MEETING DATE: 6/25/2019
DEPARTMENT:
DEPT HEAD/DIRECTOR: Ray Espinosa
AGENDA ITEM PREPARER: Jamila Saqqa and Dulce Alonso
SBC DEPT FILE NUMBER: 119
SUBJECT:
COUNTY ADMINISTRATION OFFICE - R. ESPINOSA
a) Introduce Inclusionary Housing Ordinance regulations in San Benito County to include, but are limited to the following items: 1) Assigning the in-lieu to $82,600 per off-site building permit and setting the Inclusionary Unit Cost at $413,000; 2) Updating the Housing Advisory Committee to seven members; 3) Including the term extremely low income; and 4) Removing Sections 21.03.014, 21.03.015, 21.03.16. (Chapter 21.03 of the San Benito County Code);
b) Introduce the Housing Advisory Committee By-Laws to the Board of Supervisors; and
C) Hold a public hearing on July 23, 2019 regarding the proposed Ordinance.
SBC FILE NUMBER: 119
AGENDA SECTION:
REGULAR AGENDA
BACKGROUND/SUMMARY:
In 2016 the Board of Supervisors reestablished an Inclusionary Housing Ordinance, Ch. 21.03, which set specific percentages for inclusionary housing based on the number of units. At the time of approval an in lieu payment for the inclusionary housing was not determined and a study
to establish an appropriate payment was expected. In mid-2017 San Benito County contracted with Gruen & Gruen Associates to complete an affordable gap analysis to determine an appropriate payment. The final report was provided in June 2018.
With the need for an amendment to include the addition of the in-lieu payments Staff determined it would be appropriate to make further edits to clarify sections of the ordinance. The major amendments to the ordinance include, but are limited to the following items: 1) Assigning the inlieu
payment to $61,950 per on-site building permit, 2) Assigning the in-lieu to $82,600 per offsite building permit, 3) Updating the Housing Advisory Committee to seven members, 4) including the term extremely low income, and 5) Removing sections 21.03.014, 21.03.015,21.03.16.
STAFF ANALYSIS
Affordable Gap
The Gruen & Gruen report completed an affordable gap analysis related to single family home use. This particular affordable gap analysis reviews the current market price for a single family unit and compares the difference to an affordable price based on the specific income levels of very low, low, and moderate income.
The Gruen & Gruen report established specific assumptions to assess an in-lieu payment. Reviewing several of the in-lieu payment assumptions Staff believed not all of Gruen & Gruen’s price assumptions matched the intention of the Affordable Housing Ordinance. One of the assumptions was the appropriate family size per housing unit. Gruen & Gruen indicated a two
bedroom home would house three individuals, a three bedroom home would house five individuals, and a four bedroom home would house seven individuals. Staff recommends following the State Housing & Community Development guidelines, which states with no federal assistance a household size is set to the number of bedrooms plus one. Adjusting the
assumption to follow the current State Housing & Community Development guidelines adjusts the maximum income levels allowed per housing unit. Second to determine the specific housing price Gruen & Gruen established specific loan assumptions. Adjustments made to their assumptions calculate the affordable housing pricing with a 30 year fixed rate of 6% APR, property tax rate of 1.25, a mortgage no more than 35% of income for moderate income and 30% for low to very low. Additionally Gruen & Gruen did not include the average affordable gap for extremely low income. Staff recommends adding the extremely low price calculation because even though builders are not expected to provide housing for the extremely low income group San Benito County must still follow the Regional Housing Need Allocation (RHNA) and could use potential future in lieu payments towards the construction of extremely low units.
In Lieu Payment Determination
To define the housing affordability gap Gruen & Gruen first determined the affordable list prices for a three bedroom and a four bedroom unit for the income levels extremely low, very low, low, and moderate. Once the list price was calculated for each income level Gruen & Gruen determined the average affordable price. When determining the average Gruen & Gruen deleted the list prices for extremely low units, but Staff recommends including the average and used the average in the current determination.
The next step in the methodology is to subtract the average affordable price per income level by the current average market rate price. This step provides the actual average expense gap between the market rate unit and the affordable price unit. Once a gap is determined for each income level
an average is computed. The final average provides the actual average affordable gap.
On-Site Payment Per Building Unit
In the affordable gap analysis Gruen & Gruen determined the current average market rate price is $613,500. Using the staff recommend sales price assumptions and updated Housing & Community Development State Income Limits the average price gap for all income levels(extremely low, very low, low, and moderate) is $413,000. The on-site payment is determined by multiplying the average affordable gap by the on-site minimum requirement of fifteen percent.The average affordable housing gap, $413,000, multiplied by the on-site requirement of fifteen
percent establishes an on-site in lieu payment of $61,950 per building unit.
Off-Site Payment Per Building Unit
In the affordable gap analysis Gruen & Gruen determined the current average market rate price is $613,500. Using the staff recommend sales price assumptions and updated Housing & Community Development State Income Limits the average price gap for all income levels
(extremely low, very low, low, and moderate) is $413,000. The off-site payment is determined by multiplying the average affordable gap by the off-site minimum requirement of twenty percent. The average affordable housing gap, $413,000, multiplied by the off-site requirement of
twenty percent establishes an on-site in lieu payment of $82,600 per building unit.
Housing Advisory Committee
The Affordable Housing Ordinance set to establish a Housing Advisory Committee and By-laws. One of the amendments in the ordinance increases the number of public committee members and details the types of public members to appoint. Increasing the number of public members from two to three individuals creates a clearer majority. The three public members include: one member in the affordable housing development community, one member in the builder development community, and one of the members with a financial or accounting background.
Additionally the Housing Advisory Committee By-Laws were developed to set specific standards and rules related to the blank of business related to the committee.
Extremely Low Income
In the current Affordable Housing Ordinance there was no definition of the term extremely low income. Additionally there was no clear discussion for the use of potential future use of in lieu payments towards the production, preservation, or protection of affordable homes. Developments are not expected to provide development of extremely low units, but it is important for San Benito County to have the flexibility to use any potential in lieu payments for any future projects.
Removal of Sections
The sections 21.03.014-16 were removed because the sections were left blank and no direction is currently being reviewed.
No changes or updates to sections 21.03.013.
PLANNING COMMISSION
The ordinance was brought to the Planning Commission to review and approve the ordinance on June 19. The Planning Commission made minor changes and approved staff recommends. The Planning Commission to approve the inclusionary housing in-lieu payment of $82,600 for off-site units and setting the Inclusionary Unit Cost at $413,000. Staff recommends applying the off-site fee for project developments that seek to not provide any on-site affordable unit. The planning commission also approved HAC bylaws.
BUDGETED: