|Chapter 8 (Implementation Manual) of the La Habra General Plan contains a set of measures to achieve the various goals and policies. The Implementation Manual is arranged chronologically and discusses the time at which specific goals and policies are expected to be pursued and achieved. Goals and policies are categorized as either “Near Term,” “Annual,” “Continuing,” “Periodic Updates,” and “Mid- to Long-Term.” The following “Near Term" goal as it relates to inclusionary housing is included in the Implementation Manual:
B11 Inclusionary Housing Ordinance
The City will consider adopting an inclusionary housing ordinance. The City will collect information and conduct research through case study examples and other experiences from similar cities to develop baseline best practice provisions that would require new residential and/or mixed-use developments provide affordable housing units. Analysis should include documentation of the intent and purpose, findings demonstrating the need, key terms and definitions, specific procedures and standards (e.g., percentage of units, affordability levels, duration of affordability requirements), eligibility for exceptions or alternative(s) to the production of the affordable units (e.g., payment of an in-lieu affordable unit fee), and a system for enforcing and monitoring compliance. This information will be provided to City decision makers to determine the feasibility of developing an inclusionary housing ordinance.
The specific housing element policy and program are:
Policy A7 Inclusionary Housing
Explore the development of an inclusionary housing ordinance.
Program A5 Inclusionary Housing
Consider adopting an inclusionary housing ordinance that would require new residential and/or mixed-use developments provide affordable housing units. The City will collect information and conduct research through case study examples and other experiences from similar cities to develop baseline best practice provisions. Analysis should include documentation of the intent and purpose, findings demonstrating the need, key terms and definitions, specific procedures and standards (e.g., percentage of units, affordability levels, duration of affordability requirements), eligibility for exceptions or alternative(s) to the production of the affordable units (e.g., payment of an in-lieu affordable unit fee), and a system for enforcing and monitoring compliance. This information will be provided to City decision makers to determine the feasibility of developing an inclusionary housing ordinance.
Staff began preparation of the proposed inclusionary housing ordinance in November 2014; however, work ceased due to litigation surrounding these types of ordinances that were occurring in other California cities. Litigation focused on the validity of inclusionary housing ordinances in California and targeted cities which had adopted inclusionary housing ordinances. In the case of California Building Industry Association (CBIA) v. the City of San Jose, the California Supreme Court upheld the City of San Jose’s Inclusionary Housing Ordinance and determined that such ordinances are legally valid.
Current zoning practices, while not intentionally exclusionary, have impacted the production of affordable units. To help address this, many cities throughout the United States, including here in California, have implemented inclusionary zoning as a planning tool to encourage the development of affordable units. To facilitate the production of affordable housing, the State of California has, since 1980, enacted several laws that, in addition to authorizing cities to adopt inclusionary housing ordinances, have also mandated local jurisdictions to adequately plan and meet the housing needs of all income levels in their communities. To that end, the State of California requires that the regional agencies, such as the Southern California Association of Governments (SCAG) in Southern California, forecast the housing needs of cities within specific geographic regions of California. This forecast is known as the Regional Housing Needs Assessment (RHNA).
RHNA occurs on an eight-year cycle and establishes the number of affordable units each municipality is required to plan for, as well as provide areas in respective jurisdictions where units can be constructed. The most recent policy actions by the State has resulted in a goal that three million new housing units be built statewide during the current RHNA cycle, with approximately 1.3 million housing units allocated to SCAG cities. Of that number, La Habra has been allocated 803 new units.
The break down by affordability range for La Habra is shown below:
||Number of units
In the past there have been no penalties assessed by the State against cities who did not meet their allocated RHNA requirements; however, going forward jurisdictions that fail to "make adequate steps" toward meeting their RHNA numbers may face penalties by the State, which could include:
Current City Practices
- The State refusing to certify the city's General Plan or Housing Element, which may result in fines pursuant to California Government Code 65584.08 and/or the loss of local control over certain land use decisions;
- Legal action initiated by the State of California; and
- The potential withholding of Federal and State grant money, such as Cal Home Program funds; streets, infrastructure and transportation grants; homelessness assistance grants; affordable housing grants (SB-2, LEAP, etc.); Jobs/Housing Balance Improvement Incentive Grant funds; and Community Development Block Grant Program funds.
The City of La Habra has utilized a variety of tools to help satisfy affordable housing requirements (see Past City Actions, Attachment 3). Generally, this effort has been accomplished through the use of discretionary permits, such as Specific Plans, Planned Unit Developments (PUDs), and Development Agreements, wherein conditions of approval included the provision of affordable housing units. Examples of providing affordable housing units have included the conversion of existing market rate units to affordable units, setting aside land for affordable units, or paying an “in-lieu-of” fee by the developer to the City's Housing Authority.
Most recently, the City adopted Chapter 18.80 “Affordable Housing Incentives” of the La Habra Municipal Code (LHMC), which was required for the City to comply with State mandates. LHMC Chapter 18.80 adheres to State law and provides concessions to housing developers on zoning development standards. Concessions may include: reduced parking requirements, approval for the construction of additional units, and/or deviations on development standards, such as building setbacks or height requirements. To date, two residential projects totaling eighty units of new housing have taken advantage of the incentives described in LHMC Chapter 18.80, resulting in the production of eight affordable units within those developments.
In most cases, developers have contributed funding to the City for affordable housing, but not in amounts that have allowed the Housing Authority to accumulate sufficient funds towards the production of affordable units. The current method to encourage the construction of affordable housing is either ineffective or insufficient and, subject to Council consideration, should be replaced with a process that results in the successful development of affordable housing units.
Inclusionary Housing Ordinance Survey
As part of its study into this issue, staff conducted a survey to examine the inclusionary housing ordinances of other local cities (see Inclusionary Housing Survey, Attachment 4). Currently eight of 34 cities in Orange County have an inclusionary housing ordinance, along with the neighboring City of Whittier in Los Angeles County. For those Orange County cities that have an inclusionary housing ordinance, the majority require that a minimum of 15% of new units constructed as part of a new residential development be affordable; however, other aspects of these ordinances vary from city to city.
Based on the review of other cities' requirements, staff prepared a draft ordinance that incorporate aspects of the ordinances that staff believes to be most beneficial to La Habra (see Resolution, Attachment 1). The draft ordinance is intended to be as simple as possible, yet still provide the City with the ability to receive fair-market in-lieu payments, should a developer choose to not construct affordable housing units as part of a proposed project.
The proposed inclusionary housing ordinance includes the following features:
The adoption of an inclusionary housing ordinance has certain advantages, which include the following:
- Applies to projects of 10 or more residential units (for-sale or rental)
- Requires that 15% of units within a residential project be affordable
- If units are for sale, affordable units must be available to families earning no more than 110% of area annual median income (in La Habra, this currently equates to $98,374 per year for a family of four)
- If units are rental, 9% of units must be available to moderate income families and 6% of units must be available for low and very-low income families
- Units can be provided "on site" or at another location within the City
- Units must maintain affordability for a period of time consistent with State law (currently 55 years for rental units and 45 years for owner-occupied units)
- Developer can choose to pay an in-lieu fee instead of providing affordable units
- An In-lieu fee provided by a developer will be retained by the City and used toward the production of future affordable housing projects
The draft ordinance, if adopted, provides a stronger method of enforcement, is consistent with inclusionary housing ordinances of other Orange County cities, and does not discourage developers from proposing new residential development in the community. It should be noted that the BIA (Building Industry Association) has contacted staff regarding this matter and expressed opposition to the proposed ordinance as they believe it is an unfair burden on the developers and is a deterrent to building homes within jurisdictions with such ordinances.
- Codifies the inclusionary housing requirement within the LHMC;
- Removes the step of having staff attempt to negotiate affordability considerations with developers;
- Establishes a standard in-lieu fee calculation;
- Sets consistency for multi-family projects during discretionary permit process;
- Provides the City an additional tool in meeting RHNA numbers;
- Provides residential developers greater up-front certainty regarding the city's requirements; and,
- Ensures the development of affordable housing units in order to comply with State law and RHNA allocations.
The adoption of an inclusionary housing ordinance provides the City with a tool to facilitate the construction of affordable units. The incentives currently contained within the LHMC have not resulted in the construction of affordable housing units; therefore, staff recommends that the City Council approve Zone Change 20-03 adopting an ordinance adding Chapter 18.82 "Inclusionary Housing Units" to the LHMC.
Required Findings and Conditions
No specific findings are required as part of a zone change; however, the purpose of this action is to fulfill a goal of the La Habra General Plan 2035.