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HomeMy WebLinkAboutStaff Report 4253 City of Palo Alto (ID # 4253) Regional Housing Mandate Committee Staff Report Report Type: Meeting Date: 11/14/2013 City of Palo Alto Page 1 Summary Title: Review of Density Bonus Ordinance Title: Review and Recommend Adoption of an Ordinance for a New Chapter 18.15 (Residential Density Bonus) to Include in Title 18 of the Palo Alto Municipal Code to Implement Government Code Section 65915 From: City Manager Lead Department: Planning and Community Environment Recommendation Staff requests that the Regional Housing Mandate Committee (RHMC) review and recommend that the City Council adopt the draft ordinance, revised with RHMC comments, (Attachment A) to create new Chapter 18.15 (Residential Density Bonus) to Title 18 (Zoning) of the Palo Alto Municipal Code to Implement Government Code Section 65915. Background The attached ordinance reflects input from the RHMC and has been crafted to meet State requirements and to implement Program 3.1.10 in the Housing Element of the City’s Comprehensive Plan. The State Density Bonus Law (Section 65915 of the Government Code) was first adopted in 1979. The law allows developers who offer affordable units in their developments a density bonus above what the zoning ordinance would typically allow. In 2004, the State Legislature passed SB 1818, which significantly amended Section 65915 of the Government Code. The changes to the law, effective on January 1, 2005, required local jurisdictions to adopt a density bonus ordinance in their local codes, and required:  A sliding scale of density bonuses from 20%-35% depending on the number of affordable units provided; City of Palo Alto Page 2  Provision for up to three (3) development concessions or incentives, depending on the number of affordable units provided;  A density bonus if land is donated for very low income housing. The current version of Government Code Section 65915 has been included as Attachment D. In accordance with the State statute, the 2007-2014 Housing Element Update includes a program (Program 3.1.10) requiring the City to adopt a local density bonus ordinance. Adoption of a local ordinance will make the State requirements more clear and accessible for local builders and concerned citizens, and also provides an opportunity for the City to define “concessions” the City would like to offer and under which circumstances. Without a local ordinance, builders and developers have broad flexibility to request concessions and the City has limited flexibility to deny. Handled correctly, density bonuses can be an important tool in the production of affordable units thereby reducing the City’s need to identify more parcels for its Housing Inventory Sites to meet its unmet RHNA requirements. The draft ordinance provides a menu of zoning concessions, which have been vetted by the Planning and Transportation Commission as serving two goals: (1) promoting the production of affordable housing and (2) minimizing impacts to neighboring properties. If the developer chooses from the menu of concessions, the concession would be granted automatically. These first tier of concessions are generally considered to have minimal adverse impacts. If a developer requests a concession that is not on the menu of concessions, the requested concession is reviewed as part of the underlying land use application review with the appropriate Approval Authority (the City Council or the Director of Planning and Community Environment) granting or denying the concession request. As part of the concession review process, the Approving Authority has the ability to request financial information from the developer to evaluate if the requested concession is necessary for the provision of the affordable housing. This tiered process has the benefit of steering the developer towards the menu of pre-vetted concessions. Discussion Prior to RHMC consideration, there was extensive review by the Planning and Transportation Commission (PTC). The PTC conducted three meetings in October 2011, January 2013 and March 2013. A brief summary of each meeting has been provided. October 19, 2011 City of Palo Alto Page 3 The PTC directed staff to develop an ordinance that contained the menu of concessions. As part of the Study Session, three main issues were raised:  A concern was raised that a developer, with the use of the concession(s), could circumvent height limits and/or other zoning requirements without the City’s ability to review the impacts;  Eligibility for a concession by simply meeting City’s minimum BMR requirements.  The City’s ability to request for financial documentation in support of the requested concession(s). The first and third of these items are discussed as Key Issues below. Regarding the middle item, the California Appeals Court has recently ruled that even when affordable housing is provided because of a local zoning requirement, that housing makes the project eligible for a density bonus. The ordinance has been updated to reflect this ruling. January 9, 2013 The PTC considered the formal draft ordinance including the menu of concessions. There was continued discussion about the following items:  Developer’s ability to supersede the City height limits.  The City’s BMR requirements triggering density bonus.  Requirement to submit a project pro-forma in support of a requested concession not on the menu.  Quantified concessions instead of more general, open ended concessions. The first and third of these items are discussed as Key Issues below. The middle item is addressed as part of the October 19, 2013 summary above. March 5, 2013 Staff returned with a revised ordinance that:  Quantified the concessions on the menu  Reduced the pro forma requirement from mandatory submittal of the project proforma to requesting financial information when necessary. City of Palo Alto Page 4 With these revisions, the PTC recommended approval of the draft ordinance by a vote of 7-0. The verbatim minutes from the January 9 and March 5, 2013 meetings have been included as Attachment B and C, respectively, for reference. RHMC Review On September 12, 2013, the RHMC reviewed the draft ordinance and requested that staff highlight portions of the draft ordinance to show what the Council had discretion to review and what was an addition recommended by staff and the PTC, include the January 9, 2013 PTC meeting minutes, and make some other minor revisions. During the discussion, the RHMC provided staff with a number of comments and requests. Some of these included:  Submittal of project proformas should be required of all concession requests;  A request to clarity the effects of the concession including a visual depiction of the concessions on the menu;  If a setback concession is requested in a mixed use development, the setback should only apply to the residential portion of the development, and  All concessions on the menu should be quantified. The RHMC directed staff to revise the ordinance based on the requests. The meeting was continued to give time for staff to analyze the committee’s requests and prepare revisions. Staff’s analysis is presented in the summary of key issues below. Summary of Key Issues The draft density bonus ordinance incorporates the mandatory elements of State law, including: statutory definitions of qualifying projects, required density levels, reduced parking standards for qualifying projects and required statutory findings for denial. (The mandatory elements required under the State law have been highlighted in Attachment A.) The draft ordinance differs from the State law in two key respects: (1) it establishes a local application process for applying for density bonuses and concessions that allows the City to ensure qualifying projects and (2) establishes a tiered system for claiming concessions thereby providing an incentive for developers to choose zoning concessions from a pre-vetted menu of concessions. Without a local ordinance it is more difficult for the City to verify the developer/applicant’s entitlement to concessions and bonuses and the developer/applicant largely has free reign to select which concessions to use. Pro Forma Requirement The pro forma requirement was thoroughly discussed by the PTC. In an initial draft of the ordinance, if a developer requested a non-menu concession, the submittal of the project pro City of Palo Alto Page 5 forma was required. The Commissioners were divided on this issue. Some Commissioners supported the requirement in that the pro forma was necessary since it was the only way to verify if the concession was actually needed. Other Commissioners felt the submittal requirement for a pro forma would discourage developers from requesting density bonus or concessions. Therefore it would discourage the production of affordable housing. Staff recommends that the draft ordinance retain its current requirement, that a pro forma would only be required for concessions not on the menu. The menu provides concessions that are less complex and less impactful than other potential concessions not on the menu. To provide sensitive financial information for a relatively simple concession request would be onerous and staff is concerned that it may be viewed by State housing officials as discouraging the production of affordable housing. In addition, imposing this requirement would eliminate one of the key incentives the ordinance provides for selecting a concession. Representatives of the Planning Department and the City Attorney will be available to discuss this further if desired. Visual Depiction of the Concessions on the Menu The RHMC requested that staff provide a visual depiction of the concessions, such as the visual effect of a reduction of private or public open space or setback reductions, be clarified. Without a specific project, it is difficult to illustrate a specific concession or to provide details about potential effects. However, staff can work on collecting photo examples of existing projects in advance of Council consideration. Mixed Use Development Setback Concession The RHMC also discussed concessions related to setback reductions. The RHMC directed staff to revise the ordinance to clarify that if a setback reduction was requested for a mixed use project, the setback concession could only apply to the residential portion of the development. Based on the RHMC’s concerns, staff has revised the ordinance. For “horizontal” style mixed used development, where residential and commercial uses are proposed side by side, only the residential component would be eligible for the setback concession. As currently drafted, however, this concession could still apply to all uses within a vertical mixed-use building, as it would be difficult to differentiate between non-residential and residential setbacks when uses are stacked in the same building. Furthermore, the Housing Inventory Sites (HIS) in the Housing Element is dependent on mixed use developments on Commercial zoned parcels to provide housing units. Almost all commercially zoned parcels on the HIS are smaller than one acre. Staff believes that if mixed use were proposed on the site, it would be vertical mixed use. In all instances the setback concession would also still need to be consistent with design guidelines. City of Palo Alto Page 6 Quantifying Concessions All the concessions on the menu have now been quantified. Most were quantified in the original draft at the PTC’s request, and staff has quantified the remaining concessions as described in the current draft ordinance:  A 50% reduction in public or private open space requirements, and  An increase the site coverage up to 50% or by the square footage of the affordable housing provided, whichever is less. Staff would also like to clarify the daylight plane concession. The proposed daylight plane concession reads “Reduction in daylight plane requirements not to exceed 50% of the length of the adjacent lot line.” Staff’s intent is drafting this concession was to allow a developer to protrude into the daylight plane by a limited amount. For example, a developer wants to build on a lot that is 50-feet by 100-feet and subject to daylight plane requirements. The developer could request to protrude into the daylight plane for a total of 50-linear feet adjacent the 100 foot lot line. Please note that the “amount of massing’ of the protrusion is not limited in the concession language, only the amount of linear feet allowed to protrude into the daylight plane. A RHMC member also posed the question about how a density bonus/concession request affects an adjacent historical property. The state density bonus law clearly states that a concession request can be denied if it adversely affects a property listed in the California Register of Historic Resources. Policy Implications The proposed density bonus ordinance is consistent with the policies and programs in the recent Housing Element that was just approved by HCD. Program 3.1.10 of the current 2007- 2014 Housing Element calls for the adoption of a revised density bonus program ordinance. The draft ordinance meets the requirements of the program, and allows the City to exercise more control over the concessions that are available for affordable housing development. Environmental Review The proposed Ordinance revises the requirements for granting a residential density bonus to comply with revisions to State law enacted by the Legislature through the adoption of Senate Bill 1818. Adoption of the draft density bonus ordinance will only codify allowances that developers have been able to use in housing developments since 2005. The revisions modify the criteria and incentives offered to qualifying developments but do not authorize construction not already permitted under the City’s existing codes. It is uncertain how many project applicants will seek to utilize the provisions of State law and this Ordinance and where City of Palo Alto Page 7 such projects might be located in the City. Further, each individual project will be subject to its own environmental review. Consequently, the attached proposed ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of Title 14 of the California Code of Regulations since it can be seen with certainty that there is no possibility the adoption and implementation of this Ordinance may have a significant effect on the environment. Attachments:  : Attachment A: Ordinance Not Attached - See Note (DOCX)  : Attachment B: January 9, 2013 Planning and Transportation Commission Excerpt Minutes (PDF)  : Attachment C: March 5, 2013 Planning and Transportation Commission Excerpt Minutes (PDF)  : Attachment D: Government Code Section 65915-65918 State Density Bonus Law (PDF) CiTY OF PALO ALTO TO: FROM: CITY OF PALO ALTO MEMORANDUM HONORABLE CITY COUNCIL REGIONAL HOUSING MANDATE COMMITTEE ICOUNCIL EmNG / I [ 'Q. d efore Meeting [ ] Received at Meeting CITY MANAGER DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT AGENDA DATE: November 14, 2013 ID#4253 SUBJECT: Regional Housing Mandate Committee Agenda Item No. 1 -Review and Recommend Adoption of an Ordinance for a New Chapter 18.15 (Residential Density Bonus) to Include in Title 18 of the Palo Alto Municipal Code to Implement Government Code Section 6591 Please find attached the Draft Density Bonus Ordinance for the November 14, 2013 Regional Housing Mandate Committee (RHMC) meeting. The draft ordinance is listed as Attachment A of the RHMC CMR. The RHMC members have been notified that the draft ordinance would be delivered under separate cover. Directo Planning and Community Environment [At the Committee's request, provision's required by State law are highlighted] Not Yet Approved Ordinance No. __ _ Ordinance of the Council of the City of Palo Alto Adopting New Chapter 18.15 (Residential Density Bonus) of Title 18 (Zoning) of the Palo Alto Municipal Code to Implement Government Code Section 65915 The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings and Recitals. The Council of the City of Palo Alto finds and declares as follows: A. The State Density Bonus Law (Section 65915 ofthe Government Code) was first adopted in 1979. The law allows developers who offer affordable units in their developments a density bonus above what the zoning ordinance would typically allow. Originally, developers received a density bonus of 25% if they met the density bonus requirements. B. In 2004, the State Legislature passed SB 1818, which significantly amended Section 65915 of the Government Code. The significant changes to the law, effective on January 1, 2005, included: • A higher maximum market-rate unit density bonus of 35% for a lower percentage of affordable units provided; • A sliding scale of market-rate density bonus percentages from 20%-35% depending on the percentage of affordable units provided; • Provision for up to three (3) development concessions or incentives, depending on the percentage of affordable units provided; • Granting the developer a density bonus if they donate land for very low income housing; and • Required jurisdictions to implem~nt Density Bonus law through local codes. C. In the past, the City has applied the Density Bonus law on an ad hoc basis to both market rate and affordable developments. Palo Alto Family Apartments, II located at 801 Alma Street and developed by Eden Housing, is a 50 unit affordable rental development. Eden requested concessions to encroach into the required setbacks, exceed the maximum floor area ratio (FAR) and to not provide private useable open space. The development at 195 Page Mill Road also requested concessions to allow residential uses in the General Manufacturing (GM) zoning district and to exceed the maximum FAR in return for providing 17 affordable housing units (20% ofthe total units). 1 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, pro"is1on~ required by State law are highlighted] Not Yet Approved D. The 2007-2014 Housing Element Update includes a program (Program 3.1.10) requiring. that a density bonus ordinance be adopted that is consistent with Government Code 65915. Staff anticipates that density bonus will be an important tool to help the City accommodate its Regional Housing Needs Allocation (RHNA) numbers. SECTION 2. Chapter 18.15 (Residential Density Bonus) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby added to read as follows: Sections: 18.15.010 18.15.020 18.15.030 18.15.040 18.15.050 18.15.060 18.15.070 18.15.080 18.15.090 18.15.100 18.15.010 Chapter 18.15 Residential Density Bonus Purpose Definitions Density Bonuses Development Standards for Affordable Units Development Concessions and Incentives Waiver/Modification of Development Standards Child Care Facilities Application Requirements Review Procedures Regulatory Agreement Purpose The purpose of this chapter is to: Ii (a) Comply with the state density bonus law under California Government Code section 65915. (b) Establish procedures for implementing state density bonus requirements as set forth in California Government Code S~ction 65915, as amended. (c) Facilitate the development of affordable housing consistent with the goals, objectives, and policies ofthe City's Comprehensive Plan Housing Element. [NOTE: All definitions are consistent with State law] Whenever the following terms are used in this Chapter, they shall have the meaning established by this section: 2 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (a) "Affordable Rent" means monthly rent, including a reasonable allowance for utilities and all fees for housing services, for rental Restricted Affordable Units reserved for Very Low or Lower Income Households, that does not exceed the following: (i) Very Low Income: 50 percent of the area median income for Santa Clara County, adjusted for presumed household size, multiplied by 30 percent and divided by 12. (ii) Lower Income: 60 percent of the area median income for Santa Clara County, adjusted for presumed household size, multiplied by 30 percent and divided by 12. (b) "Affordable Sales Price" means the maximum sales price at which Very Low, Lower and Moderate Income Households can qualify for the purchase of Restricted Affordable Units as set forth in the City of Palo Alto's Below Market Rate Housing Program. The sales price shall be considered affordable only if it is based on a reasonable down payment, and monthly housing payments (including interest, principal, mortgage insurance, property taxes and assessments, fire and casualty insurance, homeowners association fees, property maintenance and repairs, and a reasonable allowance for utilities), all as determined by the City, that are equal to or less than: (i) Very Low Income: 50 percent of the area median income for Santa Clara County, adjusted for presumed household size, multiplied by 30 percent and divided by 12. (ii) Lower Income: 80 percent of the area median income for Santa Clara County, adjusted for presumed household size, multiplied by 30 percent and divided by 12. (iii) Moderate Income: 120 percent of the area median income for Santa Clara County, adjusted for presumed household size, multiplied by 30 percent and divided by 12. , (c) "Applicant" means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities who seeks Development permits or approvals from the City of Palo Alto. (d) "Approval Authority" means the person or body that is authorized to approve a Development as specified in the City of Palo Alto Municipal Code. (e) "Below Market Rate Housing Program" means Chapter 18.14 of the Palo Alto Municipal Code and the Administrative Guidelines for the Below Market Rate Program. 3 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (f) "Child Care Facility" means a child day care facility other than a family day care home, including, but not limited to, infant centers, preschools, extended day care facilities, and school age child care centers. (g) "Concession or Incentive" as used interchangeably means such regulatory concessions as specified in Government Code Section 65915(k) to include: (i) A reduction of site Development Standards or architectural design requirements which exceed the minimum applicable building standards approved by the State Building Standards Commission pursuant to Part 2.5 (commencing with Section 18901) of Division 13 of the Health and Safety Code, including, but not limited to, a reduction in setback, coverage, and/or parking requirements which result in identifiable, financially sufficient and actual cost reductions; (ii) Allowing mixed use development in conjunction with the proposed residential development, if nonresidential land uses will reduce the cost of the residential project and the nonresidential land uses are compatible with the residential project and existing or planned developmentin the area where the Development will be located; and (iii) Other regulatory Concessions proposed by the applicant or the City which result in identifiable financially sufficient, and actual cost reductions. (h) "Density Bonus" means a density increase overthe Maximum Residential Density granted pursuant to Government Code Section 65915 and this Ordinance. (i) "Density Bonus Units" means those dwelling units granted pursuant to the provisions of this Chapter which exce~d the otherwise Maximum Residential Density for the development site. m "Development" means all developments pursuant to a proposal to construct or place five (5) or more additional dwelling units on a lot or contiguous lots including, without , limitation, a planned unit development, site plan, subdivision, or conversion of a non- residential building to dwelling units. (k) "Development Standard" means a site or construction condition such as a height limitation, a setback, or a floor-area ratio, that applies to a Development pursuant to any ordinance, general plan element, specific plan, charter, or other City condition, law, policy, resolution, or regulation. A "site and construction condition" is a development regulation or law that specifies the physical development of a site and buildings on the site in a Development. 4 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions' required by State law are highlighted] Not Yet Approved (I) "Discretionary Permit" means any permit issued for the Development which requires the exercise of judgment or deliberation from the Approval Authority, including but not limited to conditional use permits, variances, site plans, design review, planned development permits, general and specific plan approvals and amendments, zoning amendments, and tentative and parcel maps. (m) "Lower, Very Low, or Moderate Income" means annual income of a household that does not exceed the maximum income limits for the income category, as adjusted for household size, applicable to Santa Clara County, as published and periodically updated by the State Department of Housing and Community Development pursuant to Sections 50079.5, SOlOS, or 50093 ofthe California,Health and Safety Code. (n) "Maximum Residential Density" means the maximum number of dwelling units permitted in the Development by the City's Comprehensive Plan Land Use Element and Zoning Ordinance at the time of application, excluding the provisions of this Chapter. If the maximum density allowed by the Zoning Ordinance is inconsistent with the density allowed by the Land Use Element ofthe City's Comprehensive Plan, the Land Use Element density shall prevail. (o) "Non-Restricted Unit" means all dwelling units within a Development excluding the Restricted Affordable Units. i (p) "Qualifylng Mobilehome Park" means a mobile home park that limits residency based on age requirements for housing older persons pursuant to Section 798.76 and 799.5 of the Civil Code. (q) "Qualifying Resident" means senior citizens or other persons eligible to reside in a Senior Citizen Housing Development or Qualifying Mobilehome Park. (r) "Regulatory Agreem-ent" means a recorded and legally binding agreement between an applicant and the City to ensure that the requirements of this Chapter are satisfied. The Regulatory Agreement, among other things, shall establish: the number of Restricted Affordable Units, their size, location, terms and conditions of affordability, and production schedule. (s) "Restricted Affordable Unit" means a dWelling unit within a Development which will be available at an Affordable Rent or Affordable Sales Price for sale or rent to Very Low, Lower or Moderate Income households. (t) "Senior Citizen Housing Development" means a Development consistent with the California Fair Employment and Housing Act (Government Code Section 12900 et. seq., including 12955.9 in particular), which has been "designed to meet the physical and social needs of senior citizens," and which otherwise qualifies as "housing for older persons" as that 5 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved phrase is used in the federal Fair Housing Amendments Act of 1988 (P.L. 100-430) and implementing regulations (24 CFR, part 100, subpart E), and as that phrase is used in California Civil Code Section 51.2 and 51.3. 6 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (g) Any Restricted Affordable Unit provided pursuant to the City's Below Market Rate Housing Program shall ~ be included when determining the number of Restricted Affordable Units required to qualify for a Density Bonus or other entitlement under this Chapter. IA a(;j(;jitieA However, the payment of a housing impact or in lieu fee shall not qualify for a Density Bonus or other entitlement under this Chapter. [NOTE: This section was added in light of the recent court decision titled Latinos Unidos del Valle de Napa y Solano v. County of Napa.] Ii 7 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (i) Notwithstanding any provision of this Chapter, all Developments must satisfy all applicable requirements of the City's Below Market Rate Housing Program, which may impose requirements for Restricted Affordable Units in addition to those required to receive a Density Bonus or Concessions. (a) Restricted Affordable Units shall be constructed concurrently with Non- Restricted Units unless both the City and the applicant agree within the Regulatory Agreement to an alternative schedule for development. (b) Moderate Income Restricted Affordable Units shall remain restricted and affordable to the designated income group for a minimum period of 59 years (or a longer . period of time if required by the construction or mortgage financi or rental ;)UL/;)''''Y n,"nOI':! (b) In determining the maximum Affordable Rent or Affordable Sales Price of Restricted Affordable Units, the presumed household size as set forth in the City's Below 8 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved Market Rate Housing Program shall be used, unless the Development is subject to different assumptions imposed by other governrTIental regulations. (c) Restricted Affordable Units shall be built on-site and be dispersed within the Development, except as permitted in subsection (e) of this Section. The number of bedrooms of the Restricted Affordable Units shall be equivalent to the bedroom mix, of the Non-Restricted Units in the Development; except that the applicant may include a higher proportion of Restricted Affordable Units with more bedrooms. The design, square footage, appearance and general quality of the Restricted Affordable Units shall be compatible with the design of the Non-Restricted Units in the Development. The Development shall comply with all applicable Development Standards, except those which may be modified as provided by this Chapter. e Regulatory Agreement shall be consistent with the City's Below Market Rate Housing program guidelines. 9 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved 10 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (c) In submitting a request for Concessions or Incentives, an applicant may request the specific Concessions set forth below. The following Concessions and Incentives are deemed not to have a specific adverse impact as defined in Section 18.15.090 (b)(ii). (i) Up to a 50% average reduction of a side yard setback requirement if the design is consistent with the design guidelines, unless adjacent to R-1, R-2, RMD and other low density residential zones; (ii) Up to a 50% average reduction of the front yard setback requirements so long as setback is consistent with the design guidelines, unless adjacent to R-1, R-2, RMD and other low density residential zones; (iii) Up to a 50% average reduction of the rear yard setback requirements so long as the setback is consistent with the design guidelines, unless adjacent to R-1, R-2, RMD and other low density residential zones; (iv) A percentage increase in the height limit equal to the Density Bonus percentage for which the Development is eligible if necessary to accommodate the Restricted Affordable Units, with a maximum increase of one foot per Affordable Unit, and no event to exceed fifty (50) feet; (v) Up to fifty percent (50%) increase in the Floor Area Ratio (FAR) or up to the square footage of the Restricted Affordable Units, whichever is less. For a mixed use project, the applicant can elect to receive this FAR bonus for the entire project or for just the residential portion of the project. Any FAR bonus under this section shall be consistent with the applicable height requirements; (vi) Reduction in daylight plane requirements not to exceed 50% of the length of the adjacent lot line; (vii) Up to fifty percent (50%) increase over the maximum site coverage requirement or up to the square footage of the Restricted Affordable Units, whichever is less; , (viii) Up to a 50% reduction in private open space; or (ix) Up to a 50% reduction in public open space. (d) The setbacks referenced in this Section shall not include Special Setbacks as defined in Section 20.08.020. 11 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (e) The setbacks referenced in this Section shall only apply to the residential portion of any mixed use (residential and non-residential) development. (f) For Developments that propose to construct one hundr'ed percent (100%) of the dwelling units (except a manager's unit) as Restricted Affordable Units that are affordable to Very Low and/or Lower Income households, the Council may grant additional Concessions or Incentives or exceed the limits set forth in (i) to (ix) above if the Council finds that such Concessions or Incentives are required to provide for affordable housing cos~s, as defined in Section 50052.3 of the Health and Safety Code and are in the interest of the public health, safety, or welfare. (g) Nothing in this Chapter shall be construed to require the provision of direct financial Concessions for the Development, including the provision of publicly owned land by the City or the waiver of fees or dedication requirements. 12 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved 18.15.080 Ap.plication Requirements An application for a Density Bonus, Incentive, Concession, waiver, modification or revised parking standard shall be made as follows: (a) An application for a Density Bonus, Incentive, Concession, waiver, modification or revised parking standard shall be submitted with the first application for a Discretionary Permit for a Development and shall be processed concurrently with those Discretionary Permits. The application shall be on a form prescribed by the City and shall include the following information: 130102 jb 0131158 (i) A brief description ~f the proposed Development, including the total number of dwelling units, Restricted Affordable Units, and Density Bonus Units proposed. (ii) The zoning and comp~ehensive plan designations and assessor's parcel number{s) of the project site, and a description of any Density Bonus, Concession or Incentive, waiver or modification, or revised parking standard requested (iii) A vicinity map and preliminary site plan, drawn to scale, including building footprints, driveway and parking layout. (iv) If a Concession or Incentive is requested, a brief explanation as to the actual cost reduction achieved through the Concession or Incentive and 13 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] 130102 jb 0131158 Not Yet Approved how the cost reduction allows the applicant to provide the Restricted Affordable Units. (v) If a waiver or modification is requested, a brief explanation of why the Development Standard would physically preclude the construction of the Development with the Density Bonus, Incentives, and Concessions requested. (vi) Site plan showing Iqcation of market-rate units, Restricted Affordable Units, and Density Bon,us units within the proposed Development; (vii) Level of affordability of the Restricted Affordable Units and proposed method to ensure affordability; (viii) For Concessions and Incentives that are not included within the menu of Incentives/Concessions set forth in subsection (c) of Section 18.15.050, the application requires the submittal of the project proforma to the Director, providing evidence that the requested Concessions and Incentives result in identifiable, financially sufficient, and actual cost reductions. The cost of reviewing the project proforma, including, but not limited to, the cost to the City of hiring a consultant to review the financial data, shall be borne by the applicant. The proforma information shall include all of the following items: (ix) (A) The actual cost reduction achieved through the Concession; (B) Evidence that the cost reduction allows the applicant to provide affordable rents or affordable sales prices; and 'i (C) Other information requested by the Planning Director. The Planning Director may require additional financial information include information regarding capital costs, equity investment, debt service, projected revenues, operating expenses, and such other informatibn as is required to evaluate the financial information; 14 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (c) This Chapter implements State Density Bonus law. Any Density Bonus, Incentive, Concession, revised parking standard, waiver, or modification sought by an Applicant shall be made pursuant to this Chapter and may not be combined with similar requests under State Density Bonus law. 18.15.090 Review Procedures An application for a Density Bonus, Incentive, Concession, waiver, modification or revised parking standard shall be acted upon by the Approval Authority concurrently with the application for the first Discretionary Permit. The granting of a Density Bonus shall not be deemed approval of the entire Project or approval of any subsequent discretionary permit. 15 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved 16 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (c) Ifthe Approval Authority is not the City Council, any decision denying a Density Bonus, Incentive, Concession, waiver, modification or revised parking ~tandard may be appealed to the City Council within fourteen days of the date of the decision. 18.15.100 Regulatory Agreement (a) Applicants for a Density Bonus, Incentive, Concession, waiver, modification or revised parking standard shall enter into a Regulatory Agreement with the City. The terms of the draft agreement shall be approved as to form by the City Attorney and reviewed and revised as appropriate by the Director of Planning and Community Environment, who shall formulate a recommendation to the Approval Authority for final approval. (b) Following execution of the agreement by all parties, the completed Density Bonus Regulatory Agreement, or memorandum thereof, shall be recorded and the conditions filed and recorded on the Development. (c) The approval of the Regulatory Agreement shall take place prior to tentative map approval, and recordation shall take place prior to final map approval, dr, where a map is not being processed, prior to Architectural Review approval. The Regulatory Agreement shall be binding to all future owners and successors in interest. (d) The Regulatory Agreement shall be consistent with the guidelines ofthe City's Below Market Rate Program and shall include at a minimum the following: 130102 jb 0131158 (i) The total number of dwelling units approved for the Development, including the number of Restricted Affordable Units; (ii) A description of the household income group to be accommodated by the Restricted Affordable tJnits, and the standards for determining the corresponding Affordable Rent or Affordable Sales Price; (iii) The location, dwelling unit sizes (square feetL and number of bedrooms of the Restricted Affordablr Units; (iv) Term of use restrictions for Restricted Affordable Units of at least 59 years for Moderate Income units and at least 30 years for Low and Very Low units; (v) A schedule for completion and occupancy of Restricted Affordable Units; (vi) A description of any Concession, Incentive, waiver, modification, or revised parking standard, if any, being provided by the City; 17 Rev. Nobember 8, 2013 II II II II II II II [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved (vii) A description of remedies for breach of the agreement (the City may identify tenants or qualified purchasers as third party beneficiaries under the agreement); and (viii) Other provisions to ensure implementation and compliance with this Section. SECTION 3. CEQA The proposed Ordinance revises the requirements for granting a residential density bonus to comply with revisions to State law enacted by the Legislature through the adoption of Senate Bill 1818. Adoption of the draft density bonus codifies allowances that developers have been able touse in housing developments since 2005. Further, the revisions modify the criteria and incentives offered to qualifying developments but do not authorize construction not already permitted under the City's existing codes. Also, it is uncertain how many project applicants will seek to utilize the provisions of State law and this Ordinance and where such projects might be located in the City. Further, each individual project will be subject to its own environmental review. Consequently, this ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Section 15061(b )(3) of Title 14 of the California Code of Regulations since it can be seen with certainty that there is no possibility the adoption and implementation of this Ordinance may have a significant effect on the environment. SECTION 4. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid,such invalidity shall not affect the other provisions of this Ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this Ordinance are hereby declared to be severable. 18 130102 jb 0131158 Rev. Nobember 8, 2013 [At the Committee's request, provisions required by State law are highlighted] Not Yet Approved SECTION 5. This ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: City Clerk APPROVED AS TO FORM: Senior Assistant City Attorney 130102jb 0131158 19 Mayor APPROVED: City Manager Director of Planning & Community Environment Rev. Nobember 8, 2013 1 Planning and Transportation Commission 1 Verbatim Minutes 2 January 9, 2013 3 4 EXCERPT 5 6 Draft Density Bonus Ordinance Review: Request by Planning Division staff for PTC review 7 and recommendation to City Council for the adoption of the Density Bonus Ordinance with 8 Menu of Concessions 9 10 Chair Martinez: [Note—beginning of what Chair Martinez said cut off on the tape] provide the 11 Commission of the Density, the proposed Density Bonus Ordinance with a recommendation to 12 the Council. We will begin with a staff report. 13 14 Tim Wong, Senior Planner: Good evening, my name is Tim Wong and I’m a Senior Planner with 15 the City and this evening before you is the City’s Draft Density Bonus Ordinance. Density 16 Bonus is a state law that allows developers to build additional, a density above the maximum 17 allowable in exchange for providing affordable units in the development. And in 2004 through 18 SB 1818 the State significantly revised the Density Bonus Law. Many things were revised in the 19 law, but more significantly it increased the density bonus percentage for a lower amount of 20 affordable units or a lower percentage of affordable units in the development and it allowed for a 21 greater number of concessions to be allowed on one project. In addition it required jurisdictions 22 to adopt the state law into local ordinances. And that’s why we are here this evening. 23 24 In October of 2011 the Planning and Transportation Commission (PTC) held a study session to 25 review some of these revisions, but primarily to focus on allowable concessions and how to 26 evaluate granting these concessions. There were many items discussed, however there were 27 three items that were more commonly discussed if you will regarding concessions and they were 28 concerns about how using concessions can circumvent the City’s height limits. In addition 29 because of the City’s 15 percent Below Market Rate (BMR) requirement if a developer met the 30 BMR requirement would they be eligible for a credit? A Density Bonus Credit of one 31 concession. And lastly there was discussion about requesting financial documentation from the 32 developers to document the need of the requested concession. 33 34 At this session PTC was provided with two ordinances that had different approaches towards 35 density or towards concessions, San Mateo and the City of Santa Monica. The City of Santa 36 Monica ordinance was a little more structured with quantifiable concessions and a little more 37 detailed in how to grant the concession while the City of San Mateo was a little more flexible 38 and had more flexible language in their ordinance. And at the end of the session PTC directed 39 staff to prepare the draft ordinance more in the style of the City of Santa Monica and their menu 40 of concessions. 41 42 So what you have before you is a Draft City Density Bonus Ordinance. And some parts of the 43 ordinance include provision for a menu of concessions. So if you choose from these menus of 44 concessions no additional review is necessary per the ordinance. And these concessions that 45 have been listed in the menu were concessions drawn from past requests from approved projects: 46 increased Floor Area Ratio (FAR), encroachment in setbacks, and also requests for additional 47 height. And if the developer chooses not to choose from the menu of concessions additional 48 review is required from the approval authority and as part of the underlying discretionary permit. 49 2 And the ordinance does also include the financial information will need to be submitted as part 1 of this, part of that request. And lastly, staff anticipates that the Density Bonus Ordinance will 2 be a key tool for the City in achieving its Regional Housing Needs Allocation (RHNA) 3 requirements. And Cara will talk about some of the legal issues encountered in drafting the 4 ordinance. 5 6 Cara Silver, Senior Assistant City Attorney: Thank you Tim. Cara Silver, Senior Assistant City 7 Attorney. So the State Density Law is similar to the Housing Element Law in that it is a State 8 requirement that is essentially forced on cities. We don’t as a charter city see this very often in 9 the planning arena because we have the ability in most areas to adopt our own laws, but this is 10 one area where the State has required cities to comply with uniform requirements. 11 12 The current State Density Bonus Law in state law requires cities to adopt implementing 13 ordinances. So the substance of the law is essentially incorporated into the draft ordinance that 14 you have in front of you and there’s little discretion really to vary on the substance, but certainly 15 there is some flexibility on the procedures for implementing the ordinance. One of the highlights 16 for this evening that I wanted to bring up is the statutory findings that need to be made before if 17 the Commission is to deny an incentive or a concession. And so state law requires that certain 18 findings be made, that those findings be made in writing, and that of course substantial evidence 19 supports those findings. So we have incorporated those findings into the ordinance in section 20 18.15.090 and it’s important that some of the other requirements in the ordinance are driven by 21 those findings. And so that’s really the crucial part of your decision making here is that we want 22 to make sure that any additions or changes to the state law of course incorporate those findings. 23 24 One of the issues that is in, that we’ve discussed in the past with the Planning Commission is 25 financial information that is required from applicants. And so since one of the findings that for 26 denial relates to the financial aspect of the project and the economic viability of the project we 27 have included in the proposed ordinance in section 18.15.080 (A)(8) a requirement that the 28 applicant submit a pro forma in the event that they are requesting an exception or an incentive 29 that is not listed in our menu of options that Tim referred to. 30 31 Two final legal issues, one relates to the height limit. Again in the menu of concessions that 32 we’ve incorporated into our existing, into our proposed ordinance we have specified that 33 developments can exceed the height limits in existing residential zones, but we have specified in 34 the concessions that the height limit though can only go up to 50 feet in compliance with of 35 course the Comprehensive Plan. Now this is something that is an open issue. It could be that 36 applicants could request a height variance in excess of 50 feet and it’s still an open issue as to 37 whether the City has the ability to grant incentives that nevertheless are inconsistent with 38 existing zoning codes or even Comprehensive Plan limits. So that’s just an issue that we’re 39 footnoting at this point. 40 41 The final legal issue that we’re raising at this point is the relationship of the Density Bonus Law 42 with the BMR program. Of course in the current state of the law is that inclusionary housing 43 requirements are not applicable to rental housing given a recent court decision. So for rental 44 housing projects they typically pay housing fees and they do not provide restricted BMR units in 45 a rental housing project. However for sale condo projects inclusionary housing is still legally 46 applicable and one of the questions that was raised at the last study session by one of the 47 Commissioners was if we impose our existing inclusionary housing requirement on a for sale 48 project that automatically triggers Density Bonus. And so I think that we did some further 49 3 research on what other cities do and the existing state law and it does appear that the state law 1 does not really specifically address this issue. So it’s a policy issue of whether you want to have 2 the inclusionary housing requirement automatically trigger Density Bonus or do you want to 3 require that the inclusionary housing requirement be met first and then an applicant can apply for 4 additional Density Bonus units or incentives by derestricting an additional increment of housing. 5 So the proposed ordinance is written right now to first require that the inclusionary housing, the 6 BMR existing program be satisfied and then additional incentives would take place on top of that 7 by requiring additional derestricted units. So that highlights I think the legal issues and think 8 there’s any further wrap up? 9 10 Curtis Williams, Director: Thank you Cara, I just wanted to also add that and emphasize as Tim 11 did I think the last slide there, that this is an important component of our Housing Element 12 implementation program and that the Commission did include a number of mentions in the 13 Housing Element about certain incentives and concessions being allowed in consistency with this 14 ordinance to be developed. So this is a key part of that and will be a key part of being able to 15 show the State that we’ve complied. 16 17 Tim recounted for you some of the process here. The Commission has seen this over multiple 18 meetings, but it is a situation where we’re trying to implement the State’s overall objectives but 19 we’re trying to tailor something that fits the Palo Alto situation and trying to be a bit more 20 specific about relating the nature of the concession and the extent of the concession to the extent 21 and type of the Below Market Rate housing that’s being provided. So I know those of you who 22 have sat through some of the discussions on anything from 195 Page Mill Road to the 101 Lytton 23 and some other projects know how open ended that those discussions were because of some of 24 these state laws. So we do think this is important. We want to hear your thoughts and 25 recommendation on whether this is ready to move forward to the Council at this point. But 26 again, we think it’s a very important policy document for the City to try to set parameters around 27 the appropriate level of extensions or exceptions to allow. Thanks. 28 29 Chair Martinez: Thank you. Questions from the Commission? Commissioner Keller, questions. 30 31 Commissioner Keller: Yes, so you stated Madame City Attorney that the BMR inclusionary 32 requirements must be satisfied first for sale projects so for example, a BMR requirement 15 33 percent would not trigger a concession, but a BMR provision of 25 percent would trigger one 34 concession. Is that, am I understanding correct? 35 36 Ms. Silver: That’s the way the proposed ordinance in front of you is drafted. We believe though 37 that it’s a policy call. You can go either way on that issue. 38 39 Commissioner Keller: Well firstly I do agree with that policy, but I was, I read the ordinance and 40 I couldn’t figure out where in the ordinance it says that and I found some things that may not be 41 consistent with that so that’s what confuses me. 42 43 Chair Martinez: Further questions? 44 45 Commissioner Keller: No, but maybe you can give her a moment to respond. 46 47 Chair Martinez: Can we move on and then we’ll come back? 48 49 4 Commissioner Keller: You want to come back to that? But let me mention one thing just in 1 particular that will, for example, if you look on page 11 of the ordinance it talks about for 2 number four percentage increase in the height limit and then it’s based on a maximum increase 3 of one foot per affordable unit. That would actually be one foot for excess affordable unit over 4 the required for the BMR. So there’s little things like that that I don’t think are necessarily and I 5 couldn’t find anywhere, maybe I misread it, but that’s an issue. So that’s, also, for five that the 6 extra restricted affordable units we’re talking about. So that’s the kind of thing that I was 7 confused about, but I wasn’t sure where it was. So maybe you can tell me. Thank you. 8 9 Ms. Silver: It’s on page 7, letter G. “Any restricted affordable unit provided pursuant to the 10 City’s Below Market Rate housing program shall not be included when determining the number 11 of restricted affordable units required to qualify for a Density Bonus or other entitlement under 12 this chapter.” 13 14 Commissioner Keller: Thank you. That’s helpful, but I think that there other places in the 15 ordinance where, when you’re actually computing it based on a number that you also have to 16 exclude that number. Am I being clear? 17 18 Ms. Silver: I think what we need to do is change the term to restricted affordable units in those 19 places that you referenced. 20 21 Commissioner Keller: Yes. Ok, thank you. 22 23 Chair Martinez: Yes, Commissioner Tanaka. 24 25 Commissioner Tanaka: So my basic question is for this ordinance, and it’s kind of a general 26 question so maybe you can help me understand this, for the SB 1818, how much above or below 27 or I guess what I’m trying to get at is the qualitative feel of how much above the SB 1818 are we 28 doing? If at all or is it below? I’m just trying to just gage whether are we doing the minimum to 29 meet it or are you going above it? Or are we, I guess you can’t go below it. So maybe someone 30 could respond to that. I’m just trying to get a, because I didn’t actually read the SB 1818 myself, 31 so I don’t understand where we are compared to the state mandates. 32 33 Mr. Wong: Commissioner Tanaka we are meeting SB 1818. Nothing above and certainly not 34 below. So and I’ll be happy to provide you a copy if you really have some free time of SB 1818. 35 36 Commissioner Tanaka: Ok, and then the other clarifying question is I think the City Attorney 37 mentioned that it only applies for ownership units, not rental units. Is that right? 38 39 Ms. Silver: No. The Density Bonus Law applies both to rental and for sale. They City’s 40 inclusionary housing BMR program now no longer applies to rental housing. We cannot require 41 the construction of affordable deed restricted houses under a now not so recent court case. 42 43 Commissioner Tanaka: I see. Thank you. 44 45 Chair Martinez: Commissioner Alcheck. 46 47 Commissioner Alcheck: I’d like to ask the Planning Department whether they feel this ordinance 48 which could be described as setting the bar higher than the current ordinance will result in the 49 5 actual development of fewer Below Market Rate units. As I understand it very few applicants 1 apply for this bonus under the current ordinance. And I wonder if we will be inadvertently 2 discouraging that sort of development further. 3 4 Mr. Williams: Thank you Commissioner Alcheck. I think the, there’s a couple of parts to that. 5 One is very few in fact I’m not aware of anyone who has applied for the Density Bonus part of 6 this in Palo Alto who has ever asked for increased number of units, which you’re allowed to do 7 under this ordinance and under state law based on number of Below Market Rate units. So the 8 density part no one has done that currently. I don’t think this makes a lot of difference as far as 9 the potential for doing that because I still think things like parking and other considerations limit 10 it in a way that probably wouldn’t happen. 11 12 What does, what has happened on a handful of occasions now we’ve had where an applicant has 13 requested the concessions part. So I think that’s what we’re focused on is the incentives or 14 concessions part of it. And that has certainly been beneficial in terms of those applicants being 15 able to do their projects. I don’t know whether they would have done them without it or with a 16 lesser amount but I think what we’re doing here clearly is restricting to a level in terms of those 17 concessions less than what they could do without us having this implementing ordinance or if 18 our implementing ordinance just more or less mimicked SB 1818, which is what San Mateo’s 19 kind of did. Is that correct? Yeah, so that was basically was just reiterating the same language. 20 So I think we are restricting it. Whether it’s enough, whether it’s so much that it will drive 21 someone away from doing a project, I don’t know, but it’s certainly not encouraging more 22 housing than leaving it alone or adopting the state language. But it’s pretty hard to gage how 23 significant that is. 24 25 I do think one thing it does by this what Cara was just talking about the difference between for 26 sale and rental is this will be more beneficial for rental projects than it will be for sale because 27 you’re going to have to really get up there in terms of percentage of BMR to get the benefit out 28 of this for a for sale project. 29 30 Chair Martinez: Vice-Chair, questions? 31 32 Vice-Chair Michael: So I think to the extent that what you’ve told us is that this proposed 33 ordinance would be consistent with what’s required by the state law. It actually seems pretty 34 straightforward. To the extent that the City hasn’t recently received many if any applications for 35 Density Bonus I think Commissioner Alcheck’s question about whether we might in pursuit of 36 the goals set forth in the Housing Element or the with the housing allocation targets have a 37 policy of encouraging qualified developers to take advantage of this would be of interest. 38 39 I think I had one question that I was interested in. The submission of the pro forma financials as 40 set forth in 18.15.080 (A)(8), which seems to me to be a fairly straightforward and helpful 41 process. And I just know a similar issue comes up sometimes when you have a Planned 42 Community (PC) application and the question of public benefit and the nature of the public 43 benefit and the sort of quantity of public benefit. And I should find it useful here that there is a 44 process for some review of pro forma financials to sort of quantify certain decisions consistent 45 with the standards set forth in the ordinance. And I find that helpful. So I think that those are 46 my only comments, not really questions. 47 48 6 Chair Martinez: Good lead in. It seems that I wanted to get back to grilling the City Attorney. 1 I’m kidding. It seems to me that there are very few times where the pro formas would be offered 2 by the developer and mostly it would be sort of self-inflicted. The developer claimed that the 3 only way they could afford to do this project is if they get these concessions and then rightly so 4 somebody should ask well show us the paperwork. But in other situations where developer says 5 in order to make good use of this site I need to decrease the setbacks or I need a better FAR. It’s 6 not so much a question of the pro formas or the profitability of it, it’s more about the quality of 7 the land use. And so wouldn’t we be limited, somewhat constrained in asking for pro formas 8 Ms. City Attorney? Or Madame City Attorney as Commissioner Keller referred to you. 9 10 Ms. Silver: Thank you Chair Martinez. The way the ordinance is currently drafted the pro 11 formas are only requested in a situation where additional incentives that are not on the menu of 12 options are requested. So if somebody wants just a standard concession of waiving a setback 13 that falls in the menu and so a pro forma would not be requested. But in a limited situation 14 where an additional incentive is being requested one of the findings that the approving authority 15 needs to make is whether that particular concession is financially needed to make the project 16 viable. And so you know it seems appropriate in that situation then to request a pro forma 17 because that’s really the only substantial evidence that you would have to evaluate that issue. 18 19 Chair Martinez: Ok, but what if the applicant said “I will give the City a million dollars if I can 20 increase my density, a million dollars to build affordable housing elsewhere.” That’s not on the 21 menu I don’t think. So would the pro formas be required there? 22 23 Ms. Silver: Yeah, I think that that’s a development agreement essentially. It’s not really an 24 incentive or concession that is anticipated under Density Bonus Law. 25 26 Chair Martinez: Ok. On page four of the staff report near the top it talks about, let’s see, the 27 required units are to be built on site and then the third bullet says, “Includes the option for off-28 site development.” To me that sounds kind of contradictory. So could you clarify what that 29 means? 30 31 Mr. Wong: Chair Martinez actually it already has been done where there were two projects, 2650 32 Birch was required through Density Bonus to provide one affordable unit, but what happened 33 was 195 Page Mill, which also received two concessions in providing 17 affordable units the unit 34 at 2650 Birch was effectively transferred if you will to 195 Page Mill. There are distance 35 requirements. I think it cannot be more than a half a mile from the project site. Does that ring a 36 bell? But so the Density Bonus was fulfilled that way, but it was transferred to another 37 development which was nearby, kind of the off-site fulfillment of that for 2650. 38 39 Chair Martinez: Ok. My next question on the concessions we haven’t talked much about it and I 40 hope we can give some input tonight on that because I think this is a big deal. Why aren’t we 41 quantifying it? Why aren’t we saying yes, building height can go up one story? Why is it left 42 open ended? 43 44 Mr. Wong: It was left open ended to provide a little additional flexibility in providing those 45 concessions by not providing those quantified objectives if you will it will help show HCD that 46 we are serious about using Density Bonus as a tool to achieve our RHNA numbers and also to 47 provide that additional flexibility for the developer. 48 49 7 Chair Martinez: But we realize building height is a big deal in this town. So shouldn’t we be a 1 little bit more careful on how we offer it? 2 3 Mr. Wong: Well I do believe for that one particular concession for height we have capped it at 4 50 feet. And also there’s a proportionality in the number of affordable units offered so therefore 5 if in the height concession you can’t just provide one affordable unit in five and get unlimited 6 height. So it was an attempt to limit for height limit or quantify the restriction for height. 7 8 Mr. Williams: I mean we have quantified, is that what you’re talking about? The height 9 limitation relative to, it’s not floors, but it’s foot per affordable unit not to exceed 50 feet. So 10 there is, I mean there is a formula. 11 12 Chair Martinez: But isn’t that our limit anyway, 50 feet? Or is there something different? 13 14 Mr. Williams: Pardon? 15 16 Chair Martinez: Isn’t that our height limit anyway? 17 18 Mr. Williams: All our residential zones are less are 40 feet, 35 feet, etcetera. 19 20 Chair Martinez: Oh, ok. I get that. Since I have your attention (interrupted) 21 22 Mr. Williams: And then we have something I think a little different for mixed use somewhere. 23 Or no, ok we just left it at 50. What I think our thought was that if it was going to go over 50 24 feet though that need to then come to the Commission and go through that discretionary process. 25 26 Chair Martinez: Ok. Since I have your attention Mr. Williams isn’t, can you explain the what the 27 expectations for RHNA goals would be through implementation of this? Is it more perception or 28 is there a real number that we can identify in this? 29 30 Mr. Williams: It’s more perception. I mean I don’t think we can identify that this is going to 31 mean that 100 more units are going to be able to be accommodated in a future area. I mean what 32 the State’s looking for in terms of Housing Element compliance is that we are taking actions that 33 do provide some flexibility in this regard and do provide some incentives and concessions but 34 they don’t ask us to try to quantify how many more units that would specifically result in. And 35 we haven’t, we’ve estimated on our site analysis based on generally what can be done within 36 existing zoning parameters, but we did assume a little bit more for what the CN zone and that 37 we’ll have to amend the code to allow that. But this helps with that. It sort of helps support 38 some of the other arguments about when they question us about well these sites look kind of 39 tight and can you really get the kind of yield out of them that I think this is a section that will 40 help us tell them that we do have the flexibility to modify some of these standards to work. 41 42 Chair Martinez: And then the setbacks concession. I remember in the debate about 801 Alma the 43 proposed setbacks on all sides and the response from the City. I don’t think I was on the 44 Commission then; I was just here paying attention to what was going on. The City said well 45 that’s more than one concession and I don’t know how it ended up, but what’s being built are 46 units that everybody has said are too close to the streets as their first impression of this thing 47 going up. Seems to me that setbacks are too precious to be a concession. That it comes to us as 48 good land use practice and it comes to us as having to do with life safety as well. And light and 49 8 air and separation from neighbors and I really question whether that one should be on the table as 1 a concession. Were there other items that you considered that as potential candidates for 2 concessions that we could hear about? 3 4 Mr. Williams: I don’t think there, I don’t know if there were. Tim can answer that, but I just say 5 on the setbacks I understand what you’re saying. I think if it’s that critical in that situation that 6 we have authority under our zoning and design review powers to say that there is that kind of 7 especially if there’s a life safety type of issue, but it seems to me that from what I’ve seen on a 8 number of projects that there are several that it’s been almost a no brainer that having a reduced 9 setback was not impacting anyone and could be done. So I would hate to take that away and just 10 sort of blanket say you can’t get a concession for that. Maybe there’s a way to qualify it in here 11 or something so that there’s a point at which it’s not allowed. Maybe it’s too open ended the 12 way it is right now, but there are many times when setback isn’t affecting anyone that’s an easy 13 way to go to gain more flexibility on the site or yield on the site or something like that. 14 15 Chair Martinez: Seemingly so but anybody who I’ve talked to about 801 Alma complains about 16 the front setback. So that one wasn’t so easy to go and we gave it up. Granted it’s not, the 17 building’s not going to fall over onto somebody on the sidewalk, but (interrupted) 18 19 Mr. Williams: Yeah and it’s not done and it’s not any closer than several other buildings right in 20 the next blocks either direction. 21 22 Chair Martinez: Lower, much lower buildings that are closer (interrupted) 23 24 Mr. Williams: Some of them are pretty, ok. 25 26 Chair Martinez: But anyway I really think that one should be really considered a land use 27 decision more for Planning staff then for Architectural Review Board (ARB) or us to deal with 28 and once you offer it as a concession I don’t think it’s going to be that easy to take back. So I 29 would really give thought to doing that and I don’t know the concession of offering in lieu fees 30 for Density Bonus it seems to me, I don’t know maybe I’m mixing apples and oranges here, but 31 it just seems that would be important for us to do in terms of building our housing fund. 32 33 So and I guess in the ordinance I kind of read it over quickly this evening we are trying to get at 34 defining more clearly what these, the extent of what these concessions to go. So is it clear that 35 setback means all setbacks? Or is that negotiable or it’s not a concession if they don’t get them 36 all? 37 38 Mr. Wong: In regard, Chairman Martinez, each setback is considered one concession the way 39 this ordinance is prepared. So for 801 I understand they got three setbacks as one concession, 40 but this, the ordinance as written one setback is one concession. Although I will say the Council 41 has greater discretion to offer more flexibility in these concessions for developments that are 100 42 percent affordable. So. 43 44 Chair Martinez: Yes, Commissioner Alcheck. Comments? 45 46 Commissioner Alcheck: So I want to weigh in on the issue of requiring financial documentation 47 as evidence of the necessity of concessions. This report suggests that the Commission discussed 48 this idea and supports it and I want to highlight for the Council that since that discussion by the 49 9 Commission the makeup of this Commission has significantly changed. Only three of the 1 Commissioners from that Commission are currently Commissioners and I’m not sure there is 2 consensus anymore on whether or not we feel the financial information is helpful. And I won’t 3 speak for anyone else, but I myself do not believe the City should require developers to share 4 their financials for a number of reasons which I’m happy to share. I won’t at this time, but I am 5 happy to share them. And I strongly, strongly encourage the Council to approve this ordinance 6 without section 18.15.080 (A)(8). 7 8 And I want to highlight one other thing. I don’t believe the Planning Department believes that 9 this financial documentation is necessary. I think or at least it’s my impression, you can correct 10 me if I’m wrong that it was included here because a previous very different Commission 11 recommended it and you’re working off that recommendation. It’s not my impression that the 12 Planning Department feels that this information will help them significantly. So I want to 13 reiterate for the Council’s benefit that I am strongly opposed to this and I am that way for a 14 number of reasons and one of them is that it’s a slippery slope that I don’t believe this is 15 information that will help us. And that’s really my comment. 16 17 Chair Martinez: I’d like to open this for further discussion, but first I forgot we have one member 18 of the public that wishes to speak. So let’s open the public hearing. 19 20 Vice-Chair Michael: The speaker is Herb Borock. 21 22 Herb Borock: Thank you. I don’t think this proposed ordinance is ready to be voted to the 23 Council. Eight years ago was the first CMR about the amendments from SB 1818 and four years 24 ago this government code section was completely restated and amended. And for everyone to be 25 continuing discussing it as SB 1818 I have to say they don’t know what they’re talking about. 26 And to have one Commissioner say he hasn’t read the government code section when the version 27 that was adopted four years ago was attached to the staff report in October for you to read is a bit 28 confusing for me. 29 30 Some of the things the staff is offering I don’t think are legal such as being able to first require 31 the BMR units and then on top of it ask for concessions, such as asking for financial pro formas. 32 Those kinds of things look good to get approval but then they’re taken away by the courts. We 33 already have an ordinance the Pedestrian Transit Overlay District that says that is the way to 34 implement the Density Bonus in state law in the California Avenue area and there’s nothing in 35 here to reconcile those two. 36 37 In October you weren’t told about the condominium conversion, which is a separate section of 38 the code and that requires an action, a decision when a request is made within 90 days, but 39 there’s nothing here about what that process should be. I believe that should be before the 40 Commission and the Council. A lot of the proposed ordinance is rewriting things that are in the 41 code in Government Code Section 65915. But what happens when people rewrite things they try 42 and edit them and in some cases made them worse. For example, low income and lower income 43 can be rental units only. For sale units can only be moderate. Yet the definition in here reads as 44 if you can have for sale units that are low and lower income. You cannot do that in Density 45 Bonus law. 46 47 The issue of 2650 Birch and 195 Page Mill, I was at all the meetings and received a copy of the 48 Director’s decision. I don’t recall there being a transfer of a unit. Yet this is here sort of saying 49 10 you can do that. In fact you can’t because the definition of housing development in 65915 says it 1 has to be on contiguous sites. So you can’t put units someplace else. So that violates the law. 2 3 Similarly the Eden Housing project on Alma Street, at the time there was nothing in our law that 4 permitted a higher density that it put in. But if you calculated based on floor area and the size of 5 the units in South of Forest Avenue that project exceeded what the law allowed. This ordinance 6 gives that power, but you can only increase the density. You do not have the power to give more 7 incentives and so that is wrong as well. Thank you. 8 9 Chair Martinez: Thank you very much. Any further? Commissioner Keller. 10 11 Commissioner Keller: Yeah I was holding off further comments until we had the member or 12 members of the public speak. But I have a few comments. First I’d like to respond to the 13 comment from Commissioner Alcheck and that is that the way that government section, 14 government code, federal, state Government Section Code 65915 is that the purpose of 15 concessions is to make the housing more affordable. And therefore I would strongly recommend 16 keeping this section eight precisely because if somebody asks for a concession that’s not part of 17 what’s there then they have to explain why. Now if you want to eliminate section eight then 18 simply eliminate the ability to have concessions that are beyond what is in the menu. But if you 19 allow concessions that are not in the menu then they have to justify them and the purpose of the 20 ordinance from the state law is to make it affordable and therefore pro forma provides the ability 21 to do that. So that’s my understanding of why that is. 22 23 And I know that, couple things. First of all a number of the Commissioners have been invited to, 24 were, attended meetings put on by some organization that I know that Commissioner Tanaka 25 went to a meeting that I went to a few months ago where Commissioners and Council Members 26 and whatever are invited to attend, staff, on a countywide basis. And we were actually shown 27 how to read pro formas of housing and how to interpret them and such. So other cities may in 28 fact use them. So I’m going to put that aside as that. So if you have a catch all allowing other 29 concessions they have to justify them and explain why. 30 31 Ok. The first thing is in terms of let’s suppose you have a project in which they add five housing 32 units which are all affordable on a 100,000 square foot office building. How much concession 33 should they be entitled to get? So I think that if it’s legal, and I ask this of the City Attorney, is it 34 legal to only allow concessions on a project that is predominantly housing? And if the project is 35 not predominantly housing you don’t get a concession. So for example require that the portion 36 of development devoted to housing be at least 50 percent of the FAR of the floor area of the 37 entire project. Is that a requirement that we could have? 38 39 Ms. Silver: Commissioner Keller we’d have to research that a little bit further. The ordinance 40 that the state law really does not give much guidance on mixed use projects and unfortunately 41 there’s only like two published decisions on the statute. So we’ve struggled with how to deal 42 with mixed use projects and we’d have to think about that one a little bit more. 43 44 Commissioner Keller: So because for example what was also being discussed for the Lytton 45 Gateway project was a project in which there was a small amount of housing, one floor of 46 housing and a tremendous amount of concessions were being achieved for that. And so that was 47 a situation in which, yes? 48 49 11 Mr. Williams: So if I could just add what we’ve tried to, first of all I mean I think SB 1818 1 2 Commissioner Keller: Government Section Code 65915. 3 4 Mr. Williams: Yes. Does I think I read the intent of that as intending to apply to mixed use 5 projects. And so I, and also the fact that our Housing Element is highly reliant on mixed use 6 development in order to demonstrate that we’re compliant. So I think it would be kind of 7 counterproductive to somehow not apply it to mixed use projects. But the other thing is that 8 we’ve put the provision in here as far as the allowance for FAR is specifically limited on this 9 with that thought in mind on page 11 at the item V there. Up to 50 percent increase in the Floor 10 Area Ratio or up to the square footage of the restricted affordable units, whichever is less. So 11 what we’re saying is you don’t just get to do all kinds of extra commercial square footage just 12 because you gave us one more restricted affordable unit if that affordable unit is 1,300 square 13 feet then you get 1,300 square feet more of commercial. So we were very cognizant of that and 14 that’s why that provision is in there, to try to create some parity in those. 15 16 Commissioner Keller: Ok. 17 18 Chair Martinez: Commissioner, can I ask you what were you trying to achieve with your 19 suggestion? 20 21 Commissioner Keller: Well my suggestion is, first of all I’m not suggesting that we exclude 22 mixed use development. I’m just suggesting that we only allow mixed use developments in 23 which housing is a major component. So therefore if housing is let’s say 50 percent, 40 percent, 24 but some large percentage of the overall floor area then you get bonuses, but if housing is an 25 afterthought added onto a major office building then that’s not really a situation in which the 26 housing makes the project, more affordable housing makes the project that much more 27 unaffordable to the developer. 28 29 Chair Martinez: Commissioner the Gateway project was a PC though so the public benefits were 30 larger than just the housing being provided. It just it seems to me that you’re asking to put 31 additional constraints when we’re trying to build housing and we’re trying to make our effort to 32 the State seem more as if we’re serious behind it. I don’t really see the benefit in trying to 33 manipulate the development so it makes it less interesting for the applicant, the developer to 34 build his project because he has to provide more housing or is penalized for it. Why don’t we 35 just leave it alone? And we have the limits that the Planning Director has stated. 36 37 Commissioner Keller: Ok. May I continue? 38 39 Chair Martinez: Definitely. 40 41 Commissioner Keller: Thank you. Ok. In the cover material it basically says that, in the staff 42 report it limits the require, the limit on when a project can, when the restricted affordable units 43 no longer have to be restricted is 59 years. However on page 8 of the Draft Ordinance it says 59 44 years for some units and 30 years for other units. And I’m wondering why there’s a 30 year 45 there as opposed to 59? And secondly I’m wondering why it isn’t merely for the life of the 46 project. Why should we have to worry about it some years down the road? Why can’t it just be 47 as long as the project is there the units have to be affordable? Any thoughts? 48 49 12 Mr. Wong: Commissioner Keller I know the 30 year is straight from the Government Code 1 Section 65915 in that ownership units I believe are a minimum of 30 years. So (interrupted) 2 3 Commissioner Keller: So we can’t have a more severe requirement than the government code? 4 5 Mr. Wong: And I believe, no, we’ve made them for 59 years to be consistent with the City’s 6 BMR program. 7 8 Commissioner Keller: Ok, but it does say 30 years in the third line from the bottom of paragraph 9 B of 18.15.040. There’s one mention of 59 years and one mention of 30. Yeah I’m just 10 wondering if that has to be 30, but maybe you can think about that. 11 12 The next issue is on page nine. There’s a whole bunch of parking incentives which are by right. 13 Do those parking incentives apply only to the affordable units and our regular ordinance applies 14 to the regular units? The market rate units? Is that correct, my interpretation of that? 15 16 Ms. Silver: The by right would apply to the entire project. 17 18 Commissioner Keller: So in other words, if somebody has 20 percent affordable then let’s say 19 then they suddenly all of the development of the project, the remaining 80 percent is limited in 20 terms in of how much parking we can require? 21 22 Ms. Silver: Yes, that’s the state law. 23 24 Commissioner Keller: I see. Well I won’t mention any words I think about that, but anyway. 25 Because they’re not printable. But in any event at the bottom of that paragraph it says, “Provide 26 for tandem parking.” I would delete tandem parking. I don’t really see a reason for, if this 27 severely restricted to allow tandem parking in addition. 28 29 Chair Martinez: Do you have additional comments you want to (interrupted) 30 31 Commissioner Keller: Yeah, but I can do one; I can hold it and do another round if we have 32 another round. 33 34 Chair Martinez: Well how much more do you have? 35 36 Commissioner Keller: I have gone about a halfway through. 37 38 Chair Martinez: So you have another three minutes? 39 40 Commissioner Keller: I can go another three minutes, but I think it’s a little longer than that so 41 it’s your choice. 42 43 Chair Martinez: Ok. We’ll come back to you then. Commissioner Alcheck had some comments. 44 45 Commissioner Alcheck: I want to make a rebuttal on the financial issue. I don’t believe that the 46 ability to analyze a pro forma is relevant here. I have an MBA as well and I’ve spent many 47 nights with pro formas. I want to say that developments can take years. And the business of 48 development is risky for that very reason. And the success of a project and a development in this 49 13 City is as much a factor of fiscal components of that development as it is the time it comes 1 online. If it’s a good market, huge success. If it’s a bad market, it’s a bankruptcy. And if we 2 evaluate concessions based on how much profit a developer may make at the conclusion of a 3 specific project, we are allowing local government to reduce the upside potential and increase the 4 downside potential at the same time. It has, there is no benefit to a developer. 5 6 And I want to note that asking for a concession doesn’t guarantee receipt of that concession. 7 Each applicant that asks for a concession that’s not on the menu will have to make their case. If 8 they choose to voluntarily make that case with a pro forma, so be it. And if their case isn’t 9 strong enough without pro formas they’re denied. It’s not; you don’t ask for a concession and 10 get it. You have to make the case. And I think that we are capable of evaluating these 11 concessions without knowing how much money a developer anticipates making in a future that 12 nobody can guarantee. And that is, I mean that is the crux of the, my opposition to the analysis 13 of pro formas as a way of evaluating land use decisions. I think we need to evaluate whether we 14 want to allow these concessions because they make sense for us. They achieve a goal that we 15 have like increasing Below Market unit availability or the like. So I’m not going to make more 16 points on this outside of this comment. 17 18 Chair Martinez: Well stated Commissioner and I support your position. However I know from 19 recent events with the Speaker of the House you don’t call for a vote when you know you’re 20 going to lose. So I think the comments of Commissioner Alcheck will be heard by the Council 21 and we are going to allow it to sit as it is and with the recommendations that you’ve heard from 22 the various Commissioners today. Further comments? Commissioner Tanaka. 23 24 Commissioner Tanaka: Well one quick thing for staff is one of the members of the public made 25 some comments. I was wondering if maybe staff could quickly address those comments that we 26 heard? 27 28 Mr. Wong: I am not ready to address the Pedestrian Transit Oriented Development (PTOD) and 29 the condo conversion. I wasn’t… 30 31 Mr. Williams: The PTOD one I know we have in our Pedestrian Transit Oriented Development 32 zoning Mr. Borock is correct that we had included in there language because we developed that 33 zone very shortly after the state government code Density Bonus law was enacted and we tried to 34 envelop within that provisions that depending on how many BMR units you were providing that 35 you would get certain increases in height up to certain max. somewhat similar to what’s being 36 done here, however, then you’d be without this kind of an ordinance it became apparent that we 37 really couldn’t do that because that wasn’t in and of itself considered an implementing ordinance 38 for that code. It was just this one zoning district we had. So I think we had determined that we 39 really couldn’t apply that. 40 41 And so what I think we’re going to have to do is if this, if we pass this we’ll have to clean up that 42 ordinance and take that out and this will govern or modify it to be consistent with this or 43 something like that. So there is some inconsistency right now, but we’ll rectify that. This is a 44 broader based approach that we need to do citywide. So this is the way we should go at this 45 point and we’ll deal with the PTOD zoning at a later date. 46 47 14 Chair Martinez: And with other questions regarding state law. For example, for sale units only 1 applying to BMR applying to moderate income units if those are inconsistencies how do we 2 begin to correct that? 3 4 Mr. Williams: So you understand the question? We’re referring to ownership units that refer to 5 low and very low income. We don’t require that, but that somebody could do that and get 6 concession. 7 8 Mr. Wong: Oh absolutely. Right now the state law addresses ownership for moderate income. 9 That’s what the Government Section 65915 states, but yeah. If the developer chooses to do 10 lower affordability therefore he would be eligible for additional concessions or a higher 11 percentage of Density Bonus if that’s what the developer choses to do. 12 13 Chair Martinez: So there’s no inconsistency with the state law you’re saying? Yes? 14 15 Mr. Wong: If the developer chooses to do a deeper affordability I don’t think that that would be 16 an inconsistency with state law. 17 18 Chair Martinez: Ok, thank you. Commissioner Tanaka, I’m sorry I interrupted you. 19 20 Commissioner Tanaka: No problem. So I also saw that there was a concession for mobile home 21 parks. And I was wondering is that really part of the state law to actually have, you have to give 22 a concession for mobile home parks? 23 24 Mr. Wong: I’m sorry. Could you repeat the question again? 25 26 Commissioner Tanaka: Oh sorry. Ok. I noticed that there was a mobile home park concessions 27 and I was wondering is that really part of the state law to have the mobile home park concession? 28 29 Ms. Silver: Yes, it is. And that’s for the development of a new mobile home park and the state 30 law specifically provides incentives for the development of mobile home park and also for the 31 development of childcare facilities. And that’s part of state Density Bonus law and so it’s 32 incorporated into our local (interrupted) 33 34 Commissioner Tanaka: So there’s no choice basically. Ok. And I guess the other thing is what 35 has to be on the menu of concessions? I mean do we just, can we just put one thing or do we 36 have to have all the things that we have listed? What’s the requirement? 37 38 Mr. Wong: Commissioner Tanaka there is no requirement about what can or cannot be on the 39 menu of concessions. These concessions that were chosen by staff have just, were concessions 40 that were approved in the past or have been requested in the past. But it’s up to the Planning and 41 Transportation Commission to evaluate which are worthy if you will to stay on the menu or not. 42 43 Commissioner Tanaka: Because I’m actually with the Chair on this a bit in terms of quantifying 44 the concessions. And I think things like setback and other restrictions are kind of important and I 45 would almost want to see if this is state mandated that we have to have all of these kind of things 46 like mobile home park concessions. I would almost, or requirements. I would almost feel, sorry, 47 Density Bonus. I would almost feel like we should have just one item as a concession, an easy 48 15 one, and then everything else we should go through the PTC or ARB or the respective 1 (interrupted) 2 3 Mr. Williams: I just have to indicate that I think we have some discretion to implement this law, 4 but this is a state law that is intended to provide incentives to create housing. And I think that if 5 we come and we create one incentive and particularly if this one incentive that isn’t even 6 meaningful or something like that. I mean I’ll leave it to the City Attorney to judge whether that 7 will kind of jeopardy that puts us in, but it certainly doesn’t look good and I can tell you that 8 HCD when they’re reviewing our Housing Element is going to thumb their nose and say you’re 9 not, we’ve asked you to provide incentives and concessions for encouraging housing and they 10 are not going to be impressed by that kind of, if we’re that limited. 11 12 So I think what we’ve done is we’ve said there’s a fairly broad range of concessions here, but for 13 the most part in the areas where it really we’re talking about extensive development, FAR and 14 height, they are pretty limited and if you want to exceed those you’re going through the Council 15 and Planning Commission to do so. And that otherwise there are limits on most of these other 16 ones as to how much you can get. So it’s much, much more restrictive than what we’ve been 17 operating under the last six or seven years. But I understand it and using it to be so restrictive 18 that it doesn’t do what state law intended it to do as a Planner I don’t think that’s an appropriate 19 way to go unless the one concession that you’re granting is a really significant concession. If 20 you’re going to tell everyone they can have 25 percent more FAR kind of by right that might be 21 different. 22 23 Commissioner Tanaka: Well I guess I was just trying to think about what’s right for Palo Alto 24 and if those concessions are right for that development the various bodies would approve those 25 concessions, but I guess to have them automatic and not have any oversight to me is the 26 concerning part especially if they’re not a quantifiable concessions. So that’s more of a point, 27 that’s why I kind of was keying off of what the Chair was saying about that because actually I 28 agree. I think it makes sense. So that’s my main concern about that. I don’t know if it’s 29 possible for maybe for there to be some oversight about these concessions if they are not as 30 quantifiable. 31 32 Chair Martinez: Can I follow that up? It seems like from what we’ve seen there’s been a sense 33 of entitlement to these concessions. I know that it’s subject to ARB and to Planning staff’s 34 recommendations, but it just seems that developers from what I’ve seen feel that they can go 35 higher, they can go wider, they can go more FAR. It’s, that’s hard to sort of overcome when it’s 36 not good land use. And I think Commissioner Tanaka is really echoing my sentiments that you 37 know how do we sort of do this? And I respect what the Planning Director said, that this is 38 really an important perception that we want to give out that we’re looking for ways to increase 39 affordable housing and it may come to a few units that with insignificant impact because it is 40 hard to build things like that here. But on the one hand I don’t want to see us pushing the 41 requirement for pro formas and more documentation and like that, but on the other hand I want 42 the planning process to be on good land use not on what somebody feels they have a right to do. 43 So I don’t know how we strike a balance on that. 44 45 Ms. Silver: Chair Martinez? 46 47 Chair Martinez: Yes, City Attorney. 48 49 16 Ms. Silver: So the concessions, the menu of concessions start on page 10 of course and I’m sort 1 of struggling with this issue of the Commission thinking that they are sort of open ended and not 2 quantifiable. And we did have a fair amount of discussion on this and other jurisdictions do have 3 a little more quantification and in fact Santa Monica’s requirements were more quantifiable, but 4 we thought that it would be better to have some discretion. So the limitation that we put for 5 instance on the first three, the setback requirements is that they should comply, that the setback 6 variation should comply with design guidelines. Now it certainly is just as appropriate to modify 7 that with some other type of limitation and maybe even have a quantifiable measure, but it’s not 8 certainly open ended by any means. 9 10 And then going to the next set, the height limit we’ve talked about that is quantified very 11 expressly and as is I think the FAR. So the last three are certainly more open ended; they don’t 12 have any qualifiers. So it, maybe you can give us some guidance on how to better limit those, 13 but I think it would be helpful to review what we do have and perhaps suggest areas that you 14 think need improvement because there certainly was some effort put into trying to limit the 15 concessions in a way that did fit Palo Alto. 16 17 Mr. Williams: And we could do that in terms of saying like a percentage of no more than 25 18 percent reduction in setback or 50 percent reduction or same thing in daylight plane or open 19 space areas or things like that if that was preferred. 20 21 Commissioner Tanaka: So I (interrupted) 22 23 Chair Martinez: Commissioner Tanaka, go on. 24 25 Commissioner Tanaka: Sorry. I think that would certainly be better. I guess, I mean like I take 26 number four in the height limit issue. I mean and this is probably not possible, but for instance I 27 know the limit is 50 feet, but could you directly build something next to an R1 or in a R1 that 28 would be 50 feet? If you put a lot of BMR units in. Right? I guess I worry about that because I 29 think the Chair is right that we need to make sure that Palo Alto has the right land use. And I 30 especially don’t want the ones below which have no restrictions whatsoever. I think those, that 31 doesn’t feel right to not have those very quantifiable for some sort of like, doesn’t mean you like 32 with reduction of daylight plane requires some you could cast a huge shadow over your 33 neighbor’s property. I don’t know. I mean it doesn’t seem right. 34 35 And also I was maybe saying that either we have a lot of oversight over this to make sure that 36 something bad doesn’t happen, or we really reduce it so it, reduce it to the ones that are truly 37 quantifiable or something like that or maybe a mix of that. And so that we don’t end up with 38 something that we have no control over. 39 40 Mr. Williams: So that’s, I would just say if that is the sense of the Commission I would suggest 41 that if you want to do that and we, you would send it back to us and we would try to come back 42 to you with more quantifiable information. 43 44 Chair Martinez: Let me just follow up and then I’ll get to you Commissioner. I would suggest 45 kind of the opposite, that we adopt it just as it is as a pilot program for a year and just see what 46 comes. If we get no takers then it’s not doing what we’re trying to achieve and that’s to get more 47 BMR units. If it really becomes more problematic then we need to go back to the drawing board. 48 My only concern is that you say you can have up to 50 feet somebody will come in with a 50 49 17 foot project and we’re not finessing it. We’re sort of at the maximum at the get go. And maybe 1 that’s an unwarranted assumption given the lands that are available for housing development. So 2 maybe it’s a possibility that we just see if it works. There are certainly good ideas there and they 3 all make sense. It’s not like we’re thinking that this is some crazy thing that Planning wants to 4 do. I think it all is reasonable. It’s targeted towards our RHNA goals. You know we’re not 5 getting enough affordable housing. All the reasons for doing this and to comply to state law, 6 which is important. I think it’s worthwhile but we don’t know the outcome. And perhaps it’s as 7 easy as just giving it a try and coming back in a year and saying we have nothing to report. 8 Nobody is doing it or we’ll see another Lytton Gateway project where it’s not exactly how we 9 thought it would take shape. I don’t know. Is that a possibility for us, or is that not a good 10 planning strategy? 11 12 Mr. Williams: I mean it’s always good to review new ordinances and such when they go into 13 effect so I think that’s perfectly reasonable to specify that we review it in a year and see where 14 you are. 15 16 Chair Martinez: Vice-Chair Michael. 17 18 Vice-Chair Michael: So as always I’m impressed by the conscientious attention to detail of my 19 colleagues on the Commission pouring over this in great detail. And I’ve been thinking pretty 20 intently on each and every comment that everybody has made and I’m not persuaded that we 21 have any collective wisdom beyond there is a state law, this would implement on a local level 22 what’s required, it’s consistent with what were objectives in adopting the Housing Element. It’s 23 not been an area of heavy activity in the past nor is it really expected to be an area of heavy 24 activity going forward although it’s definitely the intention of the City to encourage the 25 development of Below Market Rate housing as part of achieving our overall objectives. 26 27 I would support the idea from Chair Martinez to move the approval of the ordinance as drafted. 28 Not on a trial basis but just as any ordinance and any ordinance that’s adopted is subject to 29 further review and amendment. I would say that the interest that sometimes comes up, I know I 30 have an interest in relationship to the new incentives and the PC project at Lytton Gateway came 31 up without having any financial information presented to the Commission I found it completely 32 nonsensical to have that discussion about what were the benefits and what was the value and why 33 and was it reasonable. Here I think the answer and advice from Deputy Assistant City Attorney 34 Silver about the very narrow application of the pro forma information only to the extent that 35 concession is sought beyond that which is an already sort of generous and comprehensive menu 36 of possibilities something is a very rational and reasonable way to provide an additional 37 incentive. If it’s not sought then there’s no reason for anybody to submit or disclose pro forma 38 information that they otherwise don’t want to disclose. So I think that very narrow and 39 reasonable part of the ordinance should definitely not be struck nor should it be taken as an 40 expression of our philosophy as a Commission regarding our appetite for digesting financial 41 information which varies very much by each Commissioner. But I think we’re ready to entertain 42 a Motion. 43 44 Chair Martinez: Not quite yet. First Commissioner Alcheck and then… 45 46 Commissioner Alcheck: I was going to ask the exact same question. I was going to suggest a 47 trial. 48 49 18 Chair Martinez: Ok. Yes, Commissioner Keller. You have three minutes. 1 2 Commissioner Keller: Sure. I have trouble reading the childcare facility. I don’t understand 3 what it means. It says, “Additional Density Bonus that is an amount of square feet of residential 4 space that is equal to or greater than the square footage of the childcare facility.” Looks like one 5 of these questions on a SAT test that I can’t figure out what they mean. Can you tell me what 6 that means? Could you give me an example of what that means? Sorry, page 12 of the 7 ordinance. 8 9 Mr. Wong: Yeah, Commissioner Keller if you provide 10,000 square feet of childcare in a 10 residential development you get an additional 10,000 square feet. 11 12 Commissioner Keller: Ok I’m not sure that’s what it reads because it says, “An additional 13 Density Bonus that is the amount of the square foot of the residential space that is equal to or 14 greater than the square footage of the childcare facility.” So you’re saying something about 15 residential space and you’re comparing that to the childcare facility and the way I read that is 16 that’s the part that’s the excess of the childcare facility? I think it’s, I think you need to clarify 17 what you mean. If you really mean that you’re adding to the amount that you add the square 18 footage that is the amount of the square footage of childcare facility then say that. If that’s what 19 you mean it’s too many words to say that and it’s pretty ambiguous from my point of view. 20 21 Chair Martinez: Ok. Point well taken so they’ll work on it. 22 23 Commissioner Keller: I have a few suggestions on how to, with respect to what the Chair said 24 about quantifying the kind of concessions. I have some suggestions along those lines. So for 25 concession one, which is reduce side yard setback, I would suggest that that be reduce side yard 26 setback on one side and I would exclude not only design, consistent with design guidelines but 27 also exclude special setbacks. Because sometimes you’re on a corner and there’s a special 28 setback on that side. For example, Alma Street or Charleston there are special setbacks and I 29 would not want to go inside that. Similarly for two and three I would exclude special setbacks 30 for all three of those. So you can’t achieve a concession that gets you closer to the street than 31 when they have, when we have one of those special setbacks for that street. Because those are 32 standard, I’m not sure whether those are considered design guidelines, but they’re standard. And 33 I think they’re called, aren’t they called special setbacks? Am I correct in that? 34 35 Mr. Williams: Yes they are called special setbacks. 36 37 Commissioner Keller: And I would not want people exceeding that. You know, limiting on that. 38 With respect to number four, concession four I believe you talked about restricted affordable 39 units as opposed to affordable unit. So that’s an additional word that you talked about adding. 40 With respect to five I don’t have any comment on that per se. With respect to six, reduction of 41 daylight plane requirement on one side as opposed to in all directions, but on one side. So each 42 daylight plane you do is its own concession. With respect to seven I’d leave that alone. With 43 respect to eight I’d separate private and public space. So a reduction of private space is one 44 concession with reduction in public open space is a separate concession. So if you split those out 45 those are two separate concessions. I would delete nine because it’s already by right. So there’s 46 no reason to have it as a concession here. 47 48 19 I would put two other concessions however. So one more concession is the public open space is 1 now nine and ten is exceeding the 35 foot height limit adjacent to residential. So that is a 2 separate concession because we have a citywide rule that says if you’re adjacent to residential, 3 neighborhood residential zone you can’t exceed the 35 height limit and that should be its own 4 separate concession. 5 6 Mr. Williams: You mean separate from the height concession? 7 8 Commissioner Keller: Yes. 9 10 Mr. Williams: So it’s a concession to exceed 35 feet but then it’s a concession to exceed it under 11 the height provision is a separate concession? 12 13 Commissioner Keller: That’s right because you’re exceeding two different rules. So the issue is 14 that that’s actually a separate provision on the code so you have to use up two concessions when 15 you’re adjacent to residential if you’re going to exceed the height limit there. Ok? So think 16 about that. 17 18 In addition this, these are by right concessions as I understand them with the exception of the 19 discretionary one where they, where there’s a dispute on whether they should have a pro forma. 20 However, if they’re going to use a discretionary process then they should use the discretionary 21 process not the by right process. Combining the two is problematic. So I would say that if you 22 used these, if you used this ordinance that this ordinance does not apply when use a PC, a PTOD, 23 or a variance or a Design Enhancement Exception (DEE). If you do any of those, which are 24 extra things you get then use those and not this. You don’t get to double dip. 25 26 Finally, what was mentioned by one member of the public is the issue of rental conversion to 27 condo. The problem is that we need to make sure that our rental conversion to condo ordinance 28 is consistent with this. And part of the consistency that needs to happen is that the BMR units 29 that are required in the conversion to condo have to take into account the ones that they achieve 30 for the, that they got from the concessions for the rental units. So in addition to the 15 percent 31 units that you have to have BMR for the conversion to condo you have to add to that all the units 32 they got, all the units that they offered for getting the concessions for the rental housing. So that 33 needs to be added to it. Ok? 34 35 I, the ordinance is I assume clear, but I’m not sure of this whether the ordinance is clear on 36 whether there are concessions for fewer than five units. It talks about the ordinance being 37 effective for more than five units. But it could probably say that it doesn’t, that no concessions 38 are allowed for under five units and it’s, I think that being explicit makes sense. 39 40 And I would remove tandem parking from 18.15.050 (A). I don’t see why we should provide by 41 right tandem parking. Essentially what that would do is it would provide tandem parking an 42 entire complex and tandem parking is problematic. And I would actually rather than passing the 43 ordinance as is I would actually prefer passing the ordinance on with these changes if people 44 would like to discuss them. 45 46 Chair Martinez: Let me as staff. Would you prefer that you come back with some revisions? 47 This is a lot of items. Or do you want us to try to hammer out a Motion with a lot of ugly 48 amendments to it? 49 20 1 Mr. Williams: No, I would say that if a majority of you feel like you want us to address those 2 amendments that we should just take in what’s been suggested and come back to you with 3 something that’s cleaner. 4 5 Chair Martinez: I don’t want to suggest though that everything that we said has to be revised. 6 7 Mr. Williams: Right. 8 9 Chair Martinez: For example there may be a good reason for including tandem parking. I don’t 10 know. Maybe tandem parking isn’t part of the parking cap it’s just tandem parking as it 11 normally is. So I would like to see you come back but on those items on this laundry list that 12 you don’t choose to incorporate just provide a reason why that you choose a different strategy on 13 that. 14 15 Commissioner Keller: Chair? 16 17 Chair Martinez: Yeah, Commissioner Keller. 18 19 Commissioner Keller: Thank you. There’s one other thing that I left off which was brought up 20 by several of the other Commissioners and I think useful in this. And that is that concessions 21 one, two, three, and five would not be eligible. Sorry, one, two, three, and four. Actually I’m 22 not sure exactly which ones of them would not be eligible, but would not be eligible to be 23 applied adjacent to R1, R2 or RMD. So in a situation where you have R1, R2 or RMD then you 24 can’t apply the daylight plane, you can’t apply the setback on the side that’s adjacent to that. 25 You can apply on the side that’s not adjacent to that, but to avoid adjacency issues on the side 26 that’s adjacent to R1, R2 or RMD you can’t do the setback or daylight plane or that kind of stuff. 27 So I’m not sure exactly which ones apply, but certainly we need to think about restricting it in 28 that way. Thank you. 29 30 Chair Martinez: Staff are we under a time constraint here? Does this have to get done by 31 February the 6th or some number? 32 33 Mr. Williams: No. 34 35 Chair Martinez: So, I know. I read 2005 and so we’re on schedule. Ok. Just so that we can 36 continue this. Commissioner Alcheck. 37 38 Commissioner Alcheck: I would like to, if it comes back and includes this pro forma piece, 39 which I’m encouraging it doesn’t I would like to know what the staff feels is the purpose and 40 whether or not the staff feels like that’s necessary for them to be, for this evaluation. Because I 41 don’t think that the report actually provides that explanation. So that’s my last comment. 42 43 Chair Martinez: Commissioner Tanaka. 44 45 Commissioner Tanaka: So I just want to comment on the concessions because I think it actually 46 makes sense for it to come back to us because it’s not urgent, it’s not frequently used, and in 47 while I in general I like the idea of trials if we have a big mistake I think it could also be a 48 problem. But can staff as they go through this try to quantify like reduced side yard setback? Is 49 21 that reduced mean get rid of it completely? Does it mean reduce it by one foot? I mean I guess 1 that’s the kind of thing that I would like to know. What does reduce mean? Reduce by how 2 much? Because if it’s just a foot it’s probably not a big deal, but if it’s the whole thing is gone 3 that could be a big deal. So maybe if that could be, anywhere you can if you have some sort of 4 quantification of that I think that would be a good idea. 5 6 And then one thing about height, I just feel that’s kind of a hot topic for the community and 7 maybe that’s kind of the height exception you really should hit the Planning Commission or City 8 Council. I don’t know if it should be by right. So that’s another thing. That’s my two cents. 9 I’m not sure other Commissioners agree with that, but I think height’s a really hot topic and the 10 other ones maybe are ok to have sort of quantification of, but height and automatic 50 foot seems 11 a bit much. That’s it. Thank you. 12 13 Chair Martinez: Seeing no other hands let’s end this item for tonight. Thank you very much. 14 Thank you (interrupted) 15 16 Mr. Williams: Did you close the public hearing? 17 18 Chair Martinez: Oh. I will. 19 20 Mr. Williams: I just want to make sure because we will have to notice it again as a public 21 hearing. 22 23 Chair Martinez: I’m sorry do (interrupted) 24 25 Mr. Williams: Should we close it or not? Does it matter? 26 27 Chair Martinez: Yes? 28 29 Ms. Silver: No, we should keep it open. 30 31 Mr. Williams: But if we don’t know what date it’s coming back then we have to notice it. 32 33 Chair Martinez: That’s a good idea. We’re going to do that. Commissioner Keller. 34 35 MOTION 36 37 Commissioner Keller: May I make a Motion to continue this item to a date uncertain giving staff 38 an opportunity to respond to our comments. 39 40 SECOND AND VOTE 41 42 Chair Martinez: Ok there’s a Motion and we have a second? Seconded by Commissioner 43 Tanaka. Those in favor, do you want to comment on that? No. Those in favor of the Motion 44 say aye (Aye). Motion passes unanimously with Commissioner Panelli absent and one empty 45 chair. I want to close the public hearing and thank you all for this. I think it will be better. 46 47 MOTION PASSED (5-0-1-1, Commissioner Panelli absent and one empty chair) 48 49 1 Planning and Transportation Commission 1 Verbatim Minutes 2 March 5, 2013 3 4 EXCERPT 5 6 Review and Recommendation to City Council to Adopt New Chapter 18.15 (Residential 7 Density Bonus) to Title 18 (Zoning) of the Palo Alto Municipal Code to Implement 8 Government Code Section 65915 (Continued from January 9, 2013) 9 10 Chair Martinez: We’re going to reconvene and start right up with Item Number 2, Review and 11 recommendation to City Council on the proposed Density Bonus Ordinance. We’ll start with a 12 staff report. 13 14 Tim Wong, Senior Planner, Housing: Good evening Commissioners, my name is Tim Wong and 15 I’m a Senior Planner. On January 9th the Planning Commission, the Planning and Transportation 16 Commission (PTC) first reviewed the initial draft Density Bonus Ordinance and there were a 17 number of comments made, but coming out of that meeting there were three main discussion 18 points. Number one main discussion point about the draft ordinance; the first point was about 19 requiring a pro forma. A second discussion point was quantification of concessions on the menu. 20 And lastly there was also some points made about jurisdiction oversight for these concessions. 21 22 And so staff went back and revised the draft Density Ordinance based on PTC feedback and in 23 regards to the requirement of pro forma, staff has revised that requirement to say that instead of 24 requiring or will require the submittal of a pro forma, staff has revised that language to say “may 25 require financial information.” Staff feels that that requirement should be retained since per the 26 Government code the only way to deny a concession is proof that it is not, that concession is not 27 needed to provide affordable units or lower the affordability. So, but instead of making it 28 mandatory staff has revised it to make it on the Director’s discretion. 29 30 Secondly the second item was quantification or quantifying the concessions. So staff has gone 31 back and quantified the more popular concessions, the setback, daylight plane, and previously 32 the height had already been quantified therefore it hadn’t been touched. Some of the less popular 33 concessions on the menu have not been quantified to hopefully make them more attractive for 34 potential developers in the future. 35 36 And lastly the last point was government or jurisdiction oversight to these concessions. In that 37 staff responds to that comment is that through the menu of concessions and quantifying some of 38 these concessions that is probably what the City can do in overseeing those concessions. The 39 purpose and intent of the government code is to kind of eliminate, not eliminate, limit City 40 oversight or jurisdiction oversight and staff feels that what is before you is probably what the 41 City can do while meeting the purpose and intent of the code. So that concludes staff’s 42 presentation. 43 44 Chair Martinez: Commissioners questions? Commissioner Alcheck? Oh, I don’t know, I should 45 ask that. Are there any members of the public who care to speak on this item? I see none. Ok. 46 Questions, comments from Commissioners. Oh I guess we’ll go with Commissioner Keller. 47 48 2 Commissioner Keller: Yeah, I suggested you formally open and close the public hearing just for 1 formality and then I’ll… 2 3 Chair Martinez: Someone might be rushing in at the last; I’m going to give them a shot at it. 4 5 Commissioner Keller: At least open it anyway. 6 7 Chair Martinez: Oh, ok. Let’s open the public hearing. 8 9 Commissioner Keller: I, based on the fact that we had an extensive discussion on this several, not 10 very, I guess several months ago, I have only one change to the recommendation that I would 11 like to see. And that is that I brought up the issue of special setbacks. And the narrative 12 basically said that special setbacks are setbacks and therefore they’re covered by what’s 13 described. That was not the intent of my suggestion. My suggestion was that special setbacks 14 may not be reduced by concession ever. And this allows setbacks to be reduced. So I was 15 suggesting that special setbacks be excluded from allowing for concessions. And the reason for 16 that is special setbacks are situations where this contextual thing going on in a neighborhood. So 17 for example, along Alma Street there’s a special 30 foot setback and that’s true along a number 18 of our major residential arterials. And I think that that should be respected regardless of the 19 development with the possible exception of Alma Village, which I didn’t agree with either. But 20 essentially those special setbacks should be respected so I would like to exclude them. 21 22 Chair Martinez: I have a question about that. Are the special setbacks somewhere codified that 23 we know what they are or is that just sort of a general term that we apply? 24 25 Amy French, Chief Planning Official: This is Amy French, Chief Planning Official. We have a 26 map that identifies the special setbacks. They were identified on… they’re larger in general than 27 the 20 foot front yard setbacks. These are arterial streets such as Middlefield, Embarcadero and 28 they’re identified through Title 19 of the Palo Alto Municipal Code in reference to the map that 29 was adopted. 30 31 Chair Martinez: Ok and to our City Attorney. Are we in compliance with the State mandate if 32 we adopt such restrictions? 33 34 Cara Silver, Sr. Assistant City Attorney: Thank you Chair. Cara Silver, Senior Assistant City 35 Attorney. What I would suggest if that’s the Commission’s intent, is to specify in the sort of 36 what we call the ministerial menu of concessions that are granted as a almost a matter of right 37 that the special, that those shall not include a waiver from the special setbacks. However, if we 38 were to outright prohibit any granting of some special setbacks even upon a financial finding that 39 the Density Bonus provision is designed to accommodate that could be legally problematic. 40 41 Chair Martinez: Commissioner Keller. 42 43 Commissioner Keller: I would certainly be supportive of the suggestion that Counsel has 44 recommended to us and that would implement what I would want. 45 46 Chair Martinez: Are you done? Commissioner Panelli, comments? Really? The other side? 47 Commissioner Alcheck. 48 49 3 Commissioner Alcheck: I’m prepared to support this. My concern and I mentioned it last time 1 was that we’re sort of setting the bar even higher and in doing so creating a bigger hurdle for 2 developers who may otherwise provide low income or affordable housing. And I guess my 3 request would be that if staff could alert us when an applicant successfully applies for this. That 4 would be of interest to me. Because it’s my understanding that this happens very infrequently 5 and so I’d just like to know if over the next year or so when those things happen because then we 6 can kind of keep track of whether or not this is accomplishing I think the lofty goal of 7 encouraging affordable housing units. But otherwise I support the Motion. I support the making 8 of a Motion. 9 10 Chair Martinez: Thank you. Commissioner Tanaka, comments? Commissioner King. 11 12 Commissioner King: Let’s see. I am walking into this sort of halfway through. I read the 13 minutes from last time and one of the things that was of interest to me were Commissioner 14 Keller’s comments about the time limit on these. And so I guess one question; what is for a 15 family of four what is the moderate income housing limit currently? Can somebody on staff 16 advise? 17 18 Mr. Wong: Commissioner King the median income for a family of four in Santa Clara County is 19 $101,300. So for a moderate income it’s about ten percent higher or $110,000-115,000 for a 20 family of four. 21 22 Commissioner King: Ok, thank you. And so my understanding is the State Density Bonus is a 23 mechanism for the State without funding affordable housing themselves to basically allow us, or 24 requires us to go above and beyond what we consider the reasonable entitlements for a property 25 effectively burdening the community, the neighbors, whomever, that we for whose protection we 26 set those entitlements and then that effective cost that is borne by the community and converted 27 into money for the developer as an incentive then lasts as long as the building is there. And so I 28 had asked staff and they were kind enough to respond today about that and it sounds like on the 29 low and very-low income units that there’s a 30 years and that as a minimum, but their response 30 was that we can’t go beyond that. But on the moderate income housing they’re using 59 years, 31 staff has proposed 59 years. 32 33 To me if our goal over time is to foster affordable housing and in this case moderate affordable 34 housing, moderate income affordable housing, as we run out of more projects over time or we 35 will truly be built out then these won’t get replaced. And so if the overarching goal for the 36 community is to have this amenity then it doesn’t seem logical to me to have a limit 59 years for 37 those, for that requirement. And so I guess my question is am I missing something? Why 38 wouldn’t we just make that in perpetuity or as long as the building exists? And it sounds like 39 from the response today that really we’re doing the 59 years for consistency and because, and I 40 quote, let’s see… consistency and then there was one… I think it basically was to paraphrase 41 because that’s how we’ve done it. And so oftentimes that is how things are retained and so I’d 42 like to bring up the question, why wouldn’t we push on that for, to match the length of the 43 building’s life? 44 45 Ms. Silver: Why don’t I take a stab at that and then Tim may want to add on. The way the 46 moderate income deed restriction works is that there is no requirement in terms of the term under 47 the State law. And so actually under, there’s no limitation. And so the City has some flexibility 48 in determining what the appropriate term for the affordability restriction should be. The way our 49 4 Below Market Rate (BMR) program is administered is that typically a deed restriction will be 1 placed on the first owner of the property and that deed restriction is typically 59 years. And then 2 when that person, if that person does not stay there for 59 years, which typically is the case the 3 new owner will come in and then a second deed restriction will be placed. And that deed 4 restriction will be 59 years according to our program guidelines. So in essence you have that 5 protection just in the way the program is administered. And I think for administrative ease at this 6 point unless there’s a need to vary from our existing procedures it’s easier at a staff level to be 7 able to administer the BMR program in a consistent fashion. 8 9 Commissioner King: Thank you. And so that’s for the ownership, the purchase BMR program. 10 Now do we not have any structures that serve the rental? Or am I missing something that that’s 11 not for moderate that we don’t offer that for moderate income rental? 12 13 Ms. Silver: We don’t typically in Palo Alto have a lot of moderate income rental properties. We 14 may have some and in that case that’s a good point that we could have a longer deed restriction 15 under State law that would be permissive to require that the property developer continue to offer 16 for rental longer than 59 years. Tim do you know if we have many moderate income units’ 17 rentals? 18 19 Mr. Wong: I do not believe we have any BMR units for moderate income, BMR rental units for 20 moderate income. Our BMR program for rentals is specifically for low income, very-low and 21 low. So we don’t have any moderate income rentals. 22 23 Commissioner King: Thank you. So I guess it begs the question if they don’t exist does it bother 24 even, bother talking about it I guess. Do we have a dinosaur rental program at all? I guess not. 25 Ok. Thank you. 26 27 Chair Martinez: Vice-Chair Michael. 28 29 Vice-Chair Michael: So thank you. So I appreciate all the work done by staff in putting this 30 together and I think it’s the right thing to do and the right way to do it; maybe unlike my feelings 31 on the last item. I think that the question about whether and when the staff would find it 32 appropriate to do some financial analysis in relationship to concessions probably doesn’t apply 33 here as much as it does maybe in the case of a Planned Community (PC) where there may be 34 some quantifiable impact on the infrastructure or community in some way that would bear upon 35 the approval process. So I think that having that be discretionary here is perfectly appropriate. 36 37 Also I really appreciate the work that you’ve done to provide a menu of options regarding the 38 concessions because I think that that encourages a open rational economic opportunity for 39 anybody who is considering doing a project. They can pick and choose, price that out, see if it’s 40 feasible and I hope that although we’ve been told that this is not likely to get heavy use that it 41 would be, that we would start to see some projects which would come under the Density Bonus 42 Ordinance and that would help the City meet its commitments regarding affordable housing and 43 the polices in the Housing Element that we’re about to finally adopt and our commitment under 44 the Regional Housing Needs Allocation (RHNA) which, all of which is very important. So I 45 think this is a step forward in that regard and I think it’s very close to being perfect and I think 46 it’s certainly good enough for our purposes and I support it. 47 48 Chair Martinez: Wait your turn young man. No, go ahead. Commissioner Panelli. 49 5 1 Commissioner Panelli: Ms. Silver you opened up a Pandora’s Box for me here because now I 2 really, I felt pretty good about where I was and now I need to understand something a bit better. 3 4 Chair Martinez: I hate it when she does that. 5 6 Commissioner Panelli: You said, if I were to understand correctly, that in the case of the, to 7 Commissioner King’s questions in the case of the moderate income housing those have deed 8 restrictions which typically last 59 years and if there’s a transfer of property, grantee, 9 grantor/grantee within that 59 year process a new 59 year period begins. Is that accurate? 10 11 Ms. Silver: Yes, that’s correct, and that’s only for ownership units, moderate income ownership 12 units. 13 14 Commissioner Panelli: And so what happens in the case of low and very-low income rental 15 properties that are held by whether it’s a profit or non-profit corporation? Those are the, that’s 16 the 30 year restriction. Correct? 17 18 Ms. Silver: Actually for the City’s affordable housing requirements we generally put a 59 year 19 deed restriction or 55. But the State Density Bonus Law provides that if a developer is willing to 20 put a 30 year deed restriction they are by law entitled to the protections of the Density Bonus 21 Law. 22 23 Commissioner Panelli: And at the end of that 30 years what happens? 24 25 Ms. Silver: It reverts to market rate unless there is some other deed restriction that applies to the 26 property. Typically developers use other funding which may have additional affordability 27 covenants that would operate to extend the term. 28 29 Commissioner Panelli: So this is a nuance I did not explicitly understand when I was reading the 30 material. We are effectively at risk of losing the affordable housing that we entitle every 30 31 years after it’s been entitled as such. And so we’re continuously losing; we give density bonuses 32 and concessions and then we effectively should just assume that we’re going to lose that 33 inventory and have to replenish it somehow. This seems like a really bad recipe. It seems like a 34 recipe for disaster. 35 36 Ms. Silver: That is the case for the small number of affordable units that are created through the 37 Density Bonus Program. State law provides that there is, that developers can just provide a 38 simple 30 year deed restriction. Now, you know, that also lines up with the age of housing stock. 39 Housing stock doesn’t last forever. It does typically turnover over a certain period, whether it’s 40 30 years or 50 years depends. And but that, yes, that is the shortfall of the Density Bonus Law. 41 42 Commissioner Panelli: Ok. Thank you. 43 44 Chair Martinez: It seems to me one of the reasons we would find this attractive is that it would 45 encourage developers to kind of take on more responsibility for lower income housing. I don’t 46 hear from Commissioner Alcheck that this is true. I heard that this would provide more 47 constraint. So is it anticipated, have we done any projections about what the outcome of 48 providing this Density Bonus Law would provide to Palo Alto? Tim? 49 6 1 Mr. Wong: I do not, we have not done any projections since it is an owner, it’s not a requirement 2 such as BMR. We can maybe project how many units and we can take 15 percent of those, but 3 for Density Bonus it really is an owner by owner type decision. So there’s no way to really 4 project how many potential density, affordable housing units we’d get through Density Bonus. 5 6 Chair Martinez: So in looking at our Regional Housing Mandate of 2,180 we couldn’t say that 7 two percent would come from something like this? We have no idea of; it’s a question, but no 8 idea of sort of the positive effects of having this Density Bonus Law? 9 10 Aaron Aknin, Assistant Director: I don’t think we could quantify an exact number of units. The 11 thing I would say, I mean I understand what Commissioner Alcheck is saying, but to the point 12 that I would disagree is that it does create some certainty both for the City in terms of developing 13 a menu of concessions and on the developer end to what the City’s expectations are, what we 14 will consider for these concessions. So I think it does help when they’re taking a look at land 15 and what they want to develop. 16 17 Chair Martinez: Correct me if I’m wrong, but hasn’t the only time this has been used is when 18 low income developers wanted to increase the number of housing units like the Eden project on 19 Alma or the one we heard last time from Palo Alto Housing Corp.? Are there others that 20 (interrupted) 21 22 Mr. Wong: Commissioner Martinez, Density Bonus, 195 Page Mill provided 17 units of 23 affordable housing for two concessions and also 2650. Same developer used Density Bonus for 24 concessions also. 25 26 Commissioner King: Sorry. What level was that? 27 28 Mr. Wong: They were rental, so they were at 60 percent of area median income. So they have 29 the 30 year restrictions on them. 30 31 Chair Martinez: So over the last year how many units do we count for that? 32 33 Mr. Wong: It would be 18 between those two developments in the past. 34 35 Chair Martinez: Well did we get a Density Bonus from the Maybell project? 36 37 Mr. Wong: Not really a Density Bonus. They’re asking for concessions, but they’re not asking 38 for additional density. 39 40 Chair Martinez: And what about the Eden housing project on Alma? They got concessions. Did 41 they get increased density? 42 43 Mr. Wong: I don’t think they got additional density. I know they got concessions. I’ll have to 44 double check, but I don’t believe they asked for density. 45 46 Chair Martinez: Ok so we can get, we can give concessions but not get additional housing units. 47 Is that how it’s going to work? 48 49 7 Mr. Wong: That is correct. The ordinance states that you don’t have to request Density Bonuses 1 to get concessions. You can just request for the concessions. 2 3 Chair Martinez: I see. And the, I like the menu of the specific concessions that are being 4 available, but the 50 foot height limit, how did we hit upon that? It sounds like an obvious 5 question, but I’d like to, I’m trying to trap you so you can respond. 6 7 Mr. Wong: Well in no way can it exceed the 50 foot, but residential I believe the maximum 8 height is 35, so it gives them a little additional height if they are to provide affordable units. 9 10 Chair Martinez: So if somebody’s proposing to do this on a mixed use development along El 11 Camino Real they would be limited to 50 foot? 12 13 Mr. Aknin: Correct. As it’s written out they’d be limited to 50 feet. 14 15 Chair Martinez: So as you’re aware the Architectural Review Board (ARB) has suggested that 16 there be some flexibility to the 50 foot height limit. So do we take that into account in this or is 17 that something that we consider separately? 18 19 Mr. Aknin: At this point I think that’s something that you would consider separately, once 20 there’s direction from Council related to the 50 foot height limit and we have a larger community 21 discussion related to that I think that’s the time that it would be appropriate to put it within this 22 discussion. 23 24 Chair Martinez: Ok so there’s a chance that we might come back and revise this? 25 26 Mr. Aknin: I think so. I mean not immediately, but when we have a community wide discussion 27 I think there could be multiple areas within our code that we’d have to take a look at. 28 29 Chair Martinez: Ok, great thank you. Commissioners anything else? Commissioner Keller? 30 31 Commissioner Keller: So a couple of things. First with respect to the affordability of moderate 32 income units does, if they were moderate income rental units does 18.15.040(b) indicate that 33 those units would be deed restricted for 59 years? Is my reading of that correct? That’s on Page 34 8 of the ordinance. 35 36 Ms. Silver: Yes. That’s correct. 37 38 Commissioner Keller: So even if people were to build a moderate income rental property it 39 would still have that deed restriction. Thank you. 40 41 The second issue is that the Density Bonus Law is unlikely to be used in Palo Alto for increasing 42 density and very likely to be used for concessions. 195 Page Mill and another as an example of 43 concessions. 101 Lytton, which is the project at Lytton and Alma originally had concessions as 44 the reason it was, because of the housing that was there that was later deleted, but somehow the 45 concessions stayed anyway. That project had concessions as well. And it’s likely that there will 46 be other projects that come along for which there are concessions. And right now those 47 concessions are by right and therefore essentially any developer can ask any concession at all 48 and there, the City has no, essentially has no way of restricting that. This would basically 49 8 indicate the menu of restrictions that we’re allowing without such a restriction the developer can 1 build things that are not as compatible with the community and the neighboring properties. And 2 so the concession law it basically is, the Density Bonus Law says that the City is supposed to 3 implement it, is supposed to enact and implement the ordinance. Is that correct? 4 5 Ms. Silver: Yes, that’s correct. 6 7 Commissioner Keller: Even though this law has been in existence for eight years or more we 8 have not yet done our duty and implemented such an ordinance so we’re now going ahead and 9 doing that. Is that understanding correct? 10 11 Ms. Silver: Yes, that is. 12 13 Commissioner Keller: Correct. Is there a minimum number of units that are required so if 14 somebody builds a four story building with 2 affordable units on the top floor is, what does that 15 trigger in terms of that? That’s 100 percent affordable, but what do they get for that? 16 17 Mr. Wong: Commissioner Keller, well first Density Bonus Ordinance kicks in when it’s five or 18 more units. So if they only build two units they would not be eligible for concessions or Density 19 Bonus. 20 21 Commissioner Keller: And State law does not require the issuance of bonuses if there are fewer 22 than four units, four units or fewer? 23 24 Mr. Wong: Yes. That was taken verbatim from the code. The five unit criteria threshold. 25 26 Commissioner Keller: Thank you. So I’m going to make hopefully a Friendly Amendment to 27 add in that special setback as (interrupted) 28 29 Chair Martinez: We don’t have a Motion yet. 30 31 Commissioner Keller: We do have a Motion. I thought there was a Motion by Commissioner 32 Alcheck with a Second by Commissioner Tanaka to move staff recommendation. That was not a 33 Motion? 34 35 Chair Martinez: Maybe I wasn’t here. 36 37 MOTION 38 39 Commissioner Keller: Ok, there’s no Motion. Then I’ll make a Motion. So I’ll move the staff 40 recommendation with, as stated with the addition that the special setback language be put in as I 41 discussed with the City Attorney. 42 43 SECOND 44 45 Chair Martinez: Ok. We have a Motion. Any second to the Motion? Yes, Commissioner 46 Alcheck. Care to speak to your Motion? 47 48 9 Commissioner Keller: I’ll just briefly say that this implements the requirement in State law that 1 the City have an implementing ordinance for the Density Bonus Law. And I think this gives a 2 reasonable set of concessions and also has a reasonable way of getting additional data from a 3 developer of low income housing who wishes to have a concession that’s not on the menu. 4 Thank you. 5 6 Chair Martinez: Commissioner Alcheck. 7 8 Commissioner Alcheck: I hope that this ordinance encourages the development of affordable 9 housing units to a greater extent than we’ve seen in the last eight years in this City. So we shall 10 see. 11 12 VOTE 13 14 Chair Martinez: Anyone else? Ok, let’s call for a vote on the Motion. Those in favor say aye 15 (Aye). Got to make sure I got it right this time. Motion passes unanimously. Thank you. Now 16 we will take our 10 minute break for changing of the guard. 17 18 MOTION PASSED (7-0) 19