P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
City of South San Francisco
Legislation Details (With Text)
File #: 22-110 Name:
Type: Study Session Status: Agenda Ready - Administrative Business File created: 2/8/2022 In control: Special City Council On agenda: 2/16/2022 Final action:
Title: City Council study session to consider a potential ballot measure authorizing the City of South San Francisco to develop, construct, or acquire affordable, low-rent housing units pursuant to Article XXXIV of the California Constitution and to provide direction to staff. (Sky Woodruff, City Attorney and Nell Selander, Director, Economic & Community Development Department) Sponsors:
Indexes:
Code sections:
Attachments: 1. eComments - Item 3.pdf
Date Ver. Action By Action Result
City Council study session to consider a potential ballot measure authorizing the City of South San Francisco to develop, construct, or acquire affordable, low-rent housing units pursuant to Article XXXIV of the California Constitution and to provide direction to staff. (Sky Woodruff, City Attorney and Nell Selander, Director, Economic & Community Development Department)
RECOMMENDATION
It is recommended that the City Council receive the following report regarding a potential ballot measure authorizing the City of South San Francisco to develop, construct, or acquire affordable, lowrent housing units pursuant to Article XXXIV of the California Constitution and provide direction to staff.
BACKGROUND
Historical Context and Scope
Article XXXIV of the California Constitution (“Article 34”) was approved in 1950 as Proposition 10, and was implemented by statute in 1976 under Health & Safety Code section 37000 et seq. It requires that a city’s voters grant prior approval before any federal, state, or local public entity can develop, construct, or acquire certain types of low rent housing projects in that city.
Under the statute, “low rent housing project” means any urban or rural dwellings, apartments, or other living accommodations for low income residents, financed in whole or in part by a federal, state, or local government. “Low income” is defined as households earning 80% or less of area median income. In San Mateo County that is a single individual earning less than $102,450 a year, or a household of four earning less than $146,350. “Financed in whole or in part by a federal, state, or local government” includes supplying labor, guaranteeing payment of liens, or other forms of financing. A public entity may not develop, construct, or acquire low rent housing projects until the voters have authorized the public entity to do so.
While the scope of Article 34 is broad, statutory exemptions exist that exclude certain types of projects from City of South San Francisco Page 1 of 5 Printed on 3/15/2022 powered by Legistar™
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Article 34’s voter approval requirements, and that specify that certain public entity actions are not considered as developing, constructing, or acquiring a low rent housing project.
Projects Exempt from Article 34
In 1976, the Legislature enacted the Public Housing Election Implementation Law (the “Public Housing Law”), California Health & Safety Code §§ 37000 et seq., to clarify ambiguities relating to the scope of the applicability of Article 34. The statute exempts eight (8) types of development from the voter approval requirement. These exemptions were most recently amended on July 19, 2021 in response to the COVID-19 pandemic, and include:
1) Privately owned housing that is (1) subject to property tax or exempt from property tax under a limited set of exemptions, and (2) not required by a public entity to reserve more than 49% of units for lowincome households. 2) Privately owned housing not exempt from property taxes by reason of any public ownership, and not financed with direct long-term financing from a public entity; 3) Units intended for owner-occupancy, which may include a limited equity housing cooperative, cooperative or condominiums;
4) Privately owned, newly constructed one-to-four family dwellings not located on adjoining sites; 5) Existing dwelling units leased by the public entity from a private owner; 6) Rehabilitation, reconstruction, improvement or addition to, or replacement of an existing low-rent housing project or a project previously or currently occupied by lower income households; 7) Acquisition, rehabilitation, reconstruction or improvement of a rental housing development which was subject to a federal or state public entity contract for assistance to provide affordable housing for lowincome households and maintains, or enters into, a contract for federal or state public entity assistance for the same purpose; and
8) Acquisition, rehabilitation, reconstruction, alterations work or new construction of lodging facilities or dwelling units using any of the following sources of funds:
a. the Coronavirus Aid, Relief, and Economic Security (“CARES Act”) b. the American Rescue Plan Act of 2021 (“ARPA”)
c. Funds appropriated pursuant to various provisions of the Health and Safety Code relating to affordable housing preservation, loans and grants to qualified rental housing developments, and multifamily housing programs.
Public Entity Actions Exempt from Article 34
The California Supreme Court has held that if a public entity is sufficiently involved in a privately owned project (i.e. provides funds conditioned upon review and approval of plans, financing, operation and maintenance and occupancy), this project may be treated as a “co-development” and Article 34 likely will be triggered under that concept. (California Housing Finance Agency v. Elliot, 17 Cal.3rd 575 (1976).) However, the public entity is still able to take certain actions with respect to housing projects that would not be considered as the public entity developing, constructing, or acquiring the project. The Public Housing Law exempts the following activities from the meaning of “develop, construct or acquire” by a public entity:
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1. Providing financing, secured by a deed of trust or other security instrument to a private owner of existing housing; or acquiring a development, for which financing previously has been provided, as a temporary measure to protect its security and with an intention to change the ownership so that it will not continue to be the owner of a low-rent housing project;
2. Acquiring or making improvements to land which is anticipated to be sold, ground leased, or otherwise transferred to a private owner prior to its development as a low-rent housing project, provided (1) the land and improvements thereon are not subject to an exemption from property taxation by reason of public ownership for more than five years following acquisition or improvement by the state public body, or (2) such an exemption from property taxation persists beyond the five-year period and no alternative use is designated for the land or improvements, but any property tax revenues lost by affected taxing agencies on account of the exemption of land or improvements from property taxes by reason of public ownership of the property, or any interest in the property after the five-year period, are fully reimbursed by payments in lieu of taxes following the expiration of the five-year period;
3. Leasing existing dwelling units from the private owner of such units, provided the lease or a subtenancy thereunder does not result in a decrease of property tax revenues with respect to the dwelling units leased;
4. Providing assistance to the private owner or occupant of existing housing which enables an occupant to live in decent, safe, and sanitary housing at a rent he or she can afford to pay;
5. Providing assistance to a low-rent housing project and monitoring construction or rehabilitation of that project and compliance with conditions of that assistance to the extent of:
a. Carrying out routine governmental functions.
b. Performing conventional activities of a lender.
c. Imposing constitutionally mandated or statutorily authorized conditions accepted by a grantee of assistance.
6. Providing assistance to a development prior to its becoming a low-rent housing project without intending or expecting that the development will become a low-rent housing project, as defined.
7. Providing financing for a low-rent housing project pursuant to Chapter 6.7 (commencing with Section 51325) of Part 3 of Division 31.
8. Providing financing for a low-rent housing project pursuant to Article 3.2 (commencing with Section 987.001) and Article 5y (commencing with Section 998.540) of Chapter 6 of Division 4 of the Military and Veterans Code.
Article 34 Voter Approval Process
The City Council may submit a ballot measure for voters to approve the City developing, constructing or acquiring low rent housing. The California Supreme Court has held that a local entity does not have to seek approval for a specific development or project, but may instead seek approval from its voters to develop, construct, or acquire a certain amount of low income housing units. (Davis v. City of Berkeley, 51 Cal.3d 227 (1990).)
Additionally, the California Supreme Court held in Davis that “article XXXIV does not prescribe a single form of ballot measure.” Therefore, an Article 34 ballot measure may be submitted for voter approval without a City of South San Francisco Page 3 of 5 Printed on 3/15/2022 powered by Legistar™
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petition under Election Code Section 9222 and may be approved by a majority vote of voters pursuant to Election Code section 9217.
DISCUSSION
Text of Proposed Ballot Question
Based on feedback from the City Council at previous study sessions, staff has developed an approach to a potential Article 34 measure and prepared a draft ballot measure question which, if approved by the voters, would authorize the City to develop, construct, or acquire low-rent housing for a period of thirty (30) years.
Instead of providing authorization for a set number of units which could be developed each year, the draft ballot measure would authorize the City to develop, construct, or acquire an amount of units equal to 1% of the total number of units existing in the City from year to year over the course of a thirty (30) year period. The measure would include an ordinance addressing the details of the approach. The ballot question is limited by state law to 75 words. The draft ballot measure question reads as follows:
Without increasing local taxes, shall the City of South San Francisco be authorized to develop, construct, and/or acquire affordable, decent, and safe rental housing for low-income persons, including families, seniors, people with disabilities, and veterans, in an amount up to 1% of the total number of existing housing units in the City of South San Francisco annually for a thirty (30) year period, with any year’s unused units being carried over each year?
If approved by the voters, the draft ballot measure would only provide authorization for the City to develop, construct, or acquire the designated number of units - the authorization is purely permissive. If approved by the voters, the City would be under no obligation to take any action pursuant to the granted authorization.
Potential Volume of Authorized Units
The approach that staff is suggesting for the potential ballot measure would authorize the City to develop, construct, or acquire up to 1% of the total number of existing housing units in the City annually for a thirty (30) year period. The total number of existing housing units in the City would be the number of existing housing units per year as determined by annual data from the State of California Department of Finance (“Department of Finance”).
The Department of Finance currently lists the total number of housing units in the City as 22,495. Using this number as a starting point, Table 1 below provides an example of the number of units that the City would be authorized to develop, construct, or acquire over a five year period if the ballot measure as written were to be submitted to and approved by the voters. The figures in Table 1 assume that each year’s allotment of units is used and that the prior years’ number of units is capitalized into the total number of housing units which exist in the City for the purposes of calculating 1% of existing housing units in the City.
Table 1
2022 2023 2024 2025 2026
Est. Total
Units
Authorized
Per Year
225 227 229 232 234
*Numbers have been rounded to their next whole unit.
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Est. Total
Units
Authorized
Per Year
225 227 229 232 234
*Numbers have been rounded to their next whole unit.
As previously mentioned, there is no requirement that each year’s allotment be used - in that case, the units authorized in the previous year would roll over to the next year. For example, if 225 units are authorized in 2022 but no units are developed, constructed, or acquired, then the number of units in 2023 that could be developed, constructed, or acquired would be 450 units.
General Plan
The first goal set out in the Housing Plan of the City’s Housing Element is to promote the provision of housing by both the private and public sectors for all income groups in the community. This goal includes promoting the development of housing for extremely low-, very low-, and lower-income households. Submission of an Article 34 ballot measure question to the voters has the potential to contribute to this goal and would be consistent with the City’s General Plan, including its Housing Element.
FISCAL IMPACT
This report is submitted for discussion purposes only and does not impact the City financially.
Ballot Measure Costs
San Mateo County Elections Office has provided a high/low estimate of the costs of placing the proposed measure on the ballot for the June 2022 Statewide Election. These estimates appear in Table 2 below.
Table 2
Total Cost Low $/Register Voters LowTotal Cost High $/Registered Voters High
$172,200 $4.53 $206,600 $5.44
Based on these estimates, if the City Council decides to submit an Article 34 ballot measure to the people for consideration at the upcoming June 2022 election, the City Council will need to approve a budget amendment to the City Clerk’s Fiscal Year 2022-23 Operating Budget.
CONCLUSION
It is recommended that the City Council receive the foregoing report regarding a potential ballot measure authorizing the City of South San Francisco to develop, construct, or acquire affordable, low-rent housing units pursuant to Article XXXIV of the California Constitution and provide direction to staff.
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