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HomeMy WebLinkAboutReso - CC - 106-2023RESOLUTION NO. 106-2023 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME APPROVING THE CITY OF BURLINGAME RESPONSE LETTER TO THE SAN MATEO COUNTY CIVIL GRAND JURY REPORT ENTITLED “ACCESSORY DWELLING UNITS: AFFORDABLE HOUSING’S PANACEA OR PREVARICATION?” WHEREAS, the San Mateo County Civil Grand Jury released a report entitled, “Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?” on June 12, 2023; and WHEREAS, the report examined if San Mateo County cities were taking sufficient steps to meet their Regional Housing Needs Allocation 6th Cycle (RHNA 6) obligations through use of Accessory Dwelling Units (ADUs), and whether they were monitoring the affordability of ADUs ; and WHEREAS, the report included seven findings and six recommendations; and WHEREAS, the County has requested that each agency respond to the applicable findings and recommendations, and submit responses to the San Mateo County Grand Jury by September 11, 2023; and WHEREAS, the City Council has received the proposed response letter for review. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME RESOLVES AND ORDERS AS FOLLOWS: That the letter in response to the San Mateo County Grand Jury Report entitled “Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?” attached hereto, is hereby approved, and the Mayor is authorized to sign and convey said letter on behalf of the City. ________________________________ Michael Brownrigg, Mayor I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify that the foregoing Resolution was introduced at a regular meeting of the City Council held on the 21st day of August, 2023, and was adopted thereafter by the following vote: AYES: COUNCILMEMBERS: BEACH, BROWNRIGG, COLSON, ORTIZ, STEVENSON NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE ________________________________ Meaghan Hassel-Shearer, City Clerk DocuSign Envelope ID: FA81CBFB-1929-4C9D-B832-CA8D48074B49 MICHAEL BROWNRIGG, MAYOR DONNA COLSON, VICE MAYOR EMILY BEACH RICARDO ORTIZ PETER STEVENSON TEL: (650) 558-7201 www.burlingame.org The City of Burlingame CITY HALL -- 501 PRIMROSE ROAD BURLINGAME, CALIFORNIA 94010-3997 August 21, 2023 Honorable Nancy L. Fineman Judge of the Superior Court c/o Bianca Fasuescu Hall of Justice 400 County Center; 2nd Floor Redwood City, CA 94063-1655 Subject: City of Burlingame’s Response to Civil Grand Jury Report Entitled “Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?” Dear Judge Fineman: After reviewing the Grand Jury Report entitled "Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?” the following are the City of Burlingame’s responses to the Grand Jury’s findings. F1. Due to recent changes in California ADU-related laws, local governments cannot condition ADU permits in San Mateo County on complying with affordability monitoring and verification. The City agrees with this finding. F2. San Mateo County and most of its municipalities rely on ADUs to meet their affordable housing commitments in their RHNA-6 plans. The City partially agrees with the finding. If the finding read “San Mateo County and most of its municipalities include ADUs to meet their affordable housing commitments in their RHNA-6 plans,” then the City of Burlingame would agree with the finding. While Burlingame counts ADUs to meet affordable housing commitments in RHNA, it is one of many strategies. Specifically, Burlingame has a total lower income housing RHNA of 1,889 units, and ADUs make up only 150 (8%) of these. Additionally, Burlingame has or is developing programs such as:  An updated General Plan that greatly increased residential density, which allows for housing that is naturally more affordable  Use of housing trust funds to support 100% affordable housing developments  Streamlined permitting processes for affordable housing The Honorable Nancy L. Fineman August 21, 2023 Page 2  Register online with the City of Burlingame to receive regular City updates at www.burlingame.org/enews.   Zoning requirements that facilitate a certain percentage of new units be rented affordably  Commercial linkage fees to fund new affordable housing F3. Atherton, Hillsborough, Portola Valley, and Woodside rely on ADUs to meet as much as 80 percent of their affordable housing commitments in their RHNA-6 plans. Not applicable: Burlingame is not named in this finding and therefore has no comment. F4. HCD has instructed San Mateo County jurisdictions to monitor and verify future ADU production and affordability every two years but has yet to specify how to verify whether very low-, low- or moderate-income households are occupying the ADUs as planned. The City partially agrees with the finding. We do not expect HCD to specify how to verify the income levels of ADU occupants. Burlingame is planning on supporting a regional ADU monitoring effort through the Association of Bay Area Governments (ABAG) or 21 Elements, a long-standing collaboration among the 21 jurisdictions of San Mateo County. F5. Other than Brisbane and Redwood City, San Mateo County and its jurisdictions have yet to articulate how they will monitor and verify ADU production or affordability. The City agrees with this finding. San Mateo County jurisdictions met on June 20, 2023 to discuss potential strategies for monitoring ADU affordability levels. Burlingame is planning to support a regional ADU monitoring effort through ABAG or 21 Elements. We expect this monitoring effort to begin no later than two years after the Housing Element was due (early 2025). F6. Without effective ADU monitoring and verification, it will be impossible to evaluate whether the jurisdictions are meeting their RHNA-6 obligations for low-, very-low, and moderate-income housing units. The City partially agrees with this finding. As noted previously, the City of Burlingame includes 150 ADUs in its Housing Element towards fulfillment of the required 1,889 allocation of lower income units. Theoretically, the City of Burlingame can still fully meet its RHNA obligations for every affordability category without a low -income ADU being provided if multifamily developments provide more affordable units than projected. With the exception of ADUs, below market units in Burlingame are subject to annual monitoring through the City’s housing management vendor. However, as stated above, Burlingame is planning to support a regional approach to monitoring ADU affordability. F7. ADU affordability and occupancy could be monitored by agencies such as HIP Housing which has proven systems and processes to verify occupancy of deed-restricted rental properties in San Mateo County. The City agrees with this finding. HIP is one potential partner agency. The following are the City of Burlingame’s responses to the Grand Jury’s recommendations: R1. San Mateo County and each City should immediately stop using ADUs to meet their State-mandated very low-, low-, and moderate-income housing targets in their Housing Element submissions until they have also proposed an effective monitoring system that verifies how newly developed ADU’s will be used. The Honorable Nancy L. Fineman August 21, 2023 Page 2  Register online with the City of Burlingame to receive regular City updates at www.burlingame.org/enews.  The recommendation will not be implemented because it is not warranted or is not reasonable. While Burlingame shares the Civil Grand Jury’s goal to increase ADU affordability monitoring, it is not feasible to revise the City’s Housing Element to eliminate the use of ADUs to meet affordable housing goals. The Housing Element was developed through a rigorous process of multiple years of public input and revisions. Burlingame has already submitted its second draft to HCD; and the draft follows HCD guidance on designating the affordability of ADUs. However, Burlingame is committed to following state housing law and to supporting the development of an effective regional ADU monitoring program that will be operated by 21 Elements or ABAG. Burlingame is also supporting the development of a new ADU nonprofit that will have programs to incentivize the production of affordable ADUs in San Mateo County. The City will have this monitoring program in place for future Housing Element cycles. R2. By February 1, 2024, San Mateo County and each City should develop, adopt, and implement a verification system capable of monitoring and verifying how newly developed ADU’s are being used. Part of the recommendation has yet to be implemented but will be implemented in the future. However, part of the recommendation is not warranted. Burlingame agrees that it is important to have high quality information about who is living in ADUs. The City will participate in the ABAG or 21 Elements ADU monitoring system. The monitoring is projected to launch in January 2025 and will likely survey people about their plans for their ADU at the time permits are issued. Due to homeowner privacy concerns and the cost of engaging with thousands of homeowners every year, it would not be practical to have an ongoing verification system that checks the income of every resident of every ADU in the county. R3. By February 1, 2024, San Mateo County and each City should develop and adopt incentives for ADU owners which could be offered in exchange for deed restrictions that would include requirements for ADU tenants to participate in independent monitoring. This recommendation has yet to be implemented but will be implemented in the future. Burlingame agrees with the goal of adopting an affordable ADU program. The City is actively involved in the creation of an ADU nonprofit to serve San Mateo County jurisdictions, and 21 Elements, working on behalf of the City, has been researching best practices. The draft work plan for the nonprofit calls for it to offer programs to incentivize the production of affordable ADUs and support homeowners in constructing ADUs in exchange for agreeing to rent at affordable levels. The nonprofit is projected to launch in July 2024 and will be financially supported by San Mateo County jurisdictions as well as private philanthropy if possible. R4. By February 1, 2024, San Mateo County and each City should track the intended use of ADUs – rented or non-rented – during the permitting process and offer incentives in exchange for deed restrictions that require ADUs to be used as rentals. This recommendation has yet to be implemented but will be implemented in the future. As part of the monitoring program referenced in response to R2, Burlingame will track the intended use of ADUs. The City already offers streamlined permitting for ADUs and ADU low permit fees, so it is not clear what incentives would be effective beyond offering direct financial support, which can be considered. However, deed restrictions are likely to be a deterrent to ADU production, given owners’ reluctance to place encumbrances on their properties. The Honorable Nancy L. Fineman August 21, 2023 Page 2  Register online with the City of Burlingame to receive regular City updates at www.burlingame.org/enews.  R5. By April 1, 2024, San Mateo County and each City should develop and adopt a new ADU affordability distribution formula specific to each jurisdiction to the extent they are used for meeting the very low-, low-, and moderate-income housing requirements in their RHNA housing elements. The recommendation will not be implemented because it is not warranted or is not reasonable. While we agree with the importance of an accurate distribution formula, given the relatively small size of Burlingame, a more meaningful distribution formula can be attained by collecting data on ADUs constructed across all San Mateo County jurisdictions. Burlingame is supporting the creation of an ADU monitoring program through 21 Elements or ABAG that will collect data that can be used to revise the distribution formula based on actual observed income levels. ABAG provides guidance on an ADU affordability distribution formula based on a study prepared in 2021 by the Terner Center for Housing Innovation at the University of California at Berkeley. The study surveyed thousands of homeowners statewide with repeat mailings, and the data was aggregated to reduce the margin of error. There was no evidence in the data to suggest significant variation from city to city. The study’s recommended affordability breakdown that a Bay Area jurisdiction can use for ADUs, which is noted as being conservative, is 30% very low, 30% low, 30% moderate , and 10% above moderate. The recommendations of 30/30/30/10 had a significant cushion built in to ensure cities did not accidentally underproduce the amount of housing needed. R6. San Mateo County and each City should consider working together to address Recommendations 2 and 3. This recommendation has been implemented. San Mateo County jurisdictions work collaboratively through 21 Elements to develop, adopt, and implement housing policies and programs in the county. San Mateo County jurisdictions are already working together to address recommendations 2 and 3. The Burlingame City Council approved this response letter at its public meeting on August 21, 2023. Sincerely, Michael Brownrigg Mayor c: Kevin Gardiner, Community Development Director Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication? Release Date: June 12, 2023 2022-2023 San Mateo County Grand Jury 2022-2023 San Mateo County Civil Grand Jury 1 “You can always count on Americans to do the right thing – after they’ve tried everything else.” Winston Churchill “Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness.” Martin Luther King, Jr. 2022-2023 San Mateo County Civil Grand Jury 2 ISSUE Are some San Mateo County communities misusing Accessory Dwelling Units (ADUs) to avoid the construction of multifamily low-income housing over the next eight years? SUMMARY Anointed the “epicenter of America’s housing dysfunction” by Harvard Business Review this year, the San Francisco Bay Area has faced an acute housing shortage at all levels for decades, especially for those who have the least. And it is no longer news that many of the workers that San Mateo County communities depend upon daily – first responders, teachers, nurses, city employees, gardeners, and housekeepers, to name just a few – cannot afford a decent place to live and raise their families close to their jobs. To address the issue, the State Legislature in 1969 passed the Housing Element Law, which says all California cities, towns, and counties, every eight years, must plan for the housing needs of all their residents regardless of income, which effectively requires development of affordable housin g. Many changes and additions have been made to the law over the years, most recently eliminating zoning restrictions governing ADUs – small homes or apartments that share a single-family lot of a larger primary residence – and allowing communities to count them as affordable housing in their Regional Housing Needs Allocation (RHNA) plans. At issue: ● Although their intentions have been good, the State has neglected to include any form of regulation to ensure low-income tenants ultimately use these ADUs as planned. ● Because owners often rent their ADUs to family and friends, they can exacerbate patterns of segregation and exclusion.1 ● And perhaps most importantly – counting ADUs as affordable housing will likely result in cities issuing permits for fewer deed-restricted low-, very low-, and moderate-income apartments and homes. Without accountability through oversight and regulations, low-, very low-, and moderate-income housing now planned in some San Mateo County jurisdictions may end up existing solely on p aper and never in operation. This problem is most acute in Atherton, Hillsborough, Portola Valley, and Woodside, where some residents are up in arms over the State-mandated housing requirements, and the city governments, trying to appease them, are proposing counting on ADUs to meet as much as 80 percent of their affordable housing targets. 1 Association of Bay Area Governments, “Final Regional Housing Needs Allocation (RHNA) Plan, San Francisco Bay Area, 2023-2031”, accessed May 27, 2023, https://abag.ca.gov/sites/default/files/documents/2021- 12/Final_RHNA_Allocation_Report_2023-2031-approved_0.pdf 2022-2023 San Mateo County Civil Grand Jury 3 Assembly Bill 72 (2017) gives the California Department of Housing and Community Development (HCD) enforcement capability on local government’s land use, planning, an d zoning requirements. In the current RHNA-6 (2023-2031) planning cycle, HCD demands that San Mateo County jurisdictions monitor and verify ADU affordability every two years. However, HCD has not specified how to prove the ADUs are rented to very low-, low- or moderate-income households, leaving it to the communities to find a solution. So far, jurisdictions have yet to do so, even though local independent agencies such as HIP Housing have systems and services in place, which they use to verify affordability of deed-restricted affordable housing, and that could be adapted Countywide to monitor and verify ADUs’ affordability and occupancy in a manner that adheres to fair housing guidelines. California needs to build 2.5 million homes by 2030 to meet current housing demands, according to the HCD. But the State averages only about 125,000 new homes annually – a shortfall by nearly two-thirds. ADUs can, indeed, provide affordable housing. And to many citizens of affluent communities, they are an appealing alternative to multi-family, deed-restricted affordable housing projects. However, just because the law makes it possible to count ADUs as affordable housing, it does not exempt cities and towns from credibly planning for badly needed affordable housing. BACKGROUND One of the State’s long-standing priorities has been to increase the availability of affordable housing for all economic segments. HCD – the California Department of Housing and Community Development – focuses on making this happen by working with local jurisdictions to create rental and homeownership opportunities for all Californians, including individuals and families who are experiencing homelessness. Beginning in 1969, the State mandated that all California cities, towns, and counties must plan for the housing needs of all Californians, regardless of income. They meet this mandate by developing and updating a Housing Element, part of a local jurisdiction’s General Plan, which shows where they will allow new housing and describes the policies and strategies necessary to support building new housing. The process of updating the Housing Element involves HCD working with various Councils of Governments (COG) to develop a RHNA plan that includes the Regional Housing Needs Determination (RHND), which assigns the number of housing units that each county and city are expected to facilitate being built in the subsequent eight years to accommodate projected growth. In the case of the Bay Area, this Council of Governments is the Association of Bay Area Governments (ABAG), which represents all nine Bay Area counties, including San Mateo County and its 20 cities and towns. Components that ABAG considers in determining each Bay Area county’s and city’s allocation of housing units include population, employment potential, proximity to transportation centers, open space, inclusivity, and diversification, all of which are becoming increasingly important to the State, accordi ng to ABAG reports. 2022-2023 San Mateo County Civil Grand Jury 4 Multiple bills in both houses of the State Legislature have been proposed over the years to change the process and increase the amount of State control over housing development. Particularly significant changes occurred during the 2017 legislative session when senators and assembly members proposed approximately 150 housing bills. That year the Governor ultimately signed a package of 15 bills related to funding for housing, streamlining development approvals, and increasing accountabil ity for meeting the requirements of the Housing Element Law. These included bills that significantly changed the RHNA process, requiring additional outreach and reporting, modifying how to calculate the RHND to reflect unmet housing needs better, increasing the number of topics to be considered in the allocation methodology, and giving HCD, on behalf of the State, the ability to sue individual counties or cities for not meeting requirements. Updating the Housing Element every eight years is an iterative process involving HCD, the regional COGs, the State Department of Finance (DOF), and local jurisdictions. (See Appendix D.) But the ultimate authority for approval of the RHNA, the RHND, and the associated Housing Elements resides with HCD. The current approved RHNA plan developed by ABAG is known as RHNA-6, which spans 2023 to 2031. HCD requires each jurisdiction to submit its completed Housing Element for review and approval by a specific date. For RHNA-6, the due date for San Mateo County and its cities was January 31, 2023. Before the due date, the jurisdictions were able to send their draft Housing Elements to HCD for preliminary review and comments and make necessary modifications that HCD highlights. Any jurisdiction which fails to meet the deadline for submission of their completed Housing Element is subject to a potential “builders remedy” action that forces a city to allow building projects regardless of whether they meet most of the local zoning restrictions. Once Housing Elements are approved, HCD monitors the progress of approved RHNA plans by requiring each jurisdiction to report its building permit activities annually. If progress is below expectations, the jurisdiction must develop alternative strategies for review and approval by HCD. During the RHNA-5 (2015-2023) progress reviews submissions, cities began including ADUs as part of the overall housing inventory in their annual reports because State legislation (Government Code section 65852.150) that became effective in January 2017 stated that ADUs are a valuable form of housing in California, which also "provide housing for family members, students, the elderly, in-home health care providers, the disabled, and others, at below market prices within existing neighborhoods." Numerous Senate and Assembly bills were enacted in 2018 and 2020, requiring local jurisdictions to streamline and allow for ease of ADU production to increase housing for all income categories. With these encouragements, ADUs being deemed a viable housing option, and facing stringent RHNA-6 requirements of approximately three times more housing units than in the RHNA-5 cycle, a few affluent San Mateo cities have proposed using ADUs to satisfy most of their plans to meet the required number of housing units in the various income categories. “ADUs are not a panacea, but they’re a good tool in the toolbox,” said a planning consultant working for a San Mateo County city. “Most land on The Peninsula is single-family homes. ADUs are opening land that was not open before. But higher density housing near transit is better.” 2022-2023 San Mateo County Civil Grand Jury 5 Added a city manager: “I think they (ADUs) are a piece of the solution, but not all of it. I think ADUs are an important way to provide opportunities for other things – where people want multigenerational living on- site, for caretakers, or other folks – they can reside in an ADU even if they’re not paying rent.” DISCUSSION While HCD-approved RHNA Housing Elements do not require the cities and counties to build affordable housing, the jurisdictions must adjust zoning ordinances, issue permits to allow construction of affordable housing, and initiate programs that incentivize such construction. However, as shown in Chart 1 below, significant portions of San Mateo County's affordable housing in RHNA-5 (2015-2023) plans did not materialize – most likely due to a lack of permit applications. With RHNA-5’s significantly lower targets, the less-than-expected performance during the RHNA-5 cycle foreshadows the enormous challenge the County’s cities and towns now face in meeting the RHNA-6 goals for the next eight years, which are approximately three times larger, as shown in Chart 2 below. Chart 1: RHNA-5 Affordable Housing Required vs. Permitted 2022-2023 San Mateo County Civil Grand Jury 6 Chart 2: RHNA-5 Affordable Housing Allocations vs RHNA-6 Besides increasing affordable housing targets by nearly 300 percent, the State has made other significant changes in the ADU laws to address the current housing crunch. Law Year Impact AB671 2019 Through Housing Elements, HCD to promote ADUs for affordable rent AB670 2019 Any local covenants and restrictions on new housing are void AB587 2019 Deed-restricted sale of ADU is allowed separately from the main house AB 68 2019 Removes local restrictions on minimum size, requirement of owner occupancy, parking requirements for garage conversion, and any impact fee. AB 3182 2020 Permitting process within 60 days SB9 2021 Facilitates lot split and allows more than1 ADU per property AB 345 2021 Allows owners to sell ADUs separately AB 2221 2023 Pre-specific time permit frame for approval of ADU applications SB 897 2023 Increases the ADU height limit to 18’ and allows retro permitting of previous unauthorized ADUs. The net effect of these changes was to minimize municipal-level regulations on ADUs – such as parking requirements, property line setbacks, height limits, or the number of ADUs on one property – and make 2022-2023 San Mateo County Civil Grand Jury 7 ADUs an acceptable means to meet affordable housing obligations. Given these changes, namely high mandatory targets for affordable housing, enthusiastic support by the State of ADUs as affordable housing, and requiring zero land use rezoning for ADUs, nearly all San Mateo County cities and towns include ADUs in their RHNA-6 Housing Elements. The issue, however, is that for every ADU included in a Housing Element – regardless of whether the ADU is built and rented to very low-, low-, or moderate-income tenants – one verifiable, deed-restricted affordable housing unit will not be built in that jurisdiction by a developer. So, How Did We Get Here? California cities and counties can now use ADUs to help satisfy their RHNA requirements. But calculating how many ADUs to put into a Housing Element and how to distribute them into each income category, differ from other housing options. ABAG instructs San Mateo County jurisdictions that the standard method is first to estimate the number of ADUs that homeowners will build in a planning period, which is 2023 through 2031 for RHNA-6. In its technical memo “Using ADUs to Satisfy RHNA,” ABAG advises members that the estimate should be based on the average number of ADU building permits issued each year, multiplied by eight, because there are eight years in a housing element cycle. “Most cities base their determination of annual ADU permits by averaging the building permits approved each year since 2019 when State law made it easier to construct the units,” the technical memo explains : “There is a small amount of flexibility in the calculations,” the memo continues. “If numbers were low in 2019 but were high in 2020, 2021, and 2022, a jurisdiction could potentially use 2020 -2022 as the baseline. This rationale would be bolstered if there was a logical explanation f or the change, e.g., the jurisdiction further loosened regulations in 2020. Projecting a higher number of ADUs than what has been demonstrated through permit approvals in recent years may be possible, but more challenging. A slightly larger number may be warranted if a robust, funded, and clear plan to increase production has been put in place. However, you are strongly encouraged to coordinate with HCD before deviating from the standard methodology.” Once cities complete their estimate, they must distribu te those units into each income category. To help its members, ABAG analyzed ADU affordability. Using data from a 2020 statewide survey of homeowners who had constructed ADUs in 2018 or 2019, ABAG concluded that the assumptions in the chart below are generally applicable in most jurisdictions. Man y Bay Area jurisdictions chose to use these numbers instead of conducting their own affordability analysis. Percent Income Category 30% Very Low Income 30% Low Income 30% Moderate Income 10% Above Moderate 2022-2023 San Mateo County Civil Grand Jury 8 “UC Berkeley Terner Center did a statewide survey of ADU affordability, and they worked with ABAG to adjust it for the Bay Area specifically,” said a San Mateo County planner. “So those (numbers) are based on surveys and data analysis of actual ADUs that have been produced, and the rents that are being offered to tenants. We are just accepting their analysis as is.” San Mateo County jurisdictions have almost unanimously adopted ABAG’s 30-30-30-10 formula. However, a 2021 report and recommendations for RHNA-6 prepared by ABAG’s Housing Technical Assistance Team, titled “DRAFT Affordability of Accessory Dwelling Units,” says that although ADUs are often affordable, jurisdictions should be cautious about relying on them too heavily because of fair housing concerns: “Many ADUs are affordable to lower and moderate-income households because they are rented to family and friends of the homeowners,” the report states. “If minorities are underrepresented among homeowners, the families and potentially friends of the homeowners will be primarily white. Therefore, relying too heavily on ADUs could inadvertently exacerbate patterns of segregation and exclusion.” The report also acknowledges that ADUs often do not serve large families, another critical fair housing concern. And while ADUs accomplish an essential fair housing goal by adding new homes in parts of the municipality that are more likely to be areas of opportunity, the report recommends that jurisdictions with fair housing concerns "may want to use more conservative assumptions based on open market rentals, excluding units made available to family and friends," as summarized below: Percent Income Category 5% Very Low Income 30% Low Income 50% Moderate Income 15% Above Moderate So far, 16 San Mateo County cities have chosen the 30-30-30-10 formula, implying there are no fair housing concerns in their jurisdictions. Only two cities – San Carlos and San Mateo – use ABAG’s more conservative formula of 5-30-50-15 in their plans. One city – Belmont – used its own judgment.2 And one – Colma – does not use ADUs in their plans at all to meet State requirements. But in all cases, these statistical estimates may not reflect the actual usage of constructed ADUs. Determining that would require actual verification by each local jurisdiction. 2 City of Belmont, “General Housing Element Draft 2023-2031”, p. 25, accessed May 27, 2023, https://www.belmont.gov/home/showpublisheddocument/21721/637968613354630000 2022-2023 San Mateo County Civil Grand Jury 9 ADUs planned in RHNA-6 (May 11, 2023) City Very Low Low Moderate Above Moderate Total ADUs Total RHNA-6 Requirement Atherton 56 56 56 112 280 348 Belmont 0 0 80 0 80 1785 Brisbane 12 12 12 4 40 1588 Burlingame 50 50 50 17 167 3257 Colma - - - - 0 202 Daly City 151 151 151 50 503 4838 East Palo Alto 35 34 34 12 115 829 Foster City 7 7 7 3 24 1896 Hillsborough 84 84 84 28 280 554 Menlo Park 26 25 26 8 85 2946 Millbrae 34 34 33 11 112 2199 Pacifica 56 56 56 19 187 1892 Portola Valley 28 28 28 8 92 253 Redwood City 152 152 152 50 506 4588 San Bruno 72 72 72 24 240 3165 San Carlos 10 61 102 30 203 2735 San Mateo 22 132 220 66 440 7015 South San Francisco 113 113 113 38 377 3956 Unincorporated San Mateo 107 107 107 36 357 2833 Woodside 36 36 36 12 120 328 (This table includes all San Mateo County jurisdictions that have submitted Housing Element plans to HCD for review. As of June 1, 2023, Half Moon Bay and Daly City have not submitted RHNA-6 plans for HCD review.) Accordingly, if HCD approves cities and towns' current Housing Elements, San Mateo County may end up with many affordable housing units that exist only on paper because they are counted as affordable units by the State but never made available or occupied by people who need affordable housing: “BMR (below market rate) unit displacement is a legitimate issue,” said a city planning consultant. “RHNA looks at (the number of) units, not the number of people being housed. For the State, they’re all counted the same – an ADU or three-bedroom apartment, five vs. one or two people. In the eyes of the State, they’re all the same.” 2022-2023 San Mateo County Civil Grand Jury 10 Finally, the cities and towns relying primarily on ADUs to meet their RHNA-6 housing targets do not meet the overall objectives required by HCD and RHNA of: ● Increasing the housing supply and mix of housing types, tenure, and affordability ● Promoting infill development and socioeconomic equity, protecting environmental and agricultural resources, and encouraging efficient development patter ns ● Promoting an improved intraregional relationship between jobs and housing ● Balancing disproportionate household income distributions ● Affirmatively furthering fair housing Housing and Community Development Pushes Back Four San Mateo County municipalities – Atherton, Hillsborough, Portola Valley, and Woodside – rely heavily on ADUs to meet low-income housing requirements in their RHNA-6 Housing Elements. May 17, 2023 While HCD does not single out those four cities for their heavy reliance on ADUs to meet their affordable housing needs, throughout the process of submission and review of draft RHNA-6 plans, HCD consistently instructed San Mateo County cities and towns that they must monitor and verify ADU production and affordability at least every two years but has not specified an acceptable process for verifying the affordability level of ADUs as planned. Should San Mateo County and its cities seek outside help on this issue, there are a handful of independent non-profit agencies and for-profit real estate management companies operating today in the Bay Area that have established systems and processes for monitoring and verifying rented occupied housing for continued affordability and adherence to fair housing guidelines while maintaining tenant a nd owner privacy – which was an issue continually raised by City Managers and other officials during Grand Jury interviews. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% ADUs as Percent of RHNA6 Affordable Housing 2022-2023 San Mateo County Civil Grand Jury 11 ADU Affordability Monitoring Emphasized in HCD Review Letters to Jurisdictions Atherton (4-4-23) Program 3.812 (New Construction of Affordable Accessory Dwelling Units): While the element was revised to include timing of each action, it is unclear how affordability will be established. The program should be revised to clarify actions to establish and track affordability. 

 East Palo Alto (4-25-23) Accessory Dwelling Units (ADU): As noted in the prior review, the element should include a program that commits to frequent monitoring (every other year) for production and affordability, and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., six months) as needed. 

 Foster City (4-24-23) Program H-D-4-h (ADU Monitoring): While the program commits to evaluating alternative actions by the end of 2026, it must commit to specific alternative actions and monitor production and affordability of ADUs more than once in the planning period (e.g., every two years). 

 Hillsborough (1-10-23 This analysis should specifically address whether the ADU strategy to accommodate lower-income households contributes to continued exclusion and disparities in access to opportunity and how the strategy promotes housing choice for a variety of households including lower-income households, and large families. To support assumptions for ADUs in the planning period, the element should reduce the number of ADUs assumed per year and reconcile trends with HCD records, including additional information such as more recent permitted units and inquiries, resources and incentives, other relevant factors, and modify policies and programs as appropriate. Further, programs should commit to additional incentives and strategies, frequent monitoring (every other year), and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., six months) if ADU production assumptions are not being achieved. Millbrae (1-24-23) Accessory Dwelling Units (ADU): To support assumptions for ADUs in the planning period, programs should commit to additional incentives and strategies, frequent monitoring (every other year) of production and affordability and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., 6 months) if needed. Depending on the analysis, the element must commit to monitor ADU production and affordability throughout the planning period and implement additional actions if not meeting target numbers within a specified time period (e.g., within six months). Redwood City (7-8-22) Programs must be expanded to include incentives to promote the creation and affordability of Accessory Dwelling Units (ADUs). Examples include exploring and pursuing funding, modifying development standards and reducing fees beyond State law, increasing awareness, pre-approved plans and homeowner/applicant assistance tools. In addition, given the city’s assumptions for ADUs, the element should include a program to monitor permitted ADUs and affordability every other year and take appropriate action such as adjusting assumptions or rezoning within a specified time period (e.g., 6 months). San Bruno (3-29-23) Accessory Dwelling Units (ADU): While the element revised the ADU assumptions, Program 4-P must be revised to commit to additional incentives and strategies, frequent monitoring (every other year) and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., 6 months) if needed. The element must also address affordability assumptions for ADU projections. San Mateo (3-27-23) Accessory Dwelling Units (ADU): Program 1.4 must commit to also monitoring affordability of the ADU units that are permitted as well as provide additional incentives or identify additional sites if production and affordability assumptions are not met. County of San Mateo (4-20-23) Accessory Dwelling Units (ADU): Further, programs should commit to additional incentives and strategies, frequent monitoring for production and affordability (every other year) and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., 6 months) if needed. The element must also address affordability assumptio ns for ADU projections, by clarifying what ABAG assumptions are utilized. 
 South San Francisco (3-30-23) The element should include a commitment to reconcile trends with reported units within the Cities submitted annual progress report. Further, as Stated in the previous review, programs should commit to additional incentives and strategies, frequent monitoring (every other year) and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., six months) if number and affordability ass umptions are not met. Woodside (10-14-22) Depending on the analysis, the element must commit to monitor ADU production and affordability throughout the planning period and implement additional actions if not meeting target numbers within a specified time period (e.g., within six months). 

 2022-2023 San Mateo County Civil Grand Jury 12 In their HCD approved housing plans, Brisbane and Redwood City aren’t definitive about how they will monitor ADU affordability but imply they will use surveys to comply with HCD instructions. Redwood City plans to collect ADU rental data during its permitting process. And Brisbane says, if available, it will participate in a regional forgivable ADU construction loan program in exchange for limiting rentals of the ADUs to extremely low-income households for 15 years. Brisbane said it is also exploring a possible city forgivable loan program if the regional program doesn’t materialize. “We can’t force people to report to us or to be honest with us,” said one jurisdiction’s planner. Another city’s chief planner concluded that a deed restriction – any limitation on a property that affects the ability of the property owner to utilize the property as they wish, such as a requirement to verify a tenant’s income and rent charged – “is the best way to (enforce) affordability.” Alternatively, one city planning official suggested the formation of a Countywide nonprofit to income-qualify and match renters to available ADUs, thereby monitoring and enforcing affordability because the smaller towns and cities don't have the resources to perform that function on their own. Finally, a fourth city planner offered an alternative view: “We’re not a city hiding behind ADUs. ABAG gave us a formula. We plopped it in. If the State said you can’t count ADUs at all, that would be fine.” A Long, Long Way to Go The Superior Court of California requires all San Mateo County Civil Grand Jury investigation reports to be completed and published by June 30 annually. And although the law required San Mateo County cities and towns to submit their housing plans by January 31, 2023, as of June 1, Daly City has yet to adopt and submit a draft plan to HCD for review and approval. Meanwhile, plans from Foster City, Half Moon Bay, Millbrae and Pacifica are now under HCD review. So far, HCD has reviewed and rejected plans from 14 jurisdictions: Atherton, Belmont, Burlingame, Colma, East Palo Alto, Hillsborough, Menlo Park, Portola Valley, San Bruno, San Carlos, San Mateo, South San Francisco, Woodside, and San Mateo County, which is responsible for unincorporated areas. As of the publication of this report, only Redwood City and Brisbane had completed the process and received the green light from HCD to proceed. One reason cited for the delay is most San Mateo County cities and towns don’t have a large enough staff to manage the workload that RHNA planning represents, so they outsource. And many could not find timely help because the consultants were busy preparing RHNA-6 plans for Southern California cities, which were due before San Mateo County municipalities. That caused many communities here to fall behind and are now out of compliance with the timing of their Housing Element submissions. These delays, coupled with citizen objections to multifamily housing in their communities, almost guarantee RHNA-6 disputes will end up in the courts and remain unresolved for many years to come and postpone the building of sorely needed affordable housing indefinitely. 2022-2023 San Mateo County Civil Grand Jury 13 FINDINGS F1. Due to recent changes in California ADU-related laws, local governments cannot condition ADU permits in San Mateo County on complying with affordability monitoring and verification. F2. San Mateo County and most of its municipalities rely on ADUs to meet their affordable housing commitments in their RHNA-6 plans. F3. Atherton, Hillsborough, Portola Valley, and Woodside rely on ADUs to meet as much as 80 percent of their affordable housing commitments in their RHNA-6 plans. F4. HCD has instructed San Mateo County jurisdictions to monitor and verify future ADU production and affordability every two years but has yet to specify how to verify whether very low-, low- or moderate-income households are occupying the ADUs as planned. F5. Other than Brisbane and Redwood City, San Mateo County and its jurisdictions have yet to articulate how they will monitor and verify ADU production or affordability. F6. Without effective ADU monitoring and verification, it will be impossible to evaluate whether the jurisdictions are meeting their RHNA-6 obligations for low-, very-low, and moderate-income housing units. F7. ADU affordability and occupancy could be monitored by agencies such as HIP Housing which has proven systems and processes to verify occupancy of deed-restricted rental properties in San Mateo County. RECOMMENDATIONS R1. San Mateo County and each City should immediately stop using ADUs to meet their State- mandated very low-, low-, and moderate-income housing targets in their Housing Element submissions until they have also proposed an effective monitoring system that verifies how newly developed ADU’s will be used. R2. By February 1, 2024, San Mateo County and each City should develop, adopt, and implement a verification system capable of monitoring and verifying how newly developed ADU’s are being used. R3. By February 1, 2024, San Mateo County and each City should develop and adopt incentives for ADU owners which could be offered in exchange for deed restrictions that would include requirements for ADU tenants to participate in independent monitoring. R4. By February 1, 2024, San Mateo County and each City should track the intended use of ADUs – rented or non-rented – during the permitting process and offer incentives in exchange for deed restrictions that require ADUs to be used as rentals. R5. By April 1, 2024, San Mateo County and each City should develop and adopt a new ADU affordability distribution formula specific to each jurisdiction to the extent they are used for meeting the very low-, low-, and moderate-income housing requirements in their RHNA housing elements. R6. San Mateo County and each City should consider working together to address Recommendations 2 and 3. 2022-2023 San Mateo County Civil Grand Jury 14 REQUEST FOR RESPONSES Pursuant to Penal Code Section 933.05, the Civil Grand Jury requests responses from San Mateo County and all 20 cities’ governing bodies for each and every Finding and Recommendation. The governing bodies should be aware that their comments or responses must be conducted subject to the Brown Act's notice, agenda, and open meeting requirements. RESPONSE REQUIREMENTS California Penal Code Section 933.05 provides: For purposes of subdivision of Section 933, as to each Grand Jury finding, the responding person or entity shall report one of the following: (1) The respondent agrees with the finding. (2) The respondent disagrees wholly or partially with the finding; in which case the response shall specify the portion of the disputed finding and shall include an explanation of the reasons. For purposes of subdivision of Section 933, as to each Grand Jury recommendation, the responding person or entity shall report one of the following actions: (1) The recommendation has been implemented, with a summary regarding the implemented action. (2) The recommendation has yet to be implemented but will be implemented in the future, with a timeframe for implementation. (3) The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study and a timeframe for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This time frame shall be at most six months from the Grand Jury report's publication date. (4) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefore. METHODOLOGY The San Mateo County Civil Grand Jury used numerous approaches to develop this report. ● Preliminary Research The Grand Jury studied RHNA-5 historical information and RHNA-6 Housing Elements submitted to HCD by the cities and towns in San Mateo County as they became available. Before conducting in-depth research, the Grand Jury studied ABAG's reports on RHNA-6 housing allocations, introducing numerous issues and a means to understand how jurisdictions establish housing allocations. Additionally, the Grand Jury reviewed a 2021 ABAG report on ADU affordability for RHNA-6 and RHNA-5 annual progress reports to understand history. 2022-2023 San Mateo County Civil Grand Jury 15 The Grand Jury also reviewed a report on ADUs titled “A Solution on the Ground: Assessing the Feasibility of Second Units in Unincorporated San Mateo County, Implementing the Backyard Revolution: Perspectives of California's ADU Owners,” April 22, 2021, Karen Chapple, Dori Ganetsos, Emmanuel Lopez, UC Berkeley Center for Community Innovation. An additional resource for Preliminary Research has been the press. Particularly following the January 31, 2023 deadline for RHNA-6 submissions, nearly 60 articles provided insights and analysis the Grand Jury could not find elsewhere. For a complete list of sources, see the Bibliography below. ● Survey After conducting its Preliminary Research, the Grand Jury sent an eight -question survey in October 2022 to the city managers of the 20 San Mateo County cities and towns and the San Mateo County planning and building department responsible for the County's unincorporated areas. See Appendix A for survey results. ● Interviews Much of the time spent by the Grand Jury on this investigation was in more than 30 interviews with 21 city managers and planning managers, five heads of nonprofit housing entities in San Mateo County, and executives at ABAG, HCD, and several other government bodies. ● Continued Research Because RHNA-6 submissions and HCD replies are ongoing, the Grand Jury has continued to monitor the status of RHNA-6 submissions and HCD responses. This report reflects submissions received prior to the report's due date of June 30, 2023. GLOSSARY Accessory Dwelling Units (ADUs) An accessory dwelling unit (ADU) is a legal and regulatory term for a secondary house or apartment that shares the building lot of a larger primary home. The unit is often used to provide additional income through rent or to house a family member. For example, an elderly parent could live in a small unit and avoid having to move to an assisted living facility. (Source: Investopedia) Affordable Housing: Very Low Income; Low Income; Moderate Income; Above Moderate Income Affordable housing is generally defined as housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities. (Source: www.hud.gov) 2022-2023 San Mateo County Civil Grand Jury 16 Association of Bay Area Governments (ABAG) The Association of Bay Area Governments (ABAG) is the Council of Governments (COG) for the nine - county Bay Area. One of California’s earliest COGs, ABAG was founded to protect regional assets from State control. ABAG continues to serve the Bay Area by providing a regional venue for collaboration and problem-solving. ABAG’s work program includes management over key regional assets, such as the San Francisco Estuary and the Bay Trail Project. It also offers a variety of cost-effective member services programs such as Pooled Liability Assurance Network (PLAN) Corporation (offering affordable liability, property insurance, claims management, risk management, and bond coverage to 30 municipalities) and financial services (offering tax-exempt capital financing for the acquisition, construction, and rehabilitation of affordable multifamily housing, health care facilities, schools, and other community facilities). ABAG POWER Natural Gas Pool conducts pooled purchasing of natural gas on behalf of 38 local governments and special districts. ABAG is also the COG that allocates the regional housing needs assessment (RHNA). (Source: CALCOG) Below Market Rate (BMR) A BMR unit is a housing unit that is priced to be affordable to households that are of moderate income or below. These housing units are often built by local government, nonprofits, or as a requirement of the developer (Inclusionary Affordable Housing Ordinance). As a result, these homes have certain deed restrictions recorded on the property, ensuring the home remains affordable for future generations. (Source: County of San Mateo) California Department of Finance (DOF) The California Department of Finance is a state cabinet-level agency within the government of California. The Department of Finance is responsible for preparing, explaining, and administering the state's annual financial plan, which the Governor of California is required under the California Constitution to present by January 10 of each year to the public. The Department of Finance's other duties include analyzing the budgets of proposed laws in the California State Legislature, creating, and monitoring current and future economic forecasts of the state, estimating population demographics and enrollment projections, and maintaining the state's accounting and financial reporting systems. California Department of Housing and Community Development (HCD) The California Department of Housing and Community Development (HCD) develops housing policy and building codes (i.e., the California Building Standards Code), regulates manufactured homes and mobile home parks, and administers housing finance, economic development, and community development programs. (Source: https://www.hcd.ca.gov/about-hcd) 2022-2023 San Mateo County Civil Grand Jury 17 Council of Governments (COG) Councils of Governments (COGs) are voluntary associations representing member local governments, mainly cities, and counties, that seek to provide cooperative planning, coordination, and technical assistance on issues of mutual concern that cross jurisdictional lines. (Source: WRCOG) Deed Restrictions A deed restriction is a term widely used in real estate to refer to any limitation on a property that limits the ability of the property owner to utilize the property as they wish. (Source: CA Realty Training) General Plan State law requires every city and county in California to prepare a General Plan for its future growth and development. A General Plan covers land use, transportation, housing, open space, natural resources, and public services. Local General Plans have been mandatory in California since the 1950s. State law also requires the cities and counties to periodically update their General Plans in response to changing conditions. Each General Plan includes maps expressing the community's vision of how and where it will grow and change. The General Plan typically has a time horizon of about 20 years. Once a General Plan is adopted, it is used by the City Council, local commissions, and City Staff as they make day-to-day decisions about the community's future. (Source: City of San Rafael) Housing Element Since 1969, California has required that all local governments (cities and counties) adequately plan to meet the housing needs of everyone in the community. California's local governments meet this requirement by adopting housing plans as part of their General Plan (also required by the State). General Plans serve as the local government's blueprint for how the city or county will grow and develop and include eight elements: land use, transportation, conservation, noise, open space, safety, environmental justice, and housing. California's Housing Element Law acknowledges that, for the private market to address Californians' housing needs and demand, local governments must adopt plans and regulatory systems that provide opportunities for (and do not unduly constrain) housing development. As a result, housing policy in California rests mainly on the effective implementation of local General Plans and, in particular, local Housing Elements. (Source: California Department of Housing and Community Development) Jurisdiction (city, town, or county) 1: the power, right, or authority to interpret and apply the law; a matter that falls within the court’s jurisdiction 2: a: the authority of a sovereign power to govern or legislate b: the power or right to exercise authority: CONTROL 3: the limits or territory within which authority may be exercised (Source: Merriam-Webster) Regional Housing Needs Allocation (RHNA) Every eight years, ABAG develops the Regional Housing Needs Allocation (RHNA) plan approved by HCD and used to assign each city and county in the Bay Area their fair share of new housing units to build. These housing units are intended to accommodate existing needs and projected growth in the region. The RHNA process is critical because it requires all cities and counties to plan for the region's housing needs, regardless of income, to prepare for future growth and ease the California's acute housing crisis. (Source: ABAG) 2022-2023 San Mateo County Civil Grand Jury 18 Regional Housing Needs Determination (RHND) The California Department of Housing and Community Development (HCD) identifies the total number of homes each region in California must plan to meet the housing needs of people at all income levels. They base the number on population projections produced by the California Department of Finance and adjustments incorporating the region's current housing needs. The jurisdictions separate the total number of housing units from HCD into four income categories that cover everything from housing for very low- income households to market-rate housing. ABAG is responsible for developing a methodology to allocate a portion of this housing need to every local government in the Bay Area. (Source: ABAG) BIBLIOGRAPHY Government Agencies ● Department of Housing and Urban Development Office of Policy Development and Research. “U.S Accessory Dwelling Units: Case Study”. https://www.huduser.gov/portal/publications/adu.pdf. June 2008 ● U.S. Department of Housing and Urban Development. “Glossary of Terms to Affordable Housing”. https://archives.hud.gov/local/nv/goodstories/2006-04-06glos.cfm. August 18, 2011 ● Department of Housing and Community Development Division of Housing Policy. “ADU Law Amendments Memorandum”. https://www.hcd.ca.gov/community-development/housing- element/housing-element-memos/docs/Accessory-Dwelling-Unit-Legislation.pdf. May 29, 2018 ● California Legislative Information. “Assembly Bill No. 68”. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB68 . 2019-2020 ● OpenStates. “California Senate Bill SB 13”. https://openStates.org/ca/bills/20192020/SB13/. 2019- 2020 ● 21 Elements. “Second Units and Junior Second Units”. http://www.21elements.com/second-units. 2020 ● Department of Housing and Community Development Division of Housing Policy. “Local Agency Accessory Dwelling Units, Memorandum”. https://www.hcd.ca.gov/community-development/housing- element/docs/ADU_TA_Memo_Final_01-10-20.pdf. January 10, 2020 ● Department of Housing and Community Development Division of Housing Policy. “Final Regional Housing Need Determination”. https://www.hcd.ca.gov/community-development/housing- element/docs/ABAGRHNA-Final060920(r).pdf. June 9, 2020 ● Association of Bay Area Governments. “Housing Element Law. Changes from 1969 to the Present”. https://abag.ca.gov/sites/default/files/rhna_background.pdf. August 1, 2020 ● California Legislative Information. “Assembly Bill No. 3182”. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB3182 . September 28, 2020 2022-2023 San Mateo County Civil Grand Jury 19 ● Southern California Association of Governments. “SCAG Regional Accessory Dwelling Unit Affordability Analysis”. https://scag.ca.gov/sites/main/files/file- attachments/adu_affordability_analysis_120120v2.pdf?1606868527. December 1, 2020 ● Association of Bay Area Governments. “DRAFT Affordability of Accessory Dwelling Units”. http://21elements.com/documents-mainmenu-3/housing-elements/rhna-6-2022-2030/1327-draft-adu- affordability-report-sep-8-2021-1/file. September 8, 2021 ● California Legislative Information. “Assembly Bill No. 345”. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB345. September 28, 2021 ● Association of Bay Area Governments. “Using ADUs to Satisfy RHNA”. https://abag.ca.gov/technical- assistance/using-adus-satisfy-rhna. March 10, 2022 ● Auditor of the State of California. “Regional Housing Needs Assessments”. https://www.auditor.ca.gov/pdfs/reports/2021-125.pdf. March 17, 2022 ● California Department of Housing and Community Development. “Accessory Dwelling Unit Handbook”. https://www.hcd.ca.gov/sites/default/files/2022-07/ADUHandbookUpdate.pdf. July 2022 ● Association of Bay Area Governments. “Final Regional Housing Needs Allocation (RHNA) Plan: San Francisco Bay Area, 2023-2031”. https://abag.ca.gov/sites/default/files/documents/2022- 12/Final%20RHNA%20Methodology%20Report%202023-2031_update_11-22.pdf. November 2022 ● State of California Department of Justice. “Attorney General Bonta Puts city of Huntington Beach on Notice That Its Proposed Ordinance Violates State Housing Law”. https://oag.ca.gov/news/press- releases/attorney-general-bonta-puts-city-huntington-beach-notice-its-proposed-ordinance. February 13, 2023 ● Department of Housing and Community Development Division of Housing Policy Development. “RE: Town of Atherton’s 6th Cycle (2023-2031) Adopted Housing Element”. https://www.dropbox.com/home/Grand%20Jury%202022%20-%202023/Committees/ADUs/ADU%20- %20research%20materials/Housing%20Elements/Pending?preview=Atherton_HCD_Letter40423.pdf. April 4, 2023 Grand Jury Reports ● San Mateo County Civil Grand Jury. “Second Units: Adding New Housing In The Neighborhood”. https://www.sanmateocourt.org/documents/grand_jury/2019/second_units.pdf. 2019-2020 Independent Agencies ● UC Berkeley. “A Solution on the Ground: Assessing th e Feasibility of Second Units in Unincorporated San Mateo County”. https://smcrecovery.org/wp-content/uploads/2021/08/UC-Report-on-ADU- feasability.pdf. January 2017 ● Ramsey-Musolf, Darrel. “Accessory Dwelling Units as Low-Income Housing: California’s Faustian Bargain”. https://www.mdpi.com/2413-8851/2/3/89. September 18, 2018 2022-2023 San Mateo County Civil Grand Jury 20 ● AARP. “The ABCs of ADUs”. https://www.hcd.ca.gov/policy-research/docs/adu-guide-web- singles.pdf. 2019 ● California YIMBY (Yes in My Back Yard). “AB 881”. https://cayimby.org/ab-881/. October 9, 2019 ● Center of Community Innovation. “The ADU Scorecard: Grading ADU Ordinances in California”. https://www.aducalifornia.org/wp-content/uploads/2020/02/ADU-Scorecard-InterimReport-200201- 1.pdf. February 1, 2020 ● UC Berkeley Center for Community Innovation. “Implementing the Backyard Revolution: Perspectives of California’s ADU Owners”. https://www.aducalifornia.org/wp- content/uploads/2021/04/Implementing-the-Backyard-Revolution.pdf. April 22, 2021 ● Terner Center for Housing Innovation, UC Berkely. “First Ever Statewide ADU Owner Survey Shows Growth, Room for Improvement”. https://ternercenter.berkeley.edu/blog/cci-adu-survey/. April 22, 2021 ● University of California, Berkeley. “California ADU”. https://www.aducalifornia.org/. August 16, 2021 ● Colburn, Gregg. Aldern, Clayton. “Homelessness is a Housing Problem”. https://homelessnesshousingproblem.com/. 2021-2022 ● Sumner, Scott. “California housing prices and homelessness”. https://www.econlib.org/california- housing-prices-and-homelessness/. May 23, 2022 ● Williams, Paul. “Carving out a Path for Public Developers”. https://housingchronicle.substack.com/p/carving-out-a-path-for-public-developers. July 14, 2022 ● Terner Center for Housing Innovation, UC Berkeley. “ADUs for All: Breaking Down Barriers to Racial and Economic Equity in Accessory Dwelling Unit Construction”. https://ternercenter.berkeley.edu/research-and-policy/adu-equity-barriers/. August 4, 2022 ● Bertolet, Dan. “Washington Bill Would Boost In-Law Apartments Throughout the State”. https://www.sightline.org/2023/01/21/washington-bill-would-boost-in-law-apartments-throughout-the- State/. January 21, 2021 ● Ohanian, Lee. “California’s Failed Soviet-Style Housing Mandates Should End Now”. https://www.hoover.org/research/californias-failed-soviet-style-housing-mandates-should-end-now. February 7, 2023 ● Hamilton, Emily. “Learning from Houston’s Townhouse Reforms”. https://www.mercatus.org/research/policy-briefs/learning-houstons-townhouse-reforms. April 11, 2023 2022-2023 San Mateo County Civil Grand Jury 21 APPENDICES ● A: Survey Results ● B: Timeline of Important Legislative Events ● C: ADUs: An American Tradition ● D: Housing Elements Are an Iterative Process 2022-2023 San Mateo County Civil Grand Jury 22 APPENDIX A Survey Results Who responded to the survey Survey responses 2022-2023 San Mateo County Civil Grand Jury 23 2022-2023 San Mateo County Civil Grand Jury 24 2022-2023 San Mateo County Civil Grand Jury 25 2022-2023 San Mateo County Civil Grand Jury 26 2022-2023 San Mateo County Civil Grand Jury 27 2022-2023 San Mateo County Civil Grand Jury 28 2022-2023 San Mateo County Civil Grand Jury 29 2022-2023 San Mateo County Civil Grand Jury 30 2022-2023 San Mateo County Civil Grand Jury 31 2022-2023 San Mateo County Civil Grand Jury 32 APPENDIX B Timeline of Important Legislative Events 1. 1970 — the Legislature directed HCD to develop guidelines for housing element preparation on one and five year cycles. SB 1489 (Moscone), emphasized housing need, passed in 1971, and ABX 1 of 1971 established more standards. The California Housing Finance Agency (CalHFA), which also assisted communities in providing affordable housing, was created in 1975. The legislation authorized HCD to review local housing elements for conformity to its guidelines. 2. 1976 — Fair-share was added to the guidelines by HCD. The COGs are now given the responsibility by HCD to distribute shares of low-income and moderate-income housing. The local housing element had to include these income requirements — whether or not communities wanted them. HCD also was given responsibility to review local housing elements. Statewide hearings in 1977 brought out a number of positions on housing elements and HCD requirements. 3. Mid 1980’s — AB 2853 (Roos), provided for faster permit processing and higher densities, and allowed the housing element to meet State goals and be reviewed by HCD. COGs would continue to formulate the fair share for each community, but HCD had final approval of the numbers and each community was to revise its Housing Element every five years. 4. 1990s — Cities and counties looked at housing elements, if certified, as providing protection against lawsuits. In addition, this decade also created the concept of regional allocation “sharing burdens of lower- income households among geographic areas,” without mandated goals. 5. 1993 — The Senate Committee on Local Government held hearings on housing element progress and heard concerns that communities were not doing enough and that housing elements were despised by local governments. Bills changed the cycle timeframe, including AB 2172 (Hauser), SB 1703 (Costa) and SC 320 (Committee). Main topics for discussion by the Committee on Housing and Land Use hearings in 1995 were the housing allocations and the Department of Finance (DoF) projections. A common complaint was that the DoF projections were not complete enough for communities to develop appropriate allocations. The COGs projections also were criticized. 6. 1998 — AB 438 (Torlakson), allowing for the creation of sub-RHNA areas, looked at how housing units were counted. 2001 — SB 910 (Dunn) would have included imposing fines on jurisdictions not complying; and would have tied RHNA to transportation planning on a six year cycle. However, this bill did not pass. 2002 — SB 423 (Torlakson) created a jobs and housing balance incentive program, also known as Workforce Housing Incentive Program. In 2003, at HCD’s request, a working group of stakeholders met to make recommendations, which included: ● Develop more transparency in determining fair shares ● Clarify land inventories of building sites ● Ensure inventories were buildable ● Increase HCD review consistency of local elements ● Explore city self-certification ● Devise better housing element enforcement that would penalize non-compliance. 7. 2004 — AB 2348 (Mullin) clarified the relationship between the land inventory and adequate sites requirement, provided guidance on the content of adequate land inventory, and provided greater development certainty. AB 2158 (Lowenthal) revised the process for determining allocation from just 2022-2023 San Mateo County Civil Grand Jury 33 DoF to include transportation planning numbers and created a review process. 8. 2005 — AB 1233 (Jones) assured that unmet need from previous RHNA cycles was added into the next cycle. 9. 2017 Housing Legislative Package Approximately 150 housing bills were submitted in 2017. Fifteen relating to funding, streamlining and accountability, were signed by the governor. These bills significantly changed how RHNA is conducted, requiring additional outreach and reporting, increasing the number of factors included, and the ability of HCD to sue individual cities for not meeting requirements. SB 2 (Atkins) Building Homes and Jobs Act is projected to generate hundreds of millions of dollars annually for affordable housing, supportive housing, emergency shelters, transitional housing, and other housing needs via a $75 to $225 recording fee on specified real estate documents. SB 3 (Beall) Veterans and Affordable Housing Bond Act of 2018 places a $4 billion general obligation bond on the November 2018 ballot to fund affordable housing programs and the veterans homeownership program (CalVet). SB 35 (Wiener) streamlines multifamily housing project approvals, at the request of a developer, in a city that fails to issue building permits for its share of the regional housing need by income category. SB 35 city approval of a qualifying housing development on a qualifying site is a ministerial act, without need for CEQA review or public hearings. AB 73 (Chiu) streamlines the housing approval process by allowing jurisdictions to create a housing sustainability district to complete upfront zoning and environmental review in order to receive incentive payments for development projects that are consistent with the ordinance. SB 167 (Skinner), AB 678 (Bocanegra), and AB 1515 (Daly) are three measures that were amended late in the 2017 legislative session to incorporate changes to the Housing Accountability Act (HAA). The HAA significantly limits the ability of a jurisdiction to deny an affordable or market-rate housing project that is consistent with existing planning and zoning requirements. AB 1505 (Bloom) allows a jurisdiction to adopt an ordinance that requires a housing development to include a certain percentage of rental units affordable to and occupied by households with extremely low, very low, low or moderate income. AB 879 (Grayson) expands upon existing law that requires, by April 1 of each year, general law cities and charter cities to send an annual report to their respective city councils, the State Office of Planning and Research (OPR) and HCD that includes information related to implementation of the General Plan. AB 1397 (Low) makes numerous changes to how a jurisdiction establishes its housing element site inventory. AB 72 (Santiago) provides HCD broad new authority to find a jurisdiction’s housing element out of substantial compliance if it determines that REGIONAL the jurisdiction fails to act in compliance with 2022-2023 San Mateo County Civil Grand Jury 34 its housing element and allows HCD to refer violations of law to the attorney general. 10. 2018 — SB 828 (Wiener) changed the way HCD determines each region’s RHND, adding a number of new factors for consideration and accounting for “unmet need” in the existing housing stock by applying “adjustment factors” to a region’s total projected households, not just the incremental housing growth. 11. 2018 — AB 1771 (Bloom) and AB 686 (Santiago) strengthened the mandate for regions and local governments to combat discrimination, overcome historic patterns of segregation, and create equal access to opportunity through housing planning and decision-making, in other words, to “affirmatively further fair housing.” AB 1771 (Bloom) added to RHNA an enhanced focus on racial equity with an explicit mandate that COGs’ housing distribution plans affirmatively further fair housing and required COGs to survey jurisdictions on their fair housing activities, to identify regional barriers to furthering fair housing, and to recommend strategies or actions to overcome those barriers. AB 686 (Santiago) created a mandate that local jurisdictions plan and administer housing and community development programs and activities in a manner that affirmatively further fair housing. 12. 2019 — AB 1486 (Ting) strengthened the Surplus Lands Act (SLA), which requires that local agencies provide right of first refusal to affordable housing developers when disposing of surplus land by expanding the scope of land subject to the right of first refusal requirement, updating the mechanics of the surplus land disposal process, extending HCD’s enforcement mandate to include the SLA and establishing financial penalties for violation of the act. AB 1487 (Chiu), authorized ABAG and MTC to place on the ballot regional housing measures to help fund affordable housing and established 3 REGIONAL HOUSING NEEDS ALLOCATION the Bay Area Regional Housing Authority. The 2019-20 State Budget also included significant new resources to support housing planning, including $250 million for local governments and COGs for planning activities. The Bay Area is receiving approximately $50 million in combined funds, split between ABAG and local jurisdictions. SB 330 (Skinner) made further revisions to the HAA, establishing new criteria for housing approvals at the local level, including prohibiting a local agency from subjecting a project to new ordinances, rules or fees after an application is submitted and limiting the number of hearings on a project to five. The bill also prohibits a local agency from lowering the allowed residential density below that level in effect on January 1, 2018 in high rent, low-vacancy areas, as defined. The bill’s provisions sunset in five years. AB-881, “Accessory dwelling units,” and AB-68, “Land use: accessory dwelling units”: Makes many of the current restrictions that cities place on ADUs obsolete. It also provides for a streamlin ed process for approvals. These bills require permits for ADUs added to single-family and multifamily homes to be approved or denied faster. Current law permits these decisions to take 120 days, but this new law requires decisions within 60 days. These approvals or denials must be issued ministerially, so that way, there are fewer potential issues to encounter. Cities and counties may establish minimum and maximum ADU size requirements, but the maximum size cannot be less than 850 square feet for a one -bedroom ADU or 1,000 square feet for more than one bedroom. 2022-2023 San Mateo County Civil Grand Jury 35 Most importantly, these bills prohibit any lot coverage, minimum lot size, etc. requirements that municipalities have. Cities have enacted these laws to have the effect of making it impossible to bu ild an ADU. Cities cannot require the correction of nonconforming zoning conditions as part of the approval process. SB-13 Accessory dwelling units are similar to AB-881 and AB-68 with a couple of significant differences. Before this bill, local agencies could require that the person applying for the ADU occupy either the primary residence or the proposed new structure. This bill exempts from these requirements all proposed ADUs until Jan. 1, 2025. Additionally, this bill removes the impact fee for ADUs sm aller than 750 square feet. Even for ADUs larger than that, the impact fees assessed must correlate with the square footage of the primary residence. SB-13 makes building ADUs cheaper and also removes an essential regulation. Now, landlords who rent their properties out can apply for an ADU for their rental properties. AB-670, “Common interest developments: accessory dwelling units,” makes it easier for people within HOA complexes to construct ADUs. Specifically, it prevents banning or unreasonably restricting on single-family lots on the construction of these units. Presently, many HOAs have CCRs ("conditions, covenants and restrictions") that prevent people from building ADUs. HOAs may worry about the uniformity of the properties if one has an ADU on it, or they might be concerned that they don't know who is and who isn't renting from an ADU. Regardless, HOAs now need to have a way for people to construct ADUs if they so choose. HOAs will likely challenge this bill, at least to some degree, in court, but for now, if you live in an HOA complex with single-family homes, you can construct an ADU. AB-671, “Accessory dwelling units: incentives," requires that general plans incentivize homeowners in some way to construct these ADUs and make them available for low-to-moderate-income households to rent. While it doesn't specify what these incentives will be, it does require local agencies to think about financial incentives and construct a plan. 2022-2023 San Mateo County Civil Grand Jury 36 APPENDIX C ADUs: An American Tradition 2022-2023 San Mateo County Civil Grand Jury 37 APPENDIX D Housing Elements Are an Iterative Process