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Page 4 of 7 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />3.The cumulative effect of external factors may amplify overall impacts. While individual <br />requirements may be manageable in isolation, broader conditions outside the proposed <br />Ordinance, including rising utility costs, insurance premium increases, and potential changes to <br />state law such as Costa-Hawkins, could compound financial and operational pressures on property <br />owners and the City, increasing the likelihood of unintended consequences such as deferred <br />maintenance, reduced investment, or challenges in program implementation. Projects may be <br />able to petition for an upward rent adjustment under the proposed Ordinance in order to <br />maintain a fair return. <br />4.Affordable housing providers may face disproportionate impacts because these properties <br />operate under restricted rents, tight operating margins, and complex regulatory frameworks, <br />limiting their ability to absorb new costs or regulatory burdens. As documented in the initial <br />9212 Report, deed restricted affordable housing plays an important role in Redwood City’s <br />housing market, accounting for almost 10 percent of all rental units (with pre-1995 buildings <br />accommodating for about 45 percent of the affordable housing stock). Based on an illustrative <br />financial cash-flow analysis, EPS found that the proposed Ordinance could create significant <br />financial challenges for affordable housing operations, particularly for pre-1995 properties <br />subject to both new fees and rent stabilization. The results suggest that if the proposed Ordinance <br />is approved, affordable housing operators / developers in pre-1995 buildings may need additional <br />public subsidies to maintain financial viability and avoid cutting resident services or foregoing <br />critical maintenance and repairs. Similarly, for affordable housing projects in the development <br />pipeline, increased costs are likely to require additional subsidies and extend development <br />timelines, potentially affecting the City's ability to deliver the housing needed to meet its RHNA <br />obligations. <br />5.The proposed Ordinance could create substantial City implementation costs that exceed the <br />stated fee levels. With tenant legal services included, annual ongoing program administration <br />costs are estimated at approximately $5.0 million to $11.1 million, before accounting for one-time <br />start-up cost repayment and establishing an operating reserve. The General Fund may not support <br />ongoing program costs, meaning all expenses would need to be recovered through fees; however, <br />the City could likely front initial start-up costs through an interfund loan that would later be repaid <br />from program revenues, potentially creating financial risk if fee collections fall short. <br />Elections Code 9215 <br />California Elections Code Section 9215 outlines the actions a legislative body must take when presented <br />with a valid initiative measure. Since the City Council ordered the supplemental 9212 Report on June 8 <br />when the certification was presented and the initial and supplemental 9212 reports has been presented <br />to the City Council, the City Council has two options: <br />a. Adopt, without alteration, the Proposed Ordinance within 10 days; or <br />b. Order an election for November 3, 2026, and submit the Proposed Ordinance, without alteration, <br />to be voted on at that election. <br />If the City Council chooses to adopt the Proposed Ordinance (Option a), it would require an affirmative <br />majority vote of the City Council to waive the first reading and introduce the Proposed Ordinance at this <br />8.A. - Page 4 of 168 <br />14