1. City Council
October 15, 2018

2. Background

3. California’s Housing Crisis
Statewide housing production has slowed down significantly compared to historic trends
Statewide housing production has not kept up with demand of growing population
Projected housing need:
180,000 homes annually
Source: California’s Housing Future: Challenges and Opportunities (CA Department of Housing and Community Development) Jan 2017 Public Draft

4. California’s Housing Crisis
Rents in California have been steadily increasing, and have not decreased even during recession
Actual rents in Pasadena and surrounding region tend to be higher than the state median shown in this chart
Source: California’s Housing Future: Challenges and Opportunities (CA Department of Housing and Community Development) Jan 2017 Public Draft

5. California’s Housing Crisis
Income
Total Renter Households (million)
% Rent Burdened
% Severely Rent Burdened
Extremely Low-Income
1.27
90%
80%
Very Low-Income
.95
87%
51%
Low Income
1.11
65%
18%
Subtotal of above
All Lower-Income Renter Households (80% AMI and below)
3.33
81%
Moderate- Income
1.03
35% 4%
Above Moderate-Income
1.54 8% 0%
All Renter Households Total
5.9
54%
30%
81%
of lower-income renter households in CA are rent burdened.
51%
of lower-income renter households in CA are severely rent burdened.
Rent Burdened means paying more than 30% of income toward housing costs.
Severely Rent Burdened means paying more than 50% of income toward housing costs.

6. State Density Bonus Law were approved with concession permits
Between
1,360 UNITS
were approved with concession permits
CONCESSIONS BEING REQUESTED:
Height
average is 8’,
or one extra story
281
Bonus units
172
Affordable units
49 Very Low
55 Low
68 Moderate
Floor Area Ratio (FAR)
average request is for 0.5 additional FAR
Majority of concession permits concentrated in Central District, consistent with General Plan

7. State Density Bonus Law in process requesting concessions
There are currently
521 UNITS
in process requesting concessions
CONCESSIONS BEING REQUESTED:
Height
average was 14’,
or one extra story
130
Bonus units 48
Affordable units
48 Very Low
0 Low
0 Moderate
Floor Area Ratio (FAR)
average request is for 0.6 additional FAR
Majority of concession permits concentrated in Central District, consistent with General Plan

8. Framing the Issue STATE LAW Density Bonus Community Benefits
Density Bonus grants higher density and concessions in exchange for providing a certain number of affordable units on-site
State law places the burden of proof on the City to find that concessions are not required for cost savings
Community Benefits
Density Bonus
Lack of Local Control
More Market Units
Concessions
Neighborhood Context
Affordable Housing

9. Previous Discussions STATE LAW TWO PATHS: FOCUS ON HEIGHT REDUCTION
Letter from HCD indicating risk of de-certified Housing Element
Consequences include loss of funding, loss of local control, and not meeting housing targets
Anticipating additional housing bills from legislature
TWO PATHS:
Reduce Allowable Intensity
Consider various options to reduce allowable development intensity by reducing density and/or height.
Seek More Affordable Units
Ability to calibrate inclusionary ordinance to achieve more affordable housing units from developers without conflicting with State law.
FOCUS ON HEIGHT REDUCTION
Reduce heights City-wide by a standard amount
Too broad and did not consider neighborhood context
Reduce heights City-wide based on neighborhood context
Variation too great and did not address problem areas
Direction to study alternative options

10. State Law KEY BILLS REALITIES:
AB 1505 (Palmer Fix)
AB 72 (Housing Element Enforcement)
SB 35 (Streamlining)
SB 828 (RHNA Reform)
SB 1333 (No Net Loss)
More?
REALITIES:
Density Bonus Law
Challenging to deny projects seeking density bonus and concessions.
Affordable Housing Requires Subsidy
The private market will not create affordable housing without public subsidy in one form or another.
STATE LEGISLATION IN RESPONSE TO HOUSING CRISIS
Allow cities to require inclusionary housing
Allow State to review compliance with Housing Policy at any time
Require ministerial approval of housing projects if goals are not met
Reform housing needs allocation process
Require cities to maintain adequate sites for affordable housing

11. Balancing the Scale

12. Balancing the Scale COMBINATION OF STRATEGIES Community Benefits
Increase affordable housing production
Provide incentives for alternative concessions
Regain local control
Community Benefits
Density Bonus
Lack of Local Control
More Market Units
Concessions
Neighborhood Context
Affordable Housing

13. Recommendation POLICY PROPOSALS
Inclusionary Requirements by Jurisdiction
POLICY PROPOSALS
Increase inclusionary housing percentage
Increase in-lieu fee obligation
Enact Policy amendments to existing inclusionary ordinance
Establish affordable housing concession menu
City
Inclusionary Requirement
(% of project units)
Berkeley
20%
Brea
10% (for-sale only)
Huntington Beach
Irvine
15%
Pasadena
Richmond
10% - 17%
San Bruno
San Jose
15% (for-sale only)
San Francisco
12%-20% (rental) 20%-33% (for-sale)
Santa Monica
5% - 25%
West Hollywood
20% - 30%

14. Recommendation POLICY PROPOSALS Increase In-Lieu Fee Obligation
Increase inclusionary housing percentage
Increase in-lieu fee obligation
Enact Policy amendments to existing inclusionary ordinance
Establish affordable housing concession menu
Increase In-Lieu Fee Obligation

15. Recommendation POLICY PROPOSALS Increase In-Lieu Fee Obligation
Increase inclusionary housing percentage
Increase in-lieu fee obligation
Enact Policy amendments to existing inclusionary ordinance
Establish affordable housing concession menu
Increase In-Lieu Fee Obligation
Fee Amount = Square Footage of Total Units x Applicable In-Lieu Fee Rate
Example: 35-unit rental project in Sub-Area “D”
Project has 42,000 SF net residential floor area
Sub-Area “D” In-Lieu Fee Rate = $24.97 per SF
In-Lieu Fee = 42,000 SF x $24.97 = $1,048,740 or
If providing inclusionary units = 4 Low-Income, 2 Moderate-Income

16. Recommendation POLICY PROPOSALS
Increase inclusionary housing percentage
Increase in-lieu fee obligation
Enact Policy amendments to existing inclusionary ordinance
Establish affordable housing concession menu
Proposed Inclusionary Ordinance Amendments
Eliminate Trade-Downs
No extra credit for Low- and Very Low-Income units
All units, regardless of income, count as single units toward inclusionary requirement
Higher Inclusionary for Off-Site
Additional 15% inclusionary if units provided off-site
Ownership Units Not Permissible for Off-Site
Rental units provide longer-term affordability
Only allow ownership for off-site if to be purchased by the City

17. Recommendation POLICY PROPOSALS Affordable Housing Concession Menus
Increase inclusionary housing percentage
Increase in-lieu fee obligation
Enact Policy amendments to existing inclusionary ordinance
Establish affordable housing concession menu
Affordable Housing Concession Menus
City
Concession Menu Items
Amount of Concession
Santa Monica
Side Yard Setback
Parcel Coverage
Rear Setback
Up to 15% deviation
Up to 10% deviation
Los Angeles
Setbacks
Lot Coverage
Lot Width
FAR
Height
Open Space
Up to 20% decrease
Up to 20% increase
Up to 35% increase
Up to 11 ft. increase
San Francisco
Rear Yard Setback
Parking
Loading
Up to 20% reduction
Up to 50% reduction
Waived
Up to 10% reduction
Up to 2 extra stories

18. Recommendation PROCESS RECOMMENDATION POLICY PROPOSALS:
Review variety of policy options
Develop studies as necessary
Workshop with Planning Commission
Return to Council with recommendations
RECOMMENDATION
Direct Staff to develop an ordinance
Amending the Inclusionary Housing Ordinance to implement goal of increasing affordable housing and establishing an affordable housing concession menu.
POLICY PROPOSALS:
Increase inclusionary housing percentage
Increase in-lieu obligation
Enact policy amendments to existing inclusionary ordinance
Establish affordable housing concession menu

19. City Council
October 15, 2018