HomeMy WebLinkAbout01 - Item 1 - Introduction to the 2021 Housing Element - 10/8/2019
CITY COUNCIL STUDY SESSION
AGENDA REPORT
MEETING DATE: OCTOBER 8, 2019 ITEM NUMBER: 1
SUBJECT: INTRODUCTION TO THE 2021 HOUSING ELEMENT UPDATE PROCESS
DATE: OCTOBER 3, 2019
FROM: PLANNING DIVISION/DEVELOPMENT SERVICES DEPARTMENT
PRESENTATION BY: BARRY CURTIS, DIRECTOR OF ECONOMIC AND DEVELOPMENT
SERVICES
MINOO ASHABI, PRINCIPAL PLANNER
FOR FURTHER INFORMATION CONTACT: MINOO ASHABI, AIA (714) 754-5610
Minoo.ashabi@costamesaca.gov
PURPOSE:
This study session is intended to update the City Council on the status of requirements
related to the 6th Housing Element Cycle and to provide initial information related to
potential strategies to prepare the required Housing Element update.
BACKGROUND:
Costa Mesa will shortly begin the state-required process to update its Housing Element.
The Housing Element is one of the required General Plan Elements and is the only
element that has a process for state certification. Costa Mesa’s Housing Element is
required by state law to be updated with the 6th RHNA Projection period starting June 30,
2021. The Housing Element includes the current status of housing production, projected
housing needs in terms of income and special needs populations, and potential locations
and policies to meet the local share of the region’s housing needs.
This report provides a brief background on existing conditions, an overview of the
required Housing Element update process including the development of the Regional
Housing Needs Assessment (RHNA), discussion of important state legislation related to
housing, and tools available to the City as it develops its Housing Element.
Existing Setting
According to the 2016 General Plan, the City contains a total area of 3,788.4 acres
dedicated to residential uses (47 percent of the City’s total area of 8,042.4 acres). As of
2010, Costa Mesa’s housing stock consisted of 58 percent renter-occupied units and 42
percent owner-occupied units. This ratio is consistent with most northern and central
Orange County cities, but higher than many south county cities. The residential land use
distribution is divided into three categories: low, medium and high density as follows per
the 2016 General Plan.
Land Use Designations Residential
Density
Acres
Developed
Acres
Undeveloped Percent
Residential
Low-Density Residential <8 du/ac 2,087.4 0.8 25.9%
Medium-Density Residential <12 du/ac 858.1 1.1 10.7%
High-Density Residential <20 du/ac 842.9 2.9 10.5%
5th Cycle Housing Element (Adopted) and 2013-2021 RHNA
The current Housing Element was adopted in September 2013 in what was considered
to be the 5th Housing Element Cycle for the SCAG region. The City’s RHNA allocation
for the 5th Housing Element Cycle consisted of one low, one very low, zero moderate
and zero above moderate income units. The RHNA for this Housing Element Cycle was
unusually low due to ongoing effects of the recession and higher than normal vacancy
rates.
In addition to providing an analysis of the population and job growth and identifying
areas of housing needs (e.g. special populations, elderly and the four income groups),
the Housing Element is required to identify specific locations where housing
opportunities are available. With the 5th Housing Element Cycle the City identified the
following potential sites for housing development:
Sakioka Lot 2 – up to 660 units up to 80 du/acre
Argotech – 9.1-acre site was allowed up to 20/du/acre. A project with 177 market
rate units has been developed on this site.
Urban Plan Areas – the Housing Element refers to 103 acres that could be
developed with up to 20 du/acre.
Annual Housing Progress Report
Per State Government Code Section 65400, by April of each year cities are required to
submit an annual housing progress report to HCD. The following is an excerpt of the
2018 annual housing report (included in the General Plan Annual Update) that was
transmitted to HCD. The table shows the total number of units built in 2018 and the
City’s progress toward meeting its RHNA (1,277 housing units have been built in the
City). However, those units have not been in the lower income categories. It is expected
that with construction of an apartment project at the former location of Costa Mesa
Motor Inn that includes nine very-low income units, the City will surpass its RHNA. With
the 5th Housing Element Cycle many cities including Costa Mesa were allocated an
extremely low number of units. In comparison, the City’s 4th Housing Element Cycle
allocation was 1,682 units inclusive of 353 very low-income units.
Income Level
RHNA
Allocation
by Income
Level
2013 2014 2015 2016 2017 2018
Total Units
to Date (all
years)
Total
Remaining
RHNA by
Income
Level
Very Low
Deed
Restricted 1
1 Non-Deed
Restricted
Low
Deed
Restricted 1
2 Non-Deed
Restricted 2
Moderate
Deed
Restricted
Non-Deed
Restricted
Above
Moderate 22 50 93 115 260 735 1275
Total RHNA 2 ** Note: Units in this table reflect units that have been finaled in the reporting
year to be consistent with previous reporting years.
Total Units 22 50 93 115 260 737 1277 1
ISSUES:
6th Housing Element Cycle and Regional Housing Needs Assessment (RHNA)
RHNA Process Overview
The 6th Housing Element Cycle will cover the planning period between October
2021 and October 2029. The RHNA is a state-mandated prerequisite to
development of the Housing Element. The RHNA quantifies the housing need for
each jurisdiction during each specified Housing Element Cycle.
Costa Mesa is located in the region overseen by the Southern California
Association of Governments (SCAG), which is the nation's largest metropolitan
planning organization (MPO), representing six counties, 191 cities and more than
19 million residents.
For each eight-year Housing Element planning period, a regional determination
for housing needs is provided by the State Department of Housing and
Community Development (HCD) for the entire SCAG region. SCAG is
responsible for allocating the regional RHNA to all of its member jurisdictions on
a fair-share basis. To develop a methodology to allocate the regional RHNA,
SCAG must survey all jurisdictions regarding local planning factors (also known
as “AB 2158 factors”). These factors include planning factors and constraints for
each jurisdiction such as the jobs-to-housing relationship, infrastructure
limitations outside a jurisdiction’s control, county policies to preserve agricultural
or open space, and high housing costs. New for the upcoming 6th Housing
Element Cycle, SCAG must also survey jurisdictions regarding information on
barriers to providing fair housing. Per Assembly 1771 (Bloom), a fifth objective
has been added to RHNA objectives. SCAG is required to survey information
referred to as “Assessment of Fair Housing” to be completed by any city or
county that would address fair housing and social justice as part of housing
elements or as required by HUD grants.
Once SCAG completes its fair-share RHNA allocations, each jurisdiction is then
required to update its General Plan Housing Element and to demonstrate
through sites and zoning analysis how it will accommodate the future housing
need and how it can meet its local RHNA allocation. Housing Elements are
reviewed by HCD, which determines and certifies whether a city’s Housing
Element is in compliance with state housing law.
The timeline for the 6th Cycle Housing Element process is as follows:
Feb. 2019 – September 2019 Local surveys
Draft RHNA methodology
HCD release of preliminary RHNA
numbers allows for a 30-day appeal by
COGs
Oct. 2019 – Dec. 2019 HCD review of proposed RHNA methodology
Final methodology adopted
Feb. 2020 – July 2020 Distribution of Draft RHNA
July 2020 RHNA appeal hearings
August 2020 Final draft RHNA allocation
October 2020 Adoption of final RHNA Allocation
October 2021 (estimated) Housing Elements due to HCD
Source: SCAG
http://www.scag.ca.gov/programs/Pages/Housing.aspx
Status of RHNA Process
On August 3, 2019, SCAG released for public review three draft methodologies
to distribute the regional RHNA on a fair-share basis to all member jurisdictions.
On September 12, 2019, City staff provided SCAG with an eight-page comment
letter in response to the draft methodologies (Attachment 1).
On August 22, 2019, HCD provided SCAG with the regional RHNA of 1,344,740
total units for the six-county SCAG region. This number reflects the number of
housing units the region must plan for in the 6th Housing Element Cycle covering
the period between October 2021 and October 2029.
This number is very high relative to previous RHNAs and will present a major
challenge to many cities in the SCAG region. On September 18, 2019, SCAG
submitted an appeal of the regional RHNA figure to HCD requesting a reduction
of the regional RHNA. The letter is available at this link:
http://www.scag.ca.gov/programs/Documents/RHNA/SCAG-Objection-Letter-RHNA-Regional-
Determination.pdf
Specifically, HCD’s RHNA for the SCAG region is broken down into four income
categories as follows:
Income Category Percent Housing Unit Need
Very-Low 26.1% 350,998
Low 15.3% 206,338
Moderate 16.7% 225,152
Above-Moderate 41.8% 562,252
Total 100.0% 1,344,740
After release of the regional numbers, SCAG recommended three options based
on different methodologies including accessibility to jobs and high volume transit.
Costa Mesa could have been allocated one of the following numbers that range
from 2,803 to 9,302.
Option 1 - 5,881 units (VL 2,097, L 1,613, M 1,728)
Option 2 – 9,302 units (VL 2,196, L 1,410, M 1,649)
Option 3 – 2,803 units (VL 662, L 425, M 497)*
On September 23, 2019, SCAG staff released a fourth “staff-recommended”
methodology that will be brought forward to the SCAG RHNA subcommittee on
October 7. According to the tool released by SCAG on October 3, the staff-
recommended methodology will allocate a total of 4,323 units to Costa Mesa
consisting of 1082 very low, 660 low, 769 moderate and 1,811 above moderate
income units.
Staff believes it is important that Costa Mesa receive the lowest mandated
allocation possible in order to both maintain local control and to avoid state
penalties against cities that do not meet their numbers. The City can voluntarily
exceed the RHNA, but the state continues to consider/pass strict measures to
address the state’s housing shortfall, some of which could potentially penalize
the City for failing to meet its RHNA by reducing funding in other areas (such as
transportation), or costly litigation against the City.
The following are upcoming important dates in the RHNA process. Staff is
monitoring and attending all of these meetings.
RHNA Subcommittee Meeting (Recommend Preferred Methodology)
Monday, October 7, 2019
10:00 a.m. – 12:00 p.m.
Community, Economic and Human Development (CEHD) Committee
Special Meeting (Recommend Preferred Methodology)
Monday, October 21, 2019
10:00 a.m. - 12:00 p.m.
Regional Council Regular Meeting (Approve Methodology)
Thursday, November 7, 2019
12:15 p.m. - 2:00 p.m.
Housing Element: Issues and Challenges
6th Housing Element Cycle
The City’s final RHNA allocation is still unknown, but the City must begin to
prepare for the likely need to address a significantly higher figure than in
previous cycles. Since the process to update the Housing Element has an
aggressive schedule, staff believes the City Council should begin to consider a
hierarchy of issues to address potential RHNA scenarios such as up-zoning and
rezoning, an update to the Accessory Dwelling Unit (ADU) ordinance and
whether to consider new tools to incentivize affordable housing such as an
inclusionary housing ordinance, among other options.
The 6th Housing Element Cycle covers the housing element planning period of
October 2021 through October 2029. Major milestones for jurisdictions include
the development of the RHNA methodology, distribution of the draft RHNA
allocation, a RHNA allocation appeals process, and the adoption of the final
RHNA allocation in the third quarter of 2020. The 6th Housing Element Cycle is
due to HCD in October 2021. The following is a link to RHNA fact sheet:
http://www.scag.ca.gov/Documents/RHNA-2017factsheet.pdf
Housing Element Update Process
The Housing Element process will take an average of 8-12 months to complete.
The City will need to budget for and retain a consultant that will prepare the
Housing Element update as well as the required CEQA document. The process
also requires public outreach and workshops that should be included in the
schedule. If the final RHNA numbers remain high as expected, a General Plan
Amendment and a Code Amendment to up-zone and/or rezone properties, along
with additional public outreach, may be needed.
Adopting a Housing Element requires a General Plan Amendment and is subject
to at least one public hearing each by the Planning Commission and the City
Council. The adopted General Plan update is required to be submitted to HCD
for certification; the City’s adopted Housing Element is due to HCD by October
2021. Following the adoption, the City will need to follow up with Zoning Code
and other policy amendments related to implementation of programs and policies
outlined in the Housing Element.
Potential Need to Add Additional Residential Land and/or Density
Given the anticipated higher RHNA allocation and to meet the requirements of
state Housing Element law at it relates to the need to identify adequate sites to
house the low and very low income component of the RHNA (which requires
vacant sites be zoned at a minimum density of 30 dwelling units per acre to so
satisfy the siting requirements for low and very low income housing), the City
may need to identify areas to rezone at a minimum density of 30 dwelling units
per acre. Staff will need to complete further analysis, but there may be adequate
sites within the City to meet the moderate and above moderate components of
the RHNA; however, additional rezoning may be required should there be
insufficient opportunities to address the allocation for all income categories. In
addition to new residential development, per recent state legislation, accessory
dwelling units (ADUs) can be counted toward the RHNA on a 1-to-1 basis,
including the affordable components where the City can show such units are
rented within applicable affordability limits.
With new housing legislation (SB 167, AB 678, AB 1515, AB 879 and AB 72
passed in 2017 and 2018), cities are under more pressure to follow state
requirements in terms of Housing Element updates and annual reporting of
progress toward meeting local RHNA allocations due to the linkage of
performance under state housing law and certain state funds and potential
penalties for non-compliance. To update the Housing Element and meet its
RHNA obligations, the City will first need to identify sites where housing could be
developed at a minimum density of 30 dwelling units per acre. Furthermore, the
City will need to adopt policies and programs to ensure that these sites are
available to developers and are encouraged to be developed. The following
discusses the process that the City will need to follow to complete the 6th
Housing Element Cycle.
Options to Consider
In developing the required Housing Element, the City Council will likely need to
consider several options to address the RHNA, such as, establishing streamlined
authorization for up-zoning or rezoning certain areas, and/or creating overlays to
allow and incentivize housing development. Other options, such as provisions for
ADUs and density bonuses, which are currently in effect, may also need to be
refined as tools to meet RHNA requirements.
It should be noted that the City is obligated to provide zoning and incentive
opportunities for housing development, but is not itself required to produce
housing - actual construction is left to the marketplace. To stay compliant the
City must annualy submit the housing production progress to HCD.
Challenges
Measure Y: Measure Y may present challenges in developing a Housing
Element that can be certified by the State, although the state-required Housing
Element update is exempt from Measure Y.
Measure Y could be an impediment to developers because of the time and
uncertainty involved with ballot approval. If approved by the City Council, the
proposed One Metro West project with 1,057 units will be subject to Measure Y.
The project is a large development and the applicant has committed additional
funding to meet this requirement. However, for smaller projects, this opportunity
may not be available, thereby making it difficult for the City to complete a
certifiable Housing Element and suffer resultant penalties.
Potential Strategies to Provide Adequate Housing Sites
Should it be necessary to meet the RHNA, there are a number of strategies available to
the City to add housing opportunities. These include, among others, such items as the
continued use of the Urban Plan and Residential Incentive Overlays along with potential
revisions to these plans, as well as other potential opportunity sites such as One Metro
West and Sakioka Lot 2, many of which are already zoned at sufficient densities to
satisfy low and very low income siting requirements. Similar to the proposed One Metro
West project, the City could also consider allowing additional residential uses north of
the I-405 and within the Airport Industrial Center.
Fairview Developmental Center: The site is currently permitted for up to 582 residential
units with a mix of 250 of single family (6 dwelling units per acre on a minimum of 50
acres) and 332 multiple family units (40 dwelling units per acre). Without changing the
amount of land allocated to residential uses, additional units could be accommodated at
this site through converting some of the single family acreage to 30-40 dwelling units
per acre. Other options could also be considered to create additional dwelling units at
this site.
ADUs: If pending legislation (described later in this report) is enacted, the City will need
to update its ADU ordinance to require no minimum lot size and exempt parking for
conversions and ADUs within one-half mile of a transit stop, which could have the
potential to add significant number of ADUs throughout the City. HCD has recently
allowed counting ADU units toward meeting RHNA, if the City can demonstrate through
lease agreements that the units are rented at affordable rates.
Density Bonus: The City’s density bonus requirements are consistent with the state law
that allows an increase in the maximum density, if a developer meets certain minimum
criteria by providing affordable housing.
Potential Affordable Housing Policies
Inclusionary Housing Ordinance: In order to development programs to achieve the
lower income RHNA, the City Council may wish to begin exploring an inclusionary
housing ordinance. Such a program could require new residential development to
provide a certain percentage of affordable units or, as an alternative, to pay an in-lieu
fee that the City could use to develop affordable units, likely in conjunction with an
affordable housing developer.
Other Neighboring Cities’ Approaches to Affordable Housing
City of Santa Ana: The City of Santa Ana requires a minimum of 15 percent of the total
number of units in a for-sale project to be sold or rented to low-income households. If a
new residential project consists of rental units, then a minimum of 15 percent of the
units shall be rented to low-income Households, or 10-percent rented to very low-
income households.
City of Irvine: The City of Irvine requires that new residential projects provide a
minimum of 15 percent affordable units (5 percent very low, 5 percent low, and 5
percent moderate income). Developers also have the option to meet the inclusionary
housing requirement through the payment of an in-lieu fee. The in-lieu fee is intended
to allow the City to leverage the funds with an affordable housing developer to develop
the equivalent of the 15 percent inclusionary requirement.
Additionally, the City of Irvine has formed a land trust to address affordability. The Irvine
Community Land Trust (ICLT) teams up with experienced organizations on each
community it develops. These partners provide a number of services ranging from
property development and financing to resident services. The City of Irvine supports the
ICLT by providing funding for and land for affordable housing development. By 2023, it
will have transferred a total of 17 acres.
City of Newport Beach: The City of Newport Beach requires that all new residential
development projects include the following percentages of the total number of dwelling
units within the residential development:
9 percent very low-income households
15 percent low-income households
The affordability requirement only applies to newly-created residential units. In the
event that the residential development project includes the demolition or conversion of
existing residential units, the affordability requirement only applies to the additional units
created.
City of Huntington Beach: The City of Huntington Beach requires a minimum of 10
percent of all new residential construction be affordable housing units with any
fractional amount allowed to be paid with an equivalent in-lieu fee.
Funding Options for Affordable Housing Development
The City could use federal, state and local funding for affordable housing development.
With an inclusionary housing requirement and collection of in-lieu fees, the City can set
aside funding for affordable housing development. Other potential funding sources
include: the newly-created Orange County Housing Finance Trust, CDBG and Home
Funds and SB 2 Funds. Staff will continue to explore other potential sources.
Pending State Housing Legislation
Senate Bill 13 (pending) would modify the current ADU requirements as follows:
Allows ADUs as a conversion of attached garages, storage areas, or similar
uses. Replacement parking could not be required if a garage, carport, or
covered parking structure is demolished in conjunction with the construction or
conversion of an ADU.
A maximum size less than 850 square feet for an ADU with one or less
bedrooms or up to 1,000 square feet for one bedroom.
Delays the requirement for owner occupancy of the site for five years.
Reduces the application approval timeframe to 60 days.
Provides for a tiered schedule of impact fees based on the size of the ADU as
follows: a) Zero fees for an ADU of less than 750 square feet; and b)
Proportional to the size of the primary dwelling unit for an ADU of 750 square
feet or more.
Requires HCD to review and submit findings to the local agency as to whether it
complies with ADU law. If HCD finds it does not, the local agency shall consider
HCD's findings and may either change the ordinance to comply or make findings
as to why the ordinance complies despite HCD's findings.
Requires a local agency to delay enforcement for five years of a violation of any
building standard, if correction is not necessary to protect health and safety, for
all ADUs built before January 1, 2020 and those built thereafter in jurisdictions
that, at the time the ADU was built, were not in compliance with the state's ADU
statutes.
No parking requirements for ADUs within half mile of a public transit and defines
public transit as including bus stops with fixed routes.
Allows counting ADUs to be included as identifying adequate sites for affordable
housing.
Other enrolled (but not yet approved) legislation also may revise ADU laws. For
example:
AB 68 – additionally prohibits cities from establishing lot coverage and lot size
requirements that would prohibit the installation of at least 800 square foot ADUs
with rear and side-yard setbacks of four feet.
AB 69 – Requires the Department of Housing and Community Development
(HCD) to submit standards for ADUs and Junior ADUs.
AB 670 – Requires common interest developments (e.g., homeowners
associations) to allow certain ADUs despite their covenants, conditions and
regulations (“CC&R’s”).
AB 671 – Requires cities to incentivize the development of ADUs in the housing
element
AB 881 – ADU bill similar to SB 68 and SB 13.
There are a number of additional housing bills that have been enrolled, but not yet
approved:
SB 5 – Creates state operated housing fund to allocate $200-$250 million
annually for affordable housing, transit-oriented development, high density infill,
local community engagement efforts, and certain construction work to protect
against the impacts of climate change
AB 330 – Streamlines approval of emergency shelters.
AB 1483 – Revises housing reporting requirements.
AB 1763 – Expands the density bonus law to add incentives and concessions for
projects that are 100% affordable. Expands incentives/concessions for
additional types of affordable projects. For example, sometimes prohibits a city
from imposing any parking requirements on certain low-income rental or special
needs housing developments.
ALTERNATIVES:
No alternatives were considered for this study session.
FISCAL REVIEW:
There are no costs associated with this study session. Future actions necessary to
develop and adopt the required Housing Element will results in direct costs to the City
(consultant to prepare the Housing Element) and the potential for other costs, such as
costs related to additional services necessary to serve additional housing. These
issues will be considered and addressed in conjunction with future actions.
LEGAL REVIEW:
This report has been reviewed and approved as to form by the City Attorney’s Office.
COUNCIL GOALS AND PRIORITIES:
The study session addresses City Council Goals 4(c) and 4(d) as they relate to
anticipating and planning for the new RHNA and the required Housing Element update
in a manner that will take into consideration protection of traditional suburban
neighborhoods.
CONCLUSION/ SUMMARY:
The City is required to complete an update to its Housing Element by October 2021.
The required update must include programs and sites to meet the RHNA requirements.
Staff is providing this information in advance of the final RHNA allocation to provide the
City Council with an early opportunity to begin to consider options to address the
forthcoming RHNA and to provide staff with direction to study and return to the Council
with additional information in advance of preparation of the required Housing Element
update.
___________________ _________________________________
MINOO ASHABI, AIA BARRY CURTIS, AICP
Principal Planner Director of Economic and Development
Services
__________________________
KIMBERLY HALL BARLOW
City Attorney
Attachment: 1- City’s Comment Letter to SCAG