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HC Resolution No. 15-04 Recommending the approval of BMR Housing Nexus and Non-Residential Jobs-Housing Nexus, updated mitigation fees RESOLUTION NO. 15-04 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CUPERTINO RECOMMENDING THAT THE CITY COUNCIL APPROVE THE RESIDENTIAL BELOW MARKET RATE (SMR)HOUSING NEXUS AND NON- RESIDENTIAL JOBS-HOUSING NEXUS ANALYSES,UPDATED RESIDENTIAL AND NON-RESIDENTIAL HOUSING MITIGATION FEES AND UPDATED HOUSING MITIGATION PROGRAM PROCEDURAL MANAUAL I I WHEREAS, to mitigate the impact of new development on the need for affordable housing within its boundaries, the City of Cupertino (the "City") has since 1993 implemented an Office and Industrial Housing Mitigation Program and a Residential Housing Mitigation Program, described in the Housing Element of the General Plan, requiring the payment of housing mitigation fees by non-residential development and residential projects with six units or less, and requiring the provision of moderate-income and median-income housing in developments with seven units or more (the "Housing Mitigation Program"); and WHEREAS, the City Council of the City of Cupertino has initiated the Nexus Study Update project with the approval of the 2014-2015 Work Program on May 6, 2014, and on March 27, 2015, the City published a notice of the initiation of proceedings in the form required by Government Code Section 66474.2(b); and WHEREAS, the Housing Commission is responsible for identifying sources of funds for the development of affordable housing;and WHEREAS, to further implement the affordable housing goals, objectives, policies and programs of the City's Housing Element, and to ensure that the housing mitigation fees recommended by this resolution do not exceed the actual affordable housing impacts attributable to the development projects on which the fee is imposed, the Housing Commission has received and considered three reports from Keyser-Marston Associates, Inc. (KMA) dated March 2015 and entitled"Summary and Recommendations: Below Market Rate (BMR)Housing Mitigation Program;" "Non-Residential Jobs-Housing Nexus Analysis" and "Residential Below Market Rate (BMR)Housing Nexus Analysis," (collectively,the"KMA Reports");and WHEREAS, the KMA Reports use widely used, appropriate methodology to determine the maximum amount needed to fully mitigate the burdens created by residential and non- residential development;and WHEREAS, to ensure that development projects remain economically feasible, the recommended housing mitigation fees as shown in the attached Exhibit A are lower than the maximum amount needed to fully mitigate the burdens created by new development on the need for affordable housing as determined in the KMA Reports;and WHEREAS, at least ten days prior to the date this resolution is being heard, data was made available to the public indicating the amount of cost, or estimated cost, required to provide the service for which the fee or service charge is levied and the revenue sources anticipated to Resolution No. 15-04 Page 2 provide the service, including general fund revenues, in accordance with Government Code Section 66019;and WHEREAS, at least fourteen days prior to the date this resolution is being heard, notice was provided to any persons or organizations who had requested notice, in accordance with Government Code Section 66019;and WHEREAS, notice of the hearing on the proposed fees was published in a newspaper of general circulation at least ten days prior to the Housing Commission hearing;and WHERAS, the Below Market Rate (BMR) Housing Mitigation Program Procedural Manual establishes the affordable housing mitigation requirements of the City's housing mitigation program, as required by the City's General Plan Housing Element and the procedures for implementing the requirements;and WHERAS, the Below Market Rate (BMR) Housing Mitigation Program Procedural Manual is being updated for clarity and detail and for consistency with the proposed fees;and WHEREAS, a duly and properly noticed public hearing was conducted by the Housing Commission on April 9,2015;and WHEREAS, the Housing Commission of the City of Cupertino is a recommending body to the City Council for this Resolution. NOW,THEREFORE,BE IT RESOLVED: Section 1.After careful consideration of the KMA Reports, facts,exhibits, staff report,testimony and other evidence submitted in this matter,the Housing Commission finds as follows: A. The foregoing recitals are true and correct and incorporated into this resolution by this reference. B. The purpose of the housing mitigation fee is to mitigate the burdens created by new residential and non-residential development projects on the need for extremely low, very low, low,median, and moderate-income housing. C. All housing mitigation fees collected shall be deposited into the City's Below Market- Rate (BMR) Affordable Housing Fund (AHF) to be used to increase and preserve the supply of housing affordable to households of extremely low, very low, low, median, and moderate incomes(including necessary administrative costs). D. The KMA Reports use widely used, appropriate methodology to determine the maximum justified nexus fees and inclusionary percentages. Resolution No. 15-04 Page 3 E. The findings of the KMA Reports have been considered and are hereby incorporated by this reference into this resolution, and the Housing Commission finds that new residential development and non-residential development will create a need for affordable housing by: 1. Aggravating the existing shortage of affordable housing by reducing the supply of land for affordable housing and increasing the price of remaining land. 2. Increasing local employment at extremely low, very low, low, median, and moderate-income wage levels, which increases the demand for and exacerbates the shortage of housing available to persons at those income levels. F. As shown in the Housing Element, there is a need in the City for housing affordable to households of extremely low,very low,low,median, and moderate incomes. G. The facts and substantial evidence in the record establish that there is a reasonable relationship between the need for affordable housing and the impacts of the development described in the KMA Reports for which the corresponding fee is charged, and there is also a reasonable relationship between the fee's use and the type of development for which the fee is charged, as is described in more detail in the KMA Reports attached to this resolution. H. The KMA Reports set forth cost estimates, in 2015 dollars, that are reasonable for constructing affordable housing, and the fees expected to be generated by new development will not exceed these costs. I. The Below Market Rate (BMR) Housing Mitigation Program Procedural Manual has been appropriately updated to reflect the proposed fees and development procedures. J. Adoption of this resolution is exempt from the California Environmental Quality Act because the proposed fee increase is not a project,in that it is a government funding mechanism which does not involve any commitment to any specific project (CEQA Guidelines Section 15378(b)(4)); and the proposed changes to the Housing Mitigation Program Procedural Manual are also not a project, in that the adoption of the Manual is an administrative activity that will not result in direct or indirect physical changes in the environment (CEQA Guidelines Section 15378(b)(5)). Section 2. The Housing Commission hereby recommends that the City Council adopt the housing mitigation fees shown on Exhibit "A," incorporated by this reference, and repeal any previously adopted housing mitigation fees. Section 3.The Housing Commission hereby recommends that the City Council adopt the Below Market Rate (BMR) Housing Mitigation Program Procedural Manual shown in Exhibit "B," incorporated by this reference, in place of any previously adopted Below Market Rate (BMR) Housing Mitigation Program Procedural Manual. Resolution No. 15-04 Page 4 PASSED AND ADOPTED at a meeting of the Housing Commission of the City of Cupertino this 911,day of April'2015 by the following vote: Vote Members of the Housing Commission AYES: NOES: ABSTAIN: ABSENT: ATTEST: APPROVED: Aarti Shrivastava Shirley Ch Community Development Director Chair,Housing Commission Resolution No. 15-04 Page 5 Exhibit A Proposed Housing Mitigation Fee Schedule Residential Housing Mitigation Fees Ownership Developments (1-6 Units) Detached Single Family Residence *$15.00/sq. ft. Small Lot Single Family Residence/Townhome *$16.50/sq. ft. Multi-family Attached Townhome/Apartment/ *$20.00/sq. ft. Condominium(up to 35 du/ac) Multi-family Attached Townhome/Apartment/ *$20.00/sq. ft. Condominium(over 35 du/ac) *Proposed residential ownership housing mitigation fees. Final fees to be adopted by City Council. Residential Housing Mitigation Fees Rental Developments (1+Units) Multi-family Attached Townhome/Apartment/ *$20.00/sq. ft. Condominium(up to 35 du/ac) Multi-family Attached Townhome/Apartment/ *$20.00/sq.ft. Condominium(over 35 du/ac) *Proposed residential rental housing mitigation fees. Final fees to be adopted by City Council. Non-Residential Housing Mitigation Fees Office/Research&Development(R&D)/ *$20.00/sq.ft. Industrial Hotel *$15.00/sq. ft. Retail *$10.00/sq. ft. *Proposed non-residential housing mitigation fees. Final fees to be adopted by City Council. Resolution No. 15-04 Page 6 Exhibit B Below Market Rate (BMR) Housing Mitigation Program Procedural Manual (See Attached)