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HomeMy WebLinkAboutSS2 - Inclusionary Housing - PowerPoint:IuI*61vnary nL 3luation and f COUNCIL STUI 0WP _ _ , �� �EL�IK. ��,''•S rya h � + . � .a �. � 4 �' '"'s-.�. AdL- r a m �161 r L — — r 1 i 1 ot City Council Chambers January 24, 2023 Background • September 14., 2021 - Council Study Session o Directed staff to study financial implications of inclusionary housing o Return with recommendation on percentage • March 22, 2022 - Council Study Session o Financial evaluation prepared- Keyser Marston o Uncertainty with Housing Element Update o Council consensus to delay until HE certification 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 10% Inclusionary Requirement 90 Market -Rate Base Units 10 Low -Income Units Why discuss inclusionary! Airport Area Coyote Canyon West Newport Dover-Westcliff Newport Center ADUs, Pipeline, and 51" Cycle Totals Very -Low, Moderate 1,031 536 443 208 976 Total 2,577 1,530 1,107 521 2,439 Annual Production: = 3,688 = 8 (years) = 461 Affordable Units /Year • City is committed to rezoning to meet Regional Housing Needs Allocation (RHNA) and provide new housing opportunities 1,989 • How do we promote 10,163 affordable development? RHNA Fulfillment T • Inclusionary housing can assist in fulfilling a portion of RHNA o Ensures portion of new housing opportunities created include some component of affordable o Disperse affordable housing throughout community • 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 RelationshipDensityto Bonus - Developers can utilize Density Bonus law to boost density. 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 Framework • Development Incentives . Types of projects • Development Waivers . Minimum In -lieu fee • Reduced parking • Alternatives © Optional Mandatory ON telationshiF to Density Bonus - Density Bonus and Inclusionary Housing can work together 5 20 6 22.5 7 25 8 27.5 9 30 *Not eligible for density 10 32.5 bonus if in -lieu housing 11 35 fee paid to satisfy housing 12 38.75 requirements. 13 42.5 14 46.25 15 50 15 27.5 24 50 15 10 44 50 10% Inclusionary Requirement 90 Market -Rate Base Units 10 Low -Income Units 20 Market -Rate Density Bonus Units Our Previous Ordind, Applicability of Affordable Income Distribution In -Lieu Option "$" Alternatives Other Notes All for -sale projects 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 '--' Financial Evaluation Pararnete- r s-' :k#& w: • Keyser Marston hired to perform a financial evaluation • Pro Forma analyses prepared of prototype residential developments(www.newportbeachca.gov/inclusionary) • Evaluation of housing opportunity areas Airport Area Banning r Ranc West Newport : Do Mesa Westcliff -' N Coyote Center A Canyon WN A. 7Y- i3 Pro Forma Evaluation Tests cqi Fo RNP • 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. ,&ation Standards Reduction in property values 25% max Increase in market sales prices and rents 6% max Supportable Requirem-A& ent Rental projects can support: Inclusionary Low Income Unit In -Lieu Fee / Market - Rate Unit In -Lieu Fee / SF Options for fee calculation: • By geographical area • Weighted average • Lowest fee Jr 0 V $36,690 $38.30 $34,790 $60,990 $50.30 $37,660 $38.50 F_M Supportable Requirement Ownership projects can Support: Inclusionary Moderate Income Units In -Lieu Fee / Market - Rate Unit In -Lieu Fee / SF Options for fee calculation: • By geographical area • Weighted Average • Lowest fee 2S% 8YO 5% $59,720 $37.00 $86,450 $40.00 $218,420 $86.30 $70,820 $33.80 Southern California Examples Irvine Huntington Beach Long Beach Carlsbad Encinitas Pasadena Solana Beach Beverly Hills All units 15% Y 5% very low / 5% low / 5% Moderate (In process of updating) 3+ units 10% Y Rental units: low income / For Sale: moderate income 10+ 10% ° Y Rental: 11 % low Owner: 10% moderate All units 15% Y 15% low or 12.5% very low 7+ units 10-15/ Y Rental: 15% if low, 10% very low Owner: 15% if low, 10% very low All units ° 20/ Y Rental: 5% very low 15% low / 10% moderate Owner: 20% moderate 5+ units 15/ Y Rental: 15% very low and/or low Owner: 15% 10+ 10% Y 10% very low, low or moderate Huntington Beach Overview F_M Applicability 3+ units /o o Rental: 10 % Low of Affordable Ownership: 10% Moderate In -Lieu Rental: 100 units or less Threshold Ownership: All projects Per SF fee based on number of units in project In -Lieu Fee Rental: $2.54 (3 units) - $25.36 (30+ units) Ownership: $3.58 (3 units) — $35.80 (30+ units) Alternatives Off -site construction (15%), land dedication (20%), off -site conversion/preservation (20%) Updated in 2021 Possible Ordinance E Component j Requirement Applicability All residential projects w/ net increase in units Citywide /o o of Affordable Rental: 7% Low or Very low Ownership: 8% Moderate; 5% Newport Center In -Lieu Rental: 50 units or less Threshold Ownership: All projects Rental: $36.60/SF In -Lieu Fee Ownership: $33.80/SF Alternatives Off -site construction, land dedication, off -site conversion/preservation Next Steps • City Council feedback • Prepare draft ordinance • Planning Commission public hearings • City Council public hearings Inclusionary Housing: Financial Evaluation and Future Framework CITY COUNCIL STUDY SESSION Vol,MAIO Elm Thank you. � I �f Jf J Questions . J 1' f f �l Jae 4 Seimone Jurjis Community Development Director Kathe Head Keyser Marston Associates Jaime Murillo Principal Planner FlA f kS I imurillo@newportbeachca.gov 3Y,'S of-f .{ -�✓� - } `��i�l.I