More Retail Space, Less Offce Space Leads to Less RHNA Allocation of Below-Market-Rate Housing, Xiaowen

Cupertino under-builds BMR (Below-Market-Rate) housing and way over-builds Market-Rate housing units.

Xiaowen points out,

"The goal of RHNA is to even out the income discrepancies among cities. Cupertino has way more high income households than average and way less low income households than average."

More retail space won't increase RHNA allocation for BMR housing. On the other hand, more office space will result in more allocation for BMR housing, which Cupertino is already having a hard time to build enough to satisfy RHNA allocation.

Xiaowen clarifies:

"The precise way to state should be that the more office would not increase RHNA of market rate housing allocation proportionally. More office will increase the total RHNA, however, due to the income distribution of Cupertino, even though these offices mostly generates high income jobs, but big portion of housing generated by the offices would be BMR, not market rate housing. This is quite different from how housing need is counted in city's nexus study on housing mitigation fee. In the nexus study, offices generate 100% market rate housing while retail generate mostly BMR since the accounting is purely based on job types. However, from ABAG perspective, they only care what is the total number of jobs generated, then distributed the housing need by city's current household income distribution. The goal is to make every city to have same household income distribution. Therefore, by such design, more offices result in more BMR and more traffic on road. And building more retail at this point, actually does not mean RHNA on BMR would increase. On the contrary, number of jobs generated by acreage for retail is much lower than office, it is more favorable to build more retail to reduce absolute number of RHNA. Moreover, the proportion of affordable housing allocation would not increase as indicated by the nexus study."

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From: Xiaowen Wang
Date: Mon, May 4, 2015 at 11:06 PM
Subject: What does ABAG intend to do with RHNA and how we should decide housing mitigation fee?
To: City Clerk <cityclerk@cupertino.org>, City Council < citycouncil@cupertino.org>, planning@cupertino.org, manager@cupertino.org, RebeccaT@cupertino.org

Dear City Councils,

I am writing to offer my study on RHNA regarding how BMR housing quota is allocated for RHNA. Since RHNA is the policy of ABAG to achieve state required HCD, I think we should look at its philosophy when determine the housing mitigation fee which is our city's policy to achieve RHNA.

Please find the attached slides that summarize my discovery. In particular, I want to point out an issue in the mitigation fee Nexus Study. The study only consider the different income category housing need for different type of employment, namely office and retail. However, if we look at the RHNA allocation, we would find that the RHNA allocation is not promotional to the housing need. The RHNA allocations for different income categories highly depend on the comparison between the regional distribution and the city's income distribution. The goal of RHNA is to even out the income discrepancies among cities. Cupertino has way more high income households than average and way less low income households than average. This result in we go disproportional RHNA allocation compared to city's household income distribution. Base on this formula, we actually could afford to build much more retail without change our RHNA allocation of BMR. On the other hand, building more office would not increase our RHNA allocations of market rate housing. This actually means that ABAG expect more high income workers in Cupertino to live in other cities which could potential make our city's traffic worse.

Based on this analysis, I would urge councils to charge more mitigation fee on office while charge less on retail.

Thanks for your consideration and I would like this letter to be part of record for tomorrow's hearing.

Sincerely,

Xiaowen Wang

Attachment: Housing_impact_fee_RHNA by Xiaowen.pdf