Loading...
CC 2024-08-13_10a DCA Implementing Housing Element ProgramsItem 10.a. MEMORANDUM TO: City Council FROM: Brian Pedrotti, Community Development Director BY: Andrew Perez, Planning Manager SUBJECT: Development Code Amendments to Implement Housing Element Programs and Finding that this Action is Not a Project Under the California Environmental Quality Act Pursuant to State Guidelines Section 15061 DATE: August 13, 2024 RECOMMENDATION: Introduce and conduct the first reading by title only, waiving further reading of an Ordinance entitled, “An Ordinance of the City Council of the City of Arroyo Grande Adding Section 16.52.270 Relating to Implementation of AB 1397 and Amending Chapter 16.8 2 of the Arroyo Grande Municipal Code Relating to State Density Bonus Law and Finding the Ordinance Exempt from the California Environmental Quality Act.” IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: No financial impact is projected. BACKGROUND: On January 26, 2021, City Council adopted the City’s 2020 -2028 Housing Element. The Housing Element was certified by the State Department of Housing and Community Development (HCD) on May 5, 2021. The Housing Element includes numerous programs that the city is required to initiate to implement the policies and achieve the quantified objectives listed in the Housing Element. Planning staff reports the status of each of the programs to HCD in the annual progress reports submitted to the State. The proposed ordinance amendments would implement Housing Element Programs A.1 - 1 and A.10-1, both of which are anticipated to incentivize the development of new affordable housing units. Program A.1-1 implements Assembly Bill 1397 (AB 1397) which requires the City to provide by-right approval for projects that reserve twenty percent (20%) of the units for lower income households on eligible sites listed in this program. Program A.10-1 directs staff to update AGMC Section 16.82 to be consistent with current State law regarding density bonuses for residential development. Density bonus is a State Page 166 of 218 Item 10.a. City Council Development Code Amendments to Implement Housing Element Programs and Finding that this Action is Not a Project Under the California Environmental Quality Act Pursuant to State Guidelines Section 15061 August 13, 2024 Page 2 law that allows a developer to build residential units at a higher density than would otherwise be allowed by the Municipal Code when a certain percentage of the units in the project are reserved for lower income households. For example, a housing development that proposes to reserve ten percent (10%) of the units for low-income households is entitled to a 20% density bonus. California Government Code Section 65915 establishes regulations for residential density bonuses and requires every local agency to adopt an ordinance to implement these regulations. Last updated in 2007, AGMC Section 16.82 is no longer consistent with State law regarding density bonus with the passing of various state laws relating to the same, including AB 1763 (2019), AB 2345 (2020), and AB 1287 (2023), among others. Recent changes to State density bonus laws include increases to the maximum available density bonuses, the number of incentives and concessions available to an affordable housing developer, and a new secondary density bonus that was established by AB 1287. The projections developed during the production of the Housing Element estimates that this development code amendment implementing the two programs has the potential to produce 18 extremely low-income units, 37 very low-income units, and 63 low-income units. Planning Commission Review The ordinance amendments were considered by the Planning Commission at a special meeting of the Commission on July 30, 2024. The Planning Commission adopted a resolution recommending the City Council adopt the amendments as proposed by staff. ANALYSIS OF ISSUES: Program A.1-1 – “By Right” Review of 20% Affordable Housing Projects on Certain Sites AB 1397 was adopted in September 2017 to create new state regulations related to Housing Elements, including requirements surrounding the sites inventory. Among other changes to state law, AB 1397 amended Government Code section 65583.2, and imposed certain requirements on “reuse sites,” meaning sites available and identified on the City’s Housing Element to accommodate housing needs but which sites were not approved for development in previous hou sing element cycles. (See Gov. Code section 65583.2(c)) To comply with AB 1397, the proposed Development Code Amendment (DCA) to Title 16 of the AGMC includes provisions to allow “by right” approval for projects that reserve 20% of the units for lower income households if the projects are located on sites that are reuse sites from the previous Housing Element cycle s. There are four (4) parcels that fit this criterion, and are listed in Program A.1 -1:  APN 077-011-010 – 700 Oak Park Blvd.  APN 077-204-028 – 280 S Halcyon Rd.  APN 077-211-022 – 1125, 1131, 1133 E Grand Ave. Page 167 of 218 Item 10.a. City Council Development Code Amendments to Implement Housing Element Programs and Finding that this Action is Not a Project Under the California Environmental Quality Act Pursuant to State Guidelines Section 15061 August 13, 2024 Page 3  APN 077-221-031 – 1019 E Grand Ave. Under AB 1397 and this DCA, “by right” means that the local government’s review of an owner-occupied or multifamily residential use may not require a co nditional use permit, planned unit development permit, or other discretionary review or approval that would constitute a “project” under the California Environmental Quality Act (CEQA). However, “use by right” does not exempt the use from design review for objective criteria. The DCA was drafted in a way that the by right approval would occur concurrently with the issuance of the building permit for the project. The typical reviews by the Planning, Building and Life Safety, and Engineering Divisions would still occur to ensure compliance with applicable standards found in the City’s Municipal Code and State Building Codes , but the process will be streamlined by eliminating the discretionary approval step that is typically included in the process. As outlined in Program A.1-1, all projects with 20% low or very low units would be approved by right, without discretionary review. Implementing this Program incentivizes developers to provide more affordable housing than required by the City’s inclusionary housing ordinance, which requires that a development reserve either 5% of units for very low-income households, 10% for low-income households, or 15% moderate income households. Adoption of the Ordinance is anticipated to benefit the City by increasing affordable housing stock and move closer to attaining the City’s Regional Housing Needs Assessment (RHNA) goals for affordable housing, as established by the adopted Housing Element. State Density Bonus Law Due to the ever-evolving nature of State Density Bonus Law, this DCA proposes to adopt State law by reference, preventing the need to update the Municipal Code every time State law changes. This section of the Government Code does not afford the City any discretion in its application of the density bonus l aw, therefore adopting the law by reference minimizes the amount of future staff time required to maintain AGMC Section 16.82 in compliance with State law. Recent Changes to Density Bonus Law For additional context to support the decision to adopt density bonus law by reference, this section of the staff report will summarize recent changes to the law. For example, effective as of January 1, 2024, AB 1287 allows for an additional density bonus on top of the existing maximum fifty percent (50%) density bonus provided by State Density Bonus Law. The bonus is “stackable,” meaning that Density Bonus Law allows an additional density bonus of 20% to 50% when a project provides an additional set-aside of Very Low Income or Moderate-Income units, as set forth in the tables of Government Code Section 65915(v). Additionally, AB 1287 increases the number of available incentives or concessions for certain mixed-income and one hundred percent (100%) affordable Page 168 of 218 Item 10.a. City Council Development Code Amendments to Implement Housing Element Programs and Finding that this Action is Not a Project Under the California Environmental Quality Act Pursuant to State Guidelines Section 15061 August 13, 2024 Page 4 housing developments, with the number of incentives being increased by one for both project types. The additional density bonus is applicable for both rental and for-sale housing developments. The City will apply the density bonus tables of Government Code Section 65915(f) and (v) to implement density bonus law. This would allow for projects to potentially obtain a total 100% density bonus by providing the initial percentage of affordable units to secure an initial 50% density bonus, and then a secondary percentage of affordable units in order to obtain an additional density bonus of up to 50%. Once the set-aside requirements are met to receive the maximum 50% “primary” density bonus, an applicant may request the additional density bonus available through AB 1287. The additional density bonus will be available to projects which meet the following minimum set asides:  Rental or for sale housing developments which provide 15 % of the total units to Very Low-Income households.  Rental or for sale housing developments which provide 24 percent of the total units to Lower Income households.  For sale housing developments which provide 44 percent of the total units to Moderate Income households. The additional density bonus per AB 1287 will be granted to rental or for -sale projects that meet the minimum affordability requirements listed above and also meet certain additional set-aside percentages specified in Government Code Section 65915(v)(2). Incentives and Concessions AB 1287 increases the number of available incentives or concessions for mixed -income, and 100% affordable housing developments, as defined in Government Code Section 65915(b)(1)(G). Available incentives are updated to include the following:  Four (4) incentives or concessions for mixed-income projects that include at least 16 percent of the units for Very Low Income households in a development in which the units are for rent or for sale or at least 45% of the units for Moderate Income households in a development in which the units are for sale.  Five (5) incentives or concessions for a project meeting the criteria of a 100 % affordable housing development. Next Steps Introduction of the Ordinance will allow the City Council to schedule its adopt ion at a subsequent meeting. The Ordinance would then become effective 30 days after adoption. Page 169 of 218 Item 10.a. City Council Development Code Amendments to Implement Housing Element Programs and Finding that this Action is Not a Project Under the California Environmental Quality Act Pursuant to State Guidelines Section 15061 August 13, 2024 Page 5 ALTERNATIVES: The following alternatives are provided for the Council’s consideration: 1. Introduce and conduct the first reading by title only, waiving furth er reading of an Ordinance entitled, “An Ordinance of the City Council of the City of Arroyo Grande Adding Section 16.52.270 Relating to Implementation of AB 1397 and Amending Chapter 16.82 of the Arroyo Grande Municipal Code Relating to State Density Bonus Law and Finding the Ordinance Exempt from the California Environmental Quality Act”; or 2. Provide other direction to staff. ADVANTAGES: The DCA will implement two housing programs from the City’s Housing Element that incentivize the development of affordable housing to supplement the existing affordable housing stock while helping the City meet its Regional Housing Needs Assessment targets. DISADVANTAGES: No disadvantages has been identified. ENVIRONMENTAL REVIEW: The ordinance amendment is not subject to the California Environmental Quality Act (“CEQA”) pursuant to State CEQA Guidelines sections 15060(c)(2) and 15061(b)(3). The activity is not subject to CEQA because it will not result in a direct or reasonably foreseeable physical change in the environment; and the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The DCA allows for the ministerial review of housing projects on certain sites specified in the Housing Element and ministerial projects are not subject to CEQA. An update to the Municipal Code related to density bonuses is also exempt because this action cannot cause a physical change to the environment on its own. Thus, it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment, the activity is not subject to CEQA. PUBLIC NOTIFICATION AND COMMENTS: A public hearing notice was published on August 2, 2024 , in the New Times, and the Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2. ATTACHMENTS: 1. Proposed Ordinance entitled, “An Ordinance of the City Council of the City of Arroyo Grande Adding Section 16.52.270 Relating to Implementation of AB 1397 and Amending Chapter 16.82 of the Arroyo Grande Municipal Code Page 170 of 218 Item 10.a. City Council Development Code Amendments to Implement Housing Element Programs and Finding that this Action is Not a Project Under the California Environmental Quality Act Pursuant to State Guidelines Section 15061 August 13, 2024 Page 6 Relating to State Density Bonus Law and Finding the Ordinance Exempt from the California Environmental Quality Act” Page 171 of 218 65501.00002\42459178.6 ATTACHMENT 1 ORDINANCE NO. ____ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE ADDING SECTION 16.52.270 RELATING TO IMPLEMENTATION OF AB 1397 AND AMENDING CHAPTER 16.82 OF THE ARROYO GRANDE MUNICIPAL CODE RELATING TO STATE DENSITY BONUS LAW AND FINDING THE ORDINANCE EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT WHEREAS, on May 5, 2021, the California Department of Hous ing and Community Development certified the City’s sixth cycle (2020-2028) Housing Element; and WHEREAS, the Housing Element profiles the City’s compliance with various state housing laws, including Senate Bill 2; and WHEREAS, Housing Element Program A.1-1 directs the City to amend the Municipal Code to comply with Assembly Bill 1397 to allow ministerial approval of housing projects where at least twenty percent of the units are affordable to lower income household on parcels identified in this program; and WHEREAS, Housing Element Program A.10-1 directs the City to amend the Municipal Code relating to density bonuses to comply with current State law; and WHEREAS, this Ordinance adds section 16.52.270 to allow ministerial review of housing projects that are consistent with AB 1397 and amends section 16.82 to specify that the City adopts State density bonus law by reference; and WHEREAS, on July 30, 2024, the Planning Commission conducted a duly noticed public hearing to consider the staff report, recommendations by staff, and public testim ony 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 August 13, 2024, the City Council conducted a duly noticed public hearing to consider the ordinance, including: (1) the public testimony and agenda reports prepared in connection with the ordinance; (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 August 13, 2024 introduced this Ordinance to add Section 16.52.270 and amend Section 16.82 of Title 16 of the Arroyo Grande Municipal Code; and WHEREAS, all legal prerequisites to the adoption of the ordinance have occurred. Page 172 of 218 ORDINANCE NO. PAGE 2 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 State CEQA Guidelines sections 15060(c)(2) and 15061(b)(3) because it will not result in a direct or reasonably foreseeable physical change in the environment; and the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The D CA allows for the ministerial review of housing projects on certain sites specified in the Housing Element and ministerial projects are not subject to CEQA. An update to the Municipal Code related to density bonuses is also exempt because this action cannot cause a physical change to the environment on its own. Thus, it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment, the activity is not subject to CEQA. 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.1-1 compels the City to comply with AB 1397 by allowing ministerial review of housing projects that meet certain criteria. This ordinance effectuates and implements program A.1-1 by specifying the parcels in which these provisions apply and encourages the development of affordable housing to meet targets established in the Housing Element. Additionally, program A.10-1 directs the City to update the Municipal Code to comply with State density bonus law. This ordinance effectuates and implements program A.10 -1 by adopting State law by reference as it relates to density bonuses. 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 to allow ministerial review of affordable housing projects on site that were previously evaluated for their ability to accommodate affordable housing and adopting State density bonus law by reference to ensure that the AGMC is consistent with the City’s Housing Element. Finally, this ordinance will not result in an illogical land use pattern as it is not amending the City’s zoning map. 3. Consistency with Title 16. This ordinance is consistent with the purpose and intent of AGMC Title 16 because while it does amend the type of permit required for certain affordable housing projects, it does not alter or revise the type or intensity of Page 173 of 218 ORDINANCE NO. PAGE 3 allowed uses and ensures that the provisions thereof are consistent with the City’s Housing Element. 4. Environmental. See Section 2 above. SECTION 4. Code Amendment. Section 16.52.270 is hereby added in its entirety to Title 16, Chapter 52 of the Arroyo Grande Municipal Code to read as follows: 16.52.270 – By-Right Housing Projects A. Purpose and Intent. It is the purpose of this section to facilitate the development of qualifying affordable housing units by implementing Program A.1-1 from the City of Arroyo Grande 2020-2028 Housing Element (“Program A.1-1”) and codifying the statutory requirements found in California Government Code section 65583.2(c) governing the same. B. Applicability. This section applies to the following sites listed in Program A.1-1: Assessor’s Parcel Numbers (APNs) 077-011-010, 077-204-028, 077-211-022, and 077-221-031. C. Effect. Residential projects allowed as a use by right under this section shall be exempt from discretionary review and any corresponding discretionary permits that would otherwise be required by Chapter 16.16 of this Code. For purposes of this section, “use by right” has the same meaning as provided in Government Code section 65583.2(i). D. Requirements. A proposed owner-occupied or multifamily residential project shall be allowed as a use by right under this section if all of the following requirements are satisfied: 1. The project is located on a site listed in subsection (B) above. 2. The project complies with all applicable objective City policies, development standards, and design standards established in the General Plan or Development Code. Where there is a conflict between other City requirements and this section, the provisions of this section apply. 3. The minimum residential density is 20 dwelling units per acre. 4. At least 20 percent of the units are affordable to lower income households in accordance with Government Code section 65583.2(c). SECTION 5. Code Amendment. Chapter 16.82 of the Arroyo Grande Municipal Code is hereby amended to read as follows (additions shown in underline and deletions shown in strikethrough): Page 174 of 218 ORDINANCE NO. PAGE 4 Chapter 16.82. – Density Bonuses 16.82.010. - Purpose and Application. The purpose of this chapter is to establish procedures for implementing allow density bonuses and other affordable housing incentives to qualifying projectsreference requirements, as set forth in California Government Code sections 65915 through Section 65918, as they may be amended, and to increase the production of affordable housing, consistent with the city's goals, objectives, and policies. 16.82.020. - Density Bonus. The density bonuses and other affordable housing incentives required by State law, including but not limited to, Government Code section 65915 et seq., shall be available to applicants on the terms and conditions specified in State law. SECTION 6. 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 7. Effective Date. This ordinance shall become effective 30 days after adoption. SECTION 8. 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 9. 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 Membe r _______, and by the following roll call vote to wit: AYES: NOES: ABSENT: the foregoing Ordinance was adopted this ____ day of _______, 2024. Page 175 of 218 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 176 of 218