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CD Housing Topics and Issues____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: 08-20-2018 Disposition: Accepted Report Agenda Item No: 6.b Meeting Date: August 20, 2018 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: COMMUNITY DEVELOPMENT Prepared by: Paul A. Jensen, Director; Andrew Hening, Director Homeless & Planning City Manager Approval: ______________ TOPIC: HOUSING TOPICS & ISSUES SUBJECT: PRESENTATION ON AND DISCUSSION OF HOUSING TOPICS AND ISSUES; CASE # P18-010 EXECUTIVE SUMMARY: This report is intended to provide an informational report on housing. Housing covers many topic areas and issues that are timely and critical. This report provides a summary of the key topics and issues including: State-mandated housing laws; current City housing policies and regulations; our housing stock, including our affordable housing inventory; accessory dwelling units; current housing development activity; short-term residential rentals; and the current rental housing market. As an informational report, there is no recommendation for formal City Council action other than to accept the report. However, as outlined in the Analysis section below, additional City Council discussions can be scheduled for future City Council meetings. There are numerous housing topics and issues that have been summarized in this report. For these topics and issues, staff is looking for direction from the City Council on the desired follow-up. RECOMMENDATION: Accept report and provide direction on scheduling future study sessions/meetings on selected topics. BACKGROUND: A.Introduction The booming economy coupled with the Bay Area housing crisis have triggered many actions and activities surrounding housing and housing need. The housing crisis has directly affected San Rafael in a number of ways. Like many other Bay Area communities, Marin County has skyrocketing real estate prices (median price for a single-family residence in San Rafael is over $1M; source: Zillow), homeless in need of housing, an underrepresented community of lower-income residents paying record-high rents, and an aging population. The City is faced with a lot of issues and dec isions around housing and there is a continuing stream of new State legislation that is intended to facilitate housing growth. The purpose of this report is to provide a summary of where we are with housing and housing issues that SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 we will or may need to address moving forward. This discussion addresses the broader topic areas, starting with State and regional planning mandates for housing. B. State Housing Mandates The State of California establishes the laws and requirements associated with land use and housing that are applied for all municipalities in the state. Specifically, the State requires that each local jurisdiction adopt a General Plan that includes a Housing Element. The Housing Element is required to include goals, policies and programs to promote and facilitate housing for the municipality. The Housing Element must also incorporate the municipalities share of the “Regional Housing Need Allocation” (RHNA). RHNA is the housing need allocation that is set and determined for each region (e.g., the SF Bay region) by the State of California Department of Housing and Community Development (HCD). Required by State law since 1981, RHNA represents a target number for planning and accommodating new housing units for a broad range of affordability levels. Each county and local municipality must take its share of the RHNA and incorporate it into their respective General Plan Housing Elements. The Housing Element must demonstrate how the local municipality allocation can be met or achieved through zoning for housing and supportive General Plan implementation measures. The Housing Element must demonstrate, to the satisfaction of HCD, that the local municipality zoning and property inventory can accommodate our RHNA allocation. Further, approved and proposed housing development projects are counted toward meeting the RHNA. Once incorporated into the local Housing Element and adopted by the local municipality, the Ho using Element must be certified by HCD. At present, RHNA is administered in eight-year-cycles. The current RHNA cycle is 2015-2023. The State of California also establishes the statewide standards for environmental protection and sustainability. In 2008, the Governor signed SB 375. The legislation of SB 375 requires that the regional metropolitan transportation organizations (e.g., Metropolitan Transportation Commission) develop a Sustainable Communities Strategy (SCS). The goal of the SCS is to reach a greenhouse gas emission (GHG) reduction target for each region. The primary contributor to GHG impacts is emissions from fossil-fueled vehicles. Therefore, the greatest effort to reach this target is to develop ways to reduce the amount of vehicle miles traveled, such as planning for more housing and jobs that can be concentrated in the urban/developed areas and around or near transit. C. Regional Planning for Housing The Bay Area, which encompasses nine counties, is served by several regional agencies, including the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC). Now merged as the Bay Area Metro Center, MTC/ABAG manage, administer and oversee regional planning and transportation matters. Since the early 1970’s, ABAG has served as the Bay Area’s “Council of Governments” (COG). As a COG, MTC/ABAG: a) project and monitor jobs and housing growth for the region; and b) administer the State-mandated Regional Housing Need Allocation (RHNA). These roles are described as follows: 1. Since 1978, ABAG has been responsible for developing and publishing jobs and housing growth projections for the region. The projections are based, in part on the growth and development projections of local general plans, input from local agencies and trends in the economy. Historically, ABAG published the jobs and housing projections every two-four years. Local jurisdictions are not bound by or required to comply with the jobs/housing projections, but they are often used by local jurisdictions as a base for forecasting build-out in local general plans. 2. For the Bay Area region, MTC/ABAG is provided the Bay Area RHNA from HCD and it is the responsibility of ABAG, in coordination with the nine Bay Area counties and respective SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 cities/towns, to distribute this allocation to each community. In 2015, San Rafael complied with the current RHNA cycle (2015-2023) by adopting an updated Housing Element. Our adopted Housing Element, which was certified by HCD, demonstrates that the City’s 2015-2023 RHNA allocation of 1,007 residential units has been met through current zoning and identified housing opportunity sites. In response to the state-mandates for an SCS, in 2014 MTC/ABAG adopted Plan Bay Area, the Bay Area region’s SCS. Plan Bay Area promotes that future growth be concentrated in urban areas that are accessible to transit. The key tool to achieving concentrated growth has been the establishment of “Priority Development Areas” (PDA). A PDA is a geographic area that is close to, along, or within transit nodes and connections that can be earmarked for concentrated growth, particularly housing growth. In 2009, the City designated a half-mile area around the Downtown San Rafael transit center. In 2017, MTC/ABAG adopted an update to Plan Bay Area (Plan Bay Area 2040). The update did not result in major changes to the 2014 Plan, but the growth projections were adjusted. The Plan Bay Area 2040 household growth projections/forecast for San Rafael are presented in the following table: Households - 2010 Households- 2040 Household Growth Citywide 22,800 25,600 2,800 (12% increase) Downtown Priority Development Area 1,700 2,600 900 (53% increase) The number of households is projected to grow by slightly over 12% by 2040. The second row indicates that a high concentration of household growth is projected to occur within the Downtown PDA. It is important to note that the growth projections for households/housing are in accord with the housing projections in our current San Rafael General Plan 2020 and no changes are needed to our current policies. D. Current City Housing Policies & Regulations Our current housing policies are embedded in the San Rafael General Plan 2020. Specifically, the Plan’s Housing Element contains many policies and programs that facilitate and reinforce the development and preservation of all types of housing; link: Housing Element As noted above, the Housing Element was adopted in 2015 and covers an eight-year RHNA cycle from 2015-2023. An update of the Housing Element will not occur until 2022. However, it is likely that General Plan 2040, presently underway, will include some minor changes/amendments to the current Housing Element. RHNA The Housing Element accommodates our portion of the RHNA (1,007 residential units) as follows: Housing Need Total Extremely & Very Low- Income Households Low- Income Households Moderate- Income Households Above Moderate- Income Households Average Yearly Need 1,007 240 148 181 438 125 An inventory of properties demonstrating compliance with RHNA is presented in Appendix B of the Housing Element. It is worth noting that under current citywide zoning, the City has identified sites that can accommodate over 2,000 residential units within the current RHNA cycle, which exceeds the RHNA allocation. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 Housing Goals & Policies A list of key General Plan 2020 Housing Element goals and policies is provided in Attachment 1 of this report. Briefly, these goals and policies support the following: ➢ Acknowledging and accommodating a citywide housing need (Goal 3) ➢ Promoting a diverse housing supply (Goal 4) ➢ Protecting the existing housing stock (Policy H-7) ➢ Supporting and encouraging affordable housing that is distributed throughout the community Policy H-1) ➢ Ensuring that the housing stock is maintained in good condition (Policy H-8) ➢ Providing housing for special needs including seniors, single parents, homeless and disabled (Policies H-9 and H-12) ➢ Supporting aging-in-place (Policies H-11 and H-13) ➢ Promoting fair housing practices and programs (Policy H-5) ➢ Encouraging higher density housing near transit (Policy H-15) ➢ Enforcing the inclusionary housing requirements (Policy H-18) Affordable Housing Requirements Housing Element Policy H-18 (Inclusionary Housing) gets the most attention with new residential land development. This policy is also addressed as regulations in the City Zoning Ordinance (SRMC Section 14.16.030), which are summarized as follows: 1. Affordable housing units are required in new housing development projects. For projects containing 2-10 housing units, the inclusionary requirement is 10%.1 For projects containing 11- 20 housing units, the requirement is 15%, and for projects with 21 or more units, the requirement is 20%. 2. The policies and regulations favor on-site construction so that the inclusionary units are integrated into the project and throughout the community. Construction of on-site inclusionary units is priority. If such units cannot be constructed on-site, off-site construction of the required affordable units is second priority. Payment into the City’s affordable housing in-lieu fee fund is last priority. 3. The required affordability levels vary by type of housing, with rental (very low- and low-income mix) versus ownership (low- and moderate-income mix). 4. The affordable housing units are required to remain affordable for the longest feasible time or at least 55 years. When a housing project results in a fractional-unit requirement, for example a 2.3-unit requirement, two inclusionary units are required to be built on-site and the 0.3-unit equivalent is paid in affordable housing in-lieu fees. 1 An exemption from this requirement is allowed for smaller projects. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 It is important to note that non-residential projects are also subject to the affordable housing requirements of SRMC Section 14.16.030. A nexus study was conducted in 2005 to support the linkage of housing need with employment and workforce. The code provisions include a formula to determine housing need based on non-residential use type and size. While the intent is to encourage the development of inclusionary housing in non-residential development projects, housing may not be an allowed use on some commercial or industrial sites. Therefore, most non-residential development projects pay into the affordable housing in-lieu fee fund. One good example is the Target store project in southeast San Rafael. This project was required to contribute $774,000 to this fund. Affordable Housing In-lieu Fee Fund City Fund 243 is the repository for the affordable housing/commercial linkage fees that are collected for residential and non-residential development. The fee that is charged is based on an individual project’s affordable housing unit requirement. The in-lieu fee was recently updated in May 2018 and is $331,070 per affordable housing unit. The fee amount is adjusted annually, taking into consideration inflation, the local median sales price for a home (attached and detached), and average annual building cost index. At present, Fund 243 has a $1.3 million revenue balance. SRMC Section 14.16.030.J. sets forth the limitations on use of this fund. The fund can solely be used for the purpose of increasing and expanding the supply of affordable housing, which can include: a) design and construction costs; b) acquisition of property and property rights; and c) cost of program development and on-going administration of the housing program fund. Expenditures from this fund must be authorized by the City Council. There have not been any recent expenditures from this fund. However, the fund is used to pay the Marin Housing Authority to manage our below-market rate (BMR) rental program (approximately $30,500/fiscal year). Density Bonus Provisions The affordable housing requirements of SRMC Section 14.16.030 also incorporate “density bonus” provisions. Required by State law, a density bonus: a) allows a developer to exceed the maximum number of units permitted by local zoning and the General Plan by up to 35%; and b) prescribes allowances for concessions and incentives for, among others, reduced off-street parking, reduced building setbacks, and additional building height. Certain concession requests by a developer require the submittal of a project “pro-forma.” The pro-forma is intended to demonstrate that the requested concession is necessary to make the project financially feasible. Most of the recent housing projects reviewed and approved by the City included the approval of a density bonus. Most of the bonuses that have been granted are modest. However, at present, the Planning Division is processing two projects with considerably-higher bonus requests than the 35% established by the State (Whistlestop/EDEN Housing project and the 703-723 3rd Street housing development). The density bonus law is very complicated and is subject to periodic change by the State. Therefore, should the City Council desire a more in-depth review and discussion on this topic, staff recommends that it be addressed in a separate meeting. E. Current City Housing Information, Demographics & Statistics As noted above, the General Plan 2020 Housing Element was last updated in 2015 for the 2015-2023 RHNA cycle. The Housing Element Background Report (General Plan 2020 Appendix B) contains a lot of information and data on population and housing (link: https://www.cityofsanrafael.org/documents/gp- 19-appendix-b-housing-element/). As much of the data and information in the Background Report is based on 2010 US Census data, staff has also tapped the American Community Survey (2016), which provides a more current source to supplement the Census data. A summary of data for key topics is provided below. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6 Population Dynamics and Income Demographics and Housing Information Statistics 2 San Rafael Marin County Population 60,651 259,358 Number of Housing Units 23,906 112,259 Number of Households 22,800 104,400 Mean Household Size –persons per household Owners Renters 2.30 2.68 2.44 2.36 Median Age- years 40.2 44.5 Our population is aging. . . • 18% of all San Rafael residents are over 65 years old. • 40% of all owner-occupied San Rafael households are headed by someone over 65 years old. Of this total, 7% of the households are headed by someone over 85 years old. • 41% of homeowners over 65 live alone. • 18% of all renter San Rafael households are headed by someone over 65 years old. Our population is growing in diversity. . . • 57% - Non-Hispanic white • 29% - Hispanic/Latino • 3% - African American • 7% - Asian • 3% - Other Our households vary in size and composition. . . • 33% - Single person household • 30% - Families without children less than 18 years of age living at home • 28% - Families with children less than 18 years of age living at home • 9% - Non-family Our household incomes range. . . • 42%- $100,000 and over • 24%- $50,000-$99,999 • 21%- $20,000-$49,999 • 13%- Under $20,000 On the topic of household income, several months ago, the State of California published household income limits for Marin County (2018) based on household size. The following table presents the Marin County income limits by household size.3 These income limits (and this table) are used to determine households qualifying for below-market-rate housing. 2 San Rafael General Plan 2020 Housing Element, 2015; US Census, 2010; American Community Survey, 2016 3 State of California Department of Housing and Community Development, 2018 SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7 Income Category 1-person household 2-person household 3-person household 4-person household Extremely Low $30,800 $35,200 $39,600 $44,000 Very Low (< 50%) * $51,350 $58,650 $66,000 $73,700 Low (50%-80%) * $82,200 $93,950 $105,700 $117,400 Median $82,900 $94,700 $106,550 $118,400 Moderate (80% - 120%) * $99,450 $113,700 $127,900 $142,100 * % of County Median Income Our household tenure is balanced. . . • 52% Home ownership households • 48% Renter households Housing Stock The City’s housing stock varies, but detached, single-family residences is the predominant housing type in San Rafael. The following totals include mobile homes and “liveaboard” boats berthed at marinas. Housing Type 4 Total # of Units Single-family residential- detached 5 11,280 Single-family residential- attached 2,051 Duplex/Multiple-family residential- 2-4 units 887 Multiple-family residential- 5 units or more 9,238 Mobile homes 418 6 Boat 48 Total Housing Units: 23,906 Affordable Housing Inventory The City has a variety of housing that is affordable to households with below-market rate incomes. The variety of affordable housing covers the following: 1. Inclusionary Housing. As discussed above, the Housing Element and City Zoning Ordinance have policies and regulations, respectively, that require inclusionary housing in market-rate projects. Since 1986, the City has leveraged the creation of many rental and for-sale below market-rate units through the development of market-rate residential projects. The inclusionary housing in these development projects range from 10% to over 20% of the project unit total. Examples of for-sale projects with BMR ownership units include: Redwood Village (Sequoia Dr @ North San Pedro Rd); Village @ Loch Lomond Marina (Pt San Pedro Rd); Chapel Cove (Pt San Pedro Rd); Terra Linda Highlands (Orchid Ave); Loch Lomond Highlands (Inverness Dr). Examples of rental projects with BMR rental units include: 33 North (33 San Pablo Ave); Mission Townhomes (524 Mission/1200 Irwin St), Rafael Town Center (4th St), and Lone Palm (840 C St). 2. Non-Profit & Publicly-owned Housing. There are a number of 100% affordable housing projects in San Rafael that are owned/managed by non-profit organizations or public agencies. These housing projects serve families, seniors, and our special needs population (disabled, transitional). Examples of these housing projects include Rotary Manor (5th Ave), San Rafael 4 76% of the existing housing stock was built prior to 1970. Source: American Community Survey, 2016 5 Average median home price in 2018 is $1,022,200 and median rent for a single-family home is $4,029/month Source: Zillow, 2018 6 418 mobiles homes in two parks, Contempo Marin and B-Bar-A Park. Space rents are controlled through the City’s mobile home park rent stabilization ordinance. Annual space rent increases are capped a 75% of CPI SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 8 Commons (4th/Mary St), Pilgrim Park Apartments (Pilgrim Way), Lifehouse (626 Del Ganado Rd); and Martinelli House (1327 Lincoln Ave). 3. Transitional and Shelter Housing. There are a number of facilities and housing projects that provide supportive housing and temporary shelter for extremely low-income households. Examples include: Homeward Bound (190 Mill St); Marin Hotel (1111 4th St); Carmel Hotel (831 B St); and Palm Court (199 Greenfield Ave). Recently, “Opening Doors” (formerly Marin Homeless Action Task Force) initiated the preparation of a countywide inventory of affordable housing, which is price-controlled. The following table provides affordable housing types and quantities for Marin County and San Rafael. At present, there are a total of 6,125 affordable housing units/households in Marin County of which 1,414 are within San Rafael. Population Served San Rafael Marin County Public Housing 40 496 Seniors 256 1,126 Family 680 2,791 Disabled 84 207 Permanent/Supportive Housing 52 337 Transitional & Shelter 185 336 Home Ownership (BMR for-sale units) 117 832 Total: 1,414 6,125 Accessory (Second) and Junior Dwelling Units Accessory dwelling units (ADU), also referred to as second units and “in-law” units, have been regulated in San Rafael since 1983. ADUs are full dwelling units containing living area, a kitchen and a bathroom but are generally small in size (under 1,000 square feet). Unlike a residential duplex, an ADU is ancillary to a main, single-family dwelling located on a single-family residential lot. These units are restricted in size and are subject to numerous regulations to ensure that the unit remains ancillary to the main dwelling. The City also requires that the property owner occupy either the main dwelling unit or the ADU; this requirement is memorialized through the recording of a deed restriction. San Rafael was the first jurisdiction in Marin County to adopt an ADU ordinance and the ordinance has been amended several times since 1983. The early ADU ordinance required the approval of a Use Permit and Environmental and Design Review and hefty utility connection and traffic mitigation fees. In 2016, the City also adopted an ordinance establishing “junior second unit” (JSU) regulations. A JSU is a small, self-contained living space within an existing home that is under 500 square feet in size. JSUs start with the conversion of an existing bedroom and the addition of an “efficiency” kitchen, which does not contain a stove nor is permitted 220v electrical service. Off-street parking is not required but the main dwelling unit must have adequate parking to meet the City’s off-street parking regulations. Since adoption of the code, the City has approved three JSUs. Since 1983, the City has approved over 200 ADUs. Until 2017, the general trend was that the City reviewed and approved a meager-average of 4-6 ADUs per calendar year. The start-ups for ADUs were generally slow because of challenges such as the cost of construction, utility connection fees, fire sprinkler installation cost, traffic mitigation fees, and off-street parking requirements. However, this trend changed when new ADU regulations were passed with the 2016 State housing legislation. Effective January 2017, all local jurisdiction ordinances and regulations in California were repealed by this new legislation, requiring local jurisdiction compliance with the State “model” ordinance. Local jurisdictions in California can administer and enforce the State model ordinance or adopt its own ordinance consistent with the State regulations. The 2017 State ADU regulations substantially watered SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 9 down historic regulations and permitting. The most significant changes in the State include, among others, the following: 1. The local jurisdiction’s ability to impose a permit that is subject to discretionary review has been substantially reduced. Most ADUs must be processed with a ministerial permit where the unit must merely meet the minimum regulations and standards for approval. This permit review does not require a notification of action to neighboring property owners or residents. 2. Off-street parking is not required if the property is within ½-mile of a public transit stop. 3. Utility connection fees cannot be charged if the ADU is contained within or is a part of the main dwelling unit. While staff has prepared a draft, combined ADU/JSU ordinance to comply with the current State regulations, we have yet to move forward with public hearings and adoption. Part of this pause is strategic. First, as discussed below (2017-2018 Housing Legislation), there continues to be new housing bills introduced that propose further changes to the statewide ADU regulations. If the bills pass, then additional changes to a local ordinance must be adopted. Second, absent our own local ordinance, we have been operating under the State model ordinance, which has been surprisingly successful. In 2017, the City reviewed and approved 30 ADUs for the calendar year. For 2018, this record will be broken in that year-to-date, we have received 27 ADU applications. ADUs and JSUs have boosted our numbers for housing “start-ups.” The great advantage to this type of housing is that such units: a) typically have few neighborhood impacts (staff receives few complaints); and b) they count toward meeting our RHNA. In fact, HCD staff has confirmed that we are able to count ADUs and JSUs that are under 500 square feet toward meeting our RHNA for low-income households. Assisted Living/Congregate Care Housing Assisted living or congregate care offer housing in a communal or collective environment with services ranging from limited assistance to full-service care. Typically designed and marketed for our aging population or seniors, this type of housing is also available for the disabled or those with special needs. Examples of assisted living facilities in San Rafael include Alma Via (Northgate Dr and Los Ranchitos Rd), Sunrise of San Rafael (111 Merrydale Rd), and Aldersly Assisted Living (326 Mission Ave). The City recently approved two, new assisted living facilities: Oakmont Assisted Living at 3773 Redwood Highway (former Hudson Street Design property); and Aegis Assisted Living (800 Mission Ave - (intersection of Lincoln/Mission Ave). The latter project was approved by the Planning Commission on July 10 and this action has been appealed to the City Council. Historically, the City has classified assisted living and congregate care housing facilities as more of a commercial/institutional use rather than a true residential use for the following reasons: a) they are structured to be a communal or collective living environment with common dining facilities akin to a residence hotel; and b) they typically contain few or no full dwelling units (unit containing living/sleeping space, a full kitchen and a bathroom) and are not eligible for RHNA housing credit. Further, the living assistance and care components are more institutional rather than residential in nature. Nonetheless, this type of use provides critical housing for our aging population and is supported by the specific policies and programs in our Housing Element. Because of the hybrid nature of this type of use, there have been challenges in how to define, regulate and condition assisted living projects. For example, the two assisted living projects that were recently processed and approved by the City (mentioned above) were required to pay the commercial linkage SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 10 fee in-lieu of providing inclusionary housing within the project. Some would argue that it would be more appropriate to require the latter. Housing Element Program H-13a (Assisted Living) calls for the City to evaluate the current zoning regulations for assisted living and to assess options for regulating them as a residential use rather than a commercial use. Implementation of this program has yet to be initiated by staff. F. Housing Development Activity Prior to the Great Recession, the City approved a handful of medium-to-large residential and mixed-use development projects. The development projects included, among others: Village @ Loch Lomond Marina (81 residential units); 1203 Lincoln Ave/800 Mission Ave (36 residential units); 524 Mission/1200 Irwin St (15 residential units); 1857 Lincoln Ave (17 residential units); and 33 San Pablo Ave (82 residential units). During the Great Recession, except for the 33 San Pablo Ave development, none of these development projects were built. Most of the housing development activity during this time focused on single-family dwelling additions and remodels. Following the Great Recession, housing development activity remained slow. However, within the last several years there has been an up-tick in this activity. The following tables present a tally of housing project approvals and building permits issued during the last (2007-2014) and current (2015-2023) RHNA cycles. The table includes the breakdown of affordability. 2007-2014 RHNA Cycle Approved 2007-2014 Very Low Income Low Income Moderate Income Above Moderate Total Units Single-family Residential - - - 25 25 Multiple-family residential 3 23 19 215 260 ADU - 12 - 27 39 Total units approved: 3 35 19 267 324 Built 2007-2014 Very Low Income Low Income Moderate Income Above Moderate Total Units Single-family Residential - - - 24 24 Multiple-family residential - 8 8 92 108 ADU - 8 - 11 39 Total units built: 16 8 127 171 2015-2023 RHNA Cycle (Current Cycle) Approved 2015-Present Very Low Income Low Income Moderate Income Above Moderate Total Units Single-family Residential - - - 26 26 Multiple-family residential 6 7 2 95 110 ADU - 16 - 24 40 Total units approved: 6 23 2 145 176 Built 2015-Present Very Low Income Low Income Moderate Income Above Moderate Total Units Single-family Residential - - 1 16 17 Multiple-family residential 1 8 6 72 87 ADU - 1 - 3 4 Total units built: 1 9 7 91 108 SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 11 There has been an increased interest in housing development in Downtown and on sites close to SMART and public transit. At present, there are numerous housing development projects (including assisted living facilities) that have been approved or are currently under review. There are also several sites where housing is being considered and are in the early planning stages. Please see the attached table and maps, which describes these projects and potential housing sites (Attachment 2). G. Rental Housing Market As noted above, 48% of the housing units in San Rafael are renter occupied. Nationally, research from Harvard University’s Joint Center for Housing Studies (JCHS) finds that approximately 36% of households currently rent, indicating that our community has an above average number of renters. Nationally, the number of renter households has been growing since 2004, with JCHS attributing approximately 50% of the increase to more older Americans becoming renters. As with housing prices, rental prices have seen significant growth over the last decade. According to RentCafe, a national apartment-listing website, as of July 2018, the average rent for an apartment in San Rafael is $2,531, a 2% increase compared to the previous year, when the average rent was $2,480. Looking at data from real estate research firm Co-Star, average rental prices in Marin County have increased by 43% over the last 10 years. Even with potentially plateauing prices, the rental vacancy rate remains low. The vacancy rate refers to the number of available housing units – for sale or rent – available at any given point in time. According to the City of San Rafael’s Housing Element, “A low vacancy rate may indicate that households are having difficulty in finding housing that is affordable, leading to housing overpayment and/or overcrowding.” According to data from Co-Star, the Q2 2018 vacancy rate in Marin was 3.8%, compared to 6.8% nationally, indicating our community does indeed have a relatively low vacancy rate. It is important to preserve a variety of housing types and options for San Rafael residents at all income levels. With current high rents, many lower-income renters are struggling. According to California’s Department of Housing and Community Development, nearly one in three California renters (3 million California households) are rent burdened, meaning they are paying more than 30% of their income on housing. According to research from Harvard Professor Matthew Desmond in his award-winning book Evicted, nationally one in five of all renting households are currently paying more than 50% of their income on rent. For poorer families specifically, in 2013: • 1% were in rent-control units • 15% were in public housing • 17% were on a government subsidy • The remaining ⅔ received no federal assistance Of note, Professor Desmond also found that when it comes to legal recourse for substandard living conditions or other illegal housing practices, the scale is often tipped towards property owners. For example, 90% of landlords are represented by attorneys in housing courts; whereas, 90% of tenants are not represented by legal counsel. Given the increasingly precarious financial situation of many lower-income families that are renting, a 2017 study by Zillow found that every 5% increase in rental prices led to 2,000 more people losing their homes in Los Angeles. Numerous California communities are starting to act to preserve affordability and prevent one of the major upstream causes of homelessness. Locally, the County of Marin has been taking a lead on a variety of new efforts. The following is a range of strategies the City Council can consider for future discussions: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 12 1. Source of Income Discrimination. Now passed in the County and the Town of Fairfax (being considered by the Mill Valley and Novato), a source of income ordinance would prevent landlords from explicitly refusing to accept governmental funding sources (e.g., Housing Choice Vouchers) when posting rental vacancies. 2. Mandatory Mediation. The County of Marin has passed a mandatory mediation ordinance stating that if a property owner increases a tenant’s rent by more than 5%, the tenant can go through a non-binding mediation with the District Attorney’s Consumer Protection Unit to try to negotiate different lease terms. 3. Just Cause Eviction. The County of Marin will be considering a just cause eviction ordinance on September 11, 2018. Just cause ordinances state that renters can only be evicted for a certain list of pre-established reasons (failure to pay rent, owner re-occupancy, etc.). It is also designed to prevent retaliation (e.g. a tenant reports a health and safety issue to the City but is then evicted shortly thereafter). 4. Economic Eviction Relocation Fee. Sitting between just cause eviction and rent control is the idea of economic eviction. If a landlord raises rent to such an extent that for all intents and purposes it forces someone to move, that is an economic eviction. To counteract this, jurisdictions can require a “relocation fee” (e.g. 2-3 months of rent) to assist someone whose rent has been raised above a certain percentage (e.g. the Consumer Price Index or CPI). It still gives the landlord the ability to vacate the unit, but at a more marginal cost than long -term price regulation. 5. Rent Control/Stabilization. Rent control/stabilization allows jurisdictions to set a maximum ceiling for annual rent increases. Though no communities in Marin are currently considering rent control, it is worth noting that the City of San Rafael does in fact already have pockets of rent control within the City. For example, for the 410 mobile home trailers at Contempo Marin, annual rent cannot increase more than 75% of CPI. H. Short-term Rental Activity The short-term rental phenomenon has mushroomed in the last several years. The phenomenon is the result of: a) the high demand for and cost of housing in the Bay Area; b) tourism and the high cost of lodging; and c) the residential property owner’s struggle to make their extremely high mortgage payment. Regarding the latter, the property owner will readily admit that the rent from their short-term rental supplements their income and mortgage payment. There are two schools of thought regarding short-term rentals. Those in the “pro” camp believe it is a way to address the housing crisis and offer a subsidy to the struggling property owner. Those in the “con” camp find that short-term rentals are a nuisance to neighborhoods and are changing the character of and commercializing our single-family neighborhoods, thus reducing our permanent housing stock. The County of Marin and several cities/towns in the County experience high volumes of tourist-related short-term rental activity. This activity has resulted in prohibitions (Tiburon and Sausalito) or aggressive permitting and taxing (County, Mill Valley). San Rafael does not currently regulate most short-term rentals in private homes. However, several years ago, the City Council directed staff to monitor short-term rental activity and complaints. In response, the City contracted with Host Compliance, a company that provides a monitoring platform and assists local jurisdictions in enforcing short-term rentals. Our contract with Host Compliance allows us to access a citywide database of SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 13 active short-term rentals. The most recent report (August 1) discloses that there are 250 active short- term rentals in San Rafael. Over the past three years of monitoring, staff has tracked and recorded inquiries and complaints about short-term rentals. During this time frame, the City received less than one dozen inquiries and complaints. The following is a summary of the types of complaints that have been received: ➢ Multiple short-term rentals on the same street or very closely spaced; concerns about change in neighborhood character, traffic, safety and quality of life. ➢ Shared driveway and other shared infrastructure with a neighboring property where there is an active short-term rental. Concerns about potential liability, which is shared by both property owners. Guests are unware of the protocols that are typically respected between the property owners such as designated parking areas and cleared driveway access. ➢ Concerns that short-term rentals reduce the housing supply for long term residents; impacts to the hotel/motel business owners and increase the cost of rental housing. ➢ Neighbor actively (almost every night) using home as a short-term rental; noise and evening parties. Guests often mistake their home and knocked on the neighbor’s door, sometimes late at night. ➢ Several inquiries have been made with questions about permitting, business license and taxes. City staff is completing a “white paper” on residential short-term rentals. The purpose of the white paper is to assess whether San Rafael’s current policy of monitoring and otherwise unconditionally permitting short-term rentals continues to be the best practice policy given the following considerations: ➢ Current conditions in San Rafael’s short-term rental market; ➢ Opportunities and challenges posed by short-term rentals to the City; ➢ Emerging best practices in local short-term rental regulations, and ➢ Experiences with short-term rentals in other Marin County jurisdictions. I. 2017-2018 Housing Legislation Two-thousand-seventeen (2017) proved to be a banner year for new housing legislation. Sixteen State and Assembly Bills focusing on housing were signed by Governor Brown and are now State law. This momentum has carried forward into 2018. A summary of the housing legislation is presented in a table, which is provided as an attachment to this report (Attachment 3). The table summarizes: the purpose and of each bill; the current status (outcome); how the resulting legislation impacts the City; and required follow-up action by the City. The following new legislation is most impacting to San Rafael: 1. Ministerial Review Process for Housing Projects (SB35). This new law mandates that local jurisdictions offer a ministerial permit process for any residential project of two or more dwelling units that meets certain criteria. A project qualifying for this review is: a) located near public transit (within ½ mile of public transit; b) limited to compliance with a checklist of “objective planning standards;” c) exempt from the environmental (CEQA) review process; and d) exempt from any design review discretion. The developer must commit to pay prevailing wages for construction. This law is also linked to the local jurisdiction’s performance in meeting its RHNA by housing development approvals and construction. Based on San Rafael’s housing performance during this RHNA cycle, this ministerial review process is SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 14 not eligible for market rate housing projects that contain an inclusionary housing component of less than 50%. The prerequisite for payment of prevailing wage is a tall order as it can add considerably to the construction cost of a project. However, the additional cost will vary based on the type of construction, location of the project and the trade demands for the project. Further, prevailing wage labor is not common in Marin County unless the project is publicly-sponsored or subsidized by federal funds. Nonetheless, the City must establish a ministerial review process in the event there are requests for this process. Staff is currently preparing this process, which includes developing the “objective planning standards.” The task of developing these planning standards is challenging as they must be prescribed, quantitative and completely void of any discretion. The planning standards will: a) utilize our zoning ordinance standards and regulations; and b) incorporate and modify our City design standards such as the “good design” criteria for Downtown (presented to the City Council earlier this year). Once completed, staff will present the objective planning standards and ministerial review process to the Design Review Board and Planning Commission for a recommendation, followed by adoption of the process by the City Council. It is expected that this process will be completed this fall. 2. Return of Inclusionary Housing for Rental Projects (AB1505). This new law overturned Palmer v. City of Los Angeles by reinstating a City’s ability to require developers to provide inclusionary housing in market rate rental projects (Costa Hawkins Act). However, the law limits a local jurisdiction’s ability to impose an inclusionary housing requirement that exceeds 15% when adopting a new ordinance. Our current inclusionary housing policies and regulations are applicable to and are required for rental projects. Therefore, the City does not need to do anything to respond to this new law. 3. Strengthening the Housing Accountability Act (AB678, SB167, AB1515). The new laws reinforce the Housing Accountability Act by establishing new limitations on local jurisdiction review and action on a housing project. Specifically, the new laws limit the local jurisdiction’s ability to deny a housing development project that is consistent with the local General Plan. Further, the new laws require that the local jurisdiction provide a housing developer/applicant a list of project inconsistencies with the local General Plan and zoning within 30-60 days following application completeness. If the local jurisdiction fails to complete this task within the prescribed time limits, the housing development application is automatically deemed consistent with the local General Plan and zoning regulations. These laws involve a change in local project review practices, but no formal amendments to local policies or regulations. 4. “No Net Loss Zoning” (AB1397, SB166). The new laws prohibit the local jurisdiction from: a) downzoning housing sites; or b) approving new housing at significantly lower densities than that projected for the same site in the local Housing Element. Should the latter occur, the local jurisdiction is required to accommodate the unmet housing need on another housing site. This law involves a change in local project review practices, but no formal amendments to local policies or regulations. Worthy of mention is the “Transit Rich Housing Project Bill” (SB827). While this legislation was voted down by the State Senate this past spring, it would have authorized a housing project to be exempt from local density/intensity limits and minimum parking requirements if the project is within a ½-mile radius of a major transit stop or a ¼-mile radius of a high-quality transit corridor. The biggest and most controversial provision of this failed legislation was the guarantee of 55-85-foot building heights for housing projects near transit. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 15 ANALYSIS: As this report is informational, there is no staff recommendation for a formal action. However, a number of the housing topic areas are timely for special attention and further review by the City Council in separate meetings. Therefore, staff has identified the following for key housing topic areas and issues summarized in this report, and seeks City Council direction on which topics to bring forward for further discussion: A. Rental Housing Market. Issues covered can include, among others, source of income discrimination, just cause eviction and rent control. B. Accessory Dwelling Units (ADU). A draft ADU ordinance has been prepared to comply with the 2017 State laws. It is expected that the draft ordinance will be scheduled for Planning Commission review in the next several months, followed by City Council review and action by the end of 2018. C. 2017-2018 Housing Legislation. The most significant legislation is SB35 (ministerial review process for housing projects). Creating and adopting this process and the “objective planning standards” will involve public meetings with the Design Review Board, Planning Commission and City Council. Therefore, a follow-up process has already been initiated. D. Short-term Rentals. Issues covered can include pros and cons to developing a short-term rental program, enforcement and regulation options, and best practices. E. General Plan 2020 Housing Element. As discussed above, our Housing Element was adopted in 2015 and will not be revisited for update until 2022 (current 2015-2023 RHNA cycle). As part of the General Plan 2040 process, it is likely that there will be some minor amendments to the Housing Element, but this task will be vetted first by the General Plan 2040 Steering Committee. F. Inclusionary Housing Policies and Regulations. Our current inclusionary housing policies and regulations have been successfully implemented and staff believes that there is no reason to change them. Any major changes to the current policies and regulations will require an update to our affordable housing in-lieu fee/commercial linkage fee study. If a study session is scheduled on this topic, it could also cover our affordable housing in-lieu fee fund and its use. G. Density Bonus Regulations. Although the City has approved numerous housing projects that include a density bonus, the regulations and laws on this topic are very complicated, so a study session would be valuable. H. Special Housing- Assisted Living/Congregate Care Facilities. While strongly supported by the General Plan 2020, these uses create several challenges for the City (e.g., how to address/not address density limitations; when projects are eligible for RHNA credit; how to address the City’s affordable housing requirements). COMMUNITY OUTREACH: A public notice of this meeting was mailed to stakeholders, agencies and special interest groups 15- days prior to this meeting. Those noticed included, among others, all neighborhood associations, the Federation of San Rafael Neighborhoods, housing advocacy groups, and the San Rafael Chamber of Commerce. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 16 Upcoming public meetings and study sessions on selected housing topics and issued will involve ample notification to the public and stakeholders. FISCAL IMPACT: This item is an informational report, which has no direct fiscal impact on the City. The fiscal impact of individual projects, tasks or studies resulting from this housing discussion will be assessed and determined on a case-by-case basis. OPTIONS: The City Council has the following options to consider: 1.Accept and provide direction as recommended by staff; 2.Do not accept the report; or 3.Direct staff to return with more information. RECOMMENDED ACTION: Accept the report. ATTACHMENTS: 1.Key Housing Element Goals & Policies 2.Table and Maps presenting residential development projects approved, currently under review and potentially-planned 3.2017-2018 Housing Legislation table 4.Correspondence ATTACHMENT 1 SAN RAFAEL GENERAL PLAN 2020 HOUSING ELEMENT Key Goals & Policies Supporting and Facilitating All Types of Housing 1-1 ➢ GOAL 3: HOUSING NEEDS. It is the goal of San Rafael to have a strong sense of community and responsibility in meeting housing needs. Historically, San Rafael has provided housing of all types to meet the varied needs of its population in settings that enhance the feeling of community. ➢ Policy H-1. Housing Distribution. Promote the distribution of new and affordable housing of quality construction throughout the city to meet local housing needs. ➢ Policy H-2. Design That Fits into the Neighborhood Context . Recognize that construction of new housing and improvements on existing prop erties can add to the appearance and value of the neighborhood if they fit into the established character of the area. Design new housing, remodels, and additions to be compatible to the surrounding neighborhood. Incorporate transitions in height and setbacks from adjacent properties to respect adjacent development character and privacy. Respect existing landforms and minimize effects on adjacent properties. ➢ Policy H-4. Governmental and Community Collaboration . Collaborate when possible with other jurisdictions in Marin County in addressing regional housing needs. Support community partnerships to assist in the development of needed housing and continue to provide technical assistance to owners, developers, and non-profits. Participate in local and regional housing assistance programs and establish relationships and coordinate with other public agencies, non-profit housing sponsors, and for- profit housing sponsors in the use of available programs and funding resources to provide lower -cost housing in San Rafael. Take leadership in attaining the goals of the Housing Element by coordinating with interested parties and carrying out prescribed actions in a timely manner. ➢ Policy H-5. Fair Housing Take action when necessary to prevent discrimination on the basis o f race, religion, sex, marital status, ancestry, national origin, color, familial status or disability in San Rafael’s housing market. (NOTE: the City administers a “neutral inspection” practice, which allows rental tenants to request a City inspection of housing conditions and potential violations.) ➢ GOAL 4: A DIVERSE HOUSING SUPPLY. It is the goal of San Rafael to have an adequate housing supply and mix that matches the needs of people of all ages, income levels, and special requirements. ➢ Policy H-7. Protection of the Existing Housing Stock. Continue to protect existing housing from conversion to nonresidential uses. Ensure that affordable housing provided through government subsidy programs, incentives, and deed restrictions remains affordable over the r equired time period and intervene when possible to help preserve such housing. (NOTE: this policy is supported by current programs such as the rent stabilization ordinance for mobile homes and BMR resale restrictions ). ➢ Policy H-8. Housing Conditions and Maintenance. Protect and conserve the existing housing stock and existing residential areas. Protect residents and maintain the housing stock by enforcing the housing code for all types of residential units. Support good management practices and the long -term maintenance and improvement of existing housing. (NOTE: this policy is supported by programs the City currently implements such as the Hotel/Apartment Inspection Program [HIP], Residential Building Resale [RBR] Program, and relocation assistance). ➢ Policy H-9. Special Needs. Encourage a mix of housing unit types throughout San Rafael, including very low- and low-income housing for families with children, single parents, students, young families, lower income seniors, homeless and the disabled. Access ible units shall be provided in multi-family developments, consistent with State and Federal law. ➢ Policy H-11. House Sharing. Support organizations that facilitate house sharing, linking seniors and small households with potential boarders to more efficiently use existing housing stock. (NOTE: this policy promotes “aging-n-place.”) ATTACHMENT 1 SAN RAFAEL GENERAL PLAN 2020 HOUSING ELEMENT Key Goals & Policies Supporting and Facilitating All Types of Housing 1-2 ➢ Policy H-12. Residential Care Facilities and Emergency Shelters. Encourage a dispersion of residential care facilities and emergency shelters and avoid an over concentration of residential care facilities and shelters for the homeless in any given area consistent with state and federal laws. ➢ Policy H-13. Senior Housing. Encourage housing that meets the needs of San Rafael’s older population, particularly affordable units and affordable care facilities that foster aging within the community. Support development that provides housing options so that seniors can find suitable housing to rent or purchase. (NOTE: this policy is supported by programs that encourage assisted living and age-in-place assistance.) ➢ Policy H-15. Infill Near Transit. Encourage higher densities on sites adjacent to a transit hub, focusing on the Priority Development Area surrounding the San Rafael Transportation Center and future Downtown SMART station. ➢ Policy H-18. Inclusionary Housing Requirements. The City requires residential projects to provide a percentage of affordable units on site and/or pay in -lieu of fees for the development of affordable units in another location. The City’s program requires the units remain affordable for the longest feasible time, or at least 55 years. The City's primary intent is the construction of units on -site. The units should be of a similar mix and type to that of the development as a whole and dispersed throughout the development. If this is not practical or not permitted by law, the City will consider other alternatives of equal value, such as in-lieu fees, construction of units off-site, donation of a portion of the property for future nonprofit housing development, etc. Allow for flexibility in providing affordable units as long as the intent of this policy is met. Specific requirements are: Project Size % Affordable Units Required 2-10 Housing Units + 10% 11-20 Housing Units 15% 21+ Housing Units 20% + Exemptions for smaller project units may be provided in the Zoning Ordinance. Rental Units. Provide, consistent with State law, a minimum of 50% of the BMR units affordable to very low-income households at below 50% of median income, with the remainder affordable to low income households at 50-80% of median income. Sale/Ownership Units. Provide a minimum of 50% of the BMR units affordable to low income households at 50-80% of median income, with the remainder affordable to moderate income households at 80-120% of median income. . ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-1 BILLS PASSED AND SIGNED AS NEW LAW SB 2 - Permanent Source of Funds for Affordable Housing Development. Imposes a mandated $75-$225 recording fee with property sales/real estate docs (no fee for home sales). Est. revenue of $200 Million/year. Make-up for dissolving of Redevelopment Agencies. Bill signed and law in effect. City supported this bill. No direct impacts on the City. No action needed. SB 3 - $4 Billion Housing Bond. November 2018 bond on ballot. Bonds to be used to supplement cost of various existing housing programs ($3B for State affordable housing programs and $1B for CalVet Home Loan Program). Bill signed and law in effect. City supported initial bill. No direct impacts on the City. No action needed. SB 35 - Streamlined Approval Process for Housing Projects. (Coupled with SB 879, below). Creates a ministerial process for any residential project of 2 or more units near major transit. Commits developer to pay prevailing wages for construction. Limits local jurisdiction review of project for compliance with a Bill signed and law in effect. City opposed this bill. Law has a direct impact on the City; applies to most areas served by major transit. While developer interest in paying prevailing wage in Marin is not common, affordable housing projects proposed by non-profits are typically required to provide prevailing wage. Big task for local jurisdictions = creating process for individual requests. Currently, there is no City process established to address individual requests. Zoning Ordinance amendment and/or separate processing resolution needs to be adopted to address streamlined application requests. Must include “objective planning and development standards.” Standards must be prescribed and quantified to be “non- discretionary.” Requires significant input from DRB, PC, CC and public. ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-2 checklist of “objective planning standards.” Established time limits for review and action on a project requesting streamlined review. Also expands local jurisdiction requirements for annual reporting (on housing approvals and start- ups) to HCD. Provisions of law also influenced by the local jurisdiction meeting RHNA goals through actual construction. Law is extremely complicated. See separate fact sheet. Objective planning and design standards must be “quantified” to meet the test for ministerial action. Time limits for streamlined for project review will be a strain on staff and will require other projects being processed to be placed at a lower priority. Recent report issued from HCD finds that based on our RHNA performance, the streamlined process for residential projects is not required unless the development has a minimum of 50% affordable units. AB 1505 – Return of Inclusionary Housing. Palmer v. City of LA case overturned by this bill. Reinstates ability of local jurisdictions to require inclusionary housing for rental projects. Limits a local jurisdictions’ ability to impose an inclusionary housing requirement to a maximum of 15% when adopting a new ordinance. Bill signed and law in effect. City supported this bill. Law has a direct impact on the City; allows the City to employ and enforce the current inclusionary housing requirements in the GP2020 and Zoning Ordinance (up to 20% BMR unit requirement in market rate projects). Less reliance on securing BMR rental units through the density bonus process. The 15% inclusionary unit limit set by the law does not apply to the City as we would not be adopting a new ordinance. No formal action or ordinance needed by the City. Consider having the City Council adopt a resolution confirming reinstatement of the adopted inclusionary housing requirements for rental projects. AB 678, SB 167, AB 1515 – Strengthening Anti-NIMBY Law – Housing Accountability Act. Bills signed and laws in effect. City opposed this bill. City Planning Division staff will be required to comply with the timeline set for determining housing project consistency with the General Plan 2020 and zoning ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-3 Reinforces Housing Accountability Act; limits local jurisdictions ability to deny housing developments that are consistent with the local General Plan unless specific findings are made. SB 167 requires that local jurisdiction provide the developer of a housing project a list of inconsistencies with the local General Plan and zoning standards within 30-60 days after the application is deemed complete; if not done within this time frame, application is deemed consistent with all local policies. Requires that local jurisdiction pay for attorney fees and fines if a denied project is challenged. AB 1515 allows the court to determine whether a housing project is consistent with the local zoning and General Plan by selecting the substantial evidence it wishes to rely on rather than reviewing whether the local jurisdiction relied upon substantial evidence. Law has a direct impact on the City. Requires that City further boost findings when acting on a housing development project. Obligating the City to pay attorney fees and fines for a challenged action. Impacts City staff review and time management of housing projects. City action on housing projects would be vulnerable to the courts discretion to select substantial evidence if a housing project is challenged. provisions. This review could be included in the first 30 days of application filing and completeness review. No other action necessary. However, as part of the GP2040 process, the law should be carefully reviewed to determine if General Plan policies and programs need to be amended to ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-4 SB 540, AB 73 – Workforce Housing Opportunity Zones and Housing Sustainability Districts. Allows local jurisdictions to establish a workforce housing or sustainability district that includes a CEQA review and document that covers review of individual sites within the district (“front end” planning like a Specific Plan or Form-based Code approach) for up to five years. If a district is established, individual residential projects would be subject to a ministerial review planning process subject to a time limit for construction of 3 years. Authorizes local jurisdictions to create an incentive fund for “front end” zoning and CEQA review for residential infill projects within the established district. Bills signed and laws in effect. City did not take a position on this bill but it was supported by the League of CA Cities. Law is discretionary and does not apply to the City unless a district(s) is established. No formal action needed unless the City determined that a district(s) should be established. Note: In preparing for General Plan 2040, a Specific Plan or Form-based Code is being considered for Downtown San Rafael, which could provide streamlined review. AB 1397, SB 166 – “No-Net-Loss Zoning.” Modifies current “No Net Loss Zoning” law. Local jurisdiction cannot downzone sites or approve new housing at significantly lower densities than that projected for Bills signed and laws in effect. City did not take a position on this bill but it was opposed by the League of CA Cities. Law may have a direct impact on the City, but it is questionable if this law applies to charter cities. General Plan 2020 Housing Element includes a list of housing sites with estimated unit count for development. While the May require a detailed review of General Plan 2020 Housing Element housing site inventory to: a) determine if surplus sites provide a comfortable cushion; and b) determine the need to include specified income levels for projected housing on each of the housing sites. ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-5 the site in the local Housing Element without identifying other sites that could accommodate the local need for housing sites at specified income levels. Not applicable to charter cities. housing opportunity sites identified in the Housing Element (2,500 units) far exceed the RHNA for this cycle (1,005), the inventory of sites does not break down projected units by projected income levels. AB 72, SB 879 – Changes to HCD Review of Local Housing Elements. Boosts local jurisdiction requirements for annual reporting to HCD. Allows HCD to revoke local Housing Element compliance (certification) for inconsistent actions. Bills signed and laws in effect. City did not take a position on this bill. Law has a direct impact on the City. While the changes in annual reporting to HCD are more onerous but not problematic, City actions on housing projects and the General Plan Housing Element would be more vulnerable to challenge and HCD oversight. Monitor its activity related to actions on housing projects and the General Plan Housing Element to ensure compliance with the State law. AB 1521 – Expiring Affordability Restrictions. Strengthens the law regarding the preservation of existing assisted housing developments (assisted = multiple-family housing subject to federal, state or local assistance; not applicable to properties under rent controlled/rent stabilization). Requires the owner to provide notice to tenants (3 years) when the affordability restriction is to sunset. Requires that owner accept an offer to purchase by Bill passed and law in effect. City did not take a position on this bill. Law has an indirect impact on the City. Meet with Marin County Housing Authority to determine applicability of this law, and compliance. ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-6 tenant and limits rent increases at time restriction sunsets. AB 571 – Farmworker Housing. Boosts the farmworkers, low- income tax credit program. Bill passed and law in effect. City did not take a position on this bill. No impacts on the City. No action needed. AB 494, SB 229 – Easing Restrictions on ADU Construction. Requires that any new ADU that is interior to the primary single- family residence must be afforded the ministerial review process in any zoning district that permits a single-family residence (e.g., multiple-family residential districts). Parking for an exterior ADU is limited to no more than one space per unit or per bedroom, “whichever is less;” no parking is required for a detached ADU studio unit. Local jurisdictions cannot prohibit parking in setbacks or in tandem. Local utility servers cannot consider an ADU to be a residential use for calculating fees and may not require a new or separate utility connection for an interior ADU. A new and separate utility connection may be required Bill passed and law in effect. City did not take a position on this bill. Law has an indirect impact on the City. At present, City zoning permits single-family residences and ADUs in all residential zoning districts. City is working on a new, local ADU ordinance. New parking requirements will need to be addressed. Local utilities will need to be informed of the new laws addressing utility connections. Include updated parking requirements in the new ADU ordinance (yet to be adopted). ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-7 for a new exterior ADU but the fee for the connection must be based on ADU size and number of plumbing fixtures. FAILED BILLS SB 827 – Transit-Rich Housing Project Bill. Would authorize a housing project of two or more units to qualify for a “transit-rich housing bonus.” Projects within ½-mile radius of a major transit stop or ¼-mile radius of high quality transit corridor would be exempt from: maximum residential density and FAR provisions; minimum parking requirements; and design standards that restrict the ability to construct the maximum number of units. Building heights of 55 feet shall be permitted if the adjacent street width is less than 45 feet. If the adjacent street width is greater than 45 feet, 85- foot building heights shall be permitted. Bill voted down. City submitted a letter opposing this bill. This proposed law would have had a direct and dramatic impact on the City and the urban corridor of Marin County. City has many areas that meet the criteria for a transit-rich housing bonus. At present, building height limits cap at 66 feet in Downtown (with some bonuses up to 74 feet), except for the Courthouse Square property (101 feet). Suburban areas such as Terra Linda and older residential neighborhoods in Central San Rafael would be impacted. These areas typically have building height limits of 30-36 feet. Nothing now. SB 831. ADU Regulations. Bill proposed additional changes to the Accessory Dwelling Unit Bill voted down. City did not take a position on this bill. Nothing now. ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-8 (ADU) laws and local regulations. Bills propose, among others to mandate that local jurisdictions eliminate requirements such as lot, coverage, floor area ratio, setbacks, owner occupancy. The proposed law would have further reduced the City’s ability to regulate ADUs, including eliminating the ability to require that the property owner occupy either the main residence of the ADU. INTRODUCED BILLS SB 828 – RHNA Rollover Bill. Would require that State HCD address historic underproduction of housing by completing a comprehensive assessment of unmet need for each region. Plan calls for requiring local jurisdictions with high rates of income growth have a high rate of housing production commensurate to income levels. Also requires that HCD develop a methodology to require that unmet RHNA be “rolled over” to the next reporting period. Requires that local jurisdictions plan and accommodate for 200% of the local housing allocation for every income level in its Housing Element. Bill introduced. City has submitted a letter opposing this bill. This proposed law would have a direct and dramatic impact on the City in several ways. First, the current RHNA for San Rafael is 1007 units. If units are not built to meet RHNA for the annual reporting period, the number rolls over to the next period. So, if no construction occurs, the RHNA number does not go down. This bill unfairly places local jurisdictions in a vulnerable position as construction activity is dictated by the market. Local jurisdictions have no control over this market. Second, essentially, the bill requires the local jurisdiction to plan for doubling the current RHNA spread across all income levels. The San Rafael Housing Element identifies housing opportunities for approximately 2,500 units, which provides a comfortable cushion above the current 1,007- unit RHNA. Much of this cushion would ultimately become the RHNA obligation for San Rafael. Monitor progress of bill. ATTACHMENT 3 SUMMARY OF HOUSING LEGISLATION – 2017-2018 July 24, 2018 HOUSING BILL SUMMARY + COMMENTS SPECIFIC TO SAN RAFAEL ACTION PLAN FOR CITY 3-9 AB 2890. ADU Regulations. Would relax review and action by a local jurisdiction for an ADU contained in a detached accessory structure (reduced setbacks. Would also permit an ADU and Junior ADU on one residential lot. Bills introduced. City has yet to take a position on these bills. Monitor progress of bills. Rifkind Law Group 100B Drake’s Landing Road, Suite 260, Greenbrae, CA 94904 Telephone: (415) 785-7988 * Facsimile: (415) 785-7976 www.rifkindlawgroup.com Leonard A. Rifkind len@rifkindlawgroup.com August 15, 2018 Mayor Gary Phillips Members of the San Rafael City Council 1400 Fifth Avenue, Room 203 San Rafael, CA 94901 Re: Short Term Rentals Dear Mayor Phillips and Members of the City Council: We write to comment upon the Council’s upcoming “housing” agenda item set for the August 20, 2018 Council Meeting. In discussing the state of the City’s housing, we understand the item will include a discussion and report on the City’s short term rental housing stock. Specifically, our clients, Charles Comella and Linda Kruger, 94 Jewell Avenue, oppose their neighbor’s use of their residence on a shared driveway for short term rental use. Please see our letter enclosed to the attorney for the owners of 98 Jewell. We conclude the neighbor’s short term rent use in this context is an illegal business use in a residential zoning district. Our main message is the City should regulate short term rentals, require business licenses, impose transient occupancy tax, and regulate locations. One size does not fit all for short term rentals. A short term rental use on a large property with significant distance to neighbor’s residence may not create any impact on adjacent neighbors as compared to our clients’ situation where a shared driveway, tight parking and guests arriving and departing seven days a week at all hours of the day and night is completely unacceptable. Thank you in advance for your careful consideration of regulating short terms rentals in San Rafael. Sincerely, RIFKIND LAW GROUP By:__________________________ Leonard A. Rifkind LAR/ji Encls. Leonard A. Rifkind ten®rifkindlawgroup,com Rifkind Law Group 100B Drake's Landing Road, Suite 260, Greenbrae, CA 94904 Telephone: (415) 785-7988 • Facsimile: (415) 785-7976 www.rifkindlawgroup.com July 9, 2018 VIA EMAIL: bschacfcr@bschaeferlawfirm.com VIA U.S. MAIL Barrett R.P. Schaefer, Esq. Attorney at Law 790 Mission A venue San Rafael, CA 9490 I Re: Your Clients Sean and Cambria Terheyden, 98 Jewell Street, San Rafael, CA Dear Barrett: Our firm represents Charles Comella and Linda Kruger, who own and reside at 94 Jewell Street, and share a common driveway with your clients. We are in receipt of a copy of your letter March 27, 2018. Like all neighbor disputes compromise is the key to resolution. As your letter admits, your clients are operating a business in a residential neighborhood, utilizing a common driveway, in violation of the City of San Rafael's Municipal Code, as discussed below, resulting in a private nuisance to our clients. Our clients report most of the nights of the week, day in day out, week end and week out for more than a year, your clients rent not one, but two bedrooms, of their residence to short term renters, whose stay is generally a few days at most. You can imagine the kind of disruption, adversely affecting our clients' privacy and safety that this kind of "hotel" use creates on a common driveway, where our clients peacefully co-existed with your clients' predecessors in interest for decades. Accordingly, our proposed compromise is your clients' immediate cease and desist use of their property as a hotel business and to restore its use to what was intended by the City of San Rafael's zoning ordinance--for residential single household purposes. The alternative is litigation on the grounds described below. General Plan. As you well know, as a planning commissioner for the City, the general plan is "the constitution for all future development." Lesher Communications, Inc. v. City of Walnut Creek (1990) 52 Cal. 3d 531, 540. Your clients' development of a "hotel" use in a residential zone violates the City's General Plan, its Neighborhoods Element in particular. It further has created a "Project" I as defined by the California Environmental Quality Act and is subject to CEQA review. CEQA Guidelines Sec. 15378. The City's General Plan Neighborhood Element (NH-2) requires all new development in residential neighborhoods to, "Preserve, enhance and maintain the residential character of neighborhoods to make them desirable places to live. New development should: Enhance neighborhood image and quality of life .... " Comment: Your clients' hotel use is the antithesis of preserving residential character of the neighborhood. Your clients' property is located in the Dominican/Black Canyon Neighborhood, whose vision is to "Preserve and enhance the residential and historic character of the neighborhood . . . . Comment: Clearly the applicable fundamental vision and goals of the City's General Plan for the Dominican/Black Canyon Neighborhood is to preserve its residential character and your clients' hotel use is inconsistent with the General Plan and zoning ordinance as described below. Your clients' "Hotel" Use of Their Property Violates Multiple Zoning Constraints and Therefore Is Not a Permitted Use Under Any Circumstances. While the City of San Rafael has no short term rental ordinance at present, the City proscribes unauthorized business uses in residential zoned properties, except in certain limited home occupation circumstances not applicable to your clients' "hotel" use. The following municipal code definitions are illustrative of the intent to limit business use of residential property (SRMC Section 14.03.030): Applicable Municipal Code Definitions. "Dwelling unit" means one or more rooms designed, occupied or intended for occupancy as separate living quarters for the exclusive use of one household, with a kitchen, sleeping facilities, and sanitary facilities. Comment: Renting out rooms on a short tem1 basis defeats the intent of having '"one household" per dwelling unit. "Home occupation" means an accessory use of a dwelling unit, conducted entirely within the dwelling unit, carried on by one ( 1) or more persons, all of whom reside within the dwelling unit, as further defined in Section 14.16.220, Home occupations. Comment: We discuss further below and conclude your clients' "hotel" use is not a permitted "home occupation." "Hotel" means any building or portion thereof containing multiple guest rooms designed for compensation, primarily for the accommodation of transient travelers, with eating, drinking, banquet and recreational facilities related to the hotel use. but not including those facilities defined as residential care facilities. Comment: Your clients' use is consistent with the quoted definition of "hotel." Your clients use their residence for multiple guest room, at least two, designed primary for compensation for the accommodation of transient travelers. "Household" means one or more persons, whether or not related by blood, marriage or adoption, jointly occupying a dwelling unit in a living arrangement characterized by the sharing of common living areas, including area and facilities for food preparation. Indicia of a separate 2 household include, but are not limited to, one ( 1) or more of the following: a separate exterior entrance, a separate address, a separate mail box designation, a separate utility service or meter, a separate cable television line, and the existence of a rental advertisement for the separate living quarters immediately preceding their occupancy. Comment: Under this definition your clients' "hotel" use of their residential property does not create a single "household," where your clients have separate entrances for the rented rooms and advertises for separating living quarters of short duration. "Residential, single-family" means low density residential development containing one (I) primary residential "dwelling unit" for use by a single household on a single parcel. This definition includes use of a single-family dwelling and/or second dwelling unit as a household for "transitional housing" or "supportive housing" as defined under the State Health and Safety Code. Comment: Your clients' use creates more than one primary "dwelling unit" and therefore violates zoning for the subject property requiring "Residential, single-family" use. Zoning. Your Clients' Bed and Breakfast/Hotel Use is Not Permitted Under Any Circumstances. 98 Jewell Street is zoned R7.5 Single-Family Residential District. This single-family residential district provides opportunities for low-density, detached single-family residential development. (SRMC Sec. 14.04.0l0(H)(l)). As stated above, your clients' "hotel" use is in violation of applicable zoning constraints. Your clients' use is akin to a "boardinghouse" or "rooming house" and is not a pem1itted use. (SRMC Sec. 14.04.020). Your clients' use could be construed as a "bed and breakfast inn use" that requires a conditional use permit. (Id.) However, such use must be on non-hillside lots, 20,000 square feet or larger. Your clients' lot has 24 percent slope and is less than 20,000 square feet and so a CUP is not possible. Hotels and motels are not permitted uses. (Id.) Your Clients' Hotel Use is Not a Permitted Home Occupation. (SRMC Sec. 14.16.220) The purpose of this section is to establish "standards for home occupation businesses. In general, a home occupation is an accessory business use in a residence, so located and conducted that the average neighbor, under normal circumstances, would not be aware of its existence .... " (SRMC Sec. 14. l 6.220A). Comment: Your clients' use is hardly unobtrusive and has created significant impacts in the form of noise, lights, privacy and safety concerns adversely affecting our clients' reasonable quiet enjoyment of their single family residence. "A home occupation is defined as follows: A home occupation is an accessory use of a dwelling unit, conducted entirely within the dwelling unit, carried on by one (1) or more persons, all of whom reside within the dwelling unit. The use is clearly incidental and secondary to the use of the dwelling for residential purposes a11d does 1101 cl1a11ge tl,e 3 c/1aracter thereof or a<lverselv affect tl1e 11eig/1hori11g reside11ces. When a use is a home occupation, it means the owner, lessee or other persons who have a legal right to the use of the dwelling unit also have the vested right to conduct the home occupation without securing special permission to do so." [Emphasis added]. SRMC Sec. 14.16.220B). Comment: Your clients' have no vested right to conduct a short-term rental business akin to a hotel use in direct contravention of applicable zoning constraints. Additionally, your clients' use does not comply with all required standards for home occupations: • '"No more than twenty-five percent (25%) of the gross area of said residence shall be used for such purpose. An accessory structure shall not be used for home occupation purposes." Comment: Your clients' hotel use encompasses more than 25% of the gross area of their resident. (SRMC Sec. l 4. l 6.220(C)(2)). • '"The home occupation(s) shall be operated to allow no more than one (I) client at a time on-site ... The home occupation(s) may increase vehicular traffic flow and parking by no more than one (I) additional vehicle at a time." (SRMC Sec. 14. 16.220(C)(5)). Comment: Your clients' use frequently has two separate guests using the residence on site in violation of home occupation standards. • "No use shall create noise, dust, vibration, smell, smoke, glare, electrical interference, fire hazard or any other hazard or nuisance to any greater or more frequent extent than that usually experienced in an average residential occupancy in the district in question under normal circumstances wherein no home occupation exists." (SRMC Sec. 14. l 6.220(C)(6). Comment: Your clients' multiple guests frequent late night arrivals, either for their original stay or after a night of bacchanalian revelry, creates noise, lighting, and safety impacts, greatly disturbing to our clients and far in excess of an average residential occupancy where no home occupation hotel use exists. General Plan/ Zoning Summary. There is no factual basis under which your clients can continue to operate their "hotel" use at 98 Jewell Street, San Rafael because the use violates both the City's General Plan and Zoning Ordinance in numerous respects. Response to Cease and Desist Correspondence, Dated March 27, 2018. Demand to Cease and Desist Hotel Use. For the reasons stated above regarding your clients' violation of the City's General Plan and Zoning Ordinance, your clients have no legal right to continue to operate an illegal hotel use on their property. Demand is made for your clients to cease and desist all illegal use forthwith. Your clients' illegal business operations constitutes a private nuisance, which is defined as "Anything which is injurious to health, including, but not limited to, the illegal sale of controlled substances, or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property .... " Civ. Code Sec. 3479. Both damages and injunction are available remedies for a nuisance. Civ. Code Sec. 3501; Katenkamp v. Union Realty Co. (1936) 6 Cal. 2d 765, 776. Factors a court would consider to determine your clients' use is a nuisance include: continuity, injury to our clients, adversely affects the character of the neighborhood, and equity because preventing a 4 hotel use will still allow your clients to use their property for its intended residential and single household use as defined by the San Rafael Municipal Code. See Carter v. Johnson (1962) 209 Cal.App.2d 589, 591. Common law defines your clients' "hotel" use as a business. A business is "any activity engaged in by any person or caused to be engaged in by him with the object of gain, benefit or advantage, either direct or indirect." Union League Club. v . .Johnson (1941) 18 Cal. 2d 275. Other supporting factors to conclude your clients' use is a business include: continuity of service, use is more than merely incidental to the residential use and interferes with the character of the residential neighborhood. In a recent case, a landlord successfully evicted a tenant for engaging in a short-term rental in violation of the city's zoning law. Chen v. Kraft (2016) 243 Cal.App.4th Supp. 13. Defining short-term rentals as a "hotel" is commonplace. See City of Santa Barbara Municipal Code sections 28.04.395, 28.21.005. Neighbor Interaction/Driveway Maintenance Agreement. Our clients agree to have as little or no contact as possible with your clients. However, the parties do share a common driveway and there are cross-easements of record, so some interaction regarding use, maintenance and repair of the driveway is necessary. We suggest the parties enter into a driveway maintenance agreement. Please advise if your clients are receptive. Parking. We understand a parking dispute has arisen in which your clients are challenging a parking space that our client has used for approximately 40 years and has aggressively parked their vehicle in a manner extremely close to our clients' parked vehicle in an attempt to prevent our clients access. Demand is made for your clients to cease and desist such harassing behavior forthwith. Our clients are prepared to file an action for quiet title re: prescriptive easement and record a /is pendens as required by statute against your clients' title to protect this nonpossessory property right. Demand to Cease and Desist Illegal Video Surveillance. Your clients are illegally surveilling our clients' property with video cameras that capture main living areas of our clients' personal residence. See photo enclosed, provided by your client from his Nest Camera, to our clients. This is unacceptable, harassing and illegal. Civ. Code sec. 1708.8, which states: A person is liable for constructive invasion of privacy when the defendant attempts to capture, in a manner that is offensive to a reasonable person, any type of visual image, sound recording, or other physical impression of the plaintiff engaging in a private, personal or familial activity, through the use of any device. regardless of whether there is a physical trespass, if this image, sound recording or other physical impression could not have been achieved without a trespass unless the device was used. There is no doubt pointing a camera at a person's house and windows is the exact type of private, personal or familial activity protected by Section 1708.8. Your clients' illegal video surveillance constitutes both common law invasion of privacy and criminal invasion of privacy. The elements of the latter are intrusion into a private, place, conversation or matter and in a manner offensive to a reasonable person. Shulman v. Group W Prods., Inc. (1998) 18 5 Cal. 4111 200, 231. Pena l Code section 630 el seq . makes eavesdropping and other forms of invasion privacy subject to crimina l sanction. C onclus ion . Our c li e nt s a re prepared to lit igate this case. You r c li ents hav e no right to change the status quo of 40 years of quiet enjoyment by starting a new business that inte rferes with our clients ' reasonable qu iet e njoyment of their res idenc e. Your cli e nt s' hotel business must cease and the video surveil lance camera must come down or be directed to only s urveille your clients' property, not their ne ighbor 's property. Normal ly, I would s uggest med iating this dispute, but I see no middle gro und, either your clients cease and desist th e ir ill ega l business or they do not. If your c li ents do not cease and desist all hotel activities with in 10 days of the date of thi s letter and take down their website inviting paying guests to the si te, then we will have no choice but to proceed w ith pursuing all legal remedies available against yo ur clients regarding their illegal use of th eir property. Sincerely, RlFKIND LAW GROUP By i .) CJL~t n ~narcl A. Rifkincl ~ LAR/ji Encls. Clients F. 6 .... ... ' -----\ ' '. '(01 , ' ,, .. :--~·· 'f·.,t··•c;J--~.·-..... •'"1, -·v-1:-: ... ~ J. f'i.,-:::--;. . ·, .,. f'" -:..:=· ,. . . li . • .. · · .. ·, 1. '~ ' ~ 1 --. • -1