meeting date: prepared by - granicus

MEETING DATE: November 19, 2014

PREPARED BY: Diane S. Langager Principal Planner

DEPT. DIRECTOR: Jeff Murphy

DEPARTMENT: Planning & Building CITY MANAGER: Gus Vina

SUBJECT: Consideration of possible options to amend the City’s Affordable Unit Policy in an effort to incentivize participation; consideration of possible options to address the expiration date currently set for units permitted under the City’s Housing Certification Program; and, consideration of options for a public mailer that will be sent to residents in an effort to gauge interest in program participation. RECOMMENDED ACTION: Discuss and consider available options, along with associated benefits and drawbacks, to revise the Affordable Unit Policy, Housing Certification Program and public mailer and provide staff direction, as deemed appropriate. STRATEGIC PLAN: The subject matter being considered relates to the Community Planning Focus Area of the City’s Strategic Plan. FISCAL CONSIDERATIONS: There are no fiscal impacts associated with the preparation and analysis of this report. Some of the listed options may result in financial impacts. Those impacts are detailed further in the Analysis section of the Agenda Report. BACKGROUND: On May 7, 2014, as part of a presentation on the Community Planning Strategic Plan Focus Area, Council directed that staff return the Affordable Unit Policy for Council consideration with options that incentivize participation without sacrificing health/safety standards. The City has allowed illegal units built prior to City incorporation (October 1, 1986) to continue to operate under three separate, yet related housing policies/programs: the Housing Certification Program (Exhibit CC-1), Illegal Dwelling Unit Policy (Exhibit CC-2) and the Affordable Unit Policy (Exhibit CC-3). While the allowances under each policy/program vary, all three recognized the following.

• Many illegal units exist because they were constructed prior to the incorporation of the City and the establishment of the City’s building codes.

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• Many of the units provide an affordable housing option that might not otherwise be

available.

• The policies/programs support the General Plan by providing a means of utilizing existing and sound housing stock to provide affordable housing.

A brief overview of each policy is provided below. An exhibit that compares the varying requirements of the three policies can be found in Exhibit CC-4.

A. Housing Certification Program In September 1993, the City adopted the Housing Certification Program (HCP). The purpose of the program was to allow unpermitted units to remain with minimal improvements, with the understanding that the units must be abated within 20 years. As part of the program a basic safety inspection was conducted to insure that no obvious health and safety issues were present.

At the conclusion of the 20-year time period, property owners have the option of either:

• Converting the unit back to its original permitted use (many of the uses were converted detached garages, storage building, etc.), and/or removal of the unpermitted structure;

• Bring the unit into compliance under the Illegal Dwelling Unit Policy (now the

Affordable Unit Policy), which is described in “C” below; or,

• Bring the unit into compliance with standard City provisions for accessory or dwelling units.

The HCP program was available for a two year window (1/1/94 – 12/31/95); therefore the HCP certificates began to expire in January 2014, with most of the participating units due to expire in 2015.

B. Illegal Dwelling Unit Policy

Concurrent with the HCP, in September 1993, the City Council enacted the Illegal Dwelling Unit Policy (IDU), which offered a more permanent solution for property owners in exchange for relaxed standards under the Zoning Ordinance (i.e. parking requirements, setback encroachments, etc.) and the legalization of the unit. The structure needed to be brought into compliance with current building and fire codes and a covenant was recorded against the property to ensure that the unit is rented to families of moderate, low or very low income for a period of 40 years.

C. Affordable Unit Policy (AUP)

In January 1996, the Affordable Unit Policy (AUP) replaced the IDU. The primary change between the two programs was that the AUP no longer allowed rentals for moderate-income households and the 40-year affordability rental restriction of the IDU was extended to perpetuity. The AUP requires the units to be reserved solely to very low to low income households (50% to 80% of the HUD Regional Median Household Income levels). The change from the 40 year to perpetuity time restriction came about with the deletion of General Plan Land Use Policy 10.4. Policy 10.4 specified, “The elimination of illegal

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[dwelling] units shall be emphasized.” There had been concern that allowing the units to remain in perpetuity conflicted with this provision. Research found that early discussions of the Illegal Unit Policies focused on attempting to balance General Plan goals and policies between the abatement of illegally constructed units and the provisions and maintenance of a sound housing stock that provides affordable units. To insure against any inconsistency or misunderstanding of City policy and intent related to illegal dwelling units, the policy was deleted in June 1993.

ANALYSIS: A. Option to Address Deadline for HCP

1. Option 1: Maintain Current Policy

Based on the terms of the HCP program, once the 20-year time period expires the unit would need to either be abated or brought into compliance with the current standards. To abate the unit would require removal or conversion back to its previous permitted use; or it can be legalized through the current AUP program. Benefits/Drawbacks: A benefit to enforcing the original agreement is that it could garner participation in the AUP. Units that convert into legal AUP units could possibly count towards the City’s housing needs for low/very low income category. At the time of this Agenda Report, however, City staff has not confirmed whether State Housing and Community Development (HCD) will agree with this position --- HCD may find that the units are part of the City’s existing inventory since the units are part of an established program. Given the AUP rent restrictions, a possible drawback to this approach is that property owners may opt to convert or remove the unit; whereby a loss in the City’s rental stock would result as well as displacing the tenant(s).

2. Option 2: Extend Time Restriction

The 20-year time period could be extended for another 20 years or other specified time period. It is suggested that if a time extension is granted another safety inspection be conducted to ensure that no health and safety issues have arisen with the unit over the last 20 years. Benefits/Drawbacks: The time extension would postpone the discussion, and allow the issue to be revisited at a later time which would maintain the rental stock and not displace the tenant. However, the time extension would also extend the length of time that the unit does not conform to current building and fire codes. As time moves on, the requirements of state codes, especially related to energy efficiency, become more rigorous, whereby renovation may become infeasible or too costly. Additionally, without conforming to Title 24, the energy efficiency of the unit may be lacking. Extending the time period would also remove the potential for the unit to come under the AUP, whereby rent restrictions could be placed on the unit.

B. Options to Improve/Enhance the AUP

In order to further incentivize the existing AUP program, a number of options can be considered.

1. Duration of Affordability Time Period Reducing the duration of the rent restrictions for the program could be considered. The time period could be reduced from the existing requirement of perpetuity (life of

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the structure) to 55 years; this would be consistent with the City’s Inclusionary Housing Ordinance as well as changes recently made to Density Bonus Law under AB2222 (effective January 1, 2015). Alternatively, to maximize the incentive, a lesser time period of 40, 30 or even 20 years could be considered. In recent discussions with the State HCD, agency staff verbally indicated that a time period of less than perpetuity (specifically 20 years) could be considered. Benefits/Drawbacks: Reducing the time period for the rent restriction could be an incentive to draw interest from more people to participate as it reduces the encumbrance on the property. Reducing the time period will allow a property owner to rent at market rate following the conclusion of the rental restriction. However, it is worth noting that the City may have to address preservation of unit loss through subsequent Housing Element related programs in future years. Conversely, the program is structured as a “quid pro quo” --- in exchange for a permanent waiver of certain zoning requirements (parking, setback, etc.), the City gets permanent housing for low/very low income families. This “something for something” exchange is lost when the rental restriction time period is shortened.

2. Rent Restrictions

The rent restrictions, which are currently set at low/very low income households, could be expanded to also include moderate households, as had been allowed in the IDU program. Benefits/Drawbacks: Being able to charge rent for families that qualify as moderate income may make participation more economically feasible for property owners. With this option the unit can be maintained and the tenant not displaced. However, the City would not be able to count the units toward our housing obligations for low/very low-income families.

3. Eligibility Threshold

Currently to be eligible for the AUP program, proof is required that the unit existed prior to the City’s incorporation; October 1, 1986. Consideration could be given to expanding the eligibility threshold to more recent years. Benefits/Drawbacks: This option could potentially bring in more eligible units, as some may have been created after incorporation. The question is where do you draw the line for the threshold? One of the primary reasons why the program was developed was because the City recognized that many illegal units exist because they were constructed prior to the incorporation of the City and the establishment of the City’s building codes and local control over enforcement. By extending the eligibility threshold, an argument can be made that the policy change rewards “bad behavior” and encourages folks to construct without processing required permits.

4. Zoning Compliance

Consideration could be given to lessening the requirements for zoning compliance. Currently the provisions require compliance with the zoning development standards to the “extent feasible”. As an example, if unimproved space were available for parking, paving improvements would need to be made which can add costs to the property owner. Eliminating the provisions for zoning code compliance altogether could incentivize the program to garner more participation.

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Benefits/Drawbacks: A potential reduction in costs and work effort on the part of the property owner could result in an increase in program participation. However, impacts of the second unit could be further exacerbated, such as the lack of on-site parking, which in the end could affect the surrounding neighborhood. Furthermore, as mentioned in #3 above, such a policy change could be perceived as rewarding “bad behavior”.

5. Enforcement/Voluntary

Virtually all property owners who participate in the program did so in an effort to resolve a code violation brought on by a neighbor. Because the program is complaint based, an option to be considered is to transition to a proactive based program. Under this option, Code Enforcement Officers would seek out illegal units and “force” compliance either through program participation or removal/conversion of the unit. Benefits/Drawbacks: The benefits of this approach include identifying potentially more units than under the current “voluntary” approach. Further, the City could ensure that units are constructed under current building and fire codes so inhabitants are living in safe accommodations. However, applying enforcement proceedings on a proactive measure could result in the loss of existing (albeit unpermitted) units, displacement of tenants, and frustrations from property owners who may have bought the property believing the unit was legally constructed.

6. Processing Fees and Impact Fees

Currently there is a fee for processing the AUP application and recordation of the affordability rental agreement. Additionally, there are building permit fees and other construction impact fees, which vary depending upon the scale and scope of the improvements. A reduction in the fee amounts could be considered. Additionally, as had been done in the past with the Housing Certification Program, a reduction in the sewer connection fee can also be considered. Benefits/Drawbacks: A reduction in fees would result in a cost savings to the property owner, which could be an incentive to garner more participation in the program. Based on the current fee schedule, the Department operates roughly at a 50% cost recovery --- in other words, roughly half of the Department’s costs are covered by fees as opposed to General Purpose Revenue. As such, a reduction in fees will result in a loss of revenue to the City which will impact the Department’s overall cost recovery percentage. To help understand the potential impact, below is a breakdown of the typical fees collected for units under the AUP (this is an average only; actual fees may vary).

AUP Application: $ 900 Building Permits: $2,200 Sewer Connection: $2,400 TOTAL: $5,500

Assuming that the Department receives 10 AUP requests per year (that is approximately 5 times the amount historically processed), roughly $55,000 each year would be required from the General Fund to offset this loss in revenue.

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C. Do Other Jurisdictions have Similar Programs?

Most jurisdictions surveyed do not have a similar type program. In preparation of this report, staff was able to make contact with 15 of the 18 other jurisdictions in the region. A summary of the research results is included in Exhibit CC-5. Staff found that two cities had programs that provided some relief to unpermitted accessory units.

• Escondido

The City of Escondido does not maintain a specific Illegal Dwelling Unit Policy; however, as part of its provisions for Nonconforming Uses and Structures (Division 3 of the Escondido Municipal Code), there are provisions, based on specific findings, to allow the Director of Community Development to determine that nonconforming status exists for residential, commercial or industrial zoned properties, even though permit documentation is not available. The unit needs to have been constructed prior to 1976 and conform to zoning regulations in effect at the time the unit was constructed. These provisions are not applicable to units that clearly were created illegally.

Escondido’s nonconforming provisions also allow low and very low income housing units to be repaired, altered, improved or reconstructed to a condition complying with all applicable building, electrical, plumbing and similar codes without regard to the percent limitations set forth in the nonconforming regulations. The units at issue shall have been inhabited continuously by individuals with low or very low income for at least one year prior to the date of the proposed improvements and the property shall be restricted for occupation by low and very low income households for a period of at least ten years.

• County of San Diego Section 6156 of the County’s Zoning Code includes provisions that allow, upon the issuance of an Administrative Permit, the conversion to a second dwelling unit of an existing legal accessory living unit, or legalization as a second dwelling unit of an illegal accessory living unit which existed on July 1, 1994, when the unit does not conform to one or more of requirements related to minimum lot size, maximum living area, off-street parking, architectural design, location of entrance height and/or setback if a variance had been authorized with the establishment of a legal accessory unit. No income restrictions are required in association with this provision.

Refer to Exhibit CC-6 for the provisions of Escondido and the County of San Diego referenced above.

D. Options for Resident Notification to Solicit Participation

Certain community members have made statements that there are hundreds (possibly over a thousand) unpermitted accessory units within the City. Those same folks also contend that should the AUP be amended to encourage participation (reduced fees, reduced rental restriction period, extended eligibility, etc.), and be better noticed, a significant number of property owners would be more willing to voluntarily comply. This compliance could possibly reduce the City’s need to amend our housing plan and rezone sites to accommodate State requirements. As previously reported, the City can only take credit for reductions in its Regional Housing Needs Allocation (RHNA) obligations pursuant to what it can prove to the State. Refer to Exhibit CC-7 for more information regarding second units and/or conversion of illegal units to fulfill a part of RHNA. At this point, there is no evidence that supports statements that the

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City has as many unpermitted accessory dwelling units as mentioned above. Further, there is no evidence that folks who have these units are willing to voluntarily participate in the AUP and record a rental restriction agreement against their property. Lastly, should there be property owners in the community who are indeed willing to participate, the property owners would need to process and record the rental restriction, secure the required permits and upgrade their unit to address any building code shortfalls, a process that could take 3 to 9 months to complete, before the City’s draft Housing Plan is scheduled for consideration by the State later next year. As such, staff does not find that this is a viable or feasible solution to significantly address our State housing obligations. While the City’s AUP program may have little impact in addressing our current housing needs, it could help us in reducing our RHNA requirements for the next housing cycle. To help assess the number of unpermitted accessory units in the City, language has been developed for three mailer options:

• Option 1: appeals to all homeowners who have second dwelling units • Option 2: appeals only to homeowners who have unpermitted second dwelling

units • Option 3: appeals to homeowners who want their units to count toward affordable

housing

Refer to Exhibit CC-8 for the suggested language for each option; upon Council direction, the flyer will be finalized. The language proposed in all three mailers is intended to merely encourage residents to simply call and inquire about the program. Staff will maintain a log of how many inquiries are made and report their findings to Council. No code enforcement action will be taken as part of this effort against individuals who call and have unpermitted structures. It is estimated that a mailer to all City residents will cost approximately $8,700; this cost may vary depending on the format/type of notice that is mailed (i.e. postcard vs. envelope & flyer).

ENVIRONMENTAL CONSIDERATIONS: Revisions to the policies are exempt from the California Environmental Quality Act (CEQA) pursuant to Section 151061(b)(3) of the CEQA Guidelines, which is the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. The units coming in for legalization under the AUP and/or extension of the HCP would be exempt from environmental review pursuant to Section 15301(a) and (e)(1) of the CEQA Guidelines related to the permitting of existing private structures where negligible or no expansion of an existing use occurs. Section 15301(a) exempts interior or exterior alterations involving such things as interior partitions, plumbing and electrical conveyances; and Section 15301(e)(1) exempts additions to existing structures provided that the addition will not result in an increase of more than 50 percent of the floor area of the structures before the addition, or 2,500 square feet, whichever is less.

ATTACHMENTS: Exhibit CC-1 Housing Certification Program Exhibit CC-2 Illegal Dwelling Unit Policy Exhibit CC-3 Affordable Unit Policy Exhibit CC-4 Accessory Unit Policy Comparison Chart Exhibit CC-5 Summary of Research Results Exhibit CC-6 Similar Provisions of City of Escondido and County of San Diego

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Exhibit CC-7 10/13/2014 correspondence from Veronica Tam & Associates re: Second Units for RHNA

Exhibit CC-8 Options for Mailers Exhibit CC-9 Public Correspondence

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Exhibit CC-1

HOUSING CERTIFICATION PROGRAM

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Exhibit CC-2

ILLEGAL DWELLING UNIT POLICY

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Exhibit CC-3

AFFORDABLE UNIT POLICY

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Exhibit CC- 4

ACCESSORY UNIT POLICY COMPARISON CHART

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ACCESSORY UNIT POLICY COMPARISON EXHIBIT CC-4

REQUIREMENT HOUSING CERTIFICATION

PROGRAM (HCP) ILLEGAL DWELLING UNIT POLICY (IDU)

AFFORDABLE UNIT POLICY (AUP)

Date started 1/1/94 9/15/93 1/1/96

Unit existed prior to incorporation Yes Yes Yes

Rental income restrictions None Moderate, Low,

Very Low Income Low and Very Low Income

Rental restriction time limits None 40 years Perpetuity

Occupancy/use restrictions None Continuously occupied Continuously maintained

Zoning Ordinance compliance No Yes, to extent feasible Yes, to extent feasible

Uniform Housing Code compliance Yes No No

Uniform Building/Fire Code compliance No Yes Yes

Policy legalized the unit No Yes Yes

Policy expiration date December 31, 1995 December 31, 1995 Current Program

Units allowed to remain 20-years In Perpetuity

(Life of Structure) In Perpetuity

(Life of Structure)

Units authorized under this program 164 5 53

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Exhibit CC- 5

SUMMARY OF RESEARCH RESULTS

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Affordable (Illegal) Unit Policy Research Results of San Diego County Jurisdictions

Jurisdiction Similar Policy Notes

Carlsbad No

Chula Vista No

Coronado No

Del Mar No

May consider one in the future

El Cajon No

Escondido Somewhat similar

Applies to legal non-conforming units

Imperial Beach No Citizens have little tolerance for illegal units

La Mesa No

Lemon Grove No

National City No

Formation of such a policy has been discussed in recent years

Oceanside No

Poway

San Diego, City No

In the past, penalty fees have been waived to legalize units.

San Diego, County Somewhat similar

San Marcos No

Though somewhat liberal provisions for Accessory Units

Santee No

Solana Beach

Vista

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Exhibit CC- 6

SIMILAR PROVISIONS OF CITY OF ESCONDIDO AND COUNTY OF SAN DIEGO

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Exhibit CC- 7

10/13/2014 CORRESPONDENCE FROM VERONICA TAM & ASSOCIATES

RE: SECOND UNITS FOR RHNA

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October 13, 2014 To: Manjeet Ranu/Michael Strong City of Encinitas From: Veronica Tam Veronica Tam and Associates Second Units for RHNA – Required Analysis As provided in Government Code Section 65583.1(c)(1)), local governments can employ a variety of development strategies and/or commit to specific program actions to address the adequate sites requirement for accommodating the Regional Housing Needs Allocation (RHNA). In addition to identifying vacant or underutilized land resources, local governments can address a portion of their adequate sites requirement through the provision of second units. To rely on second units as part of an overall adequate sites strategy to accommodate (a portion) of the regional housing need, the element must include an estimate of the potential number of second units to be developed in the planning period based on an analysis that considers the following factors:

Number of second units developed in the prior planning period;

Community need for these types of housing units, the resources and/or incentives available that will encourage the development of second-units; and

Other relevant factors as determined by HCD. HCD has also accepted the conversion of illegal units to legalized units against the RHNA. Encinitas - Second Units/Conversion of Illegal Units According to staff, the City averages about 20 second units annually. However, most are documented by the owners as above moderate in rental rates. Conversion of illegal units to legalized units can be used to fulfill a portion of the City’s RHNA as well. This type of activities averages only 1.5 units per year. Use of second units and/or conversion of illegal units to fulfill a part of the RHNA must be based on historical trend, not based on “potential capacity,” i.e. the fact that there may be a lot of illegal units in the City is not an adequate argument for counting all these units toward the RHNA. The quantified objectives in the Housing Element can be inflated reasonably (beyond current trends) if the City can demonstrate a market demand, attractive incentives, and marketing efforts. In the Housing Element, typical analysis to justify an expanded second unit program includes:

Historical trend of second unit development/conversion of illegal units and occupancy patterns. Given the market conditions in Encinitas, HCD is not likely to accept these units as potentially affordable units unless the City can show evidence of second/converted units being rented at low costs or being occupied by extended family members at low or no costs. For Encinitas, you have a better chance of crediting the second/converted

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units against the lower income RHNA if they are being used by domestic help, family members at no or low costs.

For the City of San Marino, the City had to contact property owners to inquire about the uses and rents collected. We recommend adding intended uses as part of the information to be collected from the application.

Number of second unit/conversion applications that meet City requirements versus number of applications that cannot meet City requirements. If the City is intending to justify a larger number of second/converted units than the previous planning period, the City needs to identify the constraints to developing second units/converting units and commits to making modifications (see San Marino and Del Mar examples presented later). The City must show HCD you are doing something different in order to facilitate and encourage second units and the conversion of illegal units.

Marketing efforts: The Housing Element should include a program to promote second units and conversion of illegal units. However, the marketing program is not a determining factor in terms of how many units HCD would accept. Trends and mitigation measures are critical.

Housing Elements with Second Unit Strategy Del Mar Housing Element Existing Requirements: The Del Mar Zoning Ordinance requires the following:

1) The parcel meets the minimum lot size specified for the underlying zone;

2) The Second-Dwelling-Unit does not exceed 550 square feet in floor area;

3) The rental fee charged for the second unit is affordable to individuals that qualify as low income;

4) The Second-Dwelling-Unit is deed-restricted for rental to only low income individuals for at least 30 years;

5) If in a detached structure, the Second-Dwelling-Unit does not exceed a building height of 14 feet and, if in a separate structure, is also located a minimum of six feet from any other structure;

6) The property is not located within one of the City’s sensitive resource areas, namely the Bluff/Slope and Canyon, Open Space, Historic, Coastal Bluffs or Lagoon Overlay zones; and

7) At least one off-street parking space (covered or uncovered) is provided. Although this ordinance has been in place since 1999, no second units have ever been constructed. There are a number of dwelling units within Del Mar that were constructed or converted without the benefit of required permits. In some cases, these dwelling units are not allowed uses and/or exceed the allowed residential density of the zoning for the property. Housing Element Programs: the City has included proposals for additional incentives in the Second-Dwelling-Unit Program as a means by which to increase the use of the Program. They include:

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1) Additional building floor area of up to 550 sq. ft. above the maximum allowable Floor Area Ratio (FAR) for the property. In a community where land costs are high and Floor Area Ratios are strictly regulated, the provision of this additional building floor area is a major incentive and, as such, is anticipated to generate requests for property owners to avail themselves of the opportunities to construct Second-Dwelling-Units;

2) Allowances for rear yard setback encroachments; and

3) An amnesty program to allow unpermitted dwelling units that qualify for Second-Dwelling-Unit status to gain legal status.

HCD has accepted the City’s objective of eight (8) second units over the next eight years with these incentives. However, the City does not rely on these units to meet its RHNA, even though it is eligible to do so. San Marino Housing Element Existing Requirements: The San Marino Zoning Ordinance requires the following:

The minimum floor area shall not be less than 150 square feet; the maximum floor area of the unit shall not exceed 600 square feet, exclusive of garage;

The lot currently contains an existing single family dwelling;

The unit may be rented but not sold separately from the primary unit on the lot – a second unit shall at all times be held under the same ownership as the remainder of the lot;

The unit shall conform to the same development standards as that set forth for the zone and area district in which the second unit is to be located.

The unit shall have its own entrance;

Common walls separating dwelling units shall be properly soundproofed. Details of the proposed means of soundproofing shall be submitted with the application;

The design of the second unit shall be consistent with that of the main building; and

The unit must be served by its own parking space.

A second unit may not have separate utility services. Between 2006 and 2013, only three second units have been constructed. Only one of the three units is occupied by extended family members at a low rent. What is more prevalent in this community is the construction of pool houses via a CUP process. Pool houses have less restrictive development standards (setbacks) and have no maximum size. Pool houses typically consist of a large room and a full bathroom; however, a kitchen is not allowed. Housing Element Programs: The San Marino Housing Element includes the following actions to promote/facilitate second units: Facilitate second unit construction by revising the Second Unit Ordinance so that the development standards are more similar to those for a “pool house”, or accessory structure containing livable area. Specifically, undertake a comprehensive review of the City Code and identify barriers to the construction of second units and how they can be eliminated. Specific considerations include:

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a. Setbacks – Consider changing the required setbacks for second units so that they are

similar to those required for a pool house, or other accessory structure with livable area. The current Code requires a second unit to have the same setbacks as a main house, whereas a pool house allows for a much less restrictive rear yard setback.

b. Maximum allowable size - Consider increasing the maximum allowable size of a second unit in relation to the lot size. Currently, the maximum allowable size for a second unit is 600 square feet for all lots. A second unit size of 800-1,200 square feet may be more appropriate for larger lots.

c. Parking – The Code currently requires a dedicated, enclosed parking space for a second unit. Consider allowing an open parking space or pad that is not visible from public view as an alternative.

d. Definitions – Consider amending the Code definition for “kitchen” so that the requirements for cooking devices in a second unit may be met by portable cooking devices.

Other possible actions to increase second unit construction include:

Amend the Zoning Code to allow the conversion of pool houses into second units.

Waive permit fees for both new construction of second units and conversion of existing accessory structures (legal or illegal) into second units. This provision shall be valid for three years from the date of adoption of the revised second unit ordinance.

Allow conversion of unpermitted, existing, accessory structures into second units without penalty, provided that all other applicable Code requirements are met. This provision shall be valid for three years from the date of adoption of the revised second unit ordinance.

Contact property owners to educate them about second units and encourage conversion of their pool house or illegal second unit into a legal second unit.

HCD accepted the City’s proposed objectives to fulfill its entire lower income RHNA of 12 units using second units.

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Exhibit CC- 8

OPTIONS FOR MAILERS

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OPTION #1: appeals to all homeowners who have second dwelling units

Does your home have a “granny flat” or other type of second dwelling?

If so, we want to hear from you!

The City of Encinitas is working to create a housing plan that meets the changing needs of our residents. As part of

this process, we’ll be working to identify opportunities for more housing—but first, we need to get a clear picture of

how much housing we currently have.

We’re trying to take count of how many “granny flats” or accessory units exist in Encinitas. If you have one on your

property, please give us a quick call so we can add it to our inventory. This information will help us greatly as we

plan for the future of Encinitas. Please contact…

OPTION #2: appeals only to homeowners who have unpermitted second dwelling units

Did you know that if your home has an unpermitted “granny flat” or other type of second dwelling, there’s a

program that will help you bring it into compliance?

The City of Encinitas has a program to work with homeowners to legalize existing unpermitted dwelling units. If

you’re one of those homeowners, please call us to learn more.

We’d especially like to hear from you now because we are creating a plan to meet future housing needs in

Encinitas. As we plan, we need to get a true sense of how much housing we have—however, unpermitted units are

not counted in our inventory, and therefore we may not be getting a clear picture.

Please help us get all the information we need as we plan for the future of Encinitas. Please contact…

OPTION #3: appeals to homeowners who want their units to count toward affordable housing

Would you like to help the City of Encinitas reach its goal of meeting the evolving housing needs of our

community?

If your home has an unpermitted “granny flat” or some other type of second dwelling, you have an opportunity to

bring your unit into compliance while helping the City achieve its goals.

We are in the process of creating a plan to identify more opportunities for affordable housing in Encinitas. But first,

we want to get a clear picture of how much housing inventory we really have. Anything that was built without

permits is not in our inventory, and therefore, we may not be getting a clear picture.

Help us get an accurate count by giving us a quick call. We’ll work with you to bring your unpermitted addition into

compliance — so long as you agree to rent the unit to families with low income. This will help the City in two ways:

1) We will get a true sense of our current housing inventory and 2) Your unit could help us meet affordable housing

goals with existing units, thereby reducing the need for us to locate them elsewhere.

It’s important that we have all the facts as we plan for the future of Encinitas. Please help us get all the information

we need by giving us a call, and learn more about how you can be a part of the solution to meet the evolving

housing needs of our community.

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Exhibit CC- 9

PUBLIC CORRESPONDENCE

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... .

Kerry Kusiak

From:Sent:To:Subject:

Jeff MurphyWednesday, October 08, 2014 1:37 PMKerry KusiakFW: Amnesty for illega/fnonconforming apartments

Please include in the staff report... also, make sure that we notify this person once the hearing date is set.

JEFF

From: Jeff MurphySent: Wednesday, October 08, 2014 8: 15 AMTo: 'william.mcchesney(§gmail.com' .Cc: Brandi Lewis

Subject: RE: Amnesty for illegal/nonconforming apartments

Mr. McChesney,

During the Community Planning Strategic Planning Session in May of this year, among other actions, Council directed that staff returnwith options to amend the City's Affordable Dwelling Unit Policy (also known as the "Amnesty Program") that incentivize the programwithout sacrificing health/safety standards (this includes researching to see if other jurisdictions have similar programs). TheDepartment's Work Plan that was presented to the Council as part of the budget identified a target date of Spring 2015. The sunsetissue that you raise in your email will be included in our option package.

We will keep your email on record and advise you when the policy options will be presented before the CounciL.

. JEFF

From: Willam McChesney (mailto:william.mcchesney(Çgmail.com)Sent: Thursday, September 25, 2014 12:45 PM

To: Teresa Barth

Subject: Amnesty for illegal/nonconforming apartments

Dear Teresa Arballo Barth,

I am writing to urge you to approve the amnesty for ilegal/nonconforming apartments in Encinitas. Since i am sure youunderstand the issues of the Housing Element and up-zoning better than i do, I thought what I might bring to thediscussion is my personal experience and give this issue a human face.

In the early 1970s, my father built a small apartment behind his rental house next door and was surprised when there wasa big demand and it rented instantly. He saw that this was a way to have an income for his retirement, so over the nextseveral years he built four more. Of course there wasn't enough low cost rentals in the town so they all rented quickly. In1988, he passed away and i inherited the property. The next year a disgruntled neighbor called in a complaint. After sixyears of uncertainty, my wife and i signed the Covenant Program. We paid $1,300 for each apartment for sewer feesand made the improvements that were required by the program. We also signed a covenant that would expire in 20years.

During this time we renovated the apartments, including rewiring to bring them up to code.. Life has been pretty stable forus, but we always have the 2016 deadline in the back of our minds. Because these apartments are our major source ofincome, this causes us a great deal of anxiety. But its not only the money that worried us. It is also thatthe tenants, whohave become our friends over the years and this amnesty would affect them too.

1

11/19/2014 Item #10A

. There's Bob in apartment E. He has lived there 18 years and he always has a joke or a funny story. His rent is

$760 for a studio.. There's Katie in apartment D. She has been there 2 1/2 years. Even though we had lots of applicants we rented

to her because she was a nanny and worked for cash and that made it impossible for her rent a place. She is anoffice manager now and was recently promoted. Her rent is $1,030 for a one bedroom.

. Maria lives in apartment A. Ten years ago she rented from us for two years then she got a job in San

Francisco. She couldn't take the cold, rainy weather up there. When she came back to Encinitas, she gave usher phone number and roommated for 4 years until her old place was vacant again. She has been there 5 yearsnow and pays $860 for a one bedroom.

. Apartment B is where Jeff lives. He moved her a year ago from Vermont. He pays $1,020 for a one bedroom.

He's just happy living on the beach in California.. My sister Marilyn lives with her son Christopher in apartment C. Marilyn is a licensed family

counselor. Christopher has multiple medical problems and is on disability. Their rent is $500 for a onebedroom. All these rents also include all utilties.

So you can see these apartments have already been providing low income housing for the community for more than 40years. This zoning issue has been a problem for my wife and i for 25 years. Amnesty would be a huge relief and agodsend to us, and keep good, honest people who cannot afford expensive housing a part of our community.

Sincerely,Bill and Sabina McChesney

2

11/19/2014 Item #10A

Robert Bonde1620 Haydn Drive, Cardiff-By-The-Sea, CA 92007 7607537477 Rbonde007(êgmail.com

October 7, 2014

Mayor Gaspar and CouncilpersonsCity of EncinitasEncinitas, CA 92024 .

Subject: Housing Element

Dear Mayor Gaspar and Councilpersons:

The General Plan Housing Element must be deferred until the City has its base data in place.How can you plan for low and moderate income housing without having a clue about whatalready exists.

i applauded you for recognizing the need to count the massive number of non-recordeddwellng units located within our town and for the first time since incorporation having theintestinal fortitude to do somethingabo!Jt it. The problem is that staff does not seem torecognize the nexus between affordable housing requirements and ilegal units an"d continuesto stir up the citizenry~ In n)Qst c~ses, for every non-recorded unit brought within compliancethere wil be one less 10"" and moderate income dwellng unit needed. It is believed that thereare in excess of 1,000 non-recorded housing units or more in this City today.

In the 44 years that I have owned woperty in town, I have seeri the number of non-recordedunits increase dramatically. Many began innocently t() provide the seasonal needs of the DelMar Racing crowd and local workers, but as the area grew as a highly desirable beachdestination location, the d~mand for low cost housYngexploded. Older neighborhoods werethe first to feel the impacts of conversions, but soon owners ofnew facilties found ways to slipthem in and now they are everyhere. As rents increased, some commercial spaces even

became ilegal rental units.

The ownership of bootleg rental units is without a dqubt the largest underground industry inthe city. I wouldn't be surprised if it exceeded an annual cash val,l,e of over $10,000,000. Thisrental industry, like the lucrative bootleg alcohol industry it mirrors, is based on secrecy andclandestine operations; therefore mistrust abounds.

It wil be no simple task to have owners of these units to come forward and declare their cashcows. I believe that unfortunately both the carrot and stick approaches wil eventually berequired if full compliance is to be achieved becalJse the market rate for such rentals is so greatin comparison to the low income housinglimit allowed, some bootleggers wil never comply.Whatever is done must be fair and equal for all.

11/19/2014 Item #10A

Carrot -

The city must, of course, begin by seeking the cooperation of the owners of as many of theseunits as possible. To do so it must create a procedure that includes:

I. Understanding

A. Explain why the City is now proceeding with a legalization process that isbased upon cooperation and compassion rather than the traditionalpenalization process associated with ferreting bootlegged units.

B. Explain why it is important for all parties to work together to protect thecharacter and livabilty of the communities.

ii. Trust - People in general do not trust government. Bootleggers are particularly

wary. The amenable identification of ilegal units is doomed to failure unless trustcan be established.

A. Develop a communication procedure between the owner and City that isprivacy protected (one approach)

1. City acquire a phone line without caller identification.2. Instruct persons who wish information on legalization to call this

(safe) number.3. Without giving his or her name or address the person could be

assigned a case number by the operator.'4. City could make survey forms available on line.

5. Property owner could complete the survey and submit it by mail,using only the case number.

6. City staff could review and evaluate submittals and prepare anapproval analysis of the submittal.

7. A city web site could be established whereby the property ownercould receive information and instructions about his or her specificcase over the internet without ever being identified.

8. Property owner could respond by mail,ágain by only the casenumber.

9. Once the City staff response is received, the property owner could bedetermine if he or she would like to proceed with the legalizationprocess and to be identified.

IIi. Incentive - Create a limited window of opportunity to legalize units that

bootleggers can't resist. For a time period (180 days):

11/19/2014 Item #10A

1. No City penalties/legal action2. No City fees

. 3. No water or sewer connection and capacity fees (except if on a, septicsewer system)

4. Revised City Accessory Unit Codes

a. Simplified application process

b. Qualify additional units

1. Duplexes

2. Condominiums

3. Units built until Proposition A in 2013

4. Units not currently rented

5. Adaptable future facilitiesc. Onerous conditions

1. Eliminate annual reporting requirement

2. Establish covenant limit (20 years)3. Eliminate the compliance to all current codes if major building

or accessory unit are damaged more than 75% as determinedby city staff.

d. Accommodate more flexibilty in building codes where possible1. Setbacks

2. Floor area ratios

3. Parking

e. Make improvement funding loan money available at low interest.5. Advertise the program widely and often

a. Seek city leaders endorsement

iv. Compliance - City to make every effort possible to get owner to voluntarily signon to the program

Stick - For hard core bootleggers

i. Locate non-recorded units

A. Observation

1. Visual appearances

a. Garage conversions

b. Number of main entrances2. Mail boxes

3. House numbers

4. Vehicles

5. Trash cans

6. Electric meters

B. Smoke tests (free standing units)C. Offcial records - photographs

11/19/2014 Item #10A

. ,

O. Complaints already on record (avoid getting neighbors involved)

II. Plead

II. Negotiate

iv. Mediate

V. ArbitrateVi. Sue - Only after every other attempt fails as history shows that in those cases

where legal action is taken, everyone loses.

I beg you to not proceed with the Housing Element until all "ilegal units" are counted as theentire process is dependent upon good base data, and at the present, you do not have thiscritical information.

Attached is a draft of proposed code changes that must be enacted if you expect the countingprocess to be successfuL.

Please do not send out appeals for people to legalize their dwellng units without firstmodifying the codes because to do 50 wil surely have a negative impact on the results we allhope for. Remember, it wil be far less disruptive to the law abiding citizenry in allcommunitï'es to bring about conformation of non,.recorded dwellng units than it wil be to foisthigher densities and more traffic upon them.

Sincerely,

Robert Bonde

11/19/2014 Item #10A

Revised City of Encinitas Affordable Unit Policy

Proposed by Robert Bonde

1. To maximize the number of reported accessory dwellng units, the Citv shalldispense with all filing, inspection, sewer capacity, and other service fees and

simplifv the application process for existing accessory units by:A. Eliminating the term "ilegal dwellng unit" and replace it with "non-

recorded dwellng unit". Negative connotationB. Allow all units constructed prior to the Passage of Proposition A in

2013 to be converted. (Eliminating the reguirement that only unitsconstructed prior to incorporation be allowed to be converted) Unitsare there and should be counted

C. Allow accessory units in duplexes and condominiums. Source of mostnon-recorded units

D. Eliminate the reguirement that only those non-recorded unitscontinuously rented since incorporation be allowed to be converted.

Unit is either non-recorded or not. This reguirement makes no senseE. Eliminate the need for the inclusion in the covenant that the facility

meets all City land use and building regulations if the accessory unit ormain structure is ever damaged by more than 75%and needs to berebuilt. Major deterrent to the legalization process.

F. Eliminate the need for site plans, set back and property lines,easement information, roof extension lines, fence/garden wallheights, curb cut data and driveway details for applications for

accessory units that are within existing structures. Unnecessary detailif structure was originally permitted.

G. Reduce the cost of the building permit by allowing a draftsperson toprepare the plans fora conversion of an existing space into an

accessory unit rather than reguiring an architect or engineer to do so.Over kil.

H. Öty to continue to provide the covenant preparation service and theowner to pay the recording fee.

l: Reguire the Owner to provide the tenant's income verifcation

information only upon the change of occupancy and not annually. Too

much red tape

L. The City building inspector to provide the final inspection andverifcation that the accessory unit meets UBC and UFC reguirements.

11/19/2014 Item #10A

Current Accessory Unit Approval Process with Proposed

Modifications

Accessory Units (Encinitas MunicipaLCode Section 30~48~040T): The City

finds that there are many benefits assOciated with the creation of accessory residential units on

existing single iamil'l lots, '..l:iel: ineh:IElelQrEl9~ (7):

. Providing affordable housing for low and mo~erate income household without

public subsidy while maintainïr'lß the general character of a single famil't

neighborhood. .. Providing cost effective means, of serving development through the use of

existing infrastructure.

. Providing a means for homeowners of new or e)Çistinghomes to meet loan

payments.. Providing seclj rity for senior homeowners.

. Providing the City assistance in meeting its State mandated low and moderateincome housing guotas.

. Providing the.Cityadditional income to assist with budget reguirements

. Providinamorehousina close to transportation corridors to reduce greenhouse

gases. Providing a way to reduce land fill demands

i. Accessory residential units are permitted subject to the following regulations:

1. On piJrcels zoned for residential-sfamily dwellngs as a permitted use, one

attaçhed or det~ched accessory unit may be eenstri-eteå included. Attached ordetached units shall be perrni~ted by right.

2. Attached and detached accessory units must maintain the general character of asingle famil't the neighborhoq,d anElR3aintain tl:eia~araeter as a single iamil't

E1'..ellng as determined by the Director.

3. Maximum living area of an accessory unitshall not exceed 750 square feet or30% of the living area of the 'principal residence, whiçhever is less. An accessory

unit of 400 square feet is perrnitt~d,regardless of the living area of the principal

residence.4. Accessory units shall be praYi~e with full kitcheii facilities, standard height limits,

lot coverage, floor area ratip, main buildingsetbacks"an~ etl:'er ree¡i:irements fer

resiElentialzenes ~QrEl. 97 17)

5. One off .street parking space shall be provide for the seeenEi accessory unit

reguested in addition to any off-street parkingrequirements for the principalunit. The primary unit may utilze tandem parking, and the parking for theaccessory unit may be located in the required front yard.

11/19/2014 Item #10A

6. Properties currently served by a septic system shall be required to connect into

the sewer system provided the sewer Iineêxists in the streetor alley

immediatelyadjäcent to the property.7. Accessory units shall be used as a dwellng unit only, and no businesses other

than home occupations shall be conducted from or i.n the seeaREI unit.

8. Accessory units shall be permitted on a lot or parcel having another

condominium, duplex. a guest house or accessory living quarters. (Conversions

of such quarters into an accessory unit is permitted providing all zoning and

building code requirements are met). However, only one detached accessoryunit structure for residential occupancy per legal

lot is permitted.

9. Prior to issuance of a building permit for an accessory unit, a low income

covenant shall be recorded between the Owner and the City of Encinitas

agreeing only to the terms stipulated in this ordinance.

Current City regulations for adding accessory units to single family dwellngs asdistributed by the planning department CinterpretedL.

1. One attached or detached accessory unit allowed (State law allows a granny flat byright)

2. Compatibilty

A. Director of Planning to determine if unit is visually èompatible3. Living area

A. Max. 750 square feet or 30% of principal residence, whichever is lessB. 400 square feet allowed regardless of size of principal residence

4. Meet residential codesA. Full kitchenB. Building height limit

C. Floor area ratioD. Main building setbacks

5. One parking space (may be located in front yard setback)6. Dwellng unit only7. Must have a covenant stipulated in the ordinance recorded8. Fees

1. Planning - $75

2. Sewer - (CSD) - $2,750

3. Drawings/etc. - (estimate) $1,000

Total Estimated cost $3,825

Note: This section does not apply to duplexes or condominiums.

Current ilegal affordable dwellng unit legalization procedure as distributed bythe City planning department Cinterpretedl:

11/19/2014 Item #10A

Verify unit existed priorto Oct..l. 1986Must be abated if constructed after Oct. 1,1986Must meet all development standards required for accessory unitsMust have been used as a dwellng unit continuously since conversion

Application for approvalCopy of grant deed

Copy of building recordFloor plan

Site plan

1. Property lines

2. Setback lines

3. Location of all buildingsa. Must show roof extensions

b. Driveways

1. Locations

2. Surface materials

3. Percentage of slope

4. Curb cuts

c. Off-street parking areas

d. Wålls and fences

1. Location

2. Height

3. Construction materials

e. Easements

1. Location

2. Type

IIi. Administrative Planning and Building Review

A. Unit required to meet development standards to the extent practicableIV. Building Permit

A. Complete construction drawings1. Architect or Engineer may be required to verify that field construction

complies with the current UBC and UFC codes

2. Site Plan

V. Dwellng Unit Requirements

A. Living room 220 square feet min. for 2 occupant or lessa. Each occupant above 2 add 100 square feet

B. Closet required

C. Kitchen

1. Sink

2. Cooking appliances

3. Refrigerator

i.

A.

B.

C.

II.

A.

B.

C.

D.

11/19/2014 Item #10A

All of the above must have a minimum of 30 inches of clear space

D. Bath

1. Toilet

2. Sink

3. Tub or shower

Vi. Income Restrictions

A. Covenant (no time limit)1. If the b~i1ding and or unit is ever damaged by more than 75% of the

value, the entire property shall be brought in to full compliance withall City land use and building regulations.

2. Low income renter reservation3. Recorded at owners expense

B. Tenant's Income Verification1. Verify annually

VII. Final Inspection Required

VIII. Fees

A. Administrative Review - $900B. Sewer- (CSD) -$2,750

C., Drawings - survey - (estimate) $3000D. City Fees - ?

Total Estimated Costs - $6,000 Minimum

Note: Applicant has 6 months to complete the process or the unit could be subject toabatement.

11/19/2014 Item #10A

meeting date: prepared by - granicus

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