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HomeMy WebLinkAbout24654RESOLUTION NO. 24654 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, ESTABLISHING THE "AFFORDABLE AND MULTI -FAMILY HOUSING INCENTIVE PROGRAM," A PROGRAM TO ESTABLISH REDUCED DEVELOPMENT IMPACT FEES AND DEVELOPER FEES RELATED TO RESIDENTIAL PROJECTS CONSTRUCTING NEW AFFORDABLE DWELLING UNITS, OR CONSTRUCTING NEW MULTI -FAMILY RESIDENTIAL UNITS. WHEREAS, on June 19, 2019, the City Council of the City of Palm Springs, (hereinafter "City Council"), directed staff to develop a policy to establish reduced development impact fees, application fees, and permit fees related to residential projects that construct new affordable residential dwelling units, and WHEREAS, development impact fees are monetary exactions established and imposed according to various sections of the Palm Springs Municipal Code and the California Government Code, and collected as fees at rates established by Resolution to finance the design, construction, installation, and acquisition of public infrastructure or to recover the costs of adding capacity in existing public infrastructure; and WHEREAS, the City has established the following development impact fees applicable to residential projects: a Drainage Fee to implement the City's Master Plan of Drainage; the Public Art Fee to establish public art throughout the City; the Park Fee in accordance with Ordinance No. 1632 pursuant to the Quimby Act; and the Sewer Connection Fee, (the "Development Impact Fees"); and WHEREAS, developer fees are specific fees imposed on certain applications or permits associated with the Building, Engineering, Fire, and Planning Services Departments (the "Developer Fees"), established and imposed according to various sections of the Palm Springs Municipal Code and the California Government Code, and collected as fees at rates established by Resolution to adequately recover the City's costs to provide services in those Departments; and WHEREAS, funding for the construction of new affordable dwelling units has significantly decreased since the state of California's decision to completely dissolve and eliminate all of the Redevelopment Agencies existing throughout the state, including the City of Palm Springs Redevelopment Agency, and WHEREAS, production of new affordable dwelling units has stalled due to increased construction costs and an overall decline in Federal and State funding for affordable housing; and Resolution No. 24654 Page 2 WHEREAS, on March 6, 2019, the City Council adopted Ordinance No. 1981, as a means of creating Accessory Dwelling Units ("ADUs") in accordance with California Government Code (CGC) Section 65852.2, recognizing ADUs as an important source of housing that contributes to the character and diversity of housing opportunities in the City, and as providing workforce housing, housing for family members, students, elderly, in - home health care providers, the disabled, and others; and WHEREAS, Section 93.23.14(D)(4)(a) of the Palm Springs Zoning Code adopted by Ordinance No. 1981 set forth a requirement that the owner of an ADU may live within the primary dwelling unit or the ADU, and may rent the other unit, provided rentals shall be for periods of twenty-eight (28) days or more, or may rent both the primary dwelling unit and ADU concurrently for periods of twenty-eight (28) days or more; and WHEREAS, in accordance with Section 93.23.14(D)(4)(a) of the Palm Springs Zoning Code, new ADUs may not be constructed with the intent purpose of being operated as a "Vacation Rental" as that term is defined in and pursuant to Chapter 5.25 of the Palm Springs Municipal Code; and WHEREAS, the City Council's adoption of Ordinance No. 1981 was in compliance with the State's mandate regarding ADUs wet forth in CGC Sections 65852.1 and 65852.2, as a response to the State's severe housing crisis, with the intention of providing for the creation of more ADUs; and WHEREAS, payment of Development Impact Fees and Developer Fees constitutes a barrier for the construction of affordable dwelling units and ADUs; and WHEREAS, the City Council desires to establish a policy of incentivizing the construction of new affordable dwelling units, multiple -unit and ADUs through the establishment of lower Development Impact Fees and/or Developer Fees, as a way of addressing the City's and State's housing crisis; and WHEREAS, nothing herein constitutes the City's approval of any applications, development project entitlements and/or permits, and such, to the extent required in the future, are subject to and contingent upon City Council approval following, to the extent applicable, environmental review in compliance with the California Environmental Quality Act ("CEQA"). THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, HEREBY RESOLVES, DETERMINES AND APPROVES AF FOLLOWS: SECTION 1. Factual Findings: A. The true and correct recitals above are incorporated by this reference herein as the basis and foundation for the City's adoption of this Resolution. B. The City Council has determined that waiving or reducing certain Development Impact Fees and Developer Fees established by previous Resolutions for new residential Resolution No. 24654 Page 3 projects that construct affordable and/or multi -family residential dwelling units or ADUs would not significantly alter the City's ability to finance the design, construction, installation, and acquisition of public infrastructure or significantly impact existing finance plans. C. The establishment of lower Development Impact Fees and Developer Fees to incentivize construction of new affordable and/or multi -family residential dwelling units and ADUs is consistent with the City of Palm Springs General Plan Housing Element, in furtherance of: Goal HS1: Facilitate a broad range of housing types, prices, and opportunities to address current and future housing needs; and Action HS1.3: Continue to Offer Financial Incentives. Whereas the City of Palm Springs has designated sufficient vacant land to support the production of housing affordable to all economic segments of the community, affordable housing typically requires publicly and privately funded financial assistance to make projects feasible. To that end, the City grants financial incentives (e.g., fee waivers for parks), to support the production of affordable housing to be built during the present housing element planning period. The continuation of financial incentives will further City housing goals. 5-Year Objectives: • Continue to approve fee reductions and waivers, General funds, and make available other financial assistance, where possible, for extremely low, very low and low income housing projects. • Consider waiving the Multiple Species Habitat Conservation Plan fee (e.g., fee to acquire sensitive habitat) for extremely low, very low and low income affordable housing projects. • Promote financial and development assistance programs to the building community on an annual basis. D. The City Council has considered the effects of the reduced Development Impact Fees and Developer Fees to incentivize construction of new affordable and/or multi -family residential dwelling units and ADUs with respect to the City's and region's housing needs. SECTION 2. Affordable and Multi -Family Housing Incentive Program Established. 1) The City Council hereby establishes the "Affordable and Multi -Family Housing Incentive Program" applicable to new residential projects that construct affordable dwelling units for sale or rent, or for construction of new multi -family dwelling units for sale or rent, or construction of new ADUs, (hereafter the "Program"). The Program shall provide relief from payment of applicable Development Impact Fees and/or Developer Fees, or deferral of the payment of these fees, as further specified herein. Resolution No. 24654 Page 4 2) Purpose: The City Council hereby establishes the Program to encourage the construction of residential projects that will provide units with affordable rents or affordable housing costs for low and very low-income households in the City of Palm Springs. Additionally, the City Council establishes the Program to encourage construction of new housing affordable to middle income households. The City Council finds that payment of certain fees for residential development may create a barrier to such development and desires, by the adoption of this Resolution, to ease such barrier by eliminating the requirement to pay the full cost of certain fees, or to allow deferral of the payment of certain fees. To create further incentive to construct residential projects with affordable dwelling units, the City Council also desires to reduce certain Developer Fees or a portion of such fees as set forth in this Resolution. The City Council finds that this Program is consistent with the policies and goals of the Housing Element of the General Plan of the City of Palm Springs, and necessary for the health and welfare of the City's residents. 3) Definitions a) "Affordability covenant" means a covenant restricting all low income and very low- income units to remain affordable to low income and very low-income households for not less than 55 years for rental units and not less than 45 years for owner - occupied units. b) "Affordable dwelling units" means a residential unit (single family home or multi- family condominium unit) for sale, or a residential apartment unit for rent, that are restricted for occupancy by low-income and very low-income households. c) "Affordable housing cost" refers to the definition contained in California Health & Safety Code section 50052.5, including, but not limited to, cost limits for low and very low-income households in owner -occupied housing, as further defined in Volume 25 of the California Code of Regulations. d) "Affordable housing project" means new residential projects that include construction of affordable dwelling units for sale at an affordable housing cost, or for rent at an affordable rent. e) "Affordable rent" refers to the definition contained in California Health & Safety Code section 50023, including but not limited to cost limits for low and very low- income households in rental housing, as further defined in Volume 25 of the California Code of Regulations. f) "Applicant" means the owner or owners of record of the real property who request a reduced fee amount pursuant to the Program. g) "Area Median Income" means the median household income as provided in Section 50093(c) of the California Government Code, as it is currently enacted or hereinafter amended. Resolution No. 24654 Page 5 h) "Developer Fees" refers to development processing and administrative fees including, but not limited to, application, processing, plan check and inspection fees required by code, ordinance, resolution or other law to be paid as a condition of, or prerequisite to, development of residential uses, as those codes, ordinances, resolutions or other laws may be amended from time to time. i) "Development Impact Fees" refers to city fees imposed for the purpose of defraying all or a portion of the cost of public facilities related to a development project as required by code, ordinance, resolution or other law to be paid as a condition of, or prerequisite to, development of residential uses, as those codes, ordinances, resolutions or other laws may be amended from time to time. Only Development Impact Fees imposed by the City are subject to this Program. All Development Impact Fees imposed by other entities or agencies are excluded from the Program, and shall be paid by the applicant in accordance with applicable statutes, resolutions, ordinances, and regulations. j) "Director" means the Director of Planning Services, or his or her designee. k) "Fee Program Participation Agreement' refers to the agreement by and between the applicant and the City of Palm Springs that is required for approval of participation in this Program. 1) "Household" means one person living alone or two or more persons sharing residency whose income is considered for housing payments. m) "Inclusionary Unit' means a new multi -family residential condominium unit offered for purchase to middle -income households at a sales price according to requirements specified in the Program. n) "Low-income households" refers to the definition contained in California Health & Safety Code section 50079.5, including but not limited to an income limit of 80 percent of area median income, adjusted for family size and revised annually. o) "Middle -income households" refers to household whose income is between 120 percent and 160 percent of the Area Median Income, adjusted for household size. p) "Penalties" means an amount equal to one hundred dollars ($100) per unit per month computed from the date deferred fees are due and payable or the date units are required to be constructed. q) "Very low-income households" refers to the definition contained in California Health & Safety Code section 50105, including but not limited to an income limit of 50% of area median income, adjusted for family size and revised annually. 4) Affordable Housing Projects: Resolution No. 24654 Page 6 Affordable housing projects shall be eligible for reduced Development Impact Fees and Developer Fees as follows: a) For affordable housing projects proposing construction of 100% affordable dwelling units, the applicable Development Impact Fees and Developer Fees are hereby established at a rate that is reduced by 100%. b) For affordable housing projects proposing construction of less than 100% affordable dwelling units, the applicable Development Impact Fees and Developer Fees are hereby established as follows: i) 90% - 100% affordable dwelling units = reduced by 90% ii) 80% - 89% affordable dwelling units = reduced by 80% iii) 70% - 79% affordable dwelling units = reduced by 70% iv) 60% - 69% affordable dwelling units = reduced by 60% v) 50% - 59% affordable dwelling units = reduced by 50% vi) 40% - 49% affordable dwelling units = reduced by 40% vii) 30% - 39% affordable dwelling units = reduced by 30% viii) 20% - 29% affordable dwelling units = reduced by 20% ix) 10% - 19% affordable dwelling units = reduced by 10% x) 5% - 9% affordable dwelling units = reduced by 5% xi) 1 % - 4% affordable dwelling units = reduced by 1 % c) An applicant proposing an affordable housing project may file a request with the Director at the time the applicant files applications for related land use entitlements or other approvals with the City. The request shall clearly identify the nature of the request, the type of affordable housing project, the number of units, and the requested reduction of applicable Development Impact Fees and Developer Fees pursuant to the Program. d) As a condition of the City's acceptance of an applicant's land use entitlement applications, the applicant shall be required to enter into a Fee Program Participation Agreement in a legal form satisfactory to the City Attorney and approved by the City Manager. The Fee Program Participation Agreement shall: i) Be site and project specific; ii) Require applicant to enter into required affordability covenants for proposed affordable dwelling units as a condition of receiving the benefit of the Program pursuant to the Fee Program Participation Agreement. iii) Allow for the deferral of payment of required Developer Fees and Development Impact Fees until, and immediately prior to, the City's issuance of a Certificate of Occupancy for the affordable dwelling units subject to the Fee Program Participation Agreement. If construction of the affordable Resolution No. 24654 Page 7 dwelling units is phased, or consolidated into separate buildings, the payment of required Developer Fees and Development Impact Fees will be required at the time a final inspection and Certificate of Occupancy is requested by the applicant for each phase of the affordable housing project, or each building constructed with affordable dwelling units. iv) Provide for reimbursement to the City of all applicable Developer Fee reductions provided by the Program if, following twenty-four (24) months from the City's approval of all discretionary land use entitlements associated with the affordable housing project, the applicant fails to: (1) enter into required affordability covenants, or (2) obtain a building permit from the City to construct the affordable dwelling units. Extensions of time associated with land use entitlements granted by the City shall automatically extend the time limit required herein. v) Provide for reimbursement to the City of a portion of applicable Developer Fees and/or Development Impact Fees reduced by the Program if the applicant fails to construct the number or percentage of affordable units specified in the Fee Program Participation Agreement. vi) Provide for the enforcement of the provisions of the Program; vii) Bind applicant's successors in interest; viii) Provide that the project applicant shall defend, indemnify and hold harmless the City and its officials and employees for any claim or action arising from the Agreement, including, without limitation, any claim or action regarding the applicability of prevailing wages; and ix) Be recorded with the Riverside County Recorder's Office. e) The applicant shall be responsible for any recording fees of the Fee Program Participation Agreement. 5) Multi -Family Apartment Projects: Multi -family apartment projects not constructing affordable dwelling units shall be eligible for reduced Developer Fees and Development Impact Fees as follows: a) An applicant constructing a multi -family apartment project with new apartment units for lease to the public at market rental rates shall be eligible for a 50% reduction of applicable Developer Fees and Development Impact Fees. b) As a condition of the City's acceptance of an applicant's land use entitlement or building permit applications, the applicant shall be required to enter into Fee Program Participation Agreement in a legal form satisfactory to the City Attorney and approved by the City Manager. The Fee Program Participation Agreement shall: i) Be site and project specific; Resolution No. 24654 Page 8 ii) Allow for the deferral of payment of required Developer Fees and Development Impact Fees until, and immediately prior to, the City's issuance of a Certificate of Occupancy for the apartment units subject to the Fee Program Participation Agreement. If construction of apartment units is phased, or consolidated into separate buildings, the deferral of payment of required Developer Fees and Development Impact Fees will be required at the time a final inspection and Certificate of Occupancy is requested by the applicant for each phase of the multi -family apartment project, or each building constructed with apartment units. iii) Provide for reimbursement to the City of all applicable Developer Fees reduced by the City pursuant to the Program if, following twenty-four (24) months from the City's approval of all discretionary land use entitlements associated with the multi -family apartment project, the applicant fails to obtain a building permit from the City to construct the apartment units. Extensions of time associated with land use entitlements granted by the City shall automatically extend the time limit required herein. iv) Provide for reimbursement to the City of a portion of applicable Developer Fees and Development Impact Fees reduced by the City pursuant to the Program if the applicant fails to construct the total number of apartment units specified in the Fee Program Participation Agreement. v) Provide for reimbursement to the City of all applicable Developer Fees and Development Impact Fees reduced by the City pursuant to the Program if any or all of the apartment units are converted to another use, or cease to be made available for lease to the public; vi) Bind applicant's successors in interest; vii) Provide that the project applicant shall defend, indemnify and hold harmless the City and its officials and employees for any claim or action arising from the Agreement, including, without limitation, any claim or action regarding the applicability of prevailing wages; and viii) Be recorded with the Riverside County Recorder's Office. c) The applicant shall be responsible for any recording fees of the Fee Program Participation Agreement. Resolution No. 24654 Page 9 6) Accessory Dwelling Units (ADUs): ADUs shall be eligible for reduced Developer Fees as follows: a) The applicable Developer Fees for an ADU that is constructed for the purpose of providing a rental unit to a third party, at an affordable rent pursuant to an affordability covenant, is hereby established at a rate that is reduced by 100% of the otherwise applicable amount of the subject Developer Fee(s). b) The applicable Developer Fees for an ADU constructed for the purpose of providing a rental unit to a third party, at market rental rates, or for use by a member of the applicant's family, is hereby established at a rate that is reduced by 50% of the otherwise applicable amount of the subject Developer Fee(s). c) As a condition of the City's acceptance of an applicant's land use entitlement or building permit applications, the applicant shall be required to enter into Fee Program Participation Agreement in a legal form satisfactory to the City Attorney and approved by the City Manager. When required, the Fee Program Participation Agreement shall require execution of an affordability covenant. 7) Multi -Family Residential Condominium Projects: Multi -family residential condominium projects not constructing affordable dwelling units shall be eligible for reduced Developer Fees and Development Impact Fees as follows: a) Developer Fees for new multi -family residential condominium projects where 100% of the units will be sold as Inclusionary Units are hereby established at a rate that is reduced by 100% of the otherwise applicable amount of such Developer Fee(s). b) An applicant proposing a new residential condominium project where less than 100% of the units will be sold as Inclusionary Units shall be eligible for a reduction of applicable Developer Fees as follows: i) 90% - 100% Inclusionary Units = reduced by 90% ii) 80% - 89% Inclusionary Units = reduced by 80% iii) 70% - 79% Inclusionary Units = reduced by 70% iv) 60% - 69% Inclusionary Units = reduced by 60% v) 50% - 59% Inclusionary Units = reduced by 50% vi) 40% - 49% Inclusionary Units = reduced by 40% vii) 30% - 39% Inclusionary Units = reduced by 30% viii) 20% - 29% Inclusionary Units = reduced by 20% ix) 10% - 19% Inclusionary Units = reduced by 10% x) 5% - 9% Inclusionary Units = reduced by 5% Resolution No. 24654 Page 10 xi) 1 % - 4% Inclusionary Units = reduced by 1 % c) Price limits established for Inclusionary Units: Inclusionary Units must be restricted to and sold at prices at which middle -income households can qualify for the purchase. Qualification shall be based on not more than 35% of median family income being applied to housing expenses (mortgage principal and interest, taxes, insurance, and assessments). The determination of an acceptable sales price shall be determined in accordance with the following methodology: 1. Determine Current Median Family Income (a) Obtain most recent Mean Household Income for a family ("MHI") for Riverside -Ontario -San Bernardino found in the Census ACS 1-Year Survey ("Survey") published by the U.S. Census Bureau (or if such survey is no longer published, a comparable source). The Survey can currently be obtained using the following link: https://www.census.gov/programs-surveys/acs/ (b) Increase the MHI by the change in the California Consumer Price Index ("CCPI") since the date of the Survey using information obtained from the State of California Department of Industrial Relations CCPI calculator for California, Urban Wage Earners and Clerical Workers (or Riverside if available), currently found at: https://www.dir.ca.gov/OPRL/CAPricelndex.htm. 2. Determine Affordable Sales Price (a) Divide MHI by 12 (b) Multiply result of (a) by 35% (c) Divide result of (b) by 0.005 (0.005 represents mortgage interest rate of 6%) 3. Determine Maximum Sales Price The maximum home price for any residential unit proposed by the applicant cannot exceed 120% of the Affordable Condominium Price determined in Step 2. Example: 2017 Survey = $76,530 CCPI Change between December 2017 and June 2019 = 5.8% MHI = $76,530 x 1.058 = $80,969 Resolution No. 24654 Page 11 MHI / 12 = $80,969 / 12 = $6,747 Affordable Mortgage = $6,747 x 35% _ $2,362 Affordable Sales Price = $2,362 / 0.005 = $472,319 Maximum Sales Price = $472,319 x 120% _ $566,783 The City Manager is authorized to modify the method of calculating price limits for Inclusionary Units, as may be required to update the effects of changing interest rates on home affordability. The City Manager shall publish any modification of this policy in an administrative regulation approved by the City Manager and filed with the City Clerk. Further, the City Council, in its sole discretion, may authorize participation in the Program for a multi -family residential condominium project with sales prices that exceed the maximum sales price determined above dependent upon other direct benefits provided to the community by the multi -family residential project, or if the applicant sets aside a specified amount of the condominium units as affordable dwelling units, as required by the City Council. d) As a condition of the City's acceptance of an applicant's land use entitlement applications, the applicant shall be required to enter into Fee Program Participation Agreement in a legal form satisfactory to the City Attorney and approved by the City Manager. The Fee Program Participation Agreement shall: Be site and project specific. ii) Restrict the sales price for the proposed Inclusionary Units as a condition of receiving the benefit of the Program pursuant to the Fee Program Participation Agreement. iii) Allow for the deferral of payment of required Developer Fees and Development Impact Fees until, and immediately prior to, the City's issuance of a Certificate of Occupancy for the Inclusionary Units subject to the Fee Program Participation Agreement. If construction of Inclusionary Units is phased, or consolidated into separate buildings, the payment of required Developer Fees and Development Impact Fees will be required at the time a final inspection and Certificate of Occupancy is requested by the applicant for each phase of the multi -family residential condominium project, or each building constructed with Inclusionary Units. iv) Provide for reimbursement to the City of all applicable Developer Fees reduced by the City pursuant to the Program if, following twenty-four (24) months from the City's approval of all discretionary land use entitlements associated with the multi -family residential condominium project, the applicant fails to obtain a building permit from the City to construct the inclusionary units. Extensions of time associated with land use entitlements granted by the City shall automatically extend the time limit required herein. Resolution No. 24654 Page 12 v) Provide for reimbursement to the City of a portion of applicable Developer Fees reduced by the City pursuant to the Program if the applicant fails to construct the number or percentage of Inclusionary Units specified in the Fee Program Participation Agreement. vi) Provide for the enforcement of the provisions of the Program; vii) Bind applicant's successors in interest; viii) Provide that the project applicant shall defend, indemnify and hold harmless the City and its officials and employees for any claim or action arising from the Agreement, including, without limitation, any claim or action regarding the applicability of prevailing wages; and ix) Be recorded with the Riverside County Recorder's Office. e) The applicant shall be responsible for any recording fees of the Fee Program Participation Agreement. SECTION 3. Severability. Each component of the fees and all portions of this Resolution are severable. Should any individual component of the fee or other provision of this Resolution be adjudicated to be invalid and unenforceable, the remaining provisions shall be and continue to be fully effective, and the fee shall be fully effective except as to that portion that has been judged to be invalid. SECTION 4. Effective Date. This Resolution will become effective immediately upon adoption and remain effective unless superseded by a subsequent resolution. SECTION 5. CEQA. Adoption of this Resolution is not considered a "Project" as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a "Project" means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Adoption of this Resolution establishes a policy to establish reduced City fees, and is considered exempt from CEQA pursuant to Section 15378(b), in that a "Project" does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment. Resolution No. 24654 Page 13 PASSED, APPROVED, AND ADOPTED BY THE PALM SPRINGS CITY COUNCIL THIS 2"d DAY OF OCTOBER, 2019. DAVID H. READY, ESQ CITY MANAGER ATTEST: THONY M , CITY CLE K CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS) I, ANTHONY J. MEJIA, MMC, City Clerk of the City of Palm Springs, hereby certify that Resolution No. 24654 is a full, true and correct copy as was duly adopted at a regular meeting of the City Council of the City of Palm Springs on the 2"d day of October, 2019, by the following vote: AYES: Councilmembers Holstege, Middleton, Roberts, Mayor Pro Tern Kors, and Mayor Moon NOES: None ABSENT: None ABSTAIN: None IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Springs, California, this day ofyckobcf , NTHON MEJ A, C CITY CLEARK