Okay, good morning or good afternoon. We will we've recessed our closed session We're going to reconvene to open session in our council chambers for a steady session item 3.1. Mr. McGlynn Item 3.1 Housing allocation plan and commercial linkage fee And I'm going to introduce the new community development director for the city of Windsor Jessica Jones But we still have her for a few more weeks You're supposed to congratulate her I've had the words with Ken already so we'll talk later Thank you, thank you very much. I appreciate that So thank you mayor Schwaatham members of the council. So the item before you is our a study session for inclusionary housing and commercial linkage fee What we're going to be going over today is some policy options for you and what we're hoping to get back from the council is Clear direction on those different policy options for both the inclusionary housing ordinance update as well as Introduction of a commercial linkage fee So before we get into that I'm going to be going over a bit of the background on why we're here and how we got here I'm going to then hand it over to Andy Gussison who is a project manager for the inclusionary housing piece of this He'll walk you through the various policy options that we're looking for direction on and we'll hand it over to Raisa de la Rosa in community or in economic development who will be going over the commercial linkage fee options So the slide before you here is gives you an idea of the project schedule and the outline of our engagement process through this so we really started this process back in late 2017 we had a project kickoff and some early stakeholder input and We started working on some of the background research for the inclusionary housing as well as a commercial linkage at that time Following that we had of course the fires that took some of our time away some other policy work that we were working on So the inclusionary and the commercial linkage fee Took a took a brief pause but now we're back and Early this year we put together all of that information that we had collected During the early or late 2017 and time frame. We prepared a white paper That was based on an economic feasibility Analysis for the inclusionary housing portion. We also have an economic feasibility analysis for the commercial linkage fee I believe those are also those are all part of your package that came before you In early August we held community stakeholder and workshop meetings We also visited the planning commission with a similar study session to what you're going to be hearing tonight to receive feedback on How we want to move forward with this process Last night or yesterday afternoon. We went to the housing authority again with the same Presentation receiving feedback from them. Andy is going to go over the results of both of the planning commission and the housing authority Authority as well as the community input that we received That brings us to today again. We're looking for feedback from the council In clear direction so we can move forward with drafting and ordinance for the Inclusionary housing and putting together resolutions for you related to housing impact and commercial linkage fees and that is scheduled for October 1st so Wanted to spend a little bit of time on this slide and remind everybody about why we're here, which is The housing action plan which was accepted by the council in October of 2016 the first program within the housing action plan was to increase inclusionary housing the council gave specific direction at that time to increase the production of affordable housing as part of market rate housing projects and With that there was a specific direction within the housing action plan to include a requirement that for sale housing projects include onsite affordable units And that that be at a 15% minimum for those for sale units and that it be at a mix of low and moderate income units It also specified additional regulatory and financial incentives and alternative compliance measures to maximize production of affordable units and To provide for innovation and achieving in achieving increased inclusionary The housing action plan also included a program to simplify the housing impact fee and update it based on current data and To increase the fee charged on rental units as part of an effort to encourage inclusionary units in market rate rental projects we also identified within the housing action plan direction to secure dedicated affordable housing funding through various other sources and that does include the introduction of a commercial linkage fee to offset housing demand on And impacts due to future employees So this slide goes over some of the other tools that we've been working on that the council is well aware of to address the housing needs here in Santa Rosa Recently we adopted the density bonus ordinance update We've also adopted development fee reductions and the accessory housing Dwelling unit section of our zoning code was updated to provide incentives for smaller units We've also been working on permit streamlining and process improvements to help get projects through the process in a more expedited manner We also have been looking at by right development for supportive housing consistent with state law and then also Assembly and offering of public land for housing development. So these are all Kind of pieces of that that greater puzzle that we need to address housing here in Santa Rosa And this is another piece of that with the inclusionary So what you're gonna be see what you're gonna see going through this presentation today is two pieces as I mentioned We're gonna be talking about the inclusionary housing And the commercial linkage fee for both of those we're gonna walk you through some policy options Where again, we're gonna be asking for some specific Input and direction on where we want to go with that ordinance update and the fees So this slide is showing our residential permit activity since 2000 as you can see we had a lot of Development in the early 2000s that all slowed down with the recession Starting in 2008. We've been slowly Going up but not at a very significant rate So again, this is all the reasons why we're working on the various policies to help to incentivize housing So this should be a familiar slide This was presented to the council when we brought you the general plan annual review earlier this year So this is looking at our regional housing needs allocation our Rina numbers, which are set by the state of, California And it shows what the city needs to produce Through 2023 and the total number is about 5,000 new units they're broken up into various categories from extremely low up to above moderate And it's the the requirement is distributed throughout that so this slide is showing what are What the city Santa Rosa's share of that is what we have issued to date As well as what our remaining need is and so as you can see we do have quite a significant amount of need that is still remaining and so again Reasons why we're we're bringing all these policies forward to you So this slide is showing the income categories that we're going to be talking about today very low low and moderate and the household incomes associated with those and this slide is we've got a chart that is outlining the outcome and implementation of inclusionary housing versus the in lieu fee so for inclusionary units you can see it's It's provided by the developers part of a market rate housing project provided on-site And it's typically done at the low-income category For the in lieu fee payments those payments are then provided to the housing authority and they use those to leverage a different additional funds To provide affordable housing throughout the city and generally it's at the very low and low-income category So this is an important slide. This chart is showing How we've done with our inclusionary policy since it was adopted in 1992 So as you can see Since that time the on-site construction of inclusionary units is about 174 units I do want to preface that with we do have projects that have been entitled that would provide additional Units to that number, but it is still a relatively low number Whereas with the in lieu fee since 1992 again Leveraging it with other Funding opportunities. We've been able to construct just over 1500 affordable housing units throughout the city So now I'm going to hand it over to Andy guffason who is going to be going through the policy considerations Thank you for that background Andy before you start just like counsel No, we're going to or they're going to stop the presentation after slide 25 and give you an opportunity for any questions And then again after slide 39 for another round of questions, then we'll open up for any comment from members of the public Thank You Andy. Thank you very much so we're going to address and turn a number of Policy issues that are listed here and for each of those will will present to you the The option or the suggested approach that is comes out of the white paper and the Special study that was prepared for the inclusionary ordinance. The main theme is that the the policies that are put before you are starting points for discussion and Hopefully, we will have an opportunity to see what the range of options are available. So we'll first talk about the Before we go into these individual issues, I'll give you a bit of background with the planning commission housing authority and what our stakeholders said the planning commission looked at the proposed inclusionary ordinance and found that a blended approach for Dealing with the inclusionary housing problem or solution is is the best way to go forward It might provide a better way to ensure equitable city-wide distribution of affordable units support mixed income projects Allow for neighborhood integration meaning that they're located in places where there would be services stores Parks infrastructure and then That it really should be a blended approach for both the for sale and for rental units The commission looked at a number of factors or or variables that go into the inclusionary ordinance and and things like What project size it should be applied to? The percentage and income mix as well as the fee those all can be adjusted and those will be reviewed with you today how they can be calibrated to accomplish the The goal of of the council Then in terms of providing flexibility to the regulation it was suggested that There ought to be a mechanism to allow for review of dispersion of units within a project but also within the city or its quadrants That there ought to be incentives for small and family units and in projects and that We should allow for the similar types of concessions that we we have allowed for density bonuses and and and that the units be for rental units be allowed to Interiors be allowed a baseline finish and while we're at the same time requiring the exteriors of these units to match the market rate finishes and finally The planning commission Agreed that it was important to take a look at downtown separately that there there should be a Structure fee or or requirement that recognizes the unique needs of downtown And not necessarily apply to a city-wide program And then the one of the issues that was is is being raised is that we need to have a deed restriction that extends to 55 years rather than 30 years the public which includes developers community members Responses that we received in both workshops and in individual meetings Raised a number of issues many of them That we heard from recently regarding Housing and and the fee From affordable developers as they felt the fee was a very important component Many of their projects that rely on tax loot income tax credits require Some flexibility in terms of it's very important. It's a very important source of funding for them to put projects together And that fee program also requires some flexibility in terms of how those units are distributed throughout the project They also had some concerns about land dedication As a way an alternative way to comply with the inclusionary requirement In that often that the value of the land dedication is not as great as Might be expected given the costs of development entitlement in the future then The the uh as we will review there's a bit of discussion about what level of our percentage of inclusionary should be required in projects and and As jessica stated 15 percent is is the standard that the council Was striving for when the housing allocation plan or our action plan was Accepted what we're finding and and what the development community Agreed is that a lower amount in the eight to ten percent range It would would be most appropriate and financially feasible That those are sort of the big ticket issue items that came out of our public comments Last earlier this summer and in the late 2017 So we have this uh Residential of nexus east study that was prepared that looked at prototype development in the city as a means to analyze What the uh affordability Needs are and and what the costs of constructions Would be and we took a look at single family detached typical 2000 square foot dwelling that in this city sells for Or county sells for a six hundred and sixty thousand dollars or about three hundred and thirty dollars a square foot And also a single family attached to town home Type development 1600 square feet and it would sell for four hundred and eighty thousand dollars Those and then as well as apartment units ease one two and three bedroom configurations there that on a Perth's month basis so you can see the rents range between 2000 and 2900 a month the These numbers in the pro forma that was prepared by the consultants uh was Establishing essentially what the the rate of return is needed by the developer in order to engage a project to consider it financially feasible and that Conversation with developers as well as market surveys Showed that for residential single family attached and detached required a 15 to 18 percent those are for sale units and A developer would require that level of return Before they would consider the the time risk Of that venture to be profitable or worthwhile for them to engage in for apartments for rental units The cash flow over time Results in a different sort of scenario or outcome and a six to seven percent return is needed These returns are important to keep in mind as we go forward because we would always want to Hope to establish policy or or regulatory requirements that would Um Not exceed this rate uh or or cause a development to fall below this rate of return or below this threshold And thus render it economically infeasible So we have these different dials or or or levers that we can um use on the inclusionary onsite unit side We have and we'll be reviewing these individually, but um, so we're looking at project sizes does In onsite unit requirement Get triggered by A larger project or a smaller project. Is it a project that exceeds five units or 10 units or 50 units? and then When it is triggered, what is the percent of uh units that Should be required to be affordable and then in what type of affordability is it low or very low all of these bear tremendously on that On the rate of return on a project. Likewise the in lieu fee, which is the second option In in the inclusionary ordinance that if they choose not to build or if the if the developer is allowed not to To build onsite units and pay a fee instead How much should that fee be and and when does that fee get triggered? Is it only for smaller projects or is it for A special combination Now again it we need to balance The the two sets of policies for onsite inclusionary versus the in lieu fee Based on those variables So as as long as if they're on parity then the developer Who has an economically feasible project will have a two Troy True choice between paying the fee or building the units So that brings us to our first and most probably significant policy point is The current ordinance regarding Whether the ordinance should be biased in one way towards requiring onsite units to be built Or allowing the fee to be collected or should it be a blend of both currently the ordinance essentially allows the developer to choose and the way the The onsite requirement is is set at 15 percent at low versus the fee which is set as a relatively low amount The developer as we've seen has chosen to pay the fee that fee has provided tremendous benefit to the city and that It is used by the housing authority to Help finance affordable housing projects Um, but the key policy decision at this point we're seeking from or direction now from the council would be Do we continue with that or Do we go with a blended option? Which is is suggested as an effective way that we can go forward with encouraging a Both onsite and affordable units Fees for affordable unit projects You will also say there that there are other you know Directions to go we can be exclusively pay a fee as or or exclusively require onsite development the the second Policy issue then that follows is what project size? Um, should be set to determine when inclusionary onsite units are required Currently our ordinance says a single single dwelling unit triggers the need for an onsite unit Um, as I mentioned the practice of most developers will be to pay the fee and really that's the only option for very small projects Um, the it's only when larger projects are Proposed that it becomes a consideration to build them onsite our current ordinance says that 70 units The developer is encouraged to consider Developing onsite, but again, it's their choice the the policy direction Is that we should pursue? Um a blended approach Um Which would allow small projects um To pay the fee and then a larger project Which would be defined to to be required to to pay or excuse me to build units onsite um this this It would it would lessen the financial burden on a developer of smaller Size projects and you know the the the project's less than five units or so or less than 10 and then It's a strategy that that would help to um spread the burden of the cost of affordability I can just interject real quick. Um, I did want to offer the option to stop at each one of these slides Or we do have these policy questions to see if the council has an interest in Asking questions or providing comments for each of those or if you'd like to move through them and then come back Let's get it all. It's my understanding especially with planning commission a lot pertains to other ones So let's get through slide 25 and then we'll open it up for that discussion and direction great. Okay um This illustrates um how uh a sliding scale fee might be configured if if uh developer proposes to build Include moderate rate units in a for sale project Then maybe the inclusionary requirement is 10 percent If if it's a for rent project For low income units at at eight percent That that might be inequitable the point here is that we can make the policy decision to vary the affordability with the with the percentage This chart I apologize in advance Uh, it has a lot of information on it, but the key thing I want you to pull away from this is that For our for sale for rent Um units here in the city that we have an existing fee structure for for sale Two and a half percent of sales price for the detached single family Currently on our prototype housing units would yield 16 500 or 12 200 dollars in fee based on that percentage, but if as recommended To switch to a per square foot fee program as is most common In the housing marketplace That a 13 dollar and 10 dollar fee for the for sale unit types would yield More fee But would still be within the economic threshold Needed for a developer to be enticed to build that product here in our city on the rental side The the fee structure gives a break for smaller units at at about 900 square feet But beyond that size the fee ramps up as the size of the unit increases there So you can see our current free restructures about 900 dollars for a It's a dollar per square foot and in our prototype a little bit over 900 dollars But for uh, if we were to increase it to the economically A supportable fee of 10 dollars a square feet That fee jumps 10 times to 9 000 The comment that we received uh from The planning commission and the housing authority is that maybe there should be a discount or a sliding scale For those lower units or other type of units that are Desired for the larger end of the apartment range the fee would increase but not as dramatically But again, it would be based on a fee that could be supported by developers according to our analysis The final row and there is important because it underscores that the downtown is a unique development setting Um these for sale and for rent units that were analyzed in in our studies Looked at housing types that were typically and likely to be built here in the city Downtown's a departure from that. It's much higher intensity different type of construction A different type of cost structure altogether and for that reason The studies would support or suggest that a fee waiver or a reduction or a different approach for the downtown area Should be in discussion This shows here how the recommended fees might compare with other jurisdictions here in the county and You can see in the red are the price leaders We would fall below that at 13 dollars a square foot for the detached single family dwelling and also below The attached and rental units at 10 dollars a square foot We're not it's it's not in the middle, but it's it's it's below the the top end The so then we're moving on to more sort of the mechanics of of the uh How the units will look? and and how they're configured the Regulate the regulation currently says that units need to be Of a similar mix mix of unit types and floor area as a market rate units We're We have the the ability to to consider changing that and and many jurisdictions are allowing Smaller affordable units to be built provided they have the same bedroom mix So that's one cost saving measure that Makes the burden of providing an onsite unit a little less For in terms of exterior experience Appearance and material finishing quality It's pretty much a uniform requirement that affordable units shall be the same as a market rate unit and indistinguishable There's a lot of good reasons for that for property management Issues as well as for equity issues, but it is often the case that when units are being built they're being built to a baseline condition and that For sale products will off developers will give the purchaser an opportunity to upgrade But they offer a baseline unit that's affordable So it's suggested that that might be an approach equitable approach to go forward And and just allow the market to determine What is needed in terms of the interior? the The other issue is is concerning flexibility within the regulation Do we give opportunities for a developer to provide the inclusionary units off-site? We currently do It's required to be within the same quadrant We we have land dedication and and we do have innovative alternatives Here are a couple more that are being suggested that Developers be allowed to convert existing market rate units to affordable units and get credit for that or Preserve an at-risk affordable housing unit that might be at the end of its Term and the developer can purchase it and extend it to preserve that affordable housing stock in the community With regard to geographic dispersion. I mentioned previously our current requirement is that A off-site unit needs to be in the same quadrant that would be And and it There was By by previous bodies that talked about this felt as important principle, but there should be possibly mechanism that allows for A project to fulfill the requirement outside the quadrant We have currently pretty good distribution Of affordable housing types throughout three of our quadrants the northeast is light by comparison So there may be an opportunity to incentivize Development in the northeast quadrant through this this off-site development approach The other is an important issue and this came up in the density bonus that was brought before you Is do we provide a mechanism to allow developers to not Fully disperse affordable units within a project so that the doors aren't completely blended Again the issue regarding financing for low-income tax credits is is a challenge and like the density bonus A provision that would allow when it was deemed to be necessary to preserve the funding feasibility of a project that These these units can be clustered on the project site not necessarily fully dispersed And then the new idea is that we allow a developer to build more affordable housing units on a project If they require if we were an ordinarily require let's say 10 percent if they built a 20 percent affordability in their project they can That would be an opportunity for a future project to borrow from that over I'll say over affordability in a project to get credit for it It's a new idea in the city and we can talk more about that Consultant here is more familiar with the program Then the final slide here on policies is one is the current inclusionary ordinance requires a 30-year term For any unit that is built for this as on site We were proposed that it be extended to 55 years Similar to the density bonus and other state law funding requirements And that we continue with our existing exemptions which include a broad range of affordable housing types as well as for The owner builder who is building off one off so Here's a list of the the topics that might prompt questions and I invite your comments. Thank you Great. Thanks for that me So for council, let's first go with a round of any questions you might have and then I think it might be Most helpful if we just ask these councilmember to answer all the questions or give feedback on the questions on slide 26 Correct. Okay. Who has some questions before we start giving policy direction Victoria Thank you, andi and jessica Great presentation. These are really complicated issues and I had the opportunity and pleasure to watch your Your presentations with the housing authority as well as the planning commission and found that really helpful I have a number of questions, and they're all over the board. So apologize for that What are the tax or fee reductions for affordable units as they are now So we're going to bring up our representative from the housing department to help with that question. Thank you So in terms of property taxes the majority of our affordable housing portfolio that we currently have loans on And provide compliance on receive welfare tax exemptions through the county assessor's office So they do not pay property taxes, but they do pay special assessments And that welfare tax exemption is a benefit to the city because we can use it as match for some of our federal grants So on an average unit an apartment unit what how much are is that per door? Is it dependent on the depth of affordability? They the developer Who needs to be a non-profit has to provide an annual certification to the assessor's office that the rents that they are charging and the households They are assisting meet those requirements And it's based on the assessed value of the property and improvements And is there a location that we can find or the public can find? fee schedule for rentals For those types of projects We have the housing and community services department maintains A table of affordable rents based on Income level and bedroom size that is on our website that the public can go to And is that audited or enforced in any way? The housing and community services department as part of our regulatory compliance We have regulatory agreements on properties that we have loans on on a quarterly and annual basis They provide tenant information to us So we know that the tenants are meeting the income requirements And the rents charge on the units are in compliance with those income requirements And then additionally projects that receive tax credits through the california tax credit allocation committee And through the california debt limit allocation committee, which is bonds are required to provide compliance information to those entities as well And i apologize for all the questions Are the taxes that are For gone, especially with school districts and parks. How are those taxes made up for our community? i'm unable to answer that question, but that's something we can research and get back to you on okay Does the And you might have already answered this does the tax credit vary by the depth of affordability on a project So the tax credits that a project applies for is based on the costs of the project at time of construction Or when they are re syndicating so refinancing the project So it's based on the expenses that they are incurring for construction or acquisition And then they are required to meet certain affordability levels and depending on the project structure it will vary Member flamin i think i can add on to the question you had about what happens to those taxes So property taxes if they are not paid obviously that comes to the general fund so that would not be recouped impact fees that Developers including non-profit developers would have to pay for such parks and cff in water those would be paid as part of the project Okay, i'm just curious to know if we're undercutting our schools when we second fee is probably the ones more affected Okay, um going back to the um innovative alternative on slide 24 Can you give me an example um mr. Gustafson of um an of an innovative alternative to inclusionary housing on page 24 um Any of these would be uh In for consideration like allow conversion of the existing unit that is New we would otherwise leave that category open for the developer to propose an alternative But then have some mechanism To evaluate that typically like with the density bonus an innovative alternative comes to city council for review That would be a policy decision How that would be determined and accepted the level of decision making well i see it under existing Is it something that might be proposed rather than an existing policy? It is an existing approach, but how do we go about Authorizing it now Yeah, and if that is something that the council is interested in continuing with um, that's certainly something that can be placed into the ordinance I'm just wondering since it is existing. Are we dealing with that currently? Are there examples of that or no? Yeah, so so one example would be um when we got a request to um offer one developer offered a number of lots For to habitat for humanity for example to build units on the for a four cell project Um, so it was an art typical process But they produced what the the cost savings would be what the number of affordable units that would be built What the offset of the fees that we would lose to try to show that there was value in doing that? So that was one example of an innovative approach that that's helpful um, i'm curious to know if we were to go with something like um preservation of potentially at-risk affordable units or extensions of the terms of a Near expiring affordable unit or series of units how we would uh maintain the quality or assure the quality of those units Was not subpar and we didn't create a second lower tier of housing within our community I think if that option was to be exercised We would probably be having a developer who's accessing tax credits in order to conduct rehabilitation of the units And then they would also be subject to a regulatory agreement with the city So they would be subject to regular monitoring and compliance okay, um, and then um I heard you say yesterday mr. Gustafson and again today that The northeast quadrant of town is a little light on our affordable housing not surprising. Um, can you speak to the? The the level of lightness that that we are I think the distribution is approximately 10 percent and and the other just the other quadrants are pretty equally shared around 25 percent a little higher Well, that's fairly significant um, and then going um The last question I have and then I will see the floor and thank you for your patience. Um One of the suggestions I saw here was um a credit A potential idea would be a credit for future units. I'm having a hard time finding it on the slide might be 23 24 25 Anyway, um, if we were to adopt an approach like um future credits, how would we again? enforce the construction of them with the understanding that oftentimes Development gets stalled halfway through due to financing I would ask uh caren warner or consultant who's has experience with this form of Transfer or credits to speak to the point Thank you. Um, both the cities of novato and um ronald park have an inclusionary credit program and the um requirement is that the Additional inclusionary percentage be provided in the first project So if you had a hundred unit project and you had a 10 percent inclusionary requirement The first project may say I I want to provide 20 percent And then I'll have a 10 unit credit for a future project It's important to have a time frame for when that credit is Utilized um, it couldn't be Utilized um Or it couldn't be generated from an affordable project. So if if the city was um If there was a hundred percent affordable project, it couldn't say well, I'm providing excess inclusionary and I'm going to credit a future It has to be you know mark a rate project Okay, and uh apologies one more question. Um in the jurisdictions where there are Exemptions for smaller developments mostly infill developments to be um To be exempt from having to pay and lou fees or build affordability Have we observed or assessed for any use of that? Exemption as a loophole to building affordable housing I don't have any experience with that I'm not sure about um exemptions for infill projects. It's more Um allowing for payment of the and lou fee for projects below a certain size threshold Let me remove the infill word from the question. I'll just say where there's an exemption for projects under x amount of units Do we see um people developers deciding electing to build smaller developments in order to avoid having to pay those fees? More common and we did a survey of 11 jurisdictions is that The fee is required on the smaller projects and the onsite is then at you know, say five or more required So there still is a fee on in most of the jurisdictions one or more units um that said There is The case where developers will say i'm i'm going to build a A four-unit project instead of a five-unit project So I can pay a fee instead of having to do the onsite and have you observed any mechanisms that are available to help avoid People from maybe making that type of a decision Um not that i'm familiar with and there's always whenever you create a threshold There's going to be that issue. Sure. Thank you very much Great miss gomes any questions? Thank you. I'm afraid I have quite a few questions. So I appreciate your forbearance um First also, thank you I'm really Delighted to see this come forward and there's a lot of work here And it shows so thank you for for this level of work that you've been doing I particularly want to appreciate slide 15 uh Getting the developer feasibility threshold has been difficult And I very much appreciate that we see it um It's not always apparent where the threshold is and I I thank you for for that data Is it possible for this information to come back with projects? As they are being considered bias in the future So that if you come back and say this particular developer has offered to do x Is a community benefit Can we get this information or is it Not possible for that to come with the project? Um Right off the bat. I think the the it could be a an option for the developer to provide that if they're providing some sort of Outside the box think an innovative approach that this is how they're doing it and this is what their their threshold is I think that's definitely a conversation we could have but in terms of requiring that Every project's different as you know, and so it becomes very difficult and changes constantly all the way up until the Final until occupancy essentially as close a guess as we can get. All right. It just would be helpful To not ask too much but also not ask too little um I have an interest in I love this. I have an interest in what is often referred to as the missing middle The individuals who are making 120 to 150 or upwards of 180 percent Is there any plan for us to provide some fractional benefit or requirement for missing middle So I think that's an option that we could have a discussion about if that's of interest to the council To provide a threshold there we could look at what that percentage would look like In terms of a requirement if you were to build at that level you'd have to build a certain number of units And I'm not sure that I would want to I mean our greatest need is below 30 percent But we do have folks in the 120 to 180 percent who are being missed because we don't Special funds to them and the market might not reach them The other thing I'll offer is that just like this is kind of one piece of the puzzle that we're working on for housing We're also looking at additional policies that we can work on The state as you're probably aware has provided funding for Planning purposes for housing development through sp2 and so one of the Potential projects that we're looking at which will come before the council before we submit an application Is looking at addressing missing middle. Thank you And that term has multiple meanings. I appreciate that it can mean a foreplex as well Things like that. So I'm I'm using it to mean income levels of 120 to 150 or maybe 180 On slide 24 and excuse me for jumping around a little here I think it's slide 24. I'm looking at um I recall during the last serious downturn. I think it was o8 ish That a lot of units became available at a very And it would have been really wonderful if we had the ability to use our inlu fees To purchase outright units or to work with a partner to purchase units outright um To create affordable units that were single-family residences that we didn't have to pay $300 a square foot to build So i'm asking if we can explore the possibility of using inlu fees or creative alternatives To purchase units My understanding is there may be some drawback associated with how a bag counts affordable units When item that deputy director hartman and I were just discussing was rena numbers and If existing units that we convert to affordable could be applied so we need to explore that further But in regard or ask for a bag to change that policy and that would be at the state level as well Yes, um One thing we do with our inlu fees is once they're collected we try and program them for the following budget year So we through the housing authority are trying to move these out to projects as quickly as possible So the inability to use inlu fees to purchase single-family residences during the recession We were generating much lower fees based on development, but we had also committed a significant amount of fees to projects that had been Um constructed and were nearing completion at the time the market crashed And I think you bring up a good point about how those fees are are used Through the housing authority in terms of what are the priorities and what do you want to try to accomplish as a council And how is the housing authority helping you achieve those goals? So that's a discussion I think we can have and rather than providing them directly to builders to provide them directly to purchasers Can they be used as a? deposit for example On a home there are a number of people who are paying high monthly rents. They could pay A mortgage, but they don't have a deposit And it's very hard if you're paying a high monthly rent to save for a deposit So I'm looking at can we do a more direct aid In that in that manner and can the housing authority Explore that or can we explore that with a partner such a down payment assistance program for the right? Okay. Thank you A possible first and last deposit program also How does a homeowner benefit from an increase in equity in a property they've purchased if the unit is designated as an affordable unit So four sale units that are created through the housing allocation plan are subject to Resale restriction agreement. There's a maximum sales price that is calculated at the time of initial sale And that's based on the unit size and the interest rate at the time of sale Once the property owner provides us with notification, they'll be selling we provide them with the maximum sales price based on the current market Conditions so that'd be the interest rate and then they would have the difference between the purchase price And the maximum sales price at the time of sale I would be interested in more details on that because i'm very interested in having the unit remain At a low sales price, but not at the expense of the individual who invested in the unit So if we could explore that a little more I would be interested in that On page 21 and 23, and I'm not sure which page is more applicable How do we know how many units of different sizes that we need in our community? For example, we need some three bedroom units We need some studios How do how do we match what we're doing here so that we don't have unintended outcomes Of not getting family size units is actually what my fear is So as part of the process that the city undergoes every four years for the receipt of Community development block grant and home funding through the department of housing and urban development We are required to prepare a consolidated plan And that consolidated plan evaluates census data, which includes units by bedroom size income level and a study of Households that are rent burdened so through that review of data We identify the bedroom sizes or whether it's large family size units that we need to target in the upcoming consolidated plant cycle Can we have a square foot fee? That takes into account our need for larger units That we have some kind of table or a lottery or You know that we say this year we need this many of these different sizes. So we're giving these breaks these These benefits For building affordability based on the fact that we have these needs to be filled So one option the council has which you've exercised For example downtown is to encourage a certain type of development and that's through A resolution or a short term period of how you deal with your impact fees And so this would essentially be that that you could say on a certain for a certain time period in a certain geographic area If that's how you want to locate it you want to have this impact to the fees or take some reduction for a certain outcome And so that's definitely possible. And I think that's you've demonstrated again downtown with the fees how you've dealt with that Similar on the market rate side is as mega mentioned on the affordable side on the market rate side We're having a lot of conversations with developers to look at different types of the units even the shared living spaces the smaller One bedroom with a shared Kitchen area and common space. So those are being looked at right now because we don't have that product So there's a lot of conversation on the market Exactly. Yeah, so there's a lot of market rate developers looking at what the market needs based on what we currently have and what we're lacking And so that's another way we can get to those those numbers So if we follow your advice on page 21 And go to square footage What is the way that we make sure that we don't just get lots of little units, but that we get three bedroom units So the current fee structure that we have in place right now is geared towards trying to get smaller units If you look at the dollar per foot up to 900 square feet So once you get above 900 I think it's a 908 square feet it jumps pretty dramatically So the it's different to me if it's a two bedroom unit That's 2,000 square feet and if it's a two bedroom and it's a five bedroom unit That's 2,000 square feet. Is there any way to recognize the difference in the number of bedrooms in a unit? So I think that's a good a good question We can take that back and look at how to factor in number of Number of living living quarters or living units not just square feet but square feet plus sleeping units That would I think that might hit closer to what what I'm looking for um Got that one. I think I'm looking at page 19 I'm not sure if it's 19 or 20 some of each So I'm looking at the sliding scale project size based on inclusionary percentage of an affordability And just wanting a little more information um, and I I think page 20 is attempting maybe to answer the question about that um Can a can a developer choose to have two onsite and five in lieu One developer He said is that an available option or do you have to choose all onsite onsite or all in lieu? The way the current policy is set up is that you pick one or the other But it also does allow for innovation And so that's that's an example of where somebody would have to submit something to us to evaluate to make sure that we're We're not under Achieving what we're hoping to get. Okay, so that would be an example of innovation that would come forward Will we see some kind of a table? based on Income and percent that needs to be constructed. So, you know some cities say 25 affordable But you can't build 25 affordable at 30 percent and under income levels So if they're doing very low, I would consider 5 percent to be a really good number And I'd be delighted with a very low number if they're doing that level of affordability will we see a table Or is that not in this conversation? So that that right now what we've put up here is a talk A point in a point in the look a point in the range to start the conversation So right now we're we're saying that the studies have shown what we could feasibly do or build would be 10 percent at moderate for for sale units Or eight percent at low income for rental units Your point is Should we have a i'm looking at the what the low means here low is 80 percent below 80 percent here correct So we're not we don't have a third category of under as 30 percent the very low Right, so you're bringing up a good point that an option is to provide a scale. So this could be that the The lock-in point and you can scale up. So if you want to provide less affordability, you'd have to provide potentially more Higher percentage and lower affordability. You could provide less percentage and that's the feedback We're looking for so if that's something the council wants to see We're more than happy to take that back and come up with a scale to try to address that I would be really interested in seeing that Um We haven't heard from the public yet, but I think I'm already pretty clearly on record for having issues with having separate buildings a building be Market rate and a building be affordable that bothers me very much. I'm really looking for inclusionary to mean inclusionary uh, I think it It benefits everyone and it prevents the not in my backyard issues from arising as well when we go to build the the units So you have my opinion about that. I understand though the problem with the tax credit And would be interested in seeing language like a budding adjacent As opposed to separated I understand they have to draw a property line, but if it can be a shared property line that would be good um, I mean the buildings physically sharing that property line um I would also like to receive recommendations from staff for a council action perhaps a letter um that would Request a change in how that tax credit is implemented so that it does not require The the buildings to be separated. I think that that's an old Hangover law from segregation And we we would like to see that changed So if there's a I don't know if my colleagues have a similar interest, but if we could take an action where we notified our delegation That we're very interested in what we can do to change that I would be interested in seeing it And I have a somewhat more controversial question as we go about this Even if it were a market rate unit It might not move out of someone's affordability level If there was a voluntary option for just cause or rent stabilization And I am not suggesting that we implement just cause and rent stabilization today I am saying if a unit if a developer chose to say we would do this That keeps people who are living in that unit in that unit it provides them With something similar to affordability protection Is that an option that we can discuss Even for our market rate unit I would be interested in that That that was a question you were not anticipating and I appreciate the the hesitation That would be this is a study session to explore different options in different directions So you're free to ask That staff explore that and I'm only asking it in terms of voluntary participation Okay, okay, so we'll we'll take that note I think again part of what our goal is is to take all the feedback Try to get some consensus somewhere to move forward We do want to turn around a policy for you to act on october 1st Which essentially is I understand doing the next week or so So we're going to work very quickly, but this is these are the type of the type of feedback we want I'm hearing from folks that if it were not a mandatory program They might be interested or that they might naturally be doing something similar to this anyway So let's let's let them tell us that Thank you Mr. Sawyer any questions? I do thank you, mayor And I'm going to be jumping around as well I do have a question concern on page 24 Um Yes Could you explain the conversion of existing units to affordable and you may have done that but I missed it On the what if the top of hunt on page 24 Allow conversion of existing units to affordable and preservation of at-risk affordable So a good example that the housing authority actually acted on in this past year was the purchase of a market rate apartment complex in rink and valley By bourbon housing that was converted to an affordable complex So it was previously unrestricted market rate Brents and tenants and now it is subject to a regulatory agreement and The rents are restricted based on the income levels identified Thank you and on page 23 There is a comment about The allowing the market To if someone came in and they wanted some different interior materials That they could We unless I heard this wrong that they could actually request that But wouldn't that affect the affordability of the unit in the future if they were if they if they requested and were willing to pay for nicer fixtures or or Interiors, how would that maintain the affordability? The reading this wrong No, I Maybe I didn't explain it very well, but What we've heard and what this seeks to get at is that for rental units Often or or no, so excuse me condominium for sale attached units A developer may build All the units to a base standard And then As those units are being purchased the new owners may elect upgrades much as you purchase a car You get add-ons that increase the price If the if there are designated affordable units in that complex They would have to remain at that base level to maintain their affordability Yeah, yeah, thank you Um Is it possible and I'm just going to move it just a couple of general questions Um, oh no one more on 24 There was a question regarding clusters. I think they but it doesn't look like it's there. Maybe I got the wrong page number Where clustering The affordable units Would allow for is is Easier to maintain affordability if they're clustered. I don't understand especially if they are made affordable by materials If they're not using different plumbing or electrical Materials how to how does clustering the affordability Or the affordable units make them maintain their affordability more easily I think an example that we've experienced is there was a for sale project That was approved back in about 2005 still hasn't been constructed But as part of their on-site inclusionary requirement, they are constructing rental units And those are being constructed in the form of duplexes So clustered throughout the development of for sale product are Four duplexes so a total of eight rental units. And so that's that would be clustering throughout the development So does the so does the description of a duplex itself Calls is that a is it a cluster of two or were the duplexes all kind of Constructed in the same part of the building Or were they or they Intended to be constructed in the same part of the building I don't recall their their site location off the top of my head, but it's a detail I'm just curious how that how that was going to work So so maybe I can give an example to one thing we've heard on on a for sale product Is that if a certain number of pads say we're we're turned over to a non-profit to manage the for sale Keep that rated a certain level for the 55 year term The construction of those having them close together. That's one thing that we've heard I don't know how much that changes the actual cost of that project But we start looking at uh rental products. I mean we look at these percentages I don't think that's the type of clustering that we've heard is as really valuable To cluster the individual units throughout our apartment complex. I don't think that's the intent of what What we're providing forward forward to you So those are the questions I think we'll we'll have to look into if there's a desire to cluster or not cluster We'll look into what that means and and where there's potential issues both on the for sale side And also the rental side because I think there's a two different issues. Okay. Thank you because I've always been a fan of Disperse and disbursement wherever possible and as often as possible What I'm curious about as well because I'm really intrigued by the the long list of what ifs and it's really it's it is Allowing for a fair amount of flexibility and creativity and I'm really um in favor of those two descriptors The is it possible in In our in this flexibility that we might be looking at here that we have in place Test periods to be able to Test the various the policies that we may be coming up with Today that are a little more unusual Perhaps Untested at least in santa rosa to put a What would be the next time we would be reviewing these kinds of policies to ascertain their their success and then making adjustments or Eliminations of some of the policies that they simply were not creating the kind of housing we were looking for Yeah, we'd recommend that we review this policy. I think that's a great point Anything we do here one way the other I think we need to review this at probably at a minimum of five years So typically every five years we look at impact fees. We look at What's going on that's that's enough time to start to see some trends and the construction Time it takes a couple years to get a project through sometimes So you start to see results in a five-year period So and the economy is you start to see changing the economy as well in a five-year period So we would highly recommend that we take a look at this At five years. Is it working? Is it not working? Do we need to make adjustments? Along with the impact fees the part fees cff fees and other fees that we have in place to make sure that The entire package works As you saw on the earlier slide in the presentation There's a number of policies that were put in place over the past year that the council did to try to encourage development So the the density bonus the fee the fee reductions downtown All those have time constraints on them specifically the downtown is going to expire in five years Which will force that conversation So I would recommend that we look at these housing policies Are we still achieving the same objective and what we're what tweaks do we need because they don't operate in isolation They all tie together for example if you did do an affordable project per the inclusionary percentage You get access to density bonus, which then gives you access to Other things so that's when you start to see the value of these policies together So we would need to look at those as a package I would just add on to that that you know If putting in a five-year time frame Is an excellent idea and it's one that we have used in the past But it would not preclude us from bringing something forward to the council sooner If we recognize issues or if issues come up through the council process You've read my mind. Thank you very much. Those are all the con or the questions that I have Be moving to comment when you're ready. Great. Mr. Alvarez any questions mr. Weiss mayor any questions? Thank you, mr. Mayor. I did want to follow up by councilmember combs brought up the rena numbers as it pertains to buying out affordability Within and I I'm glad she brought that up because that is Somewhere that I would like us to have a discussion About going I seem to remember that with rena It only counts if it's a creation of a new unit not taking a unit and shifting it within that portfolio Of your affordability to your market rate and so on and so forth So that is something that that I do think is good to include here I wanted to start on slide 11 And I want to appreciate that this is one of the most nuanced policy discussions that we've had since I've been on council Because looking at that chart 10 percent of the affordable units that we've had created since 1992 Have come from the inclusionary policy and 90 percent have come from the inlu fee And so I just want to make sure that we're keeping that in mind because we will at some point be having this discussion around Whether what is better for the community is it ultimately requiring the inclusion and getting fewer units as a result Or increasing the fee but losing that diversity that we do want throughout our community So I did want to make sure I pointed that out and just thank you for having it in there You talked about one of the options being to extend the deed restriction from 30 years to 55 years And in everything that we do that list that you showed there's a public benefit that's being given or that's adding cost What's the additional cost that would be added on the financing if you extended the affordable period? From 30 to 55 and how has that been taken into account as it pertains to making these pencil projects pencil out I can answer the first part of your question Um The 30 year restriction right now is currently just on projects that have strictly an inclusionary requirement So if it's on site inclusionary, it's a 30 year Restriction via the affordability agreement if the fees are used then it's 55 years Which is pursuant to the housing authorities policies And then also the density bonus if you recall was recently extended to 55 years pursuant to state law So this would bring it into alignment with existing practices Right and so has there been a discussion with developers about particularly from the finance side of this if they are Getting their financing based on after that 30 year period being able to take that affordable unit make it market rate Then there is an added cost Do we know what that added cost ends up being for folks if we extended that additional 25 years? Because I imagine the longer that you lock in the affordability period the higher the Interest is going to be on the return for the financing Oh, but we're gonna have sarah from strategic economics come up and give us a shot. Hi sarah graham So we conducted the development feasibility analysis. We did not look at it with the nuance grab the mic. Thanks Can you is that better? That's great. Okay. Um, we did not look at a time frame that specifically It's more the development feasibility analysis that That we conducted is more like in perpetuity the affordability is just assumed to be baked in I can tell you with different types of products market rate products. Um Rentals 10 projects entire buildings tend to sell more often Than a 30 year time period and certainly more than a 55 year time period. So I I don't know that these projects are Looking out that far In advance in it. And so it's a snapshot Analysis that was conducted that we did that looks at the the pro forma for for today's market conditions So that that would be a pretty complex Analysis to bake in that type of change. I I appreciate that and I do see that there are a couple of folks who Do development projects in the audience? Could be that it's not even a variable for them because as you said it's 30 years out But I would be interested to hear on the financing side What length of a window they're typically looking at to try to make sure that that they're they're penciling out I also wanted to appreciate slide 15 Because that has been a constant conversation and depending on where you fall Again, this being a nuanced conversation that we're having here today I think it'd be easy to say Developers don't build anything unless they get you know a greedy return on investment And this actually puts real dollars and real percentages to it. So I did want to appreciate that really fast But it also raises a question around Level of affordability within projects that at a certain point you start to see additional incentives kick in Typically if we're talking state or federal matching dollars, is that around 20 percent affordability? I'm gonna have Megan jump in here But some of the state grants that we've been talking about is is 15 percent is when is what they're looking for Other federal programs. I don't know if Megan you want to talk about the affordability level So tax credits have specific requirements based on the affordability level that is being provided to the units Same with bonds. So you would need to be in compliance with those requirements. Yeah, I'm just uh Across the board generalization It seems like once you hit a certain level of affordability the projects end up going a lot higher in terms of affordability Because once they qualify for those incentives, they might as well maximize them and really go for it Have we figured out sort of what that tipping point is between Not going to be able to build any affordable units and then can suddenly build a hundred percent, right? It's a great question. I've heard different numbers out there depending on the developer but essentially what what's What's up here in the conversation and I appreciate that that it is nuanced is That we were looking at but provided a third pathway. So right now there's uh, essentially either market rate or affordable projects that get done Now we're looking at a market rate with inclusion market rate without inclusion Or I'm gonna add a fourth one. I'm sorry A market rate with a market with an inclusionary that has more affordability that gets access to state and other funding or a developer non-profit developer that gets federal funding and other tax credits So there's different ways that a project could be worked out and we're talking to developers are all for those different options And so the tipping point to go from say our what our local local inclusionary policy is is to go into a federal program I've Again, correct me if I'm wrong maybe but I've heard numbers in the 30% range is when typically if you're going to go past 15 percent You're you're going to go you're going to go for it because you can get access to much more credit You can get access to more money. You get access to different incentives that you wouldn't have it at the local level Great, thank you Thank you. I think most of my questions have been answered. If you can go to slide 17 I'm not sure if this is the one but there was a comment about the 70 units where our current policy says we should consider Is that pertaining to slide 19? That's correct. Um, the existing requirement Is not really complete. That's written up there that um Every project with more than one unit needs to is subject to the inclusionary ordinance And that our current ordinance is at 70 units a project A developer should must come in and speak with Planning and economic development about the options for providing on-site units They still get to elect to to pay a fee. I guess that's my question Could you give a little bit of the history because I totally agree with the one but the 70 seems rather subjective And I'm not sure what does consider me where I have a stern conversation or how did that number come up there? And what's the intent behind that? I'd have to go back in research I don't have the answer to why it was put in at 70. Um, but yes, it is it it is a conversation That ever so brief Stating that this is what they want to do and as you can see we generally Have developers telling us that they want to provide the in-loop fee Okay, great. Thanks. All right. So now um for this portion What I would like to go is get the feedback from each council the member about the questions on slide 26 I also recognize that members of the public have not commented on this yet So consider this staff. This is temporary feedback Then after we hear the next portion of the presentation then from members of the public If any council person has been influenced by that or ask further questions Or this might not be the last answer to these questions. Does that make sense for you folks? That's great. Thank you. Okay. Mr. Oliver's can we start with you? Let's just go straight down slide 26 and give staff the feedback of the questions they're asking of us Well, excuse me. I'll start by saying that I was intrigued by the the bold moves that you're proposing here. I think it's timely As to the first one, uh, I'm interested in in the both Okay, from my perspective here, um the Sizes onsite requirements, I'm interested in the sliding scale piece of that With the appropriate onset percentages I'm toying with the 15 percent. I'm not sure on the next one yet But as far as the the finish I'm thinking the some of the same bedroom mix types Would be important to me as as the market rate On-site requirements allow some flexibility. Yes, I'm thinking yes allowing some flexibility on that Um I like the flat fee that you're moving to with the in lieu fees and not the percentage that we've had and Was that was that a double question on that? I should have very yes Exemptions I'm not sure about and the affordability term to be extended. Absolutely Great. That was all your comments Thank you, mayor. Well, I agree with um councilman world of eras's um attachment to flexibility And that's really what what I am looking for it every turn on these various questions I really Glammed on to the planning commission's attitude toward these to their their how they Digested the information and then came out with some recommendations and I really agree with with many if not all their recommendations I I think that the reason that I would like to see some flexibility And I would like to be known as the most flexible city in the in the state if we if we could approach that if they in my opinion And and having this conversation is so important perfect answer out there Everyone would would go to that perfect answer and there'd be tons of affordable housing being built all over california That clearly is not the case So, um, I'll go um through these um each the On-site or pay in lieu. I like I like the option Um, I although I am a fan of building on-site. I think that if we're going to do that I think we're going to have to drop the percentage Or come up with you know, you've mentioned several times the ability for a developer to come to you and say look We've got this idea Will this fly can can we make this work with these options and and come in with some um flexible and creative ways Both to get the housing and to allow to pencil and I do appreciate those those numbers necessary To get the financing and to give the developer as a reasonable return on their investment Um should project size determine the inclusionary on-site requirement I think the yes, I think there should be some flexibility there I don't think that every every project is is uh the same and I think that that having a I think that size should dictate The the requirement um on-site the percentage Not sure what that percentage would be. I'm not a subject matter expert in this area and I don't The the developers that are looking at building these putting these developments together Don't call me up and say You know, what's the we're going to tell you what the what the best percentage is So I I have to leave it to you and again flexibility is the key for me The in lieu fee I mentioned the 10% and should it vary absolutely Inclusionary unit size and finish. I think they should I think the finishes should be flexible I think to help create the affordability and the finishes inside I know that when I my first apartment did not have marble Marble kitchen and nor did it have You know special wood floors um clearly having the ability to Compromise some of the finishes and it helped create that affordability not only helps our our community but helps these these projects to pencil as well um In the inclusionary unit size and that was we just finished that would inclusionary on-site unit requirements allow flexibility um, yes, um They should and the appropriate in lieu fee Anything to incentivize Housing production. I'm just I that is I that's the mantra for me is getting the getting the production Of those homes as much as I value and appreciate our nonprofits like bourbon housing Taking doing the other side of the equation and then they are it isn't there They have been incredibly valuable in our community and will continue to be I believe But I am looking to incentivize that production On-site and should certain residential types be exempt and should the affordability term be extended You know It sounds like I mean, I'm not sure. I mean 30 years sounds like a long time 50 years. I'll be dead. So What what is it? These amounts of time mean different things to different people. I'm I I believe that to To the experts I certainly don't don't have enough knowledge to be able to pick a number between You know 30 and 50 so Or any other number above let's see 65 and 20 Just kidding of course And I think that's it. Thank you. Thank you miss columns Thank you. All right Should residential projects be required to build units on site pay and loophies or both Uh, I think this is a dial and not a switch And I would prefer to see a dial Used Allowing some of each I have a personal bias toward on-site But I would not enforce it to the exclusion of in loophies I believe that the reason you see the 90 percent built in in loophies is that our in loophies were grossly low I think it costs about a hundred thousand dollars Once you get matching To build a unit. What was our in loophie amount at the time? For from 92 to what was the rough dollar amount is something in the 50s, wasn't it? So so right now it's a percentage of the sales price and so a typical 600 family 600 thousand dollar home was in the 16,000 16 16,000 is that right that example or 16 16,000 16,000 So if I have a choice between building a hundred thousand dollar Times three because you'd have to get matching monies unit and a 16 and giving 16,000 dollars that might explain those numbers and What what concerns me isn't what that ratio is what concerns me is how many units did we not get built because 16 is a silly number I mean 16,000 dollars does not build a house It doesn't build an apartment It's a silly number And we shouldn't be that low So just I I see a dial. I'm not positive what the perfect range is but I don't want to push people to in loophies either and I think we were doing that Should project size determine inclusionary onsite? What's our current project site requirement? We have no requirement for onsite so that it's it's again The developer elects whether to build it or not. We don't have a requirement And this was this was added as an option because some some jurisdictions Set a threshold that says under a certain size you could pay pay the fee over a certain size You have to do the onsite and so again what that does is it just it sets a barrier So what we're asking is do do we want to have a system like that? Or do we want to have a allow for any size project to have options or lock in a certain size project? And really the only threshold that we currently have is that 70 units is when they are required to come in and talk to us about it I would like them to have to talk to us about it at a lower number than 70 But I will I'm willing to be flexible on what the outcome of the conversation is Assuming that we have a reasonable inclusionary in Luffy The appropriate in Luffy has to do with You know, how do we not kill a project but get enough money that we can build one? And how do we? How do I want to incentivize production and it should vary I Was expecting the onsite percentage requirements to come in the form of a table Because it matters to me what the level of affordability is that we're getting And I want to point out because sometimes people I'm I'm saying this for the press in the room Because the rest of us know this You can sound like a hero by saying you want 25 percent affordability and it sounds wonderful And you can stand up and say look i'm really supporting affordability. I want 25 percent That's a way to guarantee housing production does not happen in your community And What we may choose a number lower than heelsburg But we may build more houses than they do and we may get more affordability than they do By choosing a number that isn't a ridiculously high number So i'm really interested in making sure that the The slot was at slide 15 that had the profit on it That people get a profit they get a return on their investment And that we get affordable and preferably inclusionary And in order to do that we're not going to have heroic numbers like 25 percent We're going to have realistic numbers I just want to be clear about that Should inclusionary onsite unit requirements allow flexibility? Yes What is the appropriate inlufi and should it vary? I'm sure it should vary I would like it to vary enough that it incentivizes onsite production because it avoids As I said it avoids the problem that Someone doesn't want a whole complex in their neighborhood that they're afraid of But Are pleased to discover that in fact they're living in a fully integrated community It's not clear to me what the range of appropriate inlufi fees would be Is that the chart you showed us that had sort of the The you know 10 percent 8 percent And it's not again. I would like to see a table That was the inlufi Yeah, that one. That's a percentage. Yeah, I'd like to see that. No, it's the next one that I'm so So this is the percentage percent requirement The inlufi is this table, which is a little bit more complex But right shows a dollar per square foot for single family or on a multifamily different approach. All right. I'm I'm interested in making sure we get A Good combination and as I said, I'm interested in a dial and not a switch Let's make it fit our community And get us some affordable units too Should certain residential types be exempt this is an interesting question and I'm puzzled at why you asked it I have an odd answer Well, it is a component of this ordinance and and many that there are certain type uses in this case affordable housing types that Are being built and unless we specifically call them out and exempt them We would have to impose for instance the inlufi on them for construction So we could impose an inlufi on an affordable structure if we don't say that we wouldn't want to This mechanism provides who are out. I don't think that a fully affordable building which I'm not looking forward to having Should have an inlufi. I think that they since they're building fully affordable. That's fine And I think that's what you're asking Yeah, I think I think to be very explicit what we have on the screen here is what's current So accessory dwelling units deed restricted affordable housing units homeless shelters community care health facilities single resident occupancy And then owner builder. So your single home Or additions to the home or a placement of replacement of a home So just to be explicit about this is the types of exemption. This is the current exemption list I would be interested because we don't have in the building code single family residential percentage of universal design units So it can be really difficult for a kid in a wheelchair to visit his neighbors And for that family to find an accessible home for that child in a single family residence Single family residences are exempt from ADA requirements that apartments have So I would be interested in having A development that had a universal design component In having a break So if the full development had universal design so that kids could visit each other I would be interested in them having a break So that's that's my strange thing to throw out in addition all the other stuff. I say I like 55 years. Thank you That's flowing Thank you I'm doing my best here. Uh, let's see. So should residential projects be required to build units on site or paid in luffy I want to start by saying that my philosophy when I approach this issue is twofold one is about equity and making sure that our families and our seniors and our Typically disenfranchised population have access to high quality Residences in all parts of our neighbor in our city and it saddens me that That we have a disproportionately low amount of affordable units in in my district And that's something that I'd like to see addressed the other portion here is that I don't want the policy determinations that come out of this ordinance To be so onerous as to dissuade development We have everybody who needs housing in our community. And so to that end my my answers are kind of Based in the concept that building with some affordability in mind with inclusion as A tenant of doing that is more important than the all-out number of units and that if we can Take the number the percentage of requirements Down to a reasonable amount that we will hopefully find That we actually get the units built It's my understanding that this policy hasn't been updated in more than five years I'm not sure if that's the case, but I'd like to see that it comes back At least in five years if not sooner So Should residential projects be required to build on site or pay in luffy or both in general I'd like to see it projects be Doing on site. I understand that there will be situations in which in lieu is a good idea depending on size, but that In particular, I would rather see us Go to a low enough number of affordable units on site That we actually get the units built because what we know is that that provides better outcomes for families and children Rather than the all-out number and also I believe that it allows our developers to build the units without The Is much concern about you know, I think 15 is just really high as a percentage. I want to see a percentage that that essentially Takes away the fear that that a project won't pencil And so I defer to the subject matter experts on what that number is and I I know that I've seen that number in here somewhere Um Should project size determine inclusionary on-site unit requirements I think that there's a certain point at which you know if you're building a duplex You know, you're not going to require half of that to be affordable. So I'd like to see that That there would be a certain point at which smaller developments specifically infill developments Might be exempted, but I am very cautious to make sure that there's not a loophole and that the in-loop fees Are are fair to our developers, but significant enough to not encourage that type of Exemption wherever it's not necessary The appropriate onsite onsite percentage requirement is in my mind What I was saying before it is the highest reasonable number in which a project will pencil Um the appropriate in-loop fee is an interesting one And going back to slide 21 What I what I like about the updated what-if is that it's more equitable in terms of Or more reasonable in terms of what we need to Help our housing authority and get things built what I like about the existing 2.5 Is that it ties to the economy So if our economy were to tank significantly and our in-loop fee remains static and The council there's another fire or something happens and we're not able to update it That there is an issue there. And so what I'd like to see is perhaps a percentage of sales price that matches The the what-if in-loop fee, but that if The economy is booming it'll be a little higher if the economy is not so good It'll be a little lower. And so that in that regard we won't dissuade investment And I'm sure there's a percentage there that can get pretty close to the updated in-loop fee The other thing there would be to Figure out perhaps we collect 50 of that based on a pro forma and 50 of it after the sale occurs So that um that we end up getting the money I'm not sure what kinds of mechanism we have for currently collecting and I I want to be mindful that we do get it Can you clarify for me On-site unit requirement That is a mechanism to allow a developer for instance rather than to build the on-site units to fulfill the requirement by Dedicating land somewhere else for the purpose of affordable housing Or to build on-site units with another project or to for instance as we discussed Preserve at-risk affordable units that are terming out So I'm certainly open to that What I'd like to see is that it would meet one of our our values or goals like preserving affordable units Or perhaps the the land dedication in areas that are underserved in terms of affordable housing or that It's near transit oriented development in areas with specific plans so that we can more readily get those those units built in general though You know except in the very specific situations where we have special needs populations being served by supportive housing or that sort of thing I I'm Really interested in seeing how low we can go with the inclusionary Percentage as to make it worth our developers while within reason of course And so should certain residential types be exempt Yes, I think that we we have to exempt Those ones as I noted already Okay, thank you. Mr. Vice Mayor Thank you, mr. Mayor So with this first question, I'm kind of reminded of when you're on a plane And the flight attendant is telling you that in the event of an emergency the nearest exit might actually be behind you I'm kind of reminded of that in this idea that perhaps I mean clearly the inlufi is too low and perhaps by actually lowering the On-site requirement. We will actually end up with more Production and so I think my colleague who mentioned that it was more of a dial than a switch I think that that's actually the the way that I'm thinking about it as well Is that there might be a way for us to play with that so that the on-site Is looking like a more attractive option Because I think the inlufi right now is too good of a deal to pass up When working on these projects Should the project size determine inclusionary on-site unit requirement I'm going to be flexible on on that conversation and listen to the public What's the appropriate on-site percentage requirement again? I think that that is Subject to conversation with the folks who are actually building it about and I think that the other components of it are What is the inlufi looking like and also Even if you want to open up a can of worms and have the conversation around What is the expected rate of return on the investment by the developer and perhaps if they can show that it is not that That high it's not exorbitant that there is a different percentage that's required I'm open to all of that. I know we don't have time to actually do that But I think it would be an interesting conversation What is the appropriate inlufi and should it vary to incentivize housing production the answer is yes I think from what we've seen from that chart it is the preferred route and it's also the route that is creating the most units at the moment and if We have this conversation about making it more Accurately reflect the total cost to produce that unit. I think we'll be able to move the needle on the affordability Assuming that we don't push people out of their Ability to have the projects pencil out. I also think that our affordable housing developers would be here Saying yes as well that they've been able to stretch those dollars and those incentives extremely far I do want to push again On the possibility of using those inlufis to buy out affordability Again, not new units. I can understand some of the hesitancy by considering what the Difference in our housing mix has been that we've been able to make pencil I think that that'd be an interesting option to see what kind of flexibility or what kind of creativity Developers could have if there was more flexibility around that as well with the housing authority Uh Yeah, and again, I would not Suspect to know what the appropriate inlu fee is Only to say that I would hope that it would be high enough to where there's an actual Moment of pause for the developer to see whether they can create the on-site unit or whether or not They'll just go with the fee again at the rate that it's at right now It doesn't even seem like it takes much thought if you're a developer on which direction you want to go I'm open to residential types being exempt and then Listening to to john talk about the the term being extended I'm reminded of that old chinese proverb about planting a tree where you'll never see be able to sit in the shade I think 55 years means that I might not see it either But but that certainly doesn't mean that I shouldn't push for it Don't sell yourself short now First I'll thank you for this presentation It's kind of crazy that we're only about halfway through this presentation But I appreciate the patience and this is a lot of information It was interesting for me as I was reading not only the presentation, but then the three attachments and conversations with many of your staff I started reflecting back on almost like the Wizard of Oz You know behind the screen you're doing all these dials and bells and whistles to try to get this product you know we need more housing more affordable housing and It's it's an art form more than an exact science And so for me with that kind of image of the wizard back there, we need to do the right things to make this More more houses being built in Santa Rosa. So flexibility is a big key for me here I do think you know when we talk about it in general sense of our inlufi We've been incentivizing inlufi not incentivizing housing and building So I think we need to find that perfect sweet spot where incentivizing housing and not just paying the inlufi So with that the first question I think it needs to be a blended approach and again one of the things that you know I have the utmost confidence in our staff even with Jessica Leven. I know we have a deep bench But it's got to make sense. It's again. It's not a black and white So that kind of that blended approach is what I believe you heard from the planning commission Project size determining the unit requirement. I think there is a number whether it be 70 50 I would like to have some more discussion. You have more than one that should apply to it But I think at a certain point and again, I'm not the submatter expert But yeah, if you go above this amount it is going to be on site Appropriate on site percentage I was intrigued with the eight to ten percent like some of my colleagues had mentioned There are some communities in california say, you know, we have 35 inclusion air housing That sounds great looks good on paper may look good to you know run for your reelection But if nothing gets built, what's the whole point? So I'm intrigued by that eight to ten percent whatever it's going to take to get more housing Affordable housing being built because zero from zero, you know zero percentage of zero is not, you know Proper in lieu fee. Absolutely. I mean it almost sounds like a no brainer What is the appropriate in lieu fee and should it vary to incentivize housing production? Yeah Have that flexibility and incentivize housing production They should inclusionary inclusionary unit size and finish be the same as the market units On the surface absolutely But again, it can't be a deal breaker saying it has to be this way So again using creativity and being having developers open to the conversation with staff Let's have some flexibility on that. Obviously, uh, the unit requires a lot some flexibility. Yes Um, the same thing the appropriate in lieu fee. I like what staff had proposed there Some of those dollar figures that makes complete sense to me. So moving forward in that direction I'm good with the residential types being exempt and For affordability term be extended my comfort level is 55 years, you know going in that direction So With that did you get what you needed from this part of the presentation from council? Go ahead and mr. Vice mayor and if I could I apologize. I missed one about the Unit size and finish being the same for inclusionary and for the market Uh, I want the outside finish for sure to be the same Inside i'm flexible. I'm actually I did not have a dishwasher until I turned 31 and moved into a new unit So i'm very familiar with the concept of Sometimes you find what you can afford and it'd be great if we could incentivize them to be the same But i'm i'm not going to hold it to it because I'd rather have the affordable unit So did you get enough? Oh Go ahead miss one Thank you. Um, I am in favor of extending to 55 years and um, I liked what the housing authority Talked about yesterday in terms of finishes being like base cars that you know on the inside, you know, the houses are Are all the same and people can choose to upgrade when and if their finances make make it available to for them to do so So did you get your feedback from this portion of the presentation that you're looking for? We did but I want to be clear There was a certain couple items where there weren't there wasn't a consensus that we could gather from some of these items So what we're going to do is try to take our best shot at taking the consensus on multiple items So for example, uh, how the the in lieu fee there was a recommendation of going back The percent approach versus paying the fee the per square foot fee So I only heard that once so I need to just make sure is we're clear that we're going to come back with A scenario of what we heard the most of but we can also give you back after the public speaks from the council Um, the other thing we didn't hear much about was downtown. Do we want to treat downtown in any differently? We weren't very explicit about that up here But I think that's something that the council has made a priority over the number of years That do we want to make sure we carve out downtown and try to provide some continued incentive there And then also we heard the only other exception was the universal design that we don't hear from from one council member But just to be clear that we're going to try to take as much as we can from a consensus in the public in your Your final comments and incorporate that into this policy. That's I guess what I would react And I guess might take away from the downtown We've done a lot of work with that and I think this council is comfortable with the direction that we're going there So maybe the absence of comments might be we like the road that we're traveling. Okay, great. Thank you Okay, so are we ready to go on to slide 27? Yeah, we'll move on We'll be asked we'll have a public comment like I mentioned earlier at the end of the entire presentation and again I appreciate that Dwayne, but that's when we're going to have their comments So the next we're going to have righty said earlier Rosa come up and talk about the commercial linkage fee And again, we brought these two together because they do both Support the development of affordable housing in our community. This is a new fee and Ray says gonna Well, um, good afternoon, you'll be happy to know that you're more than halfway finished. This is more straightforward in that as Assistant city manager Gouin mentioned we do not have currently a commercial linkage fee at all So to start with the purpose of a commercial linkage fee is to mitigate the demand for affordable housing resulting from new market rate commercial development And as noted on this slide, it is a tool to provide an additional funding source for workforce housing So in addition to quantifying the connection between development A new commercial development and their demand for affordable housing the Study that we're going to be talking about also considers all other fees And policies that could affect the feasibility of a of a project So feasibility of a fee is I should note a requirement by law in nexus study As is showing the affordable housing and development Relationship as well as figuring out what the threshold is so again like the inclusion or policy that you just Went through they need to find the threshold for a given product type to this end The study analyzed the most common commercial development types occurring in santa rosa By estimating the number Or ash is it and they estimated the number of workers that would work in the new commercial spaces What the estimated worker household income would be? And what the affordability gap would be for new lower income households So based on recent trends and activities in santa rosa Hotels retail restaurant services And business park light industrial worthy prototypes that were selected to That represent again typical commercial development in in santa rosa. And so that's what was studied Though the assumption is that The fee would apply to any new commercial development so The questions that we're going to be asking you and that we're asking to just consider as we power through these slides are You know should the city adopt a commercial linkage fee at all And as jessica mentioned earlier the fee was identified in the housing action plan But we can still ask how that fee fits into or you know should fit into santa rosa's general housing strategy If the city does adopt a fee, what's the appropriate level? And to what degree should our neighboring or comparator cities be considered when we're looking at what the fee Could be and then lastly are there ways to innovate or be flexible In the implementation of these of these fees okay, so We did take these questions to as mentioned before the planning commission and the housing authority And just to summarize the planning commission comments On the whole the commission was in favor of a fee And though they do want to see a regular review of the fee You know perhaps they they mentioned perhaps more than Sooner than five years, but we had mentioned five years just to gauge the effectiveness and to ensure continued feasibility Uh question did come up as to whether or not a change Excuse me a change and A change and intensification. Thank you Of use would also trigger The fee or would it only be new commercial development? And lastly they were either fine with the study finding that three dollars per square foot is A reasonable fee or at least having that three dollars per square foot be a starting point for The conversation to decide what the fee could be okay And then at yesterday's housing authority opinions were a little bit more varied. So We had You know half of the folks there were in favor of a fee You know implementing it and then the other half were I'm really questioning particularly when it came to retail development whether or not a fee would be feasible Or would be a deterrent to development Though they were less concerned that they focused their concern based on their understanding of the current retail market less concerned when it came to hotels and restaurants I'm sorry Hotels and business parks We also received feedback from The public and I guess I would couch this as um, you know More on they're sort of non-plus by the idea of a commercial linkage fee They like the idea that um, or they considered three dollars to be sort of a modest entry point to an active fee and like the idea of having affordable housing responsibilities shared by commercial developers, um, you know to To address the the housing needs of their employees But only so long as the fees do not actually discourage any development, which you know again the study proves out So we do have a series of slides that Reiterate the policy options, which I just reviewed earlier. I'm gonna because this is fairly straightforward kind of Skipped through those but just again to reiterate. We have no commercial linkage fee in place to compare it to so that makes it Perhaps a little easier So looking again at the prototypes that were studied What these charts show are the pro forma analysis that tested the financial impact of the maximum Justified fee, which is the bar in each of these charts on the left Um of each graph and the reduced fee scenarios that were identified as is actually feasible In each of these prototypes. So based on based on the current economic conditions So the black line represents the yield needed to make the project Feasible and the red bars represent the total stack of the fees by scenario with six dollars in the middle and three dollars on the right any Red above the black line shows that there is financial capacity in these three models So looking at hotels Clearly there's even if you looked at the maximum justified rate There is capacity In hotel developments, but you go You're more marginal in that capacity when you're looking at retail restaurant and business park light industrial a little less so But again, we focused on the three dollars per square foot because in all scenarios That was what the studies show to be as um as allowing a project to pencil out This chart shows just sort of it really rates that The relation between the maximum justified fee and the fee option Again focusing on the three dollars per square foot so When we decided to sort of see what this could look like in terms of A development that we've actually seen in the last few years we pulled Sort of a quick survey of what we thought would would have been eligible commercial development since 2016 And we came up with about 256,000 square feet of commercial development, which would have equated to about 770 thousand dollars in Fees that would go to the housing trust In 2019 alone. There was about 115,000 Which would have been about 350 thousand dollars of Of revenue generated So that's what we're kind of looking at as it relates to the history of what we've seen produced here in the last few years The study also looked at fees in other select cities and found that three dollars per square foot is within the range of average um Though I would note on this slide that um, you can see that most cities Really from what's shown here with the exception of pleasant in do vary by by product type so They range and of course freemont is the highest In doubling what the study is showing as feasible for us in run a park, of course, is the lowest And that brings us right back to the policy consideration. So looking at the questions of whether or not we should in fact Adopt a commercial linkage fee. Um, what that should what that fee should be What are the other considerations of flexibility options that we might be able to see? if we do Move forward with this All right. Thank you for that presentation. So again, what we'll do here is we'll get any questions That might have we'll then Have comments from the public and then we'll answer these policy questions. Mr. Vice mayor. You have a question Thank you, mr. Mayor Just sort of as a fundamental question I I understand that you did an analysis of what everybody else is doing But why is the commercial linkage fee Tied to the square footage of the business and not towards the wages that they pay And the reason that I ask that is for a business like medtronic Who they have a big square footage, but they also have a high pay for their workers They don't require the same amount of affordable units as something like a walmart that is also high square footage But very low wages that then end up public dollars having to subsidize housing for the workers that live there So serogram is the author of the studies. Hi So the way that the commercial linkage fee is Calculated the maximum justified fee is based on land use categories in this case in santa rosa We we looked at three categories that are sort of the most prevalent types of commercial land use happening and the jobs Associated job categories associated with those land uses are considered and the wages Tied to those job categories are classified by land use so income and then Based on those income categories. It's very technical It the analysis determines the impact The measured impact by land use on the need for affordable housing So that's why the maximum justified fee Varies based on the type of use. It's not on a specific business Forcing to occupy the building but on the type of building it is Yeah, so it's it's less nuanced if a if a business that would typically fall into sort of the lower wage side came in with Higher wages. They wouldn't be able to get a waiver because it's a one-time Development impact fee based on the land use based on the you know the building built It can't it doesn't anticipate the business that will occupy that specifically. Okay. Thank you Okay, so any questions We'll hear from the public and then we'll make those recommendations. Sorry. You want to start this round Because well, I just have a question first the um on the deferral How would the deferral work and what is the genesis of that? So, uh feed deferral We have an impact feed deferral program currently now for for all impact fees So from a deferral standpoint if i'm understanding your question correctly, we would roll this into that same deferral package to um at Occupancy when the person is occupied when the building is occupied The other thing that we've looked at and we've tested in the downtown is a another deferral mechanism Which is either six months out or to occupancy, but then we need to get into Discussions of what that means in terms of can we collect that fee once they're up and operational? So typically we like to collect that fee at occupancy because that's really the last The last uh control we have over um collecting that fee before they're up and running Thank you Any other questions Ms. Colms you have a question Thank you, and thank you for bringing this forward. I appreciate the work you've done Looking at slide 35 first It looks as if hotels have some wiggle room At 11.5 percent that's correct and businesses business parks are Not too far off What is that six six to seven percent correct? But retail restaurant and services have some difficulty reaching the mark Of the 6.5 there where the band is shown um, is that fairly consistent that Well, let me go to i'm noting that and then taking you to slide 38 Because it looks like in this slide other communities vary the amounts based on use And they hit retail restaurant personal services pretty hard And so I would like i'm can you help me understand why You wouldn't always have a higher fee for example at hotels that have the cushion Rather than at retail restaurant personal services Yeah, I think sarah can go a little bit more in depth into this but there's two considerations This is one it's sometimes it has to do with you know incentivizing something but most likely it has to do with the The product of the study that they actually did so I'll let sarah go again into details on the technicality of the study Sure, so um the the slide that you referred to I think you said number 35 show that that considers the development feasibility Again, which is one of the considerations when implementing a new fee and our recommendation was because this is a new program And it's untested in this market to start with a with one Uniform fee for all the land uses that is at the lower ends and to to revisit it again So we recommended that low amount which is which does meet the minimum feasibility threshold for retail But it's it's a little bit marginal And meets it for the other two and then in answer to your question on this As I tried to explain before but it's very complicated and hard to explain in just a few moments, but um retail often has measured the highest impacts on the need for affordable housing because of the types of jobs that are associated with retail because More of the jobs are lower income In this type of analysis, it is typically measured as having a higher impact on the need for affordable housing for the employees Oh, go ahead. Is it So I think of restaurants and retail as being related to the hotel industry A hotel hotels often have a restaurant or have restaurants provide services to make the hotel And I typically don't go to a hotel where there's no restaurant anywhere near it. Um, so I'm I'm wondering if it makes sense for there to be a shared responsibility So hotels have a range of Jobs associated with them from the lower paying jobs to more management Jobs, so it's a it's a mix and so the the impacts are measured Overall as a lower Number that may tell I guess I'm asking is do you look at the industry? separately or do you look at it in an ecosystem because Business park and light industrial also have People who want to go to restaurants and do other things. So I'm just trying to sort out Is it an ecosystem or do you look at the industry in a silo? This is not you personally The system Well, so I think from the study that that was done it looked at each individual It's silo. So it's not it's not it's not taking into account cross cross I don't we call it pollination or sharing of Of services So I think what we had to do is look at that with the specific landings because it is an impact fee at that one point required To look at this information By silos in this manner or can we look Across industries and say wait a minute. This is an ecosystem and there should be maybe some sharing of responsibility Yeah, I mean you can are we allowed you are allowed to do that. You can take that into consideration um We follow the standard processes foreign access study and they do look at it by Sector like that. Okay, and I appreciate that there's a standard for how to do this. I am not holding you personally accountable Yes, and and and if I may If we turned back to slide 36 Which sets out the maximum justified fee so The that analysis was done By looking at the work categories of each of those Right each of those sectors So although you are free to Set the op the fee Using different criteria you cannot go above those Maximum justified fees. I wasn't actually planning to go above three hundred and twenty dollars for I figured that you you would not be going that high But I just want to point out that yes, you have flexibility, but within limitations. And so you have to Based on the way the nexus study was done, which is Industry Standard You need to consider that and consider it with an industry standard, right? I am not asking you to have done something Not that though. I might So I would be interested since we're about to receive public comment in particularly hearing comment about whether Three dollars across the board make sense or whether it makes sense perhaps to do A slightly lower number like two dollars for retail restaurants and personal services Even though They're a high share They're more They may have a little more trouble reaching for example a six dollar threshold And whether or not even though a hotel maximum justified fee is seventy five dollars if we should consider six dollars For a hotel separating out the three different categories I would be interested in hearing comment from the public Based on slide 35 that Uh hotels could take a little more and retail might take a little less So i'm just asking the public if you make comments if you could also add What your opinion is there that will influence my vote. Thank you Okay, miss lemming Thank you. Um, I'm curious to know in your methodology if um higher-end employers Are identified as uh as creating housing needs that are unmet as well as lower-end employers I'm not sure that I understand the question, but it sounds like Maybe let me rephrase it. So is this a similar question to the Are we considering the types of the Businesses that are occupying the land use What i'm trying to get at let me see if I can ask the question in different way is that We typically understand, you know, big box stores and restaurants to you know Employee people at such a rate as to um have them not be able to afford housing And that seems to me to be the reason we're having this discussion But i'm wondering if the employment of people at the other end of the keizers and metronics and Agilents and so forth of our area Add to the problem in a different way by paying people high enough wages that you get inflation in the market that prices out people on the lower end Is that something that was assessed? Okay. Now. I understand the question. Thank you This the this particular nexus methodology did not look at that second question that you described so in in that nuance it a range of Employment categories assigned to each of those land uses or building types Which includes a range of incomes, but it did this a nexus study Does not look at the specific impacts of employers You know new jobs of a specific type coming in to a community and the need for affordable housing So in addition to the legal Boundaries around what we can charge for impact fees or commercial linkage fees. Is there In other jurisdictions where they have a variation depending on industry type Is that based on trying to attract a certain type of industry or is that Based on trying to ameliorate a problem that that comes with that industry in particular So and I can't speak to you know all the specifics but For any particular city, but jurisdictions do set Sometimes their fees To incentivize or disincentivize certain Types of land uses they may Decide to give retail a break, you know, even if retail could justify the highest fee They may give retail a lower fee because they do not want to dissuade it Very commonly industrial Uses have a lower fee to not Disincentivize that whereas some communities will put the highest fee on office Because of a whole host of reasons because of traffic, you know, not even related to affordable housing. They may try and Put fees in as long as it is below the the maximum They have the ability to set the fee at any Amount that's below that maximum for lots of reasons and so long as it requires it meets the feasibility requirements right And then do we see in any other jurisdictions them tying this to a percentage of Either land value or something else that has the flexibility to go up and down with the economy so as to to not dissuade The creation of new jobs during more difficult times and to recoup that amount during you know more bullish times Well, that's um comes to the point of Reviewing it like every five years or even sooner as desired It's to be able to be flexible with the market right well I'm curious to know if we were to take a percentage approach I mean in addition to the review the that percentage approach would Seems like it might be uh have the advantage of Being more reactive to market forces than a very every five year approach I I don't know if other areas do that. I'm not aware of any jurisdiction that has tied their Um commercial linkage fee to land values. I am only I'm familiar with per square foot So do you know if it's possible to do that so long as there's a ceiling on it that doesn't exceed the feasibility limit yeah We don't have a study that allows us to test the Tying it to land values That being said we do have a study that has given us maximum fees so As we both have discussed before as long as you're staying under that fee If you want to use some flexibility in in setting the actual Fee that the city will impose You can have some flexibility in that Again, I I'm not sure of the math of how we make sure that The percentage value Uh is below the maximum justified fee again the the maximum justified fee At this point are so high that it's Unlikely that you'd be getting Above that and would it be possible just to say you know a percentage of x But not to exceed Yes, you could okay, um, and then um, it's my understanding and um, this is a question about That the housing authority would collect and disperse the moneys that are That are taken in as a result of this program if the council were to adopt it. That's correct Okay, um, and Is there a mechanism or do other municipalities have Programs or policy in place that helps the housing authority to direct the moneys to Meet the the challenges that are created as a result of the particular types of employment and the actual cause for the policy Implementation in the first place I'm not sure I got that question. Yeah, that wasn't very clear on my part That wasn't you what I'm trying to say is how are we going to be certain that the moneys collected are used to address the problem identified so so again the money would be um Issued through the jurisdiction of the housing authority the discussion about how the housing authority prioritizes the type of Projects, um, is it is another discussion? So once that funding is in place I think that conversation could happen about how we want to prioritize how we want to fund What type of NOFA's do we put out and what type of Uh solution are we trying to solve for? And is it typical that we would assess or a jurisdiction would assess this type of A fee without um without having had that question answered to start with So currently the the If I understand your question correctly The need for the fee and the way the fee was calculated was based on the the the The impacts of the Employees that are paid at a certain level that is the uh the type of product that the housing authority is currently building at low and very low type of Units and so those are the mark that those that funding would go into that program to try to push those units There are potentially other types of Products that could be developed out of that But this study did look at the various income level needed for the different type of land use areas All right I would just add to that um in my review of municipalities in california Most typically the monies from a commercial leakage fee are joined in the housing trust fund with the other Fee revenues and the stipulation that I understand is That they that money is expected to be used for um workforce housing, which is a very general term it basically means In practice that it is not used for senior housing Which you could argue It's probably not true. Um that those aren't folks in the workforce And or you know, you know very specific types of special needs housing And but other than that is most typically joined with other Fee revenues and thank you for all the work and research you did on this It does seem like there's a number of factors that uh, aren't legally required to be involved in this that do impact Our residents ability to pay for housing in in our in our jurisdiction, but um, I'll I'll let it go there So thank you very much Council any additional questions? See none. We have a couple cards on this This entire item first up Dwayne do it followed by ann cealy Dwayne in the house Don't see him. All right, ann cealy followed by peter stanley Good afternoon council ann cealy speaking for concerned citizens for santa osa I want to relate a just a short bit of history. It was in 1992 The concerned citizens representative sat down with city council members to create the the housing allocation plan It was created in concert as as a companion to the growth management policy Which sounds crazy to us now that we would want to make sure we limited to growth But at that time our wastewater Problem had not been solved. There were problems with schools and and a lot of infrastructure questions So it was necessary to address growth But we wanted to make sure that An adequate amount of the 100 units per year that was within the growth management policy went to low income households Over the years I watched as the Requirements of this policy got Loosened and loosened and loosened We Are in a state here that i'm not surprised about though. We don't have enough affordable housing It's it's happened over many years that the requirement for on-site development got spread from Developments of seven acres or more up to An undetermined amount One thing I want to make sure you know is that the requirement of for Affordable units within a development to have The same appearance has always been exterior apparent appearance not interior and the unit did not have to be Um There was no requirement for it to be different just that it would make it a uniform look throughout the development There's something happening here in this room that I just want to comment on that I'm grateful that mr. Gulen and others have spoken of our Development community and what we can make do to make things work I don't know that community and I'm sure most people don't Most people have no idea that there would be a development of 70 units or more I didn't think that happened at all It would be wonderful if that were made more evident to the public And mr. Gulen I have a great Confidence in you, but I know that we need a city policy that makes things work for everybody Thank you, and I think that was three Thank you. Thank you. Peter Stanley followed by rich wallach Thank you, mayor schwedhelm members of the council and thank you for going through this today I'm going to read through my notes very quickly because I got a lot to say And um, I want to make sure I get through most of it So my name is peter stanland with argologics. We're planning Architects are in development consulting firm in santa rosa been downtown for 17 years Finding a solution to affordable housing is clearly a community problem that needs solving And we would like to continue to be an active partner with the city to implement solutions to the goals stated here today My comments today and our current projects are focused in the downtown and are clearly the most compromised in their feasibility And complications in getting built the development data used in the inclusionary fee nexus report admittedly is not relevant to downtown I'm currently running proformas for our projects for both market rate and percent of affordability projects to see if we can make these projects work Providing affordable units on site. That's our preference Right now the 10% affordability on site has about a million and a half dollar negative hit on the initial feasibility outcomes for our Midsize projects without other forms of grant funding. So In in honesty, we haven't looked beyond market rate Conditions in response to councilman roger's questions We run our performers out 10 years with npv or net present value and equity investor return at five seven in 10 years Our best opportunity to get some traction is to reduce the barriers to entry as much as possible Not by eliminating affordable requirements, but by accepting that we need to get a momentum going Right now every perform I'm working on in the downtown is razor thin in the viability Which means any hiccup in the development costs or the economy can have pretty negative impact of feasibility There are only two ways to make non performing projects work better raise rents or reduce project costs both limited mechanisms There are other courses. There are of course other tweaks and long-term financing that help as well Six to seven percent return on capital is a baseline requirement that we have This is to incentivize projects that can easily cost which is risk 40 to 50 million dollars and more what I can say is that simply by designing more efficient units We can have both positive impacts on the market affordability and project costs Just an example by reducing average unit size from 950 square feet to 850 on 100 unit projects You can both make the units more market affordable as well as reduce construction costs by two and a half to three million dollars This is a trend in development supported by market studies. We have done and is a missing middle strategy There are great creative downtown planning examples around the country that have been successful in getting targeted community benefits included in projects Community benefits not only being affordable housing But also daycare grocery stores entertainment venues direct service providers and other elements We need in our downtown in order to make our overall community plans be successful I would encourage council support looking at downtown separately and keeping the lower inclusionary requirements and planning flexibility for projects and tod development sites for the time being Remembering that commercial uses are part of a mixed-use downtown project I would add that we also include the northwest station planning area in that strategy as well Since that is also an excellent targeted area for intensified development. Once we get the rock moving We can review the HAP again and adjust as needed to revise targets. Thank you. Thanks, Peter Rich wallach followed by doing to it Hi rich wallach with the burbank housing Here to give the affordable housing nonprofit developer perspective First like to say that we do like and value partnerships and see The model of inclusionary zoning zoning onsite But I think as miss combs suggested something where they were possibly adjacent to each other May make a lot of sense Affordable housing development is very different than market rate development. It has a lot of different rules and requirements which makes Inclusionary onsite mixed in with other units difficult There's a separate ownership. There's there would be multiple legal complications that make that a challenge Which takes away a significant subsidy source to create affordable housing Another reason that we like the the The partnership model is that it's one entitlement So rather than taking that fee and making it available to another development at some future date that would require a new site new negotiations new You know zoning entitlement work that could take an extended period of time to take advantage of that Existing site and be able to develop on that as a partnership makes a lot of sense Possibly using a density bonus for example For the market rate developer to take advantage and not lose units necessarily but but still have that affordable site Larger land sites not the downtown sites make more sense because they do have that ability to build separately downtown sites inherently Are much more expensive to build not just because of land values But because of the type of construction which makes the affordable units much more difficult to pencil We appreciate the flat dollar per square foot because we do want to encourage larger unit sizes Not only because there's a need for family housing, but also It benefits from the nine percent tax credit model to develop larger unit sizes We would say absolutely no to the idea of Differentiating units with interiors being of a lower Quality or lower amenities. I mean there's a hard to distinguish between amenities and quality But it's it's important. I think the difference is For sale products where you can have a base model for sale and somebody can go in and option their unit up But that would attract that would be attractive and wouldn't be discriminatory to affordable units Finally, we are seeing more inclusionary housing opportunities Developers are coming to us and looking for that for a for a desirable model and we embrace that and look forward to doing more So, thank you. Great. Thank you Dwayne do it The question is In 26 years How many affordable housing units got built? Dwayne there's your opportunity to give comments to the council when it's not going to be a q&a Well, that's sad because part of the process of having a true study session is a discussion With the public to understand what we the taxpayers are helping to pay for Now with that in mind, I belong to the Sonoma county housing advocacy group Which came together 22 full years ago because we've been in a crisis for housing ever since Four of the leaders of that group talked today about the situation at hand, which is it appears This is an effort to get the housing allocation plan with the disaster capitalism model Saying, oh, we must do this now because things aren't working Well, many of us believe things aren't working because some developers don't want to play fair an example is Bellevue ranch subdivision in southwest santa rosa Where the affordable housing component of 61 housing units was shifted over onto the taxpayers the developer Moved it over and burbank picked it up Burbank does a nice job in helping on some things What we would like to see myself and other members of the housing advocacy group Who in the past have actually had to file suit against the city to make sure that its housing element would comply with state law Is that there be required on-site inclusionary housing? That's how you get it In loophies allow people to get away from it We would think that also having duplexes Triplexes and foreplexes being part of the mix of unit types will help and you could use project based vouchers From the housing and urban development to finance those rather than having to go out for bonds So that's something that needs to be talked about at the housing authority But unfortunately, we can't get the planning commission the housing authority and you folks to talk with the public and actually have that Conversation with the community that I often hear the staff down here say. Oh, that's what we're going to have These types of sessions don't do that. They just essentially say this is what we may want to do I believe it's very important that you have to build those inclusionary units at the same time Is in the other units? Otherwise, it won't get done That's what happened out at belview ranch and guess what at belview ranch just by a slight of paperwork It turns out they didn't put in a deed restriction Requiring that there be that affordability Long into the future so people got their houses and got to sell them when the market was up So there's a bigger discussion that needs to be held I'd like to ask you folks to have that discussion with the public Not just your stakeholders and your special interests, but have it with the taxpayers. Thank you Thank you, dine. All right bring it back to council any Additional questions based on any of those comments here so far before we go in and answer these question