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									                                          D E S I G N ,      C O M M U N I T Y         &    E N V I R O N M E N T




1625 SHATTUCK AVENUE    MEMORANDUM
            SUITE 300
  BERKELEY, CA 94709    DA TE    February 4, 2009
    TEL: 510 848 3815
                        TO       General Plan Update Steering Committee
    FAX: 510 848 4315
  www.dceplanning.com
                        FROM     Design, Community & Environment
                        RE       Housing Element Update Kick-Off




                        At its February 11, 2009 meeting, the Steering Committee will provide input on key issues
                        relating to the Housing Element Update. This memorandum provides background
                        information on the Housing Element for this meeting. Topics discussed below include the
                        basics of California Housing Element law, Novato’s existing Housing Element and Novato’s
                        recent housing accomplishments.



                        A. California Housing Element Law
                        California Government Code Article 10.6 requires that each City and County adopt a
                        Housing Element as one of the seven required elements of the General Plan. The Housing
                        Element is different from the other required elements of the General Plan in that it must be
                        updated every five years and is subject to detailed statutory requirements. Also, unlike
                        other elements, the Housing Element must be submitted to the California State
                        Department of Housing and Community Development (HCD) for review and certification.
                        HCD certifies a Housing Element when it finds that the element is in compliance with all
                        requirements of State Housing Element law.

                        1. Required Housing Element Contents
                        State law includes a list of information and analysis that must be included in a Housing
                        Element. HCD will not certify a Housing Element that does not include this required
                        content. Some of the key content that Novato’s Housing Element must contain includes:

                         ♦ A summary of the population and housing characteristics that contribute to the present
                           and future housing need in Novato.

                         ♦ A description of constraints on the development of housing in Novato.

                         ♦ An evaluation of the existing Housing Element.

                         ♦ An inventory of sites to accommodate Novato’s identified housing need.

                         ♦ Programs to promote housing opportunities for all Novato residents.




                        Offices in Berkeley and Ventura
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 ♦ A statement of quantified objectives that estimates the number of housing units by
   income level to be constructed, rehabilitated and conserved in Novato by 2014.

2. Regional Housing Needs Allocation
As stated above, Novato’s Housing Element must demonstrate that the City can
accommodate its identified housing need for all income levels over the next five years. This
“housing need” is the number of housing units assigned to Novato by the Association of
Bay Area Governments (ABAG) through the Regional Housing Needs Allocation (RHNA)
process. For this Housing Element Update, Novato’s RHNA is 1,241 total dwelling units.
Table 1 shows Novato’s RHNA broken out by income level. One of the key tasks for the
Housing Element Update is to identify sites within Novato to accommodate these 1,241
units over the next five years.

TABLE 1 NOVATO'S 2007-2014 REGIONAL HOUSING NEEDS ALLOCATION (RHNA)

                 Extremely      Very                                Above
                    Low         Low       Low       Moderate       Moderate        Total
Dwelling Units      137          138       171          221            574          1,241




The income levels identified in the table above are based on the Marin County Median
Family Income (MFI). In 2008, the MFI in Marin County was $91,000. Income levels for
four-person households are defined as follows:

 ♦ Extremely Low Income: Households with income less than 30 percent of MFI (under
   $27,300).

 ♦ Very Low Income: Households with incomes less than 50 percent of MFI (under
   $45,500).

 ♦ Low Income: Households with incomes between 51 percent and 80 percent of MFI
   ($45,500 to $72,800).

 ♦ Moderate Income: Households with incomes between 81 percent and 120 percent of
   MFI ($72,800 to $109,200).

 ♦ Above Moderate Income: Households with incomes greater than 120 percent of MFI
   (over $109,200).

3. Changes to Housing Element Law since 2001
Since the adoption of Novato’s existing Housing Element in 2001, the California legislature
has enacted numerous new laws related to Housing Elements. The Housing Element
Update will need to comply with the requirements of these new laws. The most important
new laws include:

 ♦ AB 2348: Requires a more detailed inventory of sites to accommodate projected
   housing needs.
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 ♦ SB 520: Requires analysis of constraints to housing development, maintenance and
   improvement of housing for persons with disabilities.

 ♦ AB 1233: Establishes that in the case that a prior element failed to identify or
   implement adequate sites, the local government must zone or rezone to address this
   need (in addition to the new projected need) within one year of update.

 ♦ AB 2634: Requires the quantification and analysis of existing and projected housing
   needs of extremely low-income households.

 ♦ SB 2: Requires local jurisdictions to strengthen provisions for addressing the housing
   needs of the homeless, including the identification of zones where emergency shelters
   are allowed as a permitted use without a conditional use permit.



B. Novato’s Existing Housing Element
The update to Novato’s Housing Element will revise, refine and expand upon the existing
Housing Element. Thus, an understanding of the contents of the existing Housing Element
will be important.

Novato’s existing Housing Element can be viewed in its entirety at
http://www.ci.novato.ca.us/cd/gp/gpchap3.html. The existing Housing Element includes all of
the required contents discussed above. The Element is divided into five sections:

 ♦ Section 1: Introduction and overview of State law requirements for Housing Elements.

 ♦ Section 2: Background analysis of housing needs in Novato.

 ♦ Section 3: Assessment of housing opportunities in Novato.

 ♦ Section 4: Summary of key findings from the analysis of housing needs in Novato.

 ♦ Section 5: Vision, goal and objectives, policies and implementing actions.

Sections 3 and 5 are the most important for the Housing Element Update and are
discussed below.

1. Section 3: Housing Opportunities
Section 3 of the existing Housing Element identifies Novato’s ability to meet the City’s
RHNA for the prior planning period (1999-2006). As shown in Table 2, Novato’s RHNA
was 2,582 units, more than double the RHNA for the 2007-2014 planning period.

TABLE 2 NOVATO'S 1999-2006 REGIONAL HOUSING NEEDS ALLOCATION (RHNA)
                                                                     Above
                      Very Low          Low        Moderate         Moderate     Total
Dwelling Units            476            242           734            1,130       2,582
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Between January 1999 and the adoption of the existing Housing Element in March 2003,
1,258 units affordable to very low, low and moderate income households had already been
approved or constructed, as had 1,307 above-moderate units, resulting in a remaining
unmet need of 194 affordable units. Appendix B of the existing Housing Element is an
inventory of potential development sites available to accommodate this unmet housing
need. A map identifying the location of these sites will be provided at the February 11
Steering Committee meeting, along with information on the number of sites that were
developed during the prior 1999-2006 planning period.

2. Section 5: Housing Vision and Goal
Section 5 of the existing Housing Element identifies the housing vision and goal for Novato.
The following statements comprise the vision for housing in Novato:
 1.   People can live, work and play here.
 2.   We have housing choices to fit different needs. We have built mixed-use projects in
      our downtown, above parking lots, within commercial areas and near transit.
 3.   We have maintained the age and economic diversity of our population. We are
      socially integrated and our kids can still live here. We value human dignity and our
      cultural and economic diversity.
 4.   There is creativity in design and types of housing.
 5.   We have support systems and housing in place to help the disenfranchised
      (homeless, elderly, disabled, and others in need).
 6.   There is a distinct difference between the urban and rural areas of our community.
      The natural environment is beautiful and fragile natural systems work well.
 7.   Our town is friendly, with lots of interaction and community involvement, and there
      is coordination with other jurisdictions to address important housing issues in creative
      and effective ways.

The following statement is the goal for housing in Novato:

      Provide for a variety of housing opportunities for all economic segments of the
      community through new construction and maintenance of existing housing for an
      economically and socially diverse population, while preserving the character of the
      community. Low and moderate income housing of all types (including mobile
      homes, mobile home and recreational vehicle parks) will be given special
      consideration.

At the February 11 meeting Steering Committee members will be asked to comment on
these vision and goal statements. Specifically, Steering Committee members will be asked
to provide feedback on whether this statement still reflects current community needs and
values.
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3. Section 5: Housing Objectives, Policies and Implementing Actions
Section 5 of the existing Housing Element also includes a substantial number of specific
objectives, policies and implementing actions. These objectives, policies and actions address
the following 14 topics:
 1.   Sense of Community and Creation of Successful Partnerships
 2.   Equal Housing Opportunities
 3.   Housing Design
 4.   Existing Housing and Neighborhoods Preservation
 5.   Housing, Jobs and Transit Linkage
 6.   Variety of Infill Housing Choices
 7.   Mixed Use Housing
 8.   Affordable Housing Sites and Incentives
 9.   Inclusionary Housing
 10. Accessory Dwelling Units
 11. Special Needs Housing
 12. Special Needs Support Programs
 13. Funding and Financial Equivalent Incentives for Housing
 14. Effective Implementation and Monitoring


City staff and consultants are currently evaluating the effectiveness of programs contained in
the existing Housing Element and will prepare a matrix identifying the status of each
program and the extent to which the City has achieved specific objectives. At a future
Steering Committee meeting, currently planned for May 2009, the Steering Committee will
review this matrix and provide feedback on modifications to existing objectives, policies and
programs for the updated Housing Element.



C. Novato’s Housing Accomplishments
This section describes Novato’s housing development and production accomplishments
from 1999 to 2006.

1. Housing Production
Between January 1999 and December 2006, 2,966 housing units were built or approved in
Novato, as shown in Table 3. This number is larger than in past Housing Element periods
because of the development in Hamilton. This number exceeds Novato’s 1999-2006
RHNA by 15 percent (379 units). Novato exceeded its RHNA for the low-income and
above moderate-income affordability levels. In fact, Novato issued building permits for over
twice as many low-income units as prescribed by its RHNA, which is a unique and
noteworthy accomplishment.
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Table 3 compares Novato’s housing production for 1999-2006 with the rest of Marin
County. Novato has attained a higher percentage of its RHNA at all affordability levels
compared to that of the other jurisdictions in the county.

TABLE 3 COMPARISON OF RHNA WITH ACTUAL BUILDING PERMIT ALLOCATIONS,
        CITY OF NOVATO AND MARIN COUNTY, 1/1/1999 TO 12/31/2006
                                                                   Marin County and Other
                                                                         Jurisdictions
                          City of Novato                             (excluding Novato)
Income                    Permits          Percentage                     Permits          Percentage
 Level        RHNA        Allocated         of RHNA           RHNA        Allocated         of RHNA
Very Low           476             297               62%          765              231            30%

Low                242             527             218%           376              224            60%

Moderate           734             496               68%          992              544            55%
Above
                 1,130           1,646             146%          1,800           1,807            100%
Moderate
Total           2,582           2,966              115%         3,933           2,806             71%
Source: 2007 Novato Annual Housing Report, City of Novato and A Place to Call Home, ABAG, 2008.



2. Deed-Restricted Unit Production
A total of 1,490 deed-restricted affordable housing units have been developed in Novato
within the past five years. Approximately 4 percent, or 67 of the total deed-restricted units,
are affordable to very low income households with persons with disabilities. Approximately
30 percent, or about 450 units, of the deed-restricted units are senior housing. A majority
of these units are located in redevelopment project areas, as described below.

3. Redevelopment Agency Contribution
Novato’s Redevelopment Agency (RDA) works closely with the Planning Division to
preserve, rehabilitate and develop affordable housing in the city and to meet the goal of the
Housing Element. Of the 418 redevelopment project areas in California, the Novato RDA
is the only redevelopment agency that has committed 100 percent of its tax increment
bonding capacity to affordable housing.

The RDA manages 1,100 acres composing three redevelopment project areas: Hamilton,
Novato and Downtown. Approximately 1,021 deed-restricted affordable units in Novato
have been built in these three redevelopment areas. The Hamilton Redevelopment Area
includes the largest affordable housing development in Marin County, including:
  ♦ Meadow Park, containing 315 deed-restricted ownership units;
  ♦ the Creekside and Bay Vista apartments, with 297 affordable rent-restricted units;
  ♦ 60 transitional housing units;
  ♦ 67 senior condominiums at Villa Entrada;
  ♦ New Beginnings homeless shelter, providing 80 beds; and
  ♦ Next Key single-room occupancy housing and jobs training.
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To date, the Novato RDA has issued approximately $48 million in redevelopment-related
debt, of which $34 million, or over 70 percent, went towards affordable housing in the
former Hamilton Army Airfield. The remainder of the debt was used to support the
development of Vintage Oaks ($9 million) and fund Grant Avenue streetscape
improvements ($5 million). Most other RDAs spend about 20 percent of their funds on
affordable housing and 80 percent for other projects.

In addition, the Novato RDA has provided over $1 million to the Novato Human Needs
Center for housing assistance related programs.

4. Program Achievements
Following is a list of selected accomplishments that relate to specific programs in the existing
Housing Element. The corresponding program number from the existing Housing Element
is identified in parenthesis following each accomplishment.

 ♦ Green building standards for single family detached units were approved in 2004, and
   green building standards for multi-family units were approved in 2005. (Program 3.C).

 ♦ Novato acquired Wyndover Apartments, which were existing affordable housing units,
   in order to maintain their on-going affordability. (Program 4.E).

 ♦ Novato implemented its RDA housing programs and has completed redevelopment of
   Hamilton Airfield. (Program 6.A).

 ♦ Novato provided financial assistance for predevelopment costs for the Hamilton Senior
   Housing and Assisted Living facilities, which has a potential for 25 very low income
   units. (Program 6.C). In addition, the City has already contributed $350,000 in
   predevelopment funds to the proposed 61-unit very-low-income Warner Creek Senior
   Housing Development (Diablo). Amidst the City's current fiscal challenges, an
   additional $1.15 million has been pledged for the development based on final land use
   approval.

 ♦ Novato identified additional residential and non-residential sites appropriate for housing
   and is developing residential units at the Whole Foods project and senior housing at
   Diablo (Eden). (Program 6.D).

 ♦ Novato facilitated and/or funded the development of co-housing, cooperatives, and
   similar collaborative housing development, such as the Next Key project, a 32-unit
   Single Room Occupancy (SRO) development. (Program 6.H).

 ♦ Appropriate standards and zoning were implemented for the Next Key SRO
   development. (Program 6.J).

 ♦ Parking standards were updated for Downtown Novato. (Program 6.M).

 ♦ Mixed use development standards were implemented in Downtown Novato. (Program
   7.A).
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    ♦ Novato’s inclusionary (affordable) housing ordinance is very stringent in terms of
      affordability requirements and percentage of affordable units per project. This
      ordinance was recently updated (Program 9.A).



D. Novato’s Current Housing and Population Characteristics
This section briefly summarizes some of the most relevant data on current housing and
population characteristics in Novato.

Novato has about 52,800 residents today. Between 2000 and 2008, Novato has grown
more rapidly than either Marin County or the Bay Area as a whole, as shown in Table 4.
Novato’s population increased by 11 percent, while both the county and Bay Area grew by
less than 5 percent. A majority of the City’s recent population growth resulted from
redevelopment of Hamilton Army Airfield.

TABLE 4 POPULATION AND HOUSEHOLD TRENDS

                                                                   2008         % Change        % Change
                                     1990           2000           (Est.)       1990-2008       2000-2008
Novato
Populationa                           47,585         47,630         52,839            +11.0%        +10.9%
Householdsa                           18,236         18,524         20,750            +13.8%        +12.0%
Avg. Household Sizea                     2.59           2.52           2.50
Tenure
      Owner                              62%            68%            68%
      Renter                            38%             32%            32%
Marin County
Population                          230,096         247,289        252,413              +9.7%        +2.1%
Households                            95,006        100,650        102,541              +7.9%        +1.9%
Avg. Household Size                      2.33           2.34           2.35
Tenure
      Owner                              62%            64%            63%
      Renter                            38%             36%            37%
Bay Area
Population                        6,023,559       6,783,760      7,092,031            +17.7%         +4.5%
Households                        2,246,236       2,466,019      2,556,790            +13.8%         +3.7%
Avg. Household Size                      2.61           2.69           2.72
Tenure
      Owner                              56%            58%            58%
      Renter                            44%             42%            42%
a
  For all 1990 figures, population, households, and household size based on 1990 U.S. Census.
Sources: Claritas, 2008; 1990 U.S. Census SF-1; BAE, 2008.
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Novato is expected to continue to grow by about 16 percent over the next 30 years, while
ABAG projects that the county population will climb by only 12 percent. Projections for
the Bay Area show faster growth overall, with a 27 percent increase in population by 2035.

Novato has slightly more families than the County and Bay Area. Novato’s families
comprised 67 percent of households, compared to 60 percent in the County and 65
percent in the Bay Area.

Over the last two decades, Novato has experienced a significant gain in homeownership.
Between 1990 and 2008, the percentage of homeowners increased from 62 percent to 68
percent. Novato’s homeownership rate remains above countywide and regional levels.
As of 2008, 63 percent of County households and 58 percent of Bay Area households own
their home.

Novato households are more affluent than their counterparts in the Bay Area, but less
affluent than countywide households. As shown in Table 5, Novato households earned a
median income of $77,074 in 2008, 4 percent more than the median income in the Bay
Area and 10 percent less than the County median.

Historically, Novato has been one of the more affordable housing markets in Marin County.
As of October 2008, Novato had a median home sales price of $433,500, a 32 percent
drop over the last 12 months (including single-family homes and condominiums). In
comparison, Marin County as a whole had an October 2008 median sales price of
$875,000, representing a 32 percent loss in value from the previous year.

Homeownership remains out of reach for many Novato residents. As shown in Table 6,
very low-income households could only afford 3 percent and low-income households could
only afford 5 percent of single-family homes for sale in Novato from April through October
2008. Moderate-income households could only afford 15 percent of single-family homes.
Condominiums were somewhat more affordable. Very low-income and low-income
households could afford 18 percent and 68 percent of condominiums, respectively, while
moderate-income households could afford 86 percent of condominiums on the market.

For rental housing, analysis suggests that very low-income households would encounter
difficulty finding an affordable home in Novato. These households can afford a monthly
rent of $1,373, compared to an average market rate rent of $1,662 for a three-bedroom,
two-bathroom apartment that would comfortably accommodate a four-person family.
Low- and moderate-income households can afford monthly rents that exceed average
market rate rents. As such, these households would have less difficulty finding an affordable
rental unit in Novato.
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TABLE 5 HOUSEHOLD INCOME DISTRIBUTION, 2008

Annual                              Novato             Marin County              Bay Area
Household
Income                     Number             %       Number        %        Number          %
Less than $15,000               1,176          5.7%     6,622        6.5%      208,322       8.1%

$15,000-$24,999                 1,172          5.6%     5,668        5.5%      163,949       6.4%

$25,000-$34,999                 1,307          6.3%     6,284        6.1%      177,443       6.9%

$35,000-$49,999                 2,505         12.1%    10,433       10.2%      291,229      11.4%

$50,000-$74,999                 3,957         19.1%    16,603       16.2%      450,515      17.6%

$75,000-$99,999                 3,115         15.0%    13,129       12.8%      362,903      14.2%

$100,000-$149,999               3,918         18.9%    18,511       18.1%      474,017      18.5%

$150,000-$249,999               2,583         12.4%    14,023       13.7%      292,620      11.4%

$250,000-$499,999                   746        3.6%     6,468        6.3%       89,355       3.5%

$500,000 and over                   271        1.3%     4,800        4.7%       46,437       1.8%

Total                         20,750      100.0%      102,541   100.0%       2,556,790   100.0%
Median Annual
                                    $77,074               $85,779                 $74,256
Household Income
Source: Claritas, 2008; BAE 2008.
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TABLE 6 AFFORDABILITY OF MARKET RATE HOUSING IN NOVATOa

                                            For-Sale                                     Rental

                                            Percent
                                           of Single-          Percent
                                             Family           of Condos        Maximum
                        Maximum            Homes on           on Market        Affordable       Average
                        Affordable        Market w/in         w/in Price        Monthly         Market
                                   b                  c               c               d              e
    Income Level        Sale Price        Price Range           Range            Rent            Rent
    Very Low Income
                           $229,577              3%                18%             $1,373         $1,662
    (Up to 50% AMI)
    Low Income
                           $367,404              5%                68%             $2,222         $1,662
    (Up to 80% AMI)
    Moderate Income
                           $462,807             15%                86%             $2,809         $1,662
    (Up to 120% AMI)
a
  Affordable sale price and rent based on a four-person household income, as defined by CA HCD for Marin
County.
b
  Assumptions used to calculate affordable sale price.
      Annual interest rate (fixed):                                             66% Freddie Mac; 10-year avg.
      Term of mortgage (uears):                                                  30
      Percent of sale price as down payment:                                    20%
      Initial property tax (annual):                                          1.10%
      Mortgage insurance as percent of loan amount:                           0.00%
      Annual homeowner's insurance rate as percent of
      sale price assuming $150K coverage:                                     0.16% (CA Dept. of Ins., avg.)
      Percent of household income available for Principal, Interest,
           Tax & Insurance (PITI):                                              30%
c
   Based on all full and verified sales of units in Novato between April 15, 2008 and October 31, 2008.
d
  Assumes 30 percent of household income spent on rent and utilities, based on Marin County Housing Authority
utility allowance.
e
  For three-bedroom, two-bath units in Novato, per RealFacts. Based on rent survey from second quarter 2008.
Sources: DataQuick, 2008; RealFacts, 2008; Marin County Housing Authority, 2008; CA HCD, 2008; BAE, 2008.

								
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