HomeMy WebLinkAboutCD Challenges to Housing Development____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: 09/03/2019
Disposition: Accepted report and recommended future workshops
Agenda Item No: 6.b
Meeting Date: September 3, 2019
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Community Development
Prepared by: Paul A. Jensen,
Community Development Director
City Manager Approval: ______________
TOPIC: CHALLENGES TO HOUSING DEVELOPMENT
SUBJECT: INFORMATIONAL REPORT ON THE CHALLENGES TO APPROVING AND
DEVELOPING HOUSING; CASE # P18-010
EXECUTIVE SUMMARY:
On August 20, 2018, the City Council was presented a comprehensive, informational report on housing.
In response to the housing report information, the City Council directed staff to follow-up on four, specific
housing topics and issues. One of these four topics/issues is the challenges to the approval and
development of housing in San Rafael. Essentially, the Council requested staff to identify what changes
could be made to facilitate housing development. This task included: a) interviews with numerous
stakeholders; b) reviewing practices and actions by other cities/towns that have been successful with
approving and developing housing; c) gathering data and pertinent information; d) reviewing and
critiquing the City’s inclusionary housing requirements and entitlement process; and completing an air
rights study of seven (7) City-owned lots. As a result, staff has identified 11 key challenges to the approval
and construction of housing in San Rafael.
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, staff has identified 13 recommended
measures to facilitate the approval and development of housing. Some of these recommended measures
are underway, some are being implemented, and some require further study and future action by the City
Council. Staff is seeking feedback and direction on the list of challenges and the recommended
measures.
RECOMMENDATION:
Accept report and provide direction on staff recommendations for follow-up actions.
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BACKGROUND:
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. San Rafael is currently experiencing: skyrocketing real estate prices (median price
for a single-family residence in San Rafael is approximately $1.1 million; source: Zillow); a homeless
population 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 decisions around housing.
Every year, the City conducts a community survey. Historically, the survey results placed traffic as the
top concern and problem facing the City. The 2019 community survey conducted this spring included
the question: “What is the single largest problem facing the City of San Rafael?” The results of the 2019
survey placed affordability of housing as the largest problem facing the City, followed by homelessness
and traffic congestion.
Comprehensive Report on Housing
On August 20, 2018, Community Development Department staff presented a comprehensive report on a
broad range of housing topics and issues. The following is a summary of several key topics and issues
covered in the August 20, 2018 report, which have been updated:
1. Housing Production
Housing production is tracked and reported through the Regional Housing Needs Allocation (RHNA)
process. The RHNA process tracks housing approvals and construction in an eight-year cycle. During
the 2007-2014 RHNA cycle (mostly during the Great Recession), 324 housing units were approved
but only 171 units were built. The following tables present: a) the City’s RHNA obligation for the
current 2015-2023 cycle; and b) the approved and built housing numbers for the current 2015-2023
RHNA cycle (through the end of 2018):
2015-2023 RHNA Obligation for San Rafael
Housing
Need
Total
Extremely &
Very Low- Income
Households
Low-Income
Households
Moderate-
Income
Households
Above Moderate-
Income
Households
Average Yearly
Need
1,007 1 240 148 181 438 125
2015-2023 RHNA Cycle – Approved and Built Housing
Approved 2015-2018
Very Low
Income Low Income Moderate
Income
Above
Moderate Total Units
Single-family Residential - - - 28 28
Multiple-family residential 10 10 2 141 163
ADU - 43 - 27 70
Total units approved: 10 53 2 196 261
Built 2015-Present
Very Low
Income Low Income Moderate
Income
Above
Moderate Total Units
Single-family Residential - - 1 28 29
Multiple-family residential 1 8 6 73 88
ADU - 17 4 3 24
Total units built: 1 25 11 104 141
1 The General Plan 2020 Housing Element demonstrates that suitable sites in San Rafael are zoned to accommodate the
development of up to 2,500 additional residential units.
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We are halfway through the current eight-year RHNA cycle and only 26% of the San Rafael housing
need has been met. While housing production for market rate units (above moderate) has been fairly-
steady, production in the very low-income range has been extremely low. The City has fared better
with housing production in the low-income range, which is largely attributed to Accessory Dwelling
Unit (ADU) activity. As reported in August 2018, ADU applications and approvals continue to be very
active and represent a strong percentage of the housing start-ups.
2. Current Housing Activity and Interest
While housing production in the past 10 years has been low, in the past several years there has been
an increased housing development activity 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. A handful of housing projects
totaling about 360 housing units are approved for construction. All are market rate projects that
include a percentage of below-market rate units. In addition, the City has also approved two senior
living projects that would provide about 177 assisted living units; one is under construction (Oakmont
Assisted Living, 3773 Redwood Highway).
There is no shortage of interest in developing housing in San Rafael. At present, the City has a
number of housing projects that are currently in the Planning review process that total over 300 units.
They include, among others, the Whistlestop/EDEN Housing project in Downtown San Rafael, which
proposes 67 units that would be 100% affordable to low-income seniors. 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). The table
and maps have been updated since the August 20, 2018 report.
3. Statewide Housing Legislation.
Major efforts have been made at the State level to promote housing production through new
legislation. In 2017, 16 State and Assembly Bills focusing on housing were signed by Governor
Brown and are now State law. This momentum has carried forward into 2018. By the end of 2018,
the Governor signed 17 State and Assembly Bills on housing, many of which are revisions and
modifications to the 2017 legislation. A summary of the 2018 housing legislation is presented in a
table, which is provided as an attachment to this report (Attachment 3). The table summarizes: the
purpose of each bill; the current status (outcome); how the resulting legislation impacts the City; and
required follow-up action by the City.
One of the key Assembly Bills signed in 2017 was Senate Bill 2 (SB 2). Referred to as the “Building
Homes and Jobs Act,” this law establishes a permanent, on-going source of funding dedicated to
promoting and facilitating affordable housing development. The source of funding is secured through
a fee that is imposed at the time of the recording of every real estate instrument, paper or notice for
each single real estate transaction on a parcel of property. The recording fee ranges from $75.00 to
$225.00 depending upon the nature and scope of the property transaction. Sales transactions for
single-family homes are exempt from this fee. Effective January 1, 2018, the fee is collected by the
County Recorder, who, in turn forwards (quarterly) the fee revenues to the State Controller. The fee
is projected to generate $200 million in annual revenue statewide. For this first year (2019), 50% of
the revenue is allocated to a Planning Grant Program, while the other 50% of the revenue is
administered to the counties for homeless programs. This spring, State of California Department of
Housing and Community Development (HCD) launched the SB 2 Planning Grant Program process,
which provides local jurisdictions with a source of funds for planning to promote housing development
and production. For 2019-2020, the City of San Rafael is eligible for up to $310,000 in grant funds
for planning. On April 15, 2019, the City Council was presented with a report on SB 2, which was
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
accompanied by a list of eligible projects for which the City will pursue funding. The SB 2 Planning
Grant application has been completed and submitted to HCD.
It is important to note that about 90% of the new legislation directly impacts or places the burden and
pressure of housing production on the local jurisdictions. One example is the “by right” housing
legislation (SB 35), which mandates a local, ministerial review process for housing development
projects meeting certain conditions. This legislation limits the local jurisdiction’s discretion to the
review of such projects for compliance with a list of adopted “objective planning and design
standards.” The Planning Division staff has prepared a draft ministerial review process and
standards, which was presented to the Design Review Board (DRB) at its July 16, 2019 meeting (link
to DRB report here). The DRB will be refining these “objective planning and design standards” before
they are forwarded to the City Council for adoption. It is expected that the City Council will review
this process and standards in the early fall.
The momentum on new housing legislation has continued through 2019. Senate Bill 50 (SB 50;
Senator Weiner) was introduced in late 2018 and was recently revised to incorporate parts of Senate
Bill 4 (Senators Bell and McGuire). The combined bills now address “by right” housing legislation in
two categories: a) counties with a population of over 600,000; and b) counties with a population of
under 600,000. Although the two categories have different housing allowances and mandates for
housing projects around transit, the greater impact of the bill is the “by-right” development allowance
of a four-plex (four units in a single building) in all zoning districts. The by-right four-plex allowance
would be applicable to all cities/towns statewide, regardless of size. A summary of latest revision to
SB 50 is included in Attachment 3. On May 16, 2019, SB 50 was made a two-year bill and will be
considered in January 2020.
In response to the August 20, 2018 housing report, the City Council directed staff to follow-up on the
following four, specific housing topics and issues:
• Renter protection;
• Short-term rentals;
• Housing for an aging population; and
• Challenges to the approval and development of housing.
To date, there has been follow-up on the topics of renter protection and short-term rentals. Regarding
renter protection, in late 2018, the City Council adopted an ordinance prohibiting source of income
discrimination. In spring 2019, the City Council adopted an ordinance requiring mandatory mediation
when tenant rents are increased by more than 5% in a twelve-month period, as well as just cause eviction
requirements. Further, a comprehensive report on short-term rental was presented to the City Council
in early 2019; a draft ordinance setting forth regulations for permitting short-term rentals was presented
to the City Council on August 5, 2019. The first reading of the short-term rental ordinance is scheduled
for fall 2019.
Challenges to Housing Development
At the August 20, 2018 meeting, the City Council expressed concern that while the City has strong
policies encouraging the housing for all population groups (see Attachment 1), there are obvious
challenges that impede the development of housing. The August 20, 2018, City Council report (link
provided above) includes detailed information and data that is pertinent to the issue of challenges to
housing development. Information and data pertinent to this specific issue include, among others: State
housing mandates (Regional Housing Need Allocation – RHNA); the City’s housing policies and
affordable housing requirements; and statistics on affordable housing in San Rafael. The City Council
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directed staff to identify and study these challenges and return to the Council with an informational report
and suggested steps moving forward. In preparation for this informational report, staff completed the
following tasks and research:
1. Interviewed six (6) local and regional developers. The results of these interviews were supplemented
by the results of similar interviews conducted in Spring 2019 by a Mill’s College graduate student.
2. Interviewed representatives from the San Rafael Chamber of Commerce and Marin Builders
Association, as well as an attorney specialized in housing development and law.
3. Interviewed staff and consultants from other Bay Area cities where housing has been successfully
developed.
4. Completed a report entitled, Surface Parking Lot Air Rights Study - City of San Rafael, prepared by
Allison Giffin (June 1, 2019), of seven (7), City-owned sites in the Downtown area for potential air
rights development. General Plan 2020 Housing Element Program H-14d encourages the City to take
an active role in evaluating the feasibility of air rights development, and possible incentives for such
development. Further, Program H-14d encourages developers of affordable housing to utilize air
rights above public parking lots. The feasibility study was sponsored and funded by Opening Doors,
a public-private coalition.
5. Collected data and information. This task included information on inclusionary housing requirements
gathered by and provided to the City by a Mill’s College graduate student. Further, this task included
a re-visiting and review of the 2017 Marin County Civil Grand Jury Report entitled, Overcoming
Barriers to Housing Affordability.
Based on the interviews, the findings of the housing needs report and research/data collection, the
following have been identified as the key challenges to the approval and construction of housing:
1. City Planning and Entitlement Review Process. The City’s planning and entitlement review process
has multiple layers and can be time consuming and costly. For larger projects, the sequence of and
steps in the review process require a public forum with the Design Review Board (DRB), Planning
Commission, and often the City Council. Given the limited City staff to administer the current, multi-
step process and practices for all projects, applicants often experience delays. At a countywide level,
the 2017 Marin County Civil Grand Jury Report entitled, Overcoming Barriers to Housing Affordability
identified the planning process throughout Marin County as one of the barriers that stifles the
development process.
2. Design Review Board (DRB) Process. The DRB provides an advisory role to staff, the Planning
Commission and City Council. As design is subjective, at times, DRB review results in differing and
conflicting opinions, which can be frustrating to the applicant and the project architect. Further, the
public can get frustrated with the DRB review step in the planning process. As the DRB provides the
first public forum for public comment on a project, it is common for the public to want to comment on
higher-level policy topics that are outside the DRB’s prevue and purpose (e.g., concerns over land
use, density, environmental issues). This approach places the DRB in an awkward position to defer
to the Planning Commission or comment on such issues, which is frustrating to the public and the
applicant. Lastly, while hiring a good design professional aids in smoother review, it is not unusual
for the DRB to require design revisions resulting in several follow-up meetings with the DRB, which
adds cost to the applicant and time to the process.
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Several of the developers that were interviewed suggested that the DRB be dissolved to streamline
the Planning permit review process for all development. One developer indicated that the City of Mill
Valley dissolved its Design Board over a decade ago. In this case, the design review process was
delegated to the Planning Commission; design professionals were added to the Planning
Commission membership.
3. CEQA/Environmental Review Process and Practices. In reviewing all housing development projects,
the City is required to comply with the California Environmental Quality Act (CEQA). Applicants are
required to commission and fund technical studies and reports (e.g., costly traffic studies), which often
disclose no new findings or recommendations, or merely confirm findings that are already known.
Similarly, the direction and process of environmental review can be influenced by the extent of public
controversy and the concern or threat of litigation. If it is determined that the preparation of an
Environmental Impact Report (EIR) is needed, a minimum of one-year is added to the planning and
entitlement review process.
4. City Affordable/Inclusionary Housing Requirements: According to the for-profit developers that were
interviewed, the City’s current inclusionary housing requirements are too high. Further, while allowed
as the lowest priority option, historically, the City has not supported or encouraged payment of the
fee in-lieu of on-site construction of inclusionary units in market-rate housing projects. For-profit
developers reported that paying into the affordable housing fee fund would: a) significantly reduce
the construction cost of the market rate housing project; and b) boost the fund balance so that it can
be more effectively used to subsidize the construction of affordable units at another location.
The City has required and administered inclusionary housing policies and regulations since 1986.
Initially, the inclusionary housing provisions required that 10% of the units in a market-rate project be
set aside for below market rate sale or rental. Over time, this requirement has increased to 20% for
housing projects containing more than 21 units. In brief, the City’s current affordable housing are as
follows:
• Affordable housing units are required in new housing development projects. For projects
containing 2-10 housing units, the inclusionary requirement is 10%.2 For projects containing 11-
20 housing units, the requirement is 15%, and for projects with 21 or more units, the requirement
is 20%.
• 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 first
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 (Fund # 243)
is the lowest 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).
• The affordable housing units are required to remain affordable for the longest feasible time or at
least 55 years.
• Non-residential development 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
2 An exemption from this requirement is allowed for smaller projects.
3 Affordable Housing Fund #243 has a current balance of $1.3 million
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7
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.
5. Downtown Property Constraints and Zoning Limits. As an urban center with access to public transit,
Downtown provides the greatest opportunity for new housing development in San Rafael. However,
there are several constraints that have stifled larger residential development in Downtown. First,
Downtown San Rafael presents a grid street pattern with small lots/parcels that are individually
owned. To create a feasible footprint for development, lots/parcels must be assembled, which is costly
and challenging (some long-time property owners are not willing to sell). Further, the City no longer
has a Redevelopment Agency (RDA) to facilitate property assemblage.
Another Downtown constraint identified by developers is the residential density limits that are set
under the current zoning structure. The developers that were interviewed suggested that density
limits in Downtown be either increased or eliminated. It was acknowledged that while building height
limits (including the height bonus allowed for housing) and floor area ratio (FAR) allowances are
generous, the residential density limit coupled with off-street parking requirements heighten the
challenges to achieving feasible residential development. Most recently, the zoning density limit has
been the greatest challenge with the housing development proposed for 703 3rd Street at Lincoln
Avenue (Seagate Properties). This 120-unit housing project is proposed on a site where the zoning
limits residential development to a maximum of 41 units. A very substantial density bonus (166%)
has been requested by the developers (Seagate Properties), but the project proposes a modest
number of inclusionary/BMR units (20%) for the substantial bonus that is being requested. The
substantial density bonus that is proposed for this project has raised policy issues about the City’s
density bonus regulations.
Lastly, Downtown San Rafael includes an abundance of older buildings with some identified as
historic resources. Per the CEQA Guidelines, potential historic resources must be addressed with
new development, resulting in individual site and building assessments requiring the preparation of
an EIR. EIRs were prepared for housing projects at 809-815 B Street (41 units), 1600 Mission (Aegis
Assisted Living) and 1200 Irwin Street (Carriage House Townhomes). The preparation of an EIR for
these projects resulted in additional costs and a longer planning review process.
6. Parking Requirements. Parking requirements drive-up the cost of construction. Several developers
suggested that the City’s parking requirements should be reduced and that cost-effective measures
should be allowed.
7. Loss of Other Governmental Sources for Housing Subsidies. In 2012, the State of California
dissolved all local RDAs. Historically, RDAs provided a source and/or conduit to money and funds
from the state and federal level, which assisted in providing subsidies that were available to local
developers, property investors and owners. RDAs also played a critical role in facilitating property
assembly, which is critical in ensuring the feasibility of development. With the dissolving of the RDAs,
subsidies are not as readily available.
8. Layers of Regulatory Requirements. Regulatory requirements at the federal, state and local level
continue to increase. Most of the regulatory requirements are intended to address an environmental
protection or climate change. Examples include, among others: a) green (CalGreen) building
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standards; b) water quality requirements (storm water pollution prevention program); and c) water
conservation requirements. Compliance with requirements add to the cost of construction. As
regulatory requirements are typically mandated and administered by numerous State, County and
local agencies, it is difficult to tackle this challenge. Further, some regulatory requirements conflict
with others, which adds a layer of challenge for the both the developer and the local jurisdiction.
9. Development and Impact Fees. The City charges development and impact fees, which are applicable
to new construction. Typically, the Citywide Traffic Mitigation Fee gets the most attention by
applicants/developers. This fee is current charged at $4,246.00 per AM + PM per net new peak hour
trip. Second, the Construction Vehicle Impact Fee is often questioned by applicants as it is often
misinterpreted as a fee for traffic mitigation. This fee ($0.01 X the valuation of the construction project)
is collected to cover the cost of maintenance and repair of public streets due to construction vehicle
impacts. Both fees are required to be paid at the time a building permit is issued, which adds to soft-
costs before construction commences. Developers have periodically requested that these fees be
reduced or deferred.
As an example, the City recently received a Building Permit application for the approved, 41-unit
housing development at 809-815 B Street at 2nd Street. The following is a general estimate on several
of the development and impact fees that will be charged to this project:
• Traffic Mitigation Fee- $132,000
• Construction Vehicle Impact Fee- $100,000
• Parkland Dedication Fee 4 - $81,000
• Development Impact Fee 5- $8,400
In this past month, HCD released a long-awaited study detailing how much cities/counties in California
charge developers to build housing. This fee study, entitled Residential Impact Fees in California –
Current Practices and Policy Considerations to Improve Implementation of Fees Governed by the
Mitigation Fee Act (August 5, 2019), finds that local fees charged for housing construction can amount
to 6%-18% of the median home price.
10. Land and Construction Costs. At present, the Bay Area is the most expensive place to build in the
world. The Bay Area region is 13% more costly to develop than second-place New York. The high
cost is associated with high demand, labor shortage, steel tariffs and rapid economic growth. The
average construction cost in the Bay Area is now $417.00 per square foot.6 Other secondary factors
include:
a. Availability of labor. Given the strong economy fueling increased traffic throughout the region,
construction workers are less willing to travel long distances for work.
b. Options for land purchase. Historically, developers would option land for extended periods of time
to complete the planning and land use entitlement process. If the project is controversial, the
entitlement review process is often delayed, sometimes for years. As a result, property
owners/sellers are less likely to hold an option on their land for extended periods or will opt for an
outright sale of the land with no contingencies. With these sale conditions, the developer is less
likely to take a risk.
4 Parkland dedication fees are charged to for-sale residential projects only. This fee is not applicable or charged to rental
residential projects.
5 Development impact fee covers the cost of the project’s impact on public facilities and services in the City.
6 Bay Area News Group article; New Bay Area Crown- Most Expensive Place in the World to build; April 25, 2019
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11. Public Controversy and Opposition. In interviewing the developers and other business stakeholders,
public controversy and opposition to development surfaced as the greatest concern. At a countywide
level, the 2017 Marin County Civil Grand Jury Report entitled, Overcoming Barriers to Housing
Affordability identified community resistance as the top barrier to achieving housing affordability.
When a housing development project is controversial, the entitlement review process inevitably
becomes lengthy and costly, particularly if there is threat of or concern over potential litigation. The
frustration of the applicant increases when the project has been designed to meet all basic zoning
requirements, is consistent with the General Plan, and would result in minimal (if any) environmental
impacts. Further, on occasion, appeals of actions on housing projects are filed with little supporting
rationale/justification. Lastly, given the multiple parties involved in an appeal (applicant, appellant,
design team, City staff), coordinating a City Council meeting date for an appeal hearing is challenging
and such hearings are often delayed by months. All parties interviewed stated that there needs to be
the political will of and a commitment by the decision-makers to support housing and change, even
when there is heightened controversy and opposition.
ANALYSIS:
As this report is informational, there is no staff recommendation for a formal action. However, staff has
identified a list of recommended measures and actions (below) for the City Council to review, consider
and provide direction. As discussed below, some of the recommended measures and actions have
already been implemented and have proven to be successful. However, some of the recommendations
will require further study, and/or legislative or policy changes that will require formal City Council action.
1. Streamline the Planning/Entitlement Review & Design Review Board (DRB) Process.
The following measures are recommended, and staff has commenced with implementing them:
a. Adjust the Pre-Application review process. Pre-Application review is recommended for most in-
fill and large housing projects. This process provides the applicant with early feedback from City
departments and services. The Pre-Application process requires a filing fee of $1,191.00 and the
submittal of schematic drawings and concept plans. The Pre-Application is discussed by City
staff at the bi-weekly Development Coordinating Committee (DCC) meeting. Applicants do not
attend the DCC meeting, unless it is requested. A summary of Pre-Application comments from all
City staff are formally provided in writing by the Planning Division. The turnaround time for this
process averages 30-60 days.
The City of Santa Rosa offers a streamlined Pre-Application review process, which is less formal.
Santa Rosa requires that an application be filed and accompanied by schematic
drawings/concepts; however, no fee is charged. Pre-Application meetings (similar to our DCC)
are held weekly and applicants are given verbal comments/feedback by City staff. Unlike San
Rafael, City staff comments are not formalized and provided in writing. The turnaround time for
this process is 7-14 days (as the meetings are held weekly). For our Pre-Application process, it
is recommended that the fee be waived for all housing projects and that the more informal review
employed by Santa Rosa be offered to all applicants. The Community Development Department
has tested this less formal approach on several, recent housing projects. This approach was
successful at providing quicker City staff feedback to the applicant.
b. Shift the order of the public forum review process. As discussed above, the DRB typically
provides the first public forum for public comment on a project. Therefore, it is common for the
public to want to comment on higher-level policy topics that are outside the DRB’s purview and
purpose (e.g., concerns over land use, density, bulk/mass, environmental issues). In two recent
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housing projects (Northgate Walk and 703 3rd Street), the order of the public forum review was
reversed. In shifting the order, the Planning Commission conducted the first public forum on these
projects as a “study session.” The study session forum provided an opportunity for the Planning
Commission to the address the major issues raised by the public (referenced above). Although
the Planning Commission comments in this forum are non-binding, this review approach provided
the applicants of the two projects referenced above with high level support and feedback on
density, project bulk and size, and environmental review. The Planning Commission’s support
and direction allowed the DRB to focus on the details of the project design.
c. Refine the Design Review Board’s focus of review and other approaches. By shifting the order
of the public forum review as suggested in 1.b above, less pressure is placed on the DRB to
address major policy issues that are more appropriately addressed by the Planning Commission.
As demonstrated in the DRB’s recent review of the Northgate Walk and 703 3rd Street projects,
the focus on the project design details has facilitated a more efficient and swift review.
The following are three more dramatic approaches:
1) Eliminate the DRB. Some local jurisdictions have eliminated their Design Review
Boards/Committees (e.g., Mill Valley), redirecting design review authority to the Planning
Commission and City staff. If this approach were considered, it would be prudent to structure
the Planning Commission membership to include one or two design professionals to guide
and advise the Commission at large on design matters. Staff does not recommend eliminating
the DRB as it provides a valuable role and resource to the City. The DRB, mostly comprised
of design professionals, does all the “heavy lifting” on technical design matters for the City,
which cannot be duplicated.
2) Shift the role of the DRB. Some local jurisdictions (e.g., Novato and Palo Alto) have structured
their Design Review Board/Committee as a decision-making authority rather than an advisory
body. The DRB would have review and approval authority over Environmental and Design
Review Permits, while the Planning Commission would continue to serve in decision-making
authority on all land use, subdivision and legislative matters. This approach has its
advantages and disadvantages, which depend upon the type, scale and complexity of the
project.
3) Appoint a DRB liaison to review smaller housing projects. SRMC Chapter 14.25.070
(Environmental and Design Review Permit) sets forth the hierarchy of project types and
applications that are referred to the DRB for review and a recommendation. Typically, nearly
all Design Review Permit applications for housing development are referred to the DRB,
unless they are small additions to existing improvements. One approach that would streamline
the process would be to assign a DRB member (design professional) to provide review and
input on smaller housing projects, which would be in-lieu of a review by the full DRB. For
smaller housing projects (e.g., all projects under 10 units) the DRB liaison would work with
staff and incorporate design recommendations on the permit action. In the event there are
challenging design issues, the DRB liaison would have the discretion to refer the application
to the full DRB for review at a noticed public meeting.
Staff finds that of the three measures under 1.c., 1.c.3, which is appointing a DRB liaison to review
smaller housing projects would be the least impacting to the current process and would effectively
facilitate application streamlining.
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Required Action: No formal action would be required by the City Council to initiate measure 1.b. as
it is currently being implemented by staff. The City municipal code provisions for an Environmental
and Design Review Permit do not prescribe an order of permit review other than the advisory role of
the Design Review Board. The waiver of the Pre-Application review fee for housing projects (measure
1.a.) would require the City Council to adopt a policy resolution. Eliminating, changing the authority,
or changing the review of the DRB as outlined in measure 1.c. would require the adoption of an
ordinance to amend SRMC Chapter 14.25 (Environmental and Design Review Permits).
2. Support a Form-based Code for the Downtown Precise Plan to Streamline the Planning and
CEQA/Environmental Review Process.
A Downtown Precise Plan is currently under way and it is the goal to adopt this plan concurrent with
the adoption of San Rafael General Plan 2040 (late Spring 2020). Downtown provides the greatest
opportunity in San Rafael (and the County) for development, particularly housing development, for
numerous reasons. As previously reported to the City Council, the Downtown Precise Plan and
supportive Environmental Impact Report are being prepared to include and/or cover the following,
which will facilitate housing development review and construction:
a. Establish a “form-based code” for Downtown development. Unlike conventional zoning which
provides a list of development standards and requirements, a form-based code sets general site
parameters for allowable building height and building floor area (FAR). A form-based code does
not include a prescribed residential density cap/limit. The general parameters are accompanied
by supportive graphics and a menu of architectural styles that are appropriate for the Downtown
setting and character. This approach allows a property owner/developer the flexibility to “work
within an allowable box” without being constrained by density. This code approach can also
streamline the design review process if it structured to provide a menu of acceptable architectural
styles that can be selected by the developer. Ultimately, housing projects like the 703 3rd Street
development would not need to request a density bonus, and the City would not be placed in the
position to negotiate over project concessions (waivers to regulations) or the BMR/inclusionary
unit requirements.
b. As part of the Downtown Precise Plan form-based code, consideration should be given to a
modest increase in the Downtown building height limits. The current building height limits were
established as part of the 1993 Downtown Vision process; these height limits are appropriate for
Downtown development. Allowing building heights of up to 6-7 stories would still allow for wood-
frame construction, which is far more economical for the developer than steel-frame or concrete
construction.
c. Incorporate State housing legislation that mandates a streamlined development review process
for transient-oriented development.
d. Incorporate the recommendations of the Downtown Parking & Wayfinding Study (2018). While
some recent zoning code amendments were adopted to incorporate elements of this study, these
amendments did not capture all of the study recommendations. Missing from this study are
parking recommendations for residential use.7 The Downtown Precise Plan will include
recommendations for changes in residential parking requirements and expansion of the
Downtown Parking District.
7 Note: the 703 3rd Street housing development project is designed with an automated parking lift and stacking system, which
was recommended in the Downtown Parking & Wayfinding Study and has been incorporated into SRMC Chapter 14.18
(Parking)
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e. Address historic resources and streamline CEQA/environmental review. The Environmental
Impact Report (EIR) that is being prepared for the General Plan 2040 will incorporate an updated
historic resource inventory and provide a higher level of technical analysis and detail for the
Downtown Precise Plan area. This higher level of EIR technical analysis for Downtown will permit
development projects to “tier” from this EIR for CEQA/environmental review clearance. In most
cases, new development will be exempt from or minimize the level of CEQA/environmental
review.
Required Action: It is requested that the City Council confirm support to proceed with a form-based
code for the Downtown Precise Plan. Ultimately, when the Downtown Precise Plan is presented to
the City Council for consideration, the Plan and form-based code will be codified through the adoption
of an Ordinance and Resolution. The General Plan 2040 EIR is underway, which is scoped to provide
an additional level of detail for the Downtown Precise Plan area. Therefore, no formal action is
required at this time.
3. Streamline CEQA/Environmental Review Process and Practices.
San Rafael contains very few remaining undeveloped sites that have potential development. Nearly
all new development opportunities in San Rafael are urban in-fill (e.g., Downtown, Northgate, some
areas of Southeast San Rafael). Environmental review for most new infill development projects can
be streamlined and minimized by relying on the use of exemptions (e.g., “categorical exemptions”)
that are permitted under the CEQA Guidelines. While a CEQA categorical exemption is common on
small infill projects, the Planning Division staff has more recently recommended a categorical
exemption for larger housing projects. Two, large housing projects that have benefited from this
approach are: Northgate Walk (136 units at 1005-1010 Northgate Drive); and 703 3rd Street (120
residential units). Both projects qualified for CEQA Guidelines Categorical Exemption 15332 in that
they are: a) on sites that are developed and located near transit; b) consistent with the General Plan
2020 and zoning; and c) supported by technical studies. The use of the CEQA categorical exemption
for both projects significantly reduced the processing cost for the developer/applicant and eliminated
several CEQA-prescribed steps that involve many months of processing time.
Required Action: Encourage and direct staff to continue the practice of using the CEQA exemptions,
where appropriate, to streamline the CEQA/environmental review process for housing projects. For
the Downtown Precise Plan area. As noted in #3 above, the General Plan 2040 EIR is underway,
which is scoped to provide an additional level of detail for the Downtown Precise Plan area. Therefore,
no formal action is required at this time.
4. Reduce the Requirements for Certain Technical Studies.
It is common practice and policy for the City to require the submittal of supportive technical studies
with a new development application. The extent and type of technical studies vary by project type,
size, location, and design. Issues such as geology/soil conditions, biological resources, traffic,
historic resources, and drainage are critical and integral to the design and review of the development
project. Therefore, it is not expected that this practice and policy will significantly change. However,
there are certain topic areas that trigger technical studies that are costly and often result in delays in
the process; traffic and historic resources fall in this category. One example is the approved, 41-unit
residential development at 809-815 B Street project which was subject to a lengthy environmental
review process because of potential impacts to historic resources. The following measures and
actions are being pursued to ultimately reduce (or eliminate) the need for site-specific technical
reports, which would reduce applicant cost and processing time:
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a. As discussed in recommended measure #2 above, the inventory of potential historic resources is
being updated for the Downtown area, which will be incorporated into the EIR that will support the
Downtown Precise Plan. The inventory will include measures for mitigating potential historic
resource impacts, which will allow development projects to “tier” from this EIR for project
CEQA/environmental review clearance.
b. On June 3, 2019, the City Council was presented a report on traffic methodologies for General
Plan 2040. Per State law (SB 743), the City will be phasing-out the use of the level of service
(LOS) methodology for assessing traffic for CEQA/environmental review. To comply with the
State law, the City will be phasing-in a new traffic methodology, which is Vehicle Miles Traveled
(VMT). However, the City has the option to retain and monitor LOS for local intersection
management; it just cannot be used as a tool for CEQA/environmental review. One the options
included in the June 3 report is to revisit the threshold for when a detailed traffic study is necessary
to assess a new development project’s impact on the local street network. Staff recommends
that individual traffic studies should be reserved for larger development projects that generate a
specific number of new AM and PM peak hour trips, or projects necessitating a rezoning or
General Plan Amendment. The intent is to exclude infill projects from such studies when they
have been modeled within the General Plan forecast. This recommendation will be presented
again to the City Council as part of the Council’s review of a white paper on VMT.
Required Action: No formal action is required by the City Council at this time. The recommended
measures related to historic resources and traffic are in the planning stages as part of the General
Plan 2040 process. These measures would be incorporated into the General Plan 2040, Downtown
Precise Plan and accompanying EIR, which will ultimately be considered by the City Council for
action.
5. Consider Changes to the City’s Inclusionary Housing Requirements.
The structure of the City’s inclusionary housing requirements is now over 30 years old. While the
requirements have done well at yielding inclusionary/BMR units in market rate projects throughout
the City, some changes to these requirements are warranted and timely. In responding to the current
housing crisis, numerous cities in California have revisited their inclusionary housing requirements.
The most significant action has been by the City of Sacramento, which recently placed its inclusionary
housing requirements for market rate projects “on-hold.” In addition, to spur construction in the central
city, the City of Sacramento went further by waiving fees for high-density, infill housing. More locally,
the City of Novato offers the applicant/developer the option to either build inclusionary/BMR units on
site or pay into its affordable housing fund; the latter option is often chosen by the applicant/developer.
Consequently, the greater fund balance has been adequate to subsidize the construction of
affordable housing projects throughout Novato (mostly at Hamilton Village).
Facing a similar housing crisis in the State of Hawaii, in 2018, the City of Honolulu updated its
affordable housing requirements. Honolulu offers a menu of options for the applicant/developer to
select in meeting the affordable housing requirements. The menu offers, among others: off-site
construction of inclusionary/BMR units; varying percentage requirements; varying depths/levels of
affordability (e.g., moderate-income instead of low-income); varying time periods for which the units
must be affordable (e.g., 30 years, 55 years); and providing other, defined public benefits. The
following is a list of additional approaches that are worthy of consideration:
• Lowering/reducing the BMR requirement from 20% to 15%.
• Allowing a developer to meet the requirement by paying the affordable housing in-lieu fee.
• Allowing a developer to meet the requirement with a combination of a lower on-site percent of
inclusionary/BMR units and payment of the in-lieu fee.
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• Changing the current affordability range requirements (e.g., allow moderate income for rental
projects, which right now requires that the BMR rental units be in the very low- and low-income
category).
• Temporarily lowering/reducing the BMR requirement to 10% to facilitate new housing
construction. When new housing construction reaches a specified housing unit goal (e.g., 500
units), then reinstate the current requirements.
• Placing a “pause” on the inclusionary/BMR requirements until new housing construction reaches
a specified housing unit goal.
There are advantages and disadvantages to each of the approaches. The “menu of options”
approach taken by Honolulu offers the best opportunity for promoting housing construction, while still
yielding new affordable housing units and other desired public benefits.
There is one caution to reducing or changing the affordable housing requirements. As we are
governed by the State’s Regional Housing Needs Allocation (RHNA) process, the type and amount
of housing that is produced and reported to the State dictates our obligations and compliance with
certain housing legislation. As noted above, while San Rafael housing production for market rate
units (above moderate) has been fairly-steady, production in the very low-income range has been
extremely low. Reducing or placing a temporary pause on the inclusionary/BMR requirements could
further impact housing production in the lower income category.
Required Action: Direct staff to return to the City Council with a “menu of options” approach to
meeting the City’s inclusionary housing requirements. Major changes to the inclusionary/BMR
requirements may require an amendment to the General Plan Housing Element and adoption of an
ordinance to amend SRMC Section 14.16.030.8 However, interim changes or the approval of a “menu
of options” can likely be approved through the City Council adoption of a policy resolution.
6. Consider Changes to the Use & Administration of the Affordable Housing In-lieu Fee Fund.
The affordable housing in-lieu fee is addressed in SRMC Section 14.16.030. Adjusted earlier this
year,9 this fee is $343,969.00 per unit. The fee is applicable to both residential and non-residential
(commercial linkage) development projects and has been administered as follows:
• As top priority, the City has always required the development of inclusionary/BMR units within a
market-rate housing development project. Therefore, the in-lieu fee charge for residential
developments is required to cover a fractional unit requirement in a new housing development.
For example, if the inclusionary/BMR requirement for the housing project is 4.25 units, the
developer is required to build four BMR units on-site and pay the in-lieu fee to meet the balanced
requirement of 0.25 units. Based on the current fee per unit, the fee charged for 0.25 units would
be $86,000.
• The revenue for this fund is largely generated by new non-residential development (commercial
linkage). For example, the Target Store project fee was $774,000. Two recently-approved
assisted living projects (Oakmont and Aegis) will add approximately $1 million to this fund.
The current fund balance is $1.3 million, which is not enough to fund construction of affordable
housing unless is leveraged or largely subsidized by other sources. SRMC Section 14.16.030
8 Note: Changes in the inclusionary/BMR requirements will not require the approval or re-certification of the General Plan
Housing Element by the State of California Department of Housing and Community Development.
9 The fee per unit is adjusted annually to account for inflation utilizing updated data on the median home sales price and
building cost index.
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specifies that the fund can be used to: a) purchase property; b) fund construction of affordable units;
c) buy-down BMR units when their affordability is due to sunset; d) buy existing market rate projects
for conversion to 100% affordable units; and e) manage the City’s BMR rental program. Regarding
the latter, this fund is currently used to pay the Marin Housing Authority to administer the City’s BMR
rental program.10 Use of the fund for any of these purposes must be approved by the City Council.
Recently, there have been inquiries by housing interests to request use of the fund for specific
affordable housing projects. There is no formal process in-place to assess competing requests for
this revenue.
This fee is based on a Residential Nexus Study and Commercial Linkage Fee Study (David Paul
Rosen and Associates) that was prepared in 2002. The fee needs to be updated as housing issues,
data, and costs have dramatically changed since 2002. The City is partnering with the County of
Marin to prepare an updated fee study, which is planned to be fully funded by the Senate Bill 2 (SB
2) Planning Grant Program (discussed above). It is expected that this updated fee study will be
completed within the next year. The updated fee study will also be beneficial in addressing two
housing issues:
a. Senate Bill 743 (SB 743) requires that by mid-2020, all municipalities phase out the use of the
Level of Service (LOS) traffic review methodology for CEQA/environmental review and phase-in
a Vehicle Miles Traveled (VMT) traffic review methodology. The purpose of this change is to
address the length of vehicle travel between home and work with the goal of reducing greenhouse
gas (GHG) emissions. Mitigation for reducing VMT is to place housing close to employment. One
of the mitigation tools is employing transportation demand management (TDM). Non-residential
development projects will be largely dependent on the use of TDM. One of the more significant
TDM mitigation measures is to require the developer of a non-residential project to either
incorporate workforce housing within their development or pay a commercial linkage fee. The fee
study will provide the City the opportunity to update the commercial linkage fee; and
b. Currently, assisted living and similar residential care special uses are not addressed in the City’s
inclusionary housing policies and the commercial linkage fee. There has been a longstanding
issue as to whether such uses are residential or commercial (e.g., resident hotel with services).
Staff recommends considering the following measures for use and administration of the affordable
housing fund, which go together with recommended measure #6, above:
a. To stimulate housing, eliminate the “fractional” fee that is often required for residential projects
that provide on-site BMR/inclusionary units.
b. When the affordable housing fund balance reaches a certain amount (e.g. $2 million), release a
“Call for Applications” for City fund allocation to eligible housing projects. This approach will
require projects to compete for funds with priority given to 100% affordable projects.
c. Allow a developer (for a residential or non-residential project) to apply their required fee to
subsidize a specific, off-site affordable housing project if acceptable to the City. This approach
can foster a partnership between the developer and a non-profit housing developer.
10 The BMR Rental Program management agreement with Marin Housing Authority is for three years and will terminate in July
2020, with extensions to 2023. The annual cost to the City which is paid through Fund 243 is $16,000. The City no longer has
a housing specialist on staff to manage this program.
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The City would be best served by having a housing specialist on staff that can: a) provide in-house
administration of the BMR Rental Program and BMR Agreements; b) serve as the City’s ‘point person’
skilled in housing to negotiate with developers on inclusionary housing and/or payment of fees; and
c) track and implement all housing legislation. Presently, there is no budget to create a housing
specialist position. However, over the next year, the Community Development Department will be
assessing staff needs and identifying potential opportunities for staffing adjustments.
Required Action: Direct staff to return to the City Council with recommendations for changes in the
use and administration of the City’s affordable housing fee fund. Major changes to the administration
of the fund may require an amendment to the General Plan Housing Element and adoption of an
ordinance to amend SRMC Section 14.16.030.
7. Consider Reducing or Temporarily Waiving Development & Impact Fees for Housing Projects.
As noted discussed above, the development and impact fees charged for new development has been
identified as a factor in the financial feasibility of housing development. The fee study recently
released by the HCD (discussed above) reports that local jurisdictions levy fees and exactions to help
fund the expansion of infrastructure needed to support housing. State-imposed policies that restrict
local taxes (e.g., Proposition 13) leave local jurisdictions with limited means of raising revenue for
infrastructure, so there has been a local reliance on imposing development fees. The fee study is
based on a survey of 40 local jurisdictions in California, coupled with more in-depth case studies for
10 local jurisdictions. The fee study findings focus on recommended measures to incentivize different
housing development types, which include the following:
• Determine and disclose fees earlier in the development review process.
• Require alternative multipliers for fees. For example, instead of setting the fee schedule on a
“per unit” basis, use other multipliers such as basing the fee on unit size or grouping of units
(multiple-family residential fee is lower than for a single-family residence).
• Defer the timing of fee payment to later in the process (e.g., at time of project completion) or
require incremental payments. Collecting the fee earlier in the process (e.g., at the time a
building permit is issued) extends the length of time a developer must carry the cost of the fee.
• Waive fees for Accessory Dwelling Units (ADUs) as they are located on property that is already
developed and tapped into existing infrastructure.
The following is a summary of the major fees and suggested measures to consider, which will reduce
the burden on housing development:
a. Citywide Traffic Mitigation Fee. As noted above, the Citywide traffic mitigation fee has been
identified as a financial challenge to housing development. One of the work program tasks for
the General Plan 2040 is to update the current list of needed transportation improvements and
the Citywide traffic mitigation fee (Fehr & Peers, the City’s transportation engineering consultant
will be completing this work). However, it is not likely that the traffic mitigation fee will be reduced
as its purpose will be expanded to include funding needed for multi-modal improvements. This
fee is paid prior to the issuance of a Building Permit.
City Council Resolution 13364 (updated in 2012) sets forth the parameters for levying and
exempting traffic mitigation fees. This resolution expressly exempts traffic mitigation fees for
affordable housing projects (100% affordable) and Accessory Dwelling Units (ADUs).
Recognizing the importance and purpose of the traffic mitigation fees, similar exemptions of
subsidies for all housing projects should be carefully studied with the fee update.
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b. Construction Vehicle Impact Fee. The Construction Vehicle Impact Fee covers the cost of
construction vehicle impacts on the roadway system. The fee, which was adopted in 2004, is a
surcharge on the Building Permit fee and is paid prior to issuance of a Building Permit. The fee
amount is based on the “valuation” of the project (permitting, construction and labor costs). The
valuation approach to the fee amount has its challenges. For example, two development projects
of similar size and type could be valued differently (resulting in different fees), even though the
construction vehicle impacts on the roadways from the two projects are the same. For housing
projects, the fee should be re-structured to charge on a per-unit basis, which would provide the
developer with a specific fee amount at the front end of project planning and financing. The
Construction Vehicle Impact Fee should be studied with the update of the Citywide Master Fee
Schedule, which is scheduled for 2019/2020.
c. Parkland Dedication Fee. The parkland dedication requirements and in-lieu fee are regulated
through SRMC Title 15 (Subdivisions) and rooted in the Quimby Act. These requirements are old
and were crafted during a time when large, tract subdivision development activity was at its peak
and when parkland was dedicated as part of the subdivision mapping. On smaller, for-sale
residential development, the in-lieu fee is charged and paid prior to the recording of the
subdivision map (Final Map).
The parkland dedication requirements and in-lieu fee are solely applicable to “for-sale” residential
projects that include a subdivision map; the fee is not applicable to residential rental projects or
non-residential development/subdivisions. The purpose of the fee is to purchase land for public
park development to meet park needs for an increasing population. However, actual public park
needs are not exclusive to new residents of for-sale residential units; the need equally applies to
renters. Further, the City no longer purchases land for public parks; the current need is
maintenance and safety upgrades. A detailed review of the dedication requirements and in-lieu
fee is overdue and should be included in the update of the Citywide Master Fee Schedule.
d. Development Impact Fee. The development impact fee is charged and collected prior to the
issuance of a Building Permit. The fee covers the cost of new development impacts on public
facilities and services. For new residential projects, the fee is $127.50 per bedroom, which is not
significant.
The following measures should be considered for fees charged to new housing development:
• Allowing a housing developer to defer payment to prior to building occupancy;
• Allowing a payment plan; and/or
• Providing a fee reduction for market rate housing projects with inclusionary/BMR units.
In 2018, City of Santa Rosa City Council adopted a Development Fee Incentive Program. This
program authorizes sharply-reduced park and infrastructure impact fees for Downtown housing
projects. The program is in-place for a five year-period as part of Santa Rosa’s Downtown housing
strategy. As the City of Santa Rosa has not met its housing goals for their Downtown (Civic Center)
area, the strategy is to substantially reduce developer fees as an incentive for construction. For
housing projects capped at five stories in height, the fee reductions are as much at 40%. To boost
housing projects that include affordable units, the City offers additional discounts of $2.00/square-
foot each on park and infrastructure fees. According to the City of Santa Rosa staff, the reduction in
the development fees has been an incentive to and has generated a lot of interest for new housing
development. One recently-approved Santa Rosa housing project saved $600,000 in fees. A
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temporary reduction (or waiver) in development impact fees for housing development projects is an
option that can be considered by the City. However, the downside to reducing or waiving
development impact fees for residential projects is that it reduces the funds available for infrastructure
improvements and maintenance, which are needed to support new housing. As the need for
infrastructure improvements and maintenance would continue, shortfalls in the special funds for these
services may need to be subsidized by the General Fund. This off-set would have to be carefully
analyzed before fee reductions or waivers are approved.
Required Action: For changes in the amount, methodology and applicability of the four fees listed
above, updated studies of these fees must be completed and adopted. For changes in the timing of
fee payment method, expanding the list of exemptions from these fees, and/or authorizing a
temporary reduction or waiver, the City Council can adopt a policy resolution.
8. Amend the Density Bonus Ordinance.
SRMC Section 14.16.030 sets forth the City’s affordable housing requirements. This section also
includes very lengthy and complicated provisions for administering and approving a “density bonus.”
While this code section generally follows State law governing residential density bonuses, State law
continues to change, so some of our local code provisions are obsolete. Further, the City’s density
bonus provisions allow for a bonus amount that is above the State bonus cap of 35%. However, this
additional bonus is fully discretionary and there is no specific guidance for City negotiation nor is there
clear guidance of what is expected of the developer. This issue has been a challenge with the review
and processing of the 703 3rd Street housing project, which proposes a 166% density bonus. The
bonus request, coupled with the review of the developer “pro forma” required months of staff and
applicant time, which significantly extended the length of the planning review process.
A comprehensive update of the density bonus provisions in SRMC Section 14.16.030 is
recommended. The provisions and requirements need to be simplified and brought into compliance
with the State law. The update should: a) establish clear parameters and requirements for density
bonus requests that exceed 35%; and b) incorporate a floor area ratio (FAR) bonus provision for
Downtown, should the Downtown Precise Plan eliminate the current density limits.11
Required Action: Direct staff to return to the City Council with recommendations for City’s residential
density bonus provisions. For programming the workload, this action should be done concurrent with
implementing measures #6 and #7 above.
9. Adopt a New Accessory Dwelling Unit (ADU) Ordinance.
As noted above, ADU activity has played a strong role in housing start-ups in the last two-three years.
The City has been operating under the State regulations, which has been successful. Nonetheless,
staff is proceeding with the completing of a new, local ADU ordinance in accordance with the State
legislation. Moving forward with a local ADU ordinance has been purposely delayed because: a)
State legislation for ADUs is constantly changing; and b) there have been on-going discussions with
the Fire Department about ADU allowances and regulations in hillside and fire-prone areas with
challenged access. A draft ADU ordinance has been prepared and is expected to be presented to the
Planning Commission in early Fall. In addition to addressing the State regulations, the draft ADU
ordinance discussion will present the following measures, which could further boost ADU approvals
and start-ups:
11 Signed by Governor Brown in 2018, SB 2372 establishes new legislation establishing a “floor area ratio” bonus for housing
projects in areas/zones that are not regulated by a density limit.
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a. To simplify administration and the permitting process for the customer, combine the current Junior
Accessory Dwelling Unit (JADU) ordinance with the new ADU ordinance.
b. Eliminate off-street parking for ADUs citywide (not just within ½ mile of public transit). The
exception to this parking waiver would be for hillside areas served by narrow roads and limited
on-street parking. Such areas are challenging for the Fire Department to serve so it is critical that
travel lanes along the roads are kept clear for emergency services.
c. Allowing “tiny homes” to be permitted on single-family residential lots.
d. At present, ADUs are allowed in all residential zoning districts but this allowance is exclusive to
properties developed with a single-family dwelling. One consideration is to expand this allowance
to sites developed with duplex or multiple family residential use as a “bonus unit,” which is an
approach that has been taken by the City and County of San Francisco. The bonus unit can be
size-restricted and exempt from both off-street parking and owner occupancy requirements.
Required Action: City Council adoption of a new ADU ordinance.
10. Support a City/Developer Partnership to Facilitate Housing.
The City should promote and foster partnership opportunities to facilitate housing development. One
partnership opportunity would be through air rights development. General Plan 2020 Housing
Element Housing Element Program H-14d addresses air rights development, which reads as follows:
H-14d. Air Rights Development. Take an active role in evaluating the feasibility of air
rights development and consider possible zoning incentives for such development.
Encourage developers of affordable housing to utilize air rights, such as above public
parking lots or commercial uses Downtown.
In addition, the General Plan 2020 Economic Vitality Element Policy EV-16 and Program EV-16a
state:
EV-16. Partnership for Infill Development. Encourage public/private partnerships as
one means of redeveloping and revitalizing deteriorated or undeveloped areas.
EV-16a. Public/Private Partnerships. Identify and pursue promising public/private
opportunities for partnerships in infill development.
As discussed above, City staff has completed Surface Parking Lot Air Rights Study - City of San
Rafael assessing seven (7) Downtown San Rafael, City-owned site in entitled, Surface Parking Lot
Air Rights Study- City of San Rafael (June 1, 2019). Sponsored and funded by Opening Doors, a
public-private coalition, the feasibility study was prepared to determine the preliminary feasibility of
deeding air rights of a City-owned lot to a housing developer as a strategy to increase the stock of
housing in Downtown San Rafael. Seven lots were chosen for their location within or near the
Downtown area. Except for the 519 4th Street lot (contains a one-story building; former temporary Fire
Station #52), none of the lots contain permanent structures. The lots selected for study are selected
City-owned sites are:
• Site #1- 5th Avenue north of Lootens Place
• Site #2- 3rd and Cijos Streets
• Site #3- 2nd Street between D & E Streets
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• Sites #4 and #5- 5th Avenue and Garden Lane
• Site #6- Menzies Lot at 5th Avenue and E Street
• Site #7- 519 4th Street
The study conservatively assumes: a) the air rights would be deeded at no cost to the developer;12
b) public parking at grade would be retained and that no additional parking would be built for the
residential units (essentially shared parking); c) the site would be developed with 100% affordable
units; d) development would be within the zoning development limits (e.g., building height limit); and
e) no density bonus.
In addition to providing relevant descriptive data on the seven properties under study, the air rights
study employs a “preliminary pro forma” analysis to assess how many units of what types of housing
could be developed as raised structures above the study sites. The pro forma analysis tests a range
of housing mixes (studio, one-bedroom up to three-bedroom) at varying affordability levels (very low-
income and low-income) and estimated rent return for each of the seven lots. While the results from
the analysis are not meant to represent a comprehensive financial assessment of net present value
of all estimated costs and revenues, it offers a preliminary assessment of what types of developments
are possible on the study sites given existing regulations, allowances, constraints, and other
conditions.
The results of the study are meant to:
• Identify approximately how many residential units can be developed on each site; and
• Approximate how much income per month for each site given standard, Marin County
affordable rent levels.
The study finds that there are housing opportunities on all sites. Site #3 (2nd Street between D & E
Streets) would yield the least number of units (seven units), while Site #2 (3rd and Cijos Streets) would
yield the highest number of units (33 units).
Staff finds that the air rights opportunity for the public parking lot site is worthy of further study. Should
the City Council concur with staff, the next steps would involve a more in-depth assessment of the
sites and a formal pro forma analysis. The in-depth assessment would be presented to the City
Council for consideration.
Required Action: Direct staff to proceed with a further, in-depth assessment of air rights use of the
seven City parking lots.
11. Pursue State Funding Opportunities
As discussed above, with the State’s 2012 action to dissolve all local RDAs, major sources and/or
conduits to funds for housing have dwindled. However, in response to the current, statewide housing
crisis, new sources for funding have surfaced in the last several years through, among others, the
passage of housing legislation. Staff is actively monitoring and pursuing (when available) the following
funding opportunities:
a. SB 2 Revenues. As discussed above, staff has prepared and submitted an SB 2 Planning Grant
Program application to secure $310,000 in this program that has been allocated to the City of San
12 The cost of land represents 10-15% of the total project costs from land purchase through construction; the specific
percentage amount is dependent upon the local market for land and property constraints (Libby Seifel, Seifel Consulting, Inc.,
July 2019)
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 21
Rafael. The grant application will include “by right” zoning for 100% affordable housing projects
(discussed under recommended measure #13, below), which will streamline the process. In
2020, 70% of the SB 2 revenue will be distributed to local jurisdiction for subsidizing affordable
housing construction. It is planned that this 70% revenue will be administered using the federal
Community Development Block Grant (CDBG) formula that was used when CDBG revenues
formerly distributed to local RDAs. At this time, the amount of revenue that will be made available
to San Rafael is unknown.
b. SB 3 – Veteran and Affordable Housing Bond Act. SB 3 was signed by the Governor in 2017 and
successfully passed as a bond measure in the November 2018 Statewide ballot. Proceeds from
bond sales would set aside $3 billion for affordable housing programs, as well as infill
infrastructure financing and affordable housing matching grant programs.
c. SB 5 – Sustainable Investment Program. SB 5 was introduced in 2019 by Senators Beall,
McGuire, and Portantino, and has been reviewed by both the Assembly and Senate committees.
If approved and signed by the Governor, this program will provide local jurisdictions with access
to tax increment revenues to fund affordable housing, infrastructure and economic development
projects. This program has been crafted similar to the tax increment financing that was once
offered through the former RDAs.
d. SB 102/AB 101 – Housing Development Financing. As part of the State of California 2019/2020
budget process, the California legislature approved an additional $2.5 billion in funding to address
California’s housing and homeless crisis. This approved funding is summarized as follows:
• Housing – The State budget includes $1.75 billion for various housing-related programs such
as funding to assist renters, and repurposing housing production incentive grants to provide
infill infrastructure funding for housing projects. To assist renters, the budget includes $20
million to provide legal aid for renters and assist with landlord-tenant disputes. Like SB 2, SB
102/AB 101 allocates an additional $300,000 to San Rafael for potential planning grants. In
addition, other financial incentives and funding preferences will be awarded to local
jurisdictions that HCD designates as “pro-housing.” To be designated as pro-housing, the
local jurisdiction must adopt policies that: establish a local housing trust fund; reduce parking
requirements; adopt a “by-right approval process; reduce permit processing time; reduce
development impact fees; and establish a “Workforce Housing Opportunity Zone” or “housing
Sustainability District.” San Rafael has already adopted (or is pursuing) several of these
policies and practices, which makes us potentially eligible for the “pro-housing” designation.
• Homelessness – the State budget includes $1 billion to combat homelessness. This total
includes $650 million to local jurisdictions for homeless emergency aid.
e. AB 73 & SB 540 – Housing Sustainability Districts & Workforce Housing Opportunity Zones. For
local jurisdictions that have an adopted “specific plan” (e.g., Downtown Precise Plan), the AB 73
and SB 540 legislation would permit the establishment of a Housing Sustainability District or
Workforce Housing Opportunity Zone. Within the specific plan boundaries, housing projects would
be afforded full, CEQA/environmental review clearance and a “ministerial” review and action
based on project compliance with a list of criteria. Funding to support the up-front planning would
come from a revolving state loan fund available to local jurisdictions; loans would be repaid when
development occurs. As discussed above, the Downtown Precise Plan will include a deeper level
of CEQA/environmental review, so this legislation is worthy of further review and consideration.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 22
Required Action: Direct staff to continue to pursue state funding opportunities when they become
available. San Rafael is already pursuing the SB 2 Planning Grant Program. When launched by
HCD, direct staff to pursue the “pro-housing” designation program.
12. Adopt “By-Right” Zoning for Affordable Housing Projects.
As discussed above, staff is preparing an SB 2 Planning Grant application to secure $310,000 in this
program that has been allocated to the City of San Rafael. One of the projects in the grant application
process is to fund the development of a “by-right” zoning process for 100% affordable housing
projects. “By-right” zoning limits the City’s discretion to reviewing a housing development project for
compliance with a list of “objective planning and design standards.” This process is envisioned to
amend and be applicable to the City’s High-Density Residential (HR1) zoning district. While the
process would be applicable citywide in the HR1 District, the requested SB 2 funding will include a
“pilot” project to implement this process. The pilot project is Homeward Bound’s new emergency
shelter and 32-unit housing development proposed for 190 Mill Street.
Required Action: No action needed by the City Council. The SB 2 Planning Grant application has
been authorized by the City Council and staff is pursuing the application.
13. Consider Raising the Appeal Fee and Changes in the Appeal Scheduling Process.
Developers have commented that the current appeal fee on a Planning Commission action is too low,
which, they believe encourage appeals to the City Council that can be unsubstantiated or intended
to delay action on the project. The current fee for a San Rafael resident to file an appeal to the City
Council is $350.00 ($300.00 for an appeal to the Planning Commission).13 This fee amount has been
in-place for more than a decade. Appeal fees for residents are typically modest or kept low to afford
the public with maximum access to the public review process.
Staff has surveyed the other municipalities in Marin County and similar-sized cities in the Bay Area.
In Marin County, resident appeal fees vary from a low as $100 (Novato) to $2,587 (Sausalito). For
similar-sized cities in the Bay Area, resident appeal fees vary from $205 (Walnut Creek) to $2,668
(Redwood City). The Town of San Anselmo recently raised its appeal fees to $2,500 for an applicant
appeal and $800 for an appeal by a non-applicant/resident.
The appeal fee should be assessed and updated through completion of a nexus study. This task will
be included in the Citywide Master Fee Schedule Update, which is budgeted for completion during
this fiscal year (FY 19/20). There is some caution to raising the appeal fee too high so that is does
not undermine the public review process. Therefore, the nexus study will be critical in demonstrating
that a fee increase aligns with the service that is being provided by the City.
Regarding the scheduling challenges, some municipalities set an appeal date for a City Council public
hearing and action concurrent with or soon after the filing date of the appeal. To facilitate a quicker
public hearing date for an appeal, it is recommended that the City Clerk, in consultation with the
Community Development Director set an appeal date within five (5) working days of appeal filing.
Required Action: Direct staff to assess and update the appeal fee as part of the next Citywide Master
Fee Schedule Update. Should the City Council find that the changes in the appeal scheduling
process is worthy to pursue, direct staff to prepare an amendment to SRMC Title 14 (Zoning).
13 The fee for an applicant or a non-resident is $4,834 and $4,475 for an appeal to the Planning Commission and City Council,
respectively. This fee is a deposit, meaning once the fee amount has been drawn-down, the additional staff time to complete
the appeal process is charged to the applicant (cost recovery process).
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 23
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.
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
subsequent 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 and provide direction on staff recommendations for follow-up actions.
ATTACHMENTS:
1. Key Housing Element Goals & Policies
2. Residential development projects approved, currently under review and potentially-planned,
table and maps; updated August 2019
3. 2018 Housing Legislation table; March 25, 2019/updated July 22, 2019
4. Public Meeting Notice