Long Beach finally has an inclusionary housing policy after the City Council voted unanimously to approve two ordinances Tuesday night that will require developers to include affordable units in future developments or require them to pay fees into an account that will fund low-cost units.
The vote comes after years of discussion about instituting an inclusionary housing policy in the city. Pending final approval for the new rules, the city will eventually require developers to set aside 11% of the units in a rental development for affordable housing and 10% of units in any residential development where the homes are sold.
The inclusionary housing plan will only apply to developments over nine units in certain portions of the city including Downtown and the Long Beach Boulevard corridor extending north from Downtown to the 405 Freeway.
As adopted Tuesday night, developers could build replacement affordable units within two miles of their main project, or opt to pay in-lieu fees which would be deposited into a fund that the city could use to build affordable units itself. However, this could change in the next few months after objections from some housing-rights advocates.
They criticized what they saw as loopholes in the policy, specifically its phased-in approach that requires a lower percentage of affordable units for any development plans submitted before 2023.
They also objected to terms that let units shed their affordable status after 55 years and a 2025 sunset date for a rule that requires developers to provide one-to-one replacements for any low-income units they demolish. This is known as a “no net-loss” policy.
In response, Councilwoman Mary Zendejas asked for city staff to report back within the next four months with analysis on mandating that affordable units remain affordable for the lifetime of the project, that the sunsetting of the no net-loss policy be removed and that affordable units be mandated to be incorporated into the main project itself.
Zendejas also asked that any in-lieu fees paid by developers be used entirely to fund very-low income housing, that those fees be tied to the cost of production at the time that they’re paid and for a requirement that those funds be used to build new units, not rehabilitate existing affordable units.
“I understand how significant this step is for our city,” said Zendejas, who represents Downtown Long Beach.
The ordinances, and Zendejas’ proposals, received unanimous support from the full council, which characterized the policy as a needed step to ensure that Long Beach residents will be able to remain in the city amid rising housing costs.
“This is not a Band-Aid or a temporary solution but a major step forward in making our city a more equitable and inclusive place to live,” said Councilwoman Cindy Allen.
The council also adopted a separate in-lieu fee schedule that sets the amounts developers could pay instead of including affordable units in their designs. Like the inclusionary policy itself, the fee schedule is also phased-in with the largest penalties not being levied against developers until 2023 and beyond.
At that point, a developer would have to pay $47.50 per square foot for rental units or $390,400 per unit, if they forgo including affordable housing. For ownership units not built, they would have to pay $36.40 per square foot or $430,000 per unit.
That calculus could change, though, with Zendejas’ motion to potentially tie fees to the actual cost of construction at the time they’re paid as well as the actual cost of land.
In a separate vote Tuesday, the council also updated the city’s Mello Act in-lieu fees, something it hadn’t done since it adopted a local version of the state law in 1988. The Mello Act governs removal of affordable housing in the coastal zone.
The rates adopted by the council vote Tuesday set the price developers would have to pay if they remove affordable units based on number of bedrooms and the designated income level of the removed units.
Under the new fee schedule, a moderate income studio unit would cost $127,000 for developers not to replace it while a three-bedroom very-low income unit would cost $404,000.
“These are huge increases from the status quo,” said Christopher Koontz, deputy director of the city’s development services department. “To keep the incentive to not demolish, these fees need to be as high as legally justified.”
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