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Item 9 - Ammnd of AB1290 - GENDA REPORT SUMMARY - TO: Honorable Mayor and Members of the City Council Chairman and Members of the Redevelopment Agency FROM: James L. Bowersox, City Manager/Executive Dir~ INITIATED BY: John D. Fitch, Asst. City Manager/Asst. Executive D~ Warren H. Shafer, Director of Redevelopment Service ~ Pamela R. Colby, Redevelopment Project Administrator~ DATE: July 11, 1995 SUBJECf: Amendment of the A8 1290 Redevelopment and Housing Implementation Plan Pursuant to Senate Bill 732 ABSTRACf Adopted by the City Council/Redevelopment Agency on November 29, 1994, the A8 1290 Redevelopment and Housing Implementation Plan is a five year plan which sets forth Agency activities from FY 1993-94 through FY 1997-98. Assembly Bill 1290 mandated this planning document which must demonstrate the linkage between Agency activities and the elimination of blight and set forth a plan for meeting specific Agency affordable housing requirements. Senate Bill 732 expanded the Agency's reporting requirements ..- specific to the Agency's affordable housing obligations of Section 33413 of the California Health and Safety Code. Accordingly, the Implementation Plan is being amended at this time to incorporate this additional information. ENVIRONMENTAL REVIEW This action is not subject to CEQA review as clarified in Section 33490(a)(I)(B) of the California Health and Safety Code. FISCAL IMPACf There is no fiscal impact resulting from this action. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE A Public Hearing Notice was published in the Poway News Chieftain on June 15, 22 and 29, 1995. Public Hearing Notices were posted at the Community Park, Old Poway Park, the Poway Center for the Performing Arts and at the Twin Peaks Multipurpose facility. RECOMMENDATION It is recommended that the Redevelopment Agency adopt the attached resolution amending the Redevelopment and Housing Implementation Plan to include the "First Addendum to the A8 1290 Redevelopment and Housing Implementation Plan" (Attachment 1). ACTION 1 of 13 JIIlll 1995 ITEM 9 ,i CITY OF POWAY AGENDA REPORT TO: Honorable Mayor and Members of the City Council Honorable Chairman and Members of the Redevelopment Agency FROM: James L. Bowersox, City Manager/Executive Dire~ INITIATED BY: John D. Fitch, Assistant City Manager/Assistant Executive Director ~ Warren H. Shafer, Director of Redevelopment Service ~ Pamela R. Colby, Redevelopment Project Administrator fc.... DATE: July 11, 1995 SUBJECT: Amendment of the AS 1290 Redevelopment and Housing Implementation Plan Pursuant to Senate Bill 732 BACKGROUND The AS 1290 Redevelopment and Housing Implementation Plan was adopted by the Redevelopment Agency on November 29, 1994 in compliance with Assembly Bill 1290. This legislation, know as the Community Redevelopment Law Reform Act of 1993, was far reaching and included, among other things, the requirement that the Redevelopment Agency prepare and adopt a 5 year implementation plan for all Agency activities. This plan was to demonstrate the link between Agency activities and the elimination of blight, establish an affordable housing program, and set forth an expenditure plan for Agency Funds. Senate Bill 732 was the clean-up legislation to AB 1290 which was adopted as *' an urgency measure on September 28, 1994. This bill required that additional information concerning the Redevelopment Agency's affordable inclusionary housing requirements be fncorporated into the Redevelopment and Housing Implementation Plan which was required to be adopted by December 31, 1994. The preparation of the Implementation Plan was nearly complete at that time and it was not possible to collect and incorporate the additional information reqUired by S8 732 into the Plan document. Accordingly, this information is being brought forward at this time and will amend the Implementation Plan as adopted on November 29, 1994. The Agency's inclusionary housing obligations have not been changed by SB 732, only the reporting requirements have been modified. FINDINGS Assembly Bill 1290 required the Redevelopment Agency to include information and projections on how it would meet its affordable housing requirements pursuant to Section 33413 of the California Health and Safety Code. The subdivision of this section of law that relates to the reporting requirements JUl 11 1995 ITEM 9 ~ 2 of 13 - Agenda Report July 11, 1995 Page 2 of SB 732 is Section 33413(b), commonly referred to as the Agency's "inclusionary housing" requirements. Specifically: (1 ) At least 30 percent of all new and substantially rehabilitated dwelling units developed by an agency shall be available at affordable housing cost to persons and families of low or moderate income. Not less than 50 percent of... (these) dwelling units shall be available at affordable housing cost to, and occupied by, very low fncome households, and (2)(A)( i) At least 15% of all new and substantially rehabilitated dwelling units developed within a project area under the jurisdiction of an agency by public or private entities or persons other than the agency shall be available at affordable housing cost to persons and families of low or moderate income. Not less than 40 percent of...(these) dwelling units shall be available at an affordable housing cost to very low income households. SB 732 required the Redevelopment Agency to estimate the number of new, substantially rehabilitated and price-restricted residential units to be developed or purchased during the ffrst ten years of Implementation Plan and over the life of the Redevelopment Plan. From these estimates, the Agency is then required to identffy its associated inclusionary housing obligations. The Agency is further requfred to estimate how many of the affordable units it intends to count toward meeting its inclusionary housing obligation will be existing dwelling units made affordable through the application of affordability covenants. These reporting requirements are organized in Attachment I, "First Addendum to the AS 1290 Redevelopment and Housing Implementation Plan" in the following order: (A) new construction, (B) substantial rehabilitation, and (C) price restricted units. Within these sections, the data is further divided between the required time-frames: (1) 1993/94 to 2004 and (2) 2004 to Build-Out/Life of Redevelopment Plan, as applicable. The estimates are then divided into (a) non-agency developed/rehabilitated and (b) agency developed/assisted, as applicable. Attachment 2 provfdes deffnitions of the terms used in the First Addendum which are consistent with the definitions used in the original Implementation Plan. The Redevelopment and Housing Implementation Plan may be amended at any time, so long as speciffed noticing requirements are met. As required by Government Code Section 6063, this Public Hearing was noticed once a week for three successive weeks, with Hearing Notices posted in four individual locations throughout the Project Area. With the approval of the attached resolution (Attachment 3), the "First Addendum to the AS 1290 Redevelopment and Housing Implementation Plan" (Attachment 1) would become Addendum "An to the Redevelopment and Housing Implementation Plan adopted by the Redevelopment Agency on November 29, 1994. - JUl 11 1995 ITEM 9 'liI 3 of 13 Agenda Report July 11, 1995 Page 3 FISCAL IMPACT There is no fiscal impact resulting from this action. ENVIRONMENTAL REVIEW This action is not subject to CEQA review as clarified in Section 33490(a)(I)(B) of the California Health and Safety Code. PUBLIC NOTIFICATION AND CORRESPONDENCE A Public Hearing Notice was published in the Poway News Chieftain on June IS, 22 and 29, 1995. Public Hearing Notices were posted at the Community Park, Old Poway Park, the Poway Center for the Performing Arts and at the Twin Peaks Multipurpose facility. RECOMMENDATION It is recommended that the Redevelopment Agency adopt the attached Resolution (Attachment 3) amending the Redevelopment Agency's AS 1290 Redevelopment and Housing Implementation Plan to include the "First Addendum to the AS 1290 Redevelopment and Housing Implementation Plan" (Attachment 1). Attachments: "I" - "First Addendum to the AS 1290 Redevelopment and Housing Implementation Plan." "2" - "Definition of Terms" "3" - Redevelopment Agency Resolution C:\A81290\S8732.PLl JUL 11 1995 ITEM 9 . 4 of 13 ~ ATTACHMENT 1 "FIRST ADDENDUM TO THE AS 7290 REDEVELOPMENT AND HOUSING IMPLEMENT A TION PLAN" A. NEV RESIDENTIAL DWELLING UNITS ESTIMATED TO BE CONSTRUCTED 1) 1993/94 to 2004 I. Non-Aaencv Deve10Ded - As noted in the AS 1290 Redevelopment and Housing I.pl~entation Plan, it was estimated that 800 new non- Agency developed residential units would be constructed within the Redevelopment Project Area from 1993/94 to 2004. Units developed outside the Project Area by non-Agency entities are not subject to the inc1usionary requirement. Based on this estimate of construction activity, the app1fcab1e inc1usionary housing requirements are illustrated below in Table 1. TABLE 1 Estimated Number of Non-Agency Developed Units to be Constructed in Project Area Time Period Total Number of Number of Low/Mod Number of Very- Units Units low Units 1993/94 to 2004 800 Dwell ing Units 120 48 Inc1usionary 15% of Total 40% of 120 Reauirement b. Aaencv Deve10Ded Units - As noted in the AS 1290 Redevelopment and Housing I.ple.entation Plan, the Agency does not anticipate directly developing any resfdentia1 units within or outside the Project Area. However, to the extent that the Agency does develop any units, at least 30% of these unfts will be made available to low- and moderate-income households, with at least 50% of these units available to and occupied by very-low fncome households, at an affordable housing cost. 2) 2004 to Buf1d-Out a. Non-Aaencv Deve10Ded Units - Between 1993-94 and the year 2004, it was estimated that 800 residential units would be constructed within the Project Area. Based upon this figure, it was estimated that the Project Area would reach build-out during the life of the Redevelopment Plan. Given the current General Plan, this would leave an estimated 305 units to be constructed within the Project Area from 2004 to the end of the life of the Redevelopment Plan. - 1 JUL 11 1995 ITEM 9, III 5 of 13 To the extent that the General Plan may be amended during this time frame, these estimates will be adjusted as appropriate. Table 2 illustrates the new residential construction estimated for the Project Area and the applicable inclusionary housing requirement of the Agency for the subject time frame. TABLE 2 Estimated Number of Non-Agency Developed Units to be Constructed in Project Area Time Period Total Number of Number of Low Number of Very Units and Moderate Low Units Units 2004 to Build Out 305 Dwelling Units 46 18 Inclusionary 15% of Total 40% of 12 Requirement b. ADencv DeveloDed Units - It is not anticipated that any of the dwelling units constructed ~ithin or outside the Project Area will be "Agency developed" units. However, to the extent that the Agency does develop any units, at least 30% of these units will be made available to low- and moderate-income households, with at least 50% of these units available to and occupied by very-low income households at an affordable housing cost. B. SUBSTANTIALLY REHABILITATED RESIDENTIAL UNITS AB 1290 clarified that substantial rehabilitation applies only to multi-family rental units with 3 or more units and where the value of the improvements constitutes 25% or more of the after-rehabflitation value of the complex, inclusive of land value. The deffnitfon of substantial rehabilitation is broadened where Agency assfstance is provided, to include the rehabilitation of single-famfly units. This definition is only applicable through January I, 1997, given a "sunset" provision in the law, and it is not possible to know what definition will be used beyond that point. Therefore, the AB 1290 definition is being used for the estimates required per 5B 732. l. 1993-94 to 2004 It is not anticipated that any units will be substantially rehabilitated by the Redevelopment Agency or by parties other than the Agency during the subject time-frame. While the Agency currently operates a residential rehabilitation loan program, the program precludes rehabilitation work that would result in substantial rehabilitation, by the current definition. The 2 JUL 11 1995 ITEM 9. 4 6 of 13 - - _. program only provides funding to a level that is below what would trigger substantial rehabilitation, as confirmed by an appraisal. Building Permits are monitored by staff to track private, non-Agency assisted rehabilitation activity as applicable. To the extent that units are substantially rehabilitated, the Redevelopment Agency will ensure that the required number of units are deed restricted, made available to, and as applicable, occupied by households earning the appropriate income level. To the extent that the Legislature modifies the applicable definition of substantial rehabilitation durfng the subject time frame, these estimates will be amended as appropriate. 2. 2004 throuGh Life of Redevelooment Plan It is not anticipated that any units will be substantially rehabilitated by the Redevelopment Agency or by parties other than the Agency during the subject time frame. To the extent that some number of units are substantially rehabilitated, the Agency will ensure that the required number of units are deed restricted, made available to, and as applicable, occupied by households earning the appropriate income level. In the event that the definition of substantial rehabilitation is modified by the Legislature during the subject time frame, the Agency will amend these estimates as applicable. C. PRICE RESTRICTED RESIDENTIAL UNITS The Agency is required to estimate the number of existing dwelling units that will be made affordable to low- and moderate-income households through the recordation of deed restrictions which the Agency intends to count toward meeting its inclusionary housing obligation. Section 33413(b)(2)(B) of the California Health and Safety Code provides that the Agency may "purchase, or otherwise acquire or cause by regulation or agreement the purchase or other acquisition of, long-term affordability covenants..." to meet a portion of its inclusionary housing obligations. In order to count, the dwelling units must be defined as "multi-family. units. Further, the law allows for dwelling units outside the Project Area to be counted, however, only on a 2-for-l basis. This section of the law is currently scheduled to "sunset" on January I, 1997. 1. 1993/94 to 2004 The Agency noted its intent to acquire affordability covenants on a specified number of spaces at Poway Royal Estates Mobilehome Park in the original Implementation Plan, however, this property is located outside the Project Area. While AS 1290 allows the Agency to get credit for units made affordable outside the Project Area on a 2-for-l basis, the Agency has already identified alternative means of satisfying its inclusionary housing obligations. The Agency is in the process of determining whether to count these mobilehome units/spaces toward future inclusionary housing obligations. It is not anticipated that the Agency will acquire any affordability covenants on other existing dwelling units for the purpose of meeting its inclusionary housing obligation during the subject time frame. - 3 JUL 11 1995 ITEM 9 ' '.. 7 of 13 Again, after January 1, 1997, the Agency may no longer count these units toward meeting its inclusionary housing obligation unless the enabling Legislation is extended. 2. 2004 throuah Life of Plan The Redevelopment Agency may acquire affordability covenants on existing dwelling units within the subject time frame as part of its balanced affordable housing program. Making existing dwelling units affordable can be a cost effective means for providing affordable housing. However, it may not be possible for the Agency to receive inclusionary housing credit for units made affordable in this manner after January I, 1997 due a "sunset" provision in the law. Therefore this reporting requirement appears inapplicable at this time. If Legislation is approved to extend this type of inclusionary housing credit, the Implementation Plan may be amended as deemed appropriate. C:\AS1290\SS732.ADD 4 JUL 11 1995 ITEM 9" ,'" 8 of 13 - ,. ATTACHMENT 2 DEFINITION OF TERIIS A. Inco.e Li.its - Income limits for low and moderate income housing developed pursuant to Section 33413(b) of the California Health and Safety Code must be at affordable cost to persons and households whose income do not exceed 120 percent of the Area Median Family Income (MFI). For purposes of the Implementation Plan, the following income limits are used: 0 Very Low Income (0-50 percent of Area MFI) 0 Lower Income (51-80 percent of Area MFI) 0 Moderate Income (81-120 percent of the Area MFI) The 1995 overall MFI for the County of San Diego, as established by the Department of Housing and Urban Development (HUD), is $45,400. Income limits are adjusted for household size, with lower income limits for smaller households. Table 1 illustrates the 1995 HUD income limits by household size applicable to Poway. TABLE 1 HUD INCOME LIMITS FOR SAN DIEGO COUNTY (1995) HUD COUNTY MEDIAN FAMILY INCOME. $45,400 HOUSEHOLD SIZE INCOME 1 2 3 4 5 6 Person Persons Persons Persons Persons Persons Very Low $15,900 $18,150 $20,450 $22,700 $24,500 $26,350 Low $25,400 $29,050 $32,700 $36,300 $39,200 $42,150 Moderate $38.150 $43,600 $49.050 $54,500 $58,850 $63,200 Source: HUD Income Limits, 1995. B. Affordable Housing Costs for Owners - For owner occupied housing receiving Agency assistance, affordable housing cost shall not exceed: 0 Very Low Income Household - 30% of 50% of the Area MFI adjusted for family size; 0 Lower Income Household - 30% of 70% of the Area MFI adjusted for family size; 0 Lower Income Household Option - for those with gross income between 70% and 80% of Area MFI, the Agency has the option to establish the affordable housing cost at a level not to exceed 30% of the actual gross household income; - 1 JUL 11 1995 ITEM 9 . 9 of 13 0 Moderate Income Household - must not be less than 28% of the gross household income, nor exceed 35% of 110% of the area MFI adjusted for family size; and 0 Moderate Income Household Option - for those with gross income exceeding 110% but not more than 120% of area MFI, the Agency has the option to establish affordable housing cost at a level not to exceed 35% of gross household income. C. Affordable Housing Costs for Renters - For rental housing receiving Agency assistance, affordable housing cost shall not exceed: 0 Very Low Income Household - 30% of 50% of the Area MFI adjusted for family size; 0 Lower Income Household - 30% of 60% of the Area MFI adjusted for family size; 0 Lower Income Household Option - for those with gross income exceeding 60% but not more than 80% of Area MFI, the Agency has the option to establish the affordable housing cost at a level not to exceed 30% of the gross household income; 0 Moderate Income Household - 30% of 110% of the Area MFI adjusted for family size; and 0 Moderate Income Household Option - for those with gross income exceeding 110% but not more than 120% of the Area MFI, the Agency has the option to establish affordable housing cost at a level not to exceed 30% of gross household income. D. Duration of Affordability - Health & Safety Code Section 33413(b}(2}(C} requires that for the Agency to receive inclusionary credit for dwelling units made affordable, that they must remain affordable for not less than 30 years. Health and Safety Code Section 33413(c} requires that inclusionary units shall remain available at affordable housing cost to the income levels indicated for the longest feasible time, but not less than the period of the land use controls under the Redevelopment Plan. These affordability guarantees or covenants on such units must be made enforceable by recorded covenants or restrictions. Health and Safety Code Section 33334.3(f} states that when housing units are developed or assisted with funds from the Agency's Housing Fund, the Agency shall require that those housing units remain affordable for the longest feasible time, but for not less than 15 years for rental units or 10 years for owner-occupied units. Therefore, if the Agency is using its Housing Fund to fulfill inclusionary housing requirements, affordability controls must be extended beyond the minimum time period established under 33334.3(f} to at least the life of the Redevelopment Plan. 2 JUL 11 1995 ITEM 9. ."4 10 of 13 - E. Agency- and Non-Agency Developed Units - Housing "developed by an agency" is housing constructed by the Agency pursuant to a public works contract, whether inside or outside the Project Area. In an Agency-developed project, the Agency serves more as a co-owner/partner than a mere lender for the project. Housing "developed within the project area by public or private persons or entities other the agency" is housing constructed or rehabilitated within the project area by anyone other than the Agency, and includes both Agency- assisted and unassisted housing. F. Substantial Rehabilitation - Under AS 1290, .substantial rehabilitation" is defined as rehabilitation with cost that constitutes at least 25 percent of the after rehabilitation value of the dwelling, inclusive of the land value. AS 1290 specifies that the inclusionary obligation only arises when multi- family rental dwelling units with three or more units are substantially rehabilitated, or when single-family dwelling units with one or two units are substantially rehabilitated using Agency assistance. G. Housing Production Outside Project Area - As permitted under AS 1290, the Agency may provide on a 2:1 basis production units outside project area to satisfy Project Area housfng production obligations. H. Price-Restricted Units - Under AS 1290, the Agency may "buy" or otherwise acquire affordability covenants on existing multi-family housing to satisfy production obligations, if: (1) such units are not presently available at affordable housing cost to low- and moderate-income households or (2) such units are presently available at affordable housing cost to low- and moderate-income households but, based on substantial evidence, the Agency finds, after public hearing, that units cannot reasonably be expected to remain affordable to low- and moderate-income households. c:\A81290\SB732.DEF -., 3 JUlll 1995 ITEM 9 '1 11 of 13 RESOLUTION NO. R-95-____ A RESOLUTION OF THE POWAY REDEVELOPMENT AGENCY, CITY OF POWAY, CALIFORNIA AMENDING THE AB 1290 REDEVELOPMENT AND HOUSING IMPLEMENTATION PLAN FOR THE PAGUAY REDEVELOPMENT PROJECT AREA PURSUANT TO SB 732 WHEREAS, Assembly Bill 1290, the Redevelopment Reform Act of 1993, became effective on January 1, 1994 amending California Redevelopment Law (Section 33000 of the California Health & Safety Code, et. sea.); and WHEREAS, Section 33490(a)(I) of the California Health & Safety Code requires that on or before December 31, 1994, and every five years thereafter, the Redevelopment Agency adopt, after a public hearing, an implementation plan which must included specific goals and objects of the Agency; and WHEREAS, the Redevelopment Agency adopted the AB 1290 Redevelopment and Housing Implementation Plan on November 29, 1994; and WHEREAS, Senate Bill 732 was adopted as an urgency measure by the State Legislature and signed by the Governor on September 28, 1994; and WHEREAS, Senate Bill 732 expanded the reporting requirements for the AB ~ Redevelopment and Housing Implementation Plan relative to the Redevelopment Agency's affordable housing activities; and WHEREAS, Section 33490(d) requires that the requisite public hearing for the adoption or amendment of the implementation plan be published pursuant to Section 6063 of the Government Code and be posted in at least four permanent places within the redevelopment project area for a period of three weeks, with publication and posting completed not less than ten days prior to the date set for hearing; and, WHEREAS, on July 11, 1995, this Agency conducted and concluded the above referenced duly noticed public hearing; and WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred. NOW THEREFORE, the Poway Redevelopment Agency does resolve as follows: Section 1: The recitals hereof are true and correct and are hereby incorporated into this Resolution. Section 2: Pursuant to California Health & Safety Code Section 33490 and in compliance with SB 732, the Poway Redevelopment Agency hereby adopts that document entitled "First Addendum to the AB 1290 Redevelopment and Housing Implementation Plan" as on file in the office of the Secretary of the Redevelopment Agency. \2 of \3 JUL 11 1995 ITEM 9 ", - Resolution No. R-95- Page 2 PASSED, ADOPTED AND APPROVED, by the Redevelopment Agency of the City of Poway, California, at a regular meeting thereof this 11th day of July, 1995. Don Higginson, Chairman ATTEST: Marjorie K. Wahlsten, Secretary C:\AB12iO\SB732.RES JUl 11 1995 ITEM 9 4 13 Of 13