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6:30 P.M.

INVOCATION: Reverend Roby Correa, Magnolia Park United Methodist Church.

The Courts have concluded that sectarian prayer as part of City Council meetings is not permitted under the Constitution.

FLAG SALUTE:

ROLL CALL:

JOINT MEETING WITH THE CITY COUNCIL:

1. Suggested Guidelines for an Inclusionary Housing Ordinance:

The purpose of this report is to transmit to the Council and Redevelopment Agency Board (hereinafter referred to jointly as Agency) information regarding inclusionary housing options to assist the Agency in directing staff in drafting an Inclusionary Housing Ordinance and in-lieu fee structure for future Agency consideration. Tonight's action follows the February 18, 2003 Agency meeting, at which the Agency-appointed Blue Ribbon Task Force on Affordable Housing (Task Force) set forth recommended affordable housing programs, including adoption of an Inclusionary Zoning Ordinance to integrate affordable units within market rate developments. Following the presentation, staff was authorized to initiate steps to implement the Task Force�s recommendations and was further instructed to return with information about inclusionary housing as a prelude to drafting an Inclusionary Housing Ordinance and in-lieu fee structure.

Inclusionary zoning or inclusionary housing is a requirement adopted by a host of local jurisdictions to reserve a specific percentage of residential units affordable for lower and moderate-income households in new residential developments. As of 1998, 75 California jurisdictions (generating 24,000 affordable units) have adopted local inclusionary housing ordinances that affect housing developed within a community based upon each jurisdiction's determination of its local housing needs. Interest in inclusionary housing ordinances continues unabated. As of January 2003, the number of ordinances Statewide increased to 105. Local examples include the City of Pasadena (adopted its ordinance in 2002), the cities of Los Angeles and Long Beach (currently undertaking inclusionary housing studies) and the City of Glendale (currently weighing the merits of an inclusionary housing program).

The principal purpose of inclusionary housing is to increase the supply of affordable housing in conjunction with market rate housing, which can be particularly effective in an "up" housing market. Inclusionary zoning also fosters greater economic integration, particularly important in a "job rich" and high housing cost market as Burbank to allow lower paid workers to find housing close to employment.

A review of inclusionary housing programs Statewide suggests these common characteristics:

• The most effective inclusionary programs are mandatory but allow flexibility in the manner in which requirements are met. The use of offsets (e.g., density bonus, reduced parking) reduces the cost to the developer, which serves to improve compliance.

• All programs are structured and implemented similarly, taking the form of a basic percentage requirement for inclusionary units, accompanying targeted income levels and compulsory lengths of affordability. Requirements are applicable to single-family and multi-family projects above a minimum size threshold, such as ten units.

• Inclusionary units develop affordable housing consistent with the character of the market rate units. While most programs allow affordable housing to meet different design standards than market rate housing, integrating affordable housing into new development can result in affordable housing indistinguishable from market units.

The primary argument against inclusionary housing is that the costs in making units affordable are simply passed on to the market rate owner in the form of higher sales prices or to the tenant in the form of increased rents. If housing demand is elastic (price sensitive), developer profit is reduced because costs cannot be passed on to the consumer. Critics also argue that an inclusionary housing policy, particularly because of in-lieu fees, significantly impacts land values.

It is interesting to note that Keyser Marston Associates (KMA) found that land values, while impacted in the short term, will return to current levels within approximately two and one-half to four years, subject to the amount of in-lieu fees paid by the developer. As land values appreciate and the inclusionary housing policy becomes "an entrenched component" in the entitlement process, the impacts created by the inclusionary housing policy will diminish in importance. KMA concludes that "At that point, the market will have absorbed the costs" associated with the policy, "and the achievable land prices/developer returns will have adjusted accordingly."

Inclusionary housing clearly has become a growing trend in California. As of January 2003, over 105 jurisdictions Statewide have adopted some form of a citywide inclusionary housing program. In a time in which housing has become increasingly less affordable, inclusionary housing can be an integral element of a jurisdiction's affordable housing strategy. Inclusionary housing creates mixed-income projects negating the potential sequestering of lower income populations into specific neighborhoods.

Issue: How many units in a project will be affordable and what will be the level of affordability?

Recommendation: Staff suggests the Agency give direction to analyze a requirement that (a) 15 percent of all newly constructed for-sale units will be affordable to low and moderate-income (LMI) households, and that (b) 15 percent of all newly constructed rental units will be affordable to lower-income (LI) households, one-half of which will be affordable to very low-income (VLI) households.

Issue: How long would the inclusionary units be required to be affordable?

Recommendation: Consistent with Agency practice, the period of affordability should extend in perpetuity (which may be defined, for example, as meaning the useful life of the building, the life of the land use controls or a finite period of time, typically 99 years), with resale provisions tied to the for-sale units. Staff will analyze providing flexibility with this requirement to accommodate individual cases of hardship. The development of inclusionary units would occur concurrently with the construction of market-rate units.

Issue: What projects could be exempt from the ordinance?

Recommendation: Residential projects comprising of less than ten units would be exempt from the inclusionary zoning ordinance. Additionally, residential developments begun before enactment of the ordinance (e.g., developer obtained a variance, conditional use permit or development review approval) would be exempt from the requirements of the ordinance.

Issue: Would a developer be afforded any options to meeting the inclusionary housing obligation on the site of the project?

Recommendation: Inclusionary housing obligations for a project can be satisfied through an in-lieu fee paid to an inclusionary housing trust fund based upon fees determined through a fee study, construction of units off-site or a land donation. The fee study will be subject to the requirements of the Mitigation Fee Act, commonly referred to as AB 1600. The purpose of the fee study is to determine, among other things, the following: (1) whether there is a reasonable relationship between the use of the fee and the type of development project on which it is imposed; (2) whether there is a reasonable relationship between the need for affordable housing and the type of development project on which the fee is imposed, and; (3) proportionality between the amount of the fee and the cost of providing additional affordable housing as proposed in the ordinance.

To encourage developers to include more VLI units or larger bedroom units (three or more bedrooms) for LI households, a credit would be provided based upon an affordability gap analysis that would determine the extent of credit warranted. In addition, when preparing an inclusionary ordinance, it is important to ensure consistency with the newly updated State density bonus law. This law requires that developers be given certain concessions in return for providing a set number of affordable housing units in their developments.

Recommendation:

It is recommended that the Agency approve the recommended guidelines described above and instruct staff to return with a draft Inclusionary Housing Ordinance that is responsive to provisions mandated under recent State law (AB 1866), either under one or separate ordinances, and an in-lieu fee structure. The next step will involve preparing an in-lieu fee study (Keyser Marston Associates to be retained) and eliciting public comment during the formation of a draft ordinance that will be submitted in approximately 180 days.

CONSENT CALENDAR: (Items 2 and 3)

The following items may be enacted by one motion. There will be no separate discussion on these items unless a Member so requests, in which event the item will be removed from the consent calendar and considered in its normal sequence on the agenda. A roll call vote is required for the consent calendar.

2. MINUTES:

Approval of minutes for the regular meetings of December 17, 2002 and January 7, 2003.

Recommendation:

Approve as submitted.

3.  Cooperation agreement between the City and the Redevelopment Agency to Consider the transfer of Agency property to the City for the new Central Library project:

The City is planning the construction of a 65,000 square-foot library project on the block bounded by North Glenoaks Boulevard, North Third Street, East Olive Avenue and East Orange Grove Avenue. The library project is contingent upon the award of State Library Grant funds.

The block is approximately 154,704 square feet. The City owns approximately 92,404 square feet and the Redevelopment Agency (Agency) owns approximately 62,300 square feet. The library project will require approximately 50,921 square feet of the Agency�s property.

The proposed Cooperation Agreement indicates that, subject to the award of State grant funds to the City for the library project, the Agency will consider the conveyance of the necessary Agency property to the City for the project. In order for the Agency to transfer the property to the City, it is necessary for the Agency to conduct a public hearing and make certain findings of benefit.

Health and Safety Code Section 33445 authorizes redevelopment agencies, with the consent of the legislative body, to pay all or part of the value of the land and construction of buildings, facilities, structure or other publicly-owned improvements with findings of benefit. The findings are generally that the project will benefit the Agency or the immediate neighborhood and that there is no other reasonable means of financing the project.

The proposed Cooperation Agreement indicates that, upon notification by the City of the award of the State library grant funds, the Agency will take the necessary steps to transfer to the City the land required for the Central Library project. The agreement also authorizes the City to represent to the State, for purposes of the grant application, to certify the City has ownership and control of the Agency property for purposes of the library project. The fiscal impact of the value of the Agency property transfer will be included in the future action to consider the conveyance of the property.

Recommendation:

Adoption of proposed resolution entitled:

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING THE TERMS AND PROVISIONS OF A COOPERATION AGREEMENT BETWEEN THE AGENCY AND THE CITY RELATING TO THE TRANSFER OF CERTAIN LAND FOR THE CENTRAL LIBRARY.

RECESS to continue the Burbank Public Financing Authority and City Council meetings.