REPORT TO COUNCIL
SUBJECT
Title
Approve the 2024 Housing Element Annual Progress Report
Report
BACKGROUND
California Government Code Section 65400 (“Section 65400”) requires cities and counties to submit an Annual Progress Report (APR) to the State by April 1 of each year. APRs must be submitted to two State agencies: Governor’s Office of Planning and Research (OPR) and Department of Housing and Community Development (HCD). The APRs describe each jurisdiction’s progress in implementing the Housing Elements of their General Plans.
The 2024 APR (Attachment 1) describes the City’s accomplishments for calendar year 2024 that contribute toward meeting its Regional Housing Needs Allocation (RHNA) and Housing Element program objectives. The 2024 APR measures housing production during calendar year 2024 to be counted towards the Sixth Cycle (2023-2031) RHNA Projection Period, which began on June 30, 2022, and ends on December 31, 2030.
All “successor housing entities” are also required to submit an annual report on the Low-Moderate Income Housing Asset Funds (LMIHAF) as an addendum to the Housing Element APR to HCD. The City is the Housing Successor to the Redevelopment Agency and therefore is required to annually provide housing assets and activity information as part of the Housing Successor Agency Annual Report on the LMIHAF (Attachment 2).
EXISTING POLICY
2023-2031 Housing Element
Goal H-1: Provide adequate sites for the development of new housing through appropriate land use and zoning to address the diverse needs of Sunnyvale’s residents and workforce.
Community Vision
Policy CV-1.2: Provide accurate and thorough information in a timely manner to ensure that community members have an opportunity to respond effectively.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
DISCUSSION
The APR is comprised of thirteen different tables and reports detailing housing production and the City’s progress on implementing Housing Element programs and meeting the RHNA. For each housing unit included in the APR, the City indicates the affordability level by income group and whether the unit is deed restricted. The City considers half of all market-rate rental housing units to be Non-Deed Restricted Moderate-Income units that are affordable to households earning up to 120% of Area Median Income. The other half of market rate rental units are considered Above Moderate-Income units. This assumption aligns with the City’s Adopted 2023-2031 Housing Element and rent data from recently constructed housing projects. To determine affordability of Accessory Dwelling Units (ADUs), the City uses the recommendations of the Association of Bay Area Government’s Affordability of Accessory Dwelling Units study in September 2021 (Attachment 3), which align with the assumptions in the City’s 2023-2031 Housing Element.
The APR begins with a concise summary report of housing production during calendar year 2024. This report includes information on planning and building permits for calendar year 2024 and summarizes details such as affordability, structure type, and application type. Subsequent tables include more detailed information about each project. Due to the complexity, small row size, and difficulty viewing some of the larger tables in the APR, a summary of each table/report is provided below.
Table A in the 2024 APR shows the number of housing units for which a planning application was determined complete in calendar year 2024. An “application” is defined as a formal submittal of a project for approval. Per APR instructions, applications that have not been determined to be complete are not included. The table shows the total number of “Proposed Units”, “Approved Units” and “Disapproved Units” (Sunnyvale had zero disapproved units). While the “Approved Units” count is less than the “Proposed Units”, this does not mean the development applications were denied, but rather that some projects were not entitled the same year they were determined complete. Table A also includes building permit applications for ADU projects that were submitted under the City’s streamlined ADU approval process. Since this process does not require a planning application, the building permit application must be recorded in Table A, per HCD instructions. A summary of Table A from the 2024 APR is below:
Table A2 shows a more in-depth look at the net new housing units and developments that have received any one of the following in calendar year 2024:
• An approved planning application (“Units Issued Entitlements”);
• An issued building permit (“Units Issued Building Permits”); or
• A certificate of occupancy (“Units Finaled”).
The goal of the full table in the report is to show the timeline in which each project moves through the planning and building permitting process. The table also tracks the City’s progress towards meeting its RHNA housing goals. Housing units are counted towards the RHNA when a building permit is issued. In addition to recording general project details, Table A2 also documents whether projects take advantage of State housing laws such as State density bonus and streamlining provisions such as Senate Bill (SB) No. 9, which streamlines the residential lot split process. The summary of Table A2 below shows these units according to their respective affordability levels from Very Low-Income to Above Moderate-Income.:
Although planning entitlements and issued building permits were lower in 2024 than in prior years, finaled building permits were slightly higher due to several multifamily projects completing construction. Among these projects is Meridian, the 90-unit 100% affordable housing development, which provided a boost in affordable housing for Lower-Income households. In fact, for each phase in the permitting timeline in 2024 (planning entitlements, permits issued, and permits finaled), at least 30% of units are deemed affordable to Moderate or Lower-Income households.
Table A2 also demonstrates that 2024 was one of Sunnyvale’s strongest years for ADU production. In 2024, 74 ADUs were finaled, 73 received building permits, and 39 received planning entitlements. For comparison, between 2019 and 2023 the City averaged 45 ADUs finaled, 61 ADU permits issued, and 43 ADUs entitled. As noted above, the City offers a streamlined permitting process that requires only building permits for certain types of ADU projects. As a result, many ADU projects are no longer required to secure planning entitlements, which leads to a lower number of ADU planning entitlements. The City continues to expand its ADU resources including the creation of a pre-approved ADU plans gallery webpage, which was launched in December 2024. The new ADU plans gallery and pre-approved permitting process will further simplify and streamline the ADU development process for many homeowners.
Table B is a summary of all permitting activity for the Sixth Cycle (2023-2031) Housing Element Projection Period. This table includes permitting data beginning with the start of the Projection Period on June 30, 2022 to the end of calendar year 2024. This table reports the number of units for which building permits were issued to demonstrate progress in meeting the jurisdiction’s share of RHNA by income level. A summary of the City’s RHNA progress in Table B is provided below:
As of December 31, 2024, the 2023-2031 Housing Element cycle is 29% complete and the City has issued building permits for 1,720 units, or 14% of the City’s total RHNA. Although the City’s RHNA progress is behind the current stage in the Housing Element cycle, 2024 was the second year in a row in which planning entitlements outnumbered building permits issued. This suggests that an increase in building permit activity will follow in upcoming years.
It is important to note that the City is required to plan and accommodate for the RHNA in its Housing Element but is not required to build the units. In 2024 a majority of units that were issued planning entitlements were located in the El Camino Real Specific Plan, which was adopted in 2022. With other recently adopted specific plans such as Lawrence Station Area Plan and Moffett Park Specific Plan, the City has created significant capacity for housing units that exceeds the remaining RHNA. City staff regularly tracks housing production and remaining Housing Element sites to ensure that the City has adequate capacity to meet the remaining RHNA.
Table C identifies sites or rezoned land used to accommodate a shortfall of RHNA sites. Because the Moffett Park Specific Plan was not adopted before the start of the Sixth Cycle (2023-2031) Housing Element, the City had a shortfall of 1,535 Lower-Income units and 3,280 Above Moderate-Income units at the beginning of the Housing Element cycle. Although the Moffett Park Specific Plan sites were rezoned in 2023, Table C will continue to include these rezoned sites for the remainder of the Housing Element cycle.
Table D provides an update on the City’s progress toward achieving the 45 programs listed in the Implementation Plan of the Sixth Cycle (2023-2031) Housing Element. In 2024, the City continued ongoing work to implement programs to support the creation of 100% affordable housing, facilitate ADU production, implement the Below Market Rate housing program, and expand home improvement projects for lower-income households. Additionally, the City completed a program to address the commercial requirement for 100% affordable housing in the El Camino Real Specific Plan (Program H17) and adopted a Safe Parking ordinance to help implement Program H34 (Safe RV Parking).
Table E provides information on commercial developments that were approved with development bonuses in exchange for providing affordable housing. The City did not receive any commercial applications requesting bonuses during the reporting year.
Table F provides the number of affordable housing units rehabilitated, acquired, and/or preserved, only if such projects were included as objectives in the Housing Element. This table is not applicable to the City since rehabilitation projects are not identified as a method to meet the RHNA requirement in the Housing Element.
Table F2 shows the Above Moderate-Income units that were converted to Moderate-Income units through deed restrictions. No Above Moderate-Income units were converted in the reporting year.
Table G provides an inventory of City-owned properties in the Housing Element Sites Inventory that were leased or sold in 2024. On December 12, 2024, the City purchased 1171 Sonora Court and entered into a Disposition and Development Agreement with MidPen Housing for the development of a 100% affordable housing project. Upon acquisition of the property, the City assumed the existing lease with the current industrial tenant and will enter into a lease with MidPen prior to construction. The City also continued to lease the 1178 Sonora Court and 295 S Mathilda properties to MidPen Housing for future affordable housing developments.
Table H is an inventory of City-owned surplus lands. In 2024, the City declared the 1171 Sonora Court property to be exempt surplus land on the basis that the site will be developed as affordable housing.
Table I has been removed from the APR by HCD.
Table J shows any student housing projects that were granted a density bonus. There were no student housing projects with a density bonus in 2024.
Table K requires local governments that have adopted a local tenant preference policy to create a webpage with information about their policy and report this information on their APRs. The City does not have an adopted local tenant preference policy.
The LEAP Reporting tab includes a summary of the City’s use of the Local Early Action Planning (LEAP) grant, which is administered by HCD as well as a summary of entitlements, building permits issued, and permits finaled for calendar year 2024.
Lastly, the Low-Moderate Income Housing Funds (LMIHAF) report is required by California Health and Safety Code Section 34176.1 for a city that has assumed the housing function of a former redevelopment agency (“housing successor agency”) and is responsible for administering housing set-aside funds, now known as Low-Moderate Income Housing Funds (LMIHAF). The City is the housing successor agency for the former Redevelopment Agency of the City of Sunnyvale. Attachment 2 provides data on the Sunnyvale Housing Successor Agency’s activities and finances in fiscal year 2023/24. The City continues to meet the Extremely Low Income test, the Senior Housing Test, and Excess Surplus Test.
FISCAL IMPACT
Approval and submittal of the APR is required by State law and will assist the City in qualifying for State funding opportunities. Otherwise, as the report is primarily for informational purposes, this action does not have any fiscal impact.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
Section 65400 requires Council to consider the APR “at an annual public meeting before the legislative body where members of the public shall be allowed to provide oral testimony and written comments” (on the City’s reported progress in implementing its Housing Element). In addition, email notifications were sent to interested parties, including housing advocacy organizations.
ALTERNATIVES
1. Approve the 2024 Housing Element Annual Progress Report and direct staff to submit it to the Governor’s Office of Planning and Research and the California Department of Housing and Community Development.
2. Approve the 2024 Housing Element Annual Progress Report with modifications, and direct staff to submit it to the Governor’s Office of Planning and Research and the California Department of Housing and Community Development.
STAFF RECOMMENDATION
Recommendation
Alternative 1: Approve the 2024 Housing Element Annual Progress Report and direct staff to submit it to the Governor’s Office of Planning and Research and the California Department of Housing and Community Development.
JUSTIFICATION FOR RECOMMENDATION
All local jurisdictions, including charter cities, are required to submit the APR to the Governor’s Office of Planning and Research and the California Department of Housing and Community Development by April 1 of each year. Staff recommends Alternative 1 in order to maintain the City’s compliance with State law (i.e., Health and Safety Code Section 34176.1 and Government Code Section 65400).
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Ryan Dyson, Housing Specialist II
Reviewed by: Jenny Carloni, Housing Officer
Reviewed by: Trudi Ryan, Director of Community Development
Reviewed by: Dennis Jaw, Assistant Director of Finance
Reviewed by: Matthew Paulin, Director of Finance
Reviewed by: Connie Verceles, Deputy City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. 2024 Housing Element Annual Progress Report
2. Housing Successor Agency Annual Report on the Low-Moderate Income Housing Asset Fund (LMIHAF) FY 2023/24
3. Affordability of Accessory Dwelling Units Study