HC Packet 8-9-2018ROLL CALL
CITY OF CUPERTINO
AGENDA
HOUSING COMMISSION
10300 Torre Avenue, City Hall Conference Room C
Thursday, August 9, 2018
9:00 AM
APPROVAL OF MINUTES
None
ORAL COMMUNICATIONS
This portion of the meeting is reserved for persons wishing to address the commission
on any matter not on the agenda. Speakers are limited to three (3) minutes. In most
cases, State law will prohibit the commission from making any decisions with respect to
a matter not listed on the agenda
WRITTEN COMMUNICATIONS
OLD BUSINESS
NEW BUSINESS
1. Subject: Study Session on the potential formation of a Santa Clara County
Regional Housing Needs Allocation (RHNA) sub -region
Recommended Action: Provide comments on the possibility of the formation of a
RHNA sub -region.
Staff Report
1 - GuidingPrinciples
2 - R14NA subregion overview
3 - Pros and Cons
4 - Resolution and By-laws
2. Subject: Response to the Santa Clara Civil Grand Jury Report on "Affordable
Housing Crisis: Density is our Destiny."
Recommended Action: That the Housing Commission provide comments and a
recommendation to the City Council on the City's response.
Page 1
Housing Commission AGENDA August 9, 2018
Staff Report
1 - Responses to Findings and Recommendations
2 - SCC Civil Grand Jury Report: Density is our Destiny 6.21.2018
STAFF AND COMMISSION REPORTS
ADJOURNMENT
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Page 2
CITY OF
IM
CUPERTINO
&A b ect
COMMUNITY DEVELOPMENT DEPARTMENT
PLANNING DIVISION
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3308 • FAX: (408) 777-3333
CUPERTINO.ORG
HOUSING COMMISSION STAFF REPORT
Meeting Date: August 9, 2018
Study Session on the potential formation of a Santa Clara County Regional
Housing N eed s A I I ocati on (RHNA) subregion
Recommended Action
Provide comments on the possibility of theformation of a RHNA subregion.
nicciiccinn
Background
The process of setting targets for housing growth, a necessary precursor to
updating Housing Elements, is called the Regional Housing Needs Allocation
(RHNA). The state mandates that different California regions begin their eight-
year housing planning cycle on a staggered basis identified by the Department of
Housing and Community Development (HCD.) HCD determines housing
demand for the state and subsequently, allocates this housing demand by region
upon consultation with theregional Council of Governments (COG). TheCOGfor
each region must then assume the responsibility for planning for this housing
demand among all of its constituent cities and counties. The task of allocating the
housing need, among the nine county San Francisco Bay Area, falls to the
Association of Bay Area Governments/Metropolitan Transportation Commission
(ABAG/MTC.) By law, the methodology the COG uses to allocate the housing
must comply with Statepolicy objectivesin the Government Codeand beadopted
through afair and open publicprocess.
Once each jurisdiction receives itsfinal RHNA, they must amend their Housing
Element to show how it plans to accommodate this, including identifying and
zoning sites appropriately, according to state law requirements. Cupertino's next
Housing Element update is expected in 2022 with the housing allocation process
occurring in 2021.
State law also alIowstheformation of subregions to conduct an allocation process
parallel and similar to, but separatefrom the regional COG process. Jurisdictions
that have not been satisfied with housing allocation occurring at a geographically
larger regional level have formed their own RHNA subregions to develop their
own methodology and allocate housing in a more locally relevant regional level.
Examples include the subregions formed in Napa, San Mateo and Solano counties
for the 2015-2023 RH N A cycle.
Several jurisdictions in the Santa Clara county expressed their concerns with the
regional housing allocation process from the prior housing planning cycle to the
Cities Association of Santa Clara County'; as a result of which, in the interests of
improving the implementation of housing in a more locally relevant regional
manner, the Board adopted the exploration of a Santa Clara County RHNA
subregion as a priority for the upcoming RH NA cycle (2023 - 2031.) To that end,
the Board approved the formation of a Regional Housing Task
Force/Subcommittee in 2015 to:
1. Develop of a framework and process needed to form and implement a
subregion in Santa Clara County for the next RHNA cycle (2023-2031); and
2. Review potential options for further regional response.
The Subcommittee presented its findings at the June 14, 2018 Cities Association
Board meeting and requested board memberstotakethetopicof asubregion back
to each individual City Council for discussion prior to voting on theformation of
asubregion (See Attachment 1.)
This item is presented to the Housing Commission to review and provide
commentsto the City Council regarding joining the RH NA subregion.
Analysis
The Regional Housing Task Force/Subcommittee presented a number of itemsfor
the Board's consideration in June 2018. These include an overview of the RH NA
subregion (see Attachment 2) and pros and cons of forming a RHNA subregion
(Attachment 3) and adraft resolution that each City Council could adopt asassent
'The Cities A ssociati on of Santa Clara County was formed in 1990 to represent them utual interests
of the diverse fifteen cities of Santa Clara County. The Cities Association presents a unified (and
equal) voice to other agencies, organizations, and levelsof government.
to joining a Santa Clara RH NA subregion and proposed by-laws for the subregion
(Attachment 4.)
Subregions may be formed between any two jurisdictions but must include a
county. A subregion is allowed to develop its own methodology, issue draft
allocations to member jurisdictions, conduct the revision and appeal processes,
and issue final allocations. Each subregion is also required to ensure that itsfinal
housing allocation is consistent with the Bay Area's Sustainable Communities
Strategy.2
For purposes of this RH NA subregion, the Cities Association is not proposing to
change the methodology for determining the allocation. The subregion would
allow cities the opportunity to make agreements with cities in the subregion to
trade allocations. Citiescan choosenot to makeany agreementsand simply accept
the regional allocation. However, being a member of the subregion would allow
each city a vote in the final subregional RH NA allocation. If a city chooses not to
be a part of the subregion, they would neither have the opportunity to trade
allocations nor have a vote in the proposed trades and allocations within the
subregion.
The Subcommittee identified several advantages of forming a RH NA subregion,
these include:
■ Allowing jurisdictions flexibility and an opportunity for them to trade
RH NA allocations. For e.g., notwithstanding the subregions allocation, a
city could choose to accept the regional allocation or choose to make
agreements with cities in the subregion for trading allocations.
■ Empowering cities to have a say in regional planning. For e.g. should a
city's appeal on their regional allocation get upheld, it is up toABAG/MTC
to decide how to redistribute the appealed allocation. However, with a
subregion, a city can trade allocations with another city.
■ Allow cities to collaborate on better planned development since they can
work together to address regional issues such as transit and would not
necessarily be confined by acity boundary.
2TheSustainableCommunitiesStrategy or SCSis a state -m and ated, integrated long-range
transportation and land use plan. As required by Senate Bill 375, all metropolitan regions in
California must complete a SCS as part of a Regional Transportation Plan. In the Bay Area,
ABAG/MTC is responsible for developing and adopting aSCSthat integrates transportation,
land useand housing to meet greenhouse gas reduction targetsset by the California Air
Resources Board (CA RB). Them ost recent SCSfor the San Francisco Bay Area is the Plan Bay
Area 2040, which was I ast amended in 2017.
■ Create aforum a discusssharing of planning resources. For e.g. in the San
Mateo subregion, all 21 jurisdictions share in the cost to pay a consultant to
assist in thepreparation of their housing elementsand data needs.
It also identified disadvantagesof theformation of a subregion, which include:
■ Putting in time, effort and resources and ending up with the same resuIt as
the regional allocation.
■ Lack of trust for a fair and equitable process.
■ Loss of political distance from ABAG/MTC which may result in pressure
on thecommunity to produce additional housing.
■ No role model since no other existing subregion has such Iargevariancein
population in each of the cities.
The SC county RHNA subregion is proposed to consist of one member of each
City Council and one member of the County Board of Supervisors. The by-laws
also consider the establishment of several standing committees that would assist
in the goals of the RHNA subregion. The roles of each of these standing
committees are outlined in the proposed by-laws. Theseincludethe:
■ Policy Committee — elected officials provide policy direction, review the
Technical Advisory Committee recommendations and adopt policy
consensusfor transmittal for citiesand countiesfor ratification;
■ Technical Advisory Committee—Senior staff technical experts in the field
of housing and land use from each jurisdiction to develop
recommendations for the City Manager's Association to consider;
■ City Managers Association — monthly outreach through the City
Manager's Association to allow ongoing input and consideration of the
Technical Advisory Committee recommendations, prior to approval of the
final by the Policy Committee;
■ City Councilsand Board of Supervisors—Ratify thefinal allocation; and
■ ABAG — Final approval of the RH NA Final Allocation.
Therewould besomecost associated with theestablishment of a RHNA subregion
related to administration, outreach, noticing and communicating with
ABAG/MTC. These costs should generally not be very large, but will have to be
accepted by each participating jurisdiction.
Conclusion
The Housing Commission should consider the proposed subregion format and
providetheir commentsfor the Council's consideration.
N ext Steps
The City Council will consider the proposed subregion at its August 21, 2018
meeting and provide their comments for the Cities Association of Santa Clara
County Board's consideration prior to its consideration of whether or not to
initiateformal proceedingsto begin theprocessof forming a RH NA subregion and
adopt the proposed bylaws.
Following action by the Cities Association Board, each city will have to adopt
resolutionsto affirm their decision to join thesubregion or not. Whilethere is no
timeline published, this needsto occur no later than September 2020.
Prepared by: Piu Ghosh, Principal Planner
Kerri Heusler, Senior Planner
Reviewed by: Benjamin Fu, Assistant Director of Community Development
Approved by: Aarti %rivastava, Assistant City Manager
Attachments
1. Staff Report from Cities Association of Santa Clara County Board Packet
(June 14, 2018) and Subcommittees Guiding Principles (May 2018)
2. RHNA Subregion Overview
3. Pros and Cons
4. Reso and By I aw s
OF SANTA CLARA COUNTY
Board of Directors Meeting —Agenda Report
Meeting Date: June 14, 2018
Subject: 3c RHNA Subregion Task Force (action)
Initiated by: Board Priority
Previous Consideration: none
Fiscal Impact: n/a
Attachments RHNA Subregion Overview
Pros/Cons
Guiding Principles
Resolution
By-laws
Summary: As an effort to improve the implementation of housing across the region,
the Cities Association continues to address and consider the Regional
Housing Needs Allocation (RHNA) subregion option and providing our
cities and the county more flexibility to ensure that the state mandated
housing allocations make sense regionally.
The board adopted RHNA subregion as a priority to continue exploration
for the next cycle (2023-2031) in which our region can own the
responsibility of preparing a sub -regional housing need allocation for the
geographic area of Santa Clara County. RHNA is the state mandated
process used to identify the total number of housing units that each
jurisdiction must accommodate in its Housing Element. For the current
cycle (2014-2022) the counties of San Mateo, Napa, and Solano have
formed sub -regions. A subregion is required to meet its statutory
requirements in the regional allocation process but it can develop its own
methodology, issue draft allocations to member jurisdictions, conduct the
revision and appeals processes, and issue final allocations. Generally, the
cities and the county within the sub region have more flexibility to ensure
that the allocations make sense.
Per the Board's approval in 2015, a Regional Housing Task
Force/Subcommittee was formed. Subcommittee is tasked with: a)
Developing the framework and process needed to form and implement a
subregion in Santa Clara County in the next RHNA cycle (2023-2031); and
b) Reviewing potential options for further regional response.
Recommendation: The Committee would like board members to take the topic of a subregion
back to their individual councils for discussion prior to voting on formation
of a subregion.
SANTA CLARA COUNTY RHNA SUBREGION TASK FORCE
GUIDING PRINCIPLES - May 2018
Vision
For Santa Clara County and its cities to work collaboratively to produce more housing in the Region.
have a unified voice in responding to the area's housing needs-- a problem that transcends
jurisdictional barriers.
Benefits
1. By working together to plan for housing growth, the stage is set for implementing housing, and
more housing will ultimately be built.
2. Housing will be planned in the right places, near transportation, jobs, and services.
3. Santa Clara County jurisdictions can work together to share resources.
4. Collaboration enables collective advocacy on regional and Statewide issues.
5. Partnership sets the stage for other cooperation, including sharing Housing Element consultants,
sharing expertise, analyses, and policies, and potentially enabling a shared review by the
California Housing and Community Development (HCD) Department.
6. Collective agreement is reached on strategies and tools to meet the region's housing
need, including the potential for trading RHNA numbers.
7. Greater flexibility.
Guiding Principles
1. Conform with all State objectives included in Section 66584(d), including ensuring that the
allocation of affordable homes is allocated to all jurisdictions in the region in an equitable
manner.
2. Allocate housing growth strategically around major transportation corridors and near
employment and services, while respecting infrastructure constraints and the unique natural
resources of Santa Clara County.
3. Foster collaboration between jurisdictions and develop collective strategies that provide a
framework for addressing housing need, including the potential for resource / housing
allocation trade-offs.
4. Facilitate an open dialogue between jurisdictions, the general public, and interested
organizations, including transportation agencies and land use bodies.
5. Utilize existing forums for discussion (e.g., Cities Association, City Managers' Association,
SCCAPO, etc.).
Keys to Success
1. Taking responsibility for the process and the resulting housing shares.
2. Taking into consideration other communities' interests as well as your own.
3. Being willing to accept a reasonable housing share, not just the lowest.
4. Being willing to consider negotiating trades.
5. Recognizing that working together locally is better than abdicating the responsibility to the region
and the state.
6. Elected leaders in all jurisdictions willing to compromise for regional benefit.
Santa Clara County
Regional Housing Needs Allocation (RHNA) Subregion Overview
What is a RHNA subregion? (Government Code Section 65584.03)
In recognition of the common interests and mutual challenges and opportunities associated with
providing housing, two or more contiguous cities and a county may form a subregional entity for
the purpose of allocation of the subregion's existing and projected need for housing among its
members in accordance with the allocation methodology established pursuant to Government
Code Section 65584.04.
All decisions of the subregion shall be approved by vote as provided for in the rules adopted by the
local governments comprising the subregion, or shall be approved by vote of the county and the
majority of the cities with the majority of population within the county.
What are the steps to create a subregion, following the prescribed timelines in State law?
1. Each participating jurisdiction adopts a resolution indicating its commitment to participating in
the subregional entity.
2. For Santa Clara County, the subregional entity could be a committee of the Cities Association
with participating cities and the County.
3. The Cities Association (or other entity) would enter into an agreement with the Council of
Governments (COG, in our case ABAG/MTC) that sets forth the process, timing, and other
terms and conditions of the delegation of responsibility by the COG to the subregion.
What does the subregion do, following the prescribe timelines in State law?
1. The subregion determines the methodology for allocating housing need to its participating
jurisdictions according to State law (or accepts the methodology factors from the COG as a
starting point for further distribution), providing opportunity for public comment and
modification prior to adoption of the methodology.
2. The COG allocates a share to the subregion based on a proportion consistent with the
distribution of households assumed for the comparable time period of the applicable regional
transportation plan.
3. The subregion allocates the distribution of the RHNA to the participating jurisdictions
according to the adopted methodology, providing an opportunity for public comment and
modification prior to finalizing the distribution.
What is the estimated cost of a subregion versus typical participation in the RHNA process?
Assuming that the subregion does not hire a consultant to create a separate methodology, the
costs would be:
1. Administrating and documenting the subregion meetings and decisions;
2. Conducting the required outreach prior to the subregion making its decisions;
3. Communicating with ABAG/MTC as needed; and
4. Publishing the required notices.
The Planning Departments of the participating jurisdictions typically absorb the RHNA evaluation
without additional staffing or consultant assistance.
Santa Clara County
Regional Housing Needs Allocation (RHNA) Subregion Overview
What are other activities that the subregion could assume outside of the RHNA process and State
law?
• Foster collaboration between cities within Santa Clara County
o Focus on Measure A implementation
o Facilitate an open dialogue between the jurisdictions, public, and interested
organizations on housing issues and opportunities
o Share best practices regarding rehabilitating existing housing stock, addressing
gentrification/displacement, etc.
• Work together to obtain and commit more financial resources to affordable housing
production
o Support for 2018 ballot measure for affordable housing funding
o Consider potential legislative efforts to seek meaningful tax credits and other
mechanisms
Santa Clara County
Regional Housing Needs Allocation (RHNA) Subregion Overview
What is a RHNA subregion? (Government Code Section 65584.03)
In recognition of the common interests and mutual challenges and opportunities associated with
providing housing, two or more contiguous cities and a county may form a subregional entity for
the purpose of allocation of the subregion's existing and projected need for housing among its
members in accordance with the allocation methodology established pursuant to Government
Code Section 65584.04.
All decisions of the subregion shall be approved by vote as provided for in the rules adopted by the
local governments comprising the subregion, or shall be approved by vote of the county and the
majority of the cities with the majority of population within the county.
What are the steps to create a subregion, following the prescribed timelines in State law?
1. Each participating jurisdiction adopts a resolution indicating its commitment to participating in
the subregional entity.
2. For Santa Clara County, the subregional entity could be a committee of the Cities Association
with participating cities and the County.
3. The Cities Association (or other entity) would enter into an agreement with the Council of
Governments (COG, in our case ABAG/MTC) that sets forth the process, timing, and other
terms and conditions of the delegation of responsibility by the COG to the subregion.
What does the subregion do, following the prescribe timelines in State law?
1. The subregion determines the methodology for allocating housing need to its participating
jurisdictions according to State law (or accepts the methodology factors from the COG as a
starting point for further distribution), providing opportunity for public comment and
modification prior to adoption of the methodology.
2. The COG allocates a share to the subregion based on a proportion consistent with the
distribution of households assumed for the comparable time period of the applicable regional
transportation plan.
3. The subregion allocates the distribution of the RHNA to the participating jurisdictions
according to the adopted methodology, providing an opportunity for public comment and
modification prior to finalizing the distribution.
What is the estimated cost of a subregion versus typical participation in the RHNA process?
Assuming that the subregion does not hire a consultant to create a separate methodology, the
costs would be:
1. Administrating and documenting the subregion meetings and decisions;
2. Conducting the required outreach prior to the subregion making its decisions;
3. Communicating with ABAG/MTC as needed; and
4. Publishing the required notices.
The Planning Departments of the participating jurisdictions typically absorb the RHNA evaluation
without additional staffing or consultant assistance.
Santa Clara County
Regional Housing Needs Allocation (RHNA) Subregion Overview
What are other activities that the subregion could assume outside of the RHNA process and State
law?
• Foster collaboration between cities within Santa Clara County
o Focus on Measure A implementation
o Facilitate an open dialogue between the jurisdictions, public, and interested
organizations on housing issues and opportunities
o Share best practices regarding rehabilitating existing housing stock, addressing
gentrification/displacement, etc.
• Work together to obtain and commit more financial resources to affordable housing
production
o Support for 2018 ballot measure for affordable housing funding
o Consider potential legislative efforts to seek meaningful tax credits and other
mechanisms
SANTA CLARA COUNTY RHNA SUBREGION TASK FORCE
PROS & CONS OF RHNA SUBREGION FORMATION
Cons
Example
Creates flexibility & allows
Distribute the subregion's
cities to trade
numbers or can use ABAG's
distribution
Empowers cities to have a
Self-determination: a city is
say in the regional planning
able to accept or not accept
process
allocation from another city.
Allows better alignment
Ability to plan along on
between local and regional
transit corridors and near
needs
employment.
Can find innovative solutions
Collective problem -solving
which may include
negotiating credits and
creative financing
May facilitate the production
Utilizes economies of scale
of more housing
and eliminates duplication.
Siting housing near
supportive services.
Creates a forum for
San Mateo County Trade
collaboration that leads to
Woodside/Redwood City &
innovative solutions
Daly City/Colma/County
Creates awareness (and
Creates a forum to share
healthy competition)
knowledge and success.
When one city is doing the
heavy lifting, may encourage
other jurisdictions to step up
to the plate.
If success, may create
Success may be housing or
additional opportunities for
spill over to other technical
collaborative work
areas (transportation). May
use collaboration for
legislative advocacy.
Better development
Cities can work together to
build near transit and not
SANTA CLARA COUNTY RHNA SUBREGION TASK FORCE
PROS & CONS OF RHNA SUBREGION FORMATION
necessarily confined by a city
boundary.
Creates a forum to discuss
Share resources - - may share
sharing of planning resources
in cost to pay consultants for
housing element preparation
or program ideas (for those
who want to share).
Time, effort & resources
What if subregion fails to
which may end in same
produce a different
result.
allocation?
Lack of trust for fair and
Some cities may shirk their
equitable process.
responsibility to step up and
accept housing.
Increases local control
Ability to control own
numbers and improve
county -wide performance.
Loss of political distance from
Pressure on community to
MTC and ABAG
produce additional housing.
Lack of clarity of the benefits
City worried about allocation
to accept someone's
dumping
numbers/housing
Still need to plan for housing for all income levels
Can't go to zero. Every
jurisdiction still has an
allocation in every income
level.
No role model
No other subregion has such
large population variances.
Increased use of ADUs
ADUs more feasible with
cities with large residential
lots.
RESOLUTION NO.
RESOLUTION OF INTENT TO SUPPORT FORMATION OF A HOUSING SUBREGION OF
SANTA CLARA COUNTY LOCAL AND COUNTY GOVERNMENTS TO FACILITATE AND
IMPLEMENT COUNTYWIDE HOUSING PRODUCTION CONSISTENT WITH THE
REGIONAL HOUSING NEEDS ALLOCATION (RHNA) FORMULA CURRENTLY
ASSIGNED BY THE ASSOCIATION OF BAY AREA GOVERNMENTS (ABAG)
WHEREAS, Housing Element Law (Gov. Code Sections 65580— 65589.8) provides for a Regional Housing
Need Allocation process (RHNA); and
WHEREAS, to implement such RHNA process in the San Francisco Bay Area, the State of California has
delegated to the Association of Bay Area Governments (ABAG) responsibility to adopt an allocation
methodology, then use the adopted methodology to assign to each jurisdiction in the Bay Area the
obligation to zone enough housing development capacity to accommodate production of a specific
number of housing units during the period from 2021 through 2029; and
WHEREAS, Government Code Section 65584.03 provides that certain combinations of local
governments may form a subregion to perform RHNA for themselves in order to allocate among
themselves the total number of housing units assigned to them collectively by ABAG; and
WHEREAS, the City/County of is interested in exploring the formation of a Regional
Housing Needs Allocation (RHNA) subregion consistent with the California Government Code Section
65584 et seq and acceptable to the Association of Bay Area Governments (ABAG) and the California
Department of Housing and Community Development (HCD) to facilitate collaboration with the county
and all cities in the County of Santa Clara, to efficiently and effectively deliver housing production goals;
and
WHEREAS, the Board of the Cities Association of Santa Clara County has directed the review of the
benefits of such a subregion and subsequently representatives of the Cities Association of Santa Clara
County (CASCC) have formed a committee to evaluate and make recommendations regarding the
importance of and opportunities for success through shared housing strategies which could be facilitated
by a subregional effort; and
WHEREAS, housing is a countywide challenge, and housing production types, numbers, density,
appropriateness and affordability levels can vary in different communities, and the Cities' recognize all
production types are important to the housing supply of the County and its related economic and social
health; and
WHEREAS, Cities are individually accountable for, and retain full local authority for, identifying sites for
housing development and for adopting and implementing housing policies intended to facilitate
production of housing to meet local, regional and state policy objectives embodied in the numbers
prescribed by ABAG the Sustainable Community Strategy that will be adopted by ABAG and the
Metropolitan Transportation Commission (MTC) in 2021; and
WHEREAS; through mutual cooperation and planning, the production of these housing units may be
enhanced through collective efforts and resources, therefore creating a forum for developing countywide
policy consensus on matters related to the Sustainable Community Strategy;
NOW, THEREFORE the City of does herebyfind, determine, resolve and order as follows:
Section 1: That it is in the best interest of the City to join with other cities in Santa Clara County to
explore creation of the RHNA subregion and that by working together to plan for housing growth, the
stage is set for implementing housing and more housing will ultimately be built to meet the needs of
the entire County and its residents.
Section 2: That the City Manager is hereby authorized and directed to enter into discussions regarding
the formation of a RHNA subregion and the development of a workplan and budget, and schedule of
actions leading to the countywide, self -administration of the housing needs allocation process,
allocating the countywide total housing needs allocation among all the Cities and unincorporated
County by consensus; and to bring back a recommendation and resolution for action to join a RHNA
subregion, or in the alternative, an explanation detailing the decision not to participate in the RHNA
subregion.
By-laws of the Santa Clara County Subregional RHNA Process
PURPOSE & BYLAWS
The cities within the County of Santa Clara, and the County of Santa Clara, have adopted
resolutions to participate as a Subregion (hereinafter referred to as "Subregion") in the
Regional Housing Needs Allocation (RHNA) Process. The Cities Association of Santa Clara
County (hereinafter referred to as "CASCO') will act as the representative for the Subregion.
The Subregion hereby adopts the following bylaws for the purpose of providing for the orderly
conduct of its affairs.
ARTICLE I NAME
The name of the separate entity established by the resolutions is the "Santa Clara County Sub -
Regional RHNA Process" and may be referred to as "Subregion".
ARTICLE II PURPOSES
Section 1. Subregion shall have the following purposes:
(a) Plan, organize, and maintain the work of the Subregion and be responsible for its overall
operation;
(b) Advise City Managers, City Councils and the Board of Supervisors of all significant
activities of the Subregion;
(c) Prepare, review, monitor, present to the cities and the County, and facilitate a
consensus on the Regional Housing Needs Allocation housing shares for all the cities and
the County for the 2021 Housing Element;
(d) Submit to the Association of Bay Area Governments (ABAG) for approval the housing
shares for Santa Clara County (cities and County).
(e) Provide a forum for developing a countywide policy consensus, to the greatest extent
possible, on matters related the Sustainable Communities Strategy process of which the
Regional Housing Needs Allocation is a part; and a channel for communicating such
consensus to the Joint Policy Committee of the Metropolitan Transportation
Commission and the Association of Bay Area Governments overseeing the Sustainable
Communities Strategy process from time to time when such a consensus is requested or
required by the Joint Policy Committee.
Section 2. Subregion shall not participate in or endorse any political activity involving any
individual candidate for public office. The selection of officers within Article IV herein shall not
be considered a political activity subject to this section.
ARTICLE III MEMBERS
Section 1. The County of Santa Clara and each city which has adopted a resolution of
participation shall be members of the Subregion.
Section 2. The RHNA Policy Committee (PC) of the Subregion shall consist of a member of the
City Council of each participating city to be selected by that city, and one member of the Board
of Supervisors to be selected by the Board of Supervisors.
Section 3. Each member City Council and the Board of Supervisors may select one alternate
member from its body who shall participate when the regular member is absent.
Section 4. If both the member and the alternate will be absent, the City or County, respectively,
may designate a substitute for that meeting and notify CASCC, in writing, of the designation.
Section 5. Any member may withdraw from the Subregion by adopting a resolution and
providing a written notice of intention to do so to the chairperson of the PC. The rights and
obligations of any such member shall terminate 30 days after acceptance by the PC.
Section 6. If any member, or designated representative, fails to attend two consecutive
meetings, without notification of the Chairperson or the Executive Director, the Chairperson
will notify the City Council or Board of Supervisors to encourage future participation.
ARTICLE IV- OFFICERS
Section 1. The officers of the PC shall consist of a chairperson and vice chairperson.
Section 2. The chairperson and vice chairperson shall be elected by the PC and shall serve at the
will of the PC.
Section 3. Nomination for officers of the PC shall be made from the floor. Nominations shall be
made by voting members of the PC only.
Section 4. The chairperson and vice chairperson must be voting members of the PC.
Section 5. Nominations and election of the chairperson shall precede nominations and election
of the vice chairperson. Voting shall be public.
Section 6. The chairperson shall preside at all meetings and may call special meetings when
necessary.
Section 7. The vice chairperson shall perform the duties of the chairperson in the absence of the
chairperson.
Section 8. A special election shall be called by the Board of Directors if the chairperson and/or
vice chairperson is unable to serve.
Section 9. All officers shall serve without compensation.
Section 10. The chairperson or vice chairperson may be removed from office at any time by a
majority vote of those members present.
ARTICLE V STAFF SUPPORT
Section 1. The CASCC Executive Director, CASCC staff and contractors shall provide support to
the Subregion and all the established committees.
Section 2. The PC shall have dealings with staff and contractors through the CASCC Executive
Director.
Section 3. All participating jurisdictions will share in the cost.
ARTICLE VI COMMITTEES/ STAKEHOLDER REVIEW
Section 1. The following standing committees shall assist in accomplishing the goals of the
SANTA CLARA COUNTY SUB REGIONAL RHNA PROCESS:
• RHNA Policy Committee
• RHNA Technical Advisory Committee
• City Managers Association
• City Councils and Board of Supervisors
• Association of Bay Area Governments
Section 2. RHNA Policy Committee (PC) - 16 Members, one member from each city and the
county, composed of elected officials. The primary role is to provide initial policy input to the
process, review the RHNA TAC recommendations and adopt a policy consensus for transmittal
to the cities and the County for ratification.
Section 3. RHNA Technical Advisory Committee (RHNA TAC) - 16 Members - One member from
each city and the county. Composed of senior staff technical experts in the field of housing and
land use. Member agencies may flexibly assign different technical experts as a function of the
subject being discussed. However, it is important that there be good communications between
the different representatives such that issues do not need to be repeated or there are no
conflicting positions from the representatives. Primary role is technical development of the
issues and solutions.
Section 4. City Managers Association - Monthly reports will be provided to the City Managers
through the City Managers Association. This will allow ongoing input by the City Managers in
the process. The final product will be presented to the City Managers for their recommendation
to the RHNA PAC for approval of the final product. Primary role of the City Managers is
practical assessment of the issues and solutions.
Section 5. City Councils/ Board of Supervisors - Primary role is ratification of the RHNA Final
Allocation prior to submittal to Association of Bay Area Governments (ABAG).
Section 6. Association of Bay Area Governments (ABAG) - Final approval of RHNA Final
Allocation.
Section 7. An appeals process will be established by the PC in conjunction with ABAG to hear
appeals by any cities or the County that disagree with their housing share as allocated by the
Subregion.
ARTICLE VII MEETING
Section 1. The PC shall establish by resolution the date, time, and place for regular PC meetings.
Section 2. The PC may hold special meetings called in accordance with Article IV, Section 6.
Section 3. All meetings of the PC shall be held in accordance with the Brown Act, Government
Code section 54950 Ct seq.
ARTICLE VIII CONDUCT OF BUSINESS
Section 1. A quorum shall consist of at least a majority of the members and shall be required for
all meetings of the PC.
Section 2. Except as state otherwise in these by-laws, all decisions of the PC shall be by majority
vote of those present.
Section 3. Adoption of the Final Regional Housing Needs Allocation shall require:
1. consent of a majority of all cities and the County participating in the Subregion, and
2. consent of each jurisdiction that has been allocated a greater share of housing than
the ABAG default allocation.
Section 4. Upon adoption of the final regional housing numbers, the subregion will
share support for outcome and support each other, for example the subregaion releasing a
resolution, annual report, and press event.
Section 5. Except as provided in these bylaws, or by a majority vote of those present, Roberts
Rule of Order Revised shall constitute the parliamentary authority for the PC.
Section 6. These by-laws may be amended by a two-thirds majority vote of members present
and who represent a majority of all cities and the County.
ARTICLE IX OTHER MATTERS
Section 1. No member shall receive compensation or reimbursement from PC or CASCC for
expenses incurred in attending any meeting or other function.
CITY OF
IM
CUPERTINO
Su b ect
COMMUNITY DEVELOPMENT DEPARTMENT
PLANNING DIVISION
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3308 • FAX: (408) 777-3333
CUPERTINO.ORG
HOUSING COMMISSION STAFF REPORT
Meeting Date: August 9, 2018
Response to the Santa Clara Civil Grand Jury Report on "Affordable Housing Crisis:
Density is our Destiny."
Recommended Action
That the Housing Commission provide comments and a recommendation to the
City Council on the City's response (see Attachment 1.)
Discussion
Background
On June21, 2018, the Santa Clara County Civil Grand Jury issued a report pursuant
to its i nvesti gat ion i nto ch al Iengesfaced by the Cou my of Santa Clara and its 15 cities,
and non-profit agencies such as the Housing Authority of Santa Clara County, Valley
Transportation Authority (VTA) and Santa Clara Valley Water District (SCVWD) in
the production of below market rate (BM R) housing (see Attachment 2.) The Grand
Jury Report states that it tackled the issue of affordable, or below market rate (BM R)
housing sincetheneed for affordable housing iscritical, California's report card gives
Santa Clara County an F grade and the need for more housing has challenged the
County for morethan adecade.
The Grand Jury researched Housing Elements, Regional Housing Needs Allocation
(RHNA) and actual production of units, for both thecurrent RHNA cycle (2015-2023)
and the prior cycle (2007-2014.) The Grand Jury's review focused on the following
topics:
1. RH N A
2. NIMBYvsYIMBY
3. Inclusionary Housing ordinances
4. Transit -Oriented Development
5. Jobs -Housing Ratios
6. Linkageand Impact Fees
7. Employer Contributions
8. Accessory Dwelling Units
9. Governmental Entities other than
Cities
The Civil Grand Jury Report directed individual citiesto respond tospecificfindings
and recommendations.
Analysis
The City of Cupertino isincluded in the Santa Clara County Civil Grand Jury Report
because it is a permitting authority for building permits and land use authority
within the County of Santa Clara. Asa result of its inclusion in the report, the City is
required to respond by letter or electronic transmission to the Civil Grand Jury's
Findings and Recommendations within 90 days, pursuant to California Penal Code
933.05. The City may respond to the report's Findings in oneof thefollowing ways:
■ Agree ■ Partially Disagree
■ Partially Agree ■ Disagree
The City may respond to the Recommendations in one of the following ways:
■ Hasbeen implemented ■ Requires further analysis
■ Has not been implemented, but ■ Will not be implemented
will be implemented in thefuture
The Civil Grand Jury Report on "Affordable Housing Crisis: Density is our Destiny"
included 20 Findings and 19 associated Recommendations. Cupertino is required to
respond to ten Findings and nine Recommendations. Attachment 1 contains the
City's draft responsesto the Findings and Recommendations.
In summary, the City agrees with seven Findings and partially agrees with three
Findings. In addition, responsesto all nine Recommendations to which the City must
respond to have also been included. If it requires future implementation, a specific
timeframe has been given.
Conclusion
It is recommended that the Housing Commission consider the proposed responses
and recommend that the City Council approvethe responses (see Attachment 1.)
N ext Steps
The Housing Commission's recommendation will be presented to the City Council
at its August 21, 2018 meeting. Once approved, the letter will be transmitted to the
Santa Clara County Civil Grand Jury by thedeadlineof September 20, 2018.
Prepared by: Kerri Heusler, Senior Planner
Piu Ghosh, Principal Planner
Reviewed by: Benjamin Fu, Assistant Director of Community Development
Approved by:Aarti Shrivastava, Assistant City Manager
Attachments:
1. Responsesto Civil Grand Jury Report: Density is our Destiny
Findings
Findings
Response
Recommendations
Recommendations Response
la: To i m prove jobs-to-housi ng
imbalances, thecitiesof Palo Alto,
Santa Cl ara, M i I p i tas, M ou ntai n
Requires further analysis.
la: Lack of housing near
View and Sunnyvaleshould
employment centers worsens traffic
identify, by June 30, 2019, parcels
The recommendation does not identify
congestion in the County and
Agree
where housing densitieswill be
Cupertino as needing to act to increase
increasesthe urgency to add such
increased. The identification should
housing densities. However, Cupertino
housing.
includewhen projects are expected
continuesto plan for its Regional Housing
to be permitted and the number of
Needs Allocation (RH NA.)
BM R units anticipated for each
parcel.
Requires further analysis.
Cupertino has one of the highest Below
Market Rate housing impact and linkage fee
requirements in Santa Clara County. The
2a: The County should form atask
City isworking to update this in FY 2018-
2a: Employers in the County have
force with the cities to establish
2019. H owever, if a county led task force is
created avibrant economy resulting
Partially
housing impact fees for employers
established, it should take into account the
in an inflated housing market
Agiree
to subsidize BMR housing, by June
efforts Cupertino hasmadeto establish high
displacing many residents.
30, 2019.
impact and Iinkagefeesand consider only
providing aframework of how an employer
based impact fee might be established, while
allowing cities the flexibility to set their rates
tailored to each jurisdiction, consistent with
theestablished framework.
Findings
Findings
Response
Recommendations
Recommendations Response
Requires further analysis.
Cupertino has one of the highest Below
Market Rate housing impact and linkage fee
requirements in Santa Clara County. The
City isworking to update this in FY 2018-
2019. H owever, if a county led task force is
2b: Every city in the County should
established, it should take into account the
2b: Contributions to BMRhousing
enact housing impact feesfor
efforts cities have made to establish high
from employersin the County are
Agiree
empIoyersto create afund that
impact and linkage fees and consider only
not mandated nor evenly shared.
subsidizes BMRhousing, by June30,
providing aframework of how an employer
2019.
based impact fee might be established and
allow citiesthe flexibility to set their rates
tailored to each jurisdiction, consistent with
theestablished framework. Cupertino was
able to recently contribute $4.672 towards an
18 -unit senior affordable project being
developed by Charities Housing within the
City. The project brokeground in April 2018.
3a: RHNA sub -regions formed by
several San Francisco Bay Area
3a: Every city in the County should
counties enable their citiesto
identify at least one potential RHNA
Requires furtheranalysis.
develop promising meansto meet
Agree
sub -region they would bewilling to
The City's Association of Santa Clara County
their collective BM R requirements.
help form and join, and report how
is already considering the formation of a
Su ch su b -reg i on s can sery e as
the sub-region(s)will increase BMR
RHNA sub -region for Santa Clara County.
instructive examplesfor cities in the
housing, by the end of 2019.
County.
Findings
Findings
Recommendations
Recommendations Response
Response
Requires further analysis.
3b: A RH NA sub -region should be
The Ci ty's A ssoci ati on of Santa Clara County
formed including one or more low-
is already considering the formation of a
cost cities with one or more high-
RH NA sub -region for Santa Clara County.
cost cities, by the end of 2021.
Santa Clara County has both low-cost and
high-cost cities.
Requires further analysis.
3c: High-cost cities and the County
Once a sub -region is formed, cities can
3c: M ore BM R units could be
should provide compensation to
consider, within statutory limitations, the
developed if citieswith lower
Partially
low-cost citiesfor increased public
best way to partner with low-cost cities on
housing costsform RHNA sub-
Agree
services required for taking on more
the production of more BM R unitswhile
regionswith adjacent citieswith
BMRunits in any high-rent/low-rent
ensuring that each community continuesto
higher housing costs.
RH NA sub -region, by the end of
have a healthy and diverse mix of housing.
2021.
3e: H igh-cost/low-cost RH NA sub-
regions could be attracti ve to high-
cost ci t i es becau se t h ey cou I d m eet
Agree
their BM R requ i rements w ithout
providing units in their cities.
5a: Uneven BMR achievements
among cities is caused in part by
Agree
varying inclusionary BM R unit
percentage requirements.
Findings
Findings
Response
Recommendations
Recommendations Response
Requires further analysis.
The City adopted one of the highest housing
mitigation fees in Santa Clara County in May
2015. The City is conducting an Economic
Feasibility Study, to becompleted in 2019,
which will evaluate existing fees. While the
City's objective is to obtain on-site affordable
units, the BM R Ordinance permits
developers to meet the requirement by
6: I n -I i eu fees, w hen offered as an
6: Citieswith an in -lieu option
providing off-siteunits, land donation, or
option, aretoo low to producethe
should raise the fee to at least 30%
payment of Housing Mitigation Fees
needed number of BM R units and
Agree
higher than the inclusionary BMR
equivalent to the project's BM R
delay their creation.
equivalent where supported by fee
responsibility. Small residential projectswith
studies, by the end of 2019.
less than seven units have the option of
paying the Housing Mitigation Fee or
provide one BM R unit. Cupertino's high
BM R fees has increased the amount of
affordable housing now included in
development projects. Several projects
approved within the City now include
affordable housing whereearlier the
developer may have proposed the payment
of an in -lieu feeasan alternative.
Findings
Findings
Recommendations
Recommendations Response
Response
Requires further analysis.
Cupertino will consider collaborating with a
7: A task force to communicate the
task force to communicate the value and
valueand importanceof each city
importance of each city meeting its RHNA
7: NIMBY (Not in My Backyard)
Partially
meeting itsRHNA objectives for
objecti ves for BMRhousing, should one be
opposition adverse) affects the
pp y
Agree
BMRhousing should be created and
formed. However, residents continue to have
supply of BM R housing units.
funded by the County and all 15
valid concerns about traffic congestion and
cities, by June 30, 2019.
the lack of meaningful transit in the West
Valley. In addition, there should be more
collaboration between ci t i es to ad d ress su ch
regional issues, such as, transit.
8: It is unnecessarily difficult to
8: All 15 cities and the County
Has not been implemented but will be
P
implemented in the future.
confirm how many BM R units are
should annually publish the number
constructed in a particular year or
RH NA cycle because cities and the
Agree
of constructed BM R units, startingin
This information will be provided on the
County only report permitted units.
April 2019.
City's website, starting in April 2019.
AFFORDABLE HOUSING CRISIS
DENSITY
OUR DESTINY
Civil Gra
June
TABLE OF CONTENTS
Summary.........................................................
2
Background......................................................
3
Methodology.....................................................
4
Discussion........................................................
4
Regional Housing Needs Assessment
Suggested Solutions
Communications Campaign ......................
11
Strengthening RHNA................................
11
As Goes San Jose RHNA Performance -
So Goes the County ..................................
14
Inclusionary Housing Ordinances ..............
17
Density Bonus Implementation
and Density Near Transit ..........................
18
California Versus Its Cities .......................
18
Housing and Employment - Commercial Linkage
Fees .........................
19
Employer Contributions ...........................
21
Accessory Dwelling Units ..........................
23
Residential Impact Fees and Parcel Taxes ......
23
VTA Serves as Model for Public Entities .....
24
Findings and Recommendations .........................
25
Required Responses ..........................................
30
Appendix..........................................................
31
Glossary and Abbreviations ................................
42
Page 1 of 45
SUMMARY
The critical need for affordable housing is the issue of the day in Santa Clara County ... and
our cities are flailing. Higher densities are a necessary solution, but cities are not fully
embracing this solution in the face of resident resistance, and a lack of funding, land and
urgency. In addition, there is confusion as to the effect of higher densities on traffic
congestion.
California's report card gives Santa Clara County (County) cities an F. Everyone shares the
blame and the challenge. A city marches to the beat of its populace, and with citizen
resistance, the affordable housing crisis continues.
However, innovation -focused Silicon Valley points to some affordable housing successes. In
December 2017, the Mountain View City Council approved general development plans for
nearly 10,000 housing units. This North Bayshore plan includes 2,000 affordable units, 30%
more than officials envisioned just a few years earlier. The County's other successes include
the new 262 -unit Alexander Station in Gilroy, with every unit priced for below -median -
income households, and the Santa Clara Valley Transportation Authority's (VTA) organized
housing efforts.
An increasing number of people are one missed pay check away from relocation or
homelessness. The lack of affordable housing is destined to have an increasingly profound
impact on the County. Ironically, the County's great economic success is a cause of the
exceedingly high housing costs.
The 2017-18 Santa Clara County Civil Grand Jury (Grand Jury) tackled the issue of affordable,
or below market rate (BMR) housing. The Grand Jury's investigation made one thing clear
— drastic action is long overdue. Greater communication about the need for every city to do
its share will help. Cities can increase densities and enact policies to spark more BMR
housing. Yet, there are only minimal repercussions for cities that do not meet State -set BMR
housing objectives.
Passage of Measure A, a $950 million housing bond, in 2016 demonstrates that Countyvoters
are willing to pay a price to help solve the problem. Housing officials estimate Measure A
will create and preserve 5,000 housing units for the neediest.' That is a start, but the County
needs more than 67,000 such units.2
Besides cities, other governmental entities and the County's largest employers must step up.
There is no getting around that higher densities are needed, with a greater focus on putting
housing near jobs and near transit hubs, taking pressure off regional infrastructure.
Increasing fees that developers can pay in lieu of providing BMR units within projects is
1 https:I/www.sccgov.org/sites/scc/Pages/Affordable-Housing-Bond-Measure-A.aspx
2 Ibid
Page 2 of 45
critical. Some cities need to boost their inclusionary ordinances, which require that
developments include BMR units. Accessory dwelling units (ADUs) should be encouraged.
Employers must shoulder some of the load, perhaps via a BMR housing impact fee based on
number of employees.
San Jose, which accounts for more than half the County population, has long had more
housing than jobs and has not implemented commercial linkage fees. However, the time has
come for the nation's 10th -largest city to take that step. Smaller cities with little commercial
sites should consider residential impact fees or parcel taxes.
Cities can create a Regional Housing Needs Allocation (RHNA) sub -region that pools the
resources of more than one city to meet housing needs. Cities should have to report not just
housing permits issued, as is now the case, but also the number of BMR units actually
constructed.
BACKGROUND
The phrase "below market rate" itself reveals a big part of the challenge. Funding for BMR
housing comes from a variety of federal, state, local and private sources.
The need for more housing has challenged the County for more than a decade. The Grand
Jury focused on BMR housing, which consists of households with incomes designated as
Extremely Low Income (ELI), Very Low Income (VLI), Low Income (LI) and moderate. (See
Table Al in the Appendix.)
The average monthly rent for a two-bedroom apartment in San Jose jumped 21% to $2,8343
this year from $2,3504 five years ago. As for single-family homes, the middle class is being
priced out. In February 2018, the median price of a single-family home in the County rose a
staggering 34% from February 2017, to $1.29 millions. From 2012-16, wages in Santa Clara
County, San Mateo County and San Francisco County areas have risen an average of 2.8
percent a year, while average housing rents have risen roughly 9 percent a year.6
Housing growth continues to fall far behind job growth in the County. The San Francisco Bay
Area Planning and Urban Research Association reports that from 2010 through 2015, San
3 https:I/www.rentcafe.com/average-rent-market-trends/us/ca/santa-clara-county/san-Jose/
4 San Jose Housing Market Update Q2 2013, referenced source is RealFacts,
http:/lwww.sanioseca.gov/DocumentCenter/View/19820, page 4
5 https:/lwww.mercurynews.com/2018/03/22/bay-area-home-prices-keep-going-up-one-county-sets-a-
new-record/
6 https: [/www. mercurynews.com/2017/07/17/bay-area-rent-increases-far-outstrip-wage-gains/
Page 3 of 45
Jose created 171,000 jobs, but just 29,000 housing units. From 2010 through 2016,
employment in Silicon Valley jumped 29%, while housing inventory rose just 4%.7
METHODOLOGY
The Grand Jury interviewed over 65 people for this report, many more than once. Those
interviewed included elected and appointed government officials, leaders of nonprofits and
developers.
The investigation covered BMR housing challenges faced not just by the County and its 15
cities, but also by nonprofits and agencies such as the Housing Authority of Santa Clara
County, as well as the VTA and Santa Clara Valley Water District (SCVWD).
The Grand Jury researched the Housing Elements for each city and for the County, as well as
the Regional Housing Needs Allocation (RHNA) for the current housing cycle tracked by
RHNA, 2015-2023, and the prior cycle, 2007-2014. More than 100 documents and media
articles were reviewed and a visit to a homeless shelter helped the Grand Jury appreciate the
impact of our BMR housing shortage in a more personal manner.
DISCUSSION
Density is our Destiny
Density is at the heart of the many BMR housing solutions. The Grand Jury's review focused
on the County's 15 cities and unincorporated area, and included these topics:
• the Regional Housing Needs Assessment (RHNA - pronounced ree-na),
• NIMBY (Not in My Backyard) vs. YIMBY (Yes in My Backyard) advocacy
• inclusionary housing ordinances
• transit -oriented development
• jobs -housing ratios
• linkage and impact fees
• employer contributions
• accessory dwelling units
• governmental entities other than cities
7 httl2://svlg.org/new-study- shows- students -making -incremental -progress -in -some -key -educational -areas -
and -a -vexing -exodus -of -residents -from -the -bays
Page 4 of 45
Regional Housing Needs Assessment
California law vests most land -use regulatory authority with cities and counties. Since 1969,
California has required that these jurisdictions adequately plan to meet their housing needs.
Cities and counties must adopt Housing Elements, updated in every eight-year cycle, as part
of their general plans.$
California's RHNA is crucial to the Housing Elements. The State requires cities to submit
Annual Progress Reports on their Housing Elements to the California Department of Housing
and Community Development (HCD) and the Governor's Office of Planning and Research.9
Yet, the RHNA process does little to ensure that housing needs are met. Cities and counties
face no consequences other than bad press for failing to meet their RHNA objectives.
The State Legislature is starting to force cities to increase the housing permitting pace, a
source of conflict between the State and cities.
HCD determines the RHNA goals for California's regional planning bodies, which are known
as Council of Governments (COGS). Each COG uses demographic data to calculate housing
needs and assign RHNA goals for each city and county, in eight-year cycles.
Association of Bay Area Governments (ABAG) is the COG for the nine Bay Area counties.
The RHNA process requires local governments to be "accountable" for projected housing
needs. RHNA provides a benchmark for evaluating local zoning and regulatory actions.lo
The County's BMR RHNA results for the prior cycle (2007-2014) are shown in Figure 1.
This data is provided in Appendix, Table A2. None of the County's 15 cities met their BMR
goals last cycle, and 11 failed to even reach half.
Figure 1 shows that the best BMR performers in the last cycle were unincorporated County
(92%), Sunnyvale (85%) and Campbell (83%), while the worst were Saratoga (8%), Los
Gatos (13%) and San Jose (15%).
Figure 2 shows how the cities are doing this cycle through 2017, with Los Gatos (2%),
Campbell (2%) and Santa Clara (2%) barely making a dent in BMR permits and Milpitas
AWOL (0%). This data is provided in Appendix, Table A3.
Los Gatos and San Jose requested that their 2014 permits be counted in the current 2015-
8 California Department of Housing and Community Development, "Regional Housing Needs Allocation and
Housing Elements", http//www.hcd.ca.govlcommunity-development/housing-elementZindex.shtml
9 Ibid.
io California Department of Housing and Community Development, "Projected Housing Needs - Regional
Housing Needs Allocation", httl2://www.hcd.ca.gov/community-development/building-blocks/housing-
needs JVroj
housing-needs/proj ected-housing-needs.shtml
Page 5 of 45
2023 cycle.11 The request was granted so now these two cities have an extra year of units
credited compared to the other cities in the County. For these two cities, the numbers in
Figure 2 include 48 months of performance, vs. 36 months for the other cities. The RHNA
need in the current cycle is calculated from Jan 1, 2014, through Oct 31, 2022. (See "RHNA
current cycle" definition in the Glossary.)
Figure 3 shows performance in BMR and overall permits for the prior cycle and current cycle
through 2017. Three cities struggled to provide BMR units but succeeded in above -moderate
housing: Milpitas (19% of BMR vs. 366% of above -moderate), Los Altos (13% vs 645%) and
Los Altos Hills (41% vs 375%). This data is provided in Appendix, Table A4.
Trailing in BMR units are Los Gatos (7%), Saratoga (7%), San Jose (10%) and Cupertino
(10%).
As the Figures on the following pages show, no city met its BMR objective in the prior cycle
and only Gilroy is close to being on pace in the current 2015-2023 cycle. Proposed SB 828
says RHNA goals should be viewed as the minimum numbers needed. Worse yet, the Grand
Jury found that many BMR permitted units have not been built. Because there is no
requirement that constructed units be reported, the permitted units might never be built.
San Jose is presented in gold in Figures 1 through 4 to highlight its importance to the County,
as discussed below in the section headlined As Goes San Jose's RHNA Performance, So Goes
the County's.
11 San Francisco Bay Area Progress in Meeting 2015-2023 Regional Housing Need Allocation (RHNA),
https:[/abag.ca.govlplanning/housingneeds/pdfs/2015-2023%20 RHNAProgressReport. pdf
Page 6 of 45
Figure 1: RHNA results for the 2007-2014 cycle
Percent of 2007-2014 RHNA BMR Goal Met
Saratoga
Los Gatos
San lose
Palo Alto
Cuptertino
Mountain View
Gilroy
Santa Clara
Los Altos
Morgan Hill
Milpitas
Los Altos Hills
Monte Sereno
Campbell
Sunnyvale
Unincorporated
0% 101/. 20% 30% 40% 50% 601/. 701/. 80% 90% 100%
Percent of 2007-2014 RHNA Above Market Goal Met
Saratoga 0
Campbell 0
Palo Alto
San lose
Los Gatos
Unincorporated
Sunnyvale
Gilroy
Monte Sereno
Cuptertino
Mountain View
Santa Clara
Morgan Hill
Los Altos Hills
Milpitas
Los Altos
0% 100% 200% 300% 400% 500% 600% 700% 800% 9001 1000°/ 11000/. 12001/.
Percent of 2007-2014 RHNA Total Units Goal Met
Saratoga r
Palo Alto
Los Gatos
Sanlose
Cuptertino
Campbell
Monte Serena
Gilroy
Unincorporated
Mountain View
Sunnyvale
Santa Clara
Morgan Hill
Los Altos Hills
Los Altos
Milpitas
0% 50% 100% 150% 200% 250% 300% 350%
Page 7 of 45
Figure 2: RHNA results for 2015-2023 cycle, through 201712
Percent of 2015-2023 RHNA BMR Goal Met
Milpitas
Santa Clara
■
Los Gatos
■
Campbell
■
Los Altos
■
Cupertino
■
Sunnyvale
■
San Jose
L—A
Saratoga
Palo Alto
Unincorporated
Morgan Hill
Mountain View
Monte Sereno
—
Los Altos Hills
—
Gilroy
30% 40% 50% 60% 70% 80% 90% 100%
Percent of 2015-2023 RHNA Above Market Goal Met
Saratoga
Palo Alto
Los Gatos
Sunnyvale
Campbell
San lase
Cupertino
Santa Clara
Milpitas
Mountain View
Gilroy
Morgan Hill
Monte Serena
Los Altos Hills
Los Altos
Unincorporated
0%
100% 200% 300% 400% 500% 600% 700% S00% 900%
Percent of 2015-2023 RHNATotal Units Goal Met
Saratoga
Los Gatos
Palo Alto
Cupertino
Sunnyvale
Campbell
San Jose
Santa Clara
Milpitas
Monte Sereno
Mountain View —
Los Altos Hills —
Morgan Hill —
Los Altos p
Unincorporated r
Gilroy —
0% 20%
40% 6091. 80% 100% 120%
12 Regional Housing Needs Allocation and Housing Elements, 51h Annual Progress Report Permit Summary,
httl2://www.hcd.ca.gov/community-development/housing-element/index.shtml
f
Page 8 of 45
Figure 3: RHNA results for 2007-2017
Percent of 2007-2017 RHNA BMR Goal Met
Los Gatos
Saratoga
Cupertino
San lose ---A
Palo Alto
Los Altos
Santa Clara
Mountain View
Milpitas
Morgan Hill -
Gilroy
Sunnyvale
Monte Serena
Campbell
Los Altos Hills
Unincorporated
0% 10% 201/ 300/ 40% 509/ 60% 70% 809/ 90% 100%
Percent of 2007-2017 RHNA Above Market Goal Met
Saratoga
Campbell
Palo Alto
Los Gatos
San lose
Sunnyvale
Cupertino
Unincorporated
Gilroy
Mountain View
Monte Sereno
Santa Clara
Morgan Hill
Milpitas
Los Altos Hills
Los Altos
0%
100% 200% 300% 400% 500% 600% 700%
Percent of 2007-2017 RHNA Total Units Goal Met
Saratoga
Los Gatos
Palo Alto
San lase
Cupertino
Campbell
Sunnyvale
Monte Serena
Mountain View
Santa Clara
Los Altos Hills
Gilroy
Morgan Hill
Unincorporated
Milpitas
0% 20% 40% 60% 8091. 100% 120% 140% 160%
Page 9 of 45
The Debate and Suggested Solutions
The Grand Jury reviewed scores of topics that cover aspects of the BMR housing challenge.
This report focuses on several potentially impactful solutions. But first, there is a need to
understand the resistance to continued growth.
The Debate
There often are sound reasons to limit development. Too much development stresses
infrastructure, as vocal local residents often are quick to point out. The NIMBY (Not in My
Backyard) mindset can be strong, with arguments that sway politicians and discourage BMR
developers.
NIMBY arguments often center on transportation and schools. Greater housing density
requires acceptance of greater traffic congestion and therefore the need for modes of travel
other than the automobile. Improving transportation is often an elusive piece of the housing
puzzle, especially in cities with a high jobs -to -employed resident imbalance. Commute times
have increased by 17% in Silicon Valley this past decade. Commute times have more than
doubled to 66,000 additional vehicle hours daily.13
Another big piece of the puzzle is the stress that added population puts on overburdened
schools.
A grassroots movement known as YIMBY (Yes In My Backyard), led largely by millennials,
has started to exert influence in support of denser developments.14 YIMBYs support more
affordable housing and backed the failed SB 827, which would have forced cities to increase
development densities near transit hubs.15
The no-more-growth/no-more-jobs constituency is vocal. They want to cap jobs and
population near current levels. The ramifications of these views for our economy must be
clearly communicated.
Planners must consider which key variables should be monitored and optimized when
considering growth implementation and limits. The Grand Jury urges leaders in the County
to clearly articulate their views regarding the most critical variables to monitor and manage
in determining the preferred pace and limits for housing and employment growth.
112018 Silicon Valley Index, Rachel Massaro, Institute for Regional Studies and Joint Venture Silicon Valley,
page 9 https:I/siliconvalleyindicators.org/download-the-2018-index/
14 https:I/cayimby.org/
1s Ibid.
Page 10 of 45
Communications Campaign
The Grand Jury found strong support among both public -sector and private -sector leaders
for a unified communications campaign to educate County citizens regarding the critical
need for BMR housing and the necessity of every jurisdiction doing its RHNA share.
Many residents do understand the need. The proof came on Nov. 8, 2016, when more than
450,000 County residents voted to approve affordable housing Measure A, needed to issue
$950 million in bonds to fund BMR housing countywide. Still, the margin of approval was a
thin 1.21 percentage points above the two-thirds required.
SB 316 is on the Nov. 6, 2018, ballot. It authorizes the issuance of $3 billion in bonds for BMR
housing statewide. But officials say Measure A and SB 3 won't be enough to meet demand for
BMR housing.
Officials say more outreach describing the magnitude of the problem is needed. While the
Cities Association of Santa Clara County is among entities that could lead the way, the Grand
Jury believes the County is the logical choice to facilitate a unified communications campaign
that aims to convert NIMBYs into YIMBYs and ease the road ahead for higher densities and
more BMR housing.
A communications campaign could inform residents about a lesser-known component of
Measure A. It includes support of social services such as counseling and job training for the
ELI, VLI and LI segment. As one County official put it, "Housing is actually a treatment," a part
of whole -person care. That message, properly articulated, can go a long way toward
overcoming the objections of the NIMBYs.
The communications campaign should analyze the need for higher densities in the context
of the leadership consensus for preferred pace and limits for housing and employment
growth.
Strengthening RHNA
One avenue for possible cooperation among cities is to form one or more RHNA sub -regions.
ABAG encourages forming sub -regions. San Mateo, Napa and Solano counties have done so,
but not Santa Clara County.
Sub -regions offer promise of encouraging more BMR housing. A sub -region gives cities more
control and flexibility to meet their RHNA housing goals by sharing the burden with adjacent
cities. Sub -regions must be a combination of geographically contiguous local governments
and require ABAG's approval. The Cities Association of Santa Clara County17 is considering
16 https:I/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill id=201720180SB3
17 httl2://citiesassociation.orgI
Page 11 of 45
the possibilities of sub -regions.
BMR categories are defined by the countywide median income (Table Al in the Appendix).
The consequence is widely different ratios between cities in the median price of housing
(which is a city statistic) and the median income of buyers (which is a countywide statistic).
As a result, fewer developers are willing to consider BMR developments in the cities with the
highest -priced real estate: Los Altos, Los Altos Hills, Palo Alto, Saratoga, Los Gatos and Monte
Sereno. Their high real estate values make it harder for developers to meet their target
return on investment without greater public subsidies.
As of late 2017, 83% of County residents earning less than $50,000 a year were rent -
burdened, defined as paying more than 30% of pretax income to monthly rent. 18 The
workforce the County needs to maintain Silicon Valley's vibrant economic engine is all too
frequently leaving for more affordable places. Studies show that even tech engineers
struggle to afford homes in the County.19
The total cost of BMR units, as with any housing, largely depends on the underlying real
estate values. The Grand Jury calculated the hypothetical cost to developers, government
entities, buyers and all other stakeholders in creating a BMR unit. This was done in order to
look at the potential to create more BMR units in a sub -region that combines lower-cost with
higher -cost cities.
The County's median purchase price for a two-bedroom ranges from $609,000 in Gilroy to
$4,090,000 in Los Altos Hills, according to real estate firm Zillow's website on May 25, 2018
(Figure 4 and Table A620). The high end price is 6.7 times greater than the low end. The 6.7
value is referred to as location leverage for obtaining BMR housing.
Housing officials stress, and the Grand Jury agrees, that BMR housing should not be
concentrated in the lowest -cost areas in part because this would result in a burden shift from
wealthier cities to less wealthy ones. Still, there can be win-win situations. Cities with higher
real estate prices and little developable land could form a sub -region with adjacent cities
having lower prices to leverage more BMR units for the County overall for a given amount of
investment.
For example, a Los Gatos -San Jose sub -region would provide a location leverage of about 2
because the Los Gatos median price for a two-bedroom home is $1.43 million and San Jose's
$773,000. Nearly twice as many BMR units could be created in San Jose as in Los Gatos, for
the same cost of development and therefore purchase price.
18 https://www.mercurynews.com/2017/10/05/lifestyle-switch-more-bay-area-residents-are-choosing-to-
rent-than-ever-before-and-theyre-paving-throughh-the-nose //
19 https://www.mercurynews.com/2018/02/14/buying-a-bay-area-home-now-a-struggle-even-for-apple-
google-engineers/
20 Data from 15 Zillow.com city sites including https://www.zillow.com/palo-alto-ca/home-values/ and
https://www.zillow.com /gilroy-ca/home-values/
Page 12 of 45
Figure 4: Median Prices of Two -Bedroom Homes in Santa Clara County
o vav
Palo Milpitas
Alto
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View 0 e v v 0
1A. , 0°0 oov
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h ,yP
�
y c' San Jose o v o
°0 000
Cupertino
0000°'aOoo
Campbell
Saratoga
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Los Gatos
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o00
0Morgan Hill
San Maruti
* Unincorporated County
Gilroy
City boundaries not to scale
The potential cost benefit of creating a single sub -region comprising the entire County is
presented in Appendix, Table A6. The cities in such a sub -region would strike their own
alliances depending on their mutual needs. The data in Table A6 describe two extreme
situations for the expected sales cost of creating the BMR units needed in the County to meet
its RHNA objectives. The highest cost option is where no sub -regions are created. The total
sales price for the 32,791 BMR units required in the current cycle would be $31.9 billion with
an average price of $975 thousand.
The lowest cost sub -region option would be to place all of the BMR units in the least
expensive city (Gilroy). The total sales price for all of the BMR units needed to meet the
County's RHNA objective using this lowest cost option would be $20.1 billion (at an average
cost of $609 thousand), which would be an $11.9 billion savings. The lowest cost sub -region
option is presented only for comparison purposes. There is no political or social justification
for this lowest cost option. It is presented only to compute the lowest possible cost of BMR
housing that meets the Countywide RHNA objectives.
The higher cost cities are encouraged to evaluate their potential savings with lower cost
cities using an RHNA BMR objective sharing approach, and to determine where savings and
Page 13 of 45
regional considerations support such sharing. Such regional considerations include the
impact of BMR units on critical infrastructure and services, including; public safety,
transportation, schools, retail access, parks, and social and health services.
Cities that take on additional BMR units would need to be incentivized by their sub -region
partners, perhaps with extra funding for transportation infrastructure, parks, schools, safety
and social services.
There are other scenarios where a RHNA sub -region makes sense. The Grand Jury envisions
combining cities that have few vacant buildable parcels and no rail transit hubs with adjacent
cities that could accommodate more dense transit -oriented developments (TOD).
As Goes San Jose's RHNA Performance, So Goes the County's
San Jose's roughly 1.05 million residents comprise more than 55% of the County population.
San Jose has long complained of its lack of jobs vs. housing, a challenge because commercial
development brings in more tax revenue than the cost of services, while residential
development demands are just the opposite. San Jose has the highest housing -jobs imbalance
of any of the largest U.S. cities.21
San Jose has ambitious goals for both commercial and residential development. In September
2017, Mayor Sam Liccardo established an objective of 25,000 new housing units in five years,
starting in 2018, with 10,000 (40%) of those units below market rate.22 That would require
almost a doubling of San Jose's permitting pace. The 10,000 BMR target would require a
permitting pace five times faster than the average over the past 11 years.
The Liccardo plan directs staff to identify barriers to meeting this objective. Developers
characterize the city's approval process as overly burdensome, which critics attribute to the
city:
• being too conservative regarding litigation risks
• maintaining unrealistic open space requirements
• requiring full approval of its Urban Village plans before construction can start
• maintaining architectural requirements that are too expensive
• having high turnover in the city's planning department
Developers indicate they require a 10% to 14% return on investment (ROI) to deem a project
viable.23 They say high land, materials and labor costs in this County make achieving the
21 US Suburbs Approaching Jobs -Housing Balance, Wendell Cox, Apr. 12, 2013
httl2://www.newgeogral2hy.comlcontent/003637-us-suburbs-al2proaching_jobs-housing-balance
22 Sam Liccardo's 15 point plan for "Responding to the Housing Crisis" - 9/28/2017,
httl2://sanjose.granicus.com/MetaViewer.12hp?meta id=667033
23 "Construction costs could limit where homes are built in San Jose" by George Avalos, 5/1/2018
Page 14 of 45
target margins challenging.
San Jose's General Plan provides valuable elements for BMR housing. In December 2014, San
Jose amended its General Plan, establishing a goal that at least 15% of new housing be priced
for ELI, VLI and LI households.
In December 2016, the city amended its General Plan to:
• Establish a 25% goal for affordable housing in each Urban Village
• Allow 100% restricted (deed or income) affordable housing to move forward ahead
of market -rate development in Urban Villages
• Allow selected commercial sites of at least 1.5 acres to convert to mixed-use
residential -commercial developments if the project includes 100% restricted -
affordable housing
But developers say the city's slow pace in approving Urban Villages has delayed
development. San Jose officials say 12 of 64 total Urban Villages have been approved, and a
131h was pending at the time of this report.
Figure 5 and Appendix, Table A7 show that San Jose is 36,000 units short of meeting its BMR
objectives for the prior and current RHNA cycles. The current cycle runs until October 2022,
so San Jose has only four years to catch up.
https: I/www.mercurynews.com/2018/05/01/construction-costs-could-limit-where-san-J ose-homes-are-
built-google-adobe-diridon /
Page 15 of 45
Figure 5: BMR Permits - Unit Deficit
To make up that deficit, San Jose would have to issue 9,000 BMR permits per year through
this cycle, while it has averaged only 400 per year between 2007-2017. This BMR deficit
emphasizes why San Jose must maintain a strong BMR push even as it focuses on adding jobs.
The San Jose BMR deficit dwarfs that of any other city in the County. The city with the next -
highest BMR deficit is Santa Clara, at 4,200 units. This enormous difference in BMR unit
deficit demonstrates San Jose's shortcomings and that the County cannot make substantial
Permits - Unit Deficit
San Jose
Santa Clara
Sunnyvale
Milpitas
_
Palo Alto
_
Mountain View
_
Cupertino
.
Gilroy
.
Morgan Hill
.
Los Gatos
.
Campbell
'
Los Altos
'
Saratoga
'
Unincorporated
I
Los Altos Hills
Monte Serena
0 5 10 15 20 25 30 35 40
Santa Clara County Total Permits Unit Deficit: 59,172 Thousands
progress in meeting its RHNA BMR goals if San Jose does not perform. San Jose's importance
is why it is highlighted in Figures 1, 2, 3 and S.
San Jose is ahead of pace for above -moderate housing, as Figure 3 shows. This housing is
needed, but it shouldn't come at the expense of BMR housing. In 2013, San Jose expanded
and extended its Downtown High -Rise Development Incentive Program, which in three
downtown areas provides exemptions to the inclusionary housing ordinance and reduces in -
lieu fees to half of the rest of downtown.24 This shows San Jose's willingness to relax BMR
requirements. Given, the lack of BMR unit production by San Jose, the Grand Jury encourages
San Jose to push as hard as possible to use tools to create BMR units to their fullest advantage.
24 City of San Jose 2014-2023 Housing Element, page IV -33
Page 16 of 45
Inclusionary Housing Ordinances
Inclusionary housing ordinances (IHOs) require that developers allocate a percentage of
units for BMR housing. Eight cities in the County allow developers to pay fees in lieu of
providing the units on-site.
As Appendix, Table A8 shows, Los Altos Hills, Monte Sereno, Morgan Hill and Saratoga do not
have inclusionary ordinances. All but Morgan Hill have residential zones with large lot sizes
and few sites for large housing developments. Due to the small number of potential multi-
unit developments in Los Altos Hills, Monte Sereno and Saratoga, inclusionary ordinances
would generate few BMR units in these cities and are not a priority.
As shown in Table A8, seven Santa Clara cities have BMR inclusionary requirements of 15%
to 20%. But the inclusionary ordinances for Los Altos, Milpitas, Palo Alto and Sunnyvale
require less than 15%. Raising that percentage could help spark more BMR housing.
Setting the percentage too high, however, can be a problem. San Francisco's housing
development applications sank after the city hiked its BMR inclusionary percentage to 25%
from 12% for new rental projects, forcing the city to compromise at 18%.25 Palo Alto, much
coveted by developers, is considering a 25% requirement but only in some situations.
Morgan Hill has a voter -approved Residential Development Control System 26 (RDCS)
instead of an IHO. The RDCS makes developers compete for development permits based on
how well their applications meet the city's goals.
One issue that weakens inclusionary ordinances is the use of in -lieu fees. Cupertino, Milpitas,
Mountain View, Palo Alto, San Jose, Santa Clara and Sunnyvale give developers the option of
paying these fees instead of creating BMR units within their development. Many officials
interviewed by the Grand Jury said these fees are a bargain for developers, who often choose
that option. In -lieu fees usually go into the cities' BMR housing funds, but it can be many
years before the fees translate into BMR units. Officials say in -lieu fees usually produce fewer
BMR units than the on-site requirement would have realized.
The Grand Jury believes that in -lieu fees should be avoided and that cities should incentivize
developers to build BMR units within their developments. If cities retain in -lieu fees, they
should be raised above comparable inclusionary requirements. The fee should be set at least
one-third higher than the inclusionary requirement to encourage on-site BMR units. For
example, Santa Clara has a 15% BMR inclusionary requirement. So, at one-third higher, the
in -lieu fee would be no lower than the cost equating to a 20% inclusionary requirement.
25 Roland Li, May 18, 2017, https:,Z/www.biziournals.comisanfrancisco/news/2017/05/18/sf-affordable-
housing-compromise-development.html
26 httl2://www.morgan-hill.ca.gov/109/RDCS-Process
Page 17 of 45
Density Bonus Implementation and Density Near Transit
All cities must offer density bonuses to allow developers to build more units overall so long
as they allocate more units for BMR. Density bonuses can generate more BMR units,
especially in Transit -Oriented Developments (TODs). Transit experts advocate densities of
at least 50 units per acre for TODs.27 Such densities can effectively increase transit system
usage and enable developers to meet their profitability goals.
A 2016 State law28 extends density bonuses to mixed-use developments 29 and offers related
incentives and concessions to make projects financially feasible. Mixed-use development
can be especially attractive near transit hubs because both employees and residents can
readily access mass transit and thereby ease traffic congestion. Mixed-use projects also have
the advantage of generating tax revenue from the commercial component, offsetting the cost
of the residential component.
One alternative to denser in -fill developments is housing in exurbs where land is less costly
and housing is therefore more affordable. However, persons who work in the County and
find lower-cost housing outside the County find that high transportation costs eat into their
housing cost savings.30
Residential, commercial and mixed-use TOD appeals to cities and developers for a variety of
reasons.31 TOD encourages use of mass transit by persons who live or work near a transit
hub. Parking requirements for TOD are often eased to encourage use of mass transit.
Recently defeated SB 827 would have mandated high densities near transit hubs. It failed in
part due to organized multi -city opposition. However, cities can still move forward with
their own TOD efforts. Caltrain, VTA and BART create opportunities for BMR units in cities
with transit hubs. Cities should identify parcels within one-half mile of a transit hub and
work to bring high-density BMR -related developments on those sites.
California Versus Its Cities
Cities have failed to meet their BMR and the overall housing challenge. State lawmakers
increasingly are proposing to take some control from cities in an effort to force more housing
to be built.
27 VTA interview
28 An act to amend Section 65915 of the Government Code, relating to housing
https:I/Ieginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill id=201520160AB2501
29 California Government Code §65915(1)
30 Mixed -Income Housing Near Transit: Increasing Affordability with Location Efficiency, TOD 201, by The
Center for Transit -Oriented Development, page 5
httn: //www.reconnectingamerica.ora/assets/Unloads/091030ra201mixedhousefinal.Ddf
31 Id., page 8
Page 18 of 45
SB 828, as of June 1, 2018, proposes to modify current 1aw32 to state that cities and counties
should undertake all necessary actions to encourage, promote and facilitate the development
of housing to accommodate the entire regional housing need. The proposed measure also
requires reasonable actions be taken by local and regional governments to ensure that future
housing production meets, ata minimum, the RHNA objectives.
The League of California Cities leads the cities' fight with the State over control of land use
decisions. Local governments strongly object to any loss of local control, but State lawmakers
are looking to give RHNA allocations more teeth. Cities will increasingly face such threats if
they don't move faster to create more BMR housing.
Housing and Employment, Commercial Linkage Fees
Figure 6 and Appendix, Table A9 provide jobs to employed resident ratios for the 15 cities in
the County. The values range from 0.33 for Monte Sereno to 3.02 for Palo Alto. A jobs to
employed resident ratio of about 1.0 is viewed as balanced by the Local Agency Formation
Commission (LAFCO) of Santa Clara.33
A balanced ratio is associated with lower traffic congestion impact compared to an
unbalanced ratio. However, striving to have each city attain a ratio of 1.0 would likely lead
to unnecessary inefficiencies. Given that many employed residents commute to other cities
in the region, regional balance may be as important as balance within a single city. The Grand
Jury believes a city with a ratio of 0.9 to 1.1 reasonably balances jobs and housing. The cities
that fall within the ratio range of the translucent vertical bar (0.9 to 1.1), meet this
reasonable balance. They are represented by yellow horizontal bars in Figure 6.
Cities with jobs to employed resident ratios above 1.1 have substantially more jobs than
employed residents and typically create more road congestion flow from employees
commuting to and from their jobs. These cities are represented by the upper cluster of red
bars in Figure 6. These cities could alleviate regional traffic congestion by adding more
housing.
Cities with jobs to employed resident ratios below 0.9 have substantially more employed
residents than jobs and typically create more road congestion as well from employees
commuting to and from their homes. These cities are represented by the lower cluster of
red bars in Figure 6 and could alleviate regional traffic congestion by adding more jobs.
Commercial developments tend to raise revenue for cities. That puts more services and
corresponding financial burden on cities with more housing and less employment. For cities
32 Government Code (GC) Section 65584(a)(2)
33 LAFCO of Santa Clara County, Cities Service Review, Section 22, "Sprawl Prevention/Infill Development,
pages 314-315, httl2://santaclaralafco.org/file/ServiceReviews/CitiesSR2015/23CSRR FA Sprawl.pdf
Page 19 of 45
with high employment, higher density can place more employees near their jobs. The larger
pool of potential skilled employees makes these cities more attractive for employers.
Milpitas and Palo Alto have many differences, but among their similarities are they have
fallen short on BMR housing and have jobs to employed resident ratios above 1.1. Their
commercial linkage fee revenue could be leveraged in a RHNA sub -region to provide more
BMR housing. Additionally, higher -density residential zoning would bring in more BMR units
and improve their jobs to employed resident ratios.
Figure 6: Jobs Per Employed Resident
Jobs Per Employed Resident
Palo Alto
Santa Clara
Los Gatos
Milpitas
Campbell
Los Altos
Mountain View
Cupertino
Sunnyvale
Morgan Hill
San Jose
Saratoga
Gilroy
Los Altos Hills
Monte Serena -
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40 2.60 2.80 3.00 3.20
Google and the city of Mountain View, in the North Bayshore project, set an example of
providing substantial BMR housing for the community. By comparison, Cupertino -based
Apple's new headquarters for 12,000 employees, 34 including many new employees, was
planned with no additional housing. That might have been OK if the new headquarters was
solely a consolidation of Apple's existing space. But it appears Apple will vacate little space
and the new headquarters largely will be used to accommodate work force expansion. This
was a missed opportunity for collaboration by Cupertino.
In many cities, developers of commercial projects pay commercial linkage fees. The idea is
that cities will use these funds for new developments that would house about as many people
as are employed in that commercial project. State law requires that cities complete a nexus
34 "Here's how much every inch of Apple's new $5 billion campus cost to build" by Abagail Hess, CNBC, Oct. 9,
2017 - https:llwww.cnbc.com/2017/10/09/how-much-every-inch-of-apples-new-5-billion-campus-cost-to-
build.html
Page 20 of 45
study to determine the appropriate linkage fee.35 Linkage fees justified by the nexus studies
are often much higher than the fees adopted. The nexus study evaluates the number of
employees generated by different types of development.
Appendix, Table A10 shows that Palo Alto, Santa Clara, Cupertino, Mountain View and
Sunnyvale have commercial linkage fees for BMR housing. Palo Alto has the highest fee, at
up to $35 per square foot. Santa Clara's top linkage fee increases to $20 per square foot after
Jan. 18, 2019.36
Cities with larger jobs to employed resident ratios could form a RHNA sub -region to share
their commercial linkage fee income with other cities that have more sites for BMR projects.
This could have a bigger impact if the fees were shared with cities that can develop BMR
housing near transit stations.
Table A10 shows that Campbell, Milpitas and Saratoga have completed nexus studies that
provide fee recommendations, but none have enacted a commercial linkage fee. These cities
could quickly benefit from these commercial linkage fees.
San Jose, with its low jobs to employed resident ratio, has encouraged commercial
development. It has not completed a nexus study. But in view of the city's big BMR shortfall,
the Grand Jury recommends San Jose complete a nexus study and enact a commercial linkage
fee to create more funding for BMR housing.
Employer Contributions
The County and cities should consider enacting housing impact fees on employers. Officials
interviewed by the Grand Jury have been receptive to the idea. Mountain View and Cupertino
are to be commended for exploring the idea.37
Such a fee could be appropriate because employers have benefited from their activities in
the County. They need housing and other local services for the jobs they create directly and
indirectly. Experts say one high-tech job translates into four jobs in other sectors.38 Housing
challenges and congested roads can be improved by subsidizing denser housing near
employment centers and transportation hubs.
35 Mitigation Fee Act, Gov. Code section 66000 et seq
36 Santa Clara City Resolution 17-8482 - Establishing Affordable Housing Fees and Integrating the Fees into the
Municipal Fee Schedule, Attachment A
31 https://www.sfchronicle.comZbusiness/article/A1ple-could-get-hit-with-employer-tax-in-its-
12927462.php
38 httl2://www.bayareacouncil.org/community engagement/new-study-for-every-new-high-tech-job-four-
more-created/
Page 21 of 45
Housing impact fees set too high could make the County less desirable for companies. Still,
such a fee would be designed to help fix a region -wide problem shared by all the County's
employers and make for a more vibrant region.
The County and cities should form a task force to establish the specifics of a BMR housing
impact fee on employers. A measure recently approved by the Seattle City Council could
provide a template. Referred to as the "Amazon Tax," because Amazon.com is the largest
company headquartered in Seattle, the measure requires that businesses with annual
revenue above $20 million pay $275 per full-time employee each year over the next five
years. Seattle officials expect the tax will generate nearly $47 million and be used in part to
build more than 590 BMR housing units.39
Many large employers in Santa Clara County have contributed to solutions to the housing
crisis. Google is the major landowner in Mountain View's landmark North Bayshore Plan.40
Facebook offers monetary incentives for employees who reside near work and has pledged
$30 million for affordable housing. LinkedIn was an early, major investor41 in the Housing
Trust's TECH Fund, which aims to fund affordable housing. Cisco Systems has invested in
the TECH Fund and in March pledged $50 million42 for efforts to house the homeless in the
County. Adobe Systems, Intel, HP and Applied Materials are among major donors to the
Housing Trust.
The BMR housing crisis requires steady sources of funding, from all sectors. Given the history
of innovative solutions and philanthropy by employers, we urge the County and cities to
partner with the largest employers and groups such as the Silicon Valley Leadership Group
to develop additional solutions for the BMR housing crisis.
39 httl2//mynorthwest.com/925685/task-force-employee-hours-tax-seattle/
4o https://www.mountainview.gov/depts/comdevlplanning/activeprojects/northbayshore .asp
41 http_//www.housingtrustsv.org/news/linkedin-commits-to-affordable-housing-in-mountain-view-w-10m-
investment-in-tech-fund /
42 https:I/newsroom.cisco.com/feature-content?articleld=1918354
Page 22 of 45
Accessory Dwelling Units
ADUs are being encouraged by several cities as the most expedient option to satisfy their
RHNA allocations. These also are referred to as "granny" or "NexGen" units. Appendix, Table
All provides ADU regulation and production data.
For Monte Sereno, Saratoga, Los Gatos, Los Altos, Los Altos Hills and unincorporated County,
ADUs are a major component of their BMR housing efforts. ADUs are attractive in these cities
because they have mostly large -lot single-family residences.
These cities should require deed restrictions for ADUs, guaranteeing that these units remain
within the BMR income categories. If such deed restrictions for ADUs cannot be required, the
cities should provide incentives so owners are encouraged to voluntarily include long-term
deed restrictions.
ADUs can fit the bill for families, so long as the cities allow ADUs to be a certain size, perhaps
1,200 square feet or more, to accommodate family households.
Residential Impact Fees and Parcel Taxes
Cities with limited commercial development or developable land lack ways to generate
funding to meet BMR objectives. These cities have limited options to raise revenue in view
of Proposition 13 and the elimination of redevelopment agencies. They also have small
populations and small RHNA requirements.
An impact fee imposed on new residential development is one tool these cities could use.
Such fees are already in place in Palo Alto, San Jose and Sunnyvale, as shown in Table A8.
The fee is based on the connection between the development of market -rate housing and the
need to expand the supply of BMR housing. Such fees are typically 10% of construction costs
and are just one of many substantial fees developers have to pay.
BMR parcel taxes could be an answer but require voter approval. Fulfilling the jurisdiction's
RHNA BMR allocation would be a proper purpose for a parcel tax.
What level of revenue could be achieved from a parcel tax? In Monte Sereno there are 1,222
assessor's parcels. A tax of $1,000 per parcel would generate more than $1.2 million a year.
At an estimated price of $500,00043 per BMR unit, that could produce two BMR units per
year. The RHNA allocation to Monte Sereno for ELI, VLI and LI for the current cycle is 35
units.
The same formula for the 3,014 assessor's parcels in Los Altos Hills brings in $3 million per
year, which could yield six BMR units. The Town's current RHNA allocation for ELI, VLI and
43 The per unit cost of $500,000 is obtained using an average unit size of 1,000 sq ft, $300 per sq ft construction
cost, a density of 20 units per acre, and land cost of $4 million per acre.
Page 23 of 45
LI is 74.
VTA Serves as Model for Public Entities
The VTA recognizes the importance of developing its real estate assets and has created a
Joint Development Program (JDP).44 The VTA is creating high-density projects on its land
adjacent to transit by partnering with developers.
The VTA transit -oriented developments (TODs) include BMR housing with the aim to
improve VTA ridership. The VTA's development process includes inter -agency coordination
and collaboration with developers, cities and other stakeholders.45 The VTA development
process can serve as a model for other public entities including the Santa Clara Valley Water
District (SCVWD) and the County. Potential County sites include Civic Center, Fairgrounds
and Burbank area.
The VTA says its JDP encourages higher -density development. 46 Local jurisdiction
willingness to rezone transit -adjacent properties from commercial to residential or mixed
use is a critical step for creating BMR housing. This is especially important in San Jose, where
nine of 18 potential TOD sites presently have non-residential zoning.47
The VTA properties having potential for BMR units are listed in Appendix, Table Al2. The
Almaden and Cottle sites can provide more BMR units if San Jose would rezone these parcels
for mixed-use including residential.
With the VTA model in mind, the County and SCVWD should identify parcels they own that
are suitable for BMR.
44 VTA Joint Development Program, httl2: //vtaorgcontent.s3-us-west-
1.amazonaws.com/Site Content/VTA%201oint%20Development%20Policy_12df
4s Ibid.
46 Ibid.
47 Grand Jury interview with VTA
Page 24 of 45
FINDINGS AND RECOMMENDATIONS
Finding 1a
Lack of housing near employment centers worsens traffic congestion in the County and
increases the urgency to add such housing. Cities to respond are Campbell, Cupertino, Gilroy,
Los Altos, Los Gatos, Milpitas, Mountain View, Palo Alto, San Jose, Santa Clara and Sunnyvale.
Finding 1b
Mass transit stations (Caltrain, VTA, BART) create opportunities for BMR units. Cities to
respond are Campbell, Gilroy, Milpitas, Morgan Hill, Mountain View, Palo Alto, San Jose, Santa
Clara and Sunnyvale.
Finding 1c
Density bonus programs are not being used aggressively enough to produce the needed BMR
units within one-half mile of transit hubs. Cities to respond are Campbell, Gilroy, Milpitas,
Morgan Hill, Mountain View, Palo Alto, San Jose, Santa Clara and Sunnyvale.
Recommendation 1a
To improve jobs -to -housing imbalances, the cities of Palo Alto, Santa Clara, Milpitas,
Mountain View and Sunnyvale should identify, by June 30, 2019, parcels where housing
densities will be increased. The identification should include when projects are expected to
be permitted and the number of BMR units anticipated for each parcel.
Recommendation 1b
Cities should identify parcels within one-half mile of a transit hub that will help them meet
their LI and moderate -income BMR objectives in the current RHNA cycle, by the end of 2019.
Cities to respond are Campbell, Gilroy, Milpitas, Morgan Hill, Mountain View, Palo Alto, San
Jose, Santa Clara and Sunnyvale.
Recommendation 1c
Cities should revise their density bonus ordinances to provide bonuses for LI and moderate -
income BMR units that exceed the minimum bonuses required by State law for parcels within
one-half mile of a transit hub, by the end of 2020. Cities to respond are Campbell, Gilroy,
Milpitas, Morgan Hill, Mountain View, Palo Alto, San Jose, Santa Clara and Sunnyvale.
Finding 2a
Employers in the County have created a vibrant economy resulting in an inflated housing
market displacing many residents. Agencies to respond are all 15 cities and the County.
Finding 2b
Contributions to BMR housing from employers in the County are not mandated nor evenly
shared. Agencies to respond are all 15 cities and the County.
Page 25 of 45
AFFORDABLE HOUSING CRISIS — DENSITY IS OUR DESTINY
Recommendation 2a
The County should form a task force with the cities to establish housing impact fees for
employers to subsidize BMR housing, by June 30, 2019. Agencies to respond are all 15 cities
and the County.
Recommendation 2b
Every city in the County should enact housing impact fees for employers to create a fund that
subsidizes BMR housing, by June 30, 2020. Agencies to respond are the County and all 15
cities.
Finding 3a
RHNA sub -regions formed by several San Francisco Bay Area counties enable their cities to
develop promising means to meet their collective BMR requirements. Such sub -regions can
serve as instructive examples for cities in the County. Agencies to respond are all 15 cities.
Finding 3b
Developers are less willing to consider BMR developments in cities with the County's highest
real estate values because these developments cannot meet their target return on
investment. Cities to respond are Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Palo
Alto and Saratoga.
Finding 3c
More BMR units could be developed if cities with lower housing costs form RHNA sub-
regions with adjacent cities with higher housing costs. Responding agencies are all 15 cities.
Finding 3d
High-cost/low-cost RHNA sub -regions would be attractive to low-cost cities if they are
compensated by high-cost cities for improving streets, schools, safety, public transportation
and other services. Cities to respond are Gilroy, Milpitas, Morgan Hill and San Jose.
Finding 3e
High-cost/low-cost RHNA sub -regions could be attractive to high-cost cities because they
could meet their BMR requirements without providing units in their cities. Cities to respond
are Campbell, Cupertino, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Mountain View,
Palo Alto, Santa Clara, Saratoga and Sunnyvale.
Recommendation 3a
Every city in the County should identify at least one potential RHNA sub -region they would
be willing to help form and join, and report how the sub-region(s) will increase BMR housing,
by the end of 2019. Agencies to respond are all 15 cities.
Recommendation 3b
A RHNA sub -region should be formed including one or more low-cost cities with one or more
high-cost cities, by the end of 2021. Agencies to respond are all 15 cities.
Page 26 of 45
AFFORDABLE HOUSING CRISIS — DENSITY IS OUR DESTINY
Recommendation 3c
High-cost cities and the County should provide compensation to low-cost cities for increased
public services required for taking on more BMR units in any high-rent/low-rent RHNA sub-
region, by the end of 2021. Agencies to respond are Campbell, Cupertino, Los Altos, Los Altos
Hills, Los Gatos, Monte Sereno, Mountain View, Palo Alto, Santa Clara, Saratoga, Sunnyvale
and the County.
Finding 4a
Commercial linkage fees can be an important tool to generate critical revenues to support
BMR housing. Cities to respond are Campbell, Milpitas, Los Gatos, Los Altos and San Jose.
Finding 4b
Use of commercial linkage fees is overdue and could be expected to substantially increase
BMR units. Cities to respond are Campbell, Milpitas, Los Gatos, Los Altos and San Jose.
Recommendation 4
Campbell, Milpitas, Los Gatos, Los Altos and San Jose should enact commercial linkage fees
to promote additional BMR housing, by June 2019.
Finding 5a
Uneven BMR achievements among cities is caused in part by varying inclusionary BMR unit
percentage requirements. Agencies to respond are all 15 cities and the County.
Finding 5b
Inclusionary ordinances in cities having only a small number of potential multi -unit
developments would generate too few BMR units to justify their passage. Cities to respond
are Los Altos Hills, Monte Sereno and Saratoga.
Recommendation 5
Inclusionary BMR percentage requirements should be increased to at least 15% in Gilroy,
Los Altos, Los Gatos, Milpitas, Morgan Hill, Palo Alto and Sunnyvale, by the end of 2019.
Finding 6
In -lieu fees, when offered as an option, are too low to produce the needed number of BMR
units and delay their creation. Cities to respond are Campbell, Cupertino, Milpitas,
Mountain View, Palo Alto, San Jose, Santa Clara and Sunnyvale.
0-00011.. •t .
Cities with an in -lieu option should raise the fee to at least 30% higher than the
inclusionary BMR equivalent where supported by fee studies, by the end of 2019. Cities to
respond are Campbell, Cupertino, Milpitas, Mountain View, Palo Alto, San Jose, Santa Clara
and Sunnyvale.
Page 27 of 45
Finding 7
NIMBY (Not in My Backyard) opposition adversely affects the supply of BMR housing units.
Agencies to respond are all 15 cities and the County.
Recommendation 7
A task force to communicate the value and importance of each city meeting its RHNA
objectives for BMR housing should be created and funded by the County and all 15 cities, by
June 30, 2019.
Finding 8
It is unnecessarily difficult to confirm how many BMR units are constructed in a particular
year or RHNA cycle because cities and the County only report permitted units. Agencies to
respond are all 15 cities and the County.
Recommendation 8
All 15 cities and the County should annually publish the number of constructed BMR units,
starting in April 2019.
Finding 9
Accessory Dwelling Units (ADUs) offer a prime opportunity for cities with low housing
density and limited developable land to produce more BMR units. Cities to respond are Los
Altos, Los Altos Hills, Los Gatos, Monte Sereno and Saratoga.
Recommendation 9a
ADU creation should be encouraged by decreasing minimum lot size requirements and
increasing the allowed unit maximum square footage to that prescribed by state law, by the
end of 2019. Cities to respond are Los Altos, Los Altos Hills, Los Gatos, Monte Sereno and
Saratoga.
Recommendation 9b
Increasing BMR unit creation by incentivizing long-term affordability through deed
restrictions for ADUs should be adopted, by the end of 2019. Cities to respond are Los Altos,
Los Altos Hills, Los Gatos, Monte Sereno and Saratoga.
Finding 10
Lack of funding mechanisms to create BMR housing has restricted BMR achievement by
cities with limited commercial development or developable land. Cities to respond are Los
Altos Hills, Monte Sereno and Saratoga.
Recommendation 1Oa
Residential development impact fees to fund BMR developments should be enacted by the
cities of Los Altos Hills, Monte Sereno and Saratoga, by the end of 2019.
Page 28 of 45
Recommendation 10b
Parcel taxes to fund BMR developments should be brought as a ballot measure to the voters
of the cities of Los Altos Hills, Monte Sereno and Saratoga, by the 2020 elections.
Finding 11
The VTA is a valuable model for effectively generating BMR housing on publicly owned
property. Agencies to respond are the County and the SCVWD.
Recommendation 11a
The County should identify or create an agency, modeled after the VTA's Joint Development
Program, to coordinate partnerships between developers and both the SCVWD and the
County, for the development of BMR housing, by June 30, 2019.
Recommendation 11b
Parcels suitable for BMR housing should be offered for development by the SCVWD and the
County, by the end of 2019.
Page 29 of 45
REQUIRED RESPONSES
Pursuant to Penal Code sections 933 and 933.05, the Grand Gury requests responses as
follows:
From the following governing bodies:
Responding Agency
ampbell
upertino
ilroy
:)s Altos
:)s Altos Hills
:)s Gatos
[ilpitas
[onte Sereno
[organ Hill
fountain View
ado Alto
anjose
anta Clara
1 a, lb, 1c, 2a, 2b, 3a, 3c, 34
4a, 4b, 5a, 6, 7, 8
1 a, 2a, 2b, 3a, 3c, 3e, 5a, 6,
7,8
1 a, lb, 1c, 2a, 2b, 3a, 3c,
3d, 5a, 6, 7,8
la, 2a, 2b, 3a, 3b, 3c, 3e,
4a, 4b, 5a, 6, 7, 8, 9
2a, 2b, 3a, 3b, 3c, 3e, 5a,
5b, 6, 7, 8, 9, 10
la, 2a, 2b, 3a, 3b, 3c, 3e,
4a, 4b, 5a, 6, 7, 8, 9
la, lb, lc, 2a, 2b, 3a, 3c,
3d, 4a, 4b, 5a, 6, 7, 8
2a, 2b, 3a, 3b, 3c, 3e, 5a,
5b, 6, 7, 8, 9, 10
lb, lc, 2a, 2b, 3a, 3c, 3d,
5a, 6, 7, 8
la, lb, lc, 2a, 2b, 3a, 3c, 3(
5a, 6, 7, 8
la, lb, lc, 2a, 2b, 3a, 3b,
3c, 3e, 5a, 6, 7,8
la, lb, lc, 2a, 2b, 3a, 3c,
3d, 4a, 4b, 5a, 6, 7, 8
la, lb, lc, 2a, 2b, 3a, 3c, 34
5a, 6, 7, 8
Recommendations
lb, lc, 2a, 2b, 3a, 3b,
3c, 4, 6, 7,8
la, 2a, 2b, 3a, 3b, 3c, 6,
7,8
lb, lc, 2a, 2b, 3a, 3b, 5,
7,8
2a, 2b, 3a, 3b, 3c, 4, 5,
7, 8, 9a, 9b
2a, 2b, 3a, 3b, 3c, 7, 8,
9a, 9b, 10a, 10b
2a, 2b, 3a, 3b, 3c, 4, 5,
7, 8, 9a, 9b
la, lb, lc, 2a, 2b, 3a,
3b, 4, 6, 7,8
2a, 2b, 3a, 3b, 3c, 7, 8,
9a, 9b, 10a, 10b
lb, lc, 2a, 2b, 3a, 3b, 5,
7,8
la, lb, lc, 2a, 2b, 3a,
3b, 3c, 6, 7,8
la, lb, lc, 2a, 2b, 3a,
3b, 3c, 5, 6, 7,8
lb, lc, 2a, 2b, 3a, 3b, 4,
6, 7, 8
la, lb, lc, 2a, 2b, 3a,
3b, 3c, 6, 7, 8
Santa Clara County Board of Supervisors I1 1 , 2b, 3a, 3b, 3c, 3d, 3e, 7, I2a, 2b, 3c, 7
Clara Valley Transportation
M
Ila, l lb
Santa Clara Valley Water District 1 1 Ila, l lb
Saratoga 2a, 2b, 3a, 3b, 3c, 3e, 5a, 2a, 2b, 3a, 3b, 3c, 7, 8,
5b, 6, 7, 8, 9, 10 9a, 9b, 10a, 10b
Sunnyvale la, lb, 1c, 2a, 2b, 3a, 3c, 3e, la, lb, 1 c, 2a, 2b, 3a,
5a, 6, 7,8 3b, 3c, 5, 6, 7,8
Unincomorated County Ill 18. Ila, Ilb
Page 30 of 45
AFFORDABLE HOUSING CRISIS - DENSITY IS OUR DESTINY
UN I `IN
Table Al: Income limits for housing assistance eligibility in the County (as of 4/1/2018)48
Housing Assistance Income Eligibility Limits for Santa Clara Count
Number of
Persons in
Household
Income Limit Category (based on AMI)
Extremely Low
(30%)
Very Low (50%)
Low (80%)
1
$27,950
$46,550
$66,150
2
$31,950
$53,200
$75,600
3
$35,950
$59,850
$85,050
4
$39,950
$66,500
$94,450
5
$43,100
$71,850
$102,050
6
$46,300
$77,150
$109,600
7
1 $49,500
$82,500
$117,150
8
1 $52,700
$87,800
$124,700
BMR is separated into three income categories: Very Low Income (VLI), Low Income (LI)
and moderate -income categories. The County's income limits for these categories are
provided in Appendix Table Al. Very Low Income (VLI) is housing for households making
up to 50% of area median income (AMI), Low Income (LI, 50%-80% of AMI); moderate
income (80-120%) and above moderate (more than 120%). Extremely Low Income (ELI) is
a sub -category within VLI and is for households making 0-30% of AMI. Note that the values
in Table Al are for 30% (ELI), 50% (VLI) and 70% (LI).
48 Santa Clara Housing Authority, Section 8 Housing Programs, Income Limits
https://www.scchousingauthori , .org/section-8-housing-programs/waiting-lists-applicants/income-limits/
Page 31 of 45
Table A2: RHNA results for the 2007-2014 cycle
City/Entity
BMR Subtotal
Above Moderate (>120%))
Total
RHNA
Permits
Issued
%of
RHNA
Met
RHNA
Permits
Issued
% of
RHNA
Met
RHNA
Permits
Issued
% of
RHNA
Met
Saratoga
2351
18
8%
57
20
35%1
292
38
13%
Los Gatos
376
48
13%
186
180
97%
562
228
41%
San Jose
19,271
2,956
15%
15,450
13,073
85%
34,721
16,029
46%
Cupertino
813
127
16%
357
657
184%
1,170
784
67%
Pa to Alto
1,874
293
16%
986
787
80%
2,860
1,080
38%
Mountain View
1,447
269
19%
1,152
2,387
207%
2,599
2,656
102%
Gilroy
807
164
20%
808
1,262
156%
1,615
1,426
88%
Santa Clara
3,209
721
22%
2,664
5,952
223%
5,873
6,673
114%
Los Altos
243
57
23%
74
784
1059%
317
841
265%
Morgan Hill
812
241
30%
500
1,286
257%
1,312
1,527
116%
Milpitas
1,551
709
46%
936
6,442
688%
2,487
7,151
288%
Los Altos Hills
68
40
59%
13
76
585%
81
116
143%
Monte Sereno
33
21
64%
8
14
175%
41
35
85%
Campbell
479
399
83%
413
217
53%
892
616
69%
Sunnyvale
2,557
2,178
85%
1,869
2,403
129%
4,426
4,581
104%
Unincorporated
677
620
9211
413
422
102%
1,090
1,042
96%
County Total
34,452
8,861
26%1
25,8861
35,962
139%
60,338
44,823
74%
Pink cells and larger font entries in Tables A2, A3, A4, A5 and A6 represent lower BMR achievement, and green
cells and bold font represent higher BMR achievement.
Page 32 of 45
Table A3: RHNA results for 2015-2023 cycle, through 201749
City/Entity
Total BMR Data
Above Moderate (>120%)
Total
RHNA
Permits
Issued
%of
RHNA
Met
RHNA
Permits
Issued
% of
RHNA
Met
RHNA
Permits
Issued
% of
RHNA
Met
Milpitas
2,139
0
0%
1,151
1,193
104%
3,290
1,193
36%
Los Gatos
445
7
2%
174
60
34%
619
67
11%
Santa Clara
1,745
37
2%
755
611
81%
2,500
648
26%
Campbell
542
12
2%
391
211
54%
933
223
24%
Cupertino
794
27
3%
270
172
64%
1,064
199
19%
Sunnyvale
3,478
87
3%
1,974
1,017
52%
5,452
1,104
20%
San Jose
20,849
890
4%
14,231
7,671
54%
35,080
8,561
24%
Los Altos
380
21
6%
97
319
329%
477
340
71%
Saratoga
346
20
6%
93
12
13%
439
32
7%
Palo Alto
1,401
115
8%
587
189
32%
1,988
304
15%
Morgan Hill
612
75
12%
316
534
169%
928
609
66%
Unincorporated
249
29
12%
28
229
818%
277
258
93%
Mountain View
1,833
231
13%
1,093
1,205
110%
2,926
1,436
49%
Monte Sereno
48
11
23%
8
14
175%
56
25
45%
Los Altos Hills
106
32
30%
15
29
193%
121
61
50%
Gilroy
495
287
58%
475
727
153%
970
1,014
105%
County Total
35,462
1,881
5%
21,658
14,193
66%
57,120
16,074
28%
49https://abag.ca.gov/planning/housingneeds�
Page 33 of 45
Table A4: RHNA results for 2007-2017, compared to objectives through Oct 31, 2022
Page 34 of 45
Total BMR Data
Above Moderate (>120%)
Total
City/ Entity
RHNA
Permits
Issued
/ of
RHNA
Met
RHNA
Permits
Issued
/ of
RHNA
Met
RHNA
Permits
Issued
% of
RHNA
Met
Saratoga
581
38
7%
150
32
21%
731
70
10%
Los Gatos
821
55
7%
360
240
67%
1,181
295
25%
Cupertino
1,607
154
10%
627
829
132%
2,234
983
44%
San Jose
40,120
3,846
10%
29,681
20,744
70%
69,801
24,590
35%
Los Altos
623
78
13%
171
1,103
645%
794
1,181
149%
Palo Alto
3,275
408
12%
1,573
976
62%
4,848
1,384
29%
Santa Clara
4,954
758
15%
3,419
6,563
192%
8,373
7,321
87%
Mountain View
3,280
500
15%
2,245
3,592
160%
5,525
4,092
74%
Milpitas
3,690
709
19%
2,087
7,635
366%
5,777
8,344
144%
Gilroy
1,302
451
35%
1,283
1,989
155%
2,585
2,440
94%
Morgan Hill
1,424
316
22%
816
1,820
223%
2,240
2,136
95%
Sunnyvale
6,035
21265
38%
3,843
3,420
89%
9,878
5,685
58%
Monte Sereno
81
32
40%
16
28
175%
97
60
62%
Los Altos Hills
174
72
41%
28
105
375%
202
177
88%
Campbell
1,021
411
40%
804
428
53%
1,825
839
46%
Unincorporated
926
649
70%
441
651
148%
1,367
1,300
95%
County Total
69,914
10,742
15%
47,544
50,155
105%
117,458
60,897
52%
Page 34 of 45
Table AS: RHNA results for 2007-2017, compared with time -proportionate objectives
(75.5% for San Jose and Los Gatos, 72% for other cities)
Page 35 of 45
Total BMR Data
Above Moderate (>120%
Total
City/ Entity
RHNA
2017
Permits
Issued
%of
RHNA
Met
RHNA
2017
Permits
Issued
% of
RHNA
Met
RHNA
2017
Permits
Issued
% of
RHNA
Met
Saratoga
418
38
9%1
108
32
30%
526
70
13%
Los Gatos
620
55
9%
272
240
88%
892
295
33%
Cupertino
1,157
154
13%
451
829
184%
1,608
983
61%
San Jose
30,291
3,846
13%
22,409
20,744
93%
52,700
24,590
47%
Los Altos
449
78
17%
123
1,103
896%
572
1,181
207%
Palo Alto
2,358
408
17%
1,133
976
86%
3,491
1,384
40%
Santa Clara
3,567
758
21%
2,462
6,563
267%
6,029
7,321
121%
Mountain View
2,362
500
21%
1,616
3,592
222%
3,978
4,092
103%
Milpitas
2,657
709
27%
1,503
7,635
508%
4,159
8,344
201%
Morgan Hill
1,025
316
31%
588
1,820
310%
1,613
2,136
132%
Gilroy
937
451
48%
924
1,989
215%
1,861
2,440
131%
Sunnyvale
4,345
2,265
52%
2,767
3,420
124%
7,112
5,685
80%
Monte Sereno
58
32
55%
12
28
243%
70
60
86%
Los Altos Hills
125
72
57%
20
105
521%
145
177
122%
Campbell
735
411
56%
579
428
74%
1,314
839
64%
Unincorporated
667
649
97%
318
651
205%
984
1,300
132%
County Total
51,771
10,742
21%1
35,283
50,155
142%
87,054
60,897
70%
Page 35 of 45
Table A6: Lower-Cost/Higher-Cost City Combination Sub -region Benefit Analysis
- Current RHNA Cycle: 2015-2023
City
Median Sale
Price ($ million)
RHNA BMR
Units
Objective
Present
RHNA BMR
Units
Deficit
No Sub -region
($ million)
Lowest Cost
Sub -region
($ million)
Gilroy
$0.609
613
326
$198.53
$198.53
Morgan Hill
$0.701
612
537
$376.44
$327.03
San Jose
$0.773
20,849
19,959
$15,428.31
$12,155.03
Milpitas
$0.821
2,139
2,139
$1,756.12
$1,302.65
Campbell
$0.940
542
530
$498.20
$322.77
Santa Clara
$0.944
1,745
1,708
$1,612.35
$1,040.17
Sunnyvale
$1.200
3,478
3,391
$4,069.20
$2,065.12
Mountain View
$1.310
1,833
1,602
$2,098.62
$975.62
Cupertino
$1.340
794
767
$1,027.78
$467.10
Los Gatos
$1.430
445
438
$626.34
$266.74
Saratoga
$1.610
346
326
$524.86
$198.53
Palo Alto
$2.250
1,401
1,286
$2,893.50
$783.17
Los Altos
$2.580
380
359
$926.22
$231.42
Monte Sereno
$3.000
48
37
$111.00
$22.53
Los Altos Hills
$4.090
106
74
$302.66
$45.07
15 City Total
n/a
35,331
33,479
$32,450.13
$20,401.50
15 City Median
$1.192
n/a
n/a
n/a
n/a
The median sale price values in Table A6 are for two-bedroom units in all cities other than
Monte Sereno. The value for Monte Sereno is for three-bedroom units, because there was no
data available for two-bedroom units. The Sub -region totals (No and Lowest Cost) are
computed using the Present RHNA BMR Units Deficit.
Page 36 of 45
Table A7: Allocated BMR Permit Share and Permitted Unit Deficit
2007-2017 B M R
Allocation to
Permitted Unit
Deficit Gap
Analysis
Allocated Share
(%)
Permitted Unit
Deficit
San Jose
57.4%
36,274
Santa Clara
7.1%
4,196
Sunnyvale
8.6%
3,770
Milpitas
5.3%
2,981
Palo Alto
4.7%
2,867
Mountain View
4.7%
2,780
Cupertino
2.3%
1,453
Morgan Hill
2.0%
1,108
Gilroy
1.9%
851
Los Gatos
1.2%
766
Campbell
1.5%
610
Saratoga
0.8%
543
Los Altos
0.9%
545
Unincorporated
1.3%
277
Los Altos Hills
0.2%
102
Monte Sereno
0.1%
49
County Tota Is
59,172
Page 37 of 45
Table A8 - Inclusionary Ordinances and Residential Impact Fees5o
City
Ordinance in Place (Y/N)
Minimum
Number of
Units
Rental
Property BMR
Requirement
(%ofunits)
BMR
Requirement for In Lieu Fees (%of sales price
Resident Owned or $ per sq ft)
Units(%ofunits)
Residential
Impact Fee
Campbell
Y
10
15%
15%
no requests yet
N
Cupertino
Y
7
15%
15%
$15.48-25.80
N
Gilroy
N - Neighborhood District Policy
15%
15%
N
N
Los Altos
Y
5,10
15%
10%
N
N
Los Altos H ills
N
N
Los Gatos
Y
5,100
10-20%
10-20%
limited option
N
Milpitas
Y
5
N/A
5%
5%
N
Monte Sereno
N
N
Morgan Hill
N - RCDS
5
8%
8%
$12.92
N
Mountain View
Y
5
15%
10%
3%
N
Palo Alto
Y
3
N/A
15-25%
$50-75
$20-35/sq ft
San Jose
Y
20
15%
15%
$125K per BMR unit required
$17.41/sq ft
Santa Clara
Y
10
15%
15%
$6.67-20
N
Saratoga
N
N
Sunnyvale
Y
4,8 (full)
N/A
12.5%
7%
$9-18/sq ft
Red cells in Table A8 indicate that a city is not taking full advantage of a key means to
generate BMR units, while a green cell indicates that a city has stepped up and is using key
means to a greater advantage than other cities in the County. An empty cell indicates that
that no entryis needed for that cell.
50 Sunnyvale had a Rental Property BMR Requirement of 15% through 2012, when it was replaced with a Rental Impact Fee to
comply with Palmer. Sunnyvale is working on a new BMR Rental Requirement consistent with AB 1505 for City Council
consideration in 2018.
Page 38 of 45
5
Table A9 - Jobs per Employed
Resident Ratios 1
City
Jobs per Employed
Resident Ratio
Pa to Alto
3.02
Santa Clara
2.08
Los Gatos
1.82
Milpitas
1.50
Campbell
1.35
Los Altos
1.28
Mountain View
1.23
Cupertino
1.08
Sunnyvale
1.07
Morgan Hill
1.02
San Jose
0.89
Saratoga
0.85
Gilroy
0.84
Los Alto Hills
0.72
Monte Sereno
0.33
Table A10: Commercial Linkage Fees
City/Entity
Nexus
Study
Completed
Ordinance
in Place
Linkage Fee
($/sq ft)
Campbell
Y
N
N/A
Cupertino
Y
Y
$21.35
Gilroy
N
N
N/A
Los Altos
Y
N
N/A
Los Alto Hills
N
N
N/A
Los Gatos
N
N
N/A
Milpitas
Y
N
N/A
Monte Sereno
N
N
N/A
Morgan Hill
N
N
N/A
Mountain View
Y
Y
$2.68 to $25.58
Palo Alto
Y
Y
$20.37 to $35
San Jose
N
N
N/A
Santa Clara
Y
Y
up to $20*
Saratoga
Y
N
Sunnyvale
Y
Y
$8 to $16
Unincorporated
N
N
N/A
* Starting Jan. 18, 2019.
Cities with a mustard cell have not completed nexus studies, and those with green have
completed nexus studies.
51 LAFCO of Santa Clara County, Cities Service Review, Section 22, "Sprawl Prevention/Infill Development,
pages 314-315, http://santaclaralafco.org/file/ServiceReviewsICitiesSR2015/23CSRR FA Sprawl.pdf
Page 39 of 45
Table All: ADU regulations and production
City
Minimum Lot Area (sq ft)
2007-2014
Permits
2015-2017
Permits
Potential Units
for 2018-2023
Campbell
10,000
15
13
25
Cupertino
10,000 detached
7.2 per yr
3
32
Gilroy
6,000
20
12
15
Los Altos
No limit
11
15
35
Los Altos Hills
N/A
40
28
N/A
Los Gatos
No limit
14
4
55
Milpitas
2500-10,000
6
N/A
N/A
Monte Sereno
8,000
15
21
9
Morgan Hill
3,500
31
41
58
Mountain View
No limit
7
11
45
Palo Alto
5,000
35
23
N/A
San Jose
6,000-8,000
N/A
N/A
N/A
Santa Clara
6,000
29
20
30
Saratoga
90% of district minimum
39
38
50
Sunnyvale
5,000-8,000
20
23
N/A
Unincorporated
No limit
N/A
96
N/A
Page 40 of 45
Table Al2: VTA sites with potential for BMR unit construction
The optimistic construction dates are highlighted in the table to focus attention on the
potential near term BMR unit potential for the sites described in this table.
Page 41 of 45
Optimistic
Develop
Estimated
Construction
Total
Present Status in Development
Description/ Address
able
City
Number of
Completion
Acres
Process
Date
Acres
BMR Units
Current negotiations with
Tamien - 1197 Lick Ave
6/1/21
6.9
6.9
San Jose
developer. Application for revised
135
entitlements June 2018.
Pending negotiations with City of
Mountain View - Evelyn
6/1/21
2
2
Mtn. View
200
Mtn. View
Milpitas BART Station
6/1/22
1.7
1.7
Milpitas
Developer RFP June 2018
35+
Santa Clara Caltrain
6/1/22
0.3
0.3
Santa
Current negotiations with
TBD
Clara
developer.
Berryessa BART Station -
Awaiting preparation of Urban
southeast corner
6/1/23
3.3
3.3
San Jose
Village Plan by CSJ
70+
Blossom Hill - Blossom Hill
6/1/23
6.8
4+ (a)
San Jose
Developer RFP June 2018
80+
Rd at Canoas Creek
Curtner - Highway 87 at
6/1/23
5.9
3.5+ (a)
San Jose
Developer RFP June 2018
70+
Curtner
Parking study and policy pending,
Ohlone - Chynoweth Ave
6/1/23
8.3
TBD (a)
San Jose
needed to identify developable
TBD
at Pearl Avenue
parcel
Capitol Station - Southeast
Inactive - City requirement for
Capitol Expressway @
6/1/25
13.3
10+ (a)
San Jose
commercial renders project
Narvaeaz
infeasible
Morgan Hill - 17300
6/1/25
6.5
TBD
Morgan
Inactive - awaiting resolution of
TBD
Depot Street
Hill
ownership
Cerone - 3990 Zanker Rd
6/1/28
54.13
40
San Jose
VTA predevelopment
O
River Oaks - 3331 N. First
6/1/28
17.5
17.5
San Jose
Application to City for housing
280+
St.
allotment
Gilroy - Monterey
Inactive - awaiting High Speed
6/1/29
6.1
6.1
Gilroy
TBD
Highway at 7th St
Rail Plans
VTA (Mitchell) Block
2027-2032
3.3
3.3
San Jose
Preliminary studies
150+
Santa Teresa - Santa
TBD
35.8
35.8
San Jose
Inactive
0
Teresa Blvd at Miyuki Dr
Snell - Snell Ave at
Preliminary study done. Lower
Highway 85
TBD
6.5
TBD (a)
San Jose
priority than other sites.
TBD
Winchester - Winchester
Inactive - landbanking for future
Blvd at Budd Avenue
TBD
1.6
1.6
Campbell
development
TBD
Almaden
TBD
4.8
3+ (a)
San Jose
Preliminary studies
60+
Cottle
TBD
4.7
3+ (a)
San Jose
Ongoing discussion
TBD
The optimistic construction dates are highlighted in the table to focus attention on the
potential near term BMR unit potential for the sites described in this table.
Page 41 of 45
GLOSSARY
Area Median Income - A value determined on an annual basis by the U.S. Department of
Housing and Urban Development that represents the household income for the median
household in a specified region.
Current RHNA Cycle - ABAG defines this as two distinct periods. The "planning period"
spans the due date for one housing element and the due date for the next housing element.
For the current cycle, this is Jan 31, 2015, through Jan. 31, 2023. More important for this
report, the "projection period" is the span for which the RHNA need is calculated. It is Jan 1,
2014, through Oct 31, 2022. That is 94 months for cities that include 2014 data in their
annual housing element progress updates during the current cycle, and 82 months for the
other cities. Cities that include 2014 data in the current cycle (Los Gatos and San Jose)
completed 51% of the current cycle by the end of 2017, and 75.5% of both the prior and
current cycle. The other 13 cities and County completed 44% of the current cycle as of the
end of 2017, and 72% of both cycles.
In -Lieu Fees - Funds collected from developers that enable developers to forego BMR
inclusionary unit requirements within a project. In -lieu fees are discussed in greater detail
in view of the data presented in Table 2. There are two basic types of in -lieu fees, one
determined as a percentage of the cost of the development and the other as a cost per square
foot of the development.
Jobs per Employed Resident Ratio52 - Employed residents are calculated by subtracting the
unemployed residents from the labor force. Unemployed residents are calculated by
multiplying the labor force by the unemployment rate. This ratio is influenced by levels of
in -commuting and out -commuting as well as the number of employed residents holding
multiple jobs. ABAG assumes that this ratio holds at the 2010 level, implying the rates of net-
incommuting and multiple job -holding remain constant. ABAG's strategy is based on the
halting of the trend of increasing rates of incommuting into the region seen in recent decades,
due to road capacity constraints and additional housing production supports within the
region. This also keeps the incommute well below 2000 levels.
Urban Village53 - An urban village is a walkable, bicycle -friendly, transit -oriented, mixed use
setting that provides both housing and jobs. The urban village strategy fosters:
• Engagement of village area residents in the urban village planning process
• Mixed residential and employment activities that are attractive to an innovative work
force
52 Plan Bay Area Jobs Housing Connection Strategy, Appendix B : Housing and Employment Methodology,
page 114, May 15, 2012
https:I/www.planbayarea.org/sites/default/files/12df,[JH CS/May 2012 Jobs Housing Connection Strategy A
nnendices Low Res.pdf
53 httl2://sanjoseca.gov/planning/urbanvillages
Page 42 of 45
Revitalization of underutilized properties that have access to existing infrastructure
Densities that support transit use, bicycling, and walking
High-quality urban design
Page 43 of 45
ACRONYMS
ABAG: Association of Bay Area Governments
AMI: Area Median Income
BMR: Below Market Rate
CTOD: Center for Transit -Oriented Development
ELI: Extremely Low Income
HCD: California Department of Housing and Community Development
IHO: Inclusionary Housing Ordinance
JDP: Joint Development Program
NIMBY: Not in My Back Yard
LI: Low Income
RHNA: Regional Housing Needs Allocation
SCVWD: Santa Clara Valley Water District
VLI: Very Low Income
TOD: Transit -Oriented Development
VTA: Santa Clara Valley Transportation Authority
YIMBY: Yes in My Back Yard
Page 44 of 45
This report was ADOPTED by the 2017-2018 Santa Clara County Civil Grand
Jury on this day of 4TyAe, , 2018.
Peter L. Hertan
Foreperson
Page 45 of 45