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City CounFil Chambers
March 22 4,giQ22
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Background
• September 14., 2021— Council Study Session
o Directed staff to study financial implications of
inclusionary housing
o Return with recommendation on percentage
• Adopted Housing Element Policy Action 1K
o Interim policy within 6 months of HE adoption
o Base inclusionary requirement of 15%
o Study and adopt ordinance within 36 months
What is "inclusionary" housing?
A local ordinance that requires a pre -determined share of new
housing units be affordable to persons of very low-, low-, and/or
moderate incomes
No Inclusionary Requirement
100 Market -Rate Units
No Affordable Units
C
10% Inclusionary Requirement
90 Market -Rate Base Units
10 Low -Income Units
20 Market -Rate Density Bonus Units
Why discuss Inclusionary?
Airport Area
Banning Ranch
Coyote Canyon
West Newport
Dover -Westcliff
Newport Center
ADUs, Pipeline,
and 5t" Cycle
Low-,
Very -Low,
Moderate
976
591
536
443
183
949
729
Total
2,440
1,475
1,530
1,107
458
2,374
2,229
Totals 4,396 11,613
Ir
Annual Production:
I = 4,396 = 8 (Years)
= 550 Affordable Units /Year
InclusionaryHousing?
0-0
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Developers can utilize Density Bonus law to boost density.
F_M
If a developer does not want to use Density Bonus law then what
inclusionary (%) requirement would the City would impose?
State Density City's Inclusionary
Bonus law OR Ordinance
• Boost in Density When will this apply
• Development Incentives What type of projects?
• Development Waivers / NS%S,.,
• Reduced parking o
In-Lieu Fee $
State Density Bonus Law
• Incentive to develop
affordable housing on-
site with project
• Entitled to :
Bonus units
• Development
Incentives
• Development
standard waivers
• Reduced parking
9
5
20
6
22.5
7
25
8
27.5
9
30
10
32.5
11
35
12
38.75
13
42.5
14
46.25
15
50
10 20 10 5
15 27.5 15 10
24 50 44 50
Financial Evaluation Pararnetl
• Keyser Marston hired to perform a financial evaluation
• Pro Forma analyses prepared of prototype residential
developments
• Evaluation of housing opportunity areas
r
Banning
Ranch
West _ ! , w
Dover -
Ne
Westcliff e.
C
Airport Area
Pro Forma Evaluation Tests
F,gr�;
• The requirement
should balance
the interest
of
property owners
and developers
against the
public
benefit created by the production of affordable
housing units.
• The legal standards are:
• The requirements cannot be confiscatory; and
• The requirements cannot deprive an owner of a fair and
reasonable return on their investment.
EvA
,&ation Standards
Reduction in property values 25% max
Increase in market sales prices and rents 6% max
Our Previous Ordind,
Applicability
of Affordable
Income Distribution
In -Lieu Option "$"
Alternatives
Other Notes
All for -sale projf
15%
15% very -low, low-, or moderate -
incomes
$18,,500 increased to $28,954
Off-site construction, land
dedication, off-site conversion
Repealed in 2013
Supportable Requirement
Rental projects can support:
P,
Inclusionary
Low Income Unit
In -Lieu Fee/ Unit I $36,690 $34,790 $60,990 $37,660
In -Lieu Fee/ SF $38.30 $36.60 $50.30 $38.50
Supportable Requirement
Ownership projects can Support:
Inclusionar
Moderate
Income Units
In -Lieu Fee / Unit
In -Lieu Fee/ SF
$59,720 $86,450 $218,420 $70,820
$37.00/SF $40.00/SF $86.30 $33.80/SF
Southern California Examples
Irvine
All
units
15%
Y
5% very low / 5% low / 5% Moderate
Huntington
3+
units
10%
Y
Rental units: low income / For Sale: moderate
Beach
income
San
6+
units
c
15 /o
Y
Rental: 7.5% very low / 7.5% low
Clemente
For Sale: 3% very low / 4% low / 8% moderate
Carlsbad
7+
units
15%
Y
Units not to exceed 80% of MFI for County
Encinitas
7+
units
10-15%
Y
Rental: 15% if low, 10% very low
Owner: 15% if low, 10% very low
Y
Rental: 20% very low, low or moderate
Pasadena
All
units
20%
Owner: 5% very low, 5% very low or low, 10%
very low, low or moderate
Solana
5+
units
c
15/
Y
Rental: 15% very low and/or low
Beach
Owner: 15%
Beverly
10+
10%
Y
10% very low, low or moderate
Hills
Possible Ordinance .1
o Applicability:
■ All residential projects with net increase of units
o Minimum inclusion %:
Rental: 7% (in -lieu option: 50 units or less)
■ Ownership: 8%; 5% NC (in -lieu option: all projects)
o In -Lieu Fee:
■ Rental projects 50 units or less
■ Based on geography and product type (e.g. Rental in Newport Center)
■ Based on rental or saleable floor area (per SF fee) ?
o Allow additional alternatives:
off-site construction of affordable units
■ conversion of existing units
■ dedication of land
Schedule
April 12, 2022 — HCD to release comment letter on City's
Housing Element
April 26, 2022 —City Council Study Session on HCD
comments
Inclusionary Housing: Financial
Evaluation and Future Framework
CITY COUNCIL STUDY SESSION
Vol,MAIO
Elm Thank you.
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Questions
. J 1• f f �l Jae 4
Seimone Jurjis
Community Development Director
Kathe Head
Keyser Marston Associates
Jaime Murillo
Principal Planner
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imurillo@newportbeachca.gov
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