HomeMy WebLinkAboutDirection - Affrdable Housing - Market-Rate Residential DevelopmentCITY OF PALM DESERT
DEPARTMENT OF COMMUNITY DEVELOPMENT
STAFF REPORT
REQUEST: Provide policy direction to staff concerning exactions for affordable
housing on proposed market -rate residential development
SUBMITTED BY: Lauri Aylaian, Director of Community Development
DATE: June 18, 2015
Recommendation
That the City Council provide staff with direction that can be used to guide
entitlement processing on proposed and future market -rate residential
development.
Executive Summary
The City Council recently declined to impose an affordable housing fee on market -rate
residential development projects in the city. Absent such a fee, staff lacks clear policy
direction to guide entitlement processes. One current project and several projects in the
pipeline require staff to make recommendations regarding exactions (or lack thereof) for
affordable housing. This staff report is intended to elicit that direction, and provides
examples of previous exactions for context and reference.
Background
On May 28, 2015, the City Council considered and rejected a proposal to adopt a
standard affordable housing fee for development of new market -rate residential
development. Such a fee would have replaced the City's existing policy of requesting
that 20 percent of new housing be deed restricted to be affordable to individuals and
families with limited income. This policy, which has formally been in place since
November 2013, states as follows:
In order to strike a balance between the City's two goals of providing
affordable housing and allowing market -rate development to occur, and to
provide housing that is affordable for the people who work within the city
of Palm Desert, developers of residential tracts larger than five (5) acres in
size will be asked to.
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June 18, 2015
• Provide on their property the full number of housing units identified in
the Housing Element Inventory of Vacant Lands.
• Deed restrict 20 percent of the required housing units such that they
are affordable to persons with low or very low income. The mix of
affordability levels will be determined on a case -by -case basis, giving
consideration to product type and location.
• Provide a housing product that is appropriate to the location of their
particular property. (As examples: smaller units with fewer bedrooms
near the university; modest -sized units with more bedrooms near the
future elementary school site; and senior or age -restricted units near
health care, grocery stores, and transportation).
• Provide the foregoing without financial contribution or participation from
the City.
If the property owner insists that these requirements will render their
property valueless, then they will be required to follow the procedures
described in Palm Desert Municipal Code Chapter 25.34.140, Exceptions
Based on Unconstitutional Takings. The economic information submitted
according to the application procedures in this section of the code will be
used as the foundation for a public hearing in front of the Planning
Commission; the Commission will decide if an exception should be
granted to allow development of the project with less (or no) affordable
housing.
This policy will be reviewed at such time as new State law governing
provision of affordable housing is passed and/or the Stipulation is amended
in any material way.
For the sake of reference, the following table summarizes previous affordable housing
exactions on discretionary approvals of residential development in Palm Desert.
Project
Approvals)
Exactions
Estimated Value
Estimated
in 2015 dollars
Value per Unit
General Plan
66 affordable
Millennium
Amendment
units (13% of all
$5.10 million
$11,850
and Zone
units entitled)
Change
Catavina
Zone Change
$750,000 in lieu
$859,160
$5,400
PC2 to PR9
fee
Zone Change
62 affordable
Canterra
(Open space
units (10% of
$6.69 million
$11,995
to PR17.5)
al
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June 18, 2015
Project
Approval(s)
Exactions
Estimated Value
Estimated
in 2015 dollars
Value per Unit
Zone Change
64 affordable
The Enclave
(PR5 to PR13)
units (20% of
$3.07 million
$11,995
project total
52 affordable
Zone Change
units (20%) plus
Vineyards
(PR5 to PR17
the right to buy
$2.49 million
$11,995
and PC2)
down another
20%
General Plan
Palm Desert
Amendment
21 affordable
103 (Emerald
and Zone
units (20%)
$1.01 million
$12,285
Brook)
Change (R1-M
to PR19
The Regent
Zone Change
103 affordable
million
$14,720
San Tro ez
PR5 to PR22
units(20%)$6.07
No
18 affordable
Ponderosa II
discretionary
units (10%) for
No cost in today's
No cost in
approval
moderate
market
today's market
needed
income
Zone Change
$729 000 in lieu
Villa Portofino
to Senior
fee
$988,900
$4,070
Overlay
As additional information when considering whether, or how much, to exact on projects
requiring discretionary approval, staff cites the following relative to current projects:
• The development team proposing to construct residential housing on the former
Santa Rosa Golf Course offered a $2.25 million payment in lieu of complying with
the policy requiring that 20% of the units be provided at an affordable level. This
offer, which equates to $7,350 per unit, was rejected when an independent
analyst, Keyser Marston Associates (KMA), calculated that the value of the
entitlements requested from the City is approximately $14.6 million ($47,700 per
unit). The analysis was based upon proforma information provided by the
developer.
• KMA estimated the value of the enhancement created by the entitlements
requested for The Retreat at Desert Willow to be $3.9 million. City staff
suggested splitting this increase in value 50/50 with the developer, which would
equate to a fee of $17,400 per unit; the developer declined that offer.
• KMA reviewed the entitlements and proforma for Ponderosa II in December
2014, and opined that there was no increase in land value due to their proposed
subdivision. Staff was able to negotiate an agreement whereby 10 percent of the
G.Tlanning\Lauri Aylaian\Staff Reports\Affordable Housing Exactions 6-18-15.docx
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future apartment units at that site will be reserved for families with moderate
income.
Conclusion
Staff respectfully requests that the members of the City Council give direction as to what
exactions, if any, to request from developers of market -rate housing who apply for
changes of zone or amendments to the General Plan in order to entitle their projects.
With policy guidance from the City Council, staff will negotiate and process entitlement
applications accordingly.
Submitted By:
Lauri Aylaian, Director of Community Development
M. Wohlmuth, City Manager
G \Planning\Lauri Aylaian\Staff Reports\Affordable Housing Exactions 6-18-15 docx