EXCERPT: MINUTES OF REGULAR MEETING

OF THE CITY COUNCIL
CITY OF NOVATO, CALIFORNIA
APRIL 10, 2001
7:00 P.M. - COUNCIL CHAMBERS
ROLL CALL

Present: Mayor Jim Henderson

Mayor Pro Tem John Mani

Councilmember Michael Di Giorgio

Councilmember Carole Dillon-Knutson

Councilmember Pat Eklund

Also present: City Manager Roderick Wood, Assistant City Manager Walter Bobkiewicz, Community Development Director Carol Branan, Police Chief Brian Brady, Community Services Director Larry Dito, Acting Planning Manager Jennifer Barrett, City Engineer Steve Wallace, Senior Planner Hans Grunt, Recreational Supervisor Kathy Graves, Consultant Sonia Seeman, Hamilton Consultant Ken Bell, Contract Planner Elizabeth Cobb, Financial Advisor Debbie Kern, Special Council Joe Coomes, Assistant Special Council Seth Merewitz, City Clerk Shirley Gremmels

I.  PUBLIC HEARINGS

7.  CAPEHART/HILLSIDE PRECISE DEVELOPMENT PLAN AND TENTATIVE MAP WITH DEVELOPMENT STANDARDS EXCEPTIONS (file 208-05)

<<< only a two paragraphs out of 6 pages are for Section I.7 >>>

Councilmember Di Giorgio stated that he started working on the Hamilton project when he served on the Homeless Commission. At the time, there was also concern raised about the homeless shelter by the neighborhoods. The City put in place very strict regulations. Capehart will not be a ghetto because of the regulations in place. He also supported the project very strongly. The City has been working on Hamilton since 1974, when the base first closed. With this affordable housing program, the City is almost doubling the deed-restricted affordable housing that will be available in Marin County. Currently, 50 percent of the median income is $90,000, so the occupants of these units will be teachers, police officers, firefighters, etc. He thanked everyone for their efforts on this project.

Councilmember Dillon-Knutson stated that she worked on the Hamilton project before she was elected to the Council as a member of the Hamilton Advisory Commission, along with Councilmember Di Giorgio. Many different stakeholder groups that had an interest were involved and there was much compromise that occurred to develop a very good Reuse Plan. At that time, the vision was workforce housing, so that teachers, safety employees and other City employees could live in Novato. The master developer has taken the vision and implemented it very well. She wished that other projects would come forth with some of the amenities of this project. She was happy that the existing tree canopy could be used effectively. The plan is balanced and will be an asset to the whole community. She said that she would proudly support the project.

J.  GENERAL BUSINESS

8.  HAMILTON REUSE AFFORDABLE HOUSING COMPONENTS FOR CAPEHART/HILLSIDE: AFFORDABLE HOUSING PLAN, TRANSITIONAL HOUSING COORDINATION PLAN AND AFFORDABLE WORKFORCE HOUSING RESIDENT SELECTION PLAN (file 207-04)

Consider adopting Resolutions 39-01, 40-01 and 41-01 approving Hamilton Reuse affordable housing components for Capehart/Hillside; including: (a) Affordable Housing Plan, (b) Transitional Housing Coordination Plan, and (c) Affordable Workforce Housing Resident Selection Plan. These three components are addressed in two staff reports: one report combines the discussion and recommendations on the Affordable Housing Plan and Transitional Housing Coordination Plan, and one report addresses the Affordable Workforce Housing Resident Selection Plan.

The Assistant City Manager stated that this was the second component of the Reuse Plan to be heard.

Special Counsel Coomes gave the staff report, noting that this plan was developed under the procedures set up under Base Realignment and Closure (BRAC) Act for the disposition of surplus military property. It was a "long, drawn-out" process, but the City was finally able to use the negotiated sale process for the fair market value. To justify a fair market sale, the Navy had to find a purpose. The reuse process involved all the stakeholders identified under BRAC. The affordable housing component was the justification for the Navy to make the sale. The ranges of affordability are mandated by the Navy. The percentage of rental and the affordability will run in perpetuity or the land would have to be surrendered. There were two components of restriction, the affordable workforce housing and the 60 transitional units, which were also approved by the Housing & Urban Development Department (HUD). After the decision to demolish the units, it was determined to cluster the 60 transitional units and the pads will be conveyed to the Novato Public Finance Authority (NPFA) to be leased to the affordable housing providers for transitional units under an agreement to lease.

Councilmember Di Giorgio remembered that during discussions of the transitional housing plan, there was stipulation that if the units were not built after a certain period of time, the pads revert back to the NPFA.

Consultant Sonia Seeman referred to their agreement to lease and said that if the providers are unable to construct the units, NPFA must find another provider. If the units were already constructed and the units were in default for some reason, it would be up to the NPFA to find a successor entity to manage the program. She stressed that there were many opportunities built into the agreement to make sure the program is successful. Eventually, if the program is not successful, the units are designated to be for the low or very-low category.

Debbie Kern, Keyser-Marston, gave a presentation on the key elements of the affordable housing plan. If the developer receives the tax credits, he must meet the City's deeper level of affordability. If the developer does not receive the tax credits, he would still have to meet the Navy's level of affordability but he would have more time to do the project, up to 12 years.

Consultant Seeman gave the staff report on the transitional housing orientation plan. She stated that the Housing & Services Commission heard the plan with no changes and recommended that it be adopted. She also gave a report on the Resident Selection Plan. The Housing & Services Commission had two recommendations: to include the Novato Unified School District employees in the second priority and to move the Novato Fire Protection District Fire Fighting personnel from the second priority to the first priority. Staff recommended that the Novato Unified School District be added to the second category. She responded to Councilmember Di Giorgio that the Marin Continuum of Housing & Services will have an interest in a portion of the Commissary site.

Councilmember Di Giorgio remembered the discussions when he was on the Hamilton Advisory Commission that this project should benefit people from Novato. He questioned why it has been reduced for Novato residents to one-third of the units available.

Special Counsel Coomes advised that since this was the largest affordable housing project in the County, the preferences and criteria are subject to a developing area of the law. Under Constitutional provision of the equal protection of the law, the City cannot arbitrarily discriminate and particularly not against a protected class of people. There has to be rational basis and a relationship between the public interest and need. He stated that they have looked at plans of other jurisdictions and have tried to design a plan that could be supported by the data that is available and would not be subject to challenge. He referred to the Hamilton Workforce Housing Resident Selection Plan and the Summary of Data/Findings Local Public Sector Employment and Affordable Workforce Housing documents that are listed as attachment. He noted that two-thirds of the local public sector employees live outside of Novato. There is not the definitive data to support starting the preference plan with more than one-third of the units being available to Novato residents. Their goal was to develop a plan that would not be challenged because on its face it was arbitrarily exclusive. The plan needed to be balanced with the need to provide adequate public service by being able to attract public service employees. The provision for one third of the units to be available to local public service employees was an educated judgement on the part of staff based on the data. After an applicant's list has been developed, more information can be gathered from the applications. He responded to Councilmember Di Giorgio that for the rest of the eligibility most will probably come from the County and other local agencies in Marin.

The City Manager stated emphatically that the public employees provide fundamental and necessary services. Council wanted to be sure to provide adequate opportunity for Novato public employees to apply and live at Hamilton. Taxpayers in Novato have borne most of the cost of Hamilton since 1974.

Mayor Pro Tem Mani was concerned that two-thirds of the preferences would be lost, which could be translated to mean $130 million tax dollars. He was concerned that for years the Council has been telling its constituents that this would be workforce housing for Novato residents, and now the Council abruptly learns that Novato will lose two-thirds of its eligibility. He questioned if it now could be given to Novato seniors.

Special Counsel Coomes responded that the plan was developed to be flexible, and modification was possible upon receiving confirming data. These types of plans are examined very strictly and HUD has disallowed local preferences in other jurisdictions in the past. Their concern in developing a plan was the very new law and the implementation of the preferences that there is a disparate discrimination against protected classes. Since the data has not yet been developed, staff can only support recommending one-third preference for Novato. Later, as the applications are received, there is flexibility to increase percentages if the data supports doing so. The data collected so far does not give the information as to who of the local government employees would actually want to apply and live at Hamilton.

Assistant Special Counsel Seth Merewitz explained that for annual compliance, and as the units are constructed at the end of each phase, there would be an opportunity for Council to reconsider the percentage of units that should be available to Novato residents.

Special Counsel Coomes responded to Mayor Pro Tem Mani that the City has to have a rational basis for selecting who would have the privilege of living in the affordable units. Documentation for the preferences and a demonstration of the need should be shown.

The City Manager noted that many employees have a spouse with a second income and already live in a single-family home in another community where housing is less expensive. It is unknown whether they would be willing to move into a townhouse to be closer to work.

Councilmember Dillon-Knutson questioned whether the percentage was too conservative, as she believed there were many Novato residents who would want to live at Hamilton. Special Counsel Coomes responded with regard to affordable housing plans studied by staff in other communities, that these were very small plans compared to Novato's Affordable Housing Plan. He reiterated that staff can only support one-third at this time because they do not want to put the Council in the position of having the plan challenged or jeopardize the developer's ability to get the tax credits and bonds that are needed to construct the most affordable project. He further stated that if Council wanted preferences other than the public employees in the first tier, they would need to give direction.

Special Counsel Coomes responded to Councilmember Eklund that the Multiagency Board (MAB) list was done as a list of priorities without any analysis as to whether these priorities had supportive data. The City Manager added that plans that were just based on residency have not withstood challenge.

The public comment session was opened.

Captain Dan Northern, Novato Fire Protection District, stated that he was speaking for the future employees of the District. He advised that there will be a big turnover in employees within the District in the next five years and they believe this plan will be very helpful to hire and retain employees. He stated that 89 percent of their workforce would be eligible for the moderate range and urged that the District be given due credit. District employees who live in the community can better help protect the community.

Katie Crecelius, Marin Housing Council, stated that the tax credits are an important infusion into the property to make the units affordable. She was concerned that the plan allows for putting off the construction if the tax credits are not available. She questioned how many people would really be willing to comply with the resale provisions of the plan, which she described as onerous.

Hugh Scott, representing Ignacio Neighborhoods Committee (INC), stated that he shared the Council's frustration with the percentages recommended for Novato residents. He was angry that through the years, the community has been misled about this plan and questioned why data was not gathered on other jurisdictions.

Gail Meyers, 2 Carmel Drive, read her letter of April 10 that she distributed to the Council and stated that a challenge Novato's plan if it had a higher percentage of units available for Novato residents was not fair. She asked a number of questions to which Consultant Seeman was requested to respond.

Consultant Sonia Seeman stated that there were nine categories, of which Novato employees were number one. Water District employees are eligible to participate. With regard to the transitional housing, applicants would go through a certain progression to be eligible. Special Counsel Coomes responded that State law allows for senior housing projects.

Calvin Willhite, 10 Alta Mira Court, acknowledged that the Novato Unified School District have had been moved up in eligibility. He thought that the College of Marin employees should also be moved forward on the list. He fully supported all school employees and District offices having an opportunity for this housing, and suggested that Delanie Easton, State Superintendent of Schools, be contacted to disseminate this information Statewide. He was concerned that there was no "net worth test" for applicants.

Rita Taylor, 121 Saratoga Court, Co-President of Novato Federation of Teachers, stated that she was speaking on behalf of teachers and the Novato Unified School District. She stated that they have 451 teachers and that the beginning teachers' salaries are very low. Veteran teachers make $58,000 a year. Workforce housing would be very beneficial to Novato teachers. The District has many teachers that will soon retire. Also, the District loses teachers to neighboring communities where housing is more affordable. She was pleased that the District employees have been moved forward on the list.

Nancy Kenyon, Fair Housing of Marin, stated that Novato's Plan will be a showcase development for the rest of the United States. She noted that the one-third percentage for Novato employees was flexible, however. It was her opinion that anything higher would be violating the protected classes and be discriminatory. She urged that the Plan not be adopted until more data can be gathered on protected classes.

Leelee Shapiro, Marin Housing Council, reiterated some of her concerns that she gave to the Housing & Services Commission. She stated that because this project uses public money, it has to be affordable to all people. She referred to other smaller projects that use different kinds of money and have not been challenged. She thought this project would be challenged because of the lack of data.

Special Counsel Coomes responded to Council that the data referred to has been included in the staff report.

Charles Kellogg, Hamilton Homeowners Association, stated that according to the plan, a successful applicant does not have to move if their category changed, for example, through a job change. He questioned where the money would come from that would allow a person to still live in workforce housing if they did not pay their rent or mortgage. He questioned whether the occupancy would be mandated by the courts and was concerned about the value of the market-rate homes in the New Hamilton Partners Project.

Special Counsel Coomes responded that this project would not operate at a deficit according to the plan. For example, if a homeowner did not pay rent, the site manager would evict that person.

Consultant Debbie Kern added that there were also processes to address anyone not paying their mortgage.

David Brewer, 19 Alta Mira Court, urged that the percentages for Novato residents be much higher. He suggested that some type of Affirmative Action Plan could be included. Local agencies employees would be needed in times of natural disasters. Also, anything that would reduce traffic and pollution by removing cars from Highway 101 would be beneficial. He felt that the percentage should reflect the demographics of Novato.

The Assistant City Manager stated that staff is recommending that the Novato Unified School District be moved into the same category as the other districts and the Novato Community Hospital.

The public comment session was closed.

The City Manager summarized that this plan was intended to address a wide range of people based on income for affordable housing. The category for public employees, which includes safety employees, is obviously defendable. He stated that he understood Council's frustration, but the laws have changed as there have been court cases and new laws are being formulated in Sacramento and also by Housing & Urban Development (HUD). The goal has been workforce housing. People will be on an equal footing with regard to eligibility with two-thirds of the units being available, as that will be inclusionary housing. This project will require no future subsidies or grants, so if there are no tax credits, it will take longer to construct.

Mayor Pro Tem Mani moved, seconded by Councilmember Di Giorgio, to adopt the resolution approving the affordable housing plan, including the changes as outlined in the Special Counsel's and staff's memos referred to under Item 7 in staff's comments.

Special Counsel Coomes responded to Councilmember Eklund that adopting this resolution would not preclude the Council from again considering the Plan at a later date to examine whether the data is sufficient to change the percentages.

Councilmember Eklund was concerned that an outreach for data was not done for other public agencies.

Councilmember Di Giorgio stated that he would support the resolution because there is a possibility to adjust the percentages later. He expressed concern that it seemed that affordable housing advocates used most of the money on salaries and not on building affordable units.

Councilmember Dillon-Knutson stated that she felt like she had no choice but to support the motion. She really thought that there would be a higher percentage for Novato residents. She said that the residents' sons and daughters cannot afford to live in Novato and she did not think it was discretionary to have a higher percentage of Novato residents. After all, it was the Novato taxpayers who bore the cost of Hamilton.

Councilmember Eklund stated that she would reluctantly support the motion as she would like a higher percentage for Novato residents.

The motion carried unanimously.

Councilmember Eklund moved, seconded by Councilmember Di Giorgio, to adopt the resolution approving the Transitional Housing Coordination Plan. The motion carried unanimously.

Mayor Pro Tem Mani moved, seconded by Councilmember Dillon-Knutson, to adopt the resolution approving the Affordable Workforce Housing Resident Selection Plan. The motion carried unanimously.

I HEREBY CERTIFY that the foregoing minutes were duly and regularly adopted at a regular meeting of the Novato City Council on the 15th day of May, 2001.

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Shirley Gremmels, City Clerk