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5.02 State and Local Changes in Housing Policy and Trends 8200 Westminster Boulevard City of Westminster Westminster, California 92683 Staff Report File #:19-324,Item #:5.2 Meeting Date: Westminster City Council To:Honorable Mayor and City Council Thru:Eddie Manfro, City Manager From:Chet Simmons, Assistant City Manager Reviewed by:Sherry Johnson, Finance Director Prepared by:Alexa Smittle, Economic Development Manager SUBJECT: State and Local Changes in Housing Policy and Trends. RECOMMENDED ACTION/MOTION: Staffrecommends that theMayor and City Council receive and file the report and provide feedback to staff. BACKGROUND/DISCUSSION: INTRODUCTION Overthelastfewyears,severalissuesrelatedtocommunitydevelopmentandneighborhoodpreservation havebecomemorecommondiscussionpointsamongresidents,theCityCouncil,andevenacrossCalifornia. Atthestatelevel,manycommunitiesarestrugglingwithlegislationthatismandatingfasteranddenser housingdevelopmentthanhasbeenexperiencedbefore.Aseriesofrecenthousing-relatedbillshasonly solidified the State’s commitment to foster housing development by limiting local controls. Meanwhile,citiesmustoperateandimplementhousingpolicyattheneighborhoodlevel.Thehardworkof makingsureourcommunityremainsagreatplacetolivemeanslookingcloselyattheissuesthatnegatively impact our neighborhoods now, as growth is coming. Akeychallengeinrecentyearsisimplementationofbasicpropertymaintenancestandards.Inresponse,the CityCouncilcreatedtheCommunityPreservationUnit(CPU)tofostercommunityeducationoncitycodes, andprovidesupporttotheCodeEnforcementdivision.ThroughtheCPUandcollaborationwiththePublic WorksDepartment,staffhasbeenabletobettertrackcertainissues,suchasillegaldisposalofbulkyitems, graffiti,andunmaintainedvegetation.Forexample,wenowknowthatCitystaffpicksup30-50tonsof City of WestminsterPage 1 of 6Printed on 12/12/2019 powered by Legistar™ File #:19-324,Item #:5.2 Meeting Date: improperlydiscardedmaterialseverymonth.Theseconditionscontributetoblightinaveryvisibleway,though they are relatively easy for property owners to correct or avoid. Otherchallengesarenotasvisible.Overthelastfewmonths,staffhasbeenworkingondatacollectionforthe Five-YearConsolidatedPlanthatwillbeusedtoguidefederalgrantfundingforlower-incomeresidentsand neighborhoods.ImportantfactsincludethattheCity’smedianincomeisaboutthesameasitwasin2010, eventhoughournationaleconomyhasbeeninrecoverytheentiretime.Housingcosts,however,areonly increasing,whichmeansresidentsarepayingmoreforhousingwithlessincomethantheywereadecade ago.WorkingwiththeFairHousingFoundation,staffalsobelievesthatlivingconditionsinsomehousingunits are below health and safety standards. Withtheinformationbeinggatheredacrossmultipledivisions,it’stimetoexplorewhatmoremustbedoneto maintainourneighborhoodsandensurethewell-beingofourexistingresidents,whileweprepareforthe growth that will be spurred on by State legislation. The following information and analysis was prepared to: 1.Establish baseline information on existing housing stock; 2.Highlight some key changes in State policy that will impact future housing growth; and 3.Provide some considerations for future activities. HOUSING INVENTORY HousinginWestminsterhaslongbeenapartofthecommunity’sidentity.With75%ofallhousingunitsbuilt between1950and1980,Westminsterexhibitstheclassicpost-WorldWarII,suburban,singlefamilystyle developmentmuchofCaliforniaisknownfor.Relativelyminimalchangetothislandusepatternhasoccurred inthelastfewdecades.AccordingtotheUSCensus,Westminster’spopulationhasonlygrown3%since 2000. Figure1presentsinformationonhousingunitsinthecity.TheCountyAssessor’srollistypicallyagood measurementofsinglefamilyandcondominiumhomes,butformulti-familyunits,theunitcountcanbe inaccurate.Additionally,mobilehomesarenottypicallyinventoriedontheassessmentroll.Thus,topainta fullerpictureutilizingdatafromtheU.S.Censusandinternalknowledgebase,anadjustedestimateofunitsis also provided. Figure 1 - Housing Inventory Assessment RollAdjusted Estimate Single Family Residential16,86117,000 Multi-Family Residential6,4518,600 Mobile Homes3,150 Permitted Accessory Dwelling Units80 Total Housing Units23,31228,830 CHANGES IN OCCUPANCY Despiteslowgrowthinrecentdecades,changeshavebeenoccurringinhousingoccupancy.Accordingtothe 2017AmericanCommunitySurvey(U.S.Census),thenumberofhousingunitshasonlygoneupby4.8% since2000,butthenumberofhomesthatarerenter-occupiedhasgoneup24%inthatsametimeperiod.In short,therehasbeenadramaticshiftinsinglefamilyhomeoccupancy,whereownersarenolongerlivingin their unit, but renting it out. City of WestminsterPage 2 of 6Printed on 12/12/2019 powered by Legistar™ File #:19-324,Item #:5.2 Meeting Date: Californiaprovidesa$7,000assessedvaluepropertytaxexemptiononowner-occupiedunits,whichis reportedontheassessmentrollandisagoodbarometerofoccupancytype.Currently,7,253single-family dwellingunitsinWestminsterdonotclaimthatpropertytaxexemption,makingitlikelytheyarerenter- occupied.Figure2summarizestotaloccupancyestimates,includingsinglefamilyhomesandrentalunits,but excludingmobilehomes.Asshown,about38%areowneroccupiedunits.Forcomparison,thestateaverage is 54%. Figure 2 - Housing Occupancy Owner-Occupied Housing UnitsRenter-Occupied Housing Units 9,750 (38%)15,930 (62%) SINGLE-FAMILY RENTAL PROPERTY OWNERSHIP Furtheranalysisofthesinglefamilyhomesthatarenotreceivingthehomeowner’sexemptionrevealsthat about64%ofthosepropertyownershaveWestminstermailingaddresses.Inotherwords,whiletheowner doesn’tliveintheproperty,mostdostilllive,oratleastmaintainabusiness,inthecity.Another25%have mailingaddressesoutsidethecity,butstillinOrangeCounty.Onlyabout12%areoutsidethecountylimits,as shown in Figure 3. Figure 3 - Non-Exempt Single Family Ownership Location Theassessmentrollalsoshowsthatabout85%ofsinglefamilyhomerentalshaveuniquepropertyowner mailingaddresses.Thislikelymeansthatmanyofthepropertyownersrentingouttheirhomesunitdon’thave a lot of experience as a landlord. MULTI-FAMILY RENTAL PROPERTY OWNERSHIP Asdiscussed,thedataavailabletousonmulti-familyunitcountshassomeflaws.However,utilizingwhatwe dohave,Figure4showsabreakdownofapartmentunitsperbuilding,showingthattheoverwhelmingmajority of apartments are contained in small developments of 10 or less units. Figure 4 - Apartment Units per Building City of WestminsterPage 3 of 6Printed on 12/12/2019 powered by Legistar™ File #:19-324,Item #:5.2 Meeting Date: Whilewemaynothaveexactvalues,wedointuitivelyknowthatmostofourapartmentrentalsareindeed smallerbuildingfootprints,unlikenewercommunitiesinsouthernOrangeCountywithsprawlingapartment developments. Themulti-familybuildingownershipprofilediffersfromthatofsingle-familyrentalownership.Formulti-family buildings,onlyabout20%ofownershaveaWestminstermailingaddress,representingthesmallestgroupof ownership.Anadditional57%areoutsideWestminster,butwithinOrangeCounty;andfinallyabout23%are outside of the county entirely. Figure 5 - Multi-Family Ownership Location Californialawrequiresanyapartmentcomplexwith16ormoreunitshaveanon-sitepropertymanageror caretaker.InWestminster,nearlyallapartmentbuildingsarebelowthatthreshold,andmostbuildingsarenot ownedbycommunitymembers.Therefore,theriskassociatedwithalackofproperoversightand/or experienced managers is higher than in communities where most properties have on-site management. City of WestminsterPage 4 of 6Printed on 12/12/2019 powered by Legistar™ File #:19-324,Item #:5.2 Meeting Date: NEW STATE LAWS AND HOUSING PRODUCTION Asmentioned,theStateLegislatureadoptednumeroushousing-relatedbillsasapartofits2017legislative cycle,andagaininthe2019cycle.Mostoftheselegislativeactionshavebeenaimedatincreasingthevolume ofunitsavailable.Accessorydwellingunits(ADU’s)areaperfectexampleofthis,wherestatelawnowalmost unilaterallyallowsthedevelopmentofupto2ADUsonsinglefamilyproperties,subjecttoveryminimal restrictions.Withroughly16,300singlefamilyhomes(notincludingcondos)inWestminster,StateADUlaws could be extremely impactful on the volume and type of housing available in the city. Newlawshavealsoeliminatedsomeofthediscretionarydecisionsacityhasinapprovingordenyinga housingdevelopment.Forexample,SenateBill330limitsthenumberofpublichearingsanapplicantmustgo through,andlimitsinternalreviewanddevelopmentstandardsthatcanbeappliedtoaproject.AssemblyBill 1763increasesdensitybonusesforprojectswithcovenant-restrictedaffordablehousing.Inotherwords,it’s likely growth will continue to occur with greater density than before, which lends itself towards rental housing. STATE POLICY - THE RHNA ALLOCATION Everyeightyears,theCaliforniaDepartmentofHousingandCommunityDevelopment(HCD)conductsan analysisofthehousingneededtoaccommodateprojectedgrowth,andthenassignsaportionofthetotalunits toeachjurisdiction.ThejurisdictionmustthenrespondbyupdatingitsGeneralPlan’sHousingElementto showthatzoningadequatelyallowsforthegrowththathasbeenallocatedtoit.Thisassignmentiscalledthe RegionalHousingNeedsAssessment,or“RHNA”.Duringthiscurrenteight-yearplanningperiod,Westminster was allocated two units. Theallocationprocessiscurrentlyunderwayforthenextplanningperiod.Whilemethodologieshavenotquite beenfinalized,atotalof9,823unitshavebeenproposedforallocationtoWestminsteratthefollowingincome levels:1,893unitsaffordableatverylow-incomes,1,484unitsaffordableatlow-income,1,797unitsaffordable atmoderate-income,and4,649unitsatmarketrate.Inacommunitythathasonlygrownbyabout2,000units intwodecades,thiskindofinfluxwouldbealargedeparturefromthestatusquo,wereittooccur.It’s importanttonotethatwhiletheCitycannotforceanyonetodevelop,theState’srecenthousingpackages havelimitedwhattheCitycandeny.Again,themajorityoftheseunits,iftheyarebuilt,arelikelytobemulti- family rental units. SUMMARY AND NEXT STEPS Rentalhousingisnot,inandofitself,problematic.Infact,providingarangeofhousingoptionsand affordabilitylevelsiscriticaltomaintainahealthyeconomicenvironment.Theproblemsoccurifproperty ownersarenotawareoftheirresponsibilitiesforprovidingsafeandsanitaryhousing;arenottakingpridein their investment; and/or are failing to enforce maintenance standards. WhenthisisconsideredinthecontextofotherCityactivities,particularlycodeenforcement,CPU,fairhousing enforcement,andbulkyitemdisposal,itbecomesclearthatfurthereffortsareneededtosupportthestandards that protect our neighborhoods. Based on trends we can track, changes in State policy, and some limited speculation, staff believes the following to be true. -Existing development is becoming increasingly renter-occupied. -Most future development will be in the form of rental properties. -Many landlords may lack experience or knowledge of best practices, and may benefit from better access to information. -Some existing rental buildings (particularly if under 16 units) may not have the oversight needed to ensure proper care and maintenance when an on-site manager is not present and the property owner may not be local. City of WestminsterPage 5 of 6Printed on 12/12/2019 powered by Legistar™ File #:19-324,Item #:5.2 Meeting Date: For the benefit of the community and the long-term preservation of our neighborhoods, no matter how they may change, staff is examining several approaches to outreach, education, and enforcement. Immediate Action One action is implementable immediately, enforcement of the business license program. Under the municipal code, anyone operating 3 or more rental units must have a business license. Currently, only 38 residential landlords have a business license. Staff believes there is simply a lack of knowledge about this code section. Over the course of the last year, license enforcement focused on commercial landlord businesses licenses, and can now pivot to residential. While there is revenue associated with license enforcement, the other benefits include (a) a more accurate inventory of rental housing, and (b) better contact and communication with landlords and property managers. The latter would improve the City’s ability to share information like upcoming housing law workshops; how to facilitate bulky item pick up when units vacate; or changes in State law, such as the recently adopted rent control legislation. Future Opportunities for Discussion Staff is examining other options to increase communication between property owners and the City. One potential program is implementation of a rental unit registry for landlords that only lease 1-2 units and are therefore exempt from the business license requirement. With the implementation of ADUs and the shift of owner-occupied units to rental units, this means thousands of landlords would remain disconnected from the City as a business license is not required. Ideally the registry would be maintained online, allowing the City to provide electronic information to landlords that may not have other avenues of learning about best practices or housing laws. Furthermore, having digital or phone contact information for these landlords would assist with public safety in the event of an emergency or other issues at the site. Staff is also analyzing the feasibility of implementing a rental housing inspection program, similar to one that Anaheim currently operates. This would be a substantial undertaking from a resource perspective, and one that will need to be implemented over the course of several years. This would generally include development of a certification checklist to ensure properties are maintained pursuant to the Municipal Code as well as the State Health and Safety Code. Property owners would have the opportunity to self-certify that they are in compliance, and a code enforcement officer or other designated inspector would spot check these properties. For those property owners who do not self-certify, a city inspector would make an appointment to inspect both the exterior and interior of the building. As needed, violations would be handled through notices and citations. FISCAL IMPACT: None at this time. ATTACHMENTS: None. City of WestminsterPage 6 of 6Printed on 12/12/2019 powered by Legistar™