State laws that went into effect last year impose new conditions on a city when one of its developers decides to build market-rate housing on a site that the city has already included in its inventory of affordable housing. If the developer’s plans are to go forward, the city must find a new site, and zone it as a planned area where affordable housing could be built.

It is complicated, because cities and counties cannot zone for affordability — they can only zone for land use planning — but the idea is to have land with enough unit density per acre so that affordable housing would pencil out.

In Dublin, usually non-profit organizations have cobbled together grants and other financing, according to the city’s planning staff at March 19 City Council meeting,

However, in hearing an annual review of the city’s progress on meeting its Regional Housing Needs Assessment (RHNA) goals for affordable housing, councilmembers learned some troubling news regarding what it may be forced to do.

The city has set aside designated parcels where the density is sufficient for affordable housing to be built. However, a developer can build market-rate housing on such a parcel, and the city cannot prevent it.

Now, because of SB 116, which was approved in 2017, and took effect Jan. 1, 2018, the city is obligated to replace that used-up “opportunity site,” either with one already in the city’s land inventory, or by rezoning another one. The city can’t require any developer to locate one, but instead the city is responsible for finding it on its own, said City Attorney John Bakker.

If the city eventually runs out of sites, it could start eyeing commercial and industrial sites. Established sites would be important, because another new bill, AB 1397, says that opportunity sites should be adjacent to infrastructure.

City Manager Chris Foss gave a hypothetical example of rezoning commercial land, using a commercial strip across the street from the Civic Center as one possibility. Maybe no one would want to build housing there, but the parcel must show up on the city’s land inventory map for RHNA, he said.

Another solution would be to convert pockets of industrial sites to residential uses, said Foss. He jokingly called the shifting need to find more sites “RHNA Whack-a-Mole,” a reference to an arcade game where players knock randomly appearing “moles” back in their holes. “If you hit it, and knock it down, it pops up somewhere else.”

Councilmember Arun Goel commented that under SB 116, “The city gets the penalty; the developer gets the benefit.”

Community Development Director Jeff Baker said, “It’s not necessarily a penalty, but we can’t require the developer to locate another site. However, we can go find it.”

Mayor David Haubert said that putting the burden on the city to find new land “sounds like a loophole.” Goel agreed.

Dublin is halfway through an eight-year window to meet the state-imposed goals over the period of 2014-2022. At the halfway point as of November 2018, developers constructed or took out building permits for 3408 units, 2790 units more than the 618 units sought by RHNA.

However, in the affordable housing categories, ABAG set a goal of 1667 units, but so far Dublin has built only 96 of them. The city has four more years to encourage construction of the remaining 1571 affordable units. Since the city simply has to follow the rules, and has no direct role in producing housing, there is no consequence for the city if it were not to meet the goal.

The city has played a relatively small role in helping to create affordable housing. It requires developers of market-rate housing to make 12% of their units affordable. However, the city generally has allowed the developers to “fee out’” by contributing an in-lieu payment to the city’s affordable housing fund, said Foss.

Those funds can become part of the financing that non-profits use to build affordable housing.