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PC Min - 07/25/2006 CITY OF CAMPBELL PLANNING COMMISSION MINUTES 7:30 P.M. TUESDAY JULY 25, 2006 CITY HALL COUNCIL CHAMBERS The Planning Commission meeting of July 25, 2006, was called to order at 7:30 p.m., in the Council Chambers, 70 North First Street, Campbell, California by Chair Alderete and the following proceedings were had, to wit: ROLL CALL Commissioners Present: Chair: Vice Chair: Commissioner: Commissioner: Commissioner: Bob Alderete Michael Rocha Mark Ebner Tom Francois Elizabeth Gibbons Commissioners Absent: Commissioner: Commissioner: George Doorley Bob Roseberry Staff Present: Community Development Director: Senior Planner: Housing Coordinator: Recording Secretary: Sharon Fierro Jackie C. Young Lind Sharon Teeter Corinne A. Shinn APPROVAL OF MINUTES Motion: On motion of Commissioner Gibbons, seconded by Commissioner Rocha, the Planning Commission minutes of July 11, 2006, were approved as submitted. (6-0-1; Commissioner Doorley was absent) COMMUNICATIONS There were no communications. AGENDA MODIFICATIONS OR POSTPONEMENTS There were no agenda modifications or postponements. ORAL REQUESTS There were no Oral Requests. Planning Commission Minutes of July 25,2006 Page 2 *** PUBLIC HEARINGS Chair Alderete read Agenda Item No. 1 into the record as follows: 1. Inclusionary Housing Ordinance Public Hearing to consider the adoption of an Inclusionary Housing Ordinance (Chapter 21.24) that mandates affordable housing units for any residential developments consisting of 10 units or more. A Negative Declaration was previously adopted for the Housing Element (PLN2001-35), which included this Inclusionary Housing Policy. Tentative City Council Meeting Date: September 11, 2006. Project Planner: Sharon Teeter, Housing Coordinator Ms. Sharon Teeter, Housing Coordinator, presented the staff report as follows: . Advised that this is her second time presenting to the Commission. The first time was regarding the Rotating Shelter. . Said that she is pleased to see the Inclusionary Housing Ordinance moving forward. . Said that two actions are recommended for the Commission. One is the adoption of a Resolution that recommends that Council adopt a Negative Declaration by reference. She explained that with the 2001 Housing Element and General Plan Update there were no negative impacts and a Negative Declaration was adopted. The second action proposed is the adoption of a Resolution recommending that Council adopt the Inclusionary Housing Ordinance. . Advised that the adoption of this Inclusionary Housing Ordinance is not a new item but rather is moving a policy forward from the General Plan. . Explained that Inclusionary Housing is not a new concept. One hundred and seven (107) jurisdictions have one including 10 cities in Santa Clara County. . Commended Planner Stephanie Willsey for her work on this Inclusionary Housing Ordinance draft as well as Senior Planner Jackie C. Young Lind. . Said that all the other cities in the County, with the exception of Monte Sereno, Saratoga, Los Altos and Los Altos Hills have Inclusionary Ordinances. She hopes to see Campbell become the 11 th city to adopt one. . Reported that the Courts have upheld such Ordinances as legitimate to the State's interest. . Described several people who qualified for one of the Water Tower Condos including a single mother with two boys who is a teacher and a legal secretary. . Said that a major component of the Inclusionary Housing Ordinance is the calculation for the number of Inclusionary Units. Fifteen (15) percent is proposed for any development exceeding 10 units. As an example, for a project with 27 units the requirement would be for 4.5 affordable units that would be rounded up to 5 units. . Added that pricing for the units is determined by establishing a median income based on number of people per household. A two-bedroom unit equals a three- Planning Commission Minutes of July 25, 2006 Page 3 person household. A 10 percent down payment is assumed. The calculation takes into consideration property taxes, homeowner's fees, insurance, a utility allowance, and the current interest on a 3D-year loan. . Advised that Affordability Resale Agreements are recorded against these BMR units so that the availability of these units as affordable units is not lost upon resale. . Reported that the Redevelopment Agency's attorney drafted the Ordinance and City Attorney William Seligmann reviewed it. She thanked City Attorney William Seligmann for his review of the Ordinance and Commission Resolutions. . Said that another important element of the Inclusionary Housing Ordinance is the options that can be made available to developers. There are a full range of options that work for developers, buyers and the community. Options include rental in-lieu of for-sale units; allowance for off-site construction in another development, land and waivers. In-lieu fees are allowed for any development that results in less than 6 units per gross acre. These funds are placed in the City's Affordable Housing Fund; however, these fees don't cover the cost of providing affordable units. . Explained that a Fee Analysis Study will be completed within the next couple of months. . Added that the median income figures are the same for rental and sale units. . Stated she was available for questions. Commissioner Ebner asked about the option to use waivers and what the history is with other cities for developers applying and receiving a waiver. Housing Coordinator Sharon Teeter said she has no specific knowledge but acknowledged that most cities want the affordable units. Commissioner Ebner asked if any projects that have already been approved would be held to this Inclusionary Housing Ordinance. Housing Coordinator Sharon Teeter replied no. The provisions start after the Ordinance goes into effect in late November. Commissioner Ebner pointed out that of the 777 units the City of Campbell is required to provide, we are already two-thirds of the way there. Housing Coordinator Sharon Teeter said that the City is doing very well with the moderate units but behind in the other affordable categories. Director Sharon Fierro verified that fact. She added that when the State evaluates the achievement of a City's housing provision; they look carefully at all components including moderate, low and very low income levels. Commissioner Francois asked if there is a time frame and/or penalty for buyers of these affordable units to resell them. Planning Commission Minutes of July 25, 2006 Page 4 Housing Coordinator Sharon Teeter said that there is no penalty to sell but explained that for 55 years these units must remain affordable units. Commissioner Francois asked if there is any appreciation or equity realized by the owner upon sale of the affordable unit. Housing Coordinator Sharon Teeter reported that one unit at Orchard Grove that originated at $350,000 recently sold for $550,000. The sellers realized that equity. However, at this time the County's median income has been frozen so this amount of equity would not be realized under today's conditions. Commissioner Francois asked if any equity would be earned upon sale of an affordable unit. Housing Coordinator Sharon Teeter replied that the down payment would be returned. Director Sharon Fierro explained that without restrictions an instant windfall could occur if an affordable unit is later sold at market rate. Commissioner Francois agreed that people would likely flip them if it were possible resulting in an instant windfall. Director Sharon Fierro reminded that payments are much lower for these units which are a benefit. Housing Coordinator Sharon Teeter reminded the Commiission that the down payment is returned as well as cost of any improvements. Commissioner Francois said that this limitation is fine as long as people understand going in. Commissioner Gibbons: . Recounted that a friend tried to move into the Water Tower Project and was number one in the lottery for an affordable unit. However, upon doing the calculations for a five and/or 10 year sale. With both scenarios her friend would have lost money. . Reminded that the Federal Government had intended to mix the median incomes in both Santa Clara and San Benito Counties. . Stressed the importance that participants who buy these units are sure of the advantages. . Said that a Study is necessary to validate the formula so that it makes financial sense to participate. . Added that her friend withdrew from consideration of the affordable unit. Commissioner Rocha asked for clarification that there are deed restrictions. Planning Commission Minutes of July 25, 2006 Page 5 Housing Coordinator Sharon Teeter replied yes. Commissioner Ebner reminded that Monte Sereno, Saratoga and Los Altos are without such Inclusionary Housing Ordinances and doing just fine. He asked if there is any history of a decrease in development in a community as a result of enacting an Inclusionary Housing Ordinance. Housing Coordinator Sharon Teeter reported that two 20-year studies were conducted and it was determined that development was not reduced. One of the studies included the San Francisco Bay Area and Orange County. Commissioner Ebner pointed out that Campbell has been growing nicely. He cautioned that the cost for providing these affordable units will be borne by someone. Housing Coordinator Sharon Teeter advised that the Redevelopment Project Areas serve as an example of how this can work. She added that developers are developing in these areas. Commissioner Rocha added that for developers this is a part of their equation and a part of doing business. Chair Alderete pointed that some communities have a formula on a sliding scale while Campbell is proposing a flat 15 percent. Housing Coordinator Sharon Teeter said that the ranges for many cities are between 10 and 20 percent. She added that it was felt that 15 percent would not be too prohibitive. She reminded that there are not a lot of areas to develop. Chair Alderete said that the practice of rounding up calculations by four decimals as has been done with the example given in the report could be a problem. Housing Coordinator Sharon Teeter agreed saying that this is a good catch on Chair Alderete's part and this example will be corrected to better match the provisions of the draft Ordinance. Chair Alderete asked how the alternative in-lieu funds would be used to support affordable housing activities. Housing Coordinator Sharon Teeter reminded that only projects with 10 or more units would be required to participate in the provision of affordable units. There are no inclusionary requirements for those projects with fewer than 10 units. Additionally, projects that are developed at a density of less than six units per gross acre can have a calculated in-lieu fee instead of providing units. Chair Alderete asked how this money would be used. Planning Commission Minutes of July 25, 2006 Page 6 Housing Coordinator Sharon Teeter gave the example of the Water District Project. While some State Bond money is available to help offset mortgages, if the City has in-lieu funds available it could also be used to help make these types of affordable units even more affordable. Chair Alderete thanked Housing Coordinator Sharon Teeter for answering all of his questions, saying that she clearly knows this material. He asked how the six units per gross acre threshold was reached. Senior Planner Jackie C. Young Lind: . Explained that staff relied on the advice of the Redevelopment Agency's attorney in establishing threshold numbers. . Said that a project developed at six units per gross acre are less dense developments with larger lots and homes than a typical 10-unit or larger development. It would not be affordable for that development to incorporate affordable units in a project at a density of six units per gross acre as compared to a higher density project that is greater than six units per gross acre. The higher density project makes it more affordable to provide the unit on site instead of paying an in-lieu fee. . Reminded that there is a higher land cost for larger homes and lots. Chair Alderete agreed that fewer units per acre results in higher value and cost per unit. Planner Jackie C. Young Lind agreed that there are the issues of diminishing returns and economy of scale. Chair Alderete asked about the legal basis for Inclusionary Housing programs, the possibility for a complete waiver from the Ordinance and what would trigger that waiver. Director Sharon Fierro deferred that question to City Attorney William Seligmann. City Attorney William Seligmann said that the trigger for including provisions for waivers is Constitutional principles. Without waiver provisions included in the Ordinance, Inclusionary Housing Ordinances could be deemed a taking. Chair Alderete asked City Attorney William Seligmann if there have been lots of such challenges. City Attorney William Seligmann replied yes. He advised that there is one such Ordinance in San Diego where the waiver language didn't adhere to takings case law. However, the required language (as has been included in the Napa Ordinance) has been incorporated into Campbell's Inclusionary Housing Ordinance. Planning Commission Minutes of July 25, 2006 Page 7 Chair Alderete stated that the underlying rationale for Inclusionary Housing is to prevent lower income people from having to live far from where they work by providing affordable units in the community. Housing Coordinator Sharon Teeter explained that the City itself has employees who commute from the Central Valley. She added that it is not just having a job in a community but also enjoying the whole community experience by living near where you work. Chair Alderete said that she makes a good point. Commissioner Ebner said that he would like to see Campbell residents have access to affordable units and questioned how that could be guaranteed. Housing Coordinator Sharon Teeter said that Campbell residents and/or people working in Campbell would get first priority. Chair Alderete asked who does the oversight of the Affordable For-Sale Agreements as it could become a full-time job some day. Director Sharon Fierro explained that Housing Coordinator Sharon Teeter currently does this oversight for the Redevelopment Agency projects with affordable units. Commissioner Gibbons pointed out that Housing Coordinator Sharon Teeter handles more than eight important programs that include Low Income Housing, Senior Housing, Rehab Loans as well as working with Council Committees. She assured that there is already a tried and true process in place. Housing Coordinator Sharon Teeter assured that there is. Chair Alderete asked how many affordable units are estimated to be in place in time to fulfill the City's assigned requirement to provide a total of 777 housing units. Director Sharon Fierro: . Said that this cannot be predicted at this time. . Advised that 1,600 units have been projected through the General Plan and almost all will be above six units per gross acre. . Added that the strength of an Inclusionary Housing Ordinance is that it provides for a mixed community without developing low-income housing "projects" that would concentrate low income households without benefit of proper property maintenance and upkeep. . Stated that affordable units allow professionals such as teachers, firefighters and others to live in the same neighborhoods in which they work. Planning Commission Minutes of July 25, 2006 Page 8 Commissioner Gibbons added that the estimated 1,600 units from the General Plan also apply to rental units. She added that the Avalon Apartments have a number of affordable units. Housing Coordinator Sharon Teeter said of the 350 total units at the Avalon Apartments there are 69 affordable units. Commissioner Gibbons pointed out that with a pool of in-lieu money more of the units at the Water District Project could be for low to very-low income households. Director Sharon Fierro informed that in the past the City has purchased and rehabilitated housing units that were converted into affordable units. She added that there are some neighborhoods with absentee owners who do not maintain their rental properties. Chair Alderete opened the Public Hearing for Agenda Item No.1. Ms. Shiloh Ballard, Silicon Valley Leadership Group: . Explained that Silicon Valley Leadership Group was once known as Silicon Valley Manufacturing Group. . Said that SVLG represents 200 companies around the Silicon Valley and serves as a collective voice for the business community. . Added that five to six years ago SCLG brought the concept of Inclusionary Housing to our board and they were supportive of it. . Advised that she was originally hired to help cities update their Housing Elements. . Said that it is nice to see policies implemented including the benefits of Inclusionary Housing. . Quoted from an ABAG report that she said she hopes is wrong. In that report, it states that while Campbell is expected to provide 165 very-low income housing units to date it has produced none. To date the report states that Campbell has not produced any of the expected 77 low-income units. Director Sharon Fierro assured Ms. Shiloh Ballard that this information is so wrong and that ABAG has been contacted about this erroneous information. Ms. Shiloh Ballard: . Stressed that there is a huge need for affordable housing. . Said that cities tend to excel in providing above moderate housing. . Stated that Inclusionary Housing provides a good policy tool. . Said she is present tonight to provide general support for Inclusionary Housing. . Advised that SVLG will be hosting a luncheon on the issue of affordable housing in the near future and the members of this Commission will receive an invitation. Chair Alderete asked staff to refute the ABAG stats provided by Ms. Shiloh Ballard. Planning Commission Minutes of July 25, 2006 Page 9 Director Sharon Fierro: . Said that ABAG also published another more accurate report. . Pointed out that the Habitat for Humanity homes are very-low income units. . Said that the period for the 777 fair share housing units assigned to the City of Campbell is between 1999 and 2006. The requirement is broken down to 165 very low income units, 77 low income, 214 moderate income and 321 market rate units. To date the City has realized 506 units that include 16 very low income, 6 low income, 63 moderate income and 421 market rate units. There is currently a 371 unit shortfall if you include 149 very low income units and 71 low income units and 151 moderate income units. . Added that the Housing Element is intended to remove barriers to the development of housing. Chair Alderete closed the Public Hearing for Agenda Item No.1. Commissioner Ebner: . Said that on the face of it, an Inclusionary Housing Ordinance is well intentioned. . Stated that it comes at someone else's expense be it the landowner or developer who must average the cost to others buying market rate units. . Said that he did not think that is right. · Pointed out that without such an Ordinance, the City of Campbell has already achieved two-thirds of the units required of it. · Reiterated his belief that Inclusionary Housing is forcing someone to pay against their will and for sure someone has to pay. Commissioner Francois: . Said that he initially shared that concern. . Added that he believes that developers will crunch numbers and make it work. They will know what they are getting into. . Said this would result in a win-win situation. · Advised that he had not been in favor of treating Inclusionary Housing as an urgency matter as he did not think that would have been fair. · Said that as drafted this Inclusionary Housing Ordinance is fair and will help a lot of folks. Commissioner Ebner said that none of us has a crystal ball and can know what will occur two years down the road. That could stop development. Commissioner Gibbons: . Reminded that Campbell would be the 11 th City in Santa Clara County to adopt such an Ordinance. · Pointed out that all the tables are pretty even and Campbell is not at the low end of the totem pole. · Said that the including low-income housing units is the cost of doing business in development these days. Planning Commission Minutes of July 25, 2006 Page 10 . Reminded that there is a 20 year history of success in the provision of affordable units under the Redevelopment Agency and this Inclusionary Ordinance expands on that. . Stated that this is a classic discussion about welfare state and distributed cost. · Added that the provision of affordable housing is a community statement based on the City's General Plan and that some of the decision making on this issue has already been done. Commissioner Ebner: . Said that an Inclusionary Housing Ordinance is not an excuse to say that it is simply a cost of doing business. . Stated that he does not like that attitude. . Reminded that San Diego fought and won. · Pointed out that Saratoga and Monte Sereno do not have such Inclusionary Housing Ordinances. Commissioner Francois asked about development already in the pipeline. Director Sharon Fierro: . Said that there are some developments proposed along Bascom Avenue. Staff made these developers aware of the Council Study Session. Many of them have developed a Plan A and a Plan B but she has not heard of any developers withdrawing. . Said that developers have a window of opportunity to submit complete development applications. Sometimes it takes a developer a year or longer to put a package together and others can do it within a few months. · Reminded that this Inclusionary Housing Ordinance would not be effective until late November. Chair Alderete: . Stated his support for the staff recommendation. . Said that a lot of great information was provided in the staff report. . Said that an Inclusionary Housing Ordinance is good public policy and an effective tool. . Stressed that valid concerns and questions have been raised and he is not refuting any of those comments. · Agreed that there may be some degree of unfairness but overall it is good policy. Planning Commission Minutes of July 25, 2006 Page 11 Motion: Upon motion of Commissioner Gibbons, seconded by Commissioner Rocha, the Planning Commission took the following actions: . Adopted Resolution No. 3738 recommending that the City Council find that the Environmental Impact Report (State Clearinghouse Number 2001042063, July 26, 2001) prepared for the City of Campbell's Housing Element provides full and adequate environmental review for adoption of the Inclusionary Housing Ordinance pursuant to CEQA guidelines Section 15162, and . Adopted Resolution No. 3739 recommending that the City Council adopt an Inclusionary Housing Ordinance (Chapter 21.24) that mandates 15% affordable housing units for any residential developments consisting of 10 units or more, By the following roll call vote: AYES: Alderete, Francois, Gibbons and Rocha NOES: Ebner ABSENT: Doorley and Roseberry ABSTAIN: None Chair Alderete advised that this item would be considered by Council at its meeting of September 11, 2006 for final action. *** REPORT OF THE COMMUNITY DEVELOPMENT DIRECTOR The written report of Ms. Sharon Fierro, Community Development Director, was accepted as presented with the following additions: . Advised that three Planning Commission items were considered by Council at its meeting of July 18th, the final tract map for the Bucknall/Fulton project, the Planned Development Permit for 188 Sunnyside Avenue and the Zoning Code Update. . Informed that Vice Mayor Dan Furtado asked staff to pass along Council's thanks and congratulations to the members of the Planning Commission. . Said that this Inclusionary Housing Ordinance is counted as Phase III of the Zoning Code Update and she anticipates a Phase IV very soon. . Said that she is prepared to conduct a Study Session if the Commission wishes to proceed. Commissioner Rocha said he could not stay. Commissioner Ebner said he too could not stay. Director Sharon Fierro said that it could be held at another time. Planning Commission Minutes of July 25, 2006 Page 12 ADJOURNMENT The Planning Commission meeting adjourned at 8:40 p.m. to the next Regular Planning Commission Meeting of August SUBMITTED BY: APPROVED BY: ~LG Bob Alderete, Chair --- - ATTEST: ~' - - / ~ I~ Sharon Fierro, Secretary