in-lieu fees; or offer of land dedication or commercial linkage fee as applicable;
2. How the proposal meets General Plan policies and inclusionary housing requirements;
3. Plans and other exhibits showing preliminary site layout, grading, building elevations, parking and other site features, location of affordable dwelling units, and (where applicable) market value dwelling units;
4. Description of incentives requested, including exceptions from development standards, density bonuses, fee waivers or other incentives; and
b.d. 5. Other information which the Director determines necessary to adequately evaluate the proposal, including but not limited to the method proposed to award occupancy of the affordable units.
17.138.110080 – Required AgreementsProcedures
A. Fractional Numbers. In determining the number of dwellings that are required to be built pursuant to Section
17.138.040.B Table 2, fractional units shall be rounded up to the next higher whole number unit. If a project contains 10 units or less and the number of required inclusionary dwellings results in a fractional unit, an applicant may pay the in-lieu fee for the fractional unit or provide one Moderate affordable unit in the project. For example, a residential project proposes to construct six (6) dwelling units for rent. Per Section 17.138.040, the project would have an inclusionary housing requirement of 0.36. The applicant may pay an in-lieu fee for the fractional amount or deed restrict one of the six (6) dwelling units for Moderate-income households.
B. A. Affordable Housing Agreement. The applicant shall complete and sign an Affordable Housing Agreement.
1. Submittal of an Affordable Housing Agreement. Applicants and developers forof residential development projects subject to this Chapter shall, as a condition of development approval, submit an affordable housing agreement on forms provided by the City and pay a processing and recordation fee.
2. Timing. All building permits for inclusionary units in a residential development project shall be issued concurrently with, or prior to, issuance of building permits for the market rate units, or final recordation of a final or parcel map, whichever occurs first.
3. Construction Schedule. The inclusionary units shall be constructed concurrently with, or prior to, construction of the market rate units, unless otherwise stipulated by the applicable Review Authority of the residential development project. Occupancy permits and final inspections for inclusionary units in a residential development shall be approved concurrently with, or prior to, approval of occupancy permits and final inspections for the market rate units.
1.4. Review and Approval. The draft agreement shall be reviewed by the Director and City Attorney for compliance with project approvals, City policies and standards, and applicable codes. Following approval and signing of the agreement by the parties, the final agreement shall be recorded, and relevant terms and conditions shall be recorded as a deed restriction on those lots or affordable units subject to affordability requirements. The affordable housing agreement shall be binding to all future owners and successors in interest.
5. B. Term. The affordable housing agreement shall ensure that affordability is maintained for the longest period allowed or required by State law, but not less than 45 years for ownership and 55 years for rental.
2.6. Exemption for In-Lieu Fees Payment. An affordable housing agreement shall not be required for projects which meet their inclusionary housing requirement through the payment of in-lieu fees.
17.138.120 – 090 – Eligibility Requirements
A. Program Requirement. Only households qualifying as extremely low-, very low-, low-, ormoderate income, pursuant to the affordable housing standards, shall be eligible to rent, purchase, or occupy inclusionary units developed or
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funded in compliance with this requirement. For-sale inclusionary housing units shall be owner-occupied for the term of the affordable housingagreement.
17.138.130 –
B. Eligibility Screening. The Housing Authority City or other housing provideran Administrator designated by the City shall screen prospective renters or buyers of affordable units. Renters or bBuyers of affordable units shall enter into an agreement with the City. Occupants must be selected by means of an open, public process which ensures that individuals of a group of interested participants have equal probability of selection.are selected in accordance with the City’s BMR Ownership and Rental Housing Guidelines. Private selection of individuals by project owners is not permitted for any affordable units.
17.138.140 – Affordability Restrictions
Developers of affordable units for sale shall specify the type of affordability restriction to be applied. The developer shall choose to either: (1) participate in a shared equity purchase program, as described in Section 17.138.150, or (2) enter into an affordable housing agreement to ensure that affordability is maintained for the longest period allowed or required by State law.
17.138.15017.138.100 – Shared Equity Purchase Program
When a residential development project includes affordable housing units for sale in excess of the inclusionary housing requirement for the project, the additional units may be offered under the Shared Equity Purchase Program.
A. Under this program, the qualified buyer of a designated affordable dwelling unit shall enter into a shared equity agreement with the City. Said agreement shall be recorded as a lien against the purchased property, at no interest, securing and stating the City’s equity share in the property. The City’s equity share shall be calculated by the Director, and shall be the decimal percentage of the property’s value resulting from:
1. The difference between the property’s market value and the actual price paid by the homeowner, divided by the market value; and/or, when applicable
2. The amount of subsidy provided by the City to the homeowner to purchase the property, divided by the property’s market value.
B. Upon sale, the City’s equity share shall be repaid to the City from the proceeds of the sale, less the City’s percentage share of title insurance, escrow fees, and documentary transfer taxes, at the close of escrow. The proceeds from the sale shall be deposited into the City’s Affordable Housing Fund and shall be used for the purposes set forth in Health and Safety Code § 33334.2(e).
17.138.160 – Early Resale of Shared Equity Properties
C. In the event of “early resale,” owners of properties subject to the shared equity purchase programShared Equity Purchase Program shall either: (1) pay an equity recapture fee to the City as described in the schedule below, in addition to the City’s equity share, or (2) sell the property to another eligible household. “Early resale” shall mean the sale, lease, or transfer of property within seven years of the initial close of escrow. If the owner chooses to pay the equity recapture fee, the recapture fee shall be paid to the City upon resale at close of escrow, based on the following schedule:
Table 8-1: Percent of Equity Build-up Recaptured
Year % of Equity Build-up Recaptured
0 – 3 100%
4 75% + City’s Equity Share
5 50% + City’s Equity Share
6 25% + City’s Equity Share
7 and after 0% + City’s Equity Share
CITY OF SAN LUIS OBISPO
Title 17 – ZONING REGULATIONS
DRAFT
The recapture amount shall be determined prior to the calculation of escrow closingcosts.
17.138.170110 –Administration, Management, and Monitoring Inclusionary rental and owner units shall be managed and operated by the property owner, or the owner’s agent, for the term of the affordable housing agreement. Sufficient documentation shall be submitted to ensure compliance with this Chapter, to the satisfaction of the Director.
A. Duties of Program Administrator. The City may either handle in-house or contract for administration of the BMR Ownership Housing Program and monitoring compliance with the requirements of this Chapter to a program Administrator pursuant to an agreement executed between the City and the Administrator in accordance with the approved fee schedule. At a minimum, the Administrator shall perform the following services:
1. Maintain and administer the City’s BMR Ownership and Rental Housing Guidelines and Affordable Housing Standards.
2. Screen and select qualified buyers and renters according to the City’s Ownership and Rental Housing Guidelines and Affordable Housing Standards and maintain qualified owner and renter eligibility list;
3. Maintain a list of eligible mortgage lenders for financing the purchase of inclusionary units in accordance with the BMR Ownership Housing Guidelines;
4. Market new and vacant BMR for-sale and rental units within the City’s affordable housing inventory.
5. Monitoring compliance with terms and conditions of the occupancy and sale restrictions;
17.138.180120 – Enforcement and Appeals
A. Enforcement. No final subdivision map shall be approved, nor building permit shall be issued, nor shall any other development entitlement be granted for a residential development project whichsubject to this Chapter that does not meet these requirements. No inclusionary unit shall be rented or sold except in accordance with these requirements and the affordable housing standards.
B. Appeals. The Director shall administer and interpret these requirements, subject to applicable codes and City procedures. Decisions of the Director are appealable, subject to the Zoning Regulations Chapter 17.126 (Appeals).
17.138.190 – Severability
If any provision of this Chapter or the application thereof to any person or circumstances is held invalid, the remainder of the Chapter and the application of the provision to other persons or situations shall not be affected thereby.
RESOLUTION NO. PC- 1061-2022
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF
SAN LUIS OBISPO, CALIFORNIA, RECOMMENDING THE CITY
COUNCIL INTRODUCE AND ADOPT AN ORDINANCE AMENDING
TITLE 17 (ZONING REGULATIONS) OF THE MUNICIPAL CODE,
REPEALLING AND REPLACING CHAPTER 17.138 (INCLUSIONARY
HOUSING REQUIREMENTS) FOR QUALIFYING DEVEOPMENT
PROJECTS WITH AN EXEMPTION FROM ENVIRONMENTAL REVIEW
(CEQA) AS REPRESENTED IN THE PLANNING COMMISSION
AGENDA REPORT AND ATTACHMENTS DATED JUNE 8, 2022
(CITYWIDE; CODE-0261-2022)
WHEREAS, on January 5,1999, The City adopted its first Inclusionary Housing Ordinance contained in Ordinance No. 1346; and
WHEREAS, on June 13, 2007, and update was made to the Inclusionary Housing Ordinance regarding resident selection process for inclusionary housing contained in Ordinance No. 1508; and
WHEREAS, a Nexus Study was reviewed by Council on April 21, 2020 to determine the feasibility of increasing the required amount of affordable housing in housing projects and implementing that into the City’s Inclusionary Housing Ordinance; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a webbased public hearing via teleconference November 17, 2020, for the purpose of final adoption of the sixth cycle update to the General Plan Housing Element that included Program 2.13 that states, “Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs Allocation, per Policy 2.4”; and
WHEREAS, in April 2021, the City hired Economic & Planning Systems, Inc. (EPS) to conduct a feasibility analysis based on the findings and recommendations included in the Nexus Study and current market information and provide preliminary recommendations for updates to the City’s existing Inclusionary Housing Ordinance; and WHEREAS, the State of California Office of Housing and Community Development, on September 3, 2021, certified the City of San Luis Obispo’s 6th Cycle General Plan Housing Element as in full compliance with State Law; and WHEREAS, a Study Session was held by City Council on March 1, 2022, to review the preliminary recommendations of the feasibility analysis; and WHEREAS, on May 11, 2022, the City published a draft of the proposed amendments to Municipal Code Chapter 17.138 for public review; and
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WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California on June 8, 2022, for the purpose of recommending amendments to Chapter
17.138; and
WHEREAS, notices of said public hearing were made at the time and in the manner required by the law; and
WHEREAS, the Planning Commission has duly considered all evidence, including the testimony of the applicant, interested parties, and the evaluation and recommendations by staff, presented at said hearing.
NOW, THEREFORE, BE IT RESOLVED, by the Planning Commission of the City of San Luis Obispo as follows:
SECTION 1. Findings. Based upon all evidence, the Planning Commission makes the following findings:
1. The proposed commercial linkage fees and inclusionary housing in-lieu fees are supported by the 2020 Affordable Housing Nexus and 2021 Feasibility Analysis.
2. The proposed amendments to Title 17 of the Municipal Code are consistent with the 6th Cycle Housing Element Program 2.13 which states, “Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs Allocation, per Policy 2.4.”
3. The proposed amendments to Title 17 of the Municipal Code are consistent with the 6th Cycle Housing Element Program 4.6 which states, “Amend the City’s Inclusionary Housing Ordinance to require that affordable units in a development be of similar size, number of bedrooms, character and basic quality as the non-restricted units in locations that avoid segregation of such units, including equivalent ways to satisfy the requirement. Also evaluate adjusting the City’s allowable sales prices for deed-restricted affordable units per a variety of unit types.”
4. The replacement of Chapter 17.138 to Title 17 of the Municipal Code will not alter the character of the City or cause health safety or welfare concerns because the amendment is consistent with the General Plan and directly implements City goals and policies.
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SECTION 2. Environmental Determination. The proposed amendments to the Municipal Code Title have been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the state CEQA Guidelines, and the environmental regulations of the City. Specifically, the proposed amendments have been determined to be exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption, because the proposed actions will have no possibility of a significant effect on the environment and will not cause impacts. In this case, the proposed repeal and replacement of the Inclusionary Housing Ordinance is consistent with State Law and the City’s 6th Cycle Housing Element and will not have an significant effect and project specific environmental review will be required.
SECTION 3. Action. The Planning Commission hereby recommends the introduction of an ordinance to City Council to repeal and replace, in its entirety, Chapter
17.138, entitled “Inclusionary Housing Requirements”, of the San Luis Obispo Municipal Code as set forth in Exhibit A and incorporated herein.
Upon motion of Commissioner Jorgensen seconded by Commissioner Hopkins and on the following roll call vote:
AYES: Commissioner Francis, Commissioner Hopkins, Commissioner Jorgensen, Commissioner Munoz-Morris, Vice Chair Kahn, and Chair Quincey
NOES: None
REFRAIN: None
ABSENT: Commissioner Wulkan
The foregoing resolution was passed and adopted this 8th day of June 2022. _____________________________
Tyler Corey, Secretary
Planning Commission
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EXHIBIT A
Chapter 17.138: Inclusionary Housing Requirements
Sections:
17.138.010 – Purpose
17.138.020 – Applicability and Exclusions
17.138.030 – Definitions
17.138.040 – Inclusionary Housing Requirements
17.138.050 – Standards for Inclusionary Units
17.138.060 – In-Lieu Housing Fee
17.138.070 – Inclusionary Housing Proposal
17.138.080 – Procedures
17.138.090 – Eligibility Requirements
17.138.100 – Shared Equity Purchase Program
17.138.110 – Administration, Management, and Monitoring
17.138.120 – Enforcement
17.138.010 – Purpose
The purpose and intent of this Chapter are: 1) to promote the public welfare by increasing the production and availability of affordable housing units; 2) to establish an inclusionary housing requirement which implements General Plan policies guiding land use and housing development; and 3) to ensure that affordable housing units established pursuant to the provisions of this Chapter are located in a manner that provides for their integration with market rateunits.
17.138.020 – Applicability and Exclusions
A. This Chapter shall apply to residential development projects consisting of five or more residential lots or new dwelling units.
B. The following types of residential development projects are exempt:
1. Residential projects of four new units or less;
2. Residential additions, repairs, or remodels, provided that such work does not increase the number of existing dwellings by five or more dwelling units;
3. The addition or inclusion of Accessory Dwelling Units associated with an existing or proposed residential or mixed-use development;
4. Affordable housing projects in which 100 percent of the dwellings to be built will be sold or rented in conformance with the City’s Affordable Housing Standards (excluding any on-site manager unit);
5. Housing projects that include a density bonus.
6. Emergency projects or projects which the Council determines are necessary to protect public health and safety;
7. Development projects which the Director determines are essentially noncommercial or nonresidential in nature, which provide educational, social, or related services to the community and which are proposed by public agencies, nonprofit agencies, foundations, and other similar organizations;
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8. Projects which replace or restore a structure damaged or destroyed by fire, flood, earthquake, or other disaster within three years prior to the application for the new structure(s) (see Chapter 17.92 Nonconforming Structure);
17.138.030 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the meaning set forth below. For all other definitions, the provisions of Article 9 (Definitions) of this Title shall apply.
A. “Administrator” means Below Market Rate Program Administrator which may either be the City itself or a third-party administrator acting as an agent for the City in connection with all aspects of the operation of the City's Below Market Rate program pursuant to an Agreement entered into between the City and the Administrator, as such agreement may be amended or replaced from time to time.
B. “Affordable” means housing which can be purchased or rented by a household with very low-, low-, or moderate- income, as described in the City’s affordable housing standards.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit is below the cost of what a current market rate unit would be and is affordable to extremely low-, very low-, low-, or moderate-income households.
D. “Borrower” shall be defined as one who meets the eligibility requirements for purchasing an inclusionary affordable unit.
E. “Commercial Linkage Fee” means the fee paid by the applicant of commercial development projects to mitigate the impacts that such developments have on the demand for affordable housing in the City (see Municipal Code Chapter 4.60).
F. “Density bonus” means a density increase over the maximum density otherwise allowable under the Zoning Regulations, Chapter 17.140.
G. “Early resale” shall mean the sale, lease, or transfer of property within seven years of the initial close of escrow for Equity Share Inclusionary Units.
H. “Equity Share” shall mean the shared equity of appreciation between the City and the Borrower on inclusionary units when agreements specifically allow for affordable units to be sold at market-rate after a 7-year period.
I. “Fee Schedule” means fees that for-sale and for-rent units are subject to and are paid to either the City or the Administrator for associated costs related to but not limited to eligibility screening, income verification, marketing of affordable units, and the close of escrow or completion of new lease agreements for affordable units.
J. “Inclusionary housing unit” means a dwelling unit required under the provisions of this Chapter, and which meets the City’s affordable housing standards.
K. “Low-” or “lower-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families shall not exceed 80 percent of the median income within the City as published and periodically updated by the State Department of Housing and Community Development.
L. “Market rate” shall mean the highest price a willing buyer would pay and a willing seller would accept, both being fully informed and in an open market, as determined by an appraiser.
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M. “Moderate-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families exceed 80 percent but are less than or equal to 120 percent of the median income within the City as published and periodically updated by the State Department of Housing and Community Development.
N. “Commercial development project” shall mean development projects which result in the subdivision of land and/or the construction or conversion of structures for the purpose of conducting business, including but not limited to retail sales, restaurants, offices, gas stations, manufacturing, etc.
O. “Residential development project” shall mean development projects which result in the subdivision of land and/or the construction or conversion of structures, including, but not limited to, single-unit attached or detached homes, apartments, condominiums, live/work units, mixed-use, mobile homes, transitional housing or supportive housing, and group housing.
P. “Very low-income” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families shall not exceed 50 percent of the median income within the City as published and periodically updated by the State Department of Housing and Community Development.
17.138.040 – Inclusionary Housing Requirements
A. General Requirements. All non-exempt residential development projects shall include inclusionary units as required by this chapter. If the calculated number of units results in a fraction, the number shall be rounded as described in Section 17.138.080(A).
1. Construct the required number of inclusionary units for Residential or Mixed-Use projects;
2. Pay an in-lieu fee for Residential or Mixed-Use projects; or
3. Pay a commercial linkage fee (see Municipal Code Chapter 4.60) for new NonResidential or Non-Residential portions of Mixed-Use project(s).
B. Residential Requirements
1. Ownership Dwelling Units. Ten (10) percent of the dwelling units (see Section
17.138.080.A) shall be made available for sale to eligible households with five (5) percent for low-income households (fractional units may be rounded down to the next whole number) and five (5) percent for moderate-income households (fractional units may be rounded up to the next whole number). See Section 17.138.080.A for more information regarding fractional numbers.
2. Rental Dwelling Units. Six (6) percent of the dwelling units (see Section 17.138.080.A:
Fractional Numbers) shall be made available for rent to eligible households with three (3) percent for very low-income households (fractional units may be rounded down to the next whole number) and three (3) percent for low-income households (fractional units may be rounded up to the next whole number).
3. In-Lieu Housing Fees. An applicant may pay in-lieu fees to the City rather than construct inclusionary units on site for residential projects that would create five (5) or more dwelling units or parcels (see Section 17.138.060: In-Lieu Housing Fee).
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C. Non-Residential Requirements
1. Commercial, Office, Service, Hotel, Retail, Industrial, and Institutional Uses. An applicant shall pay a commercial linkage fee based on the gross square footage of the non-residential space in accordance with Municipal Code Chapter 4.60.
D. Mixed-Use Development Requirements
1. Dwelling Units & Commercial Space. For mixed-use development with five or more dwelling units, the inclusionary housing requirement is determined in accordance with subsection B of this Section for all dwelling units in addition to subsection C of this Section for all new commercial square footage within the development project. For example, a for-rent mixed-use project includes twenty (20) residential units and 5,000 square feet of commercial space: the inclusionary requirement would be two (2) affordable units (20 x 6% = 1.2 rounded to 2) and a commercial linkage fee would be applied to the 5,000 square feet of commercial space.
2. Commercial Space. For mixed-use development with four or less residential units, only the base inclusionary housing requirement for non-residential square footage shall be provided in accordance with subsection C of this Section. For example, a for-rent mixeduse project includes four (4) residential units and 5,000 square feet of commercial space: a commercial linkage fee would be applied to the 5,000 square feet of commercial space.
E. Residential Final Maps or Parcel Maps
1. Residential Subdivisions. Tentative Maps as defined in Chapter 16.10 “Tentative Maps” of the Municipal Code, that result in five (5) or more residential lots or parcels, which do not include any associated or required development plan, and are intended for independent development, shall pay the In-Lieu Housing Fee (see Section
17.138.060: In-Lieu Housing Fee) at the time of building permit submittal.
17.138.050 – Standards for Inclusionary Units
A. Standards. Inclusionary units must meet the following standards:
1. Inclusionary units shall be dispersed throughout the residential development projects to prevent a concentration of affordable units within the development project.
2. Inclusionary units shall be consistent with the design of market rate units in terms of exterior appearance, materials, and finished quality.
3. The applicant may reduce square footage of inclusionary units as compared to the market rate units as long as the minimum square footage of the affordable units are no less than seventy-five percent of the average size of all market rate units in the residential development project with the same bedroom count. For the purpose of this subsection, the “average size” of a unit with a certain bedroom count equals the total square footage of all market rate units with that bedroom count in the residential development project divided by the total number of market rate units with the same bedroom count in the residential development project.
4. For residential development projects with multiple market rate unit types containing differing numbers of bedrooms, inclusionary units shall be representative of the market rate unit mix. For example, a for sale, residential project includes fifty (50) dwelling units; ten (10) three-bedroom units, twenty (20) two-bedroom units, and twenty (20) onebedroom units. To represent the units within the residential project, the five (5) required inclusionary units would be one (1) three-bedroom, two (2) two-bedrooms and two (2) one-bedrooms.
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5. The required inclusionary units shall be constructed concurrently with market rate units, unless an alternative development schedule is otherwise stipulated by the applicable Review Authority of the residential development project.
6. Inclusionary units shall be subject to the City’s and/or the Administrator’s Fee Schedule in accordance with Section 17.138.110.
17.138.060 – In-Lieu Housing Fee
A. Payment of In-Lieu Fee. The developer may, at their discretion, choose to pay a fee, as established by a resolution of the City Council, to the City in lieu of constructing affordable units to meet their inclusionary housing requirement.
B. In-Lieu Fee Calculation. In-lieu fees shall be calculated using the total square footage of new, habitable square footage, as defined by California Building Code, included within the residential development project. Final Maps or Parcel Maps shall pay the In-Lieu Housing Fees consistent with Section 17.138.040E.,
C. Affordable Housing Fund. In-lieu fees shall be calculated using the new, habitable square footage, as defined by California Building Code, included within the residential development project. Final Maps or Parcel Maps in-lieu fees shall be calculated at time of individual lot development using the new, habitable square footage included within the residential development project.
D. Timing. In-lieu fees shall be paid prior to building permit issuance. For projects constructed in phases, in-lieu fees shall be paid in the proportion that the phase bears to the overall project.
17.138.070 – Inclusionary Housing Plan
A. Application Requirements. An applicant proposing a project for which inclusionary housing is required shall submit a statement with their planning application or building permit (whichever applies), describing the project’s inclusionary housing plan. The statement shall include:
1. A project description that includes details regarding the proposed residential development project such as, but not limited to total number of dwelling units, number of bedrooms per dwelling unit, square footage of all units (both residential and commercial), type of project (rental or ownership), etc.;
2. A description of the inclusionary housing plan for each construction phase, including the method chosen to meet the inclusionary housing requirement and including all of the following information including but not limited to:
a. Whether the unit is for sale or rental;
b. The number, location, unit type, tenure, number of bedrooms and baths, floor plan, construction schedule of all inclusionary units;
c. Preliminary calculation of in-lieu fees or commercial linkage fee as applicable; d. Other information which the Director determines necessary to adequately evaluate the proposal.
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17.138.080– Procedures
A. Fractional Numbers. In determining the number of dwellings that are required to be built pursuant to Section 17.138.040.B fractional units shall be rounded up to the next higher whole number unit. If a project contains 10 units or less and the number of required inclusionary dwellings results in a fractional unit, an applicant may pay the in-lieu fee for the fractional unit or provide one Moderate affordable unit in the project. For example, a residential project proposes to construct six (6) dwelling units for rent. Per Section
17.138.040, the project would have an inclusionary housing requirement of 0.36. The applicant may pay an in-lieu fee for the fractional amount or deed restrict one of the six (6) dwelling units for Moderate-income households.
B. Affordable Housing Agreement. The applicant shall complete and sign an Affordable Housing Agreement.
1. Submittal of an Affordable Housing Agreement. Applicants of residential development projects subject to this Chapter shall submit an affordable housing agreement on forms provided by the City and pay a processing and recordation fee.
2. Timing. All building permits for inclusionary units in a residential development project shall be issued concurrently with, or prior to, issuance of building permits for the market rate units.
3. Construction Schedule. The inclusionary units shall be constructed concurrently with, or prior to, construction of the market rate units, unless otherwise stipulated by the applicable Review Authority of the residential development project. Occupancy permits and final inspections for inclusionary units in a residential development shall be approved concurrently with, or prior to, approval of occupancy permits and final inspections for the market rate units.
4. Review and Approval. The draft agreement shall be reviewed by the Director and City Attorney for compliance with project approvals, City policies and standards, and applicable codes. Following approval and signing of the agreement by the parties, the final agreement shall be recorded, and relevant terms and conditions shall be recorded as a deed restriction on those lots or affordable units subject to affordability requirements. The affordable housing agreement shall be binding to all future owners and successors in interest.
5. Term. The affordable housing agreement shall ensure that affordability is maintained for the longest period allowed or required by State law, but not less than 45 years for ownership and 55 years for rental.
6. Exemption for In-Lieu Fee Payment. An affordable housing agreement shall not be required for projects which meet their inclusionary housing requirement through the payment of in-lieu fees.
17.138.090 – Eligibility Requirements
A. Program Requirement. Only households qualifying as extremely low-, very low-, low-, or moderate income, pursuant to the affordable housing standards, shall be eligible to rent, purchase, or occupy inclusionary units developed or funded in compliance with this requirement. For-sale inclusionary housing units shall be owner-occupied for the term of the affordable housing agreement.
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B. Eligibility Screening. The City or an Administrator designated by the City shall screen prospective renters or buyers of affordable units. Buyers of affordable units shall enter into an agreement with the City. Occupants must be selected by means of an open, public process which ensures that individuals of a group of interested participants are selected in accordance with the City’s BMR Ownership and Rental Housing Guidelines. Private selection of individuals by project owners is not permitted for any affordable units.
17.138.100 – Shared Equity Purchase Program
When a residential development project includes affordable housing units for sale in excess of the inclusionary housing requirement for the project, the additional units may be offered under the Shared Equity Purchase Program.
A. Under this program, the qualified buyer of a designated affordable dwelling unit shall enter into a shared equity agreement with the City. Said agreement shall be recorded as a lien against the purchased property, at no interest, securing and stating the City’s equity share in the property. The City’s equity share shall be calculated by the Director, and shall be the decimal percentage of the property’s value resulting from:
1. The difference between the property’s market value and the actual price paid by the homeowner, divided by the market value; and/or, when applicable
2. The amount of subsidy provided by the City to the homeowner to purchase the property, divided by the
property’s market value.
B. Upon sale, the City’s equity share shall be repaid to the City from the proceeds of the sale, less the City’s percentage share of title insurance, escrow fees, and documentary transfer taxes, at the close of escrow. The proceeds from the sale shall be deposited into the City’s Affordable Housing Fund and shall be used for the purposes set forth in Health and Safety Code § 33334.2(e).
C. In the event of “early resale,” owners of properties subject to the Shared Equity Purchase Program shall either: (1) pay an equity recapture fee to the City as described in the schedule below, in addition to the City’s equity share, or (2) sell the property to another eligible household. If the owner chooses to pay the equity recapture fee, the recapture fee shall be paid to the City upon resale at close of escrow, based on the following schedule:
Table 8-1: Percent of Equity Build-up Recaptured
Year % of Equity Build-up Recaptured
0 – 3 100%
4 75% + City’s Equity Share
5 50% + City’s Equity Share
6 25% + City’s Equity Share
7 and after 0% + City’s Equity Share
The recapture amount shall be determined prior to the calculation of escrow closing costs.
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17.138.110 –Administration, Management, and Monitoring
Inclusionary rental and owner units shall be managed and operated by the property owner, or the owner’s agent, for the term of the affordable housing agreement. Sufficient documentation shall be submitted to ensure compliance with this Chapter, to the satisfaction of the Director.
A. Duties of Program Administrator. The City may either handle in-house or contract for administration of the BMR Ownership Housing Program and monitoring compliance with the requirements of this Chapter to a program Administrator pursuant to an agreement executed between the City and the Administrator in accordance with the approved fee schedule. At a minimum, the Administrator shall perform the following services:
1. Maintain and administer the City’s BMR Ownership and Rental Housing Guidelines and Affordable Housing Standards.
2. Screen and select qualified buyers and renters according to the City’s Ownership and Rental Housing Guidelines and Affordable Housing Standards and maintain qualified owner and renter eligibility list;
3. Maintain a list of eligible mortgage lenders for financing the purchase of inclusionary units in accordance with the BMR Ownership Housing Guidelines;
4. Market new and vacant BMR for-sale and rental units within the City’s affordable housing inventory.
5. Monitoring compliance with terms and conditions of the occupancy and sale restrictions;
17.138.120 – Enforcement
A. Enforcement. No final subdivision map shall be approved, nor building permit issued, nor shall any other development entitlement be granted for a residential development project subject to this Chapter that does not meet these requirements. No inclusionary unit shall be rented or sold except in accordance with these requirements and the affordable housing standards.
M EMORANDUM
To: Tyler Corey, Deputy Director of Community Development From: Ashleigh Kanat, Principal
Subject: Effect of CCCI Increase and Implications for the Inclusionary Housing Ordinance Update; EPS #191142
Date: July 8, 2022
Based on Municipal Code 4.56.040, the Development Impact Fee schedule is evaluated and established each year (to be effective July 1 of each year) in conformance with the California Construction Cost Index (CCCI) as published by the California Department of General Services.
The percent increase from April 2021 to April 2022 is 24.5%.
In the absence of market context, an annual fee increase of 24.5% is extraordinary. However, the CCCI is tied to construction cost data that is tracked by the California Department of General Services, and, in general, we are in a time of substantial inflationary pressures.
Policy Justification
The policy reason for annual indexing based on changes in construction costs is to ensure the City can continue to use fee revenue to fund required capital improvements even as construction costs increase over time. Without annual indexing, the City’s ability to fund infrastructure projects to mitigate the effects of new development would erode, even though the City’s obligation to deliver those projects would remain.
When the City adopts an impact fee program, there is an implied commitment to deliver the identified capital improvements. If the fee revenue does not keep pace with increases in construction costs, other sources of revenue, including the General Fund, would be required.
Relationship to Residential Values and Feasibility
If the value of homes (based on transaction data) in San Luis Obispo was static (i.e., did not change during the past year), there would be particular cause for concern with the July 1, 2022 increase because residential developers would have to absorb increases in construction costs and increases in development impact fees without the possibility of recovering those cost increases in the final sales price (or through
Memorandum July 8, 2022
Effect of CCCI Increase Page 2
Z:\Shared\Projects\Oakland\191000s\191142_SLO_AH_Fees\Deliverables\191142_DraftMemo_market context_2022Jul08.docx increases in rental revenue). This would almost certainly have the effect of discouraging new development from occurring.
However, based on Redfin calculations of home data from MLS and/or public records, the median home price increased 26.3 percent year-over-year, as of May 2022. In May of 2021, the median home price was approximately $794,000; twelve months later (in May 2022), the median home price is $1,002,716.
While the inflationary pressures in the economy are challenging, so long as market prices of new development (residential home prices and rents and commercial rents) are also increasing, concerns about the fee increases having a negative impact on feasibility are reduced, as both costs and values are increasing proportionally.
Attachment G:
Affordable Housing Analysis and Recommendations
2020 Affordable Housing Nexus Study
A lot has changed since 1999 and as a part of the 2019-21 Financial Plan a core priority identified in the Housing and Homelessness Major City Goal (MCG) work scope and action plan was to complete an Affordable Housing Nexus Study to establish a rational nexus between market-rate residential development and nonresidential development and the need for affordable housing in the City as required by law. The last time a similar study was completed was in 2004. In 2020 the City hired consultant David Paul Rosen and Associates (DRA) to complete an Affordable Housing Nexus Study. The Study confirmed that both market-rate residential and commercial development are inducing demand for affordable housing that is not being met by the current housing market.
The Nexus Study recommendation is based on the maximum justifiable Nexus fees the City could implement to meet the affordable housing demand incurred by current development. Overall, the Study recommended that the City adopt fees less than the maximums because fees at these high levels would affect the financial feasibility of development as well as the competitiveness of development in the City. It should be noted that while incomes increased since the Nexus Study was completed, development costs have increased more – that broadening gap would result in still-higher nexus-maximum fees. Recommendations from the Nexus Study are provided below in Table 1.
Following completion of the Nexus Study, the City began work on updating the City’s Housing Element consistent with State law. On November 17, 2020, the City Council adopted the 6th Cycle Housing Element, which includes the City’s Regional Housing Needs Allocation (RHNA)1, and housing policies and programs for the 2020-2028 planning period. Program 2.13 in the 6th Cycle Housing Element specifically requires that City staff update the Inclusionary Housing Ordinance based on the information provided in the Nexus Study.
1 The City’s projected housing need during the Housing Element planning period is determined through the RHNA allocation process, based on projected Statewide growth in households as determined by the California Department of Housing and Community Development (HCD), and regionally allocated through the San Luis Obispo County Council of Government (SLOCOG). The total housing need for each jurisdiction is distributed among income categories and included in the Housing Element so that plans, policies, and standards may be created to help meet needs within the elements planning term. The City has a RHNA of 3,354 total housing units to plan for in the 6th cycle, with 826 allocated for the Very Low Income Category, 520 in the Low Income Category, 603 in the Moderate Income Category and 1,406 in the Above Moderate Income Category. In 2021, the City met its total allocation for “Above Moderate” housing units, issuing 472 permits for that category in 2021 and 1,411 in the last 3 years. This leaves 1,735 units needed to meet the 6th Cycle RHNA allocation, with 44% reserved for Extremely Low and Very Low Income, 22% for Low, and 34% for Moderate.
Attachment G
Affordable Housing Analysis and Recommendations
2022 Feasibility Analysis
The Nexus Study provides the connection for requiring additional affordable housing as a part of new development but did not take into account what amount of affordable housing would be feasible in a new development. In April 2021, the City hired Economic & Planning Systems, Inc. (EPS) to conduct a feasibility analysis of the City’s proposed affordable housing requirements and in-lieu fees and commercial linkage fees based on the findings and recommendations included in the Nexus Study and market factors.
EPS tested the feasibility of a range of inclusionary requirements and affordable housing fee levels by preparing financial pro formas reflecting the expected costs of new development, based on the Nexus Study and supplemental market research, and comparing those costs to the revenues that could be generated given the various mixes of market-rate and affordable housing and/or fee levels. Based on this analysis, EPS recommended several revisions to the City’s existing affordable housing inclusionary program for new residential and mixed-use development and introduced a nexus-based commercial linkage fee for non-residential uses based on their feasibility analysis. EPS developed a preliminary recommendation for changes to the City’s Inclusionary Housing Ordinance based on their Feasibility Analysis, which was presented to City Council on March 1, 2022. A summary of the EPS recommendations is provided below in Table 1.
Summary Comparison of Affordable Housing Analysis and Recommendations:
Table 1 provides a comparison between the City’s current IHO, the recommendations from the Nexus Study and Feasibility Analysis.
Table 1: Comparison of the City’s Current IHO, the 2020 Nexus Study’s recommendation, and the recommendation based on EPS’ feasibility analysis.
Current IHO Nexus Study
Recommendation
Feasibility Analysis
Recommendation
Where the
IHO applies
Requirements differ
within City Limits and
Expansion Areas
Same requirements
Citywide (no distinction
between City Limits vs.
Expansion Areas)
Same requirements
Citywide (no distinction
between City Limits vs.
Expansion Areas)
Table 2A
Adjustments
Applies to projects
that qualify
Remove Remove
Residential
For Sale
Within City Limits:
3% low or 5%
moderate income
Expansion Area: 5%
low and 10%
moderate income
Citywide: 15% (5% at low
and 10% at moderate)
Citywide: 10% (5%
low-income units and
5% moderate income)
Attachment G
Affordable Housing Analysis and Recommendations
Current IHO Nexus Study
Recommendation
Feasibility Analysis
Recommendation
For Sale Inlieu Fee
Within City Limits:
5% of building
valuation
Expansion Area:
15% of building
valuation
Citywide: Apply on a square
foot basis (no specific
amount recommended)
Citywide: $25 per
square foot
For Rent
Within City Limits:
3% low or 5%
moderate income
Expansion Area: 5%
low and 10%
moderate income
Citywide: 15% very lowand low-income units (5%
very low and 10% at low)
Citywide: 6% (3% very
low-income and 3%
low-income)
For Rent Inlieu Fee
Within City Limits:
5% of building
valuation
Expansion Area:
15% of building
valuation
Citywide: Apply on a square
foot basis (no specific
amount recommended).
Maximum Justifiable Nexus
fees: $48.33 - $113.99 per
square foot
Citywide: $20 per
square foot
Commercial
Commercial
Development
Within City Limits &
Expansion Area: 2
affordable units per
acre or 5% of
building valuation
Citywide: Maximum
justifiable nexus fees: $69-
173 per square foot.
Recommended Fee Range
(based on other
jurisdictions):
Other Non-residential Uses:
$2 to $5 per square foot
Industrial Uses: $1 to $4 per
square foot
Citywide:
Office, service, hotel,
and retail uses: $5 per
square foot
Industrial and
Institutional Uses: $4
per square foot
City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: July 19, 2022
TO: Mayor and Council
FROM: Matt Horn, Public Works Director
Brian Nelson, Deputy Public Works Director / City Engineer VIA: Derek Johnson, City Manager
SUBJECT: ITEM 7c – STAFF AGENDA CORRESPONDENCE DIRECTION ON
TERMS OF A COMMUNITY WORKFORCE AGREEMENT (CWA)
Staff received the following questions, regarding the subject Council Agenda Report. The questions are listed below with staff’s response in italics:
1) Question: Did staff consult CWAs from other jurisdictions that have been implemented in the last few years when developing the CWA local worker participation goal of 60%? Is there a regional “best practice” or “standard” for the local participation goal?
CWAs from other jurisdictions were reviewed as part of the CWA evaluation performed between fall 2021 and spring 2022. Local worker participation goals included in CWAs from nearby jurisdictions range from 30% (South San Luis Obispo Community Services District, Goleta, Port Hueneme) to 50% (City of Santa Barbara). There is no regional “best practice,” but the Trades Council typically includes a 30% goal or floor in the initial draft CWA as the starting point for negotiations.
The proposed 60% local worker participation goal is based on historical local worker participation from past City CIP projects and not CWAs from other jurisdictions. As noted in the Council Agenda Report, staff analyzed 14 projects constructed between January 2018 and September 2021, and determined approximately 90% of all labor hours were performed by local workers. The SLO Water Plus CWA established a 30% local worker participation goal and approximately 81% of all labor hours have been performed by local workers through May 2022. The Los Osos Valley Road Overpass Project (LOVR Project) is the second largest CIP project in City history, and it was constructed by a nonlocal contractor without a CWA in place. Approximately 69% of all labor hours on the LOVR Project were performed by local workers.
Staff believes the 60% local worker participation goal is achievable based on past project performance. Ideally, the CWA local worker participation goal should be in excess of what the City has been able to achieve without a CWA in place. 60% is
Item 7c – Staff Agenda Correspondence Page 2
the staff recommendation for local participation goal for the CWA as it is in excess other local CWAs, slightly less than the City’s historical worker participation rate has been, and less that what has been achieved by the City’s SLO Water Plus project to date.
2) Question: Does the CWA contract include any provisions in the event the local work participation threshold isn’t reached?
If the local worker participation goal is not met, the CWA includes provisions for the parties to meet and confer regarding potential changes that could be made to the agreement to help achieve the goal (reference Section 3.5.2 of Attachment A to the Council Agenda Report).
Item 7c
Department: Public Works
Cost Center: 5001
For Agenda of: 7/19/2022
Placement: Business
Estimated Time: 30 minutes
FROM: Matt Horn, Public Works Director
Prepared By: Brian Nelson, Deputy Director of Public Works and City Engineer SUBJECT: DIRECTION ON TERMS OF A COMMUNITY WORKFORCE
AGREEMENT
RECOMMENDATION
1. Based on the substantive differences, on three issues of significance, and the time constraints surrounding the bidding and contracting associated with the Cultural Arts District Parking Structure, acknowledge that a Community Workforce Agreement “CWA” shall not apply to the Cultural Arts District Parking Structure1; and
2. Direct staff to continue to dialogue with the Trades for the Prado Road Interchange and Public Safety Center projects to determine if progress can be made on the open issues.
POLICY CONTEXT
Consistent with the Council’s adopted 2021-23 Major City Goal of Economic Recovery, Resiliency, and Fiscal Sustainability work program, and a Study Session held in September 2021, on April 19, 20222, Council authorized staff to negotiate a Community Work Force Agreement (CWA) with the Tri-Counties Building and Construction Trades Council (the Trades Council). Council specifically directed staff to include the Cultural Arts District Parking Structure, Prado Road Interchange, and Public Safety Center projects, including a 60% local worker participation goal and excluding prevailing wage services provided through professional services agreements. Lastly, Council provided staff with a time frame to complete these negotiations given the bidding and contracting for the Cultural Arts District Parking Structure project.
DISCUSSION
Background
As identified in the Major City Goal Work program for Economic Recovery, a method to support local contractors, local vendors, and local labor in public projects is through community workforce agreements (CWAs). CWAs are collective bargaining agreements
1 If the parties can come to terms with the three outstanding issues prior to the Council Meeting this recommendation would be to enter into a CWA.
2 Community Workforce Agreements: Phase 2 Data Analysis, Outreach, and Draft Policy Development:
https://pub-slocity.escribemeetings.com/filestream.ashx?DocumentId=3424
Item 7c
between a project owner (the City), contractors, and building and construction trade unions. Using the direction received in April, staff reached out to the Tri-Counties Building and Construction Trades Council (Trades Council) with whom the City has an existing CWA for the SLO Water Plus Project (a.k.a. the WRRF – Water Resources Recovery Facility) to negotiate a CWA consistent with the direction provided by Council.
In addition to concurring with the presented April 19th recommendations, Council also provided further direction as follows:
1. The deadline to reach an agreement with Tri-Counties Building and Construction Trades Council is July 19, 2022 for the three legacy projects;
2. Staff should revisit CIP projects that could benefit from a CWA with each 2-year Financial Plan;
3. Staff should continue to track use of local workers in all CIP projects as part of key performance indicators;
4. Staff should revisit the continued use of CWAs after bidding of last legacy project; and
5. Staff should ensure the trades and businesses continue to coordinate with Cal Poly, Cuesta, Hancock and high schools for workforce development.
As indicated in April, staff would initiate negotiations with the Trades Council and if able to reach an agreement, a CWA would be provided to Council for review and approval; and if not able to reach an agreement, staff would return to Council for further direction.
Negotiation Status and Time Constraint Previously Identified As of the writing of this Agenda Report, the City and Trades Council have exchanged documents including best and last offers. There are several items open at this time and agreement has not been reached (those open items are discussed below). The City’s proposed agreement is Attachment A and the Trades Council’s is Attachment B.
As directed by Council, July 19th was the deadline for negotiation completion due to time constraints for the CWA apply to the Cultural Arts Parking District Parking Structure. The RFP for Construction Management and Inspection services for both Phase 1B and Phase 2 of the parking structure project was authorized for advertisement at the June 21, 20223 Council meeting. The RFP was developed based upon Council action at the April 19th meeting which excluded professional services from the terms of the CWA. Staff have delayed release of the RFP due to Issue #1 in the below section. Furthermore, final construction specifications, including specifications for CWA implementation, must be developed by September 2022 to remain on schedule for design phase delivery of Phase
2. 3 Cultural Arts District Parking Structure and Parking Structure Maintenance and Rehabilitation Projects:
https://pub-slocity.escribemeetings.com/filestream.ashx?DocumentId=4739
Item 7c
Negotiation Position Differences and Staff Recommendations The following sections detail the CWA provisions for which the City and Trades Council have been unable to reach agreement.
Issue #1: Inspection, Testing, and Surveying Services Choice The City procures inspection, testing, and surveying services through professional services agreements to support delivery of the City’s CIP. These services are critical quality assurance and quality control (QA/QC) functions that help ensure the City maintains control over project quality, budget, and schedule. The City has built trusted relationships with local consulting firms who provide these services, and these partnerships are critical to the successful delivery of the City’s CIP. Including professional services in the CWA would impact the City’s ability to retain the most qualified firms to perform essential QA/QC functions on the City’s behalf, jeopardizing the City’s ability to ensure projects have been constructed in accordance with the approved plans and specifications. It is important to note that inspection and testing services were expressly excluded from the scope of the SLO Water Plus CWA, which is being used as a template for the current CWA under consideration.
The Trades Council would like to include inspection, testing, and surveying services in the agreement as these are prevailing wage services and the crafts who perform this work are represented by the Operating Engineers Union, a member of the Trades Council.
Excluding certain crafts from coverage by the agreement is not acceptable to the Trades Council’s membership. In the negotiation meeting held on June 23rd, the Trades Council indicated there were local firms who provide these services and who would be willing to sign onto the agreement. As of the writing of this report, this information has not been provided.
Staff Recommendation: Staff continues to recommend choice for inspection, testing, and survey services procured through professional services agreements be exempt from the scope of the CWA. Including these services in the scope of the agreement would limit participation by local consultants (and by extension, local workers), reduce competition, increase project costs, and compromise the City’s ability to make a qualifications-based selection when procuring these services.
Issue #2: Local Worker Participation Goal
Staff proposed a 60% local worker participation goal based on historical local worker participation percentages from past City CIP projects. A review of fourteen CIP projects of varying types and costs completed between January 2018 and September 2021 indicated 90% of all labor hours were performed by local workers. While detailed local worker participation data is not available for projects of the size being considered for inclusion in the CWA (i.e., greater than $40M), staff believes that a 60% local worker participation goal is achievable and consistent with Council’s primary objective of prioritizing employment of local workers.
Item 7c
The Trades Council has proposed a 50% local worker participation goal. The Trades Council has not elaborated on the reason for this.
Staff Recommendation: Staff recommends the 60% local worker participation goal be preserved in the agreement. Local worker participation on City public projects has historically been high, and the goal should be set such that local worker participation with a CWA in place is higher than what it would otherwise be. The 60% local worker participation goal is also consistent with Council’s primary objective of prioritizing employment of local workers. If the goal is not met, the CWA includes provisions for the parties to meet and confer regarding potential changes to the agreement that could be implemented to help achieve the participation goal. Staff believes this collaborative approach should help mitigate the Trades Council’s concerns with the higher local worker participation goal.
Issue 3#: Agreement Term
The draft CWA initially proposed by the Trades Council included a five-year term. The bid advertisement for one of the three projects being considered for inclusion in the CWA – the Public Safety Center Project – may be issued beyond the five-year term. The Trades Council has proposed language that would extend CWA coverage to all listed projects even if the projects are bid and awarded after the five-year term.
Staff Recommendation: Staff recommends the five-year term language be preserved, with no exception for projects listed in the agreement that are bid and awarded after expiration of the term. This would allow the City to evaluate covered project performance, including local worker participation, prior to renewing the agreement or including additional projects in the scope of the agreement. Lessons learned from the first projects delivered using the CWA could be leveraged to modify the agreement and improve outcomes for future covered projects.
Public Engagement
Extensive public engagement and stakeholder outreach was performed in winter 2021/22 and spring 2022 as part of the CWA evaluation that culminated with the April 19th City Council Meeting and Council Agenda Report. Seven of the ten consultants who provide on-call soils and materials testing, construction management, and land surveying services to the Public Works Department were surveyed to determine the potential impacts associated with extending CWA requirements to these services. This stakeholder outreach informed the staff recommendation approved by Council and used as the basis for negotiations with the Trades Council.
CONCURRENCE
The Administration Department, City Attorney, and Community Services Group concur with the recommendations of this report.
Item 7c
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Section 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2021-22
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $105,000 $42,607
Water Fund $26,250 $15,652
Sewer Fund $26,250 $15,652
Parking Fund $17,500 $10,435
Total: $175,000 $130,000
The appropriated budget for FY2021-22 allocated $175,000 in operating budget to hire necessary consultant support for this ongoing effort, with costs proportionally shared between the General Fund and three enterprise funds – Water, Sewer, and Parking. To date, $45,000 has been expended to cover consultant cost. Budget has been reserved for implementation of the CWA based upon Council’s preferred action, including work to develop procedures for implementation of CWAs on covered projects. The costs of implementation in the long term, which include consultant support for CWA contract oversight during project construction, would be applied to the covered Capital Projects and be incorporated into the project construction budget.
ALTERNATIVES
Direct Staff to continue negotiations for application of a CWA to the Cultural Arts District Parking Structure. This alternative is not recommended as the project is nearing design phase completion, which includes finalization of the construction contract documents. The project is currently on schedule and further negotiation presents risk for administrative delays in acquiring construction phase consultant services and finalization of construction contract documents for project advertisement.
ATTACHMENTS
A – City Proposed Community Workforce Agreement
B – Tri-Counties Building and Construction Trades Council Proposed Community Workforce Agreement
COMMUNITY WORKFORCE AGREEMENT
BY AND BETWEEN
THE CITY OF SAN LUIS OBISPO
AND
THE TRI COUNTIES BUILDING & CONSTRUCTION
TRADES COUNCIL, AFL-CIO
AND
THE SIGNATORY CRAFT COUNCILS AND UNIONS
City of San Luis Obispo 2 Community Workforce Agreement TABLE OF CONTENTS Page
ARTICLE 1 INTENT AND PURPOSE 5
ARTICLE 2 SCOPE OF AGREEMENT 6
ARTICLE 3 UNION RECOGNITION AND EMPLOYMENT 10
ARTICLE 4 UNION ACCESS AND STEWARDS 15
ARTICLE 5 WAGES AND BENEFITS 16
ARTICLE 6 WORK STOPPAGES AND LOCKOUTS 18
ARTICLE 7 WORK ASSIGNMENTS AND JURISDICTIONAL DISPUTES 22 ARTICLE 8 MANAGEMENT RIGHTS 22
ARTICLE 9 SETTLEMENT OF GRIEVANCES AND DISPUTES 24
ARTICLE 10 REGULATORY COMPLIANCE 26
ARTICLE 11 SAFETY AND PROTECTION OF PERSON AND PROPERTY 27 ARTICLE 12 TRAVEL AND SUBSISTENCE 28
ARTICLE 13 APPRENTICES 28
ARTICLE 14 PRE-JOB CONFERENCES 29
ARTICLE 15 LABOR/MANAGEMENT COOPERATION 30
ARTICLE 16 SAVINGS AND SEPARABILITY 30
ARTICLE 17 WAIVER 31
ARTICLE 18 AMENDMENTS 31
ARTICLE 19 ENTIRE AGREEMENT 31
ARTICLE 20 DURATION OF THE AGREEMENT 32
ATTACHMENT A – LETTER OF ASSENT 34
ATTACHMENT B – LOCAL RESIDENT ZIP CODES 35
ATTACHMENT C – CRAFT EMPLOYEE REQUEST FORM 36
ATTACHMENT D – DRUG AND ALCOHOL TESTING POLICY 38
ATTACHMENT E—MASTER LABOR AGREEMENTS 46
City of San Luis Obispo 3 Community Workforce Agreement
CITY OF SAN LUIS OBISPO
COMMUNITY WORKFORCE AGREEMENT
This Community Workforce Agreement (hereinafter, “Agreement”) is entered into by and between the City of San Luis Obispo and its successors or assigns, (“City”), the Tri Counties Building & Construction Trades Council, AFL-CIO (the “Council”), and the signatory Craft Councils and Unions signing this Agreement (hereinafter together with the Council, collectively, the “Unions”). This Agreement establishes the labor relations guidelines and procedures for the City and for the Contractors and craft employees represented by the Unions and engaged in Project Work. The City, Council, Unions, and Contractors that become signatory to this Agreement by executing the Letter of Assent are hereinafter referred to herein, as the context may require, as “Party” or “Parties.”
The Parties to this Agreement understand that if this Agreement is acceptable to the City, the policy of the City will be for the Project Work to be contracted exclusively to Contractors who agree to execute and be bound by the terms of this Agreement, directly or through the Letter of Assent (a form of which is attached as “Attachment A”), and to require each of its subcontractors, of whatever tier, to become bound. The City shall include, directly or by incorporation by reference, the requirements of this Agreement in the advertisement of and/or specifications for each and every contract for Project Work to be awarded by the City.
The City shall actively administer and enforce the obligations of this Agreement to ensure that the benefits envisioned from it flow to all signatory Parties, the Contractors and crafts persons working under it, and the residents of the City. The City shall therefore designate a “Community Workforce Coordinator,” either from its own staff or an independent contractor acting on behalf of the City, who will, with the support of the Contractors and Unions, monitor compliance with this Agreement; assist, as the authorized representative of the City, in developing and implementing the programs referenced herein, all of which are critical to fulfilling the intent and purposes of the Parties and this Agreement; and to otherwise implement and administer this Agreement.
The term “Apprentice” as used in this Agreement shall mean those employees registered and participating in Joint Labor/Apprenticeship Programs approved by the Division of Apprenticeship Standards, Department of Industrial Relations of the State of California, and the Federal Department of Labor to the extent required by any Project funding source.
The term “Contractor” as used in this Agreement includes any individual, firm, partnership, or corporation, or combination thereof, including joint ventures, which as an Independent Contractor has entered into a contract with the City with respect to the Project Work, or with another Contractor as a subcontractor of whatever tier utilized by such Contractors for Project Work.
The term “Joint Labor/Apprenticeship Program” or “Approved Apprenticeship Programs,” as used in this Agreement means a joint Union and Contractor administered apprenticeship program certified by the Division of Apprenticeship Standards, Department of Industrial Relations of the State of California, and the Federal Department of Labor to the extent required by any Project funding source.
City of San Luis Obispo 4 Community Workforce Agreement The term “Local Area Resident” as used in this Agreement means a qualified person whose principal residence is located within the territory covered by the zip codes contained in Appendix B to this Agreement in priority order.
The term “Local Area Contractor” as used in this Agreement means a construction contracting entity whose principal place of business is located within the territory of Tier 1 or Tier 2 contained in Appendix B to this Agreement and has so located and continuously operated for a period of at least one (1) year prior to the award of Project Work.
The term “Letter of Assent” as used in this Agreement means the document that each Contractor (of any tier) must sign and submit to the Community Workforce Coordinator and the Council, before beginning any Project Work, which formally binds them to adhere to all applicable forms, requirements and conditions of this Agreement, in the form of the letter attached hereto as Attachment A.
The term “Project” or “Project Work” as used in this Agreement means the City’s construction, abatement, demolition, renovation, rehabilitation, upgrade and improvement work, and new construction as described in Section 2.2 of this Agreement and as contracted out by the City.
The terms “Master Labor Agreements” or “MLAs,” as used in this Agreement, means the local collective bargaining agreements of the signatory Unions having jurisdiction over the Project Work and which have signed this Agreement. A list of the applicable MLAs are attached hereto as Attachment E.
The term “Subscription Agreement” means the contract between a Contractor and a Union’s Labor/Management Trust Fund(s) that allows the Contractor to make the appropriate fringe benefit contributions in accordance with the terms of MLA.
The Union and all Contractors agree to abide by the terms and conditions of this Agreement and agree that this Agreement represents the complete understanding of the Parties.
No Contractor is or will be required to sign or otherwise become a party to any other collective bargaining agreement with a signatory Union as a condition of performing work within the scope of this Agreement.
The Parties agree that this Agreement will be made available to, and will fully apply to, any successful bidder for Project Work, without regard to whether that successful bidder performs work at other sites on either a union or non-union basis. This Agreement shall not apply to any work of any Contractor other than that on Project Work specifically covered by this Agreement.
The use of masculine or feminine gender or titles in this Agreement should be construed as including both genders and not as gender limitations unless the Agreement clearly requires a different construction. Further, the use of Article titles and/or Section headings are for information only and carry no legal significance.
City of San Luis Obispo 5 Community Workforce Agreement ARTICLE 1
INTENT AND PURPOSE
Section 1.1 Identification and Retention of Skilled Labor and Employment of Local Area Residents: The construction and capital improvement work scheduled to be performed by the City will require large numbers of craft personnel and other supporting workers. The parties understand and intend to use the opportunities provided by the extensive amount of work to be covered by this Agreement to identify and promote, through cooperative efforts, programs and procedures (which may include, for example, programs to prepare persons for entrance into formal apprenticeship programs, or outreach programs to the community describing opportunities available as a result of the Project), the interest and involvement of Local Area Residents in the construction industry; assist them in entering the construction trades, and through utilization of the approved apprenticeship programs, provide training opportunities for those Local Area Residents and other individuals wishing to pursue a career in construction.
Further, with assistance of the Community Workforce Coordinator, the City, the Contractors, the Unions and their affiliated regional and national organizations, will work jointly to develop and implement procedures promptly for the identification of craft needs, the scheduling of work to facilitate the utilization of available craft workers, and to secure the services of craft workers in sufficient numbers to meet the high demands of the Project Work to be undertaken.
Section 1.2 Encouragement of Local Area Contractors: The Project will provide many opportunities for local contractors and suppliers to participate, and the parties therefore agree that they will cooperate with all efforts of the City, the Community Workforce Coordinator, and other organizations retained by the City for the purpose of encouraging and assisting the participation of such businesses in Project Work. The parties shall ensure that the provisions of this Agreement do not inadvertently establish impediments to the participation of Local Area Contractors and Local Area Residents.
Section 1.3 Project Cooperation: The Parties recognize that the construction to take place under this Agreement involves unique and special circumstances which dictate the need for the Parties to develop specific procedures to promote high quality, rapid and uninterrupted construction methods, and practices. The smooth operation and cost effective, successful and timely completion of the work is vitally important to the City. The Parties therefore agree that maximum cooperation among all parties involved is required; and that with construction work of this magnitude, with multiple contractors and crafts performing work on multiple sites over an extended period of time, all Parties agree to work in a spirit of harmony and cooperation, and with an overriding commitment to maintain the continuity and timely completion of Project Work.
Section 1.4 Workers' Compensation Carve-out: Further, the Parties recognize the potential which the Project may provide for the implementation of a cost-effective workers' compensation system as permitted by California Labor Code, Section 3201.5, as revised. Should the City request, the Union parties agree to meet and negotiate in good faith with representatives of the City for the development, and subsequent implementation, of an effective program involving improved and revised dispute resolution and medical care procedures for the delivery of workers’ compensation benefits and medical coverage as permitted by the Code.