To: Honorable Mayor and Members of City Council
From: Rick Tooker, Community Development Director
Prepared By: Lark Ferrell, Housing Manager
TITLE:
Title
Junior Unit Initiative Program
LABEL
RECOMMENDED ACTION:
Recommendation
Adopt a resolution approving amendments to the Junior Unit Initiative Program and a budget adjustment for the Program.
Body
DISCUSSION:
On June 20, 2017, the City authorized the Junior Unit Initiative Program (the “Program”). The Program provides financing and technical assistance to help homeowners create junior accessory dwelling units (“Junior Units”). Junior Units are created by carving out separate units from one or more bedrooms of owner-occupied, single family homes. Under the terms of the Program, either the Junior Unit or the primary unit must be rented to a low-income tenant at an affordable rent. Under the Program, for each year the unit is available as an affordable rental unit, the City shall forgive 5% of the loan until the loan is fully forgiven at the end of 20 years. Since the Program’s launch, there have been issues that require amendments to the Program criteria approved by Council last year.
When the City initially launched the Program, it contracted with Lilypad Homes, a non-profit agency based in Marin County, to conduct feasibility assessments for homeowners interested in creating accessory dwelling units “ADU’s). In December, the City and Lilypad Homes jointly held a workshop. Over 100 people attended the workshop to learn about the requirements for creating Junior Units and about the Program. From this initial outreach, Lilypad completed 18 feasibility assessments for Napa homeowners interested in creating ADUs, including Junior Units. Of these, six homeowners submitted loan applications to the Program, and of these, four are currently moving forward to create Junior Units through the Program.
Unfortunately, the Program’s launch has not been without a few complications. One major issue is that a few months after the Program’s launch, Lilypad Homes notified the City it had decided to cease operations. This required City staff to redesign the Program, including staff taking over some functions previously provided by Lilypad Homes. Additionally, because Lilypad Homes is no longer providing design services, staff is proposing adding a grant for architectural services to the Program financing. In cases where designing a Junior Unit is not straight forward, this would allow the homeowner to contract with an architect to receive professional design services. Based on the initial applications received, staff does not believe every project would require these services, but having this available will help ensure applicants with more complicated design issues can still participate in the Program. Of the four applications that are currently approved, one would benefit from professional design services.
Another issue the Program has encountered is that the October fires have caused a dramatic increase in construction materials. Additionally, because of the high demand for contractors, it has become much more difficult to find contractors interested in participating in small residential rehabilitation projects. Based on initial bids received to date, staff recommends increasing the maximum loan amount from $40,000 to $50,000 to reflect the current construction market.
Additionally, because the existing Program limits assistance to units carved out of bedrooms, some homeowners interested in creating other types of low-cost ADUs cannot access assistance through the Program. Staff found there are some ADUs that could be created within existing accessory structures with only minor modifications. For example, a potential applicant has a legal “artist studio” that, with the addition of an efficiency kitchen and a private walkway, would qualify as a legal ADU. Because the intention of the Program is to expand affordable rental units by encouraging the creation of low-cost ADUs, staff recommends expanding the definition of eligible units to include existing accessory structures that can be converted to ADUs for approximately the same cost as Junior Units.
The Program is funded with General Funds allocated for affordable housing. Based on the proposed increase of the maximum loan amount described above, current funding would assist in the creation of approximately seven units (comprised of the four units currently in process and three additional units). Given the high level of interest from homeowners after the initial workshop, staff recommends Council authorize an additional $250,000 for the Program, so this number could be expanded to a total of at least 12 units.
If the additional funding and Program amendments are approved, staff anticipates scheduling a second community workshop and doing outreach for the Program over the next several weeks.
FINANCIAL IMPACTS:
Approval of this action would allocate $250,000 from the General Fund for FY2017-2018 which has been budgeted for affordable housing (49723-55002 JLHSGJRUNITS-55002).
CEQA:
The Community Development Director has determined that the Recommended Action described in this Agenda Report is not subject to California Environmental Quality Act (CEQA), pursuant to CEQA Guidelines Section 15060(c).
DOCUMENTS ATTACHED:
ATCH 1 - Resolution approving amendments to the Junior Unit Initiative Program criteria
NOTIFICATION:
Notification was provided to Live Healthy Napa County and Napa Housing Coalition.