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07 Attachment 5 - August 12, 2020 Planning Commission Verbatim Minutes LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A P P E A R A N C E S: Los Gatos Planning Commissioners: Melanie Hanssen, Chair Kathryn Janoff, Vice Chair Mary Badame Jeffrey Barnett Kendra Burch Matthew Hudes Town Manager: Laurel Prevetti Community Development Director: Joel Paulson Town Attorney: Robert Schultz Transcribed by: Vicki L. Blandin (619) 541-3405 ATTACHMENT 5 LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S: CHAIR HANSSEN: We will move on to the next item on the agenda, which is our public hearing, and that is Agenda Item #2 which is forwarding a recommendation to the Town Council for approval of amendments to Chapter 29, which is Zoning Regulations, of the Town Code regarding the Below Market Price, otherwise known as BMP, program. This applicability is town wide. The Town Code Application is A- 20-004, and the Applicant is the Town of Los Gatos. And I see Ms. Shoopman is our Staff person, so would you like to make a Staff Report? JOCELYN SHOOPMAN: Good evening. On January 28th of this year the Policy Committee recommended amendments to Chapter 29 of the Town Code regarding BMP regulations as well as modification to the Town's BMP Housing Program guidelines with the intent to increase the number of BMP units by decreasing the opportunities to pay in lieu fees, resulting in the construction of more onsite BMP units for development projects. The amendments as recommended by the Policy Committee also include modifications proposed by the Town's administrator of the BMP Housing Program, Hello Housing, LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 who manages the daily operations of the program in partnership with the Town. There is also a Desk Item for this evening that includes comments made by a Planning Commissioner. Otherwise, this completes Staff's report and we are available for any questions. CHAIR HANSSEN: Thank you, Ms. Shoopman, and it looks like Commissioner Hudes has a question for you. If any other Commissioners have questions you can use the raised hand feature or raise your hand and I will have you speak. So, Commissioner Hudes. COMMISSIONER HUDES: I just wanted to get a little better understanding of how this fits with affordable housing and the Town, and I think this might be helpful not just to me but maybe to the public as well. How does the BMP program relate to state housing requirements, RHNA requirements, and if there's a state program why do we have this? And what does it cost the Town? The Town has, I believe, 174 units that have been produced. Just some overall framing so we understand what this BMP is about. Thank you. JOEL PAULSON: Well, I'll give that a shot and then if the Town Attorney or Ms. Shoopman has any additional input. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Backing up to the state, our Housing Element cycle gives each area or region a regional housing needs allocation. From that there is a body—currently right now there is a Housing Methodology Committee body—who is going to determine how those numbers will be split up among the jurisdictions in the Bay Area. The numbers that come from that are in numerous categories, so there are above- moderate units, which is normal market rate units; there are moderate units, which is below market rate; and there are also low; very-low; and extremely-low categories. Those numbers, when they are provided to the Town, are also designated as a specific affordability level. So, that is the number of units in each of those categories the Town is expected to plan for over the eight- year housing (inaudible) cycles, so that's how that is generally handled. Cost-wise, our Hello Housing contracts, I believe the base is $70,000 approximately, and then it also has additional fees that come in if they do work above and beyond what's in the contract, including the resale of BMP units; they handle that process as well. If you have any other specific questions, I'd be happy to answer them as well. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HANSSEN: So, Commissioner Hudes has more questions. COMMISSIONER HUDES: Just a follow up. We have 174 units that have come about in this program, I believe some for sale and some rental, and this is a result of the Town having this program and encouraging developers to develop under it. What does it cost the Town in order to get affordable housing in town? JOEL PAULSON: I'm not sure I can quite follow the question. The Town has had this ordinance in place, I believe, since 1979, so when development that meets the thresholds as they've evolved over the years, whether that's a planned development or some other mechanism, once they get over a certain number of units then they have to provide Below Market Price units based on our ordinance. A couple of other pieces of information. Typically the for-sale units—I'll just give a hypothetical— if you were required to do four BMP for-sale units then two them would become moderate and two of them would become low pursuant to our guidelines. And in four rentals all the rentals are based on the moderate-income level, so that's how the rental price is set and every year the federal government provides those rental rates for Santa Clara County. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER HUDES: Just if I could follow up. So, to get this program basically the Town provides some administration and there are some costs associated with that, but the bulk of what it costs, almost all of it, comes from developers, is that correct? JOEL PAULSON: That's correct. COMMISSIONER HUDES: Okay, thank you. CHAIR HANSSEN: Do any other Commissioners have questions for Staff? TOWN ATTORNEY SCHULTZ: If I might? CHAIR HANSSEN: Go ahead. The Town Attorney has a comment. TOWN ATTORNEY SCHULTZ: Let me just add that while I think it is true that, yes, today almost all of it comes from the development of projects that meet the requirements to provide below market price housing, but if you go through the historic of how we got to this issue of providing for below market price housing a lot of that came through the redevelopment agencies, and the money we got through redevelopment, because a component of all the money that we collected had to go towards affordable housing. I'm not sure how much we have in that fund right now but it's really still left over from the redevelopment agency and it enabled us to buy certain properties like the LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Dittos Lane that's right now going through a BMP program. So, before we actually went and purchased property or do public/private partnerships with different housing advocates, that's kind of dried up because we don't have that redevelopment money. So, now we do primarily rely on it. That's how it came back, if you go way back to the redevelopment agencies. CHAIR HANSSEN: Okay. Thank you so much. I was going to ask, it's sort of a question and a comment combined. I had been involved on the Housing Element along with a number of other Commissioners, the current Housing Element is going from 2015 to 2023, and the issue with the Housing Element has been that you plan for density in certain locations in Town but it's incumbent upon developers to make a proposal to build those units, and so to me—and this is where my question comes in—it seems to me that the Below Market Price Program is really the only way we can be assured via our Town Code that when developers come in that we can get at least a couple of affordable units because they can offset their costs of the market price units with the below market price units. Is that a correct statement? LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JOCELYN SHOOPMAN: I would say that it's correct in that this program relies on private developers who propose applications to the Town, that propose a certain amount of housing units, where then now these regulations we can put in place and we can ask for the below market rate units. CHAIR HANSSEN: So, it seems like it's been successful from the Town's perspective. JOCELYN SHOOPMAN: I'll let Joel answer that, but I would think yes. CHAIR HANSSEN: All right, so that being the case is there anyone else that has questions of Staff? Did I see Commissioner Burch put her hand up? No. All right, well then we will now invite comments from members of the public. Do we have any members of the public that would like to speak on this item? JOEL PAULSON: For the member of the public we now have two, and I see Heidi Owens' hand raised so I'm going to allow her to speak. CHAIR HANSSEN: Okay, Ms. Owens. HEIDI OWENS: Hi, my question is if we can and why we don't align the Below Market Price Program with those different categories that you spoke about from the RHNA LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 numbers? Why don't we have an extremely-low-income requirement, et cetera? CHAIR HANSSEN: Staff, you're probably the best to be able to comment on this from the history perspective. JOEL PAULSON: Thank you, and thank you for the question. So, it is challenging enough for us to exact moderate and low units out of developers to make that work. Where you typically see the very-low and extremely-low units, those are generally done in either partnerships, as the Town Attorney mentioned before, public/private partnerships, or by specifically affordable housing developers who are looking to get tax credits for their projects and that helps fund that as well. It is very rare to see a just standard developer come with either very-low or extremely-low units unless you're talking about very extremely high-density projects where there is a significant number of units which wouldn't be probably viable in the Town, and then again with either funds of a jurisdiction or the nonprofits who that's really their business to create affordable housing and to be competitive for those tax credits, they generally have to get down into that very-low, extremely-low level to be competitive with other projects vying for those credits as well. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And I'm not sure if the Town Attorney has any additional thoughts on that. Yeah, it looks like he doesn't. CHAIR HANSSEN: I will jump in and say one thing from the perspective of having sat on the Housing Element Advisory Board. I remember very clearly that when we were going through and trying to process our last RHNA that one of the difficulties we had is I think it would have been a desire of everyone to mandate more very, very low income, but the feedback we got from the state, what I recall is that we can't put a lot of restrictions on where they fall in those buckets because the state views that as an impediment to getting more housing built. And, Mr. Paulson, if I'm incorrect let me know but I remember that was kind of a big deal because we were going through and saying why can't we force the issue a little bit more but the answer was that's an impediment to housing production, which is something the state doesn't want. JOEL PAULSON: Chair Hanssen, that's correct. Again, they're always looking for jurisdictions to remove barriers or impediments to housing production, so if we had a program of that nature that looked at very-low or LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 extremely-low as requirements of some percentage, then that would be challenging. I would say just one more kind of historical point that I'm trying to think, and there are probably very few instances where it actually came to fruition. The Town used to have a requirement for a community benefit, and so what some projects would do is, even if they were only required to do a moderate unit they might make that a low unit as an additional community benefit or make it the price point at a level lower than what would be required by our code, so just a little additional information. CHAIR HANSSEN: Are there any other questions from the public? JOEL PAULSON: I do not see any other hands raised. Give it a couple of seconds here. Seeing none, I think we're ready to move on in discussion. CHAIR HANSSEN: All right, so thank you, Ms. Owens, for your question and we will now close the public portion of the hearing and ask if Commissioners have any additional questions of Staff, wish to comment on the code amendments, or introduce a motion for consideration by the Commission? It looks like we have a few hands up. I saw Vice Chair Janoff and I saw Commissioner Hudes. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VICE CHAIR JANOFF: Thank you. Just a quick clarification of the process. I've got four comments. Did you want them at once? Well, three of them are questions, one is a comment. You want them all at once or one at a time, or how would you like to handle that? CHAIR HANSSEN: I think it's fine to go ahead and make all your comments at one time because we want to make sure that every commissioner has a chance to talk about any questions or comments that they have, and then hopefully we move forward to a motion. VICE CHAIR JANOFF: Okay, great. So, just real quickly then, as a matter of format there are a whole bunch of lists of bulleted items or numbered items. The penultimate item as the term "and" afterward, which to me is an all-inclusive rather than these are items on a list, so some of them are not appropriate, some of them might be appropriate. I'll just point out on page 33 there's a disconnect between the list at the top of the page and the list that follows subsequently; there is or isn't an "and". And then I'll just refer to pages 42, 43, 49, 50, and 51 as having similar lists that may be confusing or overly restrictive. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 My second comment is on page 47 there's an example calculation regarding how to calculate the 80- percent or 120-percent. We don't know what the assumed MFI is and I think it would be clarifying for that number to be included if it's just an example, so we know how the full calculation is made. Page 56, Item 3 says it requires the unit to remain affordable for 30 years. I wasn't sure what that restriction is. Is it a restriction on the loan or on the rent? There's something confusing about that restriction. Then finally page 55, Item 5, "Tenant rents and incomes will be monitored annually." What happens if their income goes up? To what end are they monitoring annually? So just a question. I'm not sure if these need discussion but just clarification, perhaps in the text. CHAIR HANSSEN: So, how do you want to handle questions? And I know Commissioner Barnett had quite a number of comments that were in the same vein about making things more clear, and he actually had proposed new language, so how does Staff want to handle that? Because at the end of the day the action by the Commission will be either a recommendation to forward this to Town Council, it could have changes along with it, or we could say that it's not ready for that, but usually in the past when we've done LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this we pass along all the comments of the Commissioners unless somebody disagrees. So, maybe Staff could help. JOEL PAULSON: A couple of things. One is thank you for the comments, Vice Chair; we'll take a look at those and/ors. To answer your last question, the guidelines specifically talk about if you are in a rental unit and your income goes up and you no longer qualify for the BMP program, then what happens is you now have to pay full market rate rental, and then the next unit that comes up available for rent in that complex becomes a BMP for the next person so that we always maintain the number. And what I'll say is that it's not the same as for-sale. So, you get into the program and you meet the requirements and are successful in being selected and then purchasing the BMP, your income can go up infinitely and we don't obviously evict folks or make them sell the unit if their income increases for for-sale. VICE CHAIR JANOFF: Thank you for that. CHAIR HANSSEN: Just to jump in as a follow up, and Commissioner Hudes had a question. But when they sell the unit it says in the code that they're going to sell the unit at a below market price. JOEL PAULSON: That's true. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HANSSEN: Even if they're affordability of paying their mortgage and stuff during the time they owned it has changed, they still are bound to sell it as an affordable unit, and it's got to be that unit that they're in, right? JOEL PAULSON: Correct. CHAIR HANSSEN: All right, so Commissioner Hudes, go ahead. COMMISSIONER HUDES: Thank you. First of all, I think that the comments by Commissioner Barnett should be part of whatever motion that we get to and so rather than repeat them I'm going to go to some other questions. I was kind of stumbling over the same things he carefully put into his item. I did have a couple of questions that it would be good to get a response on. The first one is on page 8 in the last paragraph where it talks about the employees working in town that would be entitled to the program. We have very few permanent employees these days at moderate- to low-income. Many employers are keeping the hours of employees below 35 to avoid paying for healthcare. I had a couple of questions about this because I think we're looking at a little bit of a different workforce today. Are part-time workers who might be working more than one job included? And I notice LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that in the definitions there a definition of self- employed, but I wonder in this section whether self- employed and sort of gig economy workers would be included as well? That's the first question I had. JOEL PAULSON: Well, those are great questions. Most of these modifications for processing those things is really handled by Hello Housing, so what we'll do is we will get that information and get it back to you. But we also raised that issue as depending on the action of the Planning Commission tonight and we can figure out how they exactly define that and whether or not people who are part- time maybe in Los Gatos and San Jose and Campbell or in multiple jurisdictions, then how is that handled? As well as the gig economy workers who may do work in town but they do work all over the place. So, those are good questions and we definitely can get an answer to that from Hello Housing. COMMISSIONER HUDES: Great, thank you. I had a couple others. Should I keep going, Chair? CHAIR HANSSEN: Go ahead, because I don't see any other Commissioners that had their hands up at the moment. COMMISSIONER HUDES: Okay. So, this one is probably the bigger thing I wanted to sort of get my head around and that is we're raising the limit so I assume that LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that will get more people into the pool, and I'm a bit concerned about how do we protect the ability of the really low-income folks to participate in this program if we're pulling in a lot more folks? One of the ways, it seems, is the point program. So, my first question on this is that Item C on page 10, is that the only way that we differentiate between the income of everyone who is jumping into this pool, the 60-percent gets an extra point? JOEL PAULSON: I believe so, and I would just look to Ms. Shoopman to confirm that. JOCELYN SHOOPMAN: Yes, that's the only bullet that is going to differentiate. COMMISSIONER HUDES: So, I guess the question I raise, which I think is kind of a big question, is by increasing the 120-percent of median doesn't that cause us to have less of a preference for people who previously may have been available in the low- and very-low-income and decrease their chances of getting affordable housing? My question is should we allocate more points equitably based on income, for instance, six points for very-low, four points for low, to allow these folks to compete with the larger number of people in the pool. It's not a technical question; it's more sort of a policy question that I'm raising here. Does that make sense though? LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JOCELYN SHOOPMAN: It does, and I will say to give some context when the Policy Committee considered this in their November meeting part of that meeting included input from the Applicant for 20 Dittos Lane who was proposing the teacher housing, and part of her conversation in that meeting was that many of these teachers were in the 80- to 120-percent median family income range, and so based on our current guidelines they go up to 100. Those teachers, janitorial workers, office administration wouldn't be able to meet the program, and so that was part of the conversation of raising it to 120. Also, that would be in line with the RHNA numbers for the California Department of Housing. JOEL PAULSON: So, I just offer a little bit more on that, Commissioner Hudes. The predominant majority of the state as well as how they designate different income categories goes up to 120. The Town's was 100. At 100 you actually have a pool that is pretty limited, but on the for-sale units they also have to qualify. The reality is that if someone is in the 60-percent and this was a moderate unit, they're not going to qualify just from an income to mortgage ratio standpoint. I don't know that it's taking away from those folks' opportunities. What really would be necessary is for us to have some private LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 developers, some of the nonprofits, come in and have units designated specifically for those categories, because then what that does is that gets rid of everybody else who is above and so that pool is on equal footing, because that's what they're doing. The Town Attorney has probably looked at this more recently than I, but just as an example the 50 below market rate units in the North Forty project, 49 of those are either very-low or extremely-low, and I can't remember if it's very-low and extremely or it's low and very-low, and I think there's one moderate unit for the manager who will be onsite. It allows more people to qualify up to the 120, and it really does, as Ms. Shoopman mentioned, kind of gets us in alignment with how the state defines those income categories. CHAIR HANSSEN: Go ahead, Commissioner Hudes. COMMISSIONER HUDES: I just am raising this because we think we're doing a good thing by opening the pool to more people but since we have very few units that actually come up we may be having the unintended consequence of limiting the opportunities for the lowest income people, and as you point out the issue isn't I don't think so much with the purchase units but the predominance is on the rental units. So, I don't know whether what I've LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 suggested would make sense or not, we could save that for discussion, but I just am concerned about an unintended consequence of opening the pool. I had one more sort of real quick technical point. CHAIR HANSSEN: Okay, go ahead. COMMISSIONER HUDES: And that's on page 11, the first paragraph, that sentence, it seems it might be more straightforward to just say, "If an applicant twice refuses to purchase an available unit they will be removed from the current applicant pool." The way it's worded, especially as it's been revised, is not so clear. JOEL PAULSON: Okay, we can look at simplifying that language. COMMISSIONER HUDES: And that's all I had. Thank you. CHAIR HANSSEN: If no other Commissioners had questions, I had a couple questions. Let me just check; one second. First of all, I wanted to say after I ask my other two questions I want to get some feedback from other Commissioners on the issues that Commissioner Hudes raised, which is is this the most equitable way of allocating those below market price units and is it negatively affecting the LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 lower income people by raising the limit? So, I'm hoping that some other Commissioners will have some comments on that but I had two kind of quick questions. I might not be interpreting this correctly but whereas in the hillsides we might not have forced a below market price unit, if I'm understanding this correctly like the next time we see one of these eight-unit development proposals in the hillsides that they're going to be required to do at least one below market price unit, right? JOCELYN SHOOPMAN: The previous language stated that hillside projects shall only pay in lieu fees. That language was struck out. It still leaves the possibility for them to pay an in lieu fee if they can provide justification that a BMP unit in that development would not be viable. CHAIR HANSSEN: Okay. My next question was going to kind of go along that vein. Generally when we've seen these five- to eight-unit developments that we're talking about $3 and $4 million houses, so I wasn't knowing how the math would ever work when you have these $3 and $4 million dollar houses to make it affordable for someone that's making even 120-percent of the market income. So, I think I understand the thing behind it. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But so the other thing that I noted is that the in lieu fees, generally this proposed language is going to make it more restrictive towards making a BMP versus having the option of opting out based on paying in lieu fees, but if you read the code, it's fine, but if you read the document it sort of seemed like oh, well if you have any problems regardless of whether you're in the hillsides or not that you can get Town Council approval to do the in lieu fees, and I just wondered if that was a good thing if we're trying to make it tighter and get more BMPs versus having people pay into in lieu fees? Is that going to be tight enough? JOCELYN SHOOPMAN: I'm sorry, so were you referring to the language in the Town Code as not being in line with the guidelines? CHAIR HANSSEN: Well, I might have interpreted it incorrectly but the Town Code was pretty clear that that was only for the hillsides where they could potentially do in lieu fees, and as I was reading the guidelines it sounded more open to me, so maybe I misinterpreted it. Let me ask the clarifying question though. The intent is the only people that can ask for in lieu fees are going to be people that are developing in the hillsides, is that correct? LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JOEL PAULSON: I think you're looking at the Town Code section which specifically talks about HR, and then on pages 2 and 3 of the guidelines—and that's the number of page, not the page in the PDF—they talk about HR only, or residential projects conversion, and all developments with five to nine units with an underlying of HR as well. So, it looks like that's covered both on the code and the guidelines. but we'll take another look at it as well prior to getting it to Council just to confirm. CHAIR HANSSEN: Perfect. Okay. Now, Commissioner Burch had her hand up. COMMISSIONER BURCH: Thank you. I have a couple of questions, if that's okay. One item had to do with the section concerning the resale of a below market home and my question was if the property owners did some work on the house, an addition or something that actually increased the value of the home, before that is sold does the Town do an updated assessment and then set the allowable resell value? JOEL PAULSON: I'll jump in unless Ms. Shoopman has something to say first, but generally what happens is Hello Housing, there are specific calculations that are used for upgrades, whether that's upgrading appliances, upgrading finishes, things like that, adding air LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conditioning if there wasn't air conditioning. And then there is also a depreciation scale that they use, and so they determine what if any value is still left depending on how long ago those were installed and the cost of those installations. I am trying to recall, but I don't recall ever having seeing an addition to a BMP. Typically what we get is they replaced their carpet with hardwood, or they put in air conditioning where they didn't have it, things like that. But yes, there is some flexibility there and a process to handle that increase in value that would not otherwise be (inaudible). COMMISSIONER BURCH: Chair, do you mind if I ask just a couple more? CHAIR HANSSEN: Go ahead. COMMISSIONER BURCH: All right. On page 38 in discussion with the in lieu fee, how was 6-percent determined to be the correct percentage? JOEL PAULSON: That I don't know. That's what it's been ever since I've been here, 20-plus years, but I do not know the origins unfortunately of that number. COMMISSIONER BURCH: I thought that might be the answer. Historically does that feel appropriate? LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JOEL PAULSON: We think it's appropriate, and that in combination with the fact that we are now making it extremely hard and only in the hillsides to allow in lieu fees. And that was the Policy Committee's (inaudible) as well is we really want the units produced, we don't have a whole lot of large development in town in the first place to get BMPs, and so I think we have somewhere in the neighborhood of $3.5 million in our BMP in lieu fee fund, and so the reality is if the Town… And we do have documents and there will probably continue to be conversations of how to use that money. I think some of it is being used for the Dittos Lane projects, so that's generally what we use it for, and then we use it for the administration of the BMP Program, which currently there is an RFP out because every five years approximately we go out and see if the current provider still is kind of the appropriate provider for those services, so we're going through that process currently as well. But it doesn't accrue much money. There's still a handful. I think we have probably five more in the hillside PD, and then I think the in lieu fees were also allowed for Greenwich Terrace, which is eight lots, so other than that, unless we get subdivisions in the hillside we're going to LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be asking for the units, and the only opportunity for the in lieu fees is in the hillsides and that's going to be even more limited for a number of reasons, not to mention fire and our own regulations, so we still think that that's viable. Our provider hasn't (inaudible) is low or high, so I think we're comfortable at this point moving forward with that number and we'll reach out to them again to see if there are any newer thoughts. COMMISSIONER BURCH: So then I would wonder if there's not a way to put some language around maybe evaluation periods on that 6-percent. We do know how property value goes around here and ensuring that if you are getting this from developers, and I get that it's in a very limited scope, but just ensuring that what you get really does match the current financial conditions of the real estate market so that it can be put to good use. I'm not saying it needs to be changed, I just wondered if there's a way we could put some kind of language around an annual or every five year reevaluation of that percentage and its applicability to the current market? JOEL PAULSON: We could do that. What I will say is that every time you want to reevaluate it we have to do a brand new nexus study, which means hiring a consultant, having them go through that and provide information, so LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it's not something we can just change or have Staff ability to modify or do that work on our own. COMMISSIONER BURCH: Right. JOEL PAULSON: The other thing I can offer is that it depends on the development, but hillside developments specifically is where the majority of those funds come from historically, and it's actually most of those folks. They'll get the planned development and they'll get the subdivision, they sell the individual lots, then the homeowner pays those fees because they're the one who comes forward with the house, so it's not the developer paying that up front. Now, there is some negotiation with price, with that factored in, so they may that conversation when they're selling those lots to potential homeowners. I'm not sure, I'm assuming there is because otherwise every time someone had to pay that fee I'm sure we'd hear a lot more than we currently hear regarding that issue. CHAIR HANSSEN: To follow up on what Commissioner Burch was asking, I mean you said it wasn't a problem, so in your opinion and Staff this 6-percent has been enough of a deterrent that do we typically get the people to… I mean, from what I've seen on Planning Commission we typically get them to do the BMP, so we haven't seen that many people do LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the in lieu fees that are not in the hillsides in like the last five years? JOEL PAULSON: No, absolutely not. CHAIR HANSSEN: Okay, so at the moment it seems like the 6-percent is enough of a deterrent that they're better off financially doing the BMP than they are…because they're going to make whatever decision is the least amount of money to them, right? JOEL PAULSON: Well, so that's probably a stretch. Using your analysis of let's just say a $2 million house, they're going to pay the BMP fee for that because they would have to subsidize that home if they constructed it significantly. Probably the most recent example is the homes that went up off of Knowles, the old county courthouse site. Those were not small homes, they're not hillside homes by any means, but I think the moderate units there were like they had to sell them for $448,000, somewhere in that neighborhood. That probably barely, even in a flatland project, covered their construction costs. But in a hillside there are a number of other factors as well. Typically our hillside lots are larger lots, typically larger homes. If someone was going to build those in the hillside I imagine they would come in asking for a smaller lot and a smaller home, just because the LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 other is if you're going in and you qualify for the Below Market Price Program you're not going to have the extra money to have a gardener or landscaper take care of that big property and then utilities and other things that go into it just sheerly based on the size of the home, those would be burdens to our below market price folks to try to be able to even maintain that. They're private roads, there could be common area/open space that would have HOA fees that would be very high, so those are all some of the challenges that we have, but I think we're going to see less and less of this and they're going to ultimately probably have to go all the way to the Council if they want to try to pay the in lieu fee even for an HR (inaudible). CHAIR HANSSEN: Just one quick question. The housing that's going up on Union Avenue across from Safeway, I know we heard about that. I'm trying to remember. It was under the Housing Accountability Act, but because it was nine units do they have to do a BMP? JOCELYN SHOOPMAN: They do, so they are doing a BMP above the mixed-use building. CHAIR HANSSEN: Yeah, I thought that was the case. So, then that says that part is working, that we're getting people to do the units where it's not in the LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hillsides, so I guess we'll have to see what happens with the hillsides, but I think Commissioner Burch had a good point worth considering. I don't know if it is financially feasible for the Town to keep looking at it, but since we're changing some of the dynamics we might need to at least keep our eye on it. Now, Commissioner Badame has her hand up. COMMISSIONER BADAME: Thank you. Mr. Paulson, you reminded me of the planned development—actually, I was on the Planning Commission at the time—for Knowles near Pollard. Can you remind me how many BMP units we got out of that planned development? JOEL PAULSON: Four. COMMISSIONER BADAME: Thank you. CHAIR HANSSEN: Commissioner Burch has her hand up again. COMMISSIONER BURCH: Sorry. CHAIR HANSSEN: Don't be sorry. COMMISSIONER BURCH: Mr. Paulson just reminded me though of one of the things I wanted to ask about. On page 41 there's actually a note about HOA fees. It's Item C. JOEL PAULSON: What page is that on, the document? LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER BURCH: That is on 41. It where an applicant has to demonstrate the ability to pay things based on exactly what you were just saying. Like I would assume people that are looking at BMPs, even if it was in a development that had an HOA I feel like they probably shouldn't be expected to pay an HOA fee. Does the Town have the ability to dictate that or is that a developer right? JOEL PAULSON: I'd probably defer to the Town Attorney but I don't think that's something that we can require the developer that any BMP does not have to pay HOA fees. They're still using those facilities as well, but I have not heard that that's an ability of the Town unless Mr. Schultz has some additional information. TOWN ATTORNEY SCHULTZ: I've never seen it but we can look into it. We'll put that on the list when it goes to Council. I have not seen it where that's happened. I used to have all sorts of concerns like when the roof has to be repaired if that unit hasn't provided the funds for that fix you're asking all the other neighbors that have chipped in their funds to pay for that neighbor's ability. COMMISSIONER BURCH: Or even if the HOA fee could be… JOEL PAULSON: Reduced. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER BURCH: …correlated more to the value of the home for that person maybe, I'd be curious. TOWN ATTORNEY SCHULTZ: The issue for ownership is really to integrate them, and so if they weren't paying anything to the homeowners association would that mean they wouldn't be able to sit on the board? COMMISSIONER BURCH: Yeah, you're right. TOWN ATTORNEY SCHULTZ: But we can look into it. I mean, it's an interesting concept, because ownership of BMPs is a trouble in any town and city because paying the HOAs, we've had a few where they've fallen tremendously behind on that and had to bail them out and find someone else to bail them out, and so maybe it is something we need to look at to see if there's any way we can incorporate that into some of the larger developments. COMMISSIONER BURCH: Right. Thanks. And then I just had one more, Chair, and then I'll stop. CHAIR HANSSEN: No, that's fine. COMMISSIONER BURCH: On page 44, Item 3A, I was actually just wondering if maybe Mr. Paulson could explain that one to me. I understood pretty much everything within the point system. That one I wasn't following along, so it's like for people that lived in the Town but then moved out? LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JOEL PAULSON: That's been in our guidelines for quite a while, ten years and moved out of town, (inaudible) application. TOWN ATTORNEY SCHULTZ: That's usually it's maybe who had lived here more than ten years and then they have maybe been gone just for a year or two. You don't have to be gone ten years but at least within the last ten years you've moved out maybe because you couldn't find rent in this area, now you want to move back in. COMMISSIONER BURCH: Oh, okay. TOWN ATTORNEY SCHULTZ: But you couldn't go more than ten, so if you lived here for 11 years and then were gone for 11 years, you don't get the two points, but if you've been here 11 years and you've been gone less than that ten years, then you'd get the two points. JOEL PAULSON: It's really I think (inaudible) displacement, right? TOWN ATTORNEY SCHULTZ: Yeah. JOEL PAULSON: So if someone gets priced out of the market and has to move to an adjacent jurisdiction because they can get rent affordably, if a BMP unit comes up back in town where they've lived for quite some time you want to be able to provide them that opportunity and I LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 think that's probably why those points are in the guidelines. COMMISSIONER BURCH: Okay, thanks. That makes more sense. Thank you. CHAIR HANSSEN: Did you have any more questions at the moment? COMMISSIONER BURCH: (Inaudible) I can't promise (inaudible). CHAIR HANSSEN: That's fine, because we should answer all of your questions. So, do any other Commissioners have questions at the moment? It looks like Commissioner Barnett. I'm hoping to hear from some of the other Commissioners about the points that Commissioner Hudes brought up, and so let me go to Commissioner Barnett for what comments he has. COMMISSIONER BARNETT: Speaking to that point, I was wondering if Staff could help out with some notion of how many of the BMP applicants for purchase or for rental are at certain income levels that we can already define? JOEL PAULSON: A couple of things. One is rentals. Currently you have to be at 80-percent or below the median income for Santa Clara County, and so kind of getting back to Commissioner Hudes' point is yes, this does expand that pool, but as the sheet will mention this was in LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 direct response to an issue that comes up quite often with in this instance the teacher housing that was being done at Dittos Lane. For the for-sale units you have to fall into one of those categories. Right now it's moderate or low is typically what we see. If you have more than one unit then the units get split between those two categories and then you have to be in that income bracket so 100-percent of people qualify for each of the income levels that apply for that. CHAIR HANSSEN: Okay, so did that answer your question, Commissioner Barnett? COMMISSIONER BARNETT: Yes, it does. CHAIR HANSSEN: Okay. So, just to kind of do a (inaudible) on where we are right now, because we had lots of good questions and comments so far. Our objective for this hearing is that we're supposed to make a recommendation to Town Council, and in doing so if we're recommending that they move forward with this it can be with comments. We do need to make the findings that are spelled out in the Staff Report in CEQA and compliance with the General Plan. So, that being the case we can take a number of directions, and when we've done these studies in the past LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we usually forward it along even if it's positive but please consider all these things that we brought up. But we could also say it's not ready and it needs to go back to the Policy Committee and that's the most negative scenario, so I wanted to put that out there in terms of moving the discussion forward, and Commissioner Hudes has his hand up, so go ahead. COMMISSIONER HUDES: I'm prepared to summarize into a motion if we're at that point, or if there are other important points that folks would like to raise I will just wait a bit. CHAIR HANSSEN: Well, Commissioner Janoff has her hand up so I'm going to take her comments, but I would say that it would be a good idea to try to get a motion out there to see where the Commission is, to see if we need to modify things. So, Vice Chair Janoff. VICE CHAIR JANOFF: Thank you. I just wanted to say that I thought Commissioner Hudes' concerns about the increase on the upper range is an interesting question and we really don't know the answer because it's untested, and I'm wondering whether it's possible to have a revisit with a small report of some sort that can… If we decided to go forward in supporting the larger range could we ask for a report in an appropriate period of time that says this has LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 boxed a lot of people out or it's provided new opportunities for people to get in, just so we know whether this has been a constructive change or a not constructive change? I think that it's an interesting point and we don't know how to test it now; we won't know until we have some data. Then generally speaking I think the comments that have been raised tonight have been very constructive and clear. I would support forwarding this to the Town with those comments to be considered. CHAIR HANSSEN: Thank you very much for your comments. So, Commissioner Hudes, if you wanted to make a motion, that would be great. COMMISSIONER HUDES: Yeah, actually I wanted to start with one more comment and then I'll include it in the motion, but I wanted to get it on the table first. I don't think we have enough affordable housing. I think the program is very important and I think we're going to be pushed with a lot of numbers to reach and I think it's going to be important that we create affordable housing opportunities. These numbers of how many units a developer has to build were developed a long time ago. The profit on development in town has gone up, we know that, and so I LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would add a question of whether it might be appropriate to look at raising the number that needs to be created, the amount of housing, by perhaps 10-percent? So, whatever formulas that we're using today, for instance a 5:19 requires 10-percent; perhaps it should be 11-percent so that we actually end up getting more housing. Now, it's pretty controversial and a big thing so I'm going to hold off on the motion in case folks would like to comment on that, but it seems to me that while everything has gone up, yes, costs have gone up, prices have gone up, but profits have gone up as well and so perhaps there's an opportunity to take a look, maybe even surveying what other municipalities are doing to see if we can get more affordable housing created. JOEL PAULSON: Through the Chair? CHAIR HANSSEN: Go ahead. JOEL PAULSON: Commissioner Hudes, I think that's a great idea and recommendation. I think basically you're recommending that the percentages for the various categories be reviewed and potentially increased. We would have to perform a nexus study to do that. I know a number of other jurisdictions in Santa Clara County have done that recently; the Town did not participate in that action and that was over the last few years, but we might be able to LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 use some of that base information if it's not stale to go out and do an RFP or RFQ for a nexus study for the potential to increase our BMP requirements to hopefully get more units. CHAIR HANSSEN: And Vice Chair Janoff has a comment, and I do as well, so go ahead. VICE CHAIR JANOFF: Just in light of those comments, Director Paulson, do you know the outcome? Do you know whether those numbers have been increased or decreased? I mean, I'm sensitive to your previous comments that we are wanting to not disincentivize the building of affordable housing, so do you have any idea or any information about what changed or didn't change with the municipalities who conducted those studies? JOEL PAULSON: I don't, but we can look at it. I know that there are some jurisdictions that have higher minimum requirements, 15-percent or maybe a few of them have 20-percent, that's just across the board. Ours doesn't start at 20-percent until I think you get over 100, but we can take a look at a couple of those studies before it goes to Council and move forward that information with that question from Commissioner Hudes. CHAIR HANSSEN: I had the same thought. I liked Commissioner Hudes' suggestion, but from a big picture LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 perspective I'm thinking that we ought to try to get this thing… It's going to be improved by the language changes that have already been proposed without the additional recommendations of the Planning Commission, so I think we can add onto that, but the one thing we have to balance it with is the research in the market that we're not going to deter any production of affordable housing by squeezing the developers more, but at the same time if a market supports it we should try to do that. I don't know at what point this is going to Council but if it's possible to do that before that I think it's worth looking at, but I don't want to stand in the… My personal feeling is I don't want to stand in the way of getting the code somewhat tighter even if there are to-dos that go along with it. So, Commissioner Hudes had a comment. COMMISSIONER HUDES: I'm prepared to make a motion to incorporate that idea, if that's okay. CHAIR HANSSEN: Okay, go ahead. COMMISSIONER HUDES: I move that we forward a recommendation to the Town Council to approve the changes as provided by Staff with the additions of the comments of the Planning Commission, and I want to highlight several changes that I think need to be pretty explicit. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The comments from Commissioner Barnett, as written. Commissioner Burch's comments about valuation, in particular resale considerations. Director Paulson's commitment to take a look and do some research on part-time and gig workers. Specifically the consideration of looking at additional points for different income levels in the formulation, and again, this is not explicit to change it but to look specifically at five points for 60-percent and three points for 80-percent as something for the consultants to look at to try to balance this and give a better opportunity for low-income residents to participate. Consider increasing the number of units by doing a survey of other communities to see whether it would be possible to raise the requirements by 10-percent across the board. So, those are the ones that I captured that I highlighted. There might be others, maybe somebody would like to add them to the motion, but that's the motion as I have it. CHAIR HANSSEN: Are you able to make the findings that are spelled out in the Staff Report? LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER HUDES: Yes, I would include those findings. CHAIR HANSSEN: Okay. So, let's see if there are any Commissioners that would want to second the motion and then we could always ask for modifications before we vote. Commissioner Badame. COMMISSIONER BADAME: I would second the motion based upon the additions made by Commissioner Hudes. CHAIR HANSSEN: Okay, so we have a motion and a second. Before we take a vote though this might be a good time to take any additional comments if there are Commissioners that thought there is anything in addition to what Commissioner Hudes had to say or if you had any additional comments that you haven't already made about this motion in general, this would be a good time to do it before we take a vote. So I wanted to see if any other Commissioners… But everyone had contributed suggestions so I think we're okay. I don't see any hands raised. So, that being the case we have a motion and a second. Did I miss any? Okay, right. So then we'll do a roll call vote and I will start with Commissioner Badame. COMMISSIONER BADAME: Yes. CHAIR HANSSEN: And then Commissioner Burch. COMMISSIONER BURCH: Yes. LOS GATOS PLANNING COMMISSION 8/12/2020 Item #2, Town Code Amendment – BMP Program 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HANSSEN: Okay, Commissioner Hudes. COMMISSIONER HUDES: Yes. CHAIR HANSSEN: Commissioner Barnett. COMMISSIONER BARNETT: Yes. CHAIR HANSSEN: Vice Chair Janoff. VICE CHAIR JANOFF: Yes. CHAIR HANSSEN: And then I vote yes as well, so the motion passes unanimously, and Mr. Paulson, are there any appeal rights for this decision? JOEL PAULSON: There are not appeal rights as this is a recommendation. CHAIR HANSSEN: Okay, thank you very much. And thank you for everyone for all your comments, because I think they were really helpful and will help shape this into a better solution for our town. This Page Intentionally Left Blank