City of Martinez Community and Economic Development

Within existing city or County infrastructure, there is no clear owner who is responsible for achieving RHNA permitting targets. Partially Disagree. The City partially disagrees with Finding F1 because while a single entity is responsible for reporting on RHNA permitting targets, jurisdictions do not develop housing projects. State Housing Law only requires that jurisdictions plan to address barriers to development, accommodate all types of housing based on the RHNA allocations, and report their progress towards RHNA. The Community and Economic Development Department is responsible for preparing the Annual Progress Report (“APR”) as required by State Housing Law. These reports are presented before the City Council early in the calendar year, prior to submission to HCD. Furthermore, each jurisdiction’s Housing Element identifies the departments and divisions responsible for carrying out the Housing Element’s Plans and Programs.

City and County officials see no direct path to meet state-mandated regional housing (RHNA) targets. Agree. The City agrees with finding F2. Without a dedicated funding source from the State of California or other mechanism to obtain additional funding, most local jurisdictions throughout the State will continue to miss their RHNA targets for very low-, low-, and moderate-income households. Units affordable to lower income households require significant subsidies since the cost of construction exceeds the return on investment and there is inadequate funding to support the housing need. The City’s Draft 2023- 2031 Housing Element identifies potential solutions to accommodate the RHNA targets and the City is actively exploring and implementing strategies to work towards meeting state- mandated regional housing (RHNA) targets. Despite acknowledging the complexity of the task, the City is committed to finding viable solutions and collaborating with stakeholders to address the housing needs of the region to the best of our ability. However, the City is not a housing developer and does not construct the units.

There are currently no measurable penalties if a city or a County does not achieve RHNA targets in an approved housing element plan. Disagree. While there are no legal or financial penalties if the City does not achieve their RHNA targets (nor should there be as the actual construction of these units is dependent in large part upon the private sector and the availability of funding) there are punitive consequences. For jurisdictions that do not meet their RHNA targets, developers may choose to use a ministerial, streamlined process for housing projects pursuant to Senate Bill 35. This outcome removes local control regarding these important land use decisions.

Data published by ABAG shows that Contra Costa County and most of its cities have missed their current RHNA targets for very low- and low-income housing allocations. The allocation requirements continue to increase (16x for very low-income and 4x for low-income residents). Partially Disagree. It is true that many cities and the County as a whole missed their RHNA targets for very low- and low-income housing, and that RHNA Allocation for very low- and low-income housing has continued to increase. However, the increase in RHNA allocation is not to the extent mentioned in this report. RHNA numbers from the past three cycles indicate that the current (6th) cycle has had the largest increase of 2.5x from the previous cycle in very low- and low-income housing requirements. Cycle Very Low % permitted Low % permitted Source 1999 - 2006 6,481 44% 3,741 48% link 2007 - 2014 6,512 21% 4,325 24% link 2015 - 2020 5,264 16% 3,086 55% link 2023 - 2031 13,346 n/a 7,685 n/a link

Many obstacles hinder the development of AH at the local level, specifically for very low and low- income housing, including: a. Limited availability of land; b. Restrictive zoning policies specific to AH development; c. Limited developer interest to bring projects forward; d. Limited available funding; e. Lack of community support; f. NIMBY opposition & city council response to NIMBY opposition. Partially Disagree. While it is true that items a, b, c, d, and f can hinder the development of affordable housing, the City has taken significant steps to promote the development and preservation of affordable housing. However, the City has taken recent actions primarily addressing item b. For example, in the past year, the City has approved a comprehensive update to its General Plan, updated and streamlined its ADU regulations, and updated the regulations for various residential and residential-support uses. The City is also taking further actions in connection with the 2023-2031 Housing Element Update to streamline and incentivize residential development projects with very low- and low-income housing.

Zoning changes are generally addressed only when a project is presented for development. Zoning obstacles include: a. Housing element plans that offer poor land choices for AH development; b. Restrictive height and high-density zoning policies; c. Lack of inclusionary housing ordinance(s) in many cities. Partially Disagree. AB 1397 set forth strict criteria for adequate sites. These criteria are somewhat arbitrary (e.g., not smaller than 0.5 acre and not larger than 10 acres). The requirement to demonstrate substantial evidence that existing uses do not impede redevelopment also tends to steer sites selection to neighborhoods with declining uses and lower and moderate resource areas. Most jurisdictions consider amending/changing the zoning while reviewing their Housing Element and/or updating the General Plan, not just when a project is proposed for development. 1. Pursuant to Government Code Section 65583.2(b), Housing Element sites must include information on the number of dwelling units that a site can realistically accommodate, the RHNA income category the parcel is anticipated to accommodate, whether the parcel has available or planned and accessible infrastructure, and the existing use of the site, amongst other details. When selecting sites to accommodate the lower income RHNA, HCD provides jurisdictions with best practices to consider factors such as: (1) Proximity to transit (2) Access to high performing schools and jobs (3) Access to amenities, such as parks and services (4) Access to health care facilities and grocery stores (5) Locational scoring criteria for Low-Income Housing Tax Credit (TCAC) Program funding (6) Proximity to available infrastructure and utilities (7) Sites that do not require environmental mitigation (8) Presence of development streamlining processes, environmental exemptions, and other development incentives. However, sites that meet these locational criteria do not always meet the other existing use criteria needed to demonstrate substantial evidence for existing uses to discontinue within the planning period. These include high vacancies, deteriorating conditions, marginally operating businesses, underutilization of sites, etc. These conditions are often directly contrary to access to high performing schools and jobs, amenities, adequate infrastructure, and clear of environmental hazards. In addition to the above requirements and pursuant to AB 686 (Government Code Section 65583(c)(10)), Housing Elements due on or after January 1, 2021, sites must be identified throughout the community in a manner that affirmatively furthers fair housing (“AFFH”). AFFH means taking meaningful actions, in addition to combating discrimination, that overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to opportunity based on protected characteristics. Very often the approach to site selection is to target declining areas for redevelopment. Without tax increment financing as a reinvestment tool, jurisdictions must rely on private investments as catalyst to induce redevelopment in declining neighborhoods. Housing is the best catalyst. For jurisdictions that take a neighborhood revitalization approach to accommodating the RHNA, place-based strategies that focus on public improvements, economic development, prioritization of funding, and targeted outreach are used to complement the site inventory strategies. As such, Housing Element plans provide an inventory of land that addresses the unique conditions of each jurisdiction. 2. According to State Density Bonus Law (“SDBL”), local agencies are required to allow increased density, reduced standards, and development incentives based on the number and type of affordable housing units proposed in a project. The SDBL applies to housing projects, including mixed-use developments, new subdivisions, or common-interest development. Developers may request incentives and concessions from the jurisdiction’s regulatory or development standards that result in actual and identifiable cost reductions to provide for affordable housing costs or rents. The number of required incentives is based on the percentage of affordable units provided in the qualifying project. For example, developers may ask for increased height above that allowed by the zoning regulations without the need to request a variance, exception, or conditional use permit. As such, height and density do not represent a restriction to development. Furthermore, many sites are located in transit-oriented neighborhoods where recent State laws have preempted restrictions on height and density. 3. 15 jurisdictions in Contra Costa County have implemented inclusionary housing ordinances, but the City of Martinez is not one of them. However, the City does have Program 11.J in the 2023- 2031 Housing Element where the City will consider adopting an Inclusionary Housing Ordinance, housing impact fee, and any alternatives to inclusionary housing as a means to provide some below market rate units in market-rate developments and to integrate/disperse affordable housing throughout the community. This Program is scheduled to be completed by December 2025.

Penalties directed at cities and the County (financial, loss of control over local planning) are tied to not meeting state deadlines for Housing Element plan approval. Agree. The City agrees there are penalties that are directly related to not meeting statutory deadline of the Housing Element. Builder’s Remedy, where individuals may apply for a building permit on land that is not designated for housing, is one such penalty that is directly linked to meeting state deadlines for Housing Elements. In addition, depending on specific programs, eligibility for some state funds requires a certified Housing Element (such as PLHA and State HOME funds). Finally, loss of local control is not limited to jurisdictions that do not meet specified timeframes for a certified housing element. For example, SB 35, the Housing Accountability Act, the No Net Loss Act, Density Bonus Law, and AB 2011/SB 6 specify what types of projects local jurisdictions must approve and where such projects must be approved, regardless of whether jurisdictions meet state deadlines for Housing Elements. Link to information on HCD’s accountability efforts and enforcement authority: https://www.hcd.ca.gov/planning-and-community-development/accountability-and-enforcement

Builder's Remedy and SB35 projects do not address ingrained local obstacles identified in this report that prevent the completion of approved AH projects. Partially Disagree. While Builder's Remedy and SB35 projects are valuable tools that can expedite affordable housing development, they may not comprehensively address all the ingrained local obstacles identified in this report that hinder the completion of approved AH projects. The effectiveness of these streamlined processes can vary from jurisdiction to jurisdiction, and while they can help overcome certain barriers like restrictive zoning policies and prolonged approval timelines, other challenges mentioned in the report, such as limited available funding, community support, and NIMBY opposition, may continue to persist in diverse degrees in different locations. To achieve the successful completion of approved AH projects and effectively address these obstacles, a multifaceted and jurisdiction-specific approach is required, taking into account the unique circumstances and complexities faced by each locality.

When local Redevelopment Agencies (RDA’s) were discontinued by the state in 2012, the County and cities did not address the loss of funding for affordable housing or find alternative funding to support affordable housing projects until voters passed Measure X in November 2020. Projects that target very low- and low-income residents were particularly impacted. Partially Disagree. While the County and cities did not create or find new sources of funds for affordable housing after the State discontinued 452 RDAs, State law limits local jurisdictions’ ability to create new funding sources. Voters need to approve virtually all new funding or financing mechanisms to generate the revenues or funds needed to preserve existing affordable housing and construct or finance new affordable housing. The City Council cannot, for example, float bonds any longer without voter approval. Measure X, the countywide 20-year ½ cent sales tax was approved in November 2020, is projected to provide up to $12 million annually for “housing and related services” for the entire County. Measure X Affordable Housing funds will be distributed through a Notice of Funding Availability (“NOFA”) process, a competitive process.

Measure X housing funds are not fully dedicated to building AH for very low- and low-income residents. Agree. The City agrees with this finding.

Local funding provided by bonds like Measure X Housing Fund is a critical component of a developer’s overall ability to raise funds for an AH development. Agree. Measure X is allocating $12 million per year for affordable housing development. This funding level is woefully inadequate when compared to the amount of funding required to facilitate construction of low- and very low-income housing development throughout the County. Affordable housing developers typically require multiple sources of financing such as federal and state grants, tax credits, private investments, and partnerships with nonprofit organizations. While local funding like Measure X can enhance a project's financial feasibility and facilitate its development, this local funding is only one piece of a complex tapestry of funding necessary for a project to move forward in today's economy.

Cities that proactively engage citizens, address zoning obstacles, make reasonable zoning concessions, work collaboratively with developers, provide local funding support, and are united in addressing NIMBY opposition, have been successful in attracting AH projects. Partially Disagree. While the factors listed above help attract developers, there are many other factors that can prevent a project from moving forward despite a city's best efforts. Other factors include high land costs and limited availability of developable sites, increasing labor and materials costs, expenses associated with compliance with the California Environmental Quality Act {CEQA} and associated project opposition, a lack of adequate infrastructure, transit and other amenities, environmental constraints, supply chain and material/labor costs, and unwilling landowners. Even where a project is approved by a city and set to move forward, circumstances can change that result in the development not moving forward.

The latest RHNA targets for cities and unincorporated Contra Costa County show a significant increase in the number of units that are expected to be permitted for very low and low-income housing. Partially Disagree. It is true that RHNA Allocation for very low- and low-income housing has continued to increase. However, the increase in RHNA allocation is not to the extent mentioned in this report. RHNA numbers from the past 3 cycles indicate that the current (6th) cycle has had the largest increase of 2.5x from the previous cycle in very low- and low-income housing requirements. Please see the response to Finding F4 for detailed RHNA numbers from previous Housing Element cycles. Grand Jury Recommendations