HomeMy WebLinkAboutStaff Report 8945City of Palo Alto (ID # 8945)
City Council Staff Report
Report Type: Action Items Meeting Date: 2/12/2018
City of Palo Alto Page 1
Summary Title: Housing Workplan
Title: Review and Accept a Proposed Housing Work Plan for 2018-2019 and
Refer Specific Elements to the Planning & Transportation Commission for
Preparation of Related Zoning Ordinance(s) (Continued from February 5,
2018)
From: City Manager
Lead Department: Planning and Community Environment
Recommendation
Staff recommends that the City Council:
1.Debrief their February 3rd retreat discussion on the draft work plan for 2018-2019 in
Attachment A and accept its recommendations to:
A. Complete ongoing projects and initiatives designed to stimulate the
production of affordable and workforce housing;
B. Develop and adopt one or more zoning amendment ordinances with
provisions designed to encourage production of a diversity of housing types
in appropriate locations;
C. Prepare the economic analyses necessary to prepare and consider
ordinances increasing inclusionary requirements from 15% to 20% for new
development, applying inclusionary requirements to new rental housing, and
requiring payment of in-lieu fees or off-site replacement if existing units are
removed from the housing stock resulting in a net loss of units;
D. Use the City’s affordable housing funds to stimulate the rehabilitation and
development of new affordable housing; and
E. Partner with other agencies and organizations to meet the needs of
underserved members of our community and to engage in community
conversations about the use of publicly-owned land for affordable housing.
10A
City of Palo Alto Page 2
2. refer work plan items 2.1 through 2.6 to the Planning and Transportation
Commission (PTC) for input on the preparation of a 2018 housing ordinance and a
recommendation for consideration by the City Council; and
3. refer work plan items 3.1 through 4.2 to the Policy & Services Committee for input
on possible policy changes and on the use of City housing funds.
Executive Summary
The attached Draft Housing Work Plan recommends concrete steps that can be taken during
calendar years 2018 and 2019 to address housing production, affordability, and preservation in
Palo Alto. Recommendations are based on a review of the City’s past performance, goals for
the future, and available resources, and take into consideration recent changes in State law.
This document has been prepared by staff in response to the City Council’s November 6, 2017
request that staff outline the process, priorities, and staff resources available to study and
implement a number of specific proposals outlined in a Colleagues Memo considered on that
date, as well as other relevant recommendations, including exploration of strategies to assist
community based workers such as PAUSD and City Staff to reside in Palo Alto. The Colleagues
Memo (Attachment B; see https://www.cityofpaloalto.org/civicax/filebank/documents/62351
for related minutes.) stated the desire for zoning updates to encourage diverse housing near
jobs, transit, and services, and discussed a number of specific concepts, many of which are also
called for within the City’s Housing Element (adopted November 2014) and Comprehensive
Plan (adopted November 2017).
Background & Discussion
See the draft work plan attached for a discussion of housing conditions in Palo Alto, existing
policies, available resources, and strategies for addressing items outlined in the Colleagues
Memo, the Housing Element, and the Land Use & Community Design Element of the City’s
Comprehensive Plan.
Policy Implications
See the draft work plan in Attachment A for a discussion of relevant policies and programs in
the Housing and Land Use & Community Design Elements of the City’s Comprhehensive Plan. A
list of completed and ongoing policies and programs is provided in Attachment C.
Resource Impact
See the draft work plan in Attachment A for a discussion of available resources for housing
initiatives, including staff and Council resources as well as financial resources available in the
City’s housing funds. These funds are comprised of impact and in lieu fees paid by developers
City of Palo Alto Page 3
and can only be used for the preservation and construction of affordable housing.
Timeline
See the draft work plan in Attachment A for a timeline of actions recommended over the
course of calendar year 2018 and 2019.
Environmental Review
The draft workplan is intended as a statement of the City’s intent to pursue various actions,
each of which will require separate review to determine applicability of the California
Environmental Quality Act (CEQA). For this reason, it can be seen with certainty that
acceptance of the work plan itself will not have the potential to cause a significant
envronmental impact does not require review pursuant to CEQA Guidelines Section
15061(b)(3).
Attachments:
Attachment A: Housing Work Plan Draft (PDF)
Attachment B: ID# 8630 November 6, 2017 Colleagues Memo on Housing (PDF)
Attachment C: Completed Ongoing Comp Plan and Housing Element Programs_12-21-17
(PDF)
Attachment D: Terner CASA presentation 10.25_Costs of Housing (PDF)
Attachment A
Housing Work Plan
February 5, 2018
Hard copy provided separately for City Council only. Electronic copy available at:
http://bit.ly/2F9hLWI. Hard copies to also be available at City libraries
and City Hall fifth floor.
City of Palo Alto
COLLEAGUES MEMO
November 06, 2017 Page 1 of 4
(ID # 8630)
DATE: November 6, 2017
TO: City Council Members
FROM: Council Member Fine, Vice Mayor Kniss, Council Member Wolbach
SUBJECT: COLLEAGUES' MEMO REGARDING ZONING UPDATES TO
ENCOURAGE DIVERSE HOUSING NEAR JOBS, TRANSIT, AND SERVICES
Objectives:
Palo Alto and the Bay Area region are experiencing a housing crisis, years in the making, which
causes significant economic, social, and environmental harm. While Palo Alto may never be a
truly affordable place to live, the City Council has an obligation to current and future residents
to explore policies that expand housing choices for people of different incomes, generations,
and needs. This memo intends to begin the process to:
1. Update and improve the zoning code and other regulations to facilitate a greater variety and
quantity of both below market rate (BMR) and moderately-sized market-rate housing; and
2. Increase housing density near jobs, transit, and services; and
3. Streamline the approval process for new housing projects.
Recommendation:
We recommend our colleagues refer this memo to staff to return to Council with a Work Plan
outlining the process and resources to study and implement the proposals listed in the
Discussion section (and other relevant recommendations to support the Objectives). Following
Council approval of the Work Plan, proposals should be reviewed by the Planning &
Transportation Commission (PTC) and ultimately by Council for adoption. Some proposals will
require less work than others, and so may be considered in advance of others.
Discussion:
There are many policy tools to promote additional moderately-sized and reasonably-priced
homes, especially near job centers, transit, and services. The following suggestions should be
considered by the PTC and staff as a starting point. Any changes should be appropriately
applied in different areas of our community with sensitivity to location and current land use
patterns. For example, CD, CN, CS, CC1, CC2 zones in Downtown should be treated differently
than an RM zone in a predominantly residential neighborhood.
●Housing Floor Area Ratio (FAR):
○Increase housing FAR where appropriate.
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November 06, 2017 Page 2 of 4
(ID # 8630)
○ Allow non-retail commercial FAR to convert to residential FAR.
● Affordable Housing:
○ Explore increasing affordable housing (Below Market Rate - BMR) percentage
requirements in market-rate developments up to 20%, based on economic
analysis.
○ Explore implementing inclusionary BMR program for rental units.
○ Height and density for BMR projects: Allow additional height (not exceeding the
city-wide height limit) or FAR for projects that contain substantially more BMR
units than required.
● Units/Acre:
○ Explore eliminating housing unit limits where/when possible, and use FAR in
place of units/acre.
○ Explore housing unit minimums rather than unit maximums (e.g. require building
at least 80% of the units allowed under applicable zoning or land use
designation).
○ Implement a no net-loss policy when housing is redeveloped and preserve
existing non-conforming cottage clusters.
● Parking:
○ Allow residential projects to consolidate parking and TDM efforts with other
projects or the Palo Alto TMA.
○ Explore bringing underutilized parking spaces into a public market.
○ Car-light housing: Explore car-light housing with reduced or eliminated off-street
parking requirements. (e.g. TransForm’s GreenTRIP Certification)
○ Transportation Demand Management (TDM): explore reducing residential
parking requirements for projects which provide effective TDM measures.
● Retail/Residential Mixed-Use Projects: Encourage mixed-use zoning with ground-floor
retail, community, or non-profit space; and one or more floors of housing; but no
commercial office uses.
● Transit-Oriented Development: Expand and augment the Pedestrian Transit-Oriented
Development (PTOD) zone.
● And other compatible housing-related implementation programs from the
Comprehensive Plan update.
Background:
The current housing shortage is a threat to our city’s prosperity, diversity, stability,
environment, and community character. In City-sponsored polling in 2016, 76% of Palo Alto
residents indicated that housing was an “extremely serious” or “very serious” problem. Housing
is one of our Council Priorities for 2017. Our new Comprehensive Plan will encourage
exploration of policy changes to enable more housing.
November 06, 2017 Page 3 of 4
(ID # 8630)
The housing crisis has many symptoms including displacement, separated families, long
commutes, lack of diversity, environmental impacts, etc. The City is attempting to address
several of these. This memo’s recommendations focus on the central cause of these symptoms:
the lack of adequate housing options to meet current and growing demand.
Government and academic research consistently point to the need for more housing at a
variety of price-points as essential to solving the housing crisis. To prevent urban sprawl and
congestion, new housing is best located near transit, jobs, and services.
Few Palo Altans prefer to see new office buildings instead of housing, or luxury penthouses
instead of apartments which working professionals and families can afford. Rather than
indefinitely continue the practice of responding to each site or housing proposal on its own -
and rather than struggling to adapt our policies in each case - we suggest proactively identifying
and changing policies which are counterproductive toward our housing goals.
Palo Alto has made progress. We preserved Buena Vista and helped keep over 100 families in
our community. We are considering new affordable and market-rate housing proposals. We
have taken steps toward making permanent an annual office-cap. But we can still do more to
address the other side of our jobs-housing imbalance. Doing so requires we understand and
reduce some of the barriers to creating more housing.
Some of Palo Alto’s regulations operate in practice to skew development away from
reasonably-priced housing. Instead, we currently incentivize commercial development over
housing, large housing units over smaller ones, and pricier housing over more affordable. Of
particular concern are our consistently low limits on numbers of units per-acre, low-FAR
allowances for housing (including in mixed-use projects), requirements for more parking than is
used, and requirement for on-site (rather than adjacent or nearby) parking.
Creating more housing for a range of ages and incomes is the most equitable and
environmentally sustainable path for Palo Alto. As a collective-action problem, the housing
crisis requires all cities to share in the solution. Cities which have added to the regional demand
by creating jobs have a particular obligation to permit housing in a manner appropriate for their
local character. Palo Alto’s housing production has lagged behind our commitments, while
several neighboring communities have pursued new housing development near jobs, transit,
and services. Palo Alto can do its part to address the housing shortage by increasing housing
density in a responsible manner.
Resource Impact:
A modest amount of existing planning and legal staff and consultant resources will be required
to develop the proposed Work Plan and return to Council. Development of a Work Plan can be
accomplished within existing departmental budgets and staff capacity. The amount of detail
and supporting analysis associated with elements of the Work Plan that may be required will
November 06, 2017 Page 4 of 4
(ID # 8630)
be dependent on the process and the time frame desired for this discussion and its return to
Council.
Thereafter, depending on what Council chooses to pursue and on what timeline,
implementation of some or all of the proposals may require additional resources, such as
consultants and specialists, and adjustments to other priorities and timelines. Staff will provide
additional information in the initial Work Plan.
Completed and Ongoing Comp Plan and Housing Element Programs 2015‐2023
Program # Description Plan Objective Time Frame Status
H1.1.2 Consider modifying development standards for second units, where consistent with
maintaining the character of existing neighborhoods. The modifications should
encourage the production of second units affordable to very low‐, low‐, or moderate‐
income households.
Consider modifying the Zoning Code to provide
for additional second units.
December 2017
Conduct a study within three
years of adoption of Housing
Element
Completed.
H2.1.12 Evaluate developing specific or precise plans for the downtown,California Avenue,
and El Camino Real areas to implement in the updated Comprehensive Plan. Adopt
plans for these areas, as appropriate.
Evaluate developing plans for downtown,
California Avenue, and El Camino Real.
Completed ‐ as part of Comp
Plan prep (CAPs to come)
H2.1.4 Amend the Zoning Code to create zoning incentives that encourage the development
of smaller, more affordable housing units, including units for seniors, such as reduced
parking requirements for units less than 900 square feet and other flexible
development standards.
Provide opportunities for 75 smaller, more
affordable housing units.
December 2017
Within three years of Housing
Element adoption
Completed.
H2.1.8 Promote redevelopment of underutilized sites by providing information about
potential housing sites on the City’s website, including the Housing Sites identified to
meet the RHNA and information about financial resources available throughCity
housing programs.
Provide information
to developers about potential housing sites.
Post information on
website upon adoption of
Housing Element
Completed.
H2.1.9 Amend the Zoning Code to create zoning incentives that encourage the consolidation
of smaller lots identified as Housing Inventory Sites and developed with 100%
affordable housing projects. Incentives may include development review
streamlining, reduction in required parking for smaller units, or graduated density
when consolidated lots are over one‐half acre. Adopt amendments as appropriate.
Provide information regarding zoning incentives to developers.
Amend the Zoning
Code to provide development incentives to meet
the RHNA.
December 2016
Adopt amendments
within two years of Housing
Element adoption
Completed.
H2.2.4 As detailed in the Resources chapter of the Housing Element, the City of Palo Alto has
committed to providing financial assistance towards the conversion of 23 multi‐
family units to very low‐income (30‐50% AMI) units for a period of 55 years,and is
seeking to apply credits towards the City’s RHNA (refer to Appendix C ‐ Adequate
Sites Program Alternative Checklist). The Palo Alto Housing Corporation (PAHC)
approached the City for assistance in converting a portion of the 60 units atthe
Colorado Park Apartments, to be reserved for very low‐income households.The
committed assistance will ensure affordability of the units for at least 55years,as
required by law.
By the end of the second year of the housing
element planning period, the City will enter into
a legally enforceable agreement for $200,000 in
committed assistance to purchase affordability
covenants on 23 units at the Colorado Park
Apartments. The City will report to HCD on the
status of purchasing affordability covenants no
later than July 1, 2018, and to the extent an
agreement is not in place, will amend the
Housing Element as necessary to identify
additional sites.
Ongoing Completed.
H2.2.6 On parcels zoned for mixed use, consider allowing exclusively residential use on
extremely small parcels through the transfer of zoning requirements between
adjacent parcels to create horizontal mixed use arrangements. If determined to be
appropriate, adopt an ordinance to implement this program.
Consider transfer of zoning requirements to
create horizontal mixed use.
December 2017
Within three years of Housing
Element adoption
Completed as part of Program
2.1.9.
H3.1.1 Amend the City’s BMR ordinance to lower the BMR requirement threshold from
projects of five or more units to three or more units, and to modify the BMR rental
section to be consistent with case law related to inclusionary rental housing.
Provide opportunities for four additional BMR
units.
December 2017
Amend BMR Ordinance
within three years of Housing
Element adoption.
Completed.
H3.1.6 Require developers of employment‐generating commercial and industrial
developments to contribute to the supply of low‐ and moderate‐income housing
through the payment of commercial in‐lieu fees as set forth in a nexus impact fee
study and implementing ordinances.
Generate in‐lieu fees to contribute toward the
creation of low‐ and moderate‐income housing.
Continue to regularly update
the commercial in‐lieu fee.
Completed. The commercial in‐
lieu fee was updated in June
2017.
COMPLETED PROGRAMS
Page 1 of 5
Completed and Ongoing Comp Plan and Housing Element Programs 2015‐2023
Program # Description Plan Objective Time Frame Status
H3.1.8 Recognize the Buena Vista Mobile Home Park as providing low‐ and moderate
income housing opportunities. Any redevelopment of the site must be consistent
with the City’s Mobile Home Park Conversion Ordinance adopted to preserve the
existing units. To the extent feasible, the City will seek appropriate local, state and
federal funding to assist in the preservation and maintenance of the existing units in
the Buena Vista Mobile Home Park.
Preserve the 120 mobile home units in the
Buena Vista Mobile Home Park as a low and
moderate income housing resource.
Ongoing Completed. Mobile home park
was preserved in September
2017.
H3.3.5 Review and consider revising development standards for second units to facilitate
the development of this type of housing, including reduced minimum lot size and
FAR requirements. Based on this analysis, consider modifications to the Zoning Code
to better encourage development of second units.
Complete study on impact of revised standards,
and consider Zoning Code Amendments
Ongoing Completed. Zoning code
updates completed March
2017.
H3.4.3 Periodically review the housing nexus formula required under Chapter 16.47 of the
Municipal Code to fully reflect the impact of new jobs on housing demand and cost.
Continue to evaluate the housing nexus formula,
and adjust the required impact fees to account
for the housing demand from new development.
Ongoing Completed. Housing nexus
study updated in 2016. Fees
updated in 2017.
H3.5.2 Amend the Zoning Code to clarify distancing requirements for emergency shelters,
stating that “no more than one emergency shelter shall be permitted within aradius
of 300 feet.”
Amend the Zoning Code to clarify distancing
requirements for emergency shelters.
December 2015
Adopt amendments within
one year of Housing Element
adoption
Completed.
H3.5.3 Amend the Zoning Code to revise definitions of transitional and supportive housing
to remove reference to multiple‐family uses, and instead state that “transitional and
supportive housing shall be considered a residential use of property and shall be
subject only to those restrictions that apply to other residential dwellings of the same
type in the same zone.”
Amend the Zoning Code to revise transitional
and supportive housing definitions.
December 2015
Adopt amendments within
one year
Completed.
H5.1.7 In accordance with Government Code Section 65589.7, immediately following City
Council adoption, the City will deliver to all public agencies or private entities that
provide water or sewer services to properties within Palo Alto a copy of the 2015‐
2023 Housing Element.
Immediately following adoption, deliver the
2015‐2023 Palo Alto Housing Element to all
providers of sewer and water services within the
City.
Within one month of
adoption of the Housing
Element
Completed.
L‐3.2.1 Evaluate and implement strategies to prevent conversion of residential and
neighborhood‐serving retail space to office or short‐term vacation rentals.
Completed ‐ Retail Protection
Ordinance
H1.1.1 Continue the citywide property maintenance, inspection, and enforcement program. Continue to provide services which promote
rehabilitation of substandard housing.
Ongoing Ongoing
H1.2.1 When a loss of rental housing occurs due to subdivision or condominium conversion
approvals, the project shall require 25 percent BMR units.
Provide 10 additional affordable housing units
on sites where rental housing will be lost.
Ongoing Ongoing program ‐ there have
not been any projects subject
to this program to date.
H1.3.1 Create community volunteer days and park cleanups, plantings, or similar events that
promote neighborhood enhancement and conduct City‐sponsored cleanup
campaigns for public and private properties.
Coordinate with the City’s waste and disposal
hauler to conduct a cleanup campaign once a
year to promote neighborhood clean‐up.
Ongoing Ongoing
H2.1.2 Allow increased residential densities and mixed use development only where
adequate urban services and amenities, including roadway capacity, are available.
Make sure that adequate services are available
when considering increased residential densities.
Ongoing Ongoing
H3.1.10 Annually monitor the progress in the construction or conversion of housing for all
income levels, including the effectiveness of housing production in mixed use
developments.
Provide information to the City Council on the
effectiveness of City programs.
Provide annual reports Ongoing
ONGOING PROGRAMS
Page 2 of 5
Completed and Ongoing Comp Plan and Housing Element Programs 2015‐2023
Program # Description Plan Objective Time Frame Status
H3.1.11 When using Housing Development funds for residential projects, the City shall give a
strong preference to those developments which serve extremely low‐income (ELI),
very low‐income, and low‐income households.
Provide funding opportunities for development
of housing for Extremely Low Income
households.
Ongoing Ongoing program, housing
funds provided as needed by
housing projects.
H3.1.2 Implement the BMR ordinance to reflect the City’s policy of requiring:
a) At least 15 percent of all housing units in projects must be provided at below
market rates to very low‐, low‐, and moderate‐income households. Projects on sites
of five acres or larger must set aside 20 percent of all units as BMR units. Projects
that cause the loss of existing rental housing may need to provide a 25 percent
component as detailed in Program H 1.2.1. BMR units must be comparable in quality,
size, and mix to the other units in the development.
b) Initial sales price for at least two‐thirds of the BMR units must be affordable to
a household making 80 to 100 percent of the Santa Clara County median income.
The initial sales prices of the remaining BMR units may be set at higher levels
affordable to households earning between 100 to 120 percent of the County’s
median income. For projects with a 25 percent BMR component, four‐fifths of the
BMR units must be affordable to households in the 80 to 100 percent of median
range, and one‐fifth may be in the higher price range of between 100 to 120 percent
of the County’s median income. In all cases, the sales price should be sufficient to
cover the estimated cost to the developer of constructing the BMR unit, including
financing, but excluding land, marketing, off‐site improvements, and profit.
c) If the City determines that on‐site BMR units are not feasible, off‐site units
acceptable to the City, or vacant land determined to be suitable for affordable
housing, construction, may be provided instead. Off‐site units should normally be
new units, but the City may accept rehabilitated existing units when significant
improvement in the citywide housing stock is demonstrated.
d) If the City determines that no other alternative is feasible, a cash payment to the
Residential Housing Fund, in lieu of providing BMR units or land, may be accepted.
The in‐lieu payment for projects subject to the basic 15 percent BMR requirement
shall be 7.5 percent of the greater of the actual sales price or fair market value of
each unit. For projects subject to the 20 percent requirement, the rate is 10 percent;
for projects with a 25 percent requirement (as described in Program 1.2.1 regarding
the loss of rental housing) the rate is 12 5 percent The fee on for sale projects will
Provide 10 affordable units through
implementation of the City’s BMR program.
Ongoing – implementation of
existing program
Ongoing
H3.1.3 Continue implementation of the Below Market Rate Program Emergency Fund to
prevent the loss of BMR units and to provide emergency loans for BMR unit owners
to maintain and rehabilitate their units. Consider expansion of program funds to
provide financial assistance for the maintenance and rehabilitation of older BMR
units.
Use the BMR Program Emergency Fund to
prevent the loss of at least two affordable units
and assist in maintenance and rehabilitation of
at least four older BMR units
N/A Ongoing program, preserved
one BMR unit in 2016
H3.1.9 Continue enforcing the Condominium Conversion Ordinance. Maintain the rental housing stock. Ongoing Ongoing
H3.2.1 Continue to assist very low‐income households in reducing their utility bills through
the Utilities Residential Rate Assistance Program (RAP).
Provide assistance to with utility bills to 800 low‐
income households.
Ongoing Ongoing
H3.3.1 When appropriate and feasible, require all City departments to expedite processes
and allow waivers of development fees as a means of promoting the development of
affordable housing.
Continue to reduce processing time and costs for
affordable housing projects.
Ongoing Ongoing
H3.3.2 Continue to exempt permanently affordable housing units from any infrastructure
impact fees adopted by the City.
Reduce costs for affordable housing projects. Ongoing Ongoing
Page 3 of 5
Completed and Ongoing Comp Plan and Housing Element Programs 2015‐2023
Program # Description Plan Objective Time Frame Status
H3.3.3 Promote legislative changes and funding for programs that subsidize the acquisition,
rehabilitation, and operation of rental housing by housing assistance organizations,
nonprofit developers, and for‐profit developers.
Continue as an active member of the Non‐Profit
Housing Association of Northern California to
promote legislative changes and funding for
programs relating to housing.
Ongoing Ongoing, active membership
in NPH.
H3.3.6 Continue to participate with and support agencies addressing homelessness. Continue City staff participation in prioritizing
funding for County‐wide programs.
Ongoing Ongoing, continue to fund
homeless programs with
CDBG funds.
H3.4.2 Support and expand local funding sources including the City’s Housing Development
Fund, Housing Trust of Santa Clara County, CDBG Program, County of Santa Clara’s
Mortgage Credit Certificate Program (MCC), or similar program. Continue to explore
other mechanisms to generate revenues to increase the supply of low‐ and moderate‐
income housing.
Increase the supply of affordable housing stock. Ongoing Ongoing
H3.5.1 Continue to participate in the Santa Clara County Homeless Collaborative as well as
work with adjacent jurisdictions to develop additional shelter opportunities.
Continue City staff participation as members of
the Collaborative’s CDBG and Home Program
Coordinators Group.
Ongoing Ongoing. Continued
participation in CDBG
Coordinator's group
H4.1.1 Work with appropriate State and federal agencies to ensure that fair housing laws
are enforced, and continue to support groups that provide fair housing services, such
as the Mid‐Peninsula Citizens for Fair Housing
Continue to coordinate with State and federal
agencies to support programs to eliminate
housing discrimination, and provide financial
support for fair housing services.
Ongoing Ongoing ‐ The City contracts
with Project Sentinel to
provide fair housing services.
H4.1.2 Continue the efforts of the Human Relations Commission to combat discrimination in
rental housing, including mediation of problems between landlords and tenants.
Continue to provide mediation services for rental
housing discrimination cases.
Ongoing Ongoing ‐ The City contracts
with Project Sentinel to
provide mediation services.
H4.1.3 Continue implementation of City’s ordinances and State law prohibiting
discrimination in renting or leasing housing based on age, parenthood, pregnancy, or
the potential or actual presence of a minor child.
Implement existing ordinances regarding
discrimination
Ongoing Ongoing
H4.1.4 Continue the City’s role in coordinating the actions of various support groups that
seek to eliminate housing discrimination and in providing funding and other support
for these groups to disseminate fair housing information in Palo Alto, including
information on referrals to pertinent investigative or enforcement agencies in the
case of fair housing complaints.
Continue to provide funding and other support
for these groups to disseminate fair housing
information in Palo Alto.
Ongoing Ongoing ‐ The City contracts
with Project Sentinel to
provide fair housing services.
H4.1.5 Heighten community awareness regarding and implement the Reasonable
Accommodations procedure for the siting, funding, development, and use of housing
for people with disabilities.
Continue to provide information to residents on
reasonable accommodation procedures via
public counters and on the City’s website.
Ongoing Ongoing
H4.1.6 Continue to implement the Action Plan of the City of Palo Alto’s Community
Development Block Grant (CDBG) Consolidated Plan and the Analysis of Impediments
to Fair Housing Choice.
Provide for increased use and support of
tenant/landlord educational mediation
opportunities as called for in the CDBG Action
Plan and the Analysis of Impediments to Fair
Housing Choice.
Ongoing Ongoing, Annual Action Plan is
being implemented and
Affirmatively Furthering Fair
Housing Plan to be completed
by Fall 2019
Page 4 of 5
Completed and Ongoing Comp Plan and Housing Element Programs 2015‐2023
Program # Description Plan Objective Time Frame Status
H5.1.1 Periodically report on the status and progress of implementing the City’s Green
Building Ordinance and assess the environmental performance and efficiency of
homes in the following areas:
‐ Greenhouse gas emissions
‐ Energy use
‐ Water use (indoor and outdoor)
‐ Material efficiency
‐ Stormwater runoff
‐ Alternative transportation
Prepare reports evaluating the progress of
implementing the City’s Green Building
Ordinance.
Ongoing Ongoing
H5.1.2 Continue providing support to staff and the public (including architects, owners,
developers and contractors) through training and technical assistance in the areas
listed under Program H5.1.1.
Provide educational information regarding the
City’s Green Building Ordinance.
Ongoing Ongoing program
L‐2.8.2 Develop and implement a system to inventory the characteristics of existing housing
units and track changes in those characteristics on a regular basis. Make the
information publicly available.
Medium Ongoing ‐ HCD Annual Report
L‐6.1.1 Promote awards programs and other forms of public recognition for projects of
architectural merit that contribute positively to the community.
Short Ongoing
L‐6.7.1 Implement architectural standards to assure they effectively address land use
transitions.
Routine Ongoing
Page 5 of 5
Carol Galante
CASA Technical Committee Presentation
October 25th, 2017
The mission of the
Terner Center for Housing Innovation
is to formulate bold strategies
to house families from all walks of life
in vibrant, sustainable, and affordable
homes and communities.
The Housing Challenge
We’re not building enough homes
We need to build 180,000 homes a year in California to
keep up with demand, or 1.8 million by 2025 (HCD)
3
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
The Housing Challenge
We’re not building enough homes
While we’ve seen an uptick in production in recent
years, we are well below historic homebuilding rates
4
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
The Housing Challenge
5
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Attracting jobs without the homes
Jobs added to housing permitted, 2010-2015
•San Francisco-Oakland-Hayward: 6.8 to 1
•San Jose-Sunnyvale-Santa Clara: 5.5 to 1
The Housing Challenge
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Cities that produced the fewest housing units between
2000-2015 tend to have larger price increases
The Realities of Development
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Because of cost, new construction limited to highest rents
$5/6-psf
New construction
works only at highest
rents serving fewest
people-as costs rise,
fewer people can
afford new
construction
East Bay demand at various rents and new construction rents (2015-Concord Group)
The Realities of Development
To explain the challenges facing the
production of housing, we’ve developed two
“prototype” developments
–Market Rate and Affordable
•Affordable: 50% AMI (Alameda County)
•4% LIHTC
–100 units
–1:1 parking
–5 over 1 construction (stick over podium)
•Least expensive infill construction type
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
The Realities of Development
Assumptions
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
•Prototypes are an
average Bay Area
location
•$6.5 million land price
•No EIR*
•No demolition*
•No environmental
remediation*
•No inclusionary zoning
•No offsite
infrastructure
improvements*
•No exactions*
•Standard approval
times
•Prevailing wages
•Current
construction costs
* Rare that infill projects avoid these costs. Any combination of these
costs plus current inflation could add as much as $100,000/unit
The Realities of Development
Total Development Cost
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
$578,424/unit $621,280/unit
$57,842,411 $62,127,966
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
Market Rate Affordable
The Realities of Development
Per Unit Development Costs
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
$65,400 $65,400
$382,463 $411,550
$41,000 $41,000$55,223
$68,979$26,314
$28,428$5,888
$4,424
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
Market Rate Affordable
Tax, Title, Escrow
Consultants
Financing
Fees
Hard Cost
Land
The Realities of Development
Development Funding Sources
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
35 41
5065
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Market Rate Affordable
Equity Public Funds Debt
The Realities of Development
Rents required with prototype
development costs
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Market Rate
Affordable
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
Studio 1 bedroom 2 bedroom 3 bedroom
$1,988
$2,858
$4,161 $4,696
Market Rate Affordable
The Realities of Development
Threshold requirements to make
Market Rate prototype feasible
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
1. Return on Cost must be at least 5.5%
Return on Cost is determined by dividing project’s Net Operating Income (income
minus expenses= $3,179,685) by total project cost ($57,842,411)
Market Rate Prototype Return on Cost: 5.50%
2.How much debt can I raise?
We assume that our debt requires a 1.3% Debt Service Coverage Ratio (DSCR) and a
65% Loan to Cost, which means we can obtain $37,597,567 in debt (at 5% interest rate)
3.Equity required
With 65% of costs covered with debt, we must raise $20,244,844 in equity (8%
preferred return, 17% Internal Rate of Return)
The Realities of Development
To reach 120% AMI with similar returns,
significant cost reductions must be achieved
•Reduce impact/utility fees by 50% ($1,750,000)
•Reduce parking requirements by 50% ($1,950,000)
•Construction innovations savings ($4,00,000)
–As costs are reduced, so are other items (contingency,
consultants, etc)
–Total cost savings: $9,466,158 ($94,661/unit)
–New ROC: 5.20%
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Cost Reduction Strategies
•Reducing overall cost of housing is
paramount
–Pursue construction innovations
–Right size fees
–Streamline approvals process
–Revisit parking minimums
–Utilize public lands
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TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Terner Center Development Dashboard
Development Calculator
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
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Terner Center Development Dashboard
Policy Gauge
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
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Thank you!
Carol Galante, Faculty Director
David Garcia, Policy Director