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Home My WebLink AboutCC 2026-04-14_09h Ordinance_Implementing Housing Element ProgramsItem 9.h. MEMORANDUM TO: City Council FROM: Andrew Perez, Interim Director of Community Development SUBJECT: Adoption of an Ordinance Amending Title 16 of the Arroyo Grande Municipal Code to Implement Housing Element Programs A. 1-2 and A. 10-2 DATE: April 14, 2026 RECOMMENDATION: 1) Adopt an Ordinance implementing Housing Element Programs A. 1-2 and A. 10-2 by amending Chapter 16.36 relating to allowed residential uses and re sidential density in Mixed-Use zones; and 2) Find that the Ordinance is exempt from review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080.085; IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: No financial impact is projected. BACKGROUND: On January 26, 2021, the City Council adopted the 2020 -2028 Housing Element. The Housing Element was certified by the State Department of Housing and Community Development (HCD) on May 5, 2021. The City must init iate the programs in the Housing Element to implement its policies and achieve its quantified objectives. The proposed ordinance amendments would implement Housing Element Programs A.1 - 2 and A.10-2. Each program is intended to allow for additional density and the creation of new housing opportunities within certain mixed-use zones. Program A.1-2 expands the type of residential uses allowed in the Traffic Way Mixed-Use (TMU) zone. Program A.10- 2 encourages higher density and reduces constraints to multifam ily residential development by increasing the maximum residential density in the Office Mixed -Use (OMU), Fair Oaks Mixed-Use (FOMU), and Gateway Mixed-Use (GMU) zones, and reducing permit requirements. Page 62 of 406 Item 9.h. City Council Adoption of an Ordinance Amending Title 16 of the Arroyo Grande Municipal Code to Implement Housing Element Programs A. 1-2 and A. 10-2 April 14, 2026 Page 2 The Planning Commission reviewed the ordinance amendments at its meeting on February 17, 20261. The Planning Commission was supportive of the amendments as proposed and adopted a Resolution recommending that the City Council adopt the proposed Ordinance. At a public hearing on March 24, 20262, the City Council introduced the Ordinance as proposed. ANALYSIS OF ISSUES: The Ordinance amendments are now ready for adoption. The Ordinance amendments will become effective thirty (30) days after adoption. ALTERNATIVES: The following alternatives are provided for the Council’s consideration: 1. Adopt the Ordinance as proposed; 2. Modify the Ordinance amendments and direct staff to return at a future public hearing to introduce the modified amendments; or 3. Provide other direction to staff. ADVANTAGES: The Ordinance would amend the development code to implement two housing programs from the City’s Housing Element that encourage the development of affordable housing to help meet the City’s Regional Housing Needs Assessment targets. DISADVANTAGES: None identified. Housing Element Program implementation is required to maintain compliance with state Housing Element Law. ENVIRONMENTAL REVIEW: The ordinance amendment is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Public Resources Code Section 21080.085, which exempts rezoning actions that implement programs contained in an approved housing element . PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted at City Hall a nd on the City’s website in accordance with Government Code Section 54954.2. ATTACHMENTS: 1. Ordinance 1https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=cc8d916a-1d15-47f4-91d3- a0fc84653a3c&lang=English&Agenda=Agenda&Item=18&Tab=attachments 2https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=cc8d916a-1d15-47f4-91d3- a0fc84653a3c&lang=English&Agenda=Agenda&Item=18&Tab=attachments Page 63 of 406 ATTACHMENT 1 ORDINANCE NO. AN ORDINANCE IMPLEMENTING HOUSING ELEMENT PROGRAMS A.1-2 AND A.10-2 BY AMENDING CHAPTER 16.36 RELATING TO ALLOWED RESIDENTIAL USES AND RESIDENTIAL DENSITY IN MIXED USE ZONES WHEREAS, on May 5, 2021, the California Department of Housing and Community Development (HCD) certified the sixth cycle (2020-2028) Housing Element of the City of Arroyo Grande (City); and WHEREAS, the Housing Element includes a variety of programs intended to achieve various identified housing goals; and WHEREAS, Housing Element program A.1-2 directs the City to amend the Municipal Code to remove the limitation of only live-work residential uses in the Traffic Way Mixed-Use zone by allowing a mixed use residential use type at up to 20 dwelling units per acre; and WHEREAS, Housing Element program A.10-2 directs the City to amend the Municipal Code to increase the maximum density for multifamily residential projects in the Office Mixed - Use (OMU), Gateway Mixed-Use (GMU), and Fair Oaks Mixed-Use (FOMU) zones; and WHEREAS, Housing Element program A.10-2 also directs the City to amend the Municipal Code to allow multifamily residential projects in the OMU, GMU, and FOMU zones with a Minor Use Permit; and WHEREAS, this ordinance amends Chapter 16.36 of the Arroyo Grande Municipal Code to amend the development standards for the TMU, OMU; FOMU, and GMU zones; and WHEREAS, on February 17, 2026, the Planning Commission conducted a duly noticed public hearing to consider the staff report, recommendations by staff, and public testimony concerning the ordinance. Following the public hearing, the Planning Commission voted to forward the ordinance to the City Council with a recommendation in favor of its adoption; and WHEREAS, on March 24, 2026, the City Council conducted a duly noticed public hearing to consider the ordinance, including: (1) the public testimony, agenda reports, and other written materials prepared in connection with the ordinance or offered in the matter as presented at the public hearing; (2) the policy considerations discussed therein; and (3) the consideration and recommendation of the Planning Commission; and WHEREAS, the City Council of the City of Arroyo Grande, at its regularly scheduled public meeting on March 24, 2026 introduced this Ordinance to amend Chapter 36 Title 16 of the Arroyo Grande Municipal Code; and Page 64 of 406 ORDINANCE NO. PAGE 2 WHEREAS, all legal prerequisites to the adoption of the ordinance have occurred. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS: SECTION 1. Incorporation. The above recitals are true and correct and are incorporated herein by this reference. SECTION 2. Environmental. The City Council finds that this ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Public Resources Code Section 21080.085 which exempts development code amendments that implement programs contained in an approved housing element. The City’s housing element was certified by the Department of Housing and Community Development on May 5, 2021, and the programs being implemented by this development code amendment do not meet the criteria for actions that do not qualify for this exemption. SECTION 3. Required Findings. In accordance with section 16.16.040(E) of the Arroyo Grande Municipal Code, the City Council hereby makes the following findings: 1. General Plan. The ordinance’s amendments to the AGMC are consistent with the General Plan and necessary and desirable to implement the provisions thereof. Specifically, Housing Element program A.1-2 directs the City to expand the allowable residential use types in the Traffic Way Mixed-Use zone to encourage the creation of housing units. This ordinance effectuates and implements program A.1-2 by allowing all multifamily use types and establishing development standards and permitting requirements for the use. Additionally, program A.10-2 directs the City to amend the Municipal Code to increase the maximum allowable density for multifamily projects in certain mixed-use zones and modify the permitting requirements for those projects . This ordinance effectuates and implements program A.10-2 by amending the development standards and the permit requirements these projects. For these reasons, the ordinance’s amendments to the AGMC are consistent with the General Plan and necessary and desirable to implement the provisions thereof. 2. Health, Safety, and Welfare; Illogical Land Use Pattern. Adoption of the ordinance will not adversely affect the public health, safety, and welfare as it updates the AGMC by modifying the types and intensity of multifamily housing in certain mixed -use zones where residential uses are already allowed . The increase in allowable density is an implementation of the City’s Housing Element. Implementation of these programs were analyzed in the Addendum to the General Plan Environmental Impact Report (Addendum). The Addendum determined that the project would not cause any new significant environmental impacts or substantially increase the severity of significant environmental impacts disclosed in the General Plan EIR and would not adversely affect the public’s health, safety, or welfare. Finally, this ordinance will not result in an illogical land use pattern as it is not amending the City’s zoning map and increases allowable density in mixed-use zones that contemplate multifamily housing that would benefit from existing infrastructure and services . Page 65 of 406 ORDINANCE NO. PAGE 3 3. Consistency with Title 16. This ordinance is consistent with the purpose and intent of AGMC Title 16 because it does not alter or revise the type or intensity of allowed uses and ensures that the provisions thereof are consistent with the City’s Housing Element, which establishes a plan for managing growth and residential development in a manner that is consistent with the goals of the General Plan. Additionally, the implementation of these programs encourages residential and mixed-use development by increasing the allowable density and reducing the permit requirement from a conditional use permit to a minor use permit. 4. Environmental. See Section 2 above. SECTION 4. Code Amendment. Pursuant to Housing Element program A.1-2, Subsection 16.36.020.B of Section 16.36 “Commercial and Mixed Use Development Standards and Site Development Standards” of Chapter 16.36 “Commercial and Mixed Use Districts” of Title 16 “Development Code” is hereby amended as shown in the attached Exhibit “A-1,” and incorporated by reference. New text is displayed in underline and deletions are shown in strikethrough. SECTION 5. Code Amendment. Pursuant to Housing Element program A.1-2, Table 16.36.020(B) of Section 16.36.020 “Commercial and Mixed Use Development Standards and Site Development Standards” of Chapter 16.36 “Commercial and Mixed Use Districts” of Title 16 “Development Code” is hereby amended as shown in the attached Exhibit “A-2,” and incorporated by reference. New text is displayed in underline and deletions are shown in strikethrough. SECTION 6. Code Amendment. Pursuant to Housing Element program A.10-2, Table 16.36.020(E) of Section 16.36.020 “Commercial and Mixed Use Development Standards and Site Development Standards” of Chapter 16.36 “Commercial and Mixed Use Districts” of Title 16 “Development Code” is hereby amended as shown in the attached Exhibit “A-3,” and incorporated by reference. New text is displayed in underline and deletions are shown in strikethrough. SECTION 7. Code Amendment. Pursuant to Housing Element program A.10-2, Table 16.36.020(F) of Section 16.36.020 “Commercial and Mixed Use Development Standards and Site Development Standards” of Chapter 16.36 “Commercial and Mixed Use Districts” of Title 16 “Development Code” is hereby amended as shown in the attached Exhibit “A-4,” and incorporated by reference. New text is displayed in underline and deletions are shown in strikethrough. SECTION 8. Code Amendment. Pursuant to Housing Element program A.10-2, Table 16.36.020(H) of Section 16.36.020 “Commercial and Mixed Use Development Standards and Site Development Standards” of Chapter 16.36 “Commercial and Mixed Use Districts” of Title 16 “Development Code” is hereby amended as shown in the attached Exhibit “A-5,” and incorporated by reference. New text is displayed in underline and deletions are shown in strikethrough. Page 66 of 406 ORDINANCE NO. PAGE 4 SECTION 9. Code Amendment. Pursuant to Housing Element programs A. 1-2 and A.10-2, Table 16.36.030(A) of Section 16.36.030 “Uses Permitted Within Mixed Uses and Commercial Districts” of Chapter 16.36 “Commercial and Mixed Use Districts” of Title 16 “Development Code” is hereby amended as shown in the attached Exhibit “A-6,” and incorporated by reference. New text is displayed in underline and deletions are shown in strikethrough. SECTION 10. Publication. A summary of this ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five days prior to the City Council meeting at which the proposed ordinance is to be adopted. A certified copy of the full text of the proposed ordinance shall be posted in the office of the City Clerk. Within 15 days after adoption of the ordinance, the summary with the names of those City Council members voting for and against the ordinance shall be published again, and the City Clerk shall post a certified copy of the full text of such adopted ordinance. SECTION 11. Effective Date. This ordinance shall become effective 30 days after adoption. SECTION 12. Severability. Should any provision of this ordinance, or its application to any person or circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this ordinance or the application of this ordinance to any other person or circumstance, and, to that end, the provisions hereof are severable. The City Council declares that it would have adopted all the provisions of this ordinance that remain valid if any provisions of this ordinance are declared invalid. SECTION 13. Records. The documents and materials associated with this ordinance that constitute the record of proceedings on which the City Council’s findings and determinations are based are located at 300 E. Branch Street, Arroyo Grande, CA 93420. The City Clerk is the custodian of the record of proceedings. On motion by Council Member ______, seconded by Council Member _______, and by the following roll call vote to wit: AYES: NOES: ABSENT: the foregoing Ordinance was adopted this ____ day of _______, 2026. Page 67 of 406 ORDINANCE NO. PAGE 5 ___________________________________ CAREN RAY RUSSOM, MAYOR ATTEST: ___________________________________ JESSICA MATSON, CITY CLERK APPROVED AS TO CONTENT: ________________________________ MATTHEW DOWNING, CITY MANAGER APPROVED AS TO FORM: ___________________________________ ISAAC ROSEN, CITY ATTORNEY Page 68 of 406 ORDINANCE NO. PAGE 6 EXHIBIT A-1 16.36.020 Commercial and mixed use development districts and site development standards. B. Traffic Way Mixed Use (TMU) District. The primary purpose of the TMU district is to provide for vehicle sales and services, related retail and office uses, and visitor serving facilities, and multi-family residential development convenient to both freeway traffic and vehicles or pedestrians from the nearby village area. Development standards and design guidelines are intended to enhance this specialized mix of uses at the southern gateway to Arroyo Grande which include automobile and small truck sales and service, equipment rental, repair and related services, offices, wholesale and retail sales including outdoor display, motels, restaurants and multi-family residences limited residential uses functioning as live-work units. The TMU district implements and is consistent with the Mixed Use land use category of the general plan. Refer to Table 16.36.020(B) for minimum site development standards and Table 16.36.030(A) for allowable uses. See design guidelines and standards for the vicinity of Traffic Way and Station Way for additional requirements. Page 69 of 406 ORDINANCE NO. PAGE 7 EXHIBIT A-2 Table 16.36.020(B) Traffic Way Mixed Use (TMU) Minimum Site Development Standards 1. Maximum Density Mixed Use Projects New residential limited to live-work units in conjunction with allowed uses. Density determined by discretionary action. 25 dwelling units/acre 2. Minimum Lot Size 10,000 square feet (gross). 3. Minimum Lot Width 80 feet 4. Front Yard Setback 0 - 15 feet. Exceptions may include areas for outdoor sales determined through discretionary action. 5. Rear Yard Setback 0 - 15 feet. Wherever a lot in any commercial or mixed use district abuts a residential use or a lot in any residential use district, a minimum building setback of twenty (20) feet measured from the property line shall be required for proposed commercial use.). 6. Side Yard Setback 0 feet. Wherever a lot in any commercial or mixed use district abuts a residential use or a lot in any residential use district, a minimum building setback of twenty (20) feet measured from the property line shall be required for proposed commercial use. 7. Street Side Yard Setback 0 - 15 feet. Exceptions may include areas for outdoor sales determined through discretionary action. 8. Building Size Limits Maximum height is 30 feet or three stories, whichever is less; a maximum of 36 feet is allowable through the CUP process for visitor serving uses. Maximum building size is 50,000 square feet; a greater size may be allowed through the CUP process. 9. Site Coverage and Floor Area Ratio Maximum coverage of site is 75%. Maximum floor area ratio is .75. 10. Site Design and Signs See Design Guidelines and Standards D-2.11. Additional sign standards also in Chapter 16.60. Page 70 of 406 ORDINANCE NO. PAGE 8 11. Off-Street Parking and Loading See Design Guidelines and Standards D-2.11 Exhibit 'A' for shared parking locations. See Also Section 16.56.020. Exceptions allowed by Section 16.16.120. Page 71 of 406 ORDINANCE NO. PAGE 9 EXHIBIT A-3 Table 16.36.020(E) Gateway Mixed Use (GMU) Minimum Site Development Standards 1. Maximum density—Mixed Use Projects 25 dwelling units/acre (based on gross project area). 2. Maximum density—Multi-family housing 15 25 dwelling units/acre. 3. Minimum density (projects that do not front E. Grand Avenue.)* 75% of maximum density (measured on residential portion of horizontal mixed use project area or 50% of project area, whichever is less). 4. Minimum Lot Size 20,000 square feet (gross). 5. Minimum Lot Width 100 feet. 6. Front Yard Setback 0 - 10 feet. Exceptions for larger setbacks may include entrance courtyards, areas for outdoor dining, or for projects facing a residential district as determined through discretionary review. 7. Rear Yard Setback 0 - 15 feet. Parking encouraged. For projects abutting a residential district, corresponding residential setback shall apply. 8. Side Yard Setback 0 - 5 feet. For projects abutting a residential district, corresponding residential setback shall apply. 9. Street Side Yard Setback 0 - 15 feet. Exceptions may include areas for outdoor dining, or architectural/landscape features determined through discretionary action. 10. Building Size Limits Maximum height is 35 feet or three stories whichever is less; a maximum of up to 40 feet for mixed use projects by discretionary action on lots larger than 20,000 square feet and where the building is not adjacent to a residential district. See Design Guidelines and Standards for Mixed Use Districts. Also see Section 16.48.030(B)(5) and (6). Maximum building size is 102,500 square feet. 11. Site Coverage and Floor Area Ratio Maximum coverage of site is 75%. Maximum Floor Area Ratio is 1.5. Page 72 of 406 ORDINANCE NO. PAGE 10 12. Site Design and Signs Commercial and mixed use projects larger than 20,000 sq. ft: 200 square feet of public accessible open space is required for every 5,000 square feet of office or commercial space exclusive of areas for parking and driveways. See General Commercial and Mixed Use Design Guidelines and Standards. General Plan Policies LU5-11. For mixed use projects, refer to Section 16.48.065. Additional sign standards also in Chapter 16.60. 13. Off-Street Parking and Loading See Design Guidelines and Standards. Parking is to be located behind buildings or to the side. Driveways along E. Grand Avenue shall be minimized by combining driveways, using alleys or designing development so that access is provided from local streets. See Section 16.56.020. Page 73 of 406 ORDINANCE NO. PAGE 11 EXHIBIT A-4 Table 16.36.020(F) Fair Oaks Mixed Use (FOMU) Minimum Site Development Standards 1. Maximum Density Mixed Use Projects 25 dwelling units/acre (based on gross project area). 2. Maximum Density Multi-family housing 15 25 dwelling units/acre. 3. Minimum Density (projects that do not front E. Grand Avenue.)* 75% of maximum density (measured on residential portion of horizontal mixed use project area or 50% of project area, whichever is less). 4. Minimum Lot Size 15,000 square feet (gross). 5. Minimum Lot Width 80 feet. 6. Front Yard Setback 0 - 10 feet. Exceptions for larger setbacks may include entrance courtyard areas for outdoor dining , or for projects facing a residential district as determined through discretionary review. 7. Rear Yard Setback 0 - 15 feet. Parking encouraged. For projects abutting a residential district, corresponding residential setback shall apply. 8. Side Yard Setback 0 - 5 feet. For projects abutting a residential district, corresponding residential setback shall apply. 9. Street Side Yard Setback 0 - 15 feet. Exceptions may include areas for outdoor dining, or architectural/landscape features determined through discretionary action. 10. Building Size Limits Maximum height for mixed residential/commercial use is 35 feet or three stories whichever is less; a maximum of up to 40 feet for mixed use projects by discretionary action on lots larger than 20,000 square feet and where the building is not adjacent to a residential district. See Design Guidelines and Standards for Mixed Use Districts. Also see Section 16.48.030(B)(5) and (6). Maximum building size is 50,000 square feet. 11. Site Coverage and Floor Area Ratio Maximum coverage of site is 70%. Maximum Floor Area Ratio is 1. Page 74 of 406 ORDINANCE NO. PAGE 12 12. Site Design and Signs See Design Guidelines and Standards. Please note General Plan Policies LU5-11. For mixed use projects, refer to Section 16.48.065. Additional sign standards in Chapter 16.60. 13. Off-Street Parking and Loading See Design Guidelines and Standards. Parking is to be located behind buildings or to the side. Driveways along E. Grand Avenue shall be minimized when possible by combining driveways, using alleys or designing development so that access is provided from local streets. See Section 16.56.020. Page 75 of 406 ORDINANCE NO. PAGE 13 EXHIBIT A-5 Table 16.36.020(H) Office Mixed Use (OMU) Minimum Site Development Standards 1. Maximum Density Mixed Use Projects 20 dwelling units/acre (based on gross project area) 2. Maximum Density Multi-family Housing 15 25 dwelling units/acre 3. Minimum Density * 75% of maximum density (measured on residential portion horizontal mixed use project area or 50% of project area, whichever is less) 4. Minimum Lot Size 10,000 square feet (gross); 20,000 square feet for residential projects 5. Minimum Lot Width 100 feet 6. Front Yard Setback 0 - 10 feet Exceptions may include entrance courtyards and areas for outdoor dining determined through discretionary review. 10 feet is required for projects fronting a street opposite a residential district. 7. Rear Yard Setback 0 - 15 feet. Parking encouraged. 8. Side Yard Setback 0 - 5 feet. 9. Street Side Yard Setback 0 - 15 feet. Exceptions may include areas for outdoor dining, or architectural/landscape features determined through discretionary action. 10. Building Size Limits Maximum height for mixed residential/commercial use is 35 feet or three stories whichever is less. Also see Section 16.48.030(B)(5) and (6);Maximum building size is 50,000 square feet; a greater size may be allowed through the CUP process;(See OMU-D-2.20);Three-story building components allowed only with substantial transitional space and/or lower story elements adjacent to residential districts or uses. 11. Site Coverage and Floor Area Ratio Maximum coverage of site is 70%. Maximum Floor Area Ratio is 1 12. Site Design and Signs See OMU-D-2.20. Please note General Plan Policies LU5- 11. Page 76 of 406 ORDINANCE NO. PAGE 14 For mixed use projects, refer to Section 16.48.065. Additional sign standards also in Chapter 16.60. 13. Off-Street Parking and Loading Section 16.56.020. Page 77 of 406 ORDINANCE NO. PAGE 15 EXHIBIT A-6 Allowed Land Uses and Permit Requirements— LAND USE IMU TMU D-2.11 VCD HCO D-2.4 VMU D- 2.11 HCO D-2.4 GMU FOMU HMU OMU 1 D-2.20 RC 2 Specific Use Standards and other references F. RESIDENTIAL USES Multi-family housing not located within a mixed use project NP NP MUP NP CUP CUP/ PED MUP4 CUP/ PED MUP CUP (on lots > 20,00 0 sf) CUP (on lots > 20,000 sf) MUP NP Minimum density (75% of total density allowed by district) required by Housing Element is not required on lots fronting E. Grand Ave., E. Branch Street or in HMU or IMU districts. Multi-family housing in a mixed use project CUP NP CUP NP CUP CUP CUP MUP CUP CUP Minimum density (75% of total density allowed by district) required by Housing Element is not required on lots fronting E. Grand Ave., E. Branch Street or in HMU or IMU districts. Page 78 of 406