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CC 2016-11-22 Supplemental No 1 Item 10b � n A. # ,lur fQ,fflff fro MEMORANDUM TO: CITY COUNCIL FROM: TERESA MCCLISH, COMMUNITY DEVELOPMENT DIRECTOR SUBJECT: SUPPLEMENTAL INFORMATION AGENDA ITEM 10.b. — NOVEMBER 22, 2016 CITY COUNCIL MEETING CONSIDERATION OF A RESOLUTION TO AMEND THE STAGE 1 WATER SHORTAGE EMERGENCY PROVISIONS TO IMPLEMENT ADDITIONAL RESTRICTIONS INCLUDING THE PROHIBITION OF NEW WATER CONNECTIONS WHEN SPECIFIED WATER CONDITIONS ARE DETERMINED TO EXIST DATE: NOVEMBER 21, 2016 Attached is correspondence received today regarding the above referenced agenda item. CC' City Manager City Attorney City Clerk Public Review Binder RECEIVED NOV 212016 ARROYO GRANDE Arroyo Grande City Council CITY CLERK Re: Resolution to amend Stage 1 water shortage emergency provisions /water connection moratorium Proposed Water Connection Moratorium is Not Fair to Infill Lot Owners We respectfully request that the Council give exemption consideration to existing infill lot owners wishing to build single family homes for personal occupancy. We feel the hook-up moratorium should exempt infill lots for the following reasons: 1)Infill lots produce permit fees like subdivisions, but with little environmental impact. 2)Infill development does not require new City infrastructure such as water, sewer, storm drains, streets, sidewalks, all of which are expensive for the City to maintain. 3) Infill use does not destroy farmland, open space or impact existing;view-sheds. 4) Infill use increases property tax revenue to the City, just like subdivisions. 5) Exempting the remaining infill lots within the City would have a negligible impact upon our water sources versus new subdivisions. Owners of infill lots have paid taxes on them,in some cases for many years. These taxes have gone to support many City services. Consideration should be given to owners who have paid taxes on their infill lots. Consideration should be made to exempt the moratorium for those individuals intending to occupy their new single-family residences on infill lots, versus those developing for speculative purposes. For example,we pay nearly $400.00 a month in taxes for our vacant lot. We need a home for our family; a water hook-up is a necessity,not a means for profit-making. We cannot afford to buy another house if we are unable to build on our own parcel. Nor can we afford to pay$2,500 a month to rent a home for an indeterminate amount of time. Exempting existing infill lots allows some new home construction to continue without the additional heavy impact on our water sources which is created by new subdivisions. Thank you for your considerat' Respectfully Gary& Suzanne Wells 151 Ridgeview Way Arroyo Grande, Ca 93420 ' (805) 929-5966; gswells2@gmail.com BELLE MER DEVELOPMENTS, LLC 998 Huston Street, Suite C R.8C12IVR1) Grover Beach, CA 93433 NOV 212076 AR2CO YC G E CLERK November 21, 2016 City of Arroyo Grande City Clerk 300 E. Branch Street Arroyo Grande, CA 93420 RE: City Council Hearing November 22, 2016; Building Moratorium Pending Resolution and; Request to have letter to be placed on the record. Dear Mayor, Council Members and Staff; This letter supplements the letter submitted to City Council on October 25, 2016, oral comments made at previous hearings and in opposition to the November 22, 2016 proposed Stage 1 B Building Moratorium Resolution. We request this letter be given to all Council Members and staff prior to the November 22nd Council Hearing and to be included on the record. We further request that this matter be continued so you can consider the comments contained herein and oral presentation made at the hearing. Belle Mer Developments, LLC is the property owner and developer of Tract 3054, a small infill residential project, located on Ash Street in Arroyo Grande. Belle Mer purchased the property and entitlements for 7 residential lots from the prior developer closing on July 1,2016 after the final map was recorded on June 6, 2016. The Improvement Agreement for the final map was assigned to Belle Mer by Council and Belle Mer posted the required security to construct public and private infrastructure, such as road, utilities and streetscape improvements and to abandon a water well on the property. The Bureau of Real Estate issued a Final Subdivision Public Report for the project on June 10, 2016. Belle Mer requests that the Stage 1B Emergency Resolution and Building Moratorium be based on facts and considerations such as.advanced stage of entitlement or development, investment, a direct nexus of the impact and the development mitigation measures posed and other reasons as stated below. 1. Resolution is Not Consistent with Surrounding Cities The staff report prepared for the City Council hearing on October 11th recommended adopting Building Restrictions (Moratorium). At page 10 of the report the first recommendation was to allow"Existing planning permit applications deemed complete as of the date of a Resolution imposing the building moratorium would be processed and building permits issued for those projects." We understood this to mean that development projects wherein the applications were deemed complete could proceed through to the issuance of building permits. Under this recommendation, Tract 3054 would be allowed to proceed to completion. In drafting their recommendation above staff referred to Pismo Beach and San Luis Obispo's recent adoption of Stage One Building restrictions and likened their recommendation on those. However, at the October 11th hearing the Council deviated substantially and arbitrarily from the recommendations of staff and policies of neighboring Cities with regard to a building moratorium by proposing a resolution which only allowed those with a"Vested Tentative Map"to proceed. This is not a limitation contained in neighboring cities Stage One Building restrictions. The difference between the recommendation of being allowed to continue to completion as being when the "application is deemed complete" and as opposed to what was approved"vested tentative map"removes all consideration for those small projects that were approved several years ago with a recorded final map and substantial investments made. The,staff memorandum report for the November 22nd hearing again does not address those projects with a final map. In fact attachment 2 of the report does not list Tract 3054 as a project with a final map. The only reference are the 3 lots in Architectural Review. How can a true water demand or project assessment be made without such crucial facts? The map application for Tract 3054 was submitted and staff deemed it complete over two years ago,the Planning Commission approved the tentative map and conditions over a year and a half ago and the final map was approved by Council and recorded over three months ago. The property owner entered into an Improvement Agreement with the City in July of 2016 and posted security for the completion of the public improvements which it is obligated to complete in one year. Improvement plans have been prepared and approved, substantial fees have been paid, subdivided property tax increases are in effect, significant costs for building plans, reports and studies have been incurred and loans for construction are in place accruing interest each day. As of this writing the property owner has invested over one and a half million dollars, significantly more time and investment than an approved vesting tentative map of equal density and size. 2. All Projects Should Be Treated Equally The City Attorney states the City is adopting the building moratorium and other restrictions pursuant to California Water Code Chapter Three entitled"Water Shortage Emergencies" (350-359) not under its police powers under the Subdivision Map Act or its own Municipal Code. -By the Water Codes very language this code states a health and safety emergency certainly giving the City authority to impair vested rights that are acquired by vesting tentative maps (See Government Code section 65858). As such if the City declares a Stage 1 B water shortage emergency no preference should be given to those tentative maps with the word vested stamped on them. A more equitable approach would be to assess those projects that have advanced through the process to a point that the development has received final approval and developer has invested substantial time and money. To do otherwise as proposed in the resolution would be unequitable and selective. And certainly cause great hardship to a property owner in a late stage of development. 3. Property Owner has a Common Law Vested Right to Proceed In California vested rights may be obtained under the common law if the parry performed substantial work and incurred substantial liabilities in good faith reliance on the government approval or action. Belle Mer has a reasonable good-faith belief that the development would continue,they have performed work and incurred substantial liabilities in reliance on completing the seven lot residential-project to include building permits. Belle Mer is obligated to complete the offsite improvements for the project by - July of 20'17 and is liable for the substantial construction lending in place which is due on :. or before August of 2017. If Belle Mer is stopped from completing the project through construction of the seven homes it will breach the aforementioned agreements and likely lose the investments made in the project. The Council should also consider Gov. Code section 65961 which does provide protections to a final map for 5 years after the recordation of a final map. Case law has compared this language with that in Gov. Code conferring vested rights on a tentative map. Belle Mer acted in good faith on the City actions in approving the final map for this tract and the principals of equitable estoppel should apply in this circumstance. 4. No Nexus to the Imposition of Building Moratorium or Alternative Measures on Projects with a Final Map. Staff in its October 11th findings determined that the projects currently approved would not have an impact on the current supply of water. These projects would account for less than 2% of the current water use and with a 1:1 offset of water mitigation the impact is neutral.- This is a factual basis and analysis. However,as directed by Council the November 22"d report and proposed resolution by staff not only included a complete building restriction but also included an alternative'to the restriction on new water connections. Any project that participates in the City's offset program by providing'water savings of a ratio of 1 to 1.5 (150%) can receive a building permit(new water connection). The report states that this can be achieved by a fee combined with either the purchase of a permanent water supply through an approved contract, an unfeasible option, or the retrofit of offsite facilities as determined by Public Works or a Third Party consultant. Neither of these options stated provide any certainty as to how to accomplish these measures or the cost to do so. The report cites that this more robust offset measure of 1:1.5 would eliminate potential of underestimation, wear and tear, or other water savings devices from being removed. However these are vague and ambiguous conclusions not supported by any findings or evidence. The City cannot require an offset that is more than the imposed impact if the basis is imprecise and speculative. As such the nexus between the impact and mitigation of a full moratorium on building permits or a water offset of 1:1.5 for those projects with final discretionary approval has not been met. 4. Building Moratorium Constitutes a Regulatory Taking of Property Council is proposing a Stage IB Building Moratorium Resolution that restricts the issuance of a building permit on new residential development if one or more of the three triggering events happen. Such action is an extreme restriction on private property and constitutes,a regulatory taking of property. Such action must be undertaken thoroughly and objectively with intense scrutiny. Even a temporary regulation is not different in kind from a permanent. If the owner is deprived from-the use of his property then the owner is entitled to compensation for the taking. Here there is an indefinite period that will prohibit Belle Mer from building the homes. Even if they have possession the land will not retain competitive market value and any future use is speculative. One of the triggering events is that Lopez Lake has 10,000 acre feet of water or less. The only definitive stated triggering event to eliminate the Stage I B moratorium is when Lopez Lake is has 15,000 acre feet of water. No estimates as to when that might occur or under what rainfall conditions. It could be six years or never. Here, if the proposed Building Moratorium includes Tract 3504,the property owner's rights with the regard to the property's use and value are significantly impacted and the City's actions will'impose serious liability concerns for the property owner. The action would simply render the property useless and worthless. z 5. City Does Not Have Authority to Impose Building Moratorium on Final Maps if Project is Water Neutral. The City's statutory authority to adopt a building moratorium is set forth in Water Code section 350 et seq. and Government Code 65858. Both statutes have strict procedural steps and time lines that must be followed and findings must be based on substantial evidence. Water Code section 350 allows a governing body of a distributor of a public water supply to declare a water shortage emergency condition only if it finds that ordinary demands and requirements of water cannot be satisfied without depleting the water supply of the distributor to the extent that there would be insufficient water for human consumption, sanitation and fire protection. The City does not currently have any specific thresholds in place that clearly define triggers. It is clear from the October 11th hearing that Council, staff and the community are at odds as to what those triggering thresholds should include. Government Code 65858 addresses interim measures to protect the public safety, health and welfare. This code limits the time and extensions that'may be imposed through the measure. Most importantly,this Code section require that record be supported by substantial evidence that there is no feasible alternative to satisfactorily mitigate or avoid the impact identified as well or as better with a less burdensome or restrictive effect. A requirement that new construction have zero impact to the water supply by requiring 100% or more water offset mitigation is a feasible alternative to avoid all impact that new construction would have to the water supply. Based on the October 11th staff report the review and analysis of the facts and data did not justifiably warrant a building moratorium on the current projects wherein the : application had been deemed complete. In fact the report and findings concluded there are sufficient water resources to meet the anticipated buildout demand. These findings do not support the proposed building moratorium resolution before the Council. Conclusion Belle Mer understands that Council and members of the community are concerned with the City's water supply. However,to impose a building moratorium or 150%water mitigation will have devastating outcomes for those who have invested and committed so much time, effort and money with no regard to their position in the development process at all, is not fair and will have devastating outcomes. Belle Mer's small infill project on Ash Street will provide much needed housing, abandon an agriculture well that used substantial water in the past,repair roads, cutters and complete sidewalks, underground overhead lines and create jobs. All desirable attributes for an older neighborhood. We ask the City to defer to staffs October 11th recommendations which are supported by facts and data, a necessary element under both the Water Code and Government Code. And further we ask the Council to act within their discretion and allow advanced entitled projects other than those with a vesting tentative map to continue to completion and full build out. If it does not, Belle Mer will suffer extreme undue hardship. It is our position that if the City does not give the same consideration to these projects it will be acting arbitrarily and in a discriminating and selective manner with regard which projects go forward. More reasonable options such as continuing to require new development to offset the water usage 100%, allowing those with final discretionary approval such as final maps to continue to completion of the entire project and stop taking new parcel or tentative map applications is a more feasible alternative and will not rise to the level of rendering property useless and worthless. We request you take the above in consideration prior to approving a resolution. If you have any questions please contact me through counsel at 805-994-1841. Bell Mer Developments, LLC Gary Axelsen, Member Cc: Pamela Denney, Esq.