Planning Commission - Regular Meeting

Recording in progress. And Sher Pokeitch, we're ready to begin. of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all.

Thank you. Before I start um our regular agenda, it's with great sadness that we say goodbye and acknowledge the passing of Steven Cassidy. He was the president of the Newark Chamber of Commerce. He was present at many of our meetings showing support for new businesses. And that only touches the surface of all he has done for Newark and surrounding towns, especially San Leandro, where he was a former mayor and member of the San Leandro School District. Our thoughts and prayers are with his family. And I would now like to observe a moment of silence in his honor. Thank you. Our first uh order of business is roll call. Let the record show that all five city council uh planning commissioners are in attendance. Second order of business is minutes for the approval of minutes of the regular planning commission meeting of November 19th, 2025. Can I get a motion?

Motion to approve. Okay. And I have a motion by Fitz, Commissioner Fitz, and a second by I'll second. Commissioner Becker. All those in favor say I. I. I. Let the record show it passed unanimously. Item C, written communications. Are there any written communications tonight? No written communications this evening.

Thank you. Item D, oral communications. Members of the public are invited to address the planning commission on any item not listed on the agenda. Public comments are generally limited to five minutes per speaker. Please note that state law prohibits the commission from acting on non-aggenda items. Does anyone have any non-aggenda items tonight? No. So, I will close oral communications and move on to public hearings. Item E1 hearing to consider AMUP2024-00001 and DR2024-05. an amendment use permit U-87-52 and design review to allow for a sanctuary expansion, a lobby, and an entry porch at Cedar's Church, an existing community assembly use located at 38325 Cedar Boulevard, APN92A-2375-36. The subject site is zoned RS residential single family and has a general plan designation of low density residential. I will now turn it over to Ivon Wyn. Uh good evening chairperson and commissioners. This project proposes new additions and on-site improvements to the existing Cedars Church located at 38325 Cedar Boulevard. The requested entitlements include an amendment to use permit U-87-52 and a design review which I will explain in detail throughout my presentation. The applicant is TJ Construction and the property owner is the Cedars Church of the Christian and Missionary Alliance. For tonight's agenda, I will provide an overview of the project, discuss the

requested entitlements such as the use permit amendment and design review. Then I will go over the California Environmental Quality Act SQA exemption, staff recommendation, and lastly answer any questions. The subject site is zoned RS residential single family and has a general plan designation of lowdensity residential. The subject site consists of a 3.68 acre parcel. The existing use is a community assembly use. The site currently consists of an existing building used for community assembly, an existing preschool building, a parking lot, a trash enclosure, landscaping, hardscaping, and a playground area. Um, to provide a little more insight on the history of the site, the community assembly use was originally approved in 1974 through conditional use permit U-4-6, which permitted a new building and allied facilities at the site. The use permit approved the construction of a temporary sanctuary, a daycare center, and education facilities. Since then, several amendments have been approved to accommodate the changes to the facility, including the entitlements listed on this slide. Um, for this current project, the applicant is TJ Construction. The project site is located at 38325 Cedar Boulevard. The property owner is Cedar's Church of the Christian and Missionary Alliance. The applicant is proposing exterior modifications such as a sanctuary addition, a new lobby, a covered entry porch, and on-site improvements to the existing parking lot. [snorts]

The requested entitlements for the project include a an amendment to use permit U-87-52 to allow a 911q ft addition to the existing 3,512 ft sanctuary, increasing the seating capacity from 28 to 258 seats. The previously approved conditional use permit adopted under resolution number 1103 allowed for substantial additions to the church, including a 1,400 ft² caretaker's mobile home, um a 3,600 ft classroom building, a new 600 ft² storage building, and a 1,000 ft entrance foyer at the existing church facility. Under condition E of the resolution 1103, any future sanctuary construction requires an amendment to the use permit to ensure adequate on-site parking is provided in coordination with the city. A design review for the construction of a new lobby, sanctuary edition, covered entry porch, and associated on-site improvements is also requested. The project proposes a new lobby, sanctuary edition, covered entry porch, and the repaving and restriping of the parking lot to remove the existing sport court area. The areas circled in red show the locations of the proposed improvements. Um, the proposed floor plan illustrates the sanctuary edition, which includes the removal of an interior wall to expand the existing 3,512

ft sanctuary to approximately 4,53 ft. This expansion would increase the seating capacity from 208 seats to 258 seats. In addition, the a 748 square foot lobby and a 352 foot entry porch are proposed. Um since these additions and the reconfiguration of on-site facilities, increase parking demand, and modify the existing lot, a reassessment of parking, required parking is necessary. And as previously discussed, the project requires an amendment to conditional use permit U-87-52 to ensure adequate parking is provided in accordance with New York Municipal Code Chapter 17.23. The code requires community assembly uses to provide a minimum of one parking space for every 40 square ft of assembly area where temporary seats are provided. Additionally, the existing preschool building must provide at least one parking space per employee and an area for loading and unloading children. Um, for clarification, preschools are classified as daycare centers in the code and therefore are referred to as such. Um, below is a table summarizing the uses on the site, the minimum number of required parking spaces, and the number of parking spaces proposed for each use. The project would exceed the minimum parking requirements for both uses on the site with a surplus of 36 parking spaces. Therefore, the project satisfies condition E of resolution 1103. The sanctuary edition new lobby and front entry porch would be located near the right corner of the east and west

elevations and the rest of the building will remain the same. On-site improvements include repaving and restriping of the existing lot to remove the sports court, which would increase the total number of parking spaces from 134 to 159. No new landscaping or hardscaping is proposed. These exterior improvements are designed to complement the existing architectural character of the facility through the continued use of Spanish style elements, including matching Spanish tile roofing, sandfinish stucco, and consistent roof lines and colors. Subtle updates such as new bronze glass doors and windows as well as new exterior lighting um for the entries are proposed. Overall, the project would comply with the zoning code and the conditions of the previously approved amendments and based on staff's analysis, the required conditional use permit amendment and and design review findings can be made in the affirmative. The project is categorically exempt from SQA pursuant to the mentioned SQA guidelines in the staff report and on the slide. With that said, staff requests the planning commission to adopt the draft resolution approving the use permit amendment and design review for the project based on the findings provided in the draft resolution. That concludes my presentation. Um, I'm happy to answer any question. The applicant team is here as well and also the lead pastor too and they're available to answer any questions too. Thank you.

Thank you, Ivon. Is there any questions from the commission first? Uh, did we receive any uh inquiries from the neighboring homes around there? Anybody out uh interested in the public hearing? Anybody contact you? Uh, we did send out a public hearing notice with for neighbors within the 500 feet radius, but we did not receive any um comments or concerns related to this project. Okay, great. Thanks. Mhm. Okay.

I think um just the construction the neighbors next door on the other side because I know when the construction goes on a lot of dust goes and uh are they okay with them or are you going to have some water? Remember while uh construction goes they put some water on the dust so it doesn't fly to the neighbors or a lot of work that you come up. Uh, can you come up to the podium, please?

I'm Billy Jawers in the contractor. Um, our company [clears throat] does a lot of work with public works, does a lot of work with schools and churches, and we are prepared to protect uh environment, protect any neighbors, and uh make sure that cleanliness is a priority. Okay. All right. So, now I'll take a vote. We can open up the public hearing. Oh, yes. I will now open this up to public comment if there's anybody that has public comment on this issue.

So, uh ask the applicant up for the conditions. Oh, that's right. Sorry. So to the TJ construction as the applicant, have you read and do you agree to the condition stated? Yes, ma'am. Thank you. Okay. And there was no public comment. So we will now vote on a recommendation to approve the amendment and design review. All those in favor? I I Yeah. All right. Yeah. Okay. Let the record show it passed unanimously.

Congratulations. Thank you.

Then we'll move on to item E2, which is a hearing to consider Z2025- Z002, a zoning text amendment [clears throat] to title 17, zoning of the Newark Municipal Code to amend chapter 17.26 17.26 26.0 accessory dwelling units generally affecting development standards for the construction of accessory dwelling units and junior accessory dwelling units and to amend chapter 17.45 17.45.010 residential uses generally affecting the use classification for accessory dwelling units and junior accessory dwelling units. We'll now turn it over to Joseph Balabat.

Thank you, chairperson and commissioners. Um, yeah, my name is Joseph Lapad. I'm the associate planner. Uh, tonight I'll be presenting the ADU zoning tax amendment. Uh, joining me, we have Art Intero, the deputy community development director, and our consultant, uh, Curtis Banks from Urban Planning Partners, who's in the audience and available to answer any questions. For tonight's agenda, I will provide an overview of this item, discuss what accessory dwelling units are and the impacts, uh provide a highle overview of the proposed zoning text amendment, briefly summarize the California Environmental Quality Act exemption, uh provide the staff recommendations, and going over any questions. So, I do want to make note of the key acronyms that I'll be using throughout my presentation. Uh, for the Newark Municipal Code, I'll use NMC. For accessory dwelling unit, I'll use ADU. For junior accessory dwelling unit, I'll use JADU. And lastly, for California Environmental Quality Act, I'll just say SQA. The proposed zoning text amendment would amend title 17 zoning chapter 17.26 section 17.26.040 titled accessory dwelling units and chapter 17.45 section 17.45.010 titled residential uses. The amendments modifies the development standards and updates the use classification for ADUs and JADUs. The last amendment to the current ADU ordinance was in February 2021 and the city council adopted ordinance number 528. The purpose of the zoning tax amendment is to update the existing ADU ordinance to comply with state law which includes objective development and design

standards. Update the use classification for ADUs and JDUs. provide incentives for the development of ADUs to implement the housing element programs related to ADUs and simplify the ADU zoning code to text to make it easier and navigate uh and understand. So what is an ADU? An ADU is accessory to a primary dwelling and has complete independent living facilities for one or more persons. An ADU can be detached from, attached to, or located within the pro proposed or existing structure known as a conversion ADU. A Jedu is an ADU that is 500 square ft or less and contained entirely within the single family dwelling. ADUs have been California's housing success stories since major state legislation took effect in 2016. A series of gradual reforms year after year have kept the momentum growing from 8,758 ADUs permitted in 2018 to 28,547 in 2022 statewide. In fact, the California Department of Housing Community Development, known as HCD, just reported that over 30,200 ADUs were permitted statewide in 2024. Part of why ADUs have been so successful is that they are significantly cheaper to build than other housing types. A UC Berkeley Turner Center study found that the average cost to build an ADU was $150,000 compared to $480,000 for a subsidized unit in a multifamily building. It's no surprise that we've seen the number of ADU applications and permits continue to increase even as other housing starts have faltered. ADUs offer an affordable and more accessible housing option in more expensive areas, serving an important need.

Newark is part of that ADU success story. Newark homeowners have shown an increased appetite for ADUs in recent years. In 2023, the city issued building permits for nine ADUs. In 2024, 29 ADUs. And as of November 2025, the city has issued building permits for 36 ADUs. Adus are becoming an important and valuable stock of Newark housing stock and homeowners clearly see their value. The 2023 to 2031 housing element highlights ADUs as an important part of the city's strategy to meet the six cycle regional housing needs allocation known as RENA of 1,874 units. The housing element includes policies and programs related to ADUs which are policy H2.2 second units program H2.2 ADU program and program H3.5 which is the parking standards update and study. Program H2.2 aims to help own homeowners build ADUs faster and cheaper. Its primary quantified objective is to see 160 ADUs constructed during the housing element period of 2023 to 2031. To date, 40 ADUs have been constructed in Newark since 2023. Staff anticipates the ADU production in Newark will continue to grow once the ADU ordinance is updated and incentives are in full effect. The other quantified objectives are update the ADU ordinance and create incentives, coordinate with Alama County ADU resource center for which the city has accomplished and create and maintain a pre-approved ADU program for which the city has accomplished. Program H3.5 among other quantified objectives includes removing parking requirements for ADUs. The [clears throat] proposed zoning tax

amendment is designed to bring the city's ADU and JD regulations into compliance with the recent changes in state laws and to implement the city's housing element ADU policies and programs. The proposed zoning text amendment as provided in the draft ADU ordinance would repeal and replace section 17.26.040 ADUs. As for section 17.45.010 010 residential uses. The proposed zoning tax amendment would amend the current use classification for ADUs. As we developed the draft ADU ordinance, we used the 2025 HCD ADU handbook as a guide to ensure compliance with the applicable ADU requirements.

Recording in progress. We also conducted test. We also conducted outreach with planning staff from other jurisdictions such as Redwood City, Berkeley, and Walnut Creek to learn about their incentive programs for ADUs. We could ask

we consider the concerns regarding privacy impacts, scale, compatibility with the neighborhood, and we created incentives for ADUs that exceed the minimum state requirements to allow larger, more attractive ADUs to be built in the city. The next set of slides provides a highle overview of the proposed changes to the draft ordinance. Please note that I won't be going over all the changes. Uh but if there are any changes you want to discuss further that I didn't mention, uh just let me know. We can discuss them. So I'll start off with going over the changes for compliance with state law. So the first change is the use classification for ADUs. State law provides a definition for uh an ADU and a JDU. And what the proposed amendment does is it revise the use classification for ADUs to be consistent with the state's definition of an ADU and to include the definition of a JADU. Now for this change, state law allows the creation of stateex exempt ADUs which are specific type of ADUs that meet strict size, height and setback criteria set by state law. Stateexemp ADUs are categorized into four categories and can be combined as allowed by the site and lot conditions. The four categories are one single family converted ADUs and JDUs, two single family detach ADUs, three multifamily converted ADUs, and four multifamily detach ADUs. Stateexempt ADUs must be approved ministerially and are subject to the standards specifically outlined in state law. No additional local or state standards such as lock coverage, front setbacks, and design standards may be applied to the stateex exempt ADUs. However, they must comply with building code and health and safety requirements. The proposed amendment incorporates the

stateex exempt ADU requirements into the draft ADU ordinance. Now, this slide is just the breakdown of the stateex exempt ADU requirements. So lots with the single family dwellings uh are allowed to contain the following ADUs uh which are um one conversion ADU, one JDU and one detach ADU. The conversion ADU and JDU must have exterior access and sufficient side and rear setbacks for fire and safety. The conversion ADU from an existing space of a single family dwelling or accessory structure is allegible for 150 square foot expansion to accommodate ingress and egress. The JDU will need to comply with the state law provisions and the detach ADU will need to comply with the minimum 4 foot side and rear setbacks, state law height limitations, and the maximum 800 square foot size limitation. Now, lots with a multifamily dwellings are allowed to contain the following ADUs. A conversion ADU, which allows up to 25% of the number of existing units on the multifamily dwelling, but no less than one ADU within portions of the existing multifamily dwelling that are not used as livable space. And detach ADUs, which is broken up by an existing or proposed multifamily lot. So you can have a maximum of two detach ADUs on a lot with a proposed multifamily dwelling project and you can have a maximum of eight detach ADUs on a lot with an existing multifamily dwelling not to exceed the number of existing units on the lot. The detach ADUs will need to comply with the minimum 4 foot side and rear setbacks and state law uh height limitations. Now for setbacks, state law clarified that no setback shall be required for a convergent ADU.

State law also clarified that local agencies may apply front yard setbacks for ADUs. So as long as it does not preclude an ADU of at least 800 square ft. The proposed amendment removes restrictions and clarifies that conversion ADUs do not need to be located in lawfully existing structures to comply with setback requirements. For corner law to detach or attach ADU along the streetside property line is subject to the minimum 4 foot ADU setback requirement. And for the

Excuse me. Okay. Try it now. for the uh front setback requirements. The front setback of the underlying zoning applies except for an ADU of 800 square feet or less where no alternative location on the lot exists. Lastly, the proposed amendment includes information that a detach and attached ADU are subject to the law projections per the zoning code. And what that means is roof ease uh can be allowed a certain encroachment into the required setback area. Now I'll be going over the changes that are considered incentives. These incentives follow state law, but they do go above and beyond to what the state requires. Now, state law establishes the base height limitations for AD uh the following ADUs. So, a height of 16 feet for a detach ADU on a lot with a primary dwelling. A height of 18 feet for a detach ADU on a lot with a primary dwelling that's within a half mile walking distance of a major transit stop or high quality transit corridor plus an additional 2 feet in height to accommodate the roof pitch on the ADU that is aligned with the root pitch of the primary dwelling. uh a height of 18 feet for a detach ADU on a on a lot with a multifamily multi-story dwelling and a height of 25 feet of the height limitation the local zoning ordinance that applies to the primary dwelling whichever is lower for an ADU that is attached to the primary dwelling. Uh this requirement shall not require local agency to allow an ADU to exceed two stories. The proposed amendment simplifies the height limitations where a conversion ADU shall not exceed the height of the existing structure from which it was converted. An attached ADU shall not exceed the building height standards for the zoning district applicable to the primary dwelling on the lot and an

attached ADU may not exceed two stories. And then for a detach ADU, it shall not exceed 20 feet in height. This is considered an incentive for which increasing the height limitations for detach ADUs allows for a loft design or two stories to be built. For size, state law states that a local agency must allow maximum unit size requirements for a detach or attach ADU of at least 850 square ft or 1,000 square feet for ADUs with more than one bedroom. State law also clarifies that a conversion ADU is not subject to unit size requirements. The proposed amendment eliminates the max percentage requirement of an ADU not exceeding 50% of the living area of the primary single family dwelling. And the proposed amendments includes the following size requirements. So for a conversion ADU, an ADU converted from the proposed space of a single family dwelling or existing space of a single family dwelling or accessory structure shall not be subject to any size limitations. For attached ADUs, the total floor area shall not exceed 1,000 square ft. And for detach ADUs, the total floor area shall not exceed 1,200 square ft. Sorry.

[music] I thought I turned it off. Sorry. Very sorry. I thought I had turned it off prior. That's okay. That was a beautiful melody. [laughter] It's a perfect time for me to drink some water. So, it's perfect. Good interlude.

All right. Um, an alternative option to the size requirements for detach ADUs could be based off the lot size. So, similar to the maximum floor area size requirements for ADUs in our current ordinance, the proposed size requirements for detach ADUs could be this. Um, on a lot less than 10,000 square feet, the total floor area for a detach ADU shall not exceed 1,000 square feet. And then laws for 10 that's 10,000 square feet or greater, the total floor area for a detach ADU shall not exceed 1,200 square ft. The plan commission may discuss this alternative option. The changes to the size requirement is an incentive since it increases the size limitation for attach and detach ADUs which allows a family size ADU to be built. For design, state law states that a local agency that adopts an ADU ordinance may impose objective development and design standards for ADUs except for stateex exempt ADUs. The proposed amendment modifies the design standards for ADUs except for stateex exempt ADUs to be objective. The proposed amendment also eliminates the design review requirement for a second story ADU addition which allows for a ministerial review process consistent with state law. The design standards address privacy concerns regarding the placement of second story windows and transparent doors and the placement of second story balconies and decks that face an adjoining lot with an existing single family dwelling or ADU. Additionally, the design standards address lighting concerns by ensuring downlit fixtures to prevent light trespass or glare onto adjacent properties. And the design standards provide for an attractive ADU design that maintains neighborhood compatibility. As an incentive, the elimination of designer view or second story ADU additions allow for a streamlined approach with the discretionary view as long as the ADU complies with the

requirements outlined in the draft ADU ordinance. Now, here's the full breakdown requirements in the proposed amendments. So for detach ADUs, it just it needs to match the exterior wall and roof colors to the primary dwelling. For attached ADUs, it needs to match the exterior wall and roof materials and colors to the primary dwelling. Entrances and outside stairways can't be located in the front wall planes facing a public street of the primary dwelling. Exterior lighting directed downwards and needs to comply with the lighting section of the code. uh second story windows and or transparent doors. If it faces an adjoining lot with an existing single family dwelling or ADU and within five feet of the property line, it can't overlap any portions of existing windows into adjacent bedrooms of the residential structure unless it has obscured glazing. Uh and the second story windows with clear glass are permitted if the bottom of the window sill is a minimum of 5 ft above the finished second floor. And for second story balconies or decks if faces if it faces an adjoining lot with an existing single family dwelling or ADU, it can't be located within 10 ft of the property line. The railing needs to be a minimum 42 in in height and a minimum of 50% opaque. For the other development standards, state law clarified that local agencies shall not establish limits on lot coverage, floor area ratio, open space, front setbacks, and minimum lot size for their attached or detached dwelling that does not permit at least an 800 foot ADU with 4ft side and rear yard setbacks. The proposed amendment eliminates the lock coverage requirements for ADUs greater than 800 square ft as stated in the current code. The proposed amendments includes requirements as follows. So for any ADU greater than 800 square feet and floor area shall comply with the applicable

minimum front setback requirement and minimum landscaping requirement of the underlying zoning district. Now if the ADU is located in a lot with a two-unit dwelling or multi-unit dwelling uh then the ADU shall comply with the applicable minimum open space requirement of the underlying zoning district. The removal lot coverage requirements for ADUs greater than 800 square feet is an incentive as it eliminates a barrier from proposing a reasonable size ADU. Now, for parking, state law establishes parking requirements for ADUs to not exceed one parking space per ADU or per bedroom, whichever is less, unless it qualifies for an exemption such as being within a half mile walk of public transit. The proposed amendment eliminates the off- streetet parking requirements for ADUs and the draft ordinance does include the option of providing an off- streetet parking space for an ADU subject to zoning and permitting requirements. The removal of parking requirements implements the housing element programs H2.2 and H3.5. And this is considered an incentive as it simplifies the ADU parking standards, reducing construction costs and minimizing the amount of space needed to construct an ADU. For impact fees, state law states no impact fees shall be applied to ADUs that are less than 750 square ft. Impact fees for ADUs that are 750 ft or more shall be charged proportionally to the square footage of the primary dwelling unit. The proposed amendment increases the square footage threshold for ADUs to a floor area of 800 square feet or less to not be subject to impact fees. Now, ADUs that has a floor area more than 800 square feet, impact fees will be charged. This incentive allows a reasonable size ADU to be built that could include at least two bedrooms without the burden of paying for impact fees.

And lastly, for the permitted locations for Jedus, state law limits the number of JDU to one per residential lot zone for a single family residence with a single family residence built or proposed to be built on the lot. The proposed amendment allows a JD to be permitted on a lot with a proposed or existing single unit dwelling dwelling regardless of the zoning designation. As an incentive, it increases ADU production by promoting JDUs to be easily constructed in a proposed or existing single unit dwelling without having to limit on lots zone for a single unit dwelling. So, I know that was a lot of information that I just said and I created this slide as a recap of the ADU incentives. So, there's a total of seven incentives uh for the ADUs. Uh first is the height which again increases the height limitations for detach ADUs to 20 feet. Second is size which increases the size limitations to 1,000 square feet for attached ADUs and 1,200 square feet for detach ADUs. Uh third is design which eliminates design review for second story ADU additions which allows ministerial review. Fourth is other development standards which eliminates lot coverage requirements for ADUs greater than 800 square ft. Fifth is parking which eliminates offshoot parking requirements. Sixth is impact fees which increases square footage threshold for adus of floor area of 800 square feet or less to not be subject to impact fees. And seventh is the JD regulations uh which a JDU uh can be permitted on a lot with a proposed or existing single unit dwelling regardless of the zoning district. So the proposed zoning tax amendment is exempt from squa as it can be seen with certainty that there is no possibility the adoption of this ordinance may have a significant effect on the environment.

With that said staff request the planning commission to adopt the draft resolution thereby recommending that city council approve this ordinance. And that concludes my presentation. Um uh we are happy to hear answer any questions. Again, we have our consultant here uh to answer any questions um as well. Thank you. Thank you, Joseph. [clears throat] Um yeah, there was a lot in there. I tried to follow it the best I could. I have a couple questions. Um so, regardless of all these amendments, they would still have a 4ft set back side and the back to the property next door.

That's correct. Um, all ADUs are subject to the 4 foot side and rear setbacks. It's currently stated in our current code uh for that requirement of four feet from the side and rear. So, there wouldn't be any like, oh, you can have it closer if this this it has to be 4 foot. Four feet is the four. Okay. Four feet. Okay. And also, uh, I'm sorry, I don't know this. What constitutes a multifamily lot? Uh for a multif family lot, it's basically any um thing that's more that's two or more units. So any single family homes, those are considered single family lots. Duplexes, a duplex would be a multif family lot. Correct.

Okay. [clears throat] And then if anyone else has questions or comments. Yeah, I do have a question. It was a right at the tail. It says eliminates the uh off- streetet parking requirements. We have a lot of problems with on street too much parking as it is. Is this going to cause a problem in certain neighborhoods uh where we're not going to allow uh you know I don't know how we can put off so many cars on a parking on a street. Uh isn't that a major departure from our normal policy requiring you know off- streetet parking?

Yeah, in our current code um we follow parking um requirements. So for the state as I mentioned it requires one parking uh per ADU unless it qualifies for certain exemptions examples within half mile. Let's say if it doesn't qualify the exemption um part of the uh parking that you could provide on site is it could be on a driveway um in tandem um again but in a driveway. So that does satisfy the requirements. Um, a lot of properties, and we did research within the last year, a lot of ADU permits that we looked up, they tend to be waved from the parking requirements. Uh, but even then, um, folks, you know, they tend to still want to provide parking on the site, but they could do so by providing on the driveway itself. So, shared driveway.

Yeah. [clears throat] Just something that uh concerns me down the road that there's not enough uh parking off street. I know some neighborhoods are at that point already. So, I guess we just have to do it on a case-byase basis. I guess some um kind of on that with limited street parking. Um there's probably no regulations like if you want to rent rooms to people or rent garage to somebody or something like that which is going to create a lot of cars. There's no like zoning on Yeah. So, how many people you could have living in your house renting?

We don't have a rule on the number of people, but what we do have is for ADUs. You can't uh rent it out for less than 30 days. Um it's the same for uh someone just wants to rent out a you know, a common room that's not considering ADU. Uh we don't have short-term rentals, so no uh rentals for less than 30 days. Okay.

And chair focuses just to follow up on that. Yeah, that's [clears throat] that's correct. I think the premise of your question is that um we don't require parking spaces per the size of the household or the number of people in the household. It's on a bedroom count basis. Um so you're right, there could be multiple tenants or lodgers within a particular household or dwelling unit. Um, and parking would not be required for those tenants or or lodgers at this time. Okay. Thank you. Any other questions, comments?

Couple questions. Um, as it relates to our our new arena housing allocation, how does the state treat new ADUs? Are are we are municipalities allowed to count ADUs and permitted ADUs as part of meeting that that RENA goal for cycle six?

Thank you for the question. Uh yes uh we are allowed to count ADUs towards arena. Um and in fact we did report uh the ADUs that Joseph shared with you in his earlier slide on ADU production. We did report those as part of our annual progress report last year. And furthermore, we're able to utilize a methodology that even if an ADU is not restricted to a very low-income unit, low-inccome unit, or moderate income unit, we can still claim a portion of those ADUs to each of those income levels and get credit. And and is that a function just of the the [clears throat] size and the gross rent factor of of how we're able to allocate to say uh low income or very low income AMI?

It's it's not actually it's even more simple than that. Um it's simply that we are able to claim um a certain percentage of our total ADU production towards each income band. That could change in the future, but for now we do have that ability.

Okay. Okay. So, obviously a a way not just for the our city but municipalities and the state to start moving the needle in a creative way and a good way um to meet some of those those arena housing allocations and goals that they have for the next I think seven years or we have six years left I believe. Um and clarification point switching topics on it I think slide 14 and then commissioner Bogusich [clears throat] um touched on it as well. So numerous points or topics in here we refer to uh multif family or single family and I made a note it sounds like when we say that it's referring to either the improvements or the zoning is that correct

uh for multifamily. Yeah. So for instance here um lots with multif family dwelling it says lot with proposed multif family lot with existing multif family. So when it says per proposed, is that if a site has entitlements for apartment project or could that be um a site that's zoned for multif family? Yeah. So what we take it as is if it's a site that someone could build a new multifamily complex. Got it. And if it's someone that, for example, let's say it's a vacant lot, I want to do a 80unit apartment complex, then they can do a two detach ads along with that proposal.

Got it. Okay, this would give them the buy ride ability to go and and add the ADUs to it. And it's it's it's based on the zoning then, not the general plan. Well, zoning and the use. Okay. And when I say use, it's is it a an existing multifamily building or is it going to be a new multifamily development that's going to be proposed? Okay. on that. Like if you had a duplex, what would be the total number of ADUs you could build on that onto that duplex? Yeah. If it's a new duplex project, it's an existing one.

If it's an existing, you're not going to uh be able to do eight detach ADUs. What you can do is two detach ADUs because you're not going to exceed the number of existing units on that lot. Could you build them on top of the existing ones? Great question. Um, there's certain ways you could design um, detach ADUs. So, as long as they're physically detached from the main dwelling, you could stack them on top of each other.

So, um, back to the whole eight detach ADUs, if someone wants to propose eight detach ADUs, that doesn't necessarily mean that it has to be individual eight detach units. It could be four um it could be or yeah four uh buildings but two stacked up on top of each other. That makes sense.

And they would have to adhere to all the things that were talked about as far as windows to the residents next to them or behind them and stuff like that. So those standards that I mentioned, uh, the objective design standards, they don't apply to stateex exempt ADUs. Stateexempt ADUs, they're really black and white where there's only limited um requirements that they just need to fulfill. Now, if there is any ADUs that are not considered stateex exempt, um, then we can apply um, design standards. What would what would make it state exempt?

State exempt. uh if it's um so for single family uh lots if you're a conversion ADU and if you're a JDU and then you're a detach ADU but that detach ADU is at least 800 square ft um meets the 4 foot side and rear setbacks and then it meets the height allowances. Now, for multifamily lots, um you can have a conversion ADU, which is the up to 25% of the number of existing units on the lot. Um and you can have detach ADUs. So, it's based off the difference. If it's proposed, you can have two. If it's existing, you can have up to eight, but can't exceed the number of units on the lot. So, if somebody wanted to build an ADU in a single family dwelling backyard because they had a big backyard and they wanted to make it 800 square ft, but it was going to be 400 square f feet on the bottom and 400 square f feet on the top. Would there be any limitations on where those windows went?

No, because that would be a total of 800 square ft. Even though the windows would be looking into the backyard of the neighbors, correct? There's no limitations or anything. Correct. So for if it's considered a single family detach ADU and it follows the height restrictions um and you could fit a twotory within that height limitations then uh unfortunately there was no objective design standards to be applied on the state exempt ADUs. But if it was over 800 ft and two stories, then we could apply design standards which includes the windows. If it's a second story design,

all right, thank you for clearing that up. Any other questions or comments?

Just for the record, and I've said this before with ADUs. I I am not a fan of ADUs and never have been. people invest in this community in some cases millions of dollars to purchase homes in single family residential developments and and I realize this isn't staff staff is reacting to the state and every year they continue to ramp up the requirements on local governments and then we're forced to then adopt those new regulations. But accessory dwelling units, in my opinion, will cause issues in existing neighborhoods. You're going to be planting additional homes. And boy, the sizes of these things. City of Newark used to allow uh ADUs that were, I think, less than 500 square ft. I mean, we're proposing some of these. I don't even know why they're why are they calling them accessory dwelling units. You're essentially if you can plan a,000 square foot or up to a,200 square foot accessory dwelling unit. You're essentially putting another house on an existing lot. So, we've got a number of individuals in this community and we are primarily single family residential in this community. The majority of the housing in this community is that um there's already parking issues in neighborhoods. You've got multi-generational uh homes. So, there's already parking issues. uh the state continues to squeeze those parking requirements, essentially eliminating them. So, you're going to have more and more parking on the streets. Cars lining streets just make neighborhoods look lousy. Um you're going to continue to plant these accessory dwelling units on existing residential lots. We're eliminating lot coverage requirements. You're watering down the height requirements. you're essentially eliminating the parking requirements.

Um I don't think it's a good thing for um for cities. Now, I do understand why the state's doing it. They think that by allowing this, it will add to the housing stock. And I've said this before, too. You cannot build your way out of this housing crisis in this state. But they keep trying to do it. Anyway, having said that, um I'm going to support the changes. uh reluctantly, but I'm going to support the changes um and hope that they don't continue to squeeze the cities where they start getting into such things as um allowing people to split lots um in existing residential developments. That's the problem. People have purchased their homes. they've invested significant amounts of money and then the state comes in and requires cities to basically change the rules of the game. And in my mind, they potentially will destroy what we used to know as um single family developments and you're going to start now stacking and packing u these accessory dwelling units on top of each other. here. Anyway, my opinion, but as I said, I'm still going to support it because I realize why staff is proposing this basically being required to do so by the state. Chair Bogusich, I'll maybe just follow up with a little commentary as well. Um so certainly I think um staff wants to bring forward new policies and regulations that are ultimately supportable by the planning commission, city council. We'd rather do a lot of that as homegrown initiatives rather than from Sacramento, but as you mentioned, that has been the case frequently. Um and we will continue to do so uh for better or for worse over the next few months because there's other statemandated changes to our

zoning ordinance that will um come before the planning commission including those changes that are intended to be compliant with SB9 and 10 which relate to the lot splits as you were just mentioning. Um so our code is required to be compliant with those and we'll be preparing the staff report and analysis for your consideration soon. Um, but you're you're you're right. We we would prefer to bring forward those types of regulations that work for Newark rather than that are applied statewide. I will say on the on the ADUs, that has been one of the bright spots when it does come to lowercase affordable housing and in some cases where they're deed restricted, truly affordable housing. Um as um our housing uh planner uh Michael Kulum mentioned um they do count towards Reena uh through a certain formula um that is helpful uh and they are providing homes uh to people um that perhaps cannot afford a larger rental or they're providing options for homeowners who would like extra income or to have those extended family members. So there are you know benefits I think that we recognize. Uh I would prefer that uh we are not forced to make changes to our code from state law. Um and not only that, the state really wants cities to incentivize production of ADUs even further. And that's really where sort of our menu of of of incentives have have come from. So certainly we don't disagree with the commissioner's comments uh with regard to to ADUs. Um we will do our best to manage that as we go forward. Um, little bit of a rock in a hard place, but we certainly want to acknowledge the council members comments or commissioner's comments. Thank you.

Just a quick comment on that. You were saying that the ADUs typically are less expensive and they serve like low income or people who can't afford, but there really is no like limitations on what people charge as rent for ADUs, is there?

Unless they're deed restricted. Uh ambi I'll look to staff with regards to our current requirements on deed restricting and whether or not that is going to be continued on with the new state legislation. Uh to clarify for deed restrictions um we actually cannot require deed restrictions anymore for ADUs but we can require for Jedus. And if I may comment on the affordability aspect of ADUs, um I think the the argument and the rationale there is that an ADU that's for rent in a single family neighborhood is going to be significantly more affordable by comparison to the single family home. So if you know the median home price in Newark is $1.3 million and our home size is 1,600 square feet. If you have an ADU, it's 800 square feet. That's a housing product that probably doesn't exist in most of our single family neighborhoods anymore. And so, by nature, it is more affordable to somebody who couldn't afford to purchase that $1.3 million single family home. But, um, no, we cannot deed restrict it to a low-income household.

Okay. Thank you. Couple of questions. The first question is, is the ADU going to have a different address or it's going to be the same address they're going to use? It's a great question. So, typically they do have their own separate address. Usually, at that point, it's held at it's it's taken uh care of at the building permit phase where I believe the building inspecting division takes care of the uh address assignments. Okay. The second question is in future can you sell the ADU?

Uh there are requirements [snorts] especially with the state changes about owner occupancy. Uh but typically for ADUs um the owner has to reside in one or the other. Um sorry just give me a moment. Yeah, just just to add to what Joseph is saying is for the an ADU you cannot sell it at the moment, but there was um one kind of exemption u in a scenario where there's like a nonprofit that uh purchases um in that situation they could um own it. Why I ask the question is it's one parcel and if you sell the ADU so one parcel there two houses and one is sold to just for one is sold to you one is sold to me and the parcel is the same numbers so in the future how they going to the city is going to how they going to record

that who has that parcel. Mhm. So, so today, like I said, it's it's not typically allowed only in that one situation where a nonprofit can come and buy it. Um, but yes, essentially there would be two homes on one lot. So, it's almost like if you think about it, um, like an association that would have to be kind of developed there, like an HOA almost, you know, but really it's more kind of an agreement that these two units would have like a shared lot, shared easements, and shared utilities in some way. So all that would have to be kind of you know um conducted between those two homeowners uh through some type of an agreement.

But if I remember like 20 years ago I did some addition so I had to get a signature from my neighbors because of their privacy. So what about this? If it's a double story, it's only 4 ft from the fence. It's not the privacy or

Mhm. Yeah. It's it's, you know, kind of kind of overstating. Uh there's a lot of um state rules in which allow that scenario. um and where they're not considered a state ADU. We've done our best to um take into account privacy cuz we knew that in in Newark. That's a concern. I've always heard that since I've been here. Um so we put in some type of design standards to try to help and ease that where we can. Um but for state ADUs, which fall under the state law, um that would be allowed and that would be a scenario that could occur. Yeah. And if I may add one additional thing in response to your question, Commissioner, um, as Deputy Director Interiano and Associate Planner Blabbot said, um, currently there's only one exemption in which an ADU can be sold separately from a single family home. Um, but there was recent state legislation that allows cities to opt in to allow separate sales of an ADU from a separate home. The intention of that is to um increase home ownership rates

and provide again a more naturally affordable home ownership opportunity for lower income um households and first-time home buyers. But at this time staff are not recommending that we opt into um permitting separate um sales of ADUs. And yes, those sales would also be under a kind of condo association sort of structure. There wouldn't be any um um separate um parcelization of the land. So still just one property tax for the main

uh they they would be taxed as as separate parcels. Um, but if you were thinking about it just purely spatially, you wouldn't have like a flag pole lot where you have a skinny little line going to the ADU in the backyard. Um, it would um it's it's really just a kind of like paper parcelization, but both parcels would pay separate property taxes as opposed to now. Um, it's it's just the primary parcel that pays the property tax inclusive of the the single family home and the ADU. All right, we'll open it up to public comment. Any public comment on this? gonna close public comment on this and then being being as this is a city issue that we're talking with here, there's um nobody really that has to agree to the um

not an applicant per se. The applicant there's not an applicant per se because it's a city thing. Right. Right. City thing. Okay. And since there was no public hearing and there's really no applicant, then we'll have to put it to a vote. I do have one more question just to kind of I have a million questions on that. [laughter] Uh how I've just my mind is spinning now in terms of how a home would be conveyed without a parcel. So is it a condo map? And different discussion for a different day. Um since we're not going that path and that's not tonight. Um

a lot of talk here has been about okay new state legislation, right? And and we hear this, you know, it makes press with other municipalities of, you know, they may not like new state legislation that's coming through because it's kind of a one-sizefits-all. What is what happens, right? So, not just us. I'm think I'm speaking more broadly when a municipality says, "Okay, state, we we'll use ADUs. We do not like the new the way ADU ordinance is going and we're not going to agree to it." What does the state do? What does that process look like for municipalities that don't want to go down that path? You want to give it a shot?

Yeah, thank you again for the question. I realize I did not introduce myself earlier, but I'm Michael Gulum, housing policy and programs manager. um um jurisdictions that don't comply with state housing law can be found out of compliance um with that law and as a result have their land use authority revoked um until such time as they come into compliance with state law. So um specifically in regards to this ADU presentation, associate planner Bapad, he showed a slide that had the quantified objectives for the ADU program within the city's housing element. This is effectively what we have already told the state we would um implement and commit to in due time. And one of those items that we committed to in our housing element um was removing parking requirements for ADUs. So um um what will happen one of the the next steps for this program and all subsequent housing element programs is that we'll complete an annual progress report on our progress with implementing the housing element and submit that to HCD the state in April. If they find that we're not making sufficient progress, um if we have actively taken steps not to carry out our housing element, they could respond by revoking our housing element compliance, revoking our land use authority, and submitting us to the builder's remedy. Um and even taking further steps as to requiring actions that we must take. Um just like tossing it out there purely for concept, but requiring three ADUs per lot as an example. Um so it is um in our interest to uh implement our housing element um you know to the spirit of and the schedule with what we committed to in in 2023. [snorts]

Okay. I I have a question on that. So you said they would say that we're not I'm in compliance. We're not progressing. What would what would that look like not progressing if people are saying hey I want to have an ADU and we're saying okay or maybe there's people not wanting ADUs maybe the number of ADU applications is down so what would not moving along look like as you said and not in compliance

um I think there are several different examples um one is if we have a program like this one that we committed to it to to passing by a certain date and if we miss that benchmark, that date, um then they could um take actions against us for non-compliance. If there was um a stateex exempt ADU that um ultimately we did not approve um they could take action against us for that um in violation of state ADU law. Um, and then I think there's the third one, which is that um, we're not making progress in permitting enough units. And I think that can be the most challenging one for local jurisdictions because we plan for housing and we do our duty to permit housing, but we don't build housing. Um and so a result um and a challenge with that one is that they could require us to uh open up our zoning and identify additional housing opportunity sites or increase our maximum densities um otherwise revise development standards to increase our our zoned capacity they say.

Thank you. That was very informative that really helps a lot. Of course. Thank you. I do want to add that um just recently we did receive a letter from the state. Uh it's a technical advisory letter. I believe that's what it's called, but it's to inform us that our current ADU ordinance is out of date and asking what are we going to do to update, you know, our ordinance. And so again, it's a letter that we received uh not too long ago. Um we are in the process of going through uh an ordinance change. So we are you know working you know on that. Um but just want to make note you know of that.

So that's in addition to this ADU stuff here.

Well the ADU stuff uh regardless uh it or ADU ordrance is out of date. So, it's in the works of, you know, us of just updating that ordinance, that letter, which is an added extra push that, hey, city of New York, we need to update this. What are you going to do to update this? So, we're already ahead of that of of getting the letter. Um, because we have the housing element or informs us to update our zoning code or ADUs. Um, so we've been, you know, in the process of working on that and we're getting close to the, you know, last stages of it. And I will note that jurisdictions up and down the state are getting similar letters. So New York is not specifically being called out on this. I think they kind of go down the list and find out jurisdictions that haven't quite updated their code uh to be compliance with state law and are sending

uh reminder nudges as uh associate planner indicated. Okay. All right. Thank you. Any more questions or comments? Okay. Um so now we will put it to a vote. Well, I'll make the motion to approve the resolution. Okay. Second. So, the motion by Commissioner Becker and seconded by Fitz. All those in favor say I.

I. Let the record show it passed unanimously. On to item E3. Hearing to consider a resolution of the planning commission recommending that the city council adopt an ordinance amending section 17.18.030 of the Newark municipal code and adding chapter 17.27 to the municipal update the Newark affordable housing program and affordable housing requirements. And we'll now [clears throat] turn it over to Michael Colum. Thank you, honorable chair and planning commissioners. My name is Michael Kulum, housing policy and programs manager. The item before you today concerns implementation of the city's six cycle housing element and proposed revisions to the city's affordable housing program. This item is a public hearing to consider a resolution recommending city council adopt an ordinance amending chapter 17.18 of the New York Municipal Code and adding chapter 17.27 27 to update the city's affordable housing program and affordable housing requirements. Uh I this is the agenda for tonight's presentation. Following introductions, I'll provide a brief overview of the housing element and how staff's recommendations advance its implementation. Staff's recommendations can be thought of as two separate but interconnected components. Uh the first that I'll present on is the local preference policy which is supported by a study of the risk of residential displacement in New York. The second is an inclusionary housing policy which is supported by a financial feasibility study of adopting an amended inclusionary program. And then finally, I will review the sequent implications of staff's recommendations and next steps. I'm joined this evening by Christy Wong, principal at Community Planning Collaborative, also known as CPC and formerly known as Bard and Driscoll. CBC was the principal consultant who helped

the city prepare our six cycle housing element and the 2021 2023 affordable housing work plan. And then also joining us virtually is Leo Ma, managing principal of Century Urban. Miss Wong and Mr. Ma prepared the inclusionary study which they will speak to later in this presentation. Uh to start us off, I always like to look at the data informing our policy decisions and our policy directions. Uh California has an extreme shortage of homes. uh particularly homes affordable to lower and moderate income households. The most recent statewide housing plan found that the state needs 2.5 million more homes by 2030 to adequately address our housing needs of which 1 million should be for low and very low-income households. And in recent years, uh Newark has actually exceeded its fair share of above moderate income housing. Um that's housing that doesn't have any kind of affordability restriction. It's not deed restricted. um and it's more likely to be priced at at market rates. Um our challenge and the challenge of communities across California has been building those low and lower income units. Um with serving all members of our community in mind and those lower inome households in particular, city council approved resolution 11201 in 2021 adopting the affordable housing work plan and establishing an investment framework for meeting the fifth cycle housing element targets. really trying to to uh hit those low and very low income um unit numbers. The work plan anticipated using housing impact fees uh for our housing element implementation including 80% of funds for the development of new affordable housing split between acquiring land or existing building or existing uh by acquiring land or or existing buildings for affordable housing and making loans or grants to affordable housing developers. uh the 5% um of housing impact fees were to be spent on a first-time home buyer

program and which we're now getting underway and then the remainder was allocated towards various other programs and studies and discretionary spending. The city's six cycle housing element coming uh forward to today uh was recommended for approval by the planning commission and then approved by city council um in uh 2023 and it sets out to be the city's housing affordability strategy for 2023 to 2031. Uh we're not going to solve all of our affordability challenges with the housing element, but it does establish a roadmap with achievable targets and goals. Newark's regional housing need assessment or RENA for this period is to uh a goal of permitting 1,874 new homes of which almost half should be for lower inome households. And again, while that 1874 figure may sound intimidating, it's actually 700 fewer homes than we permitted during the last housing element cycle with smaller staff and fewer resources. So, I do believe that we can meet those numbers. Um, and our challenge remains uh remains trying to target some of those numbers at serving lower income households. The housing element has 45 different programs and 35 policies. Um, and when reading it, um, uh, you'll notice that each program has its own quantified objectives. These are kind of like smart goals. They're specific, achievable, and measurable targets used to assess our progress in implementing each program. Uh furthermore, quantified objectives are timebound, meaning the city should take some kind of action to implement them by a specified date. Many of our programs have timelines for immediate implementation, midterm implementation, or by some other specific date. Uh we're not yet past um halfway. Um so um um can bear that in mind. Uh tracking and

measuring this kind of progress is very important as HCD will begin monitoring our progress in July. Uh demonstrating our good faith efforts to meet our goals is essential to maintaining our housing element compliance. And if we're not able to demonstrate progress, HCD could mandate further programs beyond those supported by our community and approved by the planning commission and council or at the more extreme end revoke our housing element compliance. And then one final reminder before we launch into the meat of this presentation is this slide that I last shared with you at a previous commission meeting. I like to think of our housing element programs in four broader policy buckets that work together to house people faster, cheaper, more sustainably, and more equitably. Um you'll see some of these graphics up at the top right of the the screen and some of my slides. And the the topics that we'll be focusing on today are policies intended to speed up land use approvals and permitting, those that intend to improve project financial feasibility and policies intended to reduce displacement and homelessness. So, uh, the first component of today's recommendations is a local preference policy. Um, as you'll see from the graphic at the top, uh, this is a policy aimed at reducing displacement and homelessness. I'll discuss how this fits into our housing element, the displacement study that supports it, related projects, and proposed implementation. Um, as I said, um, well, this this, uh, local preference policy falls squarely under our housing element's fourth goal, which is helping people to stay in their homes and communities. Um what we found from the housing element is that uh housing cost burden is extreme in Newark. Um um of Newark homeowners and renters alike, uh housing cost burden is a problem. What that means is that people are spending 30% or more of their household income on

housing. Whether that be their rent, their mortgage, utilities, um home insurance, renters's insurance, all of those things. Overall, one in 10 Newark households are severely housing cost burden, meaning they spend over 50% of their income on housing. That leaves little left to save for education, child care, a safety net. Um um and renters are particularly vulnerable as a result of these extremely high housing costs that we're seeing with two-fifths of renters being cost burden of which one in three are severely costburden. This tells us that people want to live in our community um and are willing to make sacrifices to do so, but it does put them in a very precarious position. A lot of people, however, have decided that the cost of living here has become too much. Um, [clears throat] southern Alama County has some of the highest rates of out migration in the whole Bay Area with people predominantly going to Sanwaqin County. Communities like Tracy Stockton and Mantika um um where they can afford a bigger home, a newer home um whatever whatever that means to them. Um the people who are leaving may have been here for generations but they can't compete against the folks that are making higher incomes in Santa Clara, San Mo, or San Francisco. those people themselves who can't afford to live in Santa Clara, Samonteo, or San Francisco, and so they find cheaper housing here. Um, related, we're now seeing that the average firsttime home buyer in California is 40 years old. Um, and the average home buyer overall is 59. Um, and then there's the people even lower, um, who earn too little to find an affordable home elsewhere or don't have the ability to move and so they lose their home for whatever reason and are more likely to end up homelessness. This phenomenon is acknowledged in Alama County's Home Together community plan, which the city council endorsed in 2026.

A central pillar of home together is homelessness prevention. um targeting those at risk of losing their homes with resources and supports to get them through a temporarily temporary crisis and stay housed. Um homelessness prevention is typically administered outside of the homelessness system such as through community development programming which is why I'm talking about this today whereas responding to homelessness directly on the other hand is typically the domain of public health. Um so um housing element program H4.1 commits to developing anti-displacement programs for the Oldtown specific plan area specifically um and it has two quantified objectives. The first is to adopt and apply a local preference policy to new below market rate i.e. affordable homes in the plan area. Um um below market rate means any unit that is restricted to lower or moderate income households and the preference requirement would apply to any unit BMR unit that the city is supporting financially or the city entitles. Um even though the city has not adopted a local preference policy yet, we have applied it in practice to projects throughout the city, not only in Oldtown. Um, and I'll note that there is a second quantified objective here for this program that we're not advancing at this time because it has a housing element implementation um date that's later. So, it hasn't been an immediate priority. Uh, but to uh define um the preference policy um um it would apply again to people who people who live or work in New York shall receive a preference in the purchase or lease of new affordable homes. Um, and this would be codified in Newark Municipal Code. We've considered the fact that the policy shall have a demonstrated purpose and need and shall have no disperate impact on protected classes. And then lastly, as for the process of

how it would be implemented, property developers would be required to implement the preference in the sale or lease of new new units with technical assistance and monitoring by the city. in order to demonstrate the policy would not have a disperate impact on protected classes um that's people of different races national origin language spoken at home um gender etc. The city contracted with Seafull Consulting and the Conquer Group to produce the City of Newark policy study evaluation of the need for a local affordable housing livework preference given displacement risk. The name is a mouthful. Um so it's referred to in the staff report simply as the displacement study. The displacement study identifies housing needs and conditions affecting housing affordability in Newark that contribute toward residential displacement. And it evaluates whether and how the housing crisis disproportionately and negatively impacts lower ren lower income renters and workers. And then finally, it considers whether a preference policy would negatively impact protected classes. Uh the displacement study found that lower inome households have become increasingly vulnerable to displacement due to a mismatch in the number of housing units built versus the number of jobs created in Newark and the region. As a result, from 2010 to 2020, the number of lowerincome households has decreased by 2,000 in Newark, while the number of higher inome households has increased by 3,200. During this time, wages stagnate stagnated while housing prices increased, and the number of cost burden residents um increased by 20%. Over 1,700 residents lived in overcrowded conditions, doubling or tripling up with family or friends. Under certain definitions, doubling and tripling up is considered a category of homelessness. And then households of color in New York are disproportionately lower income as compared to white households. They're more likely to live in overcrowded

conditions and to be at risk of displacement. And finally, the study found that 5% of NUSD students experienced homelessness in the 2021 2022 school year. That doesn't necessarily mean that the students were living on the street or in a or in a shelter. Um, but that could have meant that they were living out of a car doubled up with other households or living in a hotel, motel, or other temporary housing. To briefly look at the study's findings in greater detail, we see job growth in the dotted lines and housing permits in the solid line. Um, yellow is New York and blue is Alama County. um 20 uh 2010 to 2020 was an incredible um um period of housing growth for Newark. Um but even still, for every three jobs that we created, only one only one home was built. Um when you separate that out between multif family and single family homes, um only one multifamily housing unit was built for every eight jobs that were created. Um and again, that demonstrates the mismatch um in housing affordability. um as most of our our growth was in single family homes. The rapid increase in demand from new workers compared to an insufficient supply of housing, especially affordable housing, the study found negatively impacts lower inome households by increasing competition for housing and putting upward pressure on housing prices. Next, the displacement study found that the median rent for a two-bedroom home increased by 45% over this period, outpacing median incomes. Uh, the medium rent in 2019 was $2,300, [snorts] which was only affordable to households who made around or over $100,000. This was a distinct problem for employers and employees in lower wage industries, which paid workers about $40,000 a year. The study found that 40% of city jobs were in this lower wage were in these lower wage industries. Um

which can be a challenge then for attracting and retaining employees for those lower wage jobs. Um unsurprisingly the number of lower inome households in uh decreased um by 32% from 2010 to 2019. This trend was consistent across Alama County but more severe in New York. And then finally, the study found that about 27% of households in New York earn less than $75,000 a year. Some racial groups have a much higher proportion of lower-income households. However, about 35% of black, American Indian, Native Hawaiian, and Hispanic households are in that uh lower income bucket um and are more likely to be costburden and overcrowded. So um the conclusion from the preference from the displacement study is that a local preference is necessary to address growing displacement. The preference policy would not result in limits to access to housing by any individual protected class because the income eligible population for affordable housing developments is more diverse as compared to Newark's general population. Staff shared the displacement study and proposed preference policy with Alama County. uh the state department of housing and community development and the US department of housing and urban development. The county approved the study and proposed policy and required the city to indemnify the county against any claims from applying the preference to timber senior housing. That indemnification agreement is included as an exhibit to the staff report and staff are aware of not are not aware of any claims against the project city or the county. uh and the state did not comment on the materials and HUD did not provide a formal endorsement or rejection which is consistent with how those agencies have responded to other cities. While not yet formal policy, the city has incorporated a local preference requirement into the conditions of approval and affordable housing agreements for recent projects. Uh there

are limits on what units the preference can apply, however, notably homes for people exiting or at risk of homelessness or homes with county housing vouchers. The funding sources for those special needs units typically prohibit local preference policies. Um although they may have their own other regional targeting. [snorts] So uh if the planning commission recommends and the city council adopts the proposed ordinance, new affordable units entitled and or funded by the city would be required to implement the live work preference unless exempted by other laws or funding. And in order to reduce regulatory burden on affordable housing, local governments are constrained in what additional reporting they can charge to affordable housing providers. But we could require lighter effort occupancy reports to ensure the policy is being applied without creating fiscal impact on the city or the housing provider. Um to this end for for sale projects, the city's contracted with Hello Housing to monitor, enforce, and provide technical assistance to developers for first-time home buyer program and a below market rate home ownership program. Staff are working with Hello Housing now on guidelines for those programs which will be presented to council later this year um rather in 2026 um inclusive of the local preference policy. The second major component of this evening's ordinance concerns amendments to the city's affordable housing program, which is a form of inclusionary zoning, also um inclusionary housing, also known as inclusionary zoning. Similar to the local preference policy, I'll explain how this fits into our housing element. I'll define inclusionary housing, explain how current program uh the co program works, the inclusionary study, and staff's recommendations. Um this item falls under the fifth goal of our housing element um which is to increase access to affordable housing.

The housing element uh includes policy H5.4 which commits to updating the affordable housing program to require residential developers to make a portion of their units affordable to very low low or moderate income households. Um inclusionary zoning. The name here um comes from the fact that um by including affordable units in the same development as market rate units, you are creating a more equitable and economically mixed community. Staff's expectation is that the city would continue implementing um our um affordable housing development um program H5.2 two, which utilizes housing impact fees to finance new affordable homes while also generating new affordable homes through these inclusionary requirements, which would be built without city funding. So, those are two different tools. Taking into account state law and the challenges of real estate development, staff's recommendation will include alternatives to the on-site build requirement, including payment of the housing impact fee. And then finally, inclusionary requirements would be regularly reassessed to ensure they neither become an impediment to development nor leave affordable homes on the table. Um I'll take a moment to talk about program H5.2 um um which commits to ensuring an an adequate amount of affordable housing through three different programs. The first program is our inclusionary requirement that mixes affordable and market rate apartments in a single project. The second is through continued implementation of state density bonus law which is codified in Newark municipal code chapter 17.19. And the last is our affordable housing fee program. Um the joint objective for these three programs is to permit 778

affordable housing units over the housing element period. So staff are taking direction from council and our housing element to refine our affordable housing toolkit in response to current market conditions and housing needs. Build requirements and fee requirements are two tools that do the same job. Build affordable housing. Our intent with these reforms is not to toss out one tool or to only rely on another, but to refine when and how we use them to maximize affordable housing production. To that end, state government code defines inclusionary housing as both the requirement that as a condition of development of residential units, the development include a certain percentage of residential units affordable to and occupied by households with specific income limits. But it also defines inclusionary housing as any alternative means of compliance, including affordable housing impact fees. So we can break that definition down into three different buckets. a build requirement mandating residential developments build affordable units alongside market rate units. Alternative means of compliance whereby instead of setting aside affordable units, the developer and local government can agree to some other means such as dedicating land, building affordable housing in a different site or something else mutually agreeable. And then finally paying a housing impact fee that the local government would then go on to use um toward meeting affordable housing needs elsewhere through some other means. New York's current affordable housing program revis uh requires payment of the fee. The fee is against is assessed against both a residential as well as non-residential development and the cost changes depending on the time of development um the type of development and uh the size of that development. The fee is updated annually and published in the city's master fee schedule. Alternatively, our code allows

residential developers to comply by building affordable units at these percentages you see on the screen laid out by council resolution from 2014. I'll note here that um while that resolution and these percentages are from 2014, um our current inclusionary housing ordinance is from 2018. Um so there is a a mismatch um perhaps here. Uh under the current program alternative compliance is based on residential home type and lot size. Um um this resolution 10184 it also further specifies how affordable units um should be rest should be restricted to very low low and moderate income households. Not just the number but um but um the depth of affordability. The affordable housing work plan looking at our fees established an investment framework for for spending those fees. Um it's not binding but it is a helpful road map. As you can see from this chart the fund currently has a balance of $49.6 million of which $21.6 million has been spent or committed. That leaves us with $19.3 million that we could um make available through notices of funding availability um or direct loans or grants for the development of new affordable housing. Um similarly, we've committed $200,000 for establishment of a first-time home buyer program and will return to council in the coming months to appropriate the rest of the money to actually make loans to first-time home buyers. And so we're left with about $26 million for additional affordable housing work. um such as um counseling towards tenants and property owners um acquiring existing buildings or land for affordable housing or shifting money around um between these uses um as we

see fit. One way we can measure the impact of our affordable housing program is the number of units that have been built. Over the last six years, the city has committed $19.3 million for new construction. This money has supported uh 263 new low, very low and extremely low-income units of which 204 are complete or under construction and 59 are in pre-development. Alternatively, developers who have opted to set aside affordable units themselves have amassed a pipeline of 208 affordable units uh not including the 30 units um that this commission recommended be approved at Mauy Village. um of that 208 um 75 units have been built thus far. I'll briefly compare the differences between how these two pathways um actually build housing. Um projects funded by affordable housing impact fees are more likely to be standalone 100% affordable housing developments. requires a lot of subsidy from different government agencies and these subsidies stack to collectively make up the full amount of money needed to build a project. It's not uncommon for an affordable housing project to have 6 8 10 or even more funding sources. Um, of these, maybe one will be a private loan from a bank. The rest are awarded competitively. By contrast, affordable units in a larger market rate project will probably have fewer sources and are likely to be entirely privately funded. Um, for these projects, there may only be three or four sources. The majority of the money coming from a uh a bank in the form of a mortgage or a loan and then the remainder coming from investor equity. Um, these sources have to be enough to cover the cost of building the market rate units and other any other policy

priorities that um the the local agency may have, including providing um affordable housing. What's important to know here is that land costs tend to absorb any excess profits. Um, this means that in a market where projects pencil, land costs will go up because you can do more with that land. As a result, um, again, there's less money left over for other policy priorities. Project feasibility can change very quickly and to the extent that affordability is a policy priority, we have to be mindful to be sensit sensitive to these market conditions. Um, looking at this another way, um, I think we often think of, um, money for market rate projects coming solely from the developer. Um, in fact, the developers role is primarily to convince the banks and investors that their project will make enough money to pay the interest and return in that investment. The purpose of the banks and the investors is not to build housing, but to make their money produce more money. Um, they don't by nature, you know, likely have anything to do with housing. An investor could be a private equity company. It could be your pension fund, your retirement fund, or your healthcare company. Um, and they will choose where to invest their money. um to get investors to choose housing, that housing has to not only be profitable, it has to produce a higher return than other sectors. So, the developer has to design a project that at the end of the day will sell or rent for a high enough price to make the juice worth a squeeze for all of these stakeholders. Um, we've gotten to a place where the Bay Area development costs are the highest in the nation. So the market can't produce housing that is affordable to the average Joe or Jane and definitely not to lower inome households. As a result, subsidies are are needed to make new development affordable. Inclusionary housing policies collect that subsidy from new market rate development either through build requirements or fees. And as a

result, new market rate development is necessary to develop new affordable homes. Given affordable housing is dependent on market rate subsidy, inclusionary housing policies must be carefully calibrated so as to not prohibit new market rate development nor to leave new affordable homes on the table. Um, and so with that in mind, state law requires us um should we have an inclusionary ordinance to demonstrate it does not unduly constrain the production of housing. For this reason, the city contracted with Community Planning Collaborative and Century Urban to study the effects of the inclusionary build requirement. CPC has supported New York's housing objectives for several years now, including by helping us to prepare the affordable housing work plan, housing element, and tenant protections programming. And I'm grateful to their support and expertise. And I'll now turn it over to Christy Wong, principal with Community Planning Collaborative.

Hi, thank you very much. It's a pleasure and a privilege to get to work with the city of Newark. The staff is amazing and um I think I last saw you two years ago when we came with the housing element, but it's it's great to see you again. Um so, thank you for that opportunity. Um I also want to introduce our partner, Century Urban. Um Leo is on Zoom and he'll he'll present um a few of the slides today. Um they're a real estate advisory and investment and asset management firm um that provides a number of services to both public and private clients. um a a lot of them in the Bay Area but also beyond. Um and we've collaborated before with them on a number of of uh studies and activities related to inclusionary housing and commercial linkages fees linkage fees um including Vakavville and several jurisdictions in Sanonteo County. Um so Michael did a great job explaining the background on inclusionary housing as well as all of Newark's house various housing efforts. Um I don't want to be too repetitive but I did want to underscore um the importance of studying the feasibility of inclusionary housing. Um there are limitations related to these analyses. They are done at a moment in time. Um and are we look at prototypes and not at all the various different exact developments that will come forward to you. Um but we are trying to overall look at different types of projects and aim for a balance where you can get as much affordable housing as you can without without stying um new market rate development. Um as he said, you know, requirements that are set too low will leave affordable housing opportunities on the table and if we set them too high then we'll end up with no market rate and no include no affordable housing um in the end. So we want to briefly walk you through our process and we'll be available for questions later. So next slide. Um so stakeholder engagement is really critical to uh developing thoughtful inclusionary housing requirements. Um we wanted to talk to both market rate developers who are

bringing projects forward as well as affordable housing um stakeholders, affordable housing developers. Um so for this project last year we reached out to several developers that are already active in Newark um and affordable housing developers that are working in the East Bay some in Newark already and some just in the larger area. Um [snorts] so this included Eden Housing, Midpen Housing, USA Properties, Eho um sorry East Bay Housing Organizations um and some other affordable housing advocacy organizations. Um, Century Urban also conducted individual interviews with several market rate developers. Um, and we held two st developer stakeholder meetings with those with some of those developers to gather feedback feedback on the on the input assumptions and test the results of our analyses. Next slide. Um, so what did we hear in that engagement? Um, we heard I think as will not be a surprise that development costs are high. Um there are some very common themes from across the board both market rate and affordable developers that um they're higher they continue to rise the development fees development environment is not is not fantastic right now. Um and it is uh often related to that high cost. Um we also heard a strong desire for flexibility across the board. So um having multiple alternative means of compliance, having different pathways for different types of de developments to make it work. Um and also an interest in when getting into the nitty-gritty of the design and of the product type like giving giving developers options for how they can make u make it make it work together. Um and then I'll also note that you know not a surprise that there are concerns um from developers about the cumulative impact of fees and requirements that um that get put on development in community communities all

across the state really. Next slide. Um so another thing we we did was as part of our background research we looked at some of uh Newark's neighbors to understand their affordable housing requirements. This is just a very brief overview and I'm not going to read anything from this table to you. Um, but it is a widespread requirement in Alama County. I think nearly nearly all all Alama County communities have have some requirements on development. Um, and those requirements range from 10 to 20% of new units with with a fair amount of variation um in the details. So we can talk about that later if there are questions. But um generally rental projects were rental developments were asked to provide low-income affordable units and forale developments had a mix of low and moderate income. Um so next I want to turn it over to Leo to talk through some of the feasibility input assumptions. So crossing my fingers Zoom works

good. Can everyone hear me? Yes. Yes. Although now I have this view of myself. [laughter] Let's see.

Um so um I can't see the slides unfortunately. But that said, I'm assuming we're t we're looking at the slide of um the prototypes. Um worked with city staff um community planning collaborative to establish six residential development prototypes. Three of them are rental prototypes and three of them are for sale prototypes. Um the prototypes were are based on um the city's recent development pipeline activity as well as um communications with interested project sponsors. Um you can see that the uh rental prototypes included two multif family rental prototypes and one town home rental prototype. Um and then the for sale prototypes included a condo for sale prototype, a town home for sale prototypes, and a single family home for sale prototypes. Um they reflect a range of density um in terms of units per acre um as well as a range of unit mix that resulted in different uh unit sizes and average unit sizes that you can see on the screen. Um as well as a range of parking ratios um which vary according to the unit size. Um it's important to note as um Christie um has already noted that the prototype analysis that we prepared is based on a snapshot in time and real estate economic conditions can change quickly. Um these prototypes that were developed um reflect may already reflect waiverss or incentives um such as reduced parking requirements um or use of a density bonus um to improve project feasibility. Um and um we wanted to note that these are prototypical developments that we're analyzing to get a sense of what a development would look like, but every real estate development is unique and some will be more or less feasible than the prototype analysis

indicates. Uh next slide. Um and so then with regards to our input assumptions, we conducted stakeholder interviews or developer interviews as um uh Christy indicated and we also conducted our own market research to establish the input assumptions that you see on this um slide. Um they included development costs um which for rentals range from 200 to $365 per square foot and for sale from $150 to $45 per square foot. Uh but please note that these these are only reflect the hard cost assumptions and so on top of that in addition to the numbers that you see here um we also included soft cost. Um and then with regards to revenue assumptions you can see the rental rates um uh per square foot per month that we assumed for the rental prototypes as well as the for sale market uh prices sales price per square foot that we assumed for the for sale prototypes. Um and then in addition um we had to assume operating cost or research and then establish assumptions for operating costs per unit for the rental prototypes. Um and then perhaps most importantly uh we had to establish the target return metric by which uh the feasibility of the prototypes the financial feasibility of the prototypes would be measured. Um and for rental projects they were uh a 7.75% yield on cost which is basically the determined by dividing the net operating income of the project by the total development cost including land costs. Um and then the for sale target return um it was it's measured by looking at profit as a percentage of development cost and there we depending on the prototype you're targeting either 20 or 25% of development cost. Um and then with regards to the total development cost uh you can see what the

resulting total development cost per unit um uh from the analysis is on this slide. Um it range they range from a low of 410,000 per unit for the what we call the multif family infill um rental prototype um and that primarily relates to to the type of construction and the fact that we assume surface parking um and then to uh 1.48 million per unit for the single family uh for sale prototype and that relates primarily to the size of the unit that's assumed there. Um, as Christie mentioned, the impact fees that are charged for each uh type of development um are do represent a significant portion of the development cost. And you can see both the amount per unit here as well as the percentage as a percentage the the impact fee as a percentage of the total development cost on this slide. Um and then uh we also analyzed the impact fees without the um housing impact fee so that we could um see what the effect of um additional inclusionary requirement would be um in lie of the housing impact fee. Um and then summarized at the bottom of the slide are the impact fees that were included in this analysis. Um and uh we would note that the public RC fe uh is new and so at um it was not um proposed as of when we prepared our analysis. So it wasn't included in our prototype analysis.

Okay, next slide. Okay, so I'm going to there's a lot of numbers here, but I just want to walk you through um this chart. Uh so we took all those input assumptions that uh Leo and his team gathered and um ran lots of numbers and different variations. Um at the top line is what the the target return uh that Leo established was what developers are generally looking for for the various types. Um then the sec the line after that shows u the pro the projected return with the housing impact fee. that's today under your current requirements. Um that's what we think based on all those assumptions that's the return that each of those prototypes would would deliver. And so you can see that uh only the town home for sale town homes and and just just over the board the single family for sale um uh prototypes would be profitable and be likely to happen. And I believe that that fits with the development pipeline that you have uh that you have in the city at the m at the moment. Um the line after that uh the projected return without the housing impact fee. So that was the last line in the last slide. Um or that was using that those sorry using those uh fees sorry using that um that impact fee number. So, we take out the housing impact fee so that we can understand what what it looks like before we replace it with a percent requirement. Um, and that's what that white line in the middle is. Projected return without housing impact fee. Um, and you can actually see that it it even though there is a you know there is a dollar amount that's a significant number um it doesn't actually impact the feasibility. It doesn't make things that that different from how it is under today's requirements. Um so then then the line

with the star is um after we tested various scenarios with different percentage you know different income levels that we're targeting and different percentages um and a desire for some some level of simplicity. Um we ended up with a recommendation for a 10% set aside um for a different affordability levels for the um for rental and for sale. And so our goal was really to try to in this market environment, our goal was to try to stick to basically what we have today. So trying to get to numbers that were not terribly different. You know that they don't look good. They're they're not feasible at this moment in time, but um that it doesn't change the circumstances from what you are what you would face um under today's current requirements. Um, for fun, we we ran some other numbers to see like what how's what's a sensitivity analysis? What would it make um how much more how much better would it look if rents go up or um sales prices go up by 5%. Um, and we just included that there for for illustrative purposes. Um, and then I guess I just want to uh elaborate on the 10% requirement. Um we are for the rental uh prototypes. These results reflect a 10% requirement targeting low-income households um at an average of 50% AMI. So across the development um that the average affordability of those affordable units is 50%. So some could be a little lower, some could be a little higher. um that would be uh to offer a little bit of flexibility and also um a range of different affordability to different kinds of um households. Um and then for the four sale prototypes, these results reflect a 10% requirement targeting moderate

income households at 110% AMI on average. Um, just for context, the rent for a two-bedroom unit would be around um 1,750 or uh and would be 1,950 for a three-bedroom unit. Um, and the sales price for a three-bedroom home under this scenario would be um around $435,000. Um, so I'll just, you know, note the the top line here is that the u the 10% requirement results in the closest outcomes to the existing housing impact fee today. So you can see that if you compare the two yellow rows. Um, and I'll be happy to answer questions about the recommendation, but for now I'll pass it off to Michael.

Thank you, Christine Leo. Uh based on the findings from the inclusionary study, stakeholder feedback, and the city's housing goals, staff are recommending amendments to Newark Municipal Code section 17.18.030, [clears throat] the affordable housing program, and the addition of new chapter 17.27. At a high level, these amendments and additions will apply a build first requirement to residential projects of 20 or more units, restricting 10% of all units below market rents. They will clarify and streamline city requirements and expectations, provide flexibility and discretion to accommodate unique development characteristics, and be reviewed and updated regularly to ensure they do not inhibit new production or leave affordable units on the table. The first proposed change is to 17.18.030. Uh this amendment is uh a minor addition new um section H the purpose of which is to retain the affordable housing obligations for residential and non-residential projects that have already submitted a completed application. Um and this is essential to ensuring the affordable housing obligations for those projects survive other programmatic changes. And then the second um the second purpose as I said is to ensure that those non-residential projects are still assessed the housing impact fee um even if um uh council ends up approving um the rest of these inclusionary changes. The new chapter 17.27 affordable housing establishes the build requirement as the default inclusionary housing mechanism as opposed to payment of the fee. Uh 17.27 requires residential projects with 20 or more units to set aside 10% of all those units as affordable. Affordability is based on a household's income as a percentage of the median income for

Alama County, also known as area median income or AMI. The AMIs for Alama County are included um in this table. Um so those numbers that you see there are the range of um of a household's total income based on whe whether there are one, two, three or four person households and if thereby if they fall between extremely low, very low, low or moderate income and then at the bottom you have the median income for a household of that size in Alama County. Um staff's recommendation is that for homeownership projects, the average income restriction of affordable units shall not exceed 110% of the area median income with no unit being above 120% AMI. What that means is that an applicant could propose um affordable units in a home ownership project that are restricted to 80% 90% 100% AMI um up to 120% AMI. But when you take together all of those affordable units, they have to average out um to 110% AMI or below. For rental projects, the income restriction shall not exceed 50% of the area median income with no unit exceeding 80% AMI. So that would have a focus at the higher end of that this very low income band. Um but you could have some units that go up to 80% AMI um and thereby generate more um um revenue for the project. Um, finally, if a project is proposed to have 44 units, the affordability requirement would be 4.4 units. Obviously, you can't have point4 of a

home. Uh, so the developer would pay the balance of that po.4 fraction as the housing impact fee or they could voluntarily build an additional affordable unit. Additional requirements would mandate that all affordable units shall come online or you know achieve certificate of occupancy at the same time as or before the market rate units and affordable units shall reflect the same range of bedroom counts as the project of a whole access to the same amenities and be indistinguishable in terms of materials and be reasonably distributed throughout the project. We would monitor and enforce the affordability requirements by recording them against each affordable unit um um for a term of 99 years. The city would have the first right to purchase any affordable units if and when they come up for sale and the developers or sales agents must ensure tenants and buyers of affordable units meet all eligibility requirements and apply the uh local live work preference policy. And again, the city has contracted with Hello Housing already to confirm eligibility requirements, monitoring, and provide [clears throat] technical assistance. The proposed text includes language specifying specifying that it is the intent of these requirements to not depend on the availability of government subsidy. It doesn't preclude the use of such subsidies, but it also doesn't obligate the city or other public agencies to subsidize these inclusionary build units. Nothing about this ordinance would preclude the use of state density bonus law and New York's implementation of it. Density bonus is a popular way of producing more affordable housing through an inclusionary build requirement. By including affordable units, developers can get waivers and concessions against density limitations and other development standards. And then they use those waivers to build more market rate units. The additional market rate units help to provide

subsidy to get the affordable units built. For projects of less than 20 units or what we're calling small projects, the default compliance would be to pay the fee. This accounts for the inevitability of those fractional units and the challenges of managing individual units scattered across the city. Bearing in mind that the purpose of inclusionary housing is to get more affordable housing built, the proposed ordinance includes five different alternative means of compliance. All of these alternative means would be documented by an affordable housing agreement jointly executed by the developer in the city. Uh the first alternative means is the large project in loo fee. Projects of 20 units or more could request to pay the fee in lie of building affordable units and that approval will be at the discretion of the city council. Um we do have a framework for how housing impact fees are spent. Um, and there may be times when council may decide that it is in the city's best interest to accept the fee. Uh, the second option is clustered affordable units. In this option, rather than dispersing the affordable units throughout the project, um, or building the affordable and market rate units like for like, the developer could cluster those affordable units in a particular section or sections of the site. Um, the affordable unit should still be of comparable bedroom counts, finishes, materials, and have access to the same amenities. Um, the property management and resident services should be comparable to the market unit market rate units or better meet the residents needs. Clustering has, uh, I think been the most common way that Newark's existing affordable housing program has gotten developers to build affordable units. And because of that success and the fact that the units are still being built on the same site as the market rate units, achieving the policy goal of integration, staff are recommending that the city manager may approve the clustering as an alternative means of compliance.

Um, we'll just take a look at what clustering means because I think it's can be hard to visualize this stuff. Um, New York Station Seniors over in Bayside is one example for this project. three separate market rate projects grouped together their affordable housing obligations to get this 75 unit senior housing project built. Um the developers reserved a parcel within the Bayside plan area. Um um so the project is surrounded by and in that way integrated amongst the market rate parcels and units. Um, and then by grouping together the smaller obligations um of three separate market rate deals, New York Station Seniors was large enough to be eligible for low-income housing tax credits, making it more deeply affordable um and affordable for a longer period of term than it may otherwise have been. And then a second example of clustering, which we don't have yet, but we could in the future would mix housing types among a larger development. So you can imagine a development of single family homes interspersed with duplexes or forplexes but that by their nature are more naturally affordable. Uh moving on, the next is off-site development. This is similar to clustering but would have the developer build the affordable housing on a site that is not contiguous to the market rate developer. uh the developer would still have to demonstrate to the satisfaction of the city council that the proposed affordable housing project is financially feasible and that the site has sufficient capacity to accommodate all the required affordable units. Option D is site dedication. This would have the developer propose to dedicate a site to either the city or a city approved affordable housing developer um where the site with affordable housing would ultimately be built. And again, the developer would have to demonstrate that the site could be competitive for public subsidy, was of equal or greater value than payment of the fee, that the developer had had control of the proposed site, and that it could accommodate the necessary number of affordable units. This would be done at the discretion of city council.

And then the last is option E, um, which leaves open the possibility of the developer and the city to agree to some other means of sati satisfying a project's affordable housing obligation. Um staff do not anticipate an immediate fiscal impact as a result of these proposed amendments and additions. Um approximately $19.3 million remains available from the housing impact fees. Um those city council may decide in the future that it it is in the city's interest to accept the large project inli should the that housing impact fee fund um substantially reduce um or we have some other project that needs money. The project is exempt from SQUA um because it doesn't result in any physical changes. Um and uh the proposed changes do not provide any entitlements for any new land use development projects nor do they change allowed uses of land or the intensity. So um city council is scheduled to consider the planning commission's recommendation as early as January 8th. If adopted by city council, the ordinance would go into effect February 8th, just 30 days after. Staff will consider updates to the housing impact fee upon completion of the city's 2025 2026 Nexus um nexus study. And then projects with complete applications submitted prior to February 8th, 2026 will continue with payment of the HIF or their other approved alternative means of compliance. Large projects with complete applications submitted on or after February 8th will be required to set aside 10% of their units as affordable or seek alternative means of compliance under the new 17.27. And so it's staff's recommendation that the commission adopt a resolution recommending that the city council adopt an ordinance amending chapter 17.18.03 and adding 17.27. We welcome questions from the

commission. Okay, I'll open it up to the commission. Any questions, comments?

I'll go ahead and start. Um, [clears throat] probably one of the most comprehensive staff reports I think I've heard in my career. So, a very good job. Um [clears throat] my question is has the um the 10% um uh requirement has it been uh reviewed with actual developers that recommendation to see if the assumptions that the consultants have made in the real world is going to negatively or positively impact actually building this affordable housing. I'll note that the public notice um for this hearing did share the 10% um requirement and that was sent to all of the um developers that were involved in the stakeholder process. Um we have not received any comments or input from them, but I'll invite you Christy or Leo to to speak to um what was discussed at the stakeholder interviews to that effect if if there's anything.

Leo, do you want to speak to that? I I do think that in April when we met with the second with the group for the second time that we did share our preliminary um preliminary findings. Yes, I believe that was the case. Let me um [snorts] confirm I'll confirm and get back to you.

Okay. Okay. So, it's really um my question is that slide that summary slide that that you folks presented that showed the uh rate of return on these projects right there. So, I mean there's some assumptions made. Um, so if we were to talk to a develop a developer, would they agree that what you're projecting as far as rates of return for all of these different product types um would allow them to actually build u projects of this nature? That's really my question is you would they agree with your um assumptions of rate of return for each one of these product categories? you know, when we when we brought it I'll let Leo answer as well, but when we brought it to them, I think they they all said sort of directionally they they're not exactly the same numbers that they're running, but they um they agreed they sort of asented that these were in the ballpark um to what they were showing in their numbers. I don't um Leo, if you have any more details.

Yeah. Yeah. I would say that these one we established these target returns by through our developer interviews and then the these assumptions for the target returns were then shared with them um prior to actually running the analysis for their input and feedback and so they did not object to these uh um target returns. And I'll say, you know, Leo and I, we're running numbers separately, too, and then matching up and and there are various ways that if you're calculating something on this total versus that total, there there are different places where we're going to find diversions, but it the feedback that we got in those meetings was um they were not disagreeing with the findings that we had.

Okay. I just I look at um your projected return with HIF, let's just say a condo for sale, 9%. Now, the projected return with the 10% set aside is 5.7. I mean, to me, that's significant percentage rate of return. And sometimes these projects are tight. Yeah, they're always tight, but they're, you know, that I'm wondering whether a, you know, a 3.3% or a 4.3% rate of return difference would make the difference between them building something or not. Of course, the whole idea is you we want affordable housing to be built.

Absolutely. And I guess I think with with that one in particular, because I think that's the one with the biggest delta, it's already in our in our current situation or even if you take out the housing impact fee, you you don't have it at all. You're far from the 20% return that you're looking for. So I think we we felt like that the outcome was not going to be a different one no matter what steps we took at this at this time.

Sure. The other thing is when you look at that slide, you don't have to bring it up, Michael. um the one that gives the total amount of impact fees just to build this housing. When you do it so incrementally and I you know I was involved in it throughout my career. You do it so incrementally you don't really realize that when you start adding them all together. I mean, there's significant money that's uh that also is a, you know, is a detriment to being able to build any housing. And people are always complaining about the cost of housing when impact fees alone, you know, make up 10% of the cost of a house. I mean, it's it's significant.

Yeah. Um, and sorry to interrupt, but just um I did confirm that the draft recommendations were shared with the developers. Thank you, Leo. D.

No, thank you. Uh, I really do appreciate the local preference policy. I think it's uh it's going to be something that's good. I hear it all the time from residents. Um, they like folks that are living in Newark now to have an opportunity first or working in Newark to have the opportunity first. So, I think that's really good. And, you know, I like the the 10% set aside. I like that as a goal. I just just I just would feel better if I knew for sure in talking to developers that yeah, [snorts] we'd still be able to build housing. So anyway, those are my comments. Thank you. Any others?

I have a a few. Um okay, so first and foremost, I agree with Commissioner Becker. That was a fantastic presentation. Thank you. Uh comprehensive from top to from start to end. Um I'm was taking notes as we were going through and you know writing down a couple of really what was the thesis right uh one bullet point is we need to provide more homes um especially for renters and first-time home buyers. The second being is we want to update our policy uh to improve our ability to provide more affordable homes but not do so in a way that prohibits development. So at the end of the day, we want to build homes, but we don't want to update our policy to where now all of a sudden development has effectively stopped. And so this is actually a fantastic slide. I wasn't planning to go here, but what I'm really focused on is, you know, I look at this slide and town home for sale and single family for sale. So you run your sensitivity and your returns are effectively they're lower um but you're still meeting your return thresholds. And so, you know, at the end of the day, the project will still pencil. Developer will move forward. Um, and that really is a function of the lower cost environment for the the hard cost for town homes, threetory, single family homes, onetory, twotory. When you get into that condo for sale or the multif family infill or mult multif family rental, your costs shoot up. They'll often more than double. and and a fun and so now when you layer in the the 10% set aside, it's really unchanged because the project isn't penciling to begin with. Um, which isn't surprising, right? If we look at the history of Newark, we've never had an influx of apartment development, especially for mid-rise. We had a project that we approved um I think the most recent was probably at the New Park Mall shortly after our

specific plan. Um, financing world changed and that never moved forward. And so we already know the environment today already makes it challenging for apartment development, highdensity multif family development. So that's where I'm more focused at the moment. And so if you could go I forget what slide it is, but ultimately where we talk about the 50% AMI is being the average. And so I'm not I first and foremost I love uh our policy or how we're looking to update it by providing uh 10% on site. Um on the multif family side conceptually I love that hey 50% AMI I think it's fantastic. Where I get concerned is are we are we pushing too hard and entering an environment to where it already is challenging with our current policy and then makes it even more challenging by having that that basemark threshold at that 50%. Um I don't see the slide here but there was a slide where it gave all the surrounding municipalities on the for rent side and I believe if I saw correctly most municipalities gave a range of 50 to 80 Fremont was maybe 60% which is a good benchmark because Fremont gets similar rents to us slightly higher and Fremont has seen some some multif family development and so my comment is I think there was a statement that be um a program I think it was slide 29 program uh concept requirements will be reassessed regularly to ensure they don't become an impediment to new development and so that's where I'm focused is for staff if if we feel all like all of a sudden that 50% is conceptually we love it but it's

hurting our chance to get more homes that we have the opportunity to reassess and re-evaluate Um to Commissioner Becker's point, are there other creative ways that we can maybe have that 50% AMI average? Um but maybe we give those affordable homes special fee treatment. So if we have a 400 uh unit apartment project um that 10% are set aside for for affordable homes and 90% those are subject to our standard fees and maybe the 10% of homes get special fee treatment. maybe the impact fees are half or a certain percentage to help kind of move along something that could potentially work. So again, this goes back to finding ways we can be creative to to get the affordable homes that we know we really need um but can do so in a way to where at the end of the day we're getting the housing that we need as well.

Thank you for that commentary and for that question, Commissioner. Um, I appreciate the um the nudge to be creative about how we assess this and how to uh how to use this data. Um, and I do think that um considering the cumulative impact of our impact fees um is something that we could consider. Um I we can certainly take that under advisement. Um, one of the next steps that I included in that last slide was that we will be updating our impact fees as the results of an ongoing nexus study. Um, and so that is um that is something that the community development department could take under advisement to discuss with.

Yeah, certainly just adding on to that um because we are going through uh that exercise uh to look at our impact fees, an exercise we haven't done in a number of years. I think it's probably eight years or so. Um that that will be a great opportunity once we have the results of that study in to be able to test those new fees against various development projects that come before the planning commission and city council. And uh to Commissioner Becker's point is assess our our fees really, you know, really inhibiting the type of development both on the, you know, residential side and commercial side that we are that we're looking for. So, we do want we think it's a great opportunity since we're investigating our our impact fees to be able and to be able to test them against projects then to be able to carve out exemptions or other requirements for the um collection and assessment of those fees on projects in the future.

Kind of the last Thank you. And and the last comment there is we are now in an environment where market rate developers because of new state legislation, specifically state density bonus law to where market rate developers are looking more now than ever to having affordable homes included in the development because if they do so, it unlocks state density bonus, waivers, unlimited waivers and so forth, parking requirements. And so I think having some type of policy or having a policy with 10% is fantastic because it further nudges them along. Um but maybe we're we're comparing how what state density bonus law is, what our policy is and finding some some common ground between the two. That was my comments.

Any others? Okay, I'll open it up to the public for comment. It's open. Any comments? Anyone wishing to speak? Okay, I will close public comment. And can I get a motion on a recommendation to approve the amendment in addition to new works municipal code? And maybe just Commissioner Boasich. Um certainly if uh planning commissioners want to make any further uh comments um after the public hearing before a motion, that would be appropriate as well. Any further comments or questions from commissioners? No. Okay,

I will make the motion. Okay, I have a motion from Commissioner Becker. Can I get a second? I'll second. Okay, second from Commissioner Aguular. We'll now put it to a vote. All those in favor say I. I. I. Let the record show that it passed unanimously. Oops. Now mine's gone. I'm glad I wasn't the only one. Thank you. [laughter] Okay. Okay. On to staff reports. Any staff reports?

Um no uh particular staff reports uh to mention although under uh items that council will be considering. Of course on Thursday council will be considering the Mauy Village project. Um the planning commission reviewed that uh last month and um recommended unanous approval of that project. Uh so we'll be conducting the public hearing and council will be delivering on that project on Thursday. No other reports today. Okay. On to commission matters report on city council action. You just did that right.

Oops. Sorry. Oh, sorry. [laughter] Working two things at once. No reports uh from city council. Okay. Thank you. And then H planning commissioner comments. Uh yes. I just like to comment our chair on a wonderful meeting that we had uh with the Mau Village project. There was uh over 18 people commented. I thought it was handled very professionally. uh the use of the cards uh comment cards were great and the time limit was good. So kudos to you and that was a well done job. I think we did a good job in that whole meeting.

Thank you. [clears throat] Any other comments questions? I have a comment to make. Okay. First [clears throat] of all, I want to cor congratulate uh Mr. Turner. Um, we've had three diverse reports tonight and I thought every staff member that gave the report did an outstanding job. Um, thank you for this. I think the level of communication to the planning commission has improved tremendously over the last few years and you're the head of the department, Steven. So, we got to give you kudos. But your staff did a great job tonight. Thank you very much. The whole staff is here, too. [laughter] Great job. Excellent work. Any other comments from N.

All right, then the meeting is adjourned. I didn't realize. Excellent job. Thank you.