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<br /> <br />Economic & Planning Systems, Inc. 3 Introduction and Key findings <br />• The proposed Ordinance may create financial and operational challenges for <br />deed-restricted affordable housing. Redwood City has approximately 1,400 <br />deed-restricted affordable units as well as approximately 400 affordable units <br />in the pipeline 4 that could be affected by the proposed Ordinance, including <br />through program fees, administration, and tenant protection requirements. Of <br />these units, approximately 625 would be subject to the rent control provisions <br />because they were built before 1995. While these units are already income- <br />restricted, older affordable housing projects often operate with limited <br />financial flexibility and will be subject to program fees included in the proposed <br />Ordinance. This financial impact may be exacerbated for the units subject to <br />rent control if allowable rent increases fall below what would otherwise be <br />allowed based on Area Median Income (AMI). In addition, requirements tied to <br />income restrictions may also create operational complexity. For example, when <br />tenant incomes rise above initial thresholds, rents may not be increased, <br />potentially creating shortfalls in revenues. <br />• If State law governing rent control were modified in the future, the proposed <br />Ordinance could have significantly broader economic and housing market <br />impacts. While Costa-Hawkins currently limits the scope of local rent control, <br />it has been subject to prior repeal efforts and could be modified in the future. <br />In such a scenario, the proposed Ordinance could apply to a majority of the <br />City’s rental housing stock, including single-family homes, condominiums, and <br />most units older than ten years. Expanded coverage of the proposed <br />Ordinance would likely reduce the feasibility of new market-rate rental housing <br />by constraining long-term revenue growth and could incentivize conversion of <br />rental housing, particularly single-family units, to ownership. While this may <br />generate short-term increases in property-related tax revenues, over the long <br />term it could reduce rental housing supply and impact affordability for new <br />residents. <br /> <br />4 Pipeline projects include projects that have submitted a planning application with the City or have received entitlement approvals <br />but haven’t pulled building permits yet <br />8.A. - Page 131 of 168 <br />141