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HomeMy WebLinkAboutSS3 - Update on Newport Village Senior Affordable Housing Project, and Affordable Housing Requirements�tW PORr CITY OF NEWPORT BEACH COMMUNITY AND ECONOMIC DEVELOPMENT PLANNING DEPARTMENT 3300 NEWPORT BOULEVARD NEWPORT BEACH, CA 92658 (714) 644 -3200; FAX (714) 644 -3250 Hearing Date: Agenda Item No.: Staff Person: REPORT TO THE MAYOR AND CITY COUNCIL February 8, 1999 Study Session Sharon Z. Wood (949) 644 -3222 SUBJECT: Update on Newport Village Senior Affordable Housing Project, and Affordable Housing Requirements of The Irvine Company and Ford Motor Land Development Corporation Background Council member Ridgeway requested a discussion of senior affordable housing on the Newport Village site at the City Council meeting of January 25, 1999, and it was scheduled for the study session of February 8. This report provides background information on that project, as well as the affordable housing requirements of The Irvine Company (TIC) and Ford Motor Land Development Corporation (Ford), to assist the City Council's discussion. Housing Element Requirements State planning law requires cities to adopt housing elements that address regional needs for housing affordable to all income levels. Cities are not required to spend their funds to develop affordable housing, but housing elements must include programs that will enable the development of housing to meet established needs, such as zoning sufficient sites and providing density bonuses and other incentives. In addition, cities are required to update their housing elements every five years, including an analysis of the progress in implementing programs in the previous element. The next update is required by June 2000. The Housing Element of the Newport Beach General Plan includes a program to encourage the housing development industry to respond to the needs of the community. This program is to be implemented through a negotiated development process, in which the Planning Commission is to allocate, where feasible, at least 20% of the annual production of housing to low income households. The negotiated development process resulted in different requirements for TIC and Ford. The Circulation Improvement and Open Space Agreement (CIOSA) approved in 1993 entitled TIC to develop 861 market rate housing units. Because CIOSA is silent on a specific affordable housing requirement, staff has applied the 20% requirement of the Housing Element, resulting in TIC's obligation to provide 172 affordable housing units. The Ford Development Agreement approved in 1995 provides that Ford's requirement is 15% of the 404 units actually developed pursuant to that agreement, or 61 affordable housing units. The agreement further provides that, rather than developing affordable housing units, Ford shall pay an in -lieu fee of $5,000 for every market rate unit developed, or $2,020,000, and participate with the City in implementing housing project(s) to satisfy Ford's affordable housing requirement. Implementation Efforts After approving the Ford development agreement, the City Council appointed a Ford Land Affordable Housing Task Team, including a Ford representative, which evaluated several potential sites for affordable housing projects. As part of this process, the Task Team studied a possible project for senior citizens at Bayview Landing proposed by TIC, and explored ways that such a project could satisfy the affordable housing obligations of both developers. After TIC withdrew this proposal, the Task Team recommended and the City Council authorized the circulation of a request for proposals for affordable housing projects. Three proposals were submitted. The Task Team evaluated them, concluded that the senior project proposed by TIC and LINC Housing on the Newport Village site was superior, and began evaluating the specifics of the proposal. Newport Village Newport Village is one of the open space sites that CIOSA requires TIC to dedicate to the City. The City Council accepted this dedication on January 25, 1999. CIOSA also provides that up to four of the open space sites in the agreement may be used for senior affordable housing if the City and TIC agree. This use remains an option for the Newport Village site. The City Council approved Newport Village as the site for a senior affordable housing project in September 1997, and designated the City Council Newport Center Economic Opportunities (NCEO) Committee to negotiate with TIC. The proposal was for a minimum of 233 units (which would satisfy both TIC's and Ford's requirements), all of which were to be affordable to very low and low income senior citizens. Issues in the negotiation included conveyance of the site to the City or the apartment developer, replacement open space, additional parking for the Central Library, and City financial participation with the Ford in -lieu fees. There also was community concern regarding view impacts, biological resources, and loss of an open space site. The NCEO Committee and TIC were unable to reach agreement on the Newport Village site, and in July 1998, TIC advised the City that it intended to satisfy its affordable housing obligation with a senior affordable project on the Lower Bayview Landing site. Current Status of TIC and Ford Obligations Since July 1998, TIC has not provided the City with proposals or other information as to its progress on an affordable housing project on the Lower Bayview Landing site. TIC's affordable housing obligation has not been met. The City Council approved Ford's full payment of its in -lieu fee as satisfaction of its affordable housing obligation in April 1997. Ford paid the fee of $2,020,000 to the City, and the City has held these funds for use on affordable housing. Page 2 Possible Uses of In -Lieu Fee The City Council could decide to use the fee paid by Ford to assist with a senior affordable housing project at Newport Village or Lower Bayview Landing, although the latter site probably could not accommodate more units than needed to satisfy TIC'S obligation. Other possible uses are projects to rehabilitate existing apartment projects and reserve them for lower income families, or to convert existing mobile home parks to manufactured or other permanent housing for families or senior citizens. Staff has received inquiries and preliminary proposals from developers interested in projects of this type. Finally, there are approximately 225 apartments whose covenants restricting them as affordable units are due to expire within the year. The in- lieu fee could be used to extend the covenants on some of these units, which would preserve existing affordable housing and decrease the number of new units needed to satisfy the need identified in the Housing Element. SHARON Z. WOOD Assistant City Manager Page 3