Affordable Housing: a Plan Without a Home

Within existing city or County infrastructure, there is no clear owner who is responsible for achieving RHNA permitting targets. Partially Disagree. We partially disagree with Finding 1 because while a single entity is responsible for reporting on RHNA permitting targets, jurisdictions do not typically themselves develop housing projects. State Housing Law requires only that jurisdictions plan to address barriers to development, accommodate all types of housing based on the RHNA allocations, and report their progress towards RHNA. San Pablo’s Community Development/Planning 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 department 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 Partially Disagree. We partially disagree with Finding 2 because while City and County officials recognize the challenges ahead, San Pablo’s Draft Housing Element identifies a clear path to accommodate the RHNA targets and we are actively exploring and implementing strategies to work towards meeting state-mandated regional housing (RHNA) targets. Despite acknowledging the complexity of the task, San Pablo officials are committed to finding viable solutions and collaborating with stakeholders to address the housing needs of the region. Through ongoing assessments and adaptive planning, they aim to identify feasible pathways to make progress toward meeting RHNA targets. While it may be a challenging endeavor, the dedication and proactive approach of City and County officials demonstrate their commitment to addressing the housing crisis and fulfilling their obligations in accordance with state mandates. However, the cities and County are not housing developers and do not construct the units. The City of San Pablo closely monitors its progress in meeting RHNA numbers at the staff, Planning Commission, and City Council level. We project a good likelihood of meeting our current cycle overall RHNA allocation and have prepared a strong and proactive Draft Housing Element that will position San Pablo well for success during the next cycle. While the overall RHNA numbers for San Pablo may be met, the recommended above moderate-income allocation is not realistic for our local economy and housing market, and San Pablo will likely continue to do more than its fair share in producing affordable housing.

There are currently no measurable penalties if a city or a County does not achieve RHNA targets in an approved housing element plan. Partially Disagree. We partially disagree with Finding 3 because while there are no legal or financial penalties if the cities and County do not achieve their RHNA targets, there are penalties for not accommodating RHNA in a Housing Element and the consequences for not issuing adequate permits can be considered punitive. In addition, jurisdictions are subject to penalties if they do not adopt a Housing Element that is certified by the State, including designating adequate sites to accommodate the RHNA targets. For example, cities and the County may be subject to litigation from individuals, housing rights’ organizations, developers, and/or HCD. Depending on court decisions, local control may further diminish, beyond that prescribed in State law, including, for example, suspending the cities’ or County’s authority to issue building permits or approve certain land use permits. Cities and the County may also be subject to court-issued fines, court receivership, and streamlined approval processes that remove local discretion. Regardless of the reasons for lack of building permit activities, if the cities or County do not issue building permits that meet the RHNA targets, developers may choose to use a ministerial process for housing projects that meet specified criteria (SB 35). In addition, a developer could choose to construct housing on sites that the cities or County have not designated for housing.

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 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. 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 In San Pablo’s case, the City exceeded its RHNA allocations for Very Low Income (146%) and Low Income (101%) during the 1999-2006 cycle, but suffered a building downturn in 2007-2014, when it did not meet any of its income allocations. San Pablo anticipates meeting its Very Low, Low, and Moderate income RHNA allocations for the current cycle, but is unlikely to meet its Above Moderate- Income allocation.

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. Though the above list of obstacles can hinder the development of affordable housing, San Pablo has addressed each item in its Housing Element programs, policies, and actions to the extent feasible and considered acceptable to HCD. Incorporated as a largely developed community 5 in 1948, and with just 2.6 square miles, San Pablo may be considered essentially fully built out. The older residentially zoned portions of the community provide a very valuable stock of affordable housing, with large household sizes and a healthy proliferation of ADUs. Redevelopment of these areas would be expensive and counterproductive in the loss of existing affordable housing stock. Nonetheless, the City has identified ample new housing development sites in its draft Housing Element, along with modifications to its Zoning Ordinance to better facilitate higher density housing development. Through proactive efforts and a can-do attitude, the City has begun to attract increased interest by housing developers, including those who are willing to include affordable units. The San Pablo community is largely in support of the City’s efforts. Housing production is a strong feature of the City Council’s goals, and the Planning Commission has approved virtually all of the housing proposals that have been presented to it in recent years, without the need for additional hearings.

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 lower income housing 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, including San Pablo, consider amending/changing the zoning while reviewing their Housing Element and/or updating their General Plan, not just when a project is proposed for development. In fact, because zoning amendments are time consuming to prepare and generally involve extensive and often costly CEQA analysis, it makes sense to group these amendments and to time them as Housing Element, General Plan, or Specific Plan implementation actions. 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, among 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 6 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)), in 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 sites selection is to target declining areas for redevelopment. However, without tax increment financing as a reinvestment tool, jurisdictions must rely on private investments as a 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 sites 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. 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. The City of San Pablo has recently entitled a number of projects requiring density bonus and/or height adjustments, including those at 2555 El Portal, 2364 Road 20, 13717 San Pablo Avenue, and 1820 Rumrill Boulevard. 3. 15 jurisdictions in Contra Costa County have implemented inclusionary housing ordinances. Because it is a lower-income community and has not previously had a strong market for market rate units, San Pablo has not adopted an Inclusionary Housing Ordinance. San Pablo adopted an Affordable Housing Strategy document in 2020. This report recommended that the City conduct a feasibility study for inclusionary housing, but expresses concerns about the readiness of the San Pablo market. Adopting an inclusionary housing ordinance could result in a chilling of San Pablo’s housing development market, in that it can have the result of increasing housing costs and reducing profits in an area where property values are lower than in higher income areas to the south. Even without an inclusionary requirement in place, San Pablo has shown a strong recovery in the past few years, particularly for affordable housing projects. 7

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. Partially Disagree. We agree that 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 not meeting state deadlines for Housing Elements. There is also the penalty of potential loss of certain grant funding sources, which is of grave concern to our community. We partially disagree with Finding 7 because there are other penalties that are not directly tied to the statutory deadline. There are penalties associated with lawsuits, which are rarely brought forward for simply missing the statutory deadline, but more due to a perception of continued inactions. In addition, as stated in the response to Finding 3, cities and the County may be subject to litigation from individuals, housing rights’ organizations, developers, and/or HCD. Depending on court decisions, the cities and the County may lose additional local control, such as suspension of authority to issue building permits or approve certain land use permits; and/or cities and the County may be subject to court-issued fines, court receivership, and streamlined approval processes that remove local discretion. 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. It should be noted that the City of San Pablo practices streamlined processing of planning applications. The City does not keep a docket and discretionary applications are scheduled for the next available regular monthly Planning Commission meeting. The Planning Commission has a long history of rending decisions efficiently, generally without continuations. With the exception of plan adoption, appeals, map and zoning text amendments, major subdivisions, and overconcentration of alcohol, planning approvals are decided by the Planning Commission alone. Zoning Administrator approvals are rendered at the staff level within a 30-day window. 8

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 Board of Supervisors and Town/City Councils cannot, for example, float bonds any longer without voter approval. While Measure X, the countywide 20-year ½ cent sales tax was approved in November 2020, Measure X is projected to provide up to $12 million annually for “housing and related services” for the entire County (emphasis added). Measure X Affordable Housing funds will be distributed through a Notice of Funding Availability (NOFA) process, a competitive process. While it is helpful where applied, Measure X is no substitute for the meaningful, long-lasting, locally determined housing development and redevelopment activities that were previously possible with Redevelopment Agency jurisdiction and funds. Since the loss of redevelopment, the City of San Pablo, as the successor agency, has worked diligently to leverage remaining assets to promote additional housing and other redevelopment opportunities. These successes include the Mixed Use Center South area in central San Pablo, which is the home of County health facilities, the new City Hall, Public Library, an entitled 20-lot residential townhouse subdivision at 2812 Chattleton Lane, and a 91-unit mixed use development at 13717 San Pablo Avenue. Also in development on existing or prior local successor agency holdings is the 100-unit affordable Alvarado Gardens project at the old City Hall site (13831 San Pablo Avenue) currently under construction and the recently entitled 40-unit affordable housing project at 1820 Rumrill Boulevard. Other uses of the City’s successor agency funds include a first-time homebuyer program administered by the San Pablo Economic Development Corporation, and previously, a COVID related rent and mortgage support program. However, the City has neared the end of its property dispositions and without redevelopment, there is no longer the ability or resources to plan for and to accomplish the redevelopment of the community. The City and its developer partners will then be left with just facing the stiff competition for Low Income Housing Tax Credits, and Measure X or other regional, state or federal funding sources.

Measure X housing funds are not fully dedicated to building AH for very low- and low-income residents. Agree.

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. Partially Disagree. Bond funding requires voters’ approval. Depending on the timing (economic conditions and bond measures for other competing interests), bond financing has not been the most significant source of affordable housing financing. While local funding provided by bonds like Measure X Housing Fund in Contra Costa County are a beneficial component to help fund affordable housing construction, the amount of funding available from Measure X is not high enough to be a critical factor in a developer's overall ability to raise funds for an affordable housing (AH) development. Under the Measure X Program Allocation Summary, only $10 million dollars (about 13% of FY 2022-23 funding and about 4.5% of total funding) were allocated to a Local Housing Trust Fund; for FY 2023-24, $12 9 million dollars were allocated. The Measure X Housing Funds are to be dispersed by the Department of Conservation and Development (DCD) and the Health Services’ Health, Housing and Homeless (HSD- H3) Services and the Housing Authority of the County of Contra Costa. While a contributing factor, Measure X dollars allocated to housing production is not critical to the overall ability of the jurisdictions to meet their RHNA requirements for affordable housing.

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. The City of San Pablo agrees that proactive strategies can help attract affordable housing developers and mitigate the barriers to housing production; however, proactive strategies alone do not result in affordable housing projects being constructed. Suitable development sites must also exist in a community, the sites must be available, and the local market must provide a return on the developer’s investment such that a project is feasible and can be built. For example, while San Pablo engages in a host of proactive strategies outlined in its Council Work Plan Goals, Housing Element, and Affordable Housing Strategy, a variety of other obstacles towards affordable housing development exist beyond a local jurisdiction’s control. This includes the gap in financing between constructing market-rate versus affordable housing, land costs, the land-to-building ratio when a property contains an underutilized building, the cost to upgrade or renovate an existing nonresidential building to accommodate housing, infrastructure costs (on- and off-site), fees for public utilities (particularly for non-municipal utilities), delays and obstacles in accessing non-municipal services and utilities, unexpected site constraints, etc.

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. 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 4 for detailed RHNA numbers from previous Housing Element cycles. As noted above, in recent years, the City of San Pablo has had better success in meeting its Very Low Income and Low-Income housing requirements compared to its Above Moderate-Income housing allocation, and has also had some success in meeting its Moderate-Income housing requirement. For the 2023-2031 RHNA cycle, the expectations for Above Moderate-Income housing, which comprises 46% of San Pablo’s allocation (341 of the 746 total units), continues to be at odds with the local market and economic trends. This persistent expectation of the lowest-income community in the Bay Area, which is essentially fully built out, to produce half of its housing in the above-moderate category is a good illustration of how the RHNA numbers can be at odds with the on-the-ground market reality of our communities.