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Home My WebLink AboutCC 2026-03-24_10a_Supplemental 7 MEMORANDUM TO: City Council FROM: Jessica Matson, Director of Legislative & Information Services/ City Clerk SUBJECT: Supplemental Information Agenda Item 10.a - March 24, 2026 City Council Meeting Appeal Case 26-002; Appeal of Planning Commission Approval of Conditional Use Permit 25-001; Location – 1271 & 1281 James Way; Appellants – Pismo Medical Properties LLC, Arroyo Grande Partners LLC and Ray B Bunnell Revocable Trust DATE: March 24, 2026 Attached is additional correspondence received for the above referenced item. Cc: City Manager Assistant City Manager/Director of Public Works Planning Manager City Attorney City Clerk City Website and Public Review Binder Enc From: Malone, Caitlin K. <CMalone@BHFS.com> Sent: Tuesday, March 24, 2026 3:22 PM To: publiccomment@arroyogrande.org Cc: Guillen, Christopher R. <cguillen@bhfs.com>; Carlson, Mack <mcarlson@bhfs.com>; Russ Sheppel <rsheppel@gmail.com>; Isaac Rosen <Isaac.Rosen@bbklaw.com> Subject: Correspondence re 3/24/2026 Meeting Agenda Item 10a - Appeal Case 26-002 Good afternoon, Please see attached correspondence from Chris Guillen’s office re: Second Response to Appeal of Planning Commission Approval of Conditional Use Permit 25-001 for the Creekside Junction Project, sent on behalf of Russ Sheppel for tonight’s meeting. Caitlin K. Malone Legal Practice Assistant Brownstein Hyatt Farber Schreck, LLP 1020 State Street Santa Barbara, CA 93101 805.882.1462 tel CMalone@BHFS.com WE HAVE MOVED: Our new address is: 1020 State Street, Santa Barbara, CA 93101 STATEMENT OF CONFIDENTIALITY & DISCLAIMER: The information contained in this email message is attorney privileged and confidential, intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this email is strictly prohibited. If you have received this email in error, please notify us immediately by calling (303)303) 223-1300 and delete the message. Thank 50903974.1 Christopher R. Guillen 805.882.1452 direct cguillen@bhfs.com www.bhfs.com Brownstein Hyatt Farber Schreck, LLP 805.963.7000 main 1020 State Street Santa Barbara, California 93101 March 24, 2026 VIA ELECTRONIC MAIL City Council City of Arroyo Grande 215 E. Branch Street Arroyo Grande, CA 93420 publiccomment@arroyogrande.org RE: Second Response to Appeal of Planning Commission Approval of Conditional Use Permit 25- 001 for the Creekside Junction Project Dear Mayor Russom and Honorable City Councilmembers: This is the second letter submitted on behalf of my client, Russell Sheppel, the owner of 1271 and 1281 James Way (“Property”) in support of his development of a 92-unit multi-family housing project (“Project”) on the Property. Appellants Pismo Medical Properties, LLC, Arroyo Grande Partners, LLC and Ray Bunnell (collectively, “Appellants”) submitted a request to continue the hearing on their appeal of the Project on the basis that they misunderstood the law supporting the Planning Commission’s approval of the Project. As I explained in my email yesterday, granting a continuance on that basis is not only unsupported by the law, but it is bad policy. Despite their request for a continuance, Appellants have submitted two additional comment letters to this Council, alleging reasons the Council should accept their appeal. Not only do these comment letters undercut Appellants’ continuance request—if they need a continuance, why are they still arguing the merits of the Project—but they are baseless. A. There Is No Parking Shortage and Even if There Were, Parking Is Not a Specific Adverse Impact on Public Health and Safety Appellants argue that there is an existing parking shortage on site and adding additional parking demand will cause “spillover parking, increased congestion on James Way, traffic hazards, and nuisance impacts.” Appellants are wrong on both accounts. First, Associated Transportation Engineers (“ATE”) prepared the attached study to analyze the current parking demands on the properties neighboring the Project site. The study shows that the existing parking provided on site meets the City’s parking ratios, minus one space. The study then analyzes peak VIA ELECTRONIC MAIL March 24, 2026 Page 2 50903974.1 parking demands for each of the businesses in the Oak Park Professional Plaza and concludes that at peak demand only 151 spaces is required, while the Project site presently contains 157 spaces. The study then concludes that, given the adequacy of the site’s existing parking, a parking management plan amongst the various Oak Park Professional Plaza owners would solve the alleged parking issues on site as they are seemingly caused by mismanagement of the parking supply, which include, but are not limited to, Appellants’ unauthorized parking on Mr. Sheppel’s property. Second, ATE prepared a study to analyze whether the Project’s added parking demand would be met with onsite parking. The study calculated peak demand for all existing uses plus peak demand for the Project and concluded that the parking provided would be sufficient to meet demand—172 spaces at peak demand, with 196 parking spaces provided throughout the Oak Park Professional Plaza and Project site. Third, the Legislature has declared that conditions that would create “specific, adverse impact upon the public health and safety” arise infrequently. (Gov. Code, § 65589.5(a)(3).) A “specific, adverse impact” is defined as a “significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was complete.” (Id. at (d)(2).) Notably, inconsistency with a zoning ordinance is expressly not a specific, adverse impact. Any speculation about parking shortages falls far short of meeting this threshold. The California Environmental Quality Act (“CEQA”) does not require an analysis of parking shortages, nor can a parking shortage alone constitute an environmental impact. (See Save Our Access– San Gabriel Mountains v. Watershed Conserv. Auth. (2021) 68 Cal.App.5th 8, 26 [rejecting that a reduction in parking spaces constituted an environmental impact; Pub. Res. Code, § 21099(b)(3) [“[T]he adequate of parking for a project shall not support a finding of significance [under CEQA].”]; CEQA Guidelines, § 15384(a) [speculation is not evidence].) B. The Project Will Satisfy Any “Dispersal Requirements” Appellants claim that the “applicant appears to intend to assign all very-low-income units to the 20 studios.” However, Appellants do not provide any evidence of that claim. Mr. Sheppel has not indicated in any manner where the deed-restricted affordable units would be located on site. Appellants have no authority to police State or City standards applicable to the Project. The mere notion that their opinion on these matters has any weight—let alone provides a basis to deny the Project—is preposterous. Regardless, compliance with the Arroyo Grande Municipal Code’s dispersal requirement is provided for in Condition of Approval 96, which states that the Mr. Sheppel must enter into a density bonus agreement with the City prior to issuance of building permits. That agreement will ensure compliance with Arroyo Grande Municipal Code section 16.36.030. Even so, the Density Bonus Law can supersede can supersede local inclusionary requirements, like the one in Arroyo Grande Municipal Code section 16.36.030. (See 8500 Santa Monica Boulevard – Letter of VIA ELECTRONIC MAIL March 24, 2026 Page 3 50903974.1 Technical Assistance [“some inclusionary requirements can hinder, rather than facilitate, the production of affordable housing. This is because inclusionary requirements can sometimes negatively affect the economic feasibility of residential development projects. A project that is not economically feasible will not be constructed and will provide no affordable units at all.”]; City of Lafayette – State Density Bonus Law Affordability Concession – Letter of Technical Assistance [“HCD has provided prior technical assistance on how local governments should harmonize local inclusionary ordinances with the SDBL. These include letters to West Hollywood (allowing a more deeply affordable unit to be substituted for a less deeply affordable unit), Sonoma County (allowing a change in tenancy), and Menlo Park (synchronizing an affordability threshold). These letters share as a common theme that certain provisions of a local inclusionary ordinance can be subject to modification via an SDBL concession, reinforcing that the contents of a local inclusionary ordinance are not simply “off-limits” under the SDBL.”].) Accordingly, to the extent the City is compelled by Appellants’ argument, Mr. Sheppel requests that the Project be granted an additional waiver under the Density Bonus Law to excuse compliance with this local development standard. C. Appellants Misstate the Housing Accountability Act and Density Bonus Law Appellants misstate the applicable law. First, the Housing Accountability Act places the burden on the City, not the Project applicant, to comply with its provisions based on a preponderance of the evidence.1 (See Gov. Code, §§ 65589.5(i), 65589.6.) Appellant fails to provide any evidence or explanation as to how the City fails to comply with the Housing Accountability Act. Nothing Second, Density Bonus Law expressly states that the City “shall not condition the submission, review, or approval of an application . . . on preparation of an additional report or study that is not otherwise required by state law. . .” (Gov. Code, § 65915(a)(2).) The applicant need only provide “reasonable documentation” to establish eligibility for a density bonus or concession. (Id. at (a)(2), (j)(1); see Schreiber v. City of Los Angeles (2021) 69 Cal.App.5th 549 [agency cannot require a proforma to establish a basis for a concession].) The City bears the burden of proof to deny a requested concession. (Id. at (d)(4).) For waivers, the obligation is on the City to grant a waiver or reduction in development standards that will have the effect of physically precluding the project unless it can make the specific statutory findings. (Id. at (e)(1); Bankers Hill 150 v. City of San Diego (2022) 74 Cal.App.5th 755, 770.) Once an applicant establishes eligibility for density bonus and a concession, the City must grant the concession and associated waivers unless it can support statutory findings. (Bankers Hill 150, 74 Cal.App.5th at 774.) 1 People v. Miller (1916) 171 Cal. 649, 652; Harris v. Oaks Shopping Center (1999) 70 Cal.App.4th 206, 209 (“‘Preponderance of the evidence’ means evidence that has more convincing force than that opposed to it.”). VIA ELECTRONIC MAIL March 24, 2026 Page 4 50903974.1 In short, Appellants are incorrect. Mr. Sheppel provided the appropriate evidence to convince City staff and the Planning Commission that the Project qualifies for protections under State law and nothing in the record suggests otherwise. D. The Project Complies with the Mixed Use Definition in the City’s Code and with Applicable State Law Definitions As noted in our prior letter and the Staff Report, the City and Planning Commission found the Project consistent with its Office Mixed Use (OMU) zone, which allows multi-family housing on sites with existing commercial uses as “mixed use.” The City receives deference to interpretations of its own Code, and has determined the Project consistent with the OMU district requirements. (Gov. Code, § 65589.5(j)(2).) The Project can and does also qualify as a housing development project under the Housing Accountability Act and Density Bonus Law, respectively. (Gov. Code, §§ 65589.5(h)(2)(A), 65915(i).) Appellants fail to provide any evidence to the contrary. E. There Is No AB 130 Vehicle Miles Traveled (“VMT”) Requirement; AB 130 Provides a Statutory Exemption to the California Environmental Quality Act Appellants confusingly argue that the Project fails to meet some VMT standard. But there is no “VMT standard” in AB 130. (See Pub. Res. Code, § 21080.66.) Appellants also argue that “the HAA does not relieve a local agency from complying with CEQA.” Appellants again misunderstand. The Project is statutorily exempt from CEQA pursuant to Public Resources Code section 21080.66, as documented with substantial evidence by staff. This determination is reviewed under the “substantial evidence” standard, not the “fair argument” standard asserted by Appellants. (Holden v. City of San Diego (2019) 43 Cal.App.404, 410.) F. The Project Complies with All Existing Parking Easements Appellants again argue that the Project violates existing parking easements. However, as explained in detail in my letter to this Council yesterday, the Project complies with all obligations under those existing easements. VIA ELECTRONIC MAIL March 24, 2026 Page 5 50903974.1 Thank you for your attention to these comments. Please contact me with any questions. Sincerely, Christopher R. Guillen With copy to: Mack Carlson, mcarlson@bhfs.com; Russel Sheppel, rsheppel@gmail.com; Isaac Rosen, isaac.rosen@bbklaw.com 32543661.1