Planning Commission - Special Meeting

All right. Is the mic working? Let's go ahead and assemble ourselves. Start in about a minute. All right. Good afternoon slash early evening everyone. Um I am a little far from I'm going to really try to lean here. So if I if I'm not audible, someone just signal. Uh I just am having trouble reaching the mic. Uh I'm going to go ahead and call to order our first of its kind joint planning commission and city council meeting. And I am going to ask our city clerk or whoever is here to conduct our roll. There she is. To conduct our roll call, please. Mayor Source present. Vice Mayor Burgdenser present. Council members Gordon present. Matias here. Matulic present. Paul Maris present. Chair Blind. Vice Chair Taylor present. Commissioners Douglas Maderas Beasley Stanberry I don't see her. Belena I know is absent. Standifer it looks like uh council member Leedu and commissioners Belw Buena Standifer and Beasley Stanberry currently opposite. Thank you. and council member Vletigu is on her way from the city. That is going

to bring us to our pledge of allegiance. I'll ask everyone to please stand and join us for the pledge. Liberty. All right. Thank you all. That is going to bring us to our joint workshop which is our only item and that is our presentation on the regarding the preliminary findings of the inclusionary zoning feasibility study and commercial linkage fee nexus study. And we've got our planning team here. Uh take it away. Thank you all for being here. Yes, you bet. So, uh, first of all, Hector Roas, uh, long range, uh, planning manager for the planning and development services department. Um, I wanted to take the opportunity to thank both bodies, uh, for being here with us tonight. We know that, uh, you are, uh, doing double duty with a planning commission meeting later on tonight and then two council meetings uh, tomorrow. So, we really appreciate uh, you know, your uh, availability and your commitment uh, to the city. Um, most of the presentation is going to be handled by our consultant. I'll introduce them and bring them up here in a second, but first I wanted to provide a little bit of context to get us started. Um, so the way that we got to this point, um, last December, we had our housing element for the sixth cycle adopted. Uh, that document, very important document, contained two programs that speak directly to these two items. It directed the, uh, city to take a look at whether or not to adopt a inclusionary housing ordinance and commercial linkage fee. And these uh programs are intended to potentially expand um affordable housing construction in the city. Um as you'll see later on in the data presented uh the city has had quite a challenge in in

making that happen. Um so in 2023 we brought on um economic planning uh services or EPS. Um their scope of work included completing uh studies that would basically provide you the data and the wherewithal to make an informed policy decision in these two areas. um they have completed uh their preliminary analysis and uh part of the reason that we're here tonight is because we're going to be presenting the initial findings from that preliminary analysis uh present you with some policy options in those two areas and most importantly uh get direction from you as to whether we can proceed uh with the development of those policies or not and in what shape and fashion. Uh so with that I'm going to hand it over to um Darren Smith. He's with uh EPS. He's going to walk you through the rest of the presentation tonight. It's formatted in two parts. First part is going to be focused on the inclusionary housing ordinance. Um followed by discussion in that area and then secondly we're going to be bringing you the commercial linkage fee along with discussion for that as well. So with that I'll pass it over to Darren. Thank you. Good evening. Um we have a formal presentation for your screens. There it is. All right. And All right, Hector already presented this background. Um, again, I'm Darren Smith with Economic and Planning Systems. With me this evening is Rosanna Ren here at the table. Um, and we are pleased to join you this evening for this important conversation. There are, as Hector mentioned, two different policies that are under consideration this evening. One is an inclusionary housing ordinance. An inclusionary housing ordinance is u a policy by which when a market rate development comes to town um you can require them to provide a certain proportion of their units as lower income units affordable units with

income restrictions for uh decades if not in perpetuity. Um, that's a matter of policy as well, how long it lasts. But many cities and uh, counties throughout California have this kind of policy on their books right now and have for several decades dating back to the 80s. And they are in place in many places because they help to provide affordable housing through the development of market rate housing. So it is a a privately funded source of u affordable housing. The fact of this is it it brings uh equity to your community by promoting affordability within otherwise market rate buildings. Typically the units are provided within the same buildings although there are some variations on that theme. Um it helps the the communities to meet their reena requirements. I imagine you all are aware of what RENA is and the requirements, but in case there's anyone in the audience who is not. Um, RENA the it's the the way it's pronounced, it stands for regional housing needs allocation and it is determined by the state uh how much housing you need to provide at what income levels uh for your community. And every eight years um a new RENA allocation is set for the community. And this most recent round throughout the state has been very high. Uh very high numbers of housing are required at a variety of different income levels because the state has been collectively so poor at producing lower income housing and housing in general. Um, finally, one important consideration is that if you were to adopt an inclusionary housing ordinance, it would help you to uh maintain and improve your eligibility for one Bay Area grant dollars that are maintained and and uh through MTC and Abag um that are dollars

that can come to your community for a variety of uh public purposes. The other consideration this evening is a commercial linkage fee. commercial linkage fee is essentially an impact fee that addresses the fact that when a major employer comes to town or even a relatively minor employer, um they can be bringing employees to town that aren't there already. Um and some of those employees will not be paid enough to afford market rate housing in your community. And so a commercial linkage fee is a way of uh having those employers and the buildings that they're in contribute to the demand for affordable housing that they are creating with their new employees. And this has many of the same kinds of impacts uh positive impacts that are it's less common throughout California to have commercial linkage fees, but there are dozens of communities that have them throughout California. This graphic just sort of illustrates how uh how these things work. So this one is for inclusionary housing. Typically what's happening is that market rate units are being built at what's called above moderate income levels. That's typically uh people who make more than 120% of the area median income. Um so most of the units in a given project are going to be set at those prices just based on what the market can afford. But then you can require some proportion of the units in that building to be provided at low, very low or moderate income levels or uh pay a fee in lie of providing those units. Uh and those fees get collected by the community, the city and are then made available to other affordable housing projects in the future. The commercial linkage fee works somewhat differently. Again, it's uh applied to nonresidential development, so office buildings, retail, industrial, hotel,

things of that nature. Um, and it just directly pays dollars, not units necessarily, but dollars uh to the the city that can be used to provote produce or retain and preserve affordable housing for um your general community. not necessarily literally for the people who work in those buildings, but in general uh for the community because there is more demand being created for affordable housing. So, we're going to start with the inclusionary housing ordinance and I don't know if there's a a formal setup. This is a a work work session, a joint study session. Um and I understand it's the first of its kind here in Vallejo. I'm honored to be here uh to inaugurate this kind of approach. I would welcome any of you to stop me at any time and let me know if you have a a specific or general question. Um I mean for this to be a a conversation rather than a lecture this evening. Um so inclusionary housing do inclusionary requirements impact feasibility? The answer is yes. Um it affects the feasibility of a development project to have these kinds of requirements. What they effectively do is say you're going to build 100 housing units, 90, 85, whatever your your policy says. That proportion of them can be offered at whatever the market can bear. Um, but the other 10 or 15, those are kind of the typical range that we see. Um, are going to be you you have to provide those at lower than market rate prices. And depending on your policy, those those prices can be significantly lower than market rate. And because of that, the building costs the same to build, but some of those units are worth less than they otherwise would be. And because of that, the the development is less profitable than it would otherwise be. So depending on where you are and

when you are because markets fluctuate both through time and and space um there are times when it is more feasible to have these kinds of requirements than other times. And some of the other factors that go into this are the cost of acquiring land, the cost of construction, uh any city requirements like your impact fees and the uh the process of getting entitlement. um the density that is allowed whether you are providing incentives for more density or in some cases less density is actually more feasible than more density and I can explain that if you'd like as well and then of course fundamentally um what you can get for the market rate units and so we have analysis here about the the current state of economics uh for construction in Vallejo that we'll speak to momentarily. So our research questions for this task, what is happening in Ballejo's local housing market? What are other cities doing with respect to their inclusionary policies? How is the feasibility of development affected by um city requirements other than uh inclusionary here in Vallejo? And finally, can current projects accommodate inclusionary requirements and remain feasible? So those are the t the items we're taking up with this discussion this evening. We wanted to introduce um the concept of affordability and and rents. We're focused here on rents, but these kind of policies would apply also to forale housing if you so chose, but these are examples of the rents um and the income levels that we're talking about. So in the chart you see that the income levels uh these are set by the state the median income levels that kind of everything kind of pivots around um you see that for a household of a single person the

state says that the median income for Solano County is $79,250. Um, and a person making that kind of money every year could theoretically afford to pay about $1,981 a month in rent. The way that's determined is they get your whole income. They say 30% of that can go to housing costs. The the other 70 goes to everything else you need to pay for in your life. The 30% is the standard for housing cost. And on a monthly basis, that comes out to $1981. Now, we've looked at market rate rents in Vallejo. Now, this is for the entire uh inventory of housing. It's not just newly built stuff. It's not the top of the market. It's every unit in Vallejo according to CoStar, which is a kind of real estate industry standard source of data. Um they say that the the average rent for a a studio unit is about $1,459 here in Vallejo. So that means that the average studio unit is affordable to people earning 100% of median income. It's actually affordable in the final column to people earning about 74% of median income. So that would make it affordable to a lowincome household, not a very lowincome household. Very low income. The the term goes up to 50% of median income. So that person qualifying for very lowincome housing could earn half of that $79,000 or about $40,000 a year you would be qualified for affordable housing at very low incomes. So again this is data that shows the relative affordability of the overall housing stock in Vallejo. Um but any given new project is going to typically get more than the average rent um because it's brand new. Um, so we have

not used these figures to represent what a market rate unit could get in Vallejo, but rather we've looked at other market rate housing in Vallejo and the the area to see what those could get get as newly constructed buildings. The next slide shows where Vallejo's rents are relative to the rest of the county and to the Bay Area. Vallejo is the green line at the bottom. Um, and these are for units that have been built in this millennium since the year 2000 uh, in all cases. So, you see that the average today is about $221 per square foot of rent for those units in Vallejo. For the rest of the county, everything other than Vallejo, it's a little bit higher, about $2.32. For the entirety of the uh 9ount Bay Area, it's $3.36. So, that just shows some some differences in uh the achievable rents here versus other places. And those are important considerations as we're assessing the feasibility of of uh this policy and construction in general because the rent determines whether you can make a profit or not relative to the cost of construction. this slide and unfortunately you can't quite see the bottom of it but this shows going back to the year 2000 um the single family units permitted. Thank you very much whoever made that adjustment. Uh very helpful single family units permitted. Um there it is. You can see that at the beginning of this century um for the county overall that's the u the height

of the brown lines um there were you know plus or minus 2,000 units per year being permitted uh throughout Solano County and Vallejo the blue is the blue section at the bottom that was in the range of 4 to 500 units a year uh being permitted right here in Vallejo during that period of time then the housing market crashed and the overall all con construction dropped in 2007 to you know less than a quarter of what it had been before and it kind of stayed there and bounced around for the first several years of the 2010s. Um and you see that the blue bar representing Vallejo basically fell off the map. Not much construction happening at all uh in Vallejo and not very much at all either in the entirety of the county. things picked up in the late 2010s. Um, so that by the, you know, the the later years it was plus or minus a thousand units a year being constructed throughout Solano County, but Vallejo's permitting did not recover in the same way. And you see that it represents a a smaller proportion of the overall uh permitting throughout the county for basically the last decade. We have a similar chart for multif family um that shows again this cyclical uh information. Multif family was being built in significant numbers at the beginning of the century and then dropped off during that uh recession of 2008, 2009, 2010. picked up a little bit, bounced around throughout the last uh latter part of the 2010s and then really picked up in early 2020s uh throughout the county. But Vallejo, which had been a significant portion of the overall county in the earliest part of the century, um does not represent a a lot

of uh what has been built in the more recent years. So these are all to just sort of set a context of where we are in the real estate cycle broadly and also here in Vallejo. Um then we have a chart on permitting. So this is not what's been developed which was the previous one but the number of building permits that you've issued. And u again you see here that it was this one goes back to 2015. There were plus or minus 50 units a year being permitted here. uh that picked up in 2022 some o over 200 units permitted in 2022 but not yet delivered. Um and similarly in 2023 there were over a hundred units permitted but not yet delivered. Um so there's a pipeline of construction that's ready um but not you know they're kind of sitting on the sidelines right now. We've spoken to developers as part of this uh exercise and understand there there's a lot of feasibility concerns about construction costs increasing relative to rents. This chart shows that uh those dynamics. Each line goes back to the year 2000. The blue line at the top represents how much construction costs have increased since the year 2000. The red line in the middle is how much rents have con increased since 2000. And you see that it's a fair margin less. Construction costs have gone up faster than rents, which means that it's harder to keep up with uh the costs of building. The bottom line is uh mortgage interest rates. And that's interesting because it's a proxy for the cost of financing. The construction cost. The blue line is labor and materials, you know, bricks and mortar and and the construction workers, but it doesn't account for financing. The bottom line there, the green one is about financing. And you

see that interestingly, we are still now, even though people are talking about us being in a high interest rate environment, we're still below where we were 25 years ago. Uh we had historically low interest rates for an extended period of time after the recession that just picked up again um in the last two years to be you know they're around six 7% now um but it's still lower than they were in in 2000. So that that affects feasibility and in particular the fact that in the last couple of years um it's really ticked up quite a lot from being able to get a mortgage at 3% to being able to get a mortgage at 7%. You know if you're a developer and you're building uh an apartment building your rates of interest are similar to those. They're not exactly the same but they have similar dynamics and they've gone up. So, it costs more to build a building now, both because of labor and materials as well as financing than it did a few years ago. Um, so any questions? That all of that was meant to sort of set the stage for where we are in the market cycle. Um, so I can pause there, see if there's any questions. Um, seeing none, I proceed to a comparison of uh what other cities are doing with respect to their inclusionary requirements. This chart shows uh we look throughout Solano County and to other communities in the Bay Area um what they're requiring. This one is for ownership and you can see that in general we are in the 10 to 15% range. 10 to 15% of new units in a new newly constructed uh home ownership project would be required um by the cities of Benicia and conquered and Elserto and Hayward and Oakland and Richmond. Those are the the group of cities that we're

looking at here. Um there is no other city aside from Venicia in Solano County that has an inclusionary policy today. Um so you would be somewhat forward thinking in this regard. Uh Fairfield is thinking about it right now. They've had a number of conversations about it and we've we have done um similar work there, but they have not yet taken action on it and we don't know if or when they will. Um but they it is part of their policy consideration right now, but not yet adopted. Um on the rental side, so going back again, 10 to 15% is sort of um on the for sale side. That's kind of the range that we see regionally as well as throughout the state. That's pretty pretty common. Um on the rental side, it's a little bit more diverse. You see the same group of cities have anywhere from a 6% to a 10% requirement. None of these cities has as high as 15, but there are places throughout the state that have 15% requirements. And again, it's sort of the same cast of characters. Once again, Fairfield um does not is considering but has not yet taken action on inclusionary housing for um their rental housing production. Um you see that here it's generally the the blue represents lowincome housing and the the brown represents moderate income housing. So it's a mix of low and moderate. Only one of these communities conquered requires any inclusionary units at very low income. um they they require 6% overall with 1% at very low, 1% at low and the other four at moderate income. So you see that there's a range. There is a great deal of legal flexibility uh that the state allows for communities to decide for themselves what they would like to do um within some some

boundaries. Um but within those boundaries, you know, you have flexibility to make these decisions. We also were interested to know, you know, the affordable housing requirements are just part of what a city requires of development. There's all kinds of other impact fees that cities and other agencies impose on new development. So, we looked at um examples from these same places uh what the overall fee burden for these kinds of development is. Here we're looking at a single family detached home. I believe we assumed it was a 2200 square foot home so that we could get kind of apples to apples among these communities and tried to estimate for each of these communities what their overall fee burden was. Vallejo is on the left. Um so you'll see that the overall fee burden that we've estimated for Vallejo is about $69,000 per unit in this case. That's lower than any of your of these other cities. Fairfield is higher. Richmond is much higher. Hayward is much higher. Um, now Hayward, Richmond, and Santa Rosa, that's a a new one to this list. They all have an a housing fee as part of it. And so that's part of their inclusionary standard. Um, so we've accounted for those, but you know, there there is a narrative out there as we've spoken with developers that impact fees in Vallejo are problematic, problematically high. And our our analysis shows they're significant, but actually when you look at who is imposing those u those fees, it's not the city necessarily that's doing it. You have fees from the school district. You have fees from the county, you have fees from special districts. Um and they make up the majority of the overall fees that are imposed um on new construction in H or I'm sorry, in Vallejo. Um, so

you your fees are coming in at something like $25,000 the ones that the city of Vallejo itself imposes, but then there's another $40ome,000 per unit that these other uh government agencies are imposing on new construction. So again, that's just tone setting there. We did similar analysis on multif family. Once again, H Vallejo is all the way on the left. Um, Hayward, which I keep saying out loud for some reason, is all the way on the right. Um, Vallejo is once again the the lowest in these group of comparable cities. Um, but still $40,000 a unit of of cost goes to uh fees of various sorts that pay for infrastructure that is required for your community, pays for schools that are required for your community. So these aren't necessarily discretionary things. This is the way those things get paid for. But again just to for level setting our analysis shows that Vallejo is not um out of line and is in fact below average for these comparable cities. Oh keep going. Um all right so I'll pause there once more question. Sure before you go on a couple questions just to help us understand here. um for affordable units in the inclusionary housing ordinance. Can you describe those units? Are they um of equal square footage and quality build as every other unit being permitted? Yeah, typically speaking, so every community gets to sort of decide its own rules. Um the the vast majority of cities that I've worked in require the units to be of roughly equivalent size. They sometimes they allow them to be, you know, maybe 10% smaller for a three-bedroom unit. If your market rate unit is,00 square feet, maybe you could do it at

1,000. Um, and but they're in the same building typically speaking and kind of indistinguishable from the outside from the other market rate units. Great. Thank you. Couple more questions before you go on, if that's okay. Um we've had some interesting things here. So the pipeline versus the actual delivery of units. Are we seeing in Vallejo much difference or delta there between like permitting a lot but not seeing a lot of delivery or is it about equal? We're seeing that in a lot of places right now um because of the that rapid escalation of uh construction costs and financing in the last couple years and and rents or prices kind of flattening out. We're seeing that a lot of projects throughout the Bay Area, throughout the state, have pulled their permits and are ready to go, except they can't quite finish the financing because people providing that financing are concerned that it will cost more to build the building than it will be worth to sell or rent when it's done. Um so a lot of a lot of entitlement um which is sort of the the upper level and then building permits have been pulled but not necessarily actually completed yet uh or even started in earnest yet because primarily of financing concerns. Is there any sort of averages that you could estimate there of what people are seeing? Is it 70% or 80%? Not I don't have a speculating. Okay. No, sorry. And then with the ordinances you talked about in these other cities, because they've been relatively recent passages of these ordinances, have you noticed any sort of effect um in the market from pre-ordinance inclusionary zoning ordinance to post

inclusionary zoning ordinance? Um we for not all of these are relatively recent. The the comparable cities that I've described, some of them go back decades. Um and I would say that by and large there has been an absolute effect u for the overall market for those kind of macro questions that I was discussing the the cost of construction the the cost of financing relative to rents and prices. We see that everywhere. Um there are relatively few communities where uh that have not been affected by those things. With respect to the impact of inclusionary policies themselves, um you know, that's many of them have been around for decades and they've kind of weathered and and been absorbed into the economic uh calculus that developers do. And so they may adjust what they pay for land for example or other things that uh that they can affect in their overall development economics. Um but by and large these these types of policies have been around for for decades throughout the state and throughout the nation. Um and especially the strongest markets have been able to absorb those. Okay. Um, Vallejo, as we showed, is not one of the strongest markets. Uh, and your construction costs are going to be about the same. You know, to for the labor is the same labor that would build in Oakland or Santa Rosa. It's the same people and the cost of wood and the cost of, you know, all the materials are basically the same. There are some other things like the impact fees that I was just describing, like the cost of land that are going to be different from place to place, but the actual building costs are tend to be about the same. And that's why the rents that as rents differ from place to place and from time to time, that's really the determining factor on what's feasible.

Great. Thank you so much. Last one for me before you go on. Um the special district fees. Did you do we identify what what what special district fees coming later? Wastewater recreation. I think there's one more. We'll find it. So in in other cities are they absorbing these into the general fund and or they do not have wastewater fees? Yeah, the um the impact fees are don't really flow to the general fund in most places. They are dedicated to a specific type of infrastructure uh or at least maintenance of that infrastructure but typically the capital costs of infrastructure. Um, so they they don't usually enter the stream of general fund. But I think you're asking what the the sources of funds are for um those other things if there's not an impact fee for them. Is that your question? I'm just wondering whether it's a a difference in the coloration of our bars here that we we call different fees different things. So they get called out, but the fee a fee is a fee at the end of the day. Yeah. Um, so whether we call it a special district fee to do wastewater or they call it a fee for general services, um, it's still a fee to the developer regardless of how we brand it. Very fair point. Okay. Just want to make sure I understand that. Thank you very much. You're welcome. Actually, I want to build on that. You asked I I was having the same question and I I figured parks and wreck that makes sense because that's in some cities. Uh but the county fee I was interested in because you've got Solano clearly has an impact fee. Contraosta, Alamita, and Soma do not here. So is that unusual for our county to have an impact fee?

In my experience, it is kind of unusual. Um mostly it's contained to the city or a special district within the city. Um but do we know what it funds? Do we know what a thumbs I can answer that parts? Parks and and um to either create parts or um to maintain parts in most cases. Okay. Yeah. So most of the time uh parks and recreation correct me. Yeah, if that's correct. Mo most cities have their own parks fees rather than a county fee. Transportation. And transportation too. interpretation. And I'm I'm realizing we have a very long table. Maybe we should just go down the I don't know. Should we just go? Yeah. Should we just go down the line because I'm realizing now that council member Leigu has a question, but I can't see the lights. So maybe for the future when we pause, we'll just snake down and see who has questions. Sure. Council member Leig, you want to go ahead? Sure. Can we go back to on the city of Valo meetings and agenda? It says slide 22 and it city's recent permitting has exceeded unit deliveries. Um you were there losing control. There we go. So, while you've during um this commissioner's questions, you talked about potentially why we see this trend and I would like to ask you, did you dig deeper? Be did you dig deeper in this? Because what I want to know is if you're

doing analysis and you're looking at this and I look at 23 in particular, it's almost at 225 I'm just assuming. And so did you dig in to that number to really see what was going on versus just the broad analysis broad statement that you made regarding overall from a from the population of many cities and so forth and on. But I want to know what does that number when you look at that number what does that number really tell us for 2023 I'm sorry for 2022 and what does it tell us for 2023 because you do not have a another measurement next to it. So what do those numbers really tell us? Did you look at the data? Um, well, we the blue bars here come from the city's uh annual progress report sent to I I Yes, I realize that, but I want to know did you dig into those numbers to really see was it that developers were truly saying for each and every one of those projects that didn't deliver? Was it because rates product or potential service something we didn't get back to? What were the causes? Uh, the short answer to your question is no. We do not we did not ask. So, that's one thing I I think is really important to me. Our city manager is not here. Oh, where are you? Okay. Sorry, I did not see you. Sorry about that, Andrew. So what I really would like to see when I when we are paying a consultant is I see a trend something so vastly different is what does it really mean not generalizations because the other part of that becomes

we're doing a study and we are doing comparisons not just from county not with just in our own county but outside of the regional Bay Area and the reality is each of these areas worked very differently, handle their developers differently. So what are some of those things that we need to consider that might be barriers to individuals who are developing other places getting the work done or all they may be a little slower but they're still getting it done. so that we really have a way to think about our systems while we're talking about even taking on a new policy. And you're not not having that data is not helpful from my perspective as someone who looks at data to inform how do we go forward and what are some of the things that we need to do as a city while we're also thinking about this policy and how we also land in the bigger picture of how others are doing their work. So this is really important missing data from from my perspective in the dialogue. Okay. Um well, we did have uh interviews with six different developers who provided insight about the their projects. We didn't necessarily touch on every unit that's represented here on these bars. Um but the the general uh story that we got specific to their own projects was for virtually all of them, the broader market context was the the major deterrent right now. the cost versus value, the financing costs and so forth, those things that I was pointing out. Um, those were the the kind of macro level issues. So, can I ask you a question since you only chose six out of 225 potential permits that were pulled or whatever the

case may be? Were those the six major developers and how much of this work did they actually have? Um, that is I I don't have the answer to that question. the the particular developers that we spoke to were rep recommended to us by city staff as being representative of the the major projects in the city. So can you tell me of those six developers how many of those projects did they have based on what's right here? I I cannot tell you that in this moment. Okay. So that is a question that I do would like to have answered because I think again when you talk about I took a subset what is the population of that subset how much do they actually have of this total population again is really important when you speak in broad terms and we're making a decision about policy and the fact is that we're doing a study. So these kinds of this type of data from my perspective as a researcher is very important. So, thank you. Thank you. Yes. I want to thank you for this um this time. What I kind of find uh alarming is the income that you grade this off of. So, for example, I was sharing earlier, I receive every year a survey and the survey asks me um how much do I make in my household and it starts off automatic, not my writing. It starts off at 70,000, right? And then the next line item person means if someone over 18, it goes to 80 and it goes to 90. Although that's incorrect because the actual household is less than

40,000. Also too, what I'm also concerned about is I was just looking up some information and as of 2025 uh Santa Rosa there there's this impact fee is actually more than the 12,000 that you put here is actually 13,000 and some change. And one one moment please and bear with me just because I'm just, you know, we're doing a study and I want it to be accurate so that we can make a fair decision. Also too, what's missing is these cities you compared us to have more amenities than Valo do, right? 24-hour transportation. They don't have that. Starbucks, you can roll out of bed at 2:00 in the morning. We don't have that. They close almost. you barely be happy if you get it at six o'clock. So the what I worry about developers who say this and that as I shared earlier is they want to come here and they want to do that and we need it by all means absolutely but we want to make sure that the information you're going to provide to especially because it is a study that is accurate and what are the amenities what is the benefits of a developer coming here and and what are they going to offer us would they be uh would they consider mixed income development, you know. Um, but I I myself personally uh have a lot of notes. I can't read them. I'm I'm like the governor. I'm dyslexic, too. I can barely read my notes, but I write them. But anyways, but my concern is I want to make sure that um when we compare items to Vallejo that is being because it's we had a lot of development happen in the last what five years. Blue Rock Springs. We have some

development there. We have some development over um uh Abber Cunningham Broadway and all that. We had some development even on magazine and Porter. We had some development the last three years. So that that the the graph doesn't really show all that. So, you know, I just want the graph to be accurate in and um and I know this is our first study, but I just want us to be more clear and in in the numbers as my colleagues point out because I I I see a lot of concerns here already in your data with the numbers. Okay. Um you've listed a few things there. One more thing, sorry. And Valo is 21 uh points in low income out of all the cities in Val in the Solano County area. And also Salani County is the highest uh for rent and also to purchase homes out of our surrounding uh counties. And I know that cuz we sit on the the tripod. Um well, I appreciate your commentary. Certainly, it was our uh intention and our belief that we were using accurate data here. Uh it's been vetted with uh city staff to ensure its accuracy as much as possible. With respect to um Santa, you mentioned Santa Rosa's uh fee. Yeah. They have a sliding scale that varies based on the size of the units and the numbers get updated every year. So we tried to again do apples to apples by choosing the the same size of unit for every uh condition. Um so it was certainly our intention to uh be accurate with all of those numbers. Um so but I I welcome your commentary regarding anything you know to be untrue.

I would be happy to email you their data. Um, these special district is 40k per unit. Is did I not hear that correctly or is that what you said? Just want to get that clarified. I the so on. Let's see if I can get my guy. That was page 27. Yeah, let me get back there. Um so on page 27, this is for multif family development. Mhm. So, uh, apartments, um, we show for Vallejo the overall, uh, impact fees summing to about $42,000, not just the special districts, but all combined with the school district and the county and the special district and cities or the city. Okay. So, that was combined, not just the special district fees. That's right. Okay. And I think um I don't have a a tape going in my head, but uh the notion that the the impact fees generally are problematic. I'll be honest, every developer says that everywhere. Um and so what this data intends to show you is that in Vallejo, um it does not appear to us that your aggregate impact fees are out of whack. If anything, they're a little bit below

what some of these comparable cities uh are are requiring. Okay. All right. Moving on. Yeah, let's go ahead. All right. Moving on that. Okay. So um then what with all of that context we try to assess the feasibility impacts of uh what would happen if you adopted an inclusionary housing fee or inclusionary housing requirement. And so that's a matter of uh understanding what types of housing we might be talking about here um that you know based on the density and and type of actual building. um calculating what the costs of constructing those units might be and the value of those units at both the market rate prices and the affordable prices. Uh we did speak with developers uh to vet the assumptions to make sure that we were on the right track and in the right ballpark. Comparing those costs, the overall costs to the overall value to see if there was uh adequate if the the value of those units exceeded the cost in the first place. That's just basic feasibility. And if the value of those units exceeded the costs, u by how much is does that happen? And is there enough of a buffer there that you can ask for still more um community benefits in this case affordable housing, but it could equally apply to added impact fees or whatever there there might be. So that's the exercise. Um, so we looked at five different types of housing. Single family detached units at 2200 square feet per unit. Uh, smaller single family units at 1,600 square f feet per unit. Uh, condominiums at 1,200 square feet per unit, so

two-bedroom average. Uh, lower density multif family at 30 units per acre. So kind of walk up woodframe construction. um with an average two-bedroom unit size and then higher density multif family at uh 65 units per acre which is typically requiring some some form of structured parking whether it's wrapped around a parking structure or potentially under the building as a podium. So again looking at five different densities and both for sale and for rent. Uh these were our prototypes that we again looked at what's being built in B or has been built in Vallejo and surrounding communities as well as um what your zoning allows. So this slide and the next several show the results of our analysis. Um we estimate that allin the costs of construction for a single family detached unit, the larger one at 2200 square ft fourbedroom unit. Um, when you account for the cost of land, the cost of construction, the cost of impact fees and other soft costs, um, like design and marketing and financing and those sort of things, it costs about $800,000 to build that, uh, unit. So, a little less than $400 a square foot all in with all of those things that are required for development. Um, and a uh developer profit margin as well that's baked in there, too. Um, so we estimate that that happens to be about what the market will bear for that same unit here in Vallejo. That uh prices for relatively recently constructed single family homes are in the neighborhood of $375 to $400 a square foot. So it's kind of even. Um, what we show in the various bars though is the the value of those units if they

are required at something less than market rate. So the first bar shows a very lowincome household. If a ve if it's a very low-income household earning 50% of median income for a four-bedroom unit size, so a fivep person household, they could afford to pay $128,000 for that unit that costs $800,000 to build. So, the difference there, $660,000 in this case, um, is the subsidy, the implied subsidy if you were to require a developer to build a 2200 ft home uh, and sell it for $128,000. And we do that math across the board here at various income levels and show that even at moderate income prices there's still a significant subsidy uh for these units which means that the newly constructed homes in Vallejo are being sold to households generally speaking uh that earn significantly more than moderate income. They're earning 180 to 200% of median income uh to be able to afford a brand new house in this market. Um so on the one hand that means and it's it's relatively compared to the overall community it's relatively wealthy people that are able to afford these homes. It also means that it is a challenge for developers uh to be able to pro produce these units at the lower income levels that you might seek from a policy perspective because the subsidy required to do so is hundreds of thousands of dollars per unit. Um, and so the more of those that you would require, the more challenge the overall project has for feasibility. We do the same kind of analysis for each of the five different product types. This one is the smaller lot, single family. We think that those cost a little over $600,000 to build. They're they're smaller units at 1,600 ft² instead of 2200 ft². Um,

and so we think those cost a little over $600,000, but again, based on market pricing, we think they're actually worth a little less on as a at market pricing than they cost to build, which means that they aren't feasible under current market circumstances. That's not forever, but that's where we are today is that we think it costs more to build these units than they can be sold for at the end, even if they're all offered at 100% or even if all of them are offered at market rate pricing. On the other product types, we have similar results. Um, condos we think cost because we're into a multif family product type now that costs more per square foot to build. Um those units we estimate to cost over $700,000 a unit and to be worth closer to $400,000. There isn't a huge condo market here in Vallejo or anywhere in Solano County. It's kind of an unproven product type and the prices for them are relatively low. Lower density single or multif family. Uh again, we think those cost uh about a little over $500,000 a unit to build and based on rents that you can achieve today. Again, not those rents that we were showing as the overall market average, but you know, a two-bedroom unit for relatively newly constructed two-bedroom unit in Vallejo, you could get $3,000 a month for that unit. And yet, the value of that rental stream does not achieve the uh cost of construction in today's current cost environment. Um, so we have the final comparison here. The blue bars for each of those five different pro product types. The blue bars represent the cost of of development. The brown bars represent the value of those units at market rate pricing. And you see that for four of the five, we think there's a significant

feasibility challenge today in today's market. Um, and the only one that appears to be feasible to move forward today is the single family detached, the larger single family detached units because they can command prices in excess of well close to $800,000. Um, and those can afford to to pay the costs. The others are are more challenged in today's market. But again, that's a temporary condition. You have had development in the past, you will have development in the future, but this is where we are today. Um so the conclusions that we've reached with respect to this data is that uh development has been slowing. Um you saw in the data we had on construction that Vallejo represented a much more significant portion of uh development 20 years ago than it does today when you compare it to the county. the current development costs are very high uh relative to values and uh it's hard for many projects to be profitable. Um that uh de developers that we've spoken with um have expressed concern over any policy that would increase their costs of construction or decrease the values of their developments under current market circumstances. And so we are concerned that uh the imposition of a inclusionary requirement today at essentially any level um would make projects more difficult to to finance in current market circumstances and would likely slow development uh relative to what you might get if you didn't have the policy. Um I don't say that lightly. I've worked on inclusionary policies throughout the state for decades and typically they work but we're in a

market circumstance right now where it's hard. Um so we have outlined some potential next steps. One is to continue developing the policy um and suspend its enforcement. you know, keep working on the language of a of an ordinance and what you would like to see. Um, but say, "Okay, we've got it in place, but we're not going to enforce it yet until some kind of market cycle shifts and we think that we can actually get the units to happen. Another uh option is to continue working on the policy and the ordinance and just adopt it and try to enforce it right away. But recognize that they that may have a deterring effect on housing construction in the near term in your community. Um but the policy would be in place so that when the market uh comes around, it would be baked into the math that they're doing on their project. And finally, of course, there's always the option to not choose to to move forward with a an inclusionary housing policy at this time and revisit it when uh there is some other uh market circumstance in the future. Um so, unfortunately, not great news where we can say to you could you could get 25% very low income units all day long. We don't believe that's the case under current market circumstances here in Vallejo. Um but these are what we see as the the options available to you um for tonight's conversation. So again, that's the the last slide we have for the inclusionary section. Um so I'd like to pause there again and um see what kind of uh discussion you'd like to have or questions you might want to have. Thank you so much. And so I'm thinking I'm I got my eye on the clock and I want to make sure we have time for the commercial linkage discussion. So I wanted to check in with staff, whether it's the city manager or the planning

staff on what what is the sequence of next steps on this and what information would you like to get from the two boards this evening? Yes, that's a great uh question. So the reason we're here tonight is sort of to get a sense of what direction you would like to go. That doesn't mean actually, you know, taking an action tonight. Um, but we really wanted to have an early check-in with you all to see what we're seeing or show you what we're seeing and have an indication of whether you would like us to continue to develop an ordinance or not. Uh, because there will be, you know, an intense um, period there where we're working with our city attorney's um, office to mold an ordinance after a model ordinance or maybe something more specific to Valo. Uh so really what we're looking for is going around the robin with both um you know bodies so that we could get a sense of what direction we'd like to go. As you know, you're here uh together tonight because this ordinance if it gets adopted um down the line uh would be in the uh planning section of the municipal code. So uh any ordinance would have to go before a planning commission for a recommendation and then um obviously to the city council for adoption. Um, okay. I'm I'm thinking maybe about 15 minutes of I'm sure folks have questions. I'm sure we could talk about this for hours, but I we'll try to keep it tight and I mean, do we want to hear from planning commissioners first? Do you want to go through the chair? Yeah. Um, first, is this open to any public comment? Great question. Because I know that there's some public out there who might want to chime in. little bit different because we just have the one item but the both items are part of that one item. Should we potentially take public comment now on the first item? Yeah. Why don't we see who wants to speak on the inclusionary zoning and we'll invite you all up? I see Miss Leat.

Miss the whole logistics in this room. You can come on. All right. So, how many folks do we have? Jimmy, did you want to speak on inclusionary zoning? Okay. It looks like we have three speakers, four speakers. I don't know that. I think we might just have them come up because it's a quite a it's quite a track with the cards. Um All right. Yeah. Um Leah, do you want to go first since you already turned yours in? I don't know, man. If we can put a timer up there. Okay. Thank you. Good evening. Um some of these numbers I would have to question a little bit, especially about the rent ranges in Valleo. Um, right now for a twobedroom, you can't find a two-bedroom for under $2,200 a month. Um, so some of these numbers seemed a little bit skewed. I'm not looking at the average, but we're looking at where they're showing the range of $1,000 to $1,500. There's only 16% of the rentals available at that range. That's a very low range. when we consider that 40% of the people that live in Valleo are renters. So they're not getting opportunity to get any type of um wealth. They can't build wealth because it's all being extracted out of Lao because everything that's being paid out except for the few houses that are owned by Valo rent uh own homeowners which we have a lot of good people that are doing a good job about keeping the rents down. But by and large the the uh um people that are here and extracting money are from corporations. And so we have to keep that in mind. I've lived here for 40 years.

I can't remember the last time that we had affordable housing built other than subsidized housing. So, we can keep pushing it down the road saying that if we can't afford it and it's not a good time now, but we have to keep in mind that we are not being able to build generational wealth here in Balo because people can't afford to buy the houses. It may be cheaper than San Francisco. It may be cheaper than Oakland, but for our median income, it's still out of the price range for many people. And if we're trying to turn the tide and get stabilization here in Valo, we've got to start thinking about how do we make it so that people can afford to buy homes here. And with the type of jobs that we have here, because you can buy a huge home and and pay all this money out, but the money is not being spent here because the people are working in other cities. and by the time they get here, the only thing they're doing is living in those houses. So, we have to keep all of those things in mind when we're talking about this. It may not be as profitable for corporations to build affordable housing, but we have about four or five housing projects that are on the books right now. None of them have anything in the wording of those permits for affordability. So, it's all market rate. They've taken up the majority of the property, the land, the big slots, swasts of land that we have here in Balo. There are no big portions of land that where people can build uh developments right now. So, it's a lot that's going to have to be in infill. So, infill is going to be a little bit different in what the cost is because I didn't see that as part of what you're considering as far pricing. And so, we need to keep that in mind. But please do keep in mind that 40% of people living in Valo, it's almost 50,000 people here in Valo that are renters. Thank you. All right, Jimmy, go ahead. Yeah, go right ahead.

Sorry. Thank you, folks. Uh these are just a few suggestions that when we do get around and hopefully we do in my opinion get around to to this ordinance that um that there no there be no height limits in that ordinance. I I'm mainly focusing on downtown. Uh I'm a fan of highrises and uh we've got an 11 story and we've got a a sevenstory. So the president is already there. So, let's not limit uh put it in there uh in the ordinance. Um yes, put in the ordinance encouraging wording that will do mixeduse buildings, retail office on the lower floors. Um and then residential above. Uh another idea put in the ordinance the possibility to our developers to do parking but public parking within the building. maybe the second story or something good. Half and half for tenants and half and half the other half for uh for for the public. So someday when we get to the idea that we oh my god there's no parking in downtown, we've sort of solved it solved it building by building to to uh encourage the developers to do that. Um that's it. Thank you. Thank you. All right, Paul, go right ahead. Hi, my name is Paul Ty. I'm on the executive committee of the Sierra Club in Solano County and I live here in Valo. Uh, first of all, I want to commend the staff and the uh consultant for getting this report to us um just almost on time and the commercial linkage fee ahead of time. Uh it's just

a thrill really to be having this conversation after many years of of of waiting. Um, I uh want it it would be nice if we had a little bit more detail from the consultant on a couple of uh to me obvious uh options for providing uh affordable housing at uh below commercial rates. Uh one of them is simply to utilize some of the large tracks of land that have become available uh just recently here in Valo, some of which are actually owned by the city. And another one is to uh utilize the services of a home builder here that's uh produced thousands of units of uh affordable housing and shipped them out of town. And I think you know who I mean factory. Um the consultants report refers to uh buildings that are uh on commercially available land at market rates and uh stickuilt um dwellings and those are the top of the line right now. So I think there are many that's just I'm a lay person. I don't understand all there is to know about development for sure, but to me those are just two obvious things that ought to be considered in this inclusionary zoning ordinance. Um, this um chart that I got from the county in March of last year just uh kind of burned a hole in my heart.

Uh this is a developer survey that was sponsored by the uh county and all the cities through the CAP um um Solano program. uh it it lists the housing cost burden and uh it shows that 18% of all the households in Valleo are spending 50% or more of their income just on shelter. We've got to do something about it. Thank you. Thank you. And then I think I saw Crystalall back there. Go right ahead. Good evening, commission, council, community, city staff. Thanks so much, Hector, and all the folks who worked on this. I want to uplift what's already been said, but just speak directly um to what was presented to us tonight. And uh I just want to go through a few things. So, first specifically, yes, the rents are too dang high. Despite what these numbers may suggest, the reality on the ground working with so many tenants, the I uh worked with a tenant actually the complex over on magazine that you mentioned that's paying about 2,300 for I believe a studio or onebedroom. So um I'm equally concerned with these numbers. cookie. Um, so these numbers, my opinion, really aren't realistic and BHJC will soon um be releasing releasing a report that we did that indicates very low income specifically in zip codes like 94589 and 94590. And just reflecting on this, something that just stood out is like I mean everything's profit driven and like speculation sure does hurt, right? When we see the numbers, when we look at

number 13 about the RFO rents are modest compared to the county, the wages are also quite low and the wages haven't gone up. And this really doesn't reflect the disparities and displacement that exists every day. And again in a fully profit focused and developer focused landscape that's how it is unfortunately which is why we uh push for things like social housing and ideas like community land trusts. Um also agree with Dr. I leted you about wanting to dig deeper. Um, as regards to permitting and the developers were speaking to, I think six of over 200 um, is simply not enough. And when it comes to the construction costs having risen faster than rents, I think that speaks to the fact and why uh, we need things like rent stabilization and also thinking about how the wages haven't really raised. Um looking at the numbers I just have a lot of question when we talk we say things like belo's comparable and belo's below average. I think we should accompany it with very specific data and specifically speaking to the development prototypes. Uh I see that three are specifically designated for sale, two for rental and the two for rental are significantly sw smaller in square footage. That may reflect just the numbers in our city that we have so many single family detached homes. um you know dealing with disparity via the lens only of the developer is is not the only way and we have to deal with the disparity in different ways. um and consider facts and data specific to our county. Things like our per capita spending being the lowest of all nine barrier counties. And just looking again at those numbers, 108,000, slide 26, all of them. I mean, it says we're not able to accommodate in any of

these slides. And slide 26 specifically, very low income, you have $108,000 for a house. We know that doesn't exist. So rather than looking at it specifically only from a profit driven developer driven model, I think we need to think more creatively. We're all really smart and creative. Thank you. Thank you. Anyone else that wanted to speak on the item? Through the mayor, we do have one speaker online. Let's call them. Make that two. Kathleen Dop, please unmute yourself. You have the floor. Hi, Kathleen Dhip here. First, I want to clarify up the volume. Can you hear me? Okay, we're working on it. Am I too loud or too quiet? We're We're turning up our volume. You're You're just fine. Okay. Okay, we're good now. Go right ahead. Okay. I might run a little over. Um, so Okay. So, I wanted to first clarify. We're not asking the question on the table isn't how do we get more housing or more affordable housing or is even is there a need. It's are we going to ask each person who comes in and builds a 100 units to make at 10 of those subsidized or that's what an inclusionary ordinance is. It is not funding it with public money. The Mr. Smith kind of buried the lead. Housing other than single family homes at $800,000 are not feasible to build. You haven't gotten any development. This is not a market cycle issue. This is the circumstances fileo is in. I have done these studies. I would actually like to suggest that EPS you provide the full EPS report. This is just the PowerPoint. Can you distribute? I've read a lot of those. Those are usually about a 100page

report. if you make that available. Um, there's many, many things we can do to encourage housing. I don't think this is going to get us the bang for the buck. It's going to take a lot of work. There are a couple things I heard that were interesting. Um, and I'd like he if you can ask Hector to explain more, what is this risk that we might not be eligible for grants if we don't have an inclusionary policy? We might want to look at that closely and think about maybe we do have an inclusionary project that projects over 200 plus units would have this. But we want to fill in our missed lots. We want to encourage development. There's many things you have city-owned sites. Those could be um you could offer them and have the inclusionary done on those sites. You have a lot more discretion when you're also selling land. uh at least one of the projects that was approved in the tenure when I was on planning commission. It's on fair grounds um and it was to include an inclusionary because they were using one of the state um SQ exemptions that required you include an inclusionary element. So there is a pro recently approved project with an inclusionary element. uh at the time your staff said you were staffed to enforce that. I don't know that you are unless it's through the housing authority. I really want us to focus on we want to get people to invest. I think this is a lot of work. I would guess it's $200 to $300,000 more consultant fees for you to work on drafting this ordinance. It's a lot of staff bandwidth. You've got a lot of other places to put attention right now that will get you more bang for a buck on getting housing in town. This essentially, think about this. An inclusionary policy is a lot like when you go to the grocery store at the end they said, "Do you want to write roll up to put some money toward people who need

food?" It's just that it's asking the market rate developer to come in and offer up some of its project for no revenue. But we are not getting market rate housing and it is not a market cycle. It hasn't happened in 25 years. Fairfield Place has got this. We need to look at the systemic reasons and the upgrades we need to do to attract investment in town. And what you all did last week, the meeting was in person focusing on public safety. All of this, preserve your own personal policy bandwidth. This isn't the time to do an inclusionary ordinance. We're at we're at time. If you can wrap up. Thank you. Yeah, appreciate it. Next speaker, Melvin Cohen. Please unmute yourself. You have the floor. Absolutely. Thank you. Uh good evening, Mayor Source, council members, commissioners, uh and staff and community. Uh today I'm really appreciative of this conversation. Uh my name is Melvin Cowan, founder of Enough Housing and developer of the Legacy Village at Maria's Place. Um I want to first thank the planning team at EPS uh for their rigor and what we're experiencing today in today's presentation and the critical questions uh that are coming up about data. I do agree that we need to dig deeper in the data. Uh Dr. Leedu's comments I want to raise that uh the findings confirm what many of us already know. The current market conditions are tough uh not only for market rate developers but also for missiondriven affordable housing providers like myself. Uh what's clear from tonight uh is that the city may not move forward with inclusionary zoning or even linkage uh fees at this time based off of what the report is showing. Uh and I agree that now may not be the right moment for enforcement, but we can't let policy paralysis stall progress. Uh Valleo still lacks a functional, wellresourced and coordinated system to fund, support, and encourage affordable housing development. Uh projects like the Legacy

Village are stepping up to meet the need. Uh we're transforming a long motel uh into a permanent supportive housing that's focused on health and workforce access with traumainformed design on-site behavioral health uh services. This isn't just housing. It's an equitydriven strategy to stabilize our community. So if we're not ready to move forward with mandates, let's move forward with incentives. Prioritize projects that address homelessness and behavioral health. offer pre-development support, fee waiverss, and interdep departmental coordination, and build the foundation of a permanent affordable housing trust fund. Uh we need more than a pause. Uh we need a path forward. And so let's use this moment to create a system that doesn't just permit affordable housing, but actively invites it. Uh want to thank you all so much. Thank you. All right, with an eye on the clock, um, if we can just try to streamline our comments for now to get staff the direction they need on this, we may be benefited from just starting with the planning commission if folks have comments. Can can I just jump in really quickly before we start with the comments? Yeah, go ahead. I just want to add if anyone um you know doesn't quite feel comfortable or feel ready to provide direction to staff, there are other options available as well. Um if you'd like to just request that we um dig into some of these topics and get more information and come back, we can do that. Um or if you want to hear the rest of the presentation too and and see what um information is presented for commercial linkage, we can hear that. So you can talk to them both, you know, next to each other side by side. Um we can do that. So, I just wanted to put those out there before we get too far into the comments. Thank you. Appreciate that. I mean, we're almost certainly going to run out of time, so we probably will need to come back. I was seeing some nods. Um, I don't know how we feel about commercial linkage. It would be better to just

focus on the inclusionary zoning right now. Um, but why don't we start hearing comments and then we can make a decision. Well, number one, I would like to see that report myself. Um, I'm I'm I'm a data person as well and I want to see the entire report before I make any sort of um recommendation to staff at this point and that's where the meat of the matter really is. You just go down the line quickly respond to that comment. Um, there is not another document that you have not seen. We we have uh tables that go behi beyond this. There is no separate 100page report as was described. Um we have tables that show the proformas of how we got to these conclusions and we'd be happy to share those through staff. Um but there there is not an additional document somewhere that's not been provided to you. So what are we looking at when you talk about data tables? uh the data tables would show it's sort of a what we call a static proform that shows the various assumptions of uh how big the units are, what kind of parking they have, things like that. Uh what the costs for labor and materials are, the cost for parking, the cost for land, um all the various components of uh the development costs and then we compare that to the various components of value. So we show either the prices that are achievable at market rate and versus affordable rents um and also in the case of uh rental housing we have to account for not just the rents that are paid but the operating expenses of that development and so forth. So it's a a whole proforma table um that shows you

know top to bottom how we arrived at these numbers of what we think it costs to build these different types of housing versus what we think they are worth. Um so it just provides more transparency into the calculations. I would like that. Sure myself. You know I feel like we um I like inclusionary policy. We This would it would have some pros and cons to it obviously because there is a high percentage of residents that live here that are on social services and without perpetuating um instead of giving a hand up, you know, giving a hand out sort of scenario. I think what we're the piece we're missing here is the collaboration piece with It's it's almost as if we're relying on a developer to um come up with a solution for our own problem. And we we actually have to get tired of doing that. Um that's one thing. And then two, you know, there are so many cities that collaborate. There are side uh Richmond specifically that are able to do this in youth field. they're able to work with, you know, Richmond neighborhood housing services. They're just really able to get it done. Three, we really should probably um start looking at a an amendment of sorts where maybe we don't require um the developer to build the units, but you require them to pay a fee and we build our own units. I mean, we have to get to that point. We do have a housing authority. Um, and it's time for them to, you know, maybe veer out into that area. The city of Fremont, they have

their own BMR program. They don't rely on developers to build for them. Some of these cities like Pasadena, they use that money in an opportunity fund to create the housing themselves. And I think we have to get to that point to where we're actually creating, you know, being solutionoriented and providing our own answers to our questions as opposed to heavily relying on developers. Be honest, they do not care. They do not care about us. They don't care. I wouldn't either. That's not what your their job is not to care about affordable housing. They're there to make money and we are here for the residents. We are here for the citizens and we have to show that and I think we're kind of missing the point there. So hopefully we can sort of adopt this opportunity fund where it's in lie of so we're not forcing a developer in this very tumultuous type of um real estate market to build houses build you know inclusionary housing. They don't want to. That's the reality. They don't want to. So give them an in give them give them an out but make them pay for that out as well and hefty not 100,000 not 250,000 a very hefty in so that we can start building our inclusionary housing project. So I wanted to start off with saying thank you for the presentation. Um I found it to be very informative. Uh but after reviewing the presentation and hearing the comments and hearing the public comments, it brought a lot of questions for me and one thing I'm thinking about here as we

have city I mean city of Valo residents. What I'm not sure what was presented on in here in your presentation is what is the the social economic makeup or the economic makeup of our residents here and considering the units that we're trying to build. How do we bridge that gap? How do we get there? What are the the risks? You had mentioned some assumptions. You had touched on some risk uh in this presentation. But I think will be great to understand what those risks are, what those assumptions are and what's the path forward for how we can actually bridge that gap to realistically get to the income levels of city residents even though we have market rate for these homes but how do we bridge the gap and I think that will be something great to see moving forward because I think that will give us more of an informed decision on how you may be able to tailor that policy and moving forward because um one idea of yes I think we should move forward and think of a way to meet the demands the housing demands for the city of Valleo but understanding what those gaps are and how we mitigate them going forward or even if it is if we are able to mitigate it so I think that would be very help helpful in terms of just moving forward making a decision and that will be something I would actually like to see I don't want to say it's maybe an economic impact board or our economic report, but something maybe like a prototype of that sort that kind of gives like maybe a realistic perspective of here's an example of a a parcel of land that costs this amount of money and hypothetical say a developer is going to build so many units. This is what's going to be the cost in this current market as of right now. Those who are able to afford it, could they afford this? Is that even feasible? Okay. Do we

have any programs or anything available or or assistance that might be possible that we can steer them to to meet that because I know one thing we don't want to do, we don't want to discourage business but at the same time we do not want anyone excluded as well. So thinking of a way how to bridge that together, I think that will be very helpful. We like to see and that's all I have. Thank you so much. Um, couple quick questions for me. I'll try to keep it brief. Um, do you know, um, obviously, um, one Bay Area is incentivizing, uh, inclusionary housing ordinances and trying to give us reasons to want to have one in order to be able to participate in those kinds of grants. So, is there a minimum of what is an inclusionary housing ordinance um, to be uh, qualifying for those grants? Yeah. Um, I don't have the answer to that question. Hector, do you and you don't necessarily have to answer it. I'm just like trying to tee up what would be some next steps. Yeah. As far as OBG is concerned, it's not a requirement. Um, the point that we added to the slide about OAG or granting eligibility is just to say that MTC has a grant program that we score better for if we have these types of policies in place. So, there's a transit oriented community policy that we have to meet by early 2026. And there's various ways to get to the minimum compliance level and inclusionary and other policies are ways that we can you know add the math to meet that minimum point in our favor as they qualify. Okay. It'd be interesting to know what what is the minimum qualification for inclusionary housing element and if uh inloo fees only would be uh considered an inclusionary housing ordinance or not. Um as far as that point qualification maybe our city attorney could speak to that. In most cases where I've seen a policy in place um there is a minimum

percentage requirement and as an option uh cities allow developers to pay an in a fee in lie of meeting that minimum requirement whether it's 10 or 15%. So typically they go in combination right so that's actually the definition of an inloo fee. You are paying the fee in lie of doing something that you are regulatory required to do such as construct the housing. If you charge just a fee, it's a different type of study. It's basically an impact fee where you're saying you're taking all land off the market and therefore applying additional pressure to the need for affordable by building only market rate and therefore you are paying for the impact of that if you will. That's the kind of that opposite side of that particular coin. We haven't looked at that piece because in the end the what will the market bear is kind of a seinal question when you start to look at the question of if your fee is too high regardless of which it is an inlue fee for a regulatory requirement or an impact fee where you set it at some point it is the cost to construct exceeds the ability to pay regardless of how you look at that and therefore what you get is no housing as opposed to housing that includes an affordable component. Um, now none of those are looking at and and the consultant did not look at um I don't believe you looked at other ways to incentiv I don't incentivize isn't quite the right word, but so you know some developers will build affordable housing because they need the um

I'll call it lending incentives, right? So they need the tax credits or the so they're offsetting something else with those tax credits in order to build that project. This program that we're talking about right now and the study that was done didn't look at those other components. Right. So, um, with the market, just real quick, is the if there are any inclusionary housing ordinances that you know of that are somehow market-based that have a market trigger at which point the housing ordinance is triggered and there is a requirement to do inclusionary housing as part of your development and if it doesn't pencil out for some market-based measures, then it does not apply, right? Um I am not a we we've had a lot of conversation with staff about this very idea. Um and I'm not aware of any uh such policies that specifically in their ordinance say when X happens then we start. Um as a practical matter there have been cities that have in down markets suspended their program for a period of time until they see improvement. Um there have been places that have gone from not having one to having one. Um that have decided to kind of ramp up and phase it in. So they're not going from zero% this year to 15% next year. They might go zero this year, 5 10 15 to allow developers and land owners and such to account for that in their programs. Um, but specifically within the ordinance itself, I have not seen one that says when rents get to X or mortgage rates fall to Y or whatever, then we start. Um, but it it is absolutely an idea that we've tossed around and and might be an interesting approach given your market circumstances. I think it's an idea worth studying if the if the effect is

we want to actually have include you know affordable housing and having an arbitrary fee that goes on developers that means they're not going to build anything um when we have a housing shortage period whether it's affordable or not um I think that would be the most prudent approach to study at least what would be the market conditions where we would trigger it on what would be the market conditions where we would turn it off whether that's included in the ordinance or something that we have at our discretion. Thanks. All right, we've got about 18 minutes, so we'll try to do a lightning round down here and then we can decide if we want to try to whiz through the uh linkage fee, but go ahead, Vice Mayor. Thank you. And I'll I'll keep it brief because I I don't know that I have um enough information to give direction. Um I don't know that we've actually even really stated what the problem is that we're trying to solve. I do agree with what Commissioner Beasley Stanbury talked about in that we need to take this on and and this is probably something that we need to solve ourselves versus waiting for developers to solve it for us because it's never going to happen. Um some of the the data for that that I would look to the staff to try to get is for housing that's been sold in the city of Leo how many of those houses have been sold by or sold to other Valo residents. In other words, are Voya residents moving to other houses or are all of the houses being consumed by our our neighbors and communities and people moving in because it's cheaper to live here than to live somewhere else? And therefore, if we are going to build additional housing, will it just be consumed by all of our neighbors and not really help anyone in Vallejo? I mean, that's that would be data that I would want to see if we have any uh way of getting that data before we can make a kind of decision. But I agree. I think that we need to we need to look at this as something that we need to look at. I mean, I I I sit here and I try to imagine, you know, the 100 million that we spent in the last 10 years on on housed, if we were to pump that into market rate or or lower income housing, what kind of impact that would

have on our community and if we had that money to spend through impact fees and and different fees to developers, could we do that same thing for non-homeless, but people that are looking to purchase versus just rent an apartment uh in Vio. So that's kind of where I'm at right now. Thank you. So I think fundamentally we have several issues while we're talking about this that we as a city need to deal with and we've had one report regarding the building of some of our affordable housing that yet we have not implemented the recommendations for. And there's this saying, we can have all the policy we want, but how does it get implemented? Do we have the competency in our city to do the work that we need to have done? It's really important. We also need to determine, and I've brought this forward, and it's been brought forward today, we don't have developer impact fees. That's a travesty because if you have developer impact fees, you can do exactly what Commissioner Stanberry talked about. But even if we do have developer impact fees, do we have the staffing, the competency on staff to be able to get the work done? That's really important. And so I would suggest while we're talking about building determining what our inclusionary policy is going to be, we really need to look broader and determine many several things that is about how we're going to solve for affordable housing. What we're going to require of developers every time they build

something here. There are already models to do this work. It It's not rocket science. We can look at all the different models throughout this county, throughout the Bay Area. San Francisco does it, Richmond does it. A host of cities charge developer fees and build homes. their housing authorities do them or they do them in combination with a department in the on city staff and housing authority. There's a lot of ways to do this work and be able to look at those who are rent burden who are 40% renters where some literally could own if we could build affordable housing. And can you do that with having an inclusionary policy? Of course you can. But the question is first of all, what is the foundation in our city staffing as a city to do the work? And that's really what I want to talk about is where is the policy that we're bringing forward, the changes that we're going to declare on city staff, the competencies we're going to bring in. So we really can think about how we're going to lay this policy out because it really can be a trifold policy that deals with the different things that we need for affordable housing. But before we can do that, we need to determine what is the infrastructure under the policy. And if you don't have infrastructure, we can talk about policy all day long, but it will not get implemented. It's not good enough to spend another 500 hours on developing policy until we make a decision, and I'm going to say this to our city manager, until we make a decision about how are we going to build out staff infrastructure, whether

it is we're bringing in staff, we're helping staff build the skill set, we are going to partner with a particular set of contractors where our staff are going to work alongside them to build this competency. If we don't do that, you can talk about policy all day long and it's not going to work. So that's what I would say my instruction is what is the infrastructure for the city to begin to really think about the right policy to have in place around affordable housing around market rate and around how we are going to have leverage developer fees. Where are those triggers all going to be? That's what I want to understand. I don't want just another policy. I want to know how we're going to do the work with a policy. May I respond to that with some thoughts? Um so just to to circle back and and remind everybody of the context of this. Um the intention of the study session, there are lots of issues for the city to consider and discuss related to affordable housing. For this specific initiative, we asked the consultants to do a very specific thing that was to look at the essentially the market feasibility of an inclusionary ordinance. Their scope was not to identify the full range of different or or the best strategies to help advance affordable housing. So they had a very narrow scope and I know that's just a tiny slice of the problem we're trying to solve. But I just want to remind everybody of that context so that the comments can be as well focused as possible to help advance this specific work. I absolutely agree that we need to have a larger conversation. I think one thing that also is important to keep in mind is different strategies are going to require different actors to play different roles and a traditional

inclusionary housing ordinance. If you take out the inloo fee component if you have an inloo fee then somebody needs to manage that and I think our uh internal limitations related to having our own affordable housing program have already been discussed in relation to a bunch of our projects. we don't have a lot of staff to work on developing our own affordable housing. That's something I think we should develop over time. But a traditional inoff um ordinance where the developer is simply going through a normal development process but having additional including additional units that are um affordable um and restricted is requires a relatively small amount of staff work. And so I don't I think it's important that we differentiate the resources that are needed and the constraints related to different um strategies. And I have to say that a traditional inclusionary housing ordinance is has a relatively low um requirement for staff uh involvement and support. So as we're thinking about these different strategies, I totally agree that it's important to think about the the requirements that underlly them, but I don't think they should all be grouped together. There are some strategies that require a lot of staff work and some strategies that do not. And some of the others that were mentioned and I think might be more successful in the long run do require a lot more infrastructure and support. So, thank you for that, city manager. And while I would agree that we're talking about inclusionary housing, I think what's really problematic here is where the city is today around the housing conversation is extremely fragmented and it makes it very difficult to pull it apart because when you talk about being s really truly successful in doing that work, we have

to be honest that we have not done it well. We have a report that tells us that. And so again, we need to get down to what are our root cause issues and how do we solve that so that we can have the different bubbles and we can isolate those bubbles and they do have similar context and issues as it relates to the infrastructure. Housing is housing. And when we're missing pieces of it, when we're missing fundamental competencies that help us do certain work, we're still laden with certain issues. And we need to tease them out and lay a foundation so that we can look at the different bubbles and start moving towards those bubbles. What do we need for this bubble? What do we need for that bubble? But the reality is there are a set of competencies that are needed for this whole housing bubble no matter how we break it out. And so I I stand on that. I'll be very brief. We're down to eight minutes. I don't know. We're going to get to the other one. Um I do think um I think we can't afford not to do inclusionary zoning. Um I I would imagine this challenge is only going to get more difficult as time passes. I agree with what has been said. I think we do need more information and I mean I'm sympathetic to making sure that we're not accidentally doing harm, trying to help and then harming by then doing something too extreme and then housing doesn't get built at all which doesn't help anybody. At the same time, you know, two things come to mind. First, I see all these other cities that have impact fees that are higher than us and have inclusionary zoning and housing is getting built in those places. So, it is penciling in those places. You know, maybe not maybe

it's a little pricier than Valo, but I mean Fairfield has higher impact fees than us and their prices are not higher than ours. So, I I would want to dig in a little bit and kind of push on that profitability piece. And then the other piece is I would imagine this data came before the governor. I'm not going to say gutted squa, but but took a bit of a chunk out of SQUA. Uh that might make the projects pencil a little bit better than they did before. So I I do think we should continue to pursue this. I don't know that I think we need to do it very thoughtfully and I appreciate the vice mayor's comment about who's the housing for because one thing going through my mind especially thinking about commercial linkage we have so many people in Valo that work not in Valleo they leave they leave here they leave our county to work we house people in other cities that that that work in other cities that can't afford to live in those cities so then they live here and they push our workers out up county. And so, you know, we've got to think about how we create jobs and grow as also simultaneously with working on housing affordability, we have to work on getting local jobs so people can reduce commutes and get better jobs so they can afford housing because the prices certainly aren't going to go down. Um, they're only going to keep going up. It's just a matter of how fast. So, I think I that's where I would like us to go. I'd like us to talk about have a conversation as well about where folks are where where the jobs are and where our wages are and aiming for people to be able to afford to live where they where they work. Um, okay. Council member, thank you, Mayor. And generally speaking, I I generally agree with everything that's been talked about here, and I think we've identified we have more questions than we do solutions at this time. So, I think I I think in my mind the long and short of this is is we need to get past the I think I think we all understand that that it's going

to be it's it's difficult and more costly for construction, but we need to be problem solving at this point. We need to be outside the box problem solving. Identify those cities where this is where there is inclusionary housing where it is working and how how we can um implement that or kind of take that facet of that that would work here in Valo. And I think that's the next level that we need to get to. But I think we still do uh do need to take a deeper dive specifically looking at district specific of how this is going to work in each area because what's going to be built in district 1 is definitely going to be cost different from what's built in district 2, 3, four, five, and six. So I think that's the deeper dive that we need to get to from a cost analysis standpoint. But once again, I think we need to get we understand it's going to be costly, but we need to get to the point of problem solving at this point and we need to be outside the box problem solving moving forward to the chair. Thank you so much. Um I want to first of all say thank you so much for clarifying um to our city manager uh because to me um I seem that we have two questions here. bill units on site versus in loo fees um poses incentives and fees with low dollars. Um those are our thought those are two ask from what I can see. I would like to see if I can get a copy of I think I want to make clarify did I hear someone say that we already have an occlusionary housing plan policy. It just haven't been enforced or we're building on it now. Is this our first conversation on that? Making sure I heard I thought I heard you say something, sir, about that. Um, what I suggested was that, well, first of all, you do not have an inclusionary housing ordinance today. It was in your housing element that you would explore it. And so, based on the information that we provided this evening, we suggested you may want to

continue exploring and actually developing the ordinance and the language and the law. Uh, or you may want to hit pause. Thank you for letting me to clarify. You're right. I did see that in our um housing. So um so I I myself personally I do agree that we should have an inclusion zoning which better known as the policies um are encouraging develops to include a certain percentage of affordable house affordable housing units in new residential development. These policies aim to create more diverse and inclusive communities by making housing accessible to wider range of income levels. policies can vary significantly in their specific requirements targeting income levels and implementing methods. You have affordable housing requirements targeting low uh income levels, incentives for developers, off-site development, duration of affordable affordability, location of affordability units, market condition, increase housing affordability, pro permitting mixed income committees, uh community, excuse me, leveraging private development, assessing uh housing shortage impact on development and complexity of implementation and enforce and monitor monitoring. I think that is why we should have um this opportunity for us for as the city of Alleo. I do want to see us develop but I don't want to push folks out number one who worked hard to keep the city moving. Sometimes we forget where we, you know, been through once we get where we at today. Uh I remember, as I said before, I couldn't wait to get my own

place. Mom, I'm moving out. Rent was then $300. Now, not so much. I have to move in with five other people to have that independency. But then to want to purchase a home, it's almost unheard of and that's unfair. So, I would like for us to um consider doing this. I think that we should take on the next as you were saying the for infrastructure the next part at another time so that we can really dive deep into this cuz one thing we're just eating too much and we're not being able to process it. Thank you. That's my recommendation. Um thank you mayor. Uh so just a couple quick points. Um I don't necessarily agree with some of the conclusions that you've reached. Um we can talk about that some other time. Um I think at the crux of the argument um the way I feel about it is pretty in tune with uh Commissioner um uh Beasley Stansbury and um uh Kathleen Dio who called in. Uh we need to move the ordinance forward and we need to move it forward right away. Um, we can't waste time. Uh, there's a lot of projects in the pipeline and there's a lot of revenue we're missing out of. Um, and I've been very consistent about that. Um, we have systemic issues that need to be addressed and the planning commission needs to help us with that. Um, and so does the economic development commission. And so I would be in favor of moving that process forward now. uh and um you know happy to provide more specific uh feedback to the team on areas to look at. Uh but to Tara's point, I wouldn't even look at Fremont. I would look at American Canyon in terms

of a BMR program um and what they're doing there. Um so um I would be in favor of the mayor's position. And that's all I got. Thank you for the presentation. Um, let me just take a moment to say that I really appreciate that uh this is coming before us in a in a joint meeting. Um, and it's not coming before us when it's fully baked. I like that we're having some uh, you know, we're getting this conversation now versus later. So, I really appreciate that. Uh secondly, you know, my focus and I think this might be a focus for nearly everyone here is that we want to make sure that for folks who live in Valo that they have a place to stay in Valo and they're not always bounced around or god forbid they don't have a place to live. And broadly speaking, that's going to come down to having an abundance of housing of all types coupled with uh strong tenant protections. um the this inclusionary housing housing ordinance and the uh commercial linkage fee, these are tools. Uh they're not going to be the panacea. Um but with that said, we you know, we want to make sure that we get it right uh the first time. Uh it's been a while since I looked into research regarding uh inclusionary housing ordinances. Uh but when what I've looked up so far is that it's kind of a mixed bag. uh what seems to be really successful is that they seem to be successful in places where there's the cluster of uh above market uh developments and then you have something going on and you can't actually afford to have uh you know something that's uh below market rate. Um, with that said, I I I think my recommendation is that we pursue uh both programs with the intent of putting pause on enforcement while we're also intaking our recommendations, our

our input into this and really making sure that we're tailoring it to uh our recommendations because, you know, we have the the the benefit of foresight of looking back at other cities what they've done before and taking from their lessons learned and not making the same mistakes. So, let's make sure that we really get this right. I do have a few uh recommendations or rather questions that you know you don't have to answer it now but just maybe in a report is so one how often from when the inclusionary housing ordinance is implemented uh how often do do does that lead to uh an inlue fee that that the developer opts to use that versus making the the affordable housing and with those inloo fees. How how often does that actually turn into uh housing on the city's part? I mean, for all I know is that uh a lot of developers, maybe all of them are just opting into inlue fees. The city's taking the money and they don't actually make any housing, which is like, okay, great, we got some money, but if it's not going to housing, what's the point of what we're trying to do right now? Uh the second thing is I heard a comment from this from the public is you know what's the relationship between increased density and uh its ability to make sure these projects uh do pencil out. I'm thinking that you know with increased density uh that in in the face of inclusionary housing ordinance that this could help make things pencil out. I know the city of Berkeley just recently passed um I think they want to call it a missy middle housing ordinance, right? But I think the gist of it was that they upzzoned a lot of these places to make sure that those things pencil out. So I'm hoping I can get answer with that and and I think that's maybe a way forward to induce

more of that kind of housing. And lastly, I really want to explore what what kind of guarantees or how can we guarantee that for the the housing units that we're going to build uh through the the inclusion housing ordinance and the commercial linkage fee. How do we ensure that folks from Valo get into those housing units? I know it was mentioned before, but it's a very important issue to discuss. in Menllo Park. They had a spring uh a really amazing uh six-story uh mixed use uh development and they actually had they had to fight tooth and nail for this uh inclusionary housing. The problem is they couldn't get anyone to occupy those units, right? So, what are we doing wrong or what are they doing wrong and how could we uh remedy that on our end? So, those are my only recommendations. I think these are important issues to discuss and I recognize and uplift everyone else's uh issues as well and I think going forward we could make uh some really great programs. Thanks. All right. Thank you everyone. We're clearly not going to get to the commercial linkage fee. So I'll kick it back over to staff. Is is that all right? Did you get what you need is? It sounds like more more discussion needed but a broad desire to pursue this. Yeah, I could speak to that. Uh definitely a lot of great questions and digging deeper. Um I think it's also going to be helpful to speak to the specific communities that um already have these in place and speak to their experience and see how they implemented, what have been the results, what have been the trouble or pain points. So we'll bring that back and we're also going to bring back the commercial linkage fee at a later date. And sounds like you uh like the format of the joint meeting. So we'll take a look at future dates uh soon for the the next topic. But we'll have to look back at this one in particular. Bring it back. Sounds good. Well, thank you all for the manager. One thing, go ahead through the chair. Um, yeah, we got to get you to turn the mic

on though. I think this is like Doesn't your mic have money and you have to have this inclusionary uh housing ordinance as a is it is it on? We can't tell. We're trying to We're trying to figure it out. So, I think what's it ebag or GBG? Whatever it's called. Uh they have money uh available for housing. Um, but you have to have this inclusionary housing ordinance in place. Is that right? Uh, that's correct. I looked that up online before I came and that's Oh, there's money. That's correct. That in the future um we will be able to access additional funds uh for affordable housing if we have policies like these in place, but it's not limited specifically to inclusionary housing. Yeah. Well, I I don't that's not what it said on the on the on the on the site from their site. It's it said we need I'll have to take a look at that then in place to get this money and and we we want to do whatever we need to do. Now this is all that news. Okay. Yeah, I'll connect with you and get that URL so I can be better informed. All right. All right. Thanks. I think with that go ahead commissioner just real quick I also wanted to know if we could explore what council member was speaking about is having more of a firm foundation first before diving into so many different policies because honestly it just really makes sense to be here I think we should also explore at the same Yeah, when we come back, I I think we can delve deeper into the policy that we might be looking to enact and what it would um mean for enforcement and implementation on the staffing. I would agree with uh city manager uh with regards to uh this particular policy. We would implement it with every development application. So that is a known factor and we could better explain how that process would work in terms of implementation.

Thanks. So with that, I'll go ahead and adjourn us and thank you again to our presenters and we'll look forward to following up. I'll turn it over to Chair Blind. I don't know if youall want to take a short recess probably, right? I mean, Manny will need a recess to switch over this the system anyway. All right. Thank you everyone. Take a short