1 SolaratCityFacilities
February28,2023
HelenM.Cox,PhD.
SustainabilityDivisionManager
#2
Timing
Aug2022:FederalInflationReductionAct– 30%InvestmentTaxCreditrestored, DirectPayoptionfortaxͲexemptentities
Dec2022:CPUCapprovedutilities’applicationForNEM3.0 April15,2023:DeadlineforNEM2.0eligibility
2 3
,WHP$
2/28/2023
2 GovernmentCode4217.10Ͳ18allowsdesign/buildforenergy projects
RequestForProposals/Qualifications(RFP/Q)Process(Best overallvalue)
RFPReleased:December16,2022
ProcurementProcess
4ProposalsReceived:
January23,2023
NewburyPark
Library
LosRobles
Greens
Transportation
Center
TeenCenter
GrantR.Brimhall
Library
AdultCenter
Sites
4 5
2/28/2023
3 546kWGRANTR.BRIMHALLLIBRARY
GOEBELADULTCENTER
131kW
6 7
2/28/2023
4 83kWTEENCENTER
58kW
TRANSPORTATIONCENTER
8 9
2/28/2023
5 388kW
LOSROBLESGREENS
150kWNEWBURYPARKLIBRARY
10 11
2/28/2023
6 Site Annual
Usage(kWh)
Size
(kWDC)
Estimated
Production
(%ofAnnual
Usage)
TotalCost
Cost
AfterITC
Estimated
Paybackafter
ITC(years)
GrantBrimhall Library 945,951 546.4 100.5% $1,937,439 $1,356,207 8.3 GoebelAdultCenter 231,035 131.1 101.0% $453,441 $317,409 7.1 TeenCenter 149,530 82.9 95.8% $378,982 $265,287 6.4
TransportationCenter 96,423 58.0 100.2% $1,952,789 $1,366,952 12.8 LosRoblesGolfCourse 625,511 388.0 99.8% $276,480 $193,536 11.6 NewburyParkLibrary 280,909 150.0 93.0% $456,853 $319,797 6.3 Total 2,329,359 1,356.4 99.1% $5,455,984 $3,819,189
CostͲBenefitAnalysis
Site Total
Cost $5,455,984
110Ͳ7310Ͳ673.83Ͳ00(MainLibrary) $1,937,439
110Ͳ7410Ͳ673.83Ͳ00(NewburyParkLibrary) $453,441
651Ͳ5310Ͳ682.83Ͳ00(TransportationFund) $378,982
001Ͳ3560Ͳ612Ͳ8300(LosRoblesGolfCourse) $1,952,789
001Ͳ3573Ͳ677Ͳ8300(TeenCenter) $276,480
001Ͳ3574Ͳ677Ͳ8300(GoebelAdultCenter) $456,853
Availablefundingof$2,948,000inadopted2021Ͳ23CIPBudget Requestadditionalbudgetof$2,507,983+10%projectcontingency=$3,053,582.
Anticipated$1,636,795reimbursementfromITCDirectPaybringscostsdownto$3,819,189. (Possibleadditionalreimbursementof$545,598underITCaddͲonincentive.) Funding
12 13
2/28/2023
7 Schedule
Interconnection Agreement filing with SCE March 15,2023 30 percent Design Completion April 2023
Materials procurement April 2023
100 percent Design Completion August 2023
Permits Obtained December 2023
Mobilization to Start Construction December 2023
Complete Construction May – September2024
Permission to Operate July –O c t2024
Project Completion December 2024
Operations and Maintenance January – December2025
NewburyPark
Library
LosRobles
Greens
Transportation
Center
TeenCenter
GrantR.Brimhall
Library
AdultCenter
Questions?
HelenCox
[email protected]
SustainabilityDivisionManager
KenWang
[email protected]
SeniorEnergyAnalyst
14 15
Homeless
Navigation Center
Update
February 28, 2023
1 2
Item 16.A
City Council Priority 2021-22
Received $26.7 M grant through Project
Homekey to convert the Quality Inn & Suites into
77 units of permanent supportive housing.
Council unanimously authorized the use of
City owned property (1205 Lawrence Drive) for
future use as a Navigation Center.
Identify and advance solutions for emergency sheltering and permanent supportive housing.
1 .
Hh brrers to
ndependent lvn
2 3
4 Proposed Future Navigation Center Site
Street View
3 Interim Housing & Housing Navigation Process
7 5
6 Client Selection Process
• Priority for Thousand Oaks
based residents
• Referrals from TO
based nonprofits, County
agencies, and law enforcement
• Operator receives
referrals, conducts
screening/intake, client signs
contract.
4 Selected Proposer Team
Developer
Locally-based consultant
& leaseholder
Operator
Thous nd Os
N v ton Center
4 7
8 Qualifications & Experience
Developer
• Nonprofit organization
• Highly skilled staff with over 150 years of
combined experience.
• Expertise in construction development,
finance, fundraising, and technology.
• Demonstrated sophistication and innovation.
• Portfolio comprised of three interim housing
communities, including Downtown Santa
Barbara project.
Downtown Sn t Brbr 5
Qualifications & Experience
Operator
• Faith-based nonprofit organization
• Extensive experience operating tiny home
villages with navigation center and other
wrap-around services in the region.
• Demonstrated appreciation for local
sensitivities.
• Deep understanding of funding sources and
associated requirements.
• Documented successes
Sn Fernn d o Vlle Busness Journl, Novem ber 2022
6 IH0
9 10
Qualifications & Experience
Locally-based leaseholder & consultant
• Affordable housing nonprofit organization
serving Thousand Oaks since 1979.
• Leading developer and operator of permanent
supportive housing in City and County.
• 18 affordable housing communities serving
about 1,400 residents.
• Unparalleled knowledge of local development
process, existing relationships with local wrap-
around service providers and community
partners.
Hllcrest Vlls , Thous nd Os
7 IH0
Drft
St e Pln
12 11
12 Estimated Costs and Funding Sources
8 Cptl $ 3 8 M
Annu l Opertn $09M
Potent l Fundn Sources
• Councl Approved nd Bud eted C ommunt Renvestme nt Dollrs • St te Enc m pm ent Resoluton Grnt
• St te Permn e n t Loc l Housn Alloc ton
• Count Com pettve nd Non-Com pettve Grnts
• Count Cost Sh rn Areem ent
Key Elements of Exclusive Negotiation
Agreement
•Creates a good-faith negotiation period of 270 days, plus possible extensions
•City may only negotiate with this proposer during the term of the ENA
•Negotiation will include terms of a long-term lease,
operational or service agreements, construction, design, and other obligations
•Due Diligence to work on agreement, visit site and prepare necessary plans to meet proposed project tasks
•ENA does not create any rights to acquire or convey property •ENA is not an approval of a project
•CEQA will be analyzed as part of the project review
9 13
14 Community Outreach + Engagement
• www.toaks.org/homelessness
• Podcast with The Acorn Newspapers
• Community Webinar
• Rancho Conejo HOA Meeting
• T argeted Engagement with
Surrounding Businesses and Property
Owners
• Council on Aging
• Y outh Commission (12/07/2022)
14 Recommendations
Approve the Exclusive Negotiation Agreement between the City of Thousand Oaks and Many Mansions (Thousand Oaks, CA), Hope the Mission, dba Hope of the Valley Rescue Mission (Mission Hills, CA), and DignityMoves (San Francisco, CA) (collectively, "Proposer") for the development of a Navigation Center on the City-owned parcel at 1205 Lawrence Drive.
Approve the Right of Entry Agreement between the City of Thousand Oaks and Proposer for the development of a Navigation Center at 1205 Lawrence Drive.
Authorize the City to be identified as a co-applicant on the County of Ventura's grant application to the State of California for the Encampment Resolution Grant. 10 15
16 Recommendations
Authorize the City Manager to initiate the preparation of a lease agreement, operation and service agreements and other ancillary documents ("Definitive Agreement") necessary to properly develop, construct, secure, operate, and maintain the Navigation Center.
Authorize the City Manager to execute the County of Ventura Agreement to Provide Financial Support for Permanent, Y ear-Round Shelter Serving Homeless Individuals and Families and sign additional limited modifications to the Agreement.
Find that this action is not a project as defined under the California Environmental Quality Act (CEQA).
11 17
Hillcrest Site Exclusive
Negotiating Agreement
JJaimee Boscarino,, Financee Director
Noell Doran,, Assistantt Cityy Attorney
Februaryy 28,, 2023
Item 16.B
CCityy Goalss andd Priorities
• GOAL J - Implement high quality revitalization projects within Thousand Oaks Boulevard and Newbury Road Areas; Develop a pedestrian-oriented, viable, and self-sustaining Downtown;” and, continue to support production of long-term affordable housing. • PRIORITY 4 FY 2021-22 - Invest in post-pandemic community recovery through various strategic onetime/non-recurring investments. • PRIORITY 4 FY 2022-23 - Affordable Housing – Select Hillcrest School site development partner and negotiate contractual agreement / consider changes to inclusionary housing and in-lieu ordinance / explore other potential affordable housing sites.
Hillcrest Site
• 3.87 Acres
• Purchased for $10.0 Million
• Zoned R3 Multi-Family Residential for
residential development (max 30
DU/Acre)
• Existing ~26,500 sq. ft. structure will
be demolished
Key Milestones
•AAug 31, 2021 - City Council approved
Purchase and Sale Agreement for $10M
•Nov 10, 2021 - Escrow closed, City took
possession of property
•May 24, 2022 - City Council adopts
resolution declaring Hillcrest site as
exempt surplus land pursuant to the
Surplus Lands Act
RFP/Q
• Preference for development of for sale units
and all electric.
• Economic viability and financial strength of
the proposed development, including
marketability and feasibility.
• Expertise and experience of the
development entity and team in designing
and constructing high quality affordable
housing developments.
• Vision and design for a market-feasible
affordable housing development that
implements the City’s vision for the
community and promotes the community
character of Thousand Oaks.
Key Milestones
• AAug 31, 2021 - City Council approved Purchase
and Sale Agreement
• Nov 10, 2021 - Escrow closed, City took
possession of property
• May 24, 2022 - City Council adopts resolution
declaring Hillcrest site as exempt surplus land
pursuant to the Surplus Lands Act
•
June 24, 2022 - Hillcrest Affordable Housing
RFP/RFQ issued
• Nov 1, 2022 - City Council selected PSHHC to
develop for sale affordable housing at the site and
authorized City Manager to begin preparation of
ENA
• 78 affordable for-sale
townhome-style unit
• Mix of low income and
moderate income
• Fulfills requirements of
Surplus Lands Act –
income restrictions, and
45-year affordability
covenants
• Proposal is market-
feasible with sound
financial assumptions
EExclusive
Negotiating
Agreement
Purpose is to establish procedures and standards for
negotiation of a disposition and development agreement and facilitate the due diligence necessary to develop the project ENA is between the City and People’s Self-Help Housing
Corporation (PSHHC)
The ENA establishes a negotiating term of 180 calendar days, with the option for both parties to agree to three (3) 90 calendar day extensions, for a potential negotiating period of 450 calendar days
Requires PSHHC to provide the City with a detailed financial analysis for the Project within 90 days after the effective date of the ENA
EExclusive
Negotiating
Agreement
Provides that any and all costs associated with the development of the Project are the sole responsibility of People’s Self-Help Contemplates the negotiation of a Scope of Development for the future DDA that sets forth the details of the Project, including, but not limited to, the number and size of the housing units (with a minimum of 78 units), square footage of ancillary facilities, number of parking spaces, and design
Contemplates that the City and PSHHC will seek to agree upon terms and conditions for the disposition of the Hillcrest Site Requires at PSHHC’s sole expense, to comply with the requirements of the California Environmental Quality Act (CEQA) in connection with development of the Project in the absence of a qualifying exemption.
Right of Entry
Agreement
• Provides PSHHC a non-exclusive right of entry to
the Hillcrest Site in order to conduct due
diligence of the property, including physical tests,
to determine the condition of the property with
regards to the development of the Hillcrest Site
• Requires PSHHC, and any contractors
performing work at the Hillcrest Site, to be
adequately insured and indemnify the City from
any losses associated with entry onto the
Hillcrest site
Recommendations
1. Approve the Exclusive Negotiating Agreement between the City of Thousand Oaks and People’s Self-Help Housing Corporation, San Luis Obispo, CA, for the development of the City-owned parcel at 382 and 384 N. Erbes as a for sale affordable housing project.
2. Approve the Right of Entry Agreement between the City of Thousand Oaks and People’s Self-Help Housing Corporation, San Luis Obispo, CA, for the development of the City-owned parcel at 382 and 384 N. Erbes as a for sale affordable housing project.
3. Authorize City Manager to initiate preparation of a Disposition and Development Agreement between the City of Thousand Oaks and People’s Self-Help Housing Corporation.
4. Find that this action is not a project as defined under the California Environmental Quality Act.
Inclusionary Housing Program and
Nonresidential Development
Linkage Fee Update Policy
City Council
February 28, 2023
,7(0&
Request
Discuss the Inclusionary Housing Financial Evaluation and Nonresidential Development Linkage Fee Nexus Study results.
Provide direction on completing updates to the Inclusionary Housing Program and Nonresidential Development Linkage Fee ordinances.
Inclusionary Housing Program and
Linkage Fee Update Goals
• Adopted Housing Element Program
Objective to update the Inclusionary
Housing Program and Linkage Fees
• Updating the program assists the city in
meeting the Regional Housing Needs
Assessment (RHNA) numbers for affordable
housing, which for the 6th Cycle Housing
Element (2021-2029) are:
• 735 Very Low-Income
• 494 Low-income
• 532 Moderate Income
Inclusionary Housing Program and
Linkage Fee Goals
• Avoid burden on developers by providing
feasible options to contribute towards the
production of affordable housing.
• Balance of providing affordable housing and
economic development within community
Inclusionary Housing:
Financial Evaluation & Preliminary Recommendations
City of Thousand Oaks
Presented by: Keyser Marston Associates, Inc.
February 28, 2023
Inclusionary Housing Program Context
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 6
Foundational Concepts
• Over 170 jurisdictions in California include an Inclusionary Housing program as one component of their affordable
housing strategy. However, Inclusionary Housing can only be expected to fulfill a small part of the unmet need.
• RHNA targets are a good starting point for establishing the income and affordability requirements to be imposed.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 7
93 California
Jurisdictions
• Most Inclusionary Housing programs include a threshold project size:
• Common thresholds range from 3 to 10 units.
• The average and median threshold project sizes are 7 units and 5 units, respectively.
• Income and affordability requirements vary widely. Majority of the surveyed programs impose a 10% to 20% requirement:
• The thresholds tend to reflect the depth of the affordability standards being required.
• The requirements have a disproportionate impact on smaller projects, due to fewer market rate units available to spread the impacts. Sliding scale requirements are sometime used.
• The covenant periods are often set at 45 years for ownership projects and 55 years for apartment projects. Shorter and longer periods are applied in some jurisdictions.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 8
Southern
California
Jurisdictions
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 9
32 cities and counties are included in the survey.
Threshold project sizes of up to 50 units. 15 of the programs are set at 5 or fewer units.
Inclusionary Housing requirements range from 4% to 30%. 28 out of the 30 jurisdictions have requirements that range between 10% and 20%.
Ownership projects are focused on
moderate income.
Apartment projects are focused on
very low and low income.
Ownership – 45 to 55 year covenant periods.
Apartments – 55 year covenant period.
The programs all include an in-lieu fee option. Programs measure several different ways – per market rate unit, per affordable unit, per square foot.
Inclusionary
Housing
Program
Considerations
The legal standards are:
ම The requirements cannot be confiscatory; and
ම The requirements cannot deprive an owner of a fair and reasonable return on their investment.
The strength of the real estate market needs to
be considered in formulating goals & objectives.
The requirement should balance the interest of
property owners and developers against the
public benefit created by the production of
affordable housing units.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 10
Income and
Affordability
Considerations
• Inclusionary Housing programs tend to set the affordability level for ownership units at the moderate income level. This reflects the fact that higher income households are likely to have more discretionary income to devote to housing costs than lower income households.
• AB 1505, and subsequent HCD guidance, strongly recommend limiting the affordability level on apartment units to 80% of AMI:
• Stricter affordability requirements should not be applied to projects that fulfill the Inclusionary Housing requirements on site within the market rate project.
• Stricter standards can be applied to an off-site production option.
• Developers who use the State density bonus will likely propose to fulfill the affordability requirements with very low income units.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 11
Financial Evaluation
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 12
Financial Evaluation Organization
Step 1: Identify the “Residential Prototyp es” based on recently proposed projects and the results of KMA’s market surveys.
Step 2: Conduct a pro forma analysis for each Residential Prototype – first assuming a 100% market rate project.
Step 3: Based on the results of Step 2, affordable housing units are incrementally added into the pro forma to measure the impacts of an Inclusionary Housing requirement.
Step 4: Limit the Inclusionary Housing standards to avoid requirements that are confiscatory or that deprive an owner or a developer of a fair and reasonable return on investment.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 13
Apartment Development:
Financial Evaluation
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 14
Development Characteristics:
Base Zoning Alternatives
Mall Property
Neighborhood
Medium High Mixed Use
Density – Units Per Acre 30 20 30
Average Unit Size – Square Feet 892 1,073 1,042
Total Development Costs Per Unit $485,000 $578,000 $459,000 Weighted Average Rent Per Unit $3,109 $3,617 $3,566
Stabilized Return on Total Investment 5.0% 5.0% 5.2%
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 15
Rent Estimates
Weighted
Average
Market Rent
Low Income
Rent
Very Low
Income Rent
One-Bedroom Units $3,033 $1,794 $1,102
Two-Bedroom Units $3,810 $2,005 $1,226
Three-Bedroom Units $4,190 $2,219 $1,354
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 16
Pro Forma Analysis Results:
Base Zoning Alternatives
Mall Property
Neighborhood
Medium High Mixed Use
Low Income
Supportable Inclusionary Percentage 11% 8% 9%
Property Acquisition Cost Reduction Needed to Offset the Impact Created by the Affordability Requirements 27% 17% 29% Market Rent Increase Required to Offset Impact 4.9% 4.3% 5.0% Very Low Income
Supportable Inclusionary Percentage 8% 5% 6%
Property Acquisition Cost Reduction Needed to Offset the Impact Created by the Affordability Requirements
29% 16% 28%
Market Rent Increase Required to Offset Impact 5.3% 4.0% 4.7% February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 17
§65915 Density Bonus
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 18
State density bonus can potentially mitigate the impacts of affordable housing requirements by allowing an increased number of units plus one to three incentives or concessions such as height and floor area ratio increases.
Projects that use the State density bonus cannot pay a fee in lieu of producing affordable housing units.
KMA is analyzing prototype density bonus apartment projects at and below the maximum bonus provided by §65915.
Pro Forma Analysis Results:
§65915 Density Bonus Alternatives
Mall Property
Neighborhood
Medium High Mixed Use
Density Bonus Percentage 50% 50% 30%
Required Very Low Income Percentage 15% 15% 9%
Supportable Additional Low Income Requirement N/A N/A 7% February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 19
Conclusions:
Apartment
Development:
Financial
Evaluation
The analyses of the Base Zoning Alternatives found
that the following requirements can be supported:
ම Low Income: 8% - 11%
ම Very Low Income: 5% - 8%
Based on all the factors considered in the evaluation, KMA concluded that a 10% low income requirement
can be supported within the guidelines provided by
the courts and the legislature.
Developers may choose to use the §65915 density
bonus to mitigate the impacts created by the
Inclusionary Housing requirements. It is likely that the developer will choose to fulfill the density bonus and
Inclusionary requirements with very low income units.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 20
Ownership Housing:
Financial Evaluation
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 21
Development Characteristics
Townhomes
Detached Single
Family Homes
Density – Units Per Acre 20 6
Average Unit Size – Square Feet 1,875 3,148
Total Development Costs Per Unit $680,000 $1,429,000
Weighted Average Sales Price Per Unit $784,000 $1,529,000 Developer Profit as Percentage of Cost 9.0% 5.2%
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 22
Sales Price Estimates
Townhomes
Detached Single
Family Homes
Weighted Average Market Price $784,000 $1,529,000
Moderate Income Price
Three-Bedroom Units $502,100 $494,000
Four-Bedroom Units $531,100 $527,900
Five-Bedroom Units $561,900
Low Income Price
Three-Bedroom Units $228,300 $220,200
Four-Bedroom Units $235,600 $232,300
Five-Bedroom Units $244,500
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 23
Pro Forma Analysis Results
Townhomes
Detached Single
Family Homes
Moderate Income
Supportable Inclusionary Percentage 10% 5%
Property Acquisition Cost Reduction Needed to Offset
the Impact Created by the Affordability Requirements 19% 10% Market Price Increase Required to Offset Impact 3.6% 2.3% Low Income
Supportable Inclusionary Percentage 5% 3.5%
Property Acquisition Cost Reduction Needed to Offset
the Impact Created by the Affordability Requirements 18% 8% Market Price Increase Required to Offset Impact 3.2% 1.9% February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 24
Conclusions:
Ownership
Housing:
Financial
Evaluation
The analyses of the Ownership Housing Development
Alternatives found that the following requirements
can be supported:
ම Moderate Income: 5% - 10%
ම Low Income: 3.5% - 5%
Given the size of the Affordability Gaps, KMA believes that a moderate income requirement will maximize
the number of affordable units while minimizing the
Affordability Gaps.
Based on all the factors considered in the evaluation, KMA concluded that the following requirements can
be supported within the guidelines provided by the
courts and the legislature:
ම Townhomes: 10% Moderate Income
ම Detached Single Family Homes: 5% Moderate Income
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 25
Fulfillment Alternatives
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 26
In-Lieu Fee Payment Considerations
• Will in-lieu fees be allowed by right, or only under defined circumstances? Considerations are:
• Program goals
• Ownership versus apartment projects
• Project size thresholds
• Community’s views on density
• City responsibility to implement the affordable housing development. • Establishing the in-lieu fee payment amounts:
• Affordability gap methodology
• A discounted amount to encourage payment of the in-lieu fee • A schedule that provides reduced in-lieu fees for small projects.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 27
Apartment Development:
In-Lieu Fee Analysis
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 28
Affordability Gap Calculation Methodology
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 29
Differences between Market Rents and Affordable Rents are calculated.
Property tax differential is estimated.
The difference represents the annual Affordability Gap.
The net Affordability Gap is set at the annual Affordability Gap capitalized at the threshold return from the 100% market rate project analysis.
The net Affordability Gap is translated into the supportable Inclusionary requirement.
Apartment
In-Lieu Fee
Calculation:
Mixed Use
Project Example
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 30
BASE ZONING ALTERNATIVE: MIXED-USE PROTOTYPE
IN-LIEU FEE CALCULATIONS (10% LOW INCOME STANDARD)
Total Units 300
Inclusionary Housing Percentage 10%
Inclusionary Units 30
Weighted Avg Unit Size (Sf) 1,042
Affordability Gap Per Inclusionary Unit $274,000
Total In-Lieu Fee $8,220,000 30 Inclusionary Units @ $274,000 Per Inclusionary Unit In-Lieu Fee Per Total Unit in the Project
Total In-Lieu Fee $8,220,000
Total Units ÷ 300 Weighted Average Unit Size = 1,042 Square Feet In-Lieu Fee Per Total Unit in the Project $27,400 $27,400 ÷ 1,042 Sf = $26.30 Per Sf of Leasable Area Per Unit In-Lieu Fee Per Sf of Total Leasable Area
Total In-Lieu Fee $8,220,000
Total Leasable Area (Sf) ÷ 312,600 Weighted Average Unit Size = 1,042 Square Feet In-Lieu Fee Per Sf of Total Leasable Area $26.30 $26.30 Per Sf X 1,042 Sf = $27,400 Per Total Unit in the Project Ownership Housing:
In-Lieu Fee Analysis
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 31
Ownership
Housing In-Lieu
Fee Calculation:
Detached Single
Family Home
Project Example
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 32
DETACHED SINGLE FAMILY HOME PROTOTYPE
IN-LIEU FEE CALCULATIONS (5% MODERATE INCOME STANDARD)
Total Units 60
Inclusionary Housing Percentage 5%
Inclusionary Units 3
Weighted Avg Unit Size (Sf) 3,150
Affordability Gap Per Inclusionary Unit $1,057,200
Total In-Lieu Fee $3,171,600 3 Inclusionary Units @ $1,057,200 Per Inclusionary Unit In-Lieu Fee Per Total Unit in the Project
Total In-Lieu Fee $3,171,600
Total Units ÷ 60 Weighted Average Unit Size = 3,150 Square Feet In-Lieu Fee Per Total Unit in the Project $52,860 $52,860 ÷ 3,150 Sf = $16.80 Per Sf of Saleable Area Per Unit In-Lieu Fee Per Sf of Total Saleable Area
Total In-Lieu Fee $3,171,600
Total Saleable Area (Sf) ÷ 188,850 Weighted Average Unit Size = 3,150 Square Feet In-Lieu Fee Per Sf of Total Saleable Area $16.80 $16.80 Per Sf X 3,150 Sf. = $52,920 Per Total Unit in the Project Other Fulfillment Options for Consideration
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 33
Parcelization to create
an affordable housing
site:
ͻ Opportunity to
develop an
apartment project at
deeper affordability.
ͻ Provides the
affordable units in
the same location as
the market rate
project.
Off-site production of
affordable units:
ͻ Tenure decision –
apartment units as a
requirement?
ͻ Unit comparability
ͻ Proximity to the
market rate project?
Land dedication:
ͻ Appropriate site for
fulfilling the
affordable housing
obligations.
ͻ City responsibility for
developer selection.
ͻ Proximity to the
market rate project?
Acquisition &
rehabilitation of
existing rental units:
ͻ Difficulty in obtaining
RHNA credits for the
affordable units.
ͻ Displacement of
existing tenants.
Preliminary Policy Recommendations
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 34
General Policy Recommendations
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 35
Threshold Project Size The Inclusionary Housing requirements are recommended to be imposed on projects with 10 or
more units. This represents the first point a whole
Inclusionary Unit would be supported.
Covenant Periods
Apartment Development The recommendation is for a covenant that runs for as long as the property is developed with a residential use, but for not less than a 55-year period.
Ownership Housing Development The recommended covenant is for one cumulative 45- year period.
Recommended
Inclusionary Housing Production Requirements
Apartment Development 10% Low Income
Ownership Housing Development
Townhomes 10% Moderate Income
Detached Single Family Homes 5% Moderate Income
The recommended requirements are based on the following factors:
The courts have not provided guidance for defining the meaning of confiscatory or a reasonable return on a property owner’s investment.
Using a conservative approach, KMA created benchmark impacts against which potential Inclusionary Housing requirements would be measured.
The recommended Inclusionary Housing requirements are based on the results of the pro forma analyses KMA undertook as part of this Financial Evaluation.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 36
Recommended In-Lieu Fee Payments
KMA recommends that in-lieu fees be based on the total square feet of leasable or saleable area of the market rate project. This more equitably assesses the fees based on unit sizes.
Apartment Development $25.70 per square foot of leasable area Ownership Housing Development:
Townhomes $14.60 per square foot of saleable area
Detached Single Family Homes $16.80 per square foot of saleable area In-Lieu Fees should be allowed to be paid in the following cases:
Any fractional Inclusionary Unit that is required to be produced.
Apartment projects with 20 or fewer units and apartment projects with 20 or more units in cases where the obligation can be demonstrated to create an extreme financial hardship.
Premium priced ownership housing developments of any size.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 37
Off-Site Production of Inclusionary Units
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 38
Apartment Development KMA does not recommend that an off-site production option be offered for apartment developments. It is our opinion is that it is better from a public policy perspective to integrate market rate and affordable units into the same project.
Ownership Housing Development KMA recommends that developers of ownership housing developments be given the following options:
The off-site production of affordable apartment units; or The creation of a parcel within an ownership housing development site on which affordable apartments are constructed concurrently with the market rate ownership housing development project.
Other Fulfillment Options
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 39
Land Dedication The City Council should have the discretion , but not the requirement, to approve a developer’s proposal to
dedicate property in lieu of producing Inclusionary Units.
If a land dedication option is provided, it should be
subject to a detailed list of requirements that maximize the potential for an affordable housing project to be
developed in a timely fashion.
Acquisition and Rehabilitation of
Existing Apartment Units
Acquisition and rehabilitation projects must be identified in a jurisdictions Housing Element in order to receive
RHNA credit. No projects were identified in the City’s Housing Element. Since it will not be possible to obtain RHNA credit, KMA does not recommend
that an
acquisition and rehabilitation option be offered.
Next Steps
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 40
The Financial Evaluation is meant to provide the City with the context under which to update the Inclusionary Housing program in ways that are not confiscatory and that do not deprive property owners of a fair and reasonable return on their investment.
Following this meeting, the City Council will be asked to provide input on the preliminary recommendations that are being offered.
After receiving input from the City Council, KMA will prepare a report that provides recommendations for specific requirements to be imposed if the City chooses to amend the existing Inclusionary Housing Ordinance.
If the City Council chooses to go forward, a draft amendment to the Inclusionary Housing Ordinance will be prepared by the City Attorney’s office for City Council consideration.
Questions?
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 41
Nonresidential Development Linkage Fee
Nexus Study and Feasibility Analysis
City of Thousand Oaks
Presented by: Keyser Marston Associates, Inc.
February 28, 2023
Nonresidential Development Linkage Fee
• A Nonresidential Development Linkage Fee is an impact fee that is imposed on new nonresidential development to mitigate the need for affordable housing created by the new development.
• Per the Mitigation Fee Act, impact fees imposed on new development MUST be supported by a nexus study.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 43
Nonresidential Linkage Fee Basics
Impact Fee - Charge imposed by a local
government on a new development project
that is used to reduce the impacts created
by the new development.February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 44 New Nonresidential Development
Fees Paid
City Affordable
Housing Trust
Fund
New Affordable Housing
What is an Affordable Housing Nexus
Study?
• An affordable housing nexus study is used to quantify the need for affordable housing generated by new development (i.e. new office buildings or industrial projects).
• The nexus study produces a maximum legally supportable impact fee that can be charged to new development.
• Impact fees are usually assessed on a per square foot of building area basis.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 45
Nonresidential Development Linkage Fee
Nexus Methodology
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 46
New Non-
Residential
Development
New jobs and new
workers
Some of these
jobs are low
paying
Need for
affordable housing
is created
Nonresidential Nexus Study Research
• The Nonresidential Nexus Study is based on current real estate dynamics.
KMA also refers to this as the KMA Jobs-Housing Nexus Model. • The nonresidential land uses that were analyzed in Thousand Oaks are:
• Retail/Commercial
• Office
• Industrial
• Research and Development
• Hotel / Lodging
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 47
Nexus Study Results:
Maximum Legally Supportable Nonresidential Development Linkage Fees The result of the nexus study are the maximum legally supportable linkage (impact) fees:
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 48
Retail /
Commercial Office Industrial Research and
Development
Hotel /
Lodging
Maximum Nonresidential
Development Linkage Fees
Per Square Foot
$158 $162 $60 $65 $63
Financial Feasibility Analysis
• KMA prepared pro forma analyses for the following prototypical development projects:
• A retail/commercial project
• An office project
• An industrial project
• A research and development project
• A hotel / lodging project
• KMA utilized two feasibility testing methodologies based on parameters that have been used in the creation of many Nonresidential Development Linkage Fee Programs in California.
• The goal is to avoid placing an onerous burden on nonresidential developers.
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 49
Nonresidential Development Linkage Fee
as a % of Total Development Costs
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 50
Retail /
Commercial Office Industrial
Research and
Development Hotel /
Lodging
1% of Development Costs $4.83 $4.27 $1.43 $1.32 $4.48
2% of Development Costs $9.65 $8.54 $2.85 $2.65 $8.95
3% of Development Costs $14.48 $12.82 $4.28 $3.97 $13.43 4% of Development Costs $19.30 $17.09 $5.71 $5.29 $17.90 5% of Development Costs $24.13 $21.36 $7.13 $6.61 $22.38 Financial Return Results
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 51
Retail /
Commercial Office Industrial Research and
Development
Hotel /
Lodging
Threshold Feasible Return 8.00% 9.00% 6.50% 8.00% 9.00% No Nonresidential Fee 6.75% 5.08% 7.79% 6.99% 5.55%
Fee @ $1.00/SF 6.74% 5.07% 7.73% 6.94% 5.53%
Fee @ $3.00/SF 6.70% 5.04% 7.62% 6.82% 5.50%
Fee @ $5.00/SF 6.67% 5.02% 7.50% 6.71% 5.47%
Nonresidential Development Linkage Fees in
Southern California Jurisdictions
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 52
Culver
City
Los
Angeles Glendale Goleta Rancho
Cucamonga San Diego Santa Monica West
Hollywood
Nonresidential
Development
Linkage Fees
Per
Square Foot
of GBA
$5 $3.11 - $5.19 $4 Retail - $2.07 Retail - $1.00 Retail - $1.28 Retail - $11.42 $9.39 Office - $8.28 Office - $1.00 Office - $2.12 Office - $13.34 Industrial - $5.12 Industrial - $6.00 R&D - $0.80 Creative Office - $11.42 Hotel - $8.28 Warehouse - $6.00 Hotel - $1.28 Medical Office - $8.21 R&D - $6.00 Industrial - $8.97
Hotel/Lodging - $3.65
Hospital - $7.32
Institutional - $12.18
Maximum Recommended
Nonresidential Development Linkage Fees
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Retail /
Commercial Office Industrial Research and
Development
Hotel /
Lodging
Maximum Nonresidential
Development Linkage Fees
Per Square Foot
$158 $162 $60 $65 $63
KMA Recommended
Nonresidential
Development Linkage Fee
Per Square Foot
$0 - $5 $0 - $5 $0 - $5 $0 - $5 $0 - $5
Staff Recommnended
Nonresidential
Development Linkage Fee
Per Square Foot
0 0 $0- $5 0 0
Questions?
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 54
February 28, 2023 KEYSER MARSTON ASSOCIATES, INC. 55
October 3, 2017 KEYSER MARSTON ASSOCIATES, INC. 56
Inclusionary Program Applicability
10 units or more Apartment and Ownership projects
Apartment Housing Development
10% of projects units in Low-income category
Option in-lieu fee of $25.70 per square foot of leasable area Allow in-lieu fee payment for projects with 20 or fewer units Allow discretionary in-lieu fee based on extreme hardship for apartments more than 20 units
Affordability covenants for 55 years or more, as long as property was residential use Ownership Housing Development
Townhomes -10% of projects units Moderate-income category Single Family Detached - 5% of projects units Moderate -income category Townhomes- in-lieu fee option of $14.60 per SF
Single Family Detached- in-lieu fee option of $16.80 per SF Preliminary Recommendations
October 3, 2017 KEYSER MARSTON ASSOCIATES, INC. 57
Off-site Production of Inclusionary Units
Apartments - No off-site production
Ownership projects - On-site parcel for development affordable apartments concurrently Ownership projects - Off-site production of affordable apartments option Other Fulfillment Options
Land Dedication only at the discretion of City Council
, but subject to detailed requirements
ensuring timely construction of affordable housing
Rehabilitation and Acquisition not recommended due to no available RHNA credit Nonresidential Development Linkage Fee
Industrial $0-$5 per square foot
Preliminary Recommendations