AgdaPkt 2016-05-23 Closed, Joint SA and PFA

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8.C. - Page 4 Recent City Council Discussion on Affordable Housing: On April 11, 2016, the City Council held a study session to discuss funding options for affordable housing. Challenges for affordable housing construction often include lack of adequate sites and longer time frames with grant funding and tax credit requirements. It can be difficult for nonprofits to compete successfully against market-rate developments for land acquisition. Staff has concerns with requiring that 20% of all housing units downtown be affordable. This approach would not allow the City to consider the 801 Brewster project, which would provide and 50 affordable units without a City contribution. This would likely increase the time frame for bringing needed affordable housing to market. It would also require that any remaining residential projects downtown be 100 percent affordable, with the associated challenges of funding land acquisition and construction, and a longer time-to-market. Affordability Levels: At the initiation hearing, City Council discussed the possibility of specifying affordability levels for the 375 units. There are four levels of affordability possible: extremely low, very low, low, and moderate income units. Staff recommends that all 375 units be affordable to low, very low, and extremely low income households (households with 80 percent of median income or below). Though this precludes moderate-income units (up to 120 percent of median income), it is a more common level of affordability that qualifies for tax credits and is compatible with rental projects. The qualifying units would be required to meet the requirements described in the newly- adopted Affordable Housing Impact Fee Ordinance Section 18.272 (Standards for Development of Affordable Housing). These requirements include deed-restricting the projects for an affordability term of up to 55 years, similar size and finishes to market- rate units, and concurrent availability of the units with market-rate units. The proposed resolution references these sections and their requirements. This affordability level policy would go further than what was required under Redevelopment. Redevelopment allowed a significant percentage of affordable housing to be developed at the "moderate" income level. GENERAL PLAN AND ZONING COMPLIANCE This reservation would also be consistent with numerous policies in the City Housing Element, as well as recent policy direction given by Council. • Urban Form and Land Use Policy BE-18.7: Pursue mixed-use housing and commercial development in Downtown that includes a range of housing options and affordability levels. • Housing Element Policy H-2.5: Consider various avenues to ensure the provision or construction of affordable housing and other community benefits.