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
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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.
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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
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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.
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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.
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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
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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):
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ORDINANCE NO.
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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.
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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
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