City Planning Manager Chris Schaefer gave a brief presentation regarding the housing element update for the City of Fullerton. Every city and county in California must have a housing element. It’s a plan for providing housing opportunities within each jurisdiction.

The housing element is one of the mandatory elements of the General Plan and must be certified by the state and this is relinquished to the Department of Housing and Community Development (HCD). The housing element is required to be updated every eight years, and Fullerton is in Cycle 6, which relates to 2021 through 2029. The housing element contains several components. It includes the Housing Needs Assessment (HNA), which examines the city demographics and housing stock characteristics.

This information provides a foundation for understanding the city’s current and future housing needs. It also includes an analysis of Fair Housing concerns focused on equal access to opportunities and identifies constraints to housing development. Why might not all housing or certain types of housing be easily built? Examples of constraints could be governmental constraints, such as zoning regulations and fees; environmental constraints, such as flood-prone areas; financial constraints, such as getting an affordable loan to build something; it also identifies resources available for affordable housing development, including location, suitable for housing development, which is known as the site inventory, and finally, the Housing Element provides a plan to achieve the city’s housing goals and policies. This plan includes programs with actions, timelines, and objectives to address the city’s housing needs.

The Regional Housing Needs Assessment (RHNA) is one of the main drivers of the housing element. RHNA is a determination of existing and future housing needs for each city and county in California for the life of the housing element. The RHNA is a number of housing units that each city must plan for. This housing is based on the anticipated need for each jurisdiction, broken down by income category. The RHNA allocation process starts at the state level. Where the overall statewide need is determined, and then each metropolitan planning organization, in this case in Southern California, Association of Governments (SCAG), allocates RHNA to each individual jurisdiction. RHNA is based on population projections, income distribution, and access to jobs.

Fullerton’s RHNA breakdown is a hefty number of 13,209 units that are further broken down by income level based on the area median income. This includes very low, low, moderate, and above moderate levels. The housing element, as one of its major policies, will make use of the Housing Incentive Overlay Zone (HIOZ) to encourage the construction of the majority of these required housing units. The city staff started the process in about 2020, and this included holding workshops and study sessions together, as well as stakeholder and public input.

The city completed the first draft of the housing element and submitted it to HCD in November 2021 for review. HCD reviewed the document in January 2022 and provided a letter that found that the housing element, while it addressed many statutory requirements, required further revisions to comply with state housing element law. After that time, the city’s consultant who was working on this document left. And the document sat for about a year until we hired a new consultant. Who then addressed the various corrections.

One of the major concerns of the first draft of the housing element related to a new section called Affirmatively Furthering Fair Housing (AFFH). For background, in 2018, California passed Assembly Bill 686 to expand upon fair housing. And create new requirements that apply to all housing elements that are due for revision after 2021. This law requires all States and local public agencies to facilitate deliberate actions to explicitly address combat and relieve disparities resulting from past patterns of segregation to foster more inclusive communities. AB 686 creates new requirements that apply to all housing elements in the sixth cycle.

Another major correction was related to the City’s proposed housing plan. The housing plan outlines the goals, policies, and programs the city is committed to accomplish. During the planning period, new programs were added that relate to the following. Review and update the development review process to support the development of a variety of housing types. Support production of regulated affordable housing types for all income levels, homeless prevention and housing, tenant protection and support, existing programs, actions and objectives, and timelines were strengthened or clarified as needed.

Fullerton received corrections that were required for the residential land resources contained in Appendix B. This included a site inventory that was limited and could support a realistic development capacity that would achieve the city’s RHNA. Cities can currently develop a HIOZ, which can be applied to select properties. The purpose of the HIOZ is to provide optimal standards and incentives for the development of a wide variety of housing developments. The HIOZ inventory was revised to focus on three publicly owned parcels.

Assumptions for the projected number of Accessory Dwelling Units (ADUs) that may be constructed in a planning period were updated and based on historical data that we generate, which is between 60 to 80 ADUs every year.

The city is challenged with a lawsuit as a result of not having a certified Housing Element and is now subject to a stipulated judgment whereby a timeline of milestones must be met. The main item of concern is the completion and certification of the Housing Element by November of this year. Staff recommends that the draft Housing Element document be submitted to HDC for their review prior to the March deadline.

Councilmember Bruce Whitaker said that since the last census, the total population in California and Fullerton has declined each year. Sky-high real estate costs, building supply and labor costs for construction, fees, development fees, other regulatory costs, and new building codes all contribute to higher prices.

Schaefer said, “So, as we build new residential units, the promise has been that prices will be alleviated with more supply. But the opposite has been true. Because of all these costs feeding into it, any new units will be equally or more unaffordable than what we have currently.”

Councilmember Dr. Ahmad Zahra said his first year in 2019, he saw the RHNA go through SCAG, and Fullerton was hit with big numbers. Orange County got higher numbers than other areas because the HDC added job centers into the formula.

Zahra said, “My big concern has always been the poverty concentrations in mostly the southern parts of our city. I’m a little worried because these areas are already impacted by parking, a lack of open space, and other code enforcement issues. We need to push for more walkability options and mobile options. Also, the majority has been the market rate, which is quite expensive. The interesting thing about the market rate is that when you have market-rate units and a low-income unit next to it, the low-income units set their prices in the area. So, the more we drive up the market rate, the more even the low-income becomes higher. So we need to make sure that we’re pushing for affordability. Why do we only have 10% affordable? Are there areas where we can identify that are not as costly for developers where we can bump up the 10% so we can be more selective? Because I’m worried that if we’re setting this at 10% now and that’s it, we won’t have much negotiation leverage with any of the developers anymore.”

Schaffer said it was based on the analysis of our consultants, Dudek; they determined that 10% was a threshold that would not scare off developers. For instance, Santa Ana had an inclusionary housing ordinance, which was at 15%, and a lot of development stopped. So, 10% was determined to be a good number that developers would still be willing to build those affordable units.

Schaefer said, “There are different ways [to incentivize developers] such as to waive permit fees and plan check fees.”

Zahra said, “Unfortunately, this is by-right zoning. So, there won’t be any negotiation. The HIOZ development standards are going to the Planning Commission as a study session to discuss those things.”

“This is an excellent opportunity to talk about how we are going to provide incentives for developers to focus on special needs individuals, whether they be seniors or people with varied abilities like folks with autism or on the spectrum, for example, as they move into adulthood, they end up getting out of that care system. Some of the homeless have these challenges and need supportive housing, too. What are the plans to implement and incentivize developers to come and build these?”

“We need to ensure we’re not submitting a document to get HDC off our back. We need to ensure that we’re implementing these policies effectively based on our community needs. How do we incentivize more supportive housing? How do we incentivize more housing for our homeless population? The latest count is about 272 individuals. I don’t think that’s a big number for which to accommodate housing. I think it’s achievable. We can build 270 units and put every homeless individual in a unit. We have cut homelessness in half since the census in 2018. We can do this.”

“And how are we protecting individuals? I know a whole section here on fair housing and protecting tenant protections. I noticed that Rancho La Paz had been mentioned a few times as a tenant rental assistance program, but at the same time, we didn’t take action to protect these seniors. And now we’ve lost one of the two senior parks. How are we protecting tenants? How will we protect seniors?”

Councilmember Dr. Shana Charles said, “On affordable housing costs in OC, we have very-low-income, extremely-low, low, moderate. We throw those out there, and everyone in America likes to think they’re middle class. I like to think I’m middle class. I’m a tenured professor at the largest CSU in a system that has 450,000 students in a state of almost 40 million people. I’m not middle class in Orange County. And moderate, by the way, and above moderate, is over $128,000 a year. CSUF chancellor makes almost $1 million a year. I can tell you that the 40,000 students at CSUF are extremely low on that spectrum. Fullerton has this high RHNA number because we’re a job center. Well, the people in those jobs are all very low-income.”

Mayor Nicholas Dunlap said, “We’re just giving direction to staff this evening. We’re here to make the best decisions for our community and the residents. We also need to be respectful of the integrity of our historical zones. I’d like to see that we explore adding density at perimeter locations near transit and CSUF, where there’s multifamily that could potentially be upzoned additionally for future usage. I would like to see us get away from this kind of one-size-fits-all approach.”

Direction was given, and this item will be returned in March for review.