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DENSITY BONUS AGREEMENT FOR MULTI-FAMILY AFFORDABLE HOUSING AT 804 NORTH HUNTER STREET (P16-0149)
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RECOMMENDATION
Staff recommends that the City Council accept the Planning Commission’s recommendation and adopt a resolution:
1. Approving a Density Bonus Agreement for a multi-use affordable housing project at 804 North Hunter Street; and
2. Authorizing the City Manager to take appropriate and necessary actions to carry out the purpose and intent of the resolution.
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Summary
Applicant, Visionary Home Builders of California, Inc., is requesting a Density Bonus Agreement to facilitate an adaptive reuse of an existing office building with a multi-use infill development consisting of 74 residential units, on-site resident services, and 3,000 square feet of office space, on two parcels totaling 1.81-acres located at 804 North Hunter Street, on the southeast corner of Poplar and Hunter streets (Attachment A - Vicinity Map).
In order to accommodate the project as proposed, the applicant has applied for a Density Bonus to increase the allowed density from 29 units per acre to 39 units per acre which includes incentives to increase density from 39 units to 41 units, a parking reduction, and a waiver of private open space requirements.
On April 28, 2016, the Planning Commission approved a Use Permit as well as a recommendation that Council approve the Density Bonus Agreement with incentives to increase density, reduce parking, and waive private open space requirements. Council approval of the Density Bonus Agreement is required in accordance with Stockton Municipal Code (SMC) section 16.40.080. It is recommended that Council accept the Planning Commission recommendation and adopt a resolution approving a Density Bonus Agreement and incentives for a multi-use affordable housing project at 804 North Hunter Street.
DISCUSSION
Background
Applicant, Visionary Home Builders of California, Inc., is proposing an adaptive reuse of an existing office building with a multi-use infill development consisting of 74 residential units on two parcels totaling 1.81-acres.
The project has been planned to meet the housing needs of low and very low income households. The property will have 74 housing units, consisting of 72 units of affordable multifamily housing across three stories, targeting local households in Downtown Stockton making between 40% and 60% of area median income (AMI) (Attachment B - Unit Matrix). The remaining two units will be reserved for on-site managers. The project will have the following mix of unit types: 6 studios, 21 one-bedroom apartments, 23 two-bedroom apartments, and 24 three-bedroom apartments.
To accommodate the project as proposed, the applicant has applied for a Density Bonus Agreement to increase the allowed density from 29 units per acre in the zoning district to 39 units per acre. State Government Code sections 65913 and 65915, et seq. require cities to offer density bonuses and other incentives to developers to encourage affordable housing in urban areas. In accordance with SMC Section 16.40.020, the density bonus may be granted if the project has at least 10% qualifying low income household or 5% very low income households as defined by the State of California Health and Safety Code (Section 50079.5). SMC Section 16.40.030, "Types of bonuses allowed," provides one 35% density bonus to projects that propose to develop low or very low income affordable housing.
In this instance, the applicant is proposing, and funding sources require, that all units (except the two manager's units) be restricted to persons with low income to very low incomes. The 35% density bonus will allow the applicant to increase the density to 39 units per acre, to help make the housing units economically feasible.
The applicant has also requested an incentive to further increase the maximum density from 39 units per acre to 41 units per acre (allowing the requested 74 units) and a second incentive to reduce the required number of on-site parking spaces for the multi-family residential project from 114 residential spaces (one space per 0-1 bedroom units and two spaces per 2-3 bedroom units) to 58 residential parking spaces. As part of the Density Bonus term sheet, the applicant is proposing to address the parking reduction with on-site bike storage areas and has identified opportunities in the area for multimodal transportation options
Finally, the applicant has requested to waive most of the required 40 square feet of private open space per unit (balconies) (SMC Section 16.80.220 C). Due to the constraints of reconfiguring an existing building, each and every unit will be unique in its own layout in width and depth, and this private open space may only be provided on some units. In support of this request, the applicant has stated the project will provide additional open space and social gathering areas above City requirements to offset the reduced provision of private open space.
Planning Commission
On April 28, 2016, a public hearing was held before the Planning Commission. The public hearing was noticed by publication in The Record pursuant to SMC 16.88. There were no public comments received in writing, and one phone call from a neighbor with questions. Three citizens spoke in opposition during public testimony at the hearing. Concerns centered on the possibility of increased crime, parking, and compatibility of the project with the surrounding neighborhood. The Commissioners asked questions regarding the proposed Use Permit and Density Bonus Agreement. Questions from the Planning Commission centered on previous Visionary Home projects and community impact. The Planning Commission voted four to zero (three commissioners were absent) approving the Use Permit and a recommendation to City Council for the approval of the Density Bonus Agreement.
Present Situation
A Density Bonus agreement (Exhibit 1 to the Resolution) was submitted by the applicant and reviewed by the City Attorney to ensure that the owner(s), developer(s) and/or successor(s)-in-interest (ODS) comply with the provisions of the Density Bonus ordinance (SMC Chapter 16.40). The agreement indicates the number of target units, their size, location, terms and the requested incentives.
Therefore, staff recommends that the City Council accept the Planning Commission’s recommendation and adopt a resolution approving the Density Bonus agreement to facilitate the adaptive reuse of an existing office building with a multi-use infill development consisting of 74 residential units, on-site resident services, and 3,000 square feet of office space, on two parcels totaling 1.81 acres at 804 N. Hunter Street.
Environmental Review
This request is categorically exempt under the California Environmental Quality Act (CEQA) Section 15332, Class 32, of the State CEQA Guidelines. The proposed infill project is located on a developed 1.81-acre parcel that is surrounded by urban uses. Existing infrastructure is expected to be able to adequately serve the project.
FINANCIAL SUMMARY
On March 24, 2016 City Council approved a resolution for a $1.28 million dollar Neighborhood Stabilization Program (NSP) loan to Visionary Home Builders of California, Inc. for the purpose of renovating the Hunter Street apartment located at 804 North Hunter Street.
The applicant has indicated that the density bonus is necessary for a feasible rate of return and that the project would have a funding shortfall if the density bonus were not granted.
The estimated total cost of the Hunter Street Apartments project is approximately $24 million. In addition to the NSP funds, Visionary is proposing to finance the development with funds from the Affordable Housing and Sustainable Communities (AHSC) program which is administered by the State Housing and Community Development Department (HCD) and Low Income Housing Tax Credits. No general fund dollars will be expended as a result of this decision.
Attachment A - Project Vicinity Map
Attachment B - Unit Matrix