February 1, 2005
SUBJECT: Review of Study Issue Priorities for the Community Development Department for 2005 Relative to a Proposed New Study Issue to Modify the Below Market Rate Rental Program
REPORT IN BRIEF
At its meeting of January 25, 2005, the City Council requested staff to prepare a Study Issue paper to review the Below Market Rate Rental Program to determine if modifications are necessary in response to a downturn in the rental housing market. The Study Issue paper has been prepared. This report reviews the implications on the Study Issue work program of the Department of Community Development of undertaking such a new Study Issue in the current calendar year.
BACKGROUND
On December 16, 2004, the City Council ranked potential Study Issues by department for the 2005 calendar year. The Community Development Department, which had six continuing study issues and 18 newly ranked potential Study Issues, evaluated its resources for undertaking Study Issues in 2005 and determined that it could begin the eight highest ranked Study Issues in 2005, as shown in the table on the next page.
|
CC
Priority |
Study Issues |
Total CDD Hrs. Req. |
CDD Hrs. in 2005 |
Lead CDD Division |
Scheduled Completion Date |
|
Continuing Issues
|
|
|
|
|
|
|
Clarify CEQA for Heritage Pres. |
230 |
200 |
Planning |
3/22/05 |
|
|
Allowable Construction Hrs. for Homeowners |
145 |
10 |
Building |
1/25/05 |
|
|
Height Limit in R-3 Zone |
90 |
85 |
Planning |
3/8/05 |
|
|
Zoning Tools to Encourage Ownership Housing |
270 |
240 |
Planning |
8/9/05 |
|
|
TDM for High Density Res. Proj. |
195 |
195 |
Planning |
7/19/05 |
|
|
Zoning Land Use for Service Uses |
300 |
300 |
Planning |
10/25/05 |
|
|
Revise Sign Code for Auto Dealership |
300 |
60 |
Planning |
3/1/05 |
|
New Issues
|
|
|
|
|
|
1 |
Visual Streetscape/Murphy |
240 |
240 |
Planning |
10/25/05 |
|
2 |
Precise Plan/El Camino Real |
420 |
420 |
Planning |
12/13/05 |
|
3 |
Extending Wright Ave. District |
200 |
200 |
Planning |
8/25/05 |
|
4 |
Community Rooms in Multi-Family |
150 |
150 |
Planning |
10/4/05 |
|
5 |
Shop Sunnyvale Card |
140 |
140 |
Econ. Dev. |
10/18/05 |
|
6 |
Places of Assembly in Industrial Zones |
350 |
200 |
Planning |
3/06 |
|
7 |
Tree Removal Ordinance Update |
350 |
150 |
Planning |
4/06 |
|
8 |
Incentives for Business Retention and Attraction |
140 |
70 |
Econ. Dev. |
3/06 |
|
|
Total: |
|
2660 |
|
|
In 2003 the City completed a comprehensive update of the City’s Below Market Rate (BMR) provisions in the zoning code. This study look approximately 18 months to complete, involved a housing consultant for a portion of the work at a cost of $20,000, and included meetings with property developers, apartment owners, trade organizations, and affordable housing advocates. After adoption of changes to the BMR code, staff prepared BMR Administrative Procedures to assist staff and developers in complying with the program provisions.
The Tri-County Apartment Association has raised concerns about zoning code and Administrative Procedure provisions for rental units in the BMR program, believing that they may contribute to current difficulties in renting available BMR units. Specifically they would like the City to review the following recently adopted code provisions and Administrative Procedures:
- Requirement for a year-long lease of BMR units
- Requirement for prospective BMR tenants to be certified by the City
- $100 fee from prospective BMR tenants for the City to certify their eligibility
- Income qualifications for BMR households
- Eligibility priorities: residency/place of work requirements and prohibition against employees of the landlord occupying BMR units in the landlord’s facility.
- Methodology for rent calculation for BMR units
On January 25, 2005, City Council was asked by the City manager to approve the Study Issue Calendar for 2005. Council deferred action on the proposed Study Issue work program of the Department of Community Development, directed the staff to prepare a Study Issue paper on the issues raised by the Tri-County Apartment Association, and placed on its agenda for February 1, 2005, an item to rank the potential new Issue relative to the other Issues previously ranked by the Council for CDD.
EXISTING POLICY
Housing and Community Revitalization Sub-Element Action Statement
E.1.b Comprehensively review and update the Below Market Rate (BMR) programs to better address affordable housing needs. Review code requirements for terms and conditions, review and update administrative process to enhance marketing, monitoring and compliance.
DISCUSSION
The Department of Community Development consists of five divisions: Planning, Building, Economic Development, Housing and Neighborhood Preservation. Three of these divisions - - Building, Housing and Neighborhood Preservation - - are operational divisions, providing direct services to residents and businesses, generally on demand of those clients. Only Planning and Economic Development have a portion of their resources allocated to research and analysis; the use of these resources is largely discretionary, and can be assigned each year to those activities which respond to policy direction of the City Council and to priorities established by Management. Only the Planning Division has hours specifically budgeted to Study Issues, approximately 2,500 hours per year based upon full staffing.
The proposed new Study Issue is estimated to require 295 hours of staff time, 250 of which would be from the Department of Community Development. In addition, services of a professional housing consultant are required, at a cost of approximately $30,000. The attached Study Issue paper provides the information necessary for the City Council to rank this new Issue among those already ranked. To assist in such ranking, staff has also attached the Study Issue papers for the Issues ranked highest by the Council on December 16, 2004 (the eight which currently are placed “above the line”.)
The implications of including the proposed new Study Issue as a priority in the Department’s work program depend upon how the Study Issue is managed within the Department. The most appropriate division is the Housing Division. As noted above, Housing is an operational division, devoting most of its resources to on-going demands and responsibilities, including the housing rehabilitation program, the home access and paint programs, the Outside Group funding programs, the housing program for teachers and City employees, the BMR rental program (primarily monitoring), the BMR ownership program (primarily negotiating agreements with 21 new developments for approximately 140 new BMR ownership units and managing the wait-list of potential buyers), the Community Development Block Grant (CDBG) Program, and the HOME Program. Limited discretionary hours (approximately 10 percent of total hours) for 2005 are already allocated to the preparation of the Consolidated Plan as required by the U.S. Department of Housing and Urban Development, to preparation of an indirect cost plan in cooperation with the Department of Finance, and to development of a new First-time Homebuyer Program. If the new Study Issue is ranked high by the City Council and it is assigned to the Housing Division, substantial work could not begin until September, 2005, with completion estimated for March, 2006.
Alternatively, a new Study Issue could be assigned to the Planning Division, to be supported by the Housing Division. This would require Planning to transfer approximately 250 hours from another ranked Study Issue or Issues, causing that Issue or Issues to fall “below the line” for 2005. The lowest ranked Study Issue assigned to the Planning Division which is currently “above the line” is the Tree Removal Ordinance Update, which requires 300 hours of CDD time and is currently scheduled to be completed in April, 2006.
A third alternative would be to hire a consultant to undertake the Study. It is estimated that such a contract would cost upwards of $80,000, and would still require nearly 100 hours of CDD staff time to negotiate and manage the contract and to prepare final reports for the Housing and Human Services Commission and City Council. Staff estimates that the Study could be completed by December, 2005, if undertaken by a consultant.
FISCAL IMPACT
The ranking of the proposed Study Issue “above the line” for 2005 with the Study undertaken primarily by staff would require Council to approve a budget modification in the amount of $30,000, and to determine the source of those funds.
Conclusion
The Study Issue paper requested by City Council to review the Below Market Rate Rental Program is attached. If this Study Issue is ranked by City Council among the Study Issues now scheduled to be undertaken by CDD in 2005, a budget modification of $30,000 will be necessary for consultant support. Completion date of the study is dependent upon its ranking by the Council, the division assigned to do the work, and whether or not there is a larger role for a consultant.
PUBLIC CONTACT
Public contact was made through posting of the Council agenda on the City's official notice bulletin board, posting of the agenda and report on the City's web page, and the availability of the report in the Library and the City Clerk's Office.
RECOMMENDATION
To be determined by City Council.
Prepared by:
Robert Paternoster, Director
Community Development
Approved by:
Amy Chan
City Manager
Attachments
A. Study Issue Paper for Below Market Rate Rental Program Modification
B. Study Issue Paper for Eight Issues currently above the line for 2005 -
1. Visual Streetscape/Murphy