That the City Council:
A.  Receive and file the first update to the City's Inclusionary Housing Program; and,

B.  Direct staff to make minor changes to the Inclusionary Housing Ordinance to better clarify the program.

All local governments are required to develop housing programs to meet their "fair share" of existing and future housing needs across all income groups. The Housing Element must contain proactive goals, policies, and programs to facilitate the development, improvement, and preservation of housing proportionate with their housing needs established by the Regional Housing Needs Assessment (RHNA).  The Implementation Manual (Chapter 8) of the General Plan provides a framework for the implementation of the General Plan's goals and policies. The Implementation Manual, section B11 — Inclusionary Housing Ordinance, suggests the City consider adopting an inclusionary housing ordinance to assist in meeting the City's housing needs for very low, low, and moderate income housing units. Accordingly, on April 5, 2021, City Council Approved Ordinance No. 1833 (Ordinance), adopting Inclusionary Housing as part of the City's Municipal Code.  The Ordinance requires the City to evaluate the effectiveness of the Ordinance every three years.  

Provisions of the Inclusionary Housing Ordinance apply to all residential developments that construct 10 or more units.  Inclusionary Housing requires the following:

A.  For Sale Units — At least fifteen percent (15%) of the units be made available for purchase to moderate-income households
B. Rental Units — At least 9% of the units be made available for rent to moderate-income households or at least 6% of the units be made available for rent to very-low and low-income households
C.  Both For Sale and Rental Units — If both for sale and rental units are provided in the same projects, for sale and rental units shall comply with the provisions described above.

Since the adoption, the following projects in Table 1 have been subject to the Inclusionary Housing Ordinance:

It should be noted that project No. 3 (1002, 1010, and 1026 East Sterns Avenue) has expired entitlements.  Applicants are required to obtain building permits within twelve months of obtaining entitlements or their entitlements expire, unless the applicant requests an extension. The applicant did not receive building permits and did not request an extension of the entitlements. Any future housing projects at this site will be required to obtain entitlements and, depending on the number of units proposed, will be subject to the City's Inclusionary Housing Ordinance.

In addition to providing the above updates on the progress of the Inclusionary Housing Ordinance, staff is also recommending that Council direct staff to make minor changes to amend Ordinance No. 1833. Staff has been implementing the provisions of this Ordinance and, in doing so, determined that the following adjustments would make the Ordinance easier to enforce and would be simpler for developers to understand and apply to their proposed projects:

A.  Amending the definition of "Low Income Household" to clarify who is included in household post purchase

B.  Amending 18.82.080 subsection C
This subsection outlines the calculation of the in-lieu fee.  Staff proposes to amend this subsection to identify which sets of plans will be used for the calculation of in-lieu fees and provide a sample calculation of the in-lieu fee for clarity.  

C.  Amending 18.82.080 subsection J
This subsection requires a Homeowners Association (HOA) for for-sale or rental units.  As rental units would not be able to establish an HOA, staff proposes to update this subsection of the ordinance.

If so directed by Council, staff will prepare the necessary modifications to the Ordinance and will schedule a public hearing at a future date for Council to consider these changes for approval.

In reference to Table 1, the following in-lieu fees will be collected prior to issuance of the final certificate of occupancy for the following projects:

1.  120 East Whittier Boulevard — 1 unit totaling $229,437.00.

2.  310-330 East Whittier Boulevard — 1 unit totaling $288,255.50

The total in-lieu fees anticipated to be collected on the final certificate of occupancy for both projects is $517,692.50. These funds can only be used towards providing affordable housing units within the City of La Habra.

The Inclusionary Housing Updates demonstrates the City's progress towards implementation of the La Habra General Plan.

It Meets City Council Goal 5 — Development Activity and Business Assistance
Objective Q: Facilitate the development of high-quality housing at a variety of income levels, to help meet projected demand, as outlined in the Regional Housing Needs Assessment (RHNA).