HomeMy WebLinkAboutItem 11a - Housing Element Implementation PSA Amendment
DATE: April 18, 2023
TO: Honorable Mayor and City Council
FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director
Lisa Flores, Deputy Development Services Director
SUBJECT: RESOLUTION NO. 7489 AMENDING THE FISCAL YEAR 2022-23
OPERATION BUDGET AUTHORIZING AN APPROPRIATION TO AMEND
THE PROFESSIONAL SERVICES AGREEMENT WITH KIMLEY-HORN
AND ASSOCIATES TO COMPLETE IMPLEMENTATION ACTIONS
REQUIRED BY THE CITY’S ADOPTED HOUSING ELEMENT FOR THE
2021-29 PLANNING PERIOD IN THE AMOUNT OF $185,000, OFFSET BY
A REDUCTION IN THE GENERAL FUND RESERVE IN THE AMOUNT OF
$90,000, AND EXTENDING THE CONTRACT TERM TO DECEMBER 31,
2024
CEQA: Not a Project
Recommendation: Adopt
SUMMARY
An amendment to the Professional Services Agreement (“PSA”) with Kimley-Horn and
Associates is being sought to complete various actions to implement the City’s adopted
Housing Element. Funds were allocated this Fiscal Year for work on the Housing Element;
however, a number of additional and unexpected requirements from the State Office of
Housing and Community Development (“HCD”) were received and now necessitate a
larger and more comprehensive project.
It is recommended that the City Council adopt Resolution No. 7489 (refer to Attachment
No. 1) authorizing an appropriation to amend the Professional Services Agreement with
Kimley-Horn and Associates, to complete implementation actions required by the City’s
adopted Housing Element for the 2021-29 planning period in the amount of $185,000,
offset by a reduction in the General Fund Reserve of $90,000, and extending the contract
term to December 31, 2024.
Professional Services Agreement with
Kimley-Horn and Associates
April 18, 2023
Page 2 of 5
BACKGROUND
In 2021, the City Council authorized a Professional Services Agreement (“PSA”) with
Kimley-Horn and Associates to update the City’s Housing Element for the 2021-29
planning period (6th Cycle), in the amount of $208,692, of which $150,000 was funded by
a Local Early Action Planning (“LEAP”) Grant, to help defray costs of this work.
Subsequently, there were two amendments to the PSA, with one approved by the City
Manager on March 18, 2022, in the amount of $7,500 to complete additional requirements
from HCD. A second amendment for $30,000 was approved by the City Council on
November 29, 2022, bringing the total contract amount to $246,192.
The City Council approved the Housing Element on February 15, 2022. Following
Council’s approval, the City worked diligently with HCD to gain compliance, submitting 5
separate iterations of the documents. Based on a meeting and discussion with HCD on
October 10, 2022, the City was provided with guidance that if the last remaining items
were posted on the City’s website for public review for at least seven days, an extension
would be granted to October 20, 2022, to accommodate the comment period. Through
their review, HCD also informed the City that specific language had to be added to the
City’s original Resolution on the Housing Element, even though it was already adopted
by the City Council in February 2022. HCD also indicated that the revisions to the
Resolution would be the last step to achieving certification. The fifth draft was posted on
the City’s website for public review on October 13, 2022, and re-submitted to HCD on
October 20, 2022, within the prescribed deadline.
On October 28, 2022, the City received a letter from HCD that stated one word
(“residential”) was omitted from one of the programs for residential care facilities. For this
reason, HCD found the City’s draft Housing Element was not in compliance. On
November 9, 2022, the final amendments with the revised Resolution were submitted to
HCD. Despite all indications from HCD staff, and the reality of the relevant submittal
dates, the City received a “final” letter from HCD on January 6, 2023, indicating that
although the City’s materials met the statutory requirements, the materials were not
submitted in a timely manner. As a result, certain implementation actions were required
(namely, significant rezoning efforts) before the State would make a finding of
compliance. The proposed contract amendment will cover the consultant work necessary
to complete the rezoning efforts.
DISCUSSION
Anticipating that follow-up work would be necessary to implement aspects of the Housing
Element, the Development Services Department included $95,000 in the approved Fiscal
Year 2022-23 Budget. This budget was planned to be utilized for consultant services to
develop an Inclusionary Housing Ordinance along with several other required code
Professional Services Agreement with
Kimley-Horn and Associates
April 18, 2023
Page 3 of 5
changes and cleanup items designed to bring the City’s housing polices in line with the
new Housing Element. Other implementation actions such as rezoning projects, Municipal
Code text amendments, and additional housing policies were anticipated to be included
in subsequent budgets as funding and workload permitted. Upon adoption of a Housing
Element, jurisdictions are typically given up to three (3) years to effectuate zone changes
and other actions identified in the Element; however, HCD’s failure to find the City’s
Element in compliance accelerates the need to complete much of this work.
While HCD does not specifically put a timeline on the major rezoning work, they did
identify several actions that the City should complete by November 2023. These include
updated code language for the City’s Density Bonus regulations, updated code language
related to emergency shelters, transitional and supportive housing, employee housing,
and updated code language regarding mitigating constraints to housing choice for
persons with disabilities. In addition to these required actions, the City already committed
to drafting an Inclusionary Housing Ordinance as a top priority and first step toward
implementation of the Housing Element. Because of HCD’s stance related to the rezoning
efforts, it is necessary to accelerate the anticipated budget and corresponding work for
Fiscal Year 2023-24.
The rezonings include expanding the Downtown Mixed-Use Zone, establishing a
Downtown Residential Overlay Zone, increasing the density of the Mixed-Use Zone and
the High-Density Residential Zone, creating Overlays in the Live Oak and Las Tunas
areas, and expanding the Residential-Flex Overlay into the General Commercial Zone.
All these efforts expand opportunities for residential development into the City’s
commercial areas at a density that will be conducive to incentivizing residential
development in general, and importantly, incentivizing and requiring affordable housing.
It is important for the City to expediently complete these rezoning efforts along with the
other planned housing work. Although the City is challenging HCD on its ruling and
continues to urge HCD to certify the Housing Element, the lack of a certified element puts
Arcadia at risk of losing certain State funding sources and makes the City susceptible to
non-compliant development projects.
Kimley-Horn and Associates is uniquely positioned to complete this work at a speed and
cost unmatched by other consultants. The reason for this is that Kimley-Horn has assisted
the City with all facets of the Housing Element thus far. They are in possession of all
relevant maps and zoning information and they have completed extensive, site-by-site
analyses of many targeted rezoning areas. All of this previous work eliminates the need
for extensive and costly foundational research that any other housing consultant would
need to complete. Since they are currently under contract with the City, it is recommended
that an amendment be processed with Kimley-Horn and Associates to complete this work.
The term of the contract is proposed to be extended until the end of 2024 to ensure that
Professional Services Agreement with
Kimley-Horn and Associates
April 18, 2023
Page 4 of 5
all steps can be completed, and to avoid the need for future extensions, should there be
any delays in the process; Attachment No. 2 provides the proposed scope of work from
Kimley-Horn. The scope provides a list of all the items within the Implementation Program
for the Housing Element and estimates a cost to complete each item. In reviewing the
proposed scope, it is requested that all items that were specifically listed by HCD in the
January 6, 2023, letter be included in the project. In addition, the Inclusionary Housing
item and additional implementation items originally planned for this Fiscal Year should
also be included. Taken together, along with the proposed CEQA costs to evaluate the
project, the proposed scope of work totals $185,000. Additional items not included in the
requested amount are expected to be completed by staff over time, as these are not as
urgent and have not been specifically identified by HCD.
ENVIRONMENTAL ANALYSIS
The approval of the amended scope of work for the Agreement is not in and of itself, a
project per the California Environmental Quality Act (“CEQA”), as it can be seen with
certainty that it will have no impact on the environment. As shown in Attachment No. 2, it
is anticipated that the rezoning work and text amendments will be accompanied by an
Initial Environmental Study and Mitigated Negative Declaration when the project is
brought back through Planning Commission and City Council at a later date.
FISCAL IMPACT
The total contract amount for the Housing Element Update was $246,192. This amount
included additional appropriations of $7,500 in March 2022 and $30,000 in November
2022, to cover additional costs brought about by HCD’s extensive comments. Of the
$246,192 approved, a total of $150,000 was funded by a LEAP grant provided by the
State.
To fund the proposed amendment to the contract, the existing Development Services
Department budget includes $95,000 for the development of an Inclusionary Housing
Ordinance and additional housing implementation actions. In order to cover the required
rezoning items and other actions identified by HCD, an additional $90,000 budget
appropriation is being requested. It is likely that this amount would have been included in
the Fiscal Year 2023-24 budget, but HCD’s action necessitates that this funding is
requested earlier to complete the identified work. This would equate to a total budget
amendment with Kimley-Horn and Associates of $185,000, with $95,000 already provided
in the budget and an additional $90,000 appropriated from the General Fund Reserve.
There is sufficient funding available in the General Fund Reserve for appropriation of the
requested $90,000.
Professional Services Agreement with
Kimley-Horn and Associates
April 18, 2023
Page 5 of 5
RECOMMENDATION
It is recommended that the City Council adopt Resolution No. 7489 authorizing an
appropriation to amend the Professional Services Agreement with Kimley-Horn and
Associates, to complete implementation actions required by the City’s adopted Housing
Element for the 2021-29 planning period in the amount of $185,000, offset by a reduction
in the General Fund Reserve of $90,000, and extending the contract term to December
31, 2024.
Attachment No. 1: Resolution No. 7489
Attachment No. 2: Proposed Scope of Work from Kimley-Horn and Associates
Attachment No. 1
Attachment No. 2