Attachment 21 - Applicant's response to Town Council staff reportGROSVENOR EDEN
August 9, 2016
Hon. Barbara Spector and Members of the Town Council
Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95030
RE: North Forty Phase 1 ("Project")
Architecture and Site Application S-13-090
Vesting Tentative Map Application M-13-014
Special Town Council Meeting August 9, 2016
SINN1ER.HILL HOMES
COMMUNITIES OF DISTINCTION
Dear Mayor Spector, Vice Mayor Sayoc and Members of Los Gatos Town Council:
We have reviewed the Staff Report dated August 4, 2016 and wish to respond to certain
statements and analyses contained in that Report and expressed by some members of the public
in letters attached to the Staff Report. Preliminarily, we note that although the official
recommendation on page one of the Staff Report is to deny the Project, the rest of the Staff
Report contains no support for denial. Thus we assume that the official recommendation is in
line with Town practice that the staff recommendation will be to uphold the Planning
Commission's action, but that this recommendation does not reflect staff's professional
judgment which in all prior staff reports to has been to approve the Project.
The Staff Report (page 14) suggests that the Council can consider whether the "number and
distribution of units" are consistent with the Specific Plan and possibly suggest changes. A desire
to decrease the number and change the distribution of units is also expressed by some members
of the public in letters attached to the Staff Report. We disagree that this is an option. The
proposed Project is fully consistent with the objective standards of the Specific Plan, as the Staff
Report confirms. There is no other application in front of the Town, so any idea that some units
could be redistributed elsewhere in the North Forty Plan Area is pure speculation at this time.
The density proposed in our application is based on rights afforded to us by state law.
More particularly:
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1. The Density Bonus Law entitles the Project to 320 units. If there is a development standard
that precludes the Project from achieving the 320 units, it must be waived by the Town pursuant
to the Density Bonus Law.
2. Under the Housing Accountability Act, the Project cannot be denied and the density cannot
be reduced unless the Project does not conform to some objective standard; and/or there is a
"specific health or safety impact." However, the state Density Bonus Law also provides that the
Town must waive any development standard that precludes 320 units.
These rights provided by state law are in addition to rights afforded to us by Town policy. More
particularly:
1. Under the Town's Housing Element and the Housing Element statute, the approval is "by
right" and must achieve development at a minimum of 20 units per acre.
2. The Town's own North Forty EIR stated that the Project has no impact on parks or open space,
and the Town has not adopted a State Quimby Act -compliant subdivision ordinance, so no
additional open space can be required to be dedicated to the Town or for public access.
Nonetheless, the Project exceeds all the standards for private open space in the Specific Plan and
voluntarily offers to allow public access to the vast majority of the open space in the Project.
Town of Los Gatos General Plan
Not only is the right to build at this density (or higher) afforded to us by State and local law but
we believe this density or intensity is what is, in fact, envisioned by Town policy.
The Housing Element of the General Plan was adopted following the certification of the
Environmental Impact Report (EIR) for the North Forty Specific Plan. The Housing Element was
approved by this Town Council on May 5, 2015. At that time, the minimum density of 20 units
per acre to be required on the North Forty was made clear as was the required 'by -right' nature
of approvals for housing. 'By -right' is defined as "not requiring a conditional use permit or other
discretionary approval; however, design review according to the objective standards contained
in the Specific Plan can occur (see Action HOU- 2.4)." In addition, the Housing Element states
that "it is anticipated that by -right, multiple -family development at a minimum of 20 units to the
acre will occur as a single use development as permitted by the zoning." The Project is consistent
with this and other applicable policies and actions specified in the General Plan and Housing
Element as shown in attached Tables A and B.
The Specific Plan reference to "lower intensity residential" in the Lark District is a statement that
the planned uses in the Lark District are lower intensity uses than those in the Transition and
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Northern Districts due to its primarily residential character versus the other districts (which
include higher intensity mixed -use, commercial, hospitality and entertainment uses). Section
2.3.2 of the Specific Plan makes this distinction vis-a-vis the Transition District as it states:
"Located in the central portion of the Specific Plan Area, the Transition District provides a
transition and buffer between the lower intensity, primarily residential, character of the Lark
District and the active retail and entertainment emphasis of the Northern District. The Transition
District will accommodate a range of uses including neighborhood -serving stores, specialty
market and mixed -use housing with residential units above commercial. A hotel or hospitality
use could also be part of the land use mix."
In alignment with the Town's Housing Element policies, the North Forty Specific Plan makes it
more difficult for lower density residential to be approved by making multifamily housing its
focus (Section 2.4 page 2-6) and making the non -multifamily residential type, cottage clusters,
only allowable with a Conditional Use Permit (Table 2-1). Thus, the Specific Plan is in
conformance with the General Plan Housing Element Policy HOU 2.4 and the intensity of housing
proposed is in line with these policies.
The Housing Element
Related to this, members of the public have expressed concern that the Town will be required to
find another site to meet its RHNA requirements if the Project is built as proposed. The Project
proposes 50 units of affordable, income -restricted housing and 270 units of market -rate housing
(with a density bonus), all at a density of 20 units per acre. This more than meets the Town's
obligation to allow development of 270 units on the North Forty at 20 units per acre, and no
additional rezoning will be needed to meet the Town's Housing Element obligations. If a Project
application, such as the one before you, is approved at a density of less than 20 units per acre or
denied, additional rezoning would be required to meet the Town's obligations under state
Housing Element law. Please see attached e-mail correspondence from Glen Campora, Assistant
Deputy Director, Housing Policy Division, California Department of Housing and Community
Development, which is attached as Exhibit A.
Open Space and Quimby Act
Finally, reducing or redistributing units from the area covered by the Project application is being
suggested in order to create more open space. As has been already noted, the Specific Plan
requires 30 percent open space (more than any other Project in Los Gatos that we have observed
in the eight years we have been active on the North Forty), and our application exceeds this
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requirement by providing 39 percent open space, of which at least 85 percent is open to the
public.
A requirement for provision of public access to open space (including on the 30 percent already
required by the Specific Plan) cannot be justified unless it is needed to mitigate the impacts of
private development. The standard of the Nollan, Dolan, and Ehrlich cases requires that there
be an essential nexus to the impacts of the Project, and that the requirement be roughly
proportional to those impacts.
However, this nexus requirement is not satisfied in the North Forty Specific Plan. There is no
impact on public open space due to the passage of the North Forty Specific Plan or the planned
development of the Plan Area. The EIR for the Specific Plan identifies no such impact, and the
Town has no ordinance consistent with the Quimby Act requiring public open space in new
developments, since there is already abundant public open space in the Town, including open
space close to the Plan Area. The EIR determined based on the buildout of the 2020 General Plan
EIR (which included up to 750 residential units on the North 40) that there is adequate public
open space nearby to serve the Project (p. 3-187).
Despite this finding, we have designed an open space program that is the centerpiece of a model
agrarian neighborhood. The open space program will feature 2.7 acres devoted to agricultural
uses which will produce an estimated 14.5 tons of fruits and vegetables per year. These will be
grown in community gardens, commercial gardens and on producing (not ornamental) orchard
trees. We also feature eight public parks and plazas that are connected by 25' to 35' wide
landscaped paseos, shaded sidewalks and a multi -modal pathway system. These parks include a
community park that is comparable in size and scale to Town Plaza Park and two passive use
neighborhood parks that are similar in size and scale to other neighborhood parks in Los Gatos.
Finally, buoyed by the Town's aspiration for amenities for pedestrians and bicycles and in
addition to the multi -modal pathway system, we are voluntarily proposing to connect the North
Forty to the Los Gatos Creek Trail via dedicated bicycle lanes on both sides of Lark Avenue.
Reduction of Unit Sizes
In addition to the desire to reduce or redistribute units in order to create more open space,
another common complaint is that the units are too large and should be reduced in size. We
would emphasize that there is absolutely no objective standard in the Specific Plan that would
support any such reduction. The only specification of unit sizes contained in the Specific Plan is
on page 6-14, and the sizes listed there are on average considerably larger than those proposed.
In fact, if one takes the maximum residential square footage allowed (700,000 sf) and divides by
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the 270 baseline (365 density bonus) allowable units, the resulting maximum size per unit is 2,592
square feet (1,917 square feet if density bonus is used) which is approximately 1,199 (524) square
feet larger than proposed.
Any requirement to reduce unit size would in effect be a denial of this Project, since it would
require complete redesign of the buildings and site layout, in violation of the Housing Element
"by right" requirement, the Density Bonus Law, and the Housing Accountability Act. In addition,
it renders the Project infeasible economically.
After the Planning Commission's request to consider smaller unit sizes, we commissioned John
Burns Real Estate Consultants to determine the feasibility of this from a marketability
perspective. Their consumer analysis summarizes how the reduction of the average market rate
for -sale housing square footage by over 33% (from 1567 to 1000 square feet) is not supported
by the market. Based on their research, the size of units proposed is far smaller than the existing
newer multi -family for -sale housing stock in the Town. The report states: "Of newer townhomes
in Los Gatos, the median unit size is over 1,900 SF, including three bedrooms and 2 % bathrooms.
When assessing only townhomes built in the last 10 years, the median unit size is even larger, at
+/- 2,100 SF. At a weighted average size of 1,561 SF, the current product array at the Subject
Property is substantially smaller than the recently constructed housing inventory of Los Gatos."
This report is attached as Exhibit B to this letter.
Finally, the Staff Report references that the Planning Commission statement that "(t)he project
does not incorporate views adequately in the layouts as called out in Open Space Policy 01 View
Preservation and does not comply with Design Guideline 3.2.1.d Site Planning and Design, and
Section 3.2.6.e.i. Building Elements and Articulation which states "Special care shall be taken to
avoid obstructing views to the surrounding hills."" However, Section 3.2.6.e.i. more specifically
states in Section e) that "Projects located on corner parcels at signalized intersections along Lark
Avenue and Los Gatos Boulevard should incorporate major design features on the intersection
corner," and in Section I) that "Buildings located at these corner locations are strongly
encouraged to frame and front onto intersections. Special care shall be taken to avoid to avoid
obstructing views to the surrounding hills."
This portion of the Specific Plan only relates to the corner buildings at signalized intersections.
For this application, this applies only to Lark and Los Gatos Boulevard and Los Gatos Boulevard
and the new Neighborhood Street. The application does not include the land area located at the
corner of Lark Avenue and Los Gatos Boulevard (gas station location). At Los Gatos Boulevard
and the new Neighborhood Street entrance, the two buildings proposed both frame and front
onto this intersection. The Specific Plan requirement for a 30' orchard setback along Los Gatos
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Boulevard and a 25' height restriction from Los Gatos Boulevard for the first 50' from the
property line have been also been satisfied. Therefore, the reference to this portion of the
Specific Plan as a broader policy is not appropriate, and the application in fact satisfies the
objective standards for this portion of the site plan.
The above represents our responses to the Staff Report dated August 4, 2016 and expressed by
some members of the public in letters attached to the Staff Report. We appreciate your
consideration of our responses.
Sincerely,
A. Don Capobres
Principal
Harmonie Park Development
Representing Grosvenor
;de.4elieuee-
Linda Mandolini Wendi Baker
President Vice President of Development
Eden Housing SummerHill Homes
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TABLE A: Conformance with General Plan
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Policy or Action
Project Conformance
Goal LU-4 To provide for well -planned, careful growth that
reflects the Town's existing character and infrastructure.
Goal LU-11 To Plan for development of a variety of uses in
the North Forty area in a coordinated and comprehensive
way.
Policy LU-11.1 Zoning shall be changed as part of the
development applications to provide consistency with the
Vasona Light Rail Element and other elements of this
General Plan and with any future specific plan prepared for
this area.
On June 17, 2015 the Town Council adopted
Resolutions Nos. 2015-055 and 2015-056
adopting the North Forty Specific Plan and
adopting amendments to the Land Use Element
of the Los Gatos General Plan for the North Forty
Specific Plan area. Those resolutions found that
the Specific Plan was consistent with the General
Plan and amended the Land Use Element to
incorporate the major policies of the Specific
Plan. In particular, the Land Use Element was
modified to incorporate the Vision Statement
contained on page 1-1 of the Specific Plan, the
general guidelines contained on pages 1-6 and 1-
7 of the Specific Plan, and the maximum
development capacity contained in Table 2-2 of
the Specific Plan. The Specific Plan also
determined that its policies, standards, and
guidelines were consistent with the overarching
goals of the General Plan.
Therefore, given that the vision, guidelines, and
development capacity contained in the General
Plan are identical to those in the Specific Plan,
and that the Specific Plan was adopted to
determine those development standards
consistent with the vision, guidelines, and
development capacity contained in both the
General Plan and the Specific Plan, the
determination that the Project is consistent with
the Specific Plan conclusively determines that
the Project is also consistent with those
provisions of the General Plan applicable to the
North Forty.
Policy LU-11.2 The Town shall encourage uses that serve
Town residents. These include, but are not limited to open
space, playfields, office, retail, and other commercial uses.
Residential uses may be permitted as part of mixed -use
development and only with acceptable mitigation of
adverse noise, air quality, and other environmental hazards.
The North Forty Specific Plan requires a
minimum of 30% open space. The Project
application proposes 39% open space. The
Project application also proposes 66,000 square
feet of neighborhood serving commercial space
as part of a mixed -use development that also
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Policy or Action
Project Conformance
includes residential housing that meet the
objective criteria of the North Forty Specific Plan
which were established to respond to unmet
residential needs of the Town of Los Gatos.
Impacts of noise, air quality, and other
environmental hazards were studied in the
Environmental Impact Report (EIR) for the North
Forty Specific Plan. This EIR was certified by the
Town Council on January 20, 2015 by Resolution
No. 2015-002. In evaluating the environmental
impacts of the Specific Plan, the EIR
comprehensively reviewed all of the policies of
the General Plan applicable in any way to the
North Forty and found that the North Forty
Specific Plan was consistent with the applicable
General Plan policies. The conclusions of the EIR
regarding the Project's conformance with the
General Plan are hereby incorporated by
reference into these findings.
Policy LU-11.3 Provide coordinated infrastructure in the
North Forty area.
The North Forty Specific Plan requires that all
infrastructure necessary to support the
development shall be constructed in capacity
that allows for current and future phases, subject
to approval of the town engineer. All
infrastructures stubbed for future use, including
utilities and roadways, shall be constructed so as
not to appear
unfinished. The Project application complies.
The infrastructure in the Project application is
designed to stand alone and not be dependent
on improvement required in future phases. See
Tentative Map Sheet 1.3
Dimensional Plan, Grading Plans Sheet 1.6-1.14
and Preliminary Utility Plan sheet 1.16 for future
site connection edge conditions.
The infrastructure in the Project application sizes
utilities for future site connection and edge
conditions. See Preliminary Utility Plan sheet
1.16.
Policy LU-11.4 Include a variety of commercial uses
reflective of Town Council's Vision and Guiding Principles
for the North Forty. Land uses shall follow a logical land use
The North Forty Specific Plan states in Section
2.4 "In general, lower intensity shops, offices,
and residential land uses are envisioned in the
southern portion of the Specific Plan Area.
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Policy or Action
Project Conformance
pattern that takes advantage of the site opportunities while
protecting adjacent uses.
Moving northward, potential land uses transition
to mixed -use residential and potentially
hospitality uses to provide a buffer between the
primarily residential uses in the southern portion
of the Specific Plan Area and the entertainment,
restaurant, and shopping uses envisioned in the
northern portion of the Specific Plan Area."
The Project application conforms to the Specific
Plan as non -vertical -mixed use residential is
planned in the southern Lark District and retail
and mixed -use residential is proposed in the
Transition District (which is north of the Lark
District). The residential use in the Lark District is
compatible with the Highland Oaks residential
neighborhood which is located directly south of
the Lark District.
Policy LU-11.5 Avoid negative effects on the long-term
development potential of the area surrounding the North
Forty area.
The infrastructure in the Project application is
designed to stand alone and not be dependent
on improvement required in future phases. It
also, however, sizes utilities for future site
connection and edge conditions.
Proposed roadway and traffic improvements for
this Project application are also designed to
mitigate impacts of automobile trips caused by
potential future development in the North Forty
Specific Plan Area that are not a part of the
Project application. Internal roadways are also
designed for future connections and edge
conditions.
Policy LU-11.6 Incorporate multimodal links from the North
Forty area to the Vasona Light Rail station into the North
Forty Specific Plan.
Section 4.9, 4.10, 4.11 and 4.12 outline
multimodal links from the North Forty Specific
Plan Area to other parts of the Town and region.
On bicycle travel, the Project application
complies with the Specific Plan and also
voluntarily proposes to connect its internal multi -
modal path to the Los Gatos Creek Trail system
by providing dedicated bike lands from the
Project area west along Lark Avenue.
As part of the draft Conditions of Approval, The
Applicant shall prepare a Transportation Demand
Management (TDM) Plan for Town of Los Gatos
approval prior to the issuance of a building
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Project Conformance
permit. The TDM shall include a minimum of
those measures identified in the Specific Plan
such as:
a. Bicycle facility provisions
b. Transit passes and subsidies
c. Carpool incentive
d. Reserved car share parking
e. Electrical car charging stations
f. Coordination with the Santa Clara Valley
Transportation Authority (VTA) to decrease
headway times to connect to regional
destinations, etc. The TDM shall include a TDM
coordinator who will submit a TDM effectiveness
report to the Town annually.
In addition, the applicants have been actively
working with the Valley Transit Authority,
CalTrans, Silicon Valley Bicycle Coalition, Town
Staff, the school districts and Town commissions
including Bicycle and Pedestrian Advisory
Commission on specific congestion management
programs.
Goal VLR-3 To encourage mixed -use developments that
coordinate housing in proximity to either neighborhood
commercial uses or employment centers.
Policy VLR-3.4 Encourage mixed -use development of
commercial, office, and medium -high residential uses in the
North Forty area and along East Los Gatos Boulevard, north
of Lark Avenue.
Section 2.4 of the Specific Plan states that "the
Specific Plan land uses help to create a
pedestrian -oriented and interactive
environment that is compatible with surrounding
neighborhoods as well as
provides for on -site uses that are compatible
with each other. The Specific Plan specifies the
desired mix, as well as the location of land uses.
In general, lower intensity shops, offices, and
residential land uses are envisioned in the
southern portion of the Specific Plan Area.
Moving northward, potential land uses transition
to mixed -use residential and potential hospitality
uses to
provide a buffer between primarily residential
uses in the southern portion of
the Specific Plan Area and the entertainment,
restaurant, and shopping uses"
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Policy or Action
Project Conformance
The Project application proposes residential uses
that are consistent with this General Plan Policy
in addition the Town's Housing Element.
Goal VLR-9 To reduce traffic impacts of residential
development within the Vasona Light Rail area by taking
advantage of mass transit opportunities.
Policy VLR-9.5 Promote the development of mass transit
links between Los Gatos Boulevard, particularly any
development on the North Forty site, and the planned
Vasona Light Rail station.
As a condition of approval, the applicant is
required to coordinate with the Santa Clara
Valley Transportation Authority (VTA), plan for,
and provide an enhanced bus stop at the
location of the existing stop along southbound
Los Gatos Boulevard between Neighborhood
Street and Bennett Way. The improvements shall
be in compliance with VTA standards and must
be completed and accepted by the Town of Los
Gatos before a Certificate of Occupancy for any
new building can be issued.
Goal CD-1 Preserve and enhance Los Gatos' character
through exceptional community design.
Policy CD-1.6 Town staff shall review properties next to
community entry points when they are developed or
redeveloped to reflect the gateway concept.
The Project application has been reviewed by
Town Staff and the Town's consulting architect
and has met the requirements of the Town's
consulting architect.
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TABLE B: Conformance with Housing Element
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Policy or Action
Project Conformance
Action HOU-1.1: Below Market Price (BMP) Program:
Continue to implement the BMP Program in order to
increase the number of affordable units in the community.
The Project provides over 20% very low income
units, exceeding the BMP program requirement
for 20% moderate -income units. See Exhibit 19
of Attachment 1 to staff report.
Action HOU-1.7: North Forty Specific Plan Area Rezoning:
the Town will rezone 13.5 acres within the North Forty
Specific Plan area within three years of Housing Element
adoption at minimum a density of 20 dwelling units per
acre to facilitate affordable housing production. After
rezoning, owner occupied or multiple family development
will be by -right as defined by not requiring a conditional use
permit or other discretionary approval; however, design
review according to the objective standards contained in
the Specific Plan can occur (see Action HOU- 2.4). In
addition, it is anticipated that by -right, multiple -family
development at a minimum of 20 units to the acre will
occur as a single use development as permitted by the
zoning. If housing affordable to very low and low income
households is part of a mixed use development, it will
occupy at least 50 percent of the total floor area of a mixed
use Project.
The Town completed the rezoning of the North
Forty to permit housing at 20 units per acre on a
minimum of 13.5 acres within the North Forty
Specific Plan area. The zoning permits housing by
right as defined in State Law, with design review
permitted based on the objective standards in
the Specific Plan. The senior affordable housing
occupies at least S0 percent of the floor area of
the mixed use building it occupies.
Action HOU-2.4: By Right Findings: For multiple family
residential development within the North Forty and the
Southbay AHOZ site subject to by right development, the
Town will amend the
Town Code to add by right development findings that,
among other items, state that if a Project meets the
objective review criteria contained in the AHOZ Design
Guidelines or North Forty Specific Plan design guidelines
(available on the Town's website) the deciding body will
approve the affordable housing proposal.
Although the Town has not adopted these
provisions to the Town code, the Town is
reviewing the Project application based on
objective review criteria contained in the North
Forty Specific Plan design guidelines.
Goal HOU-5: Retain and expand affordable housing
opportunities for seniors.
The Project includes 49 units of housing
affordable to very low income seniors.
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Exhibit A
Barbara Kautz
From: Campora, Glen@HCD <GIen.Campora@hcd.ca.gov>
Sent: Thursday, July 28, 2016 12:55 PM
To: Barbara Kautz
Subject: HCD clarification of RHNA and Housing Element requirements
Ms. Kautz:
I'm replying to your request for HCD to clarify State Housing Law and Departmental administration in
determining local government compliance regarding Regional Housing Need Allocation (RHNA) and
Housing Element requirements. You indicate clarity is desired concerning RHNA credit for
residential units approved, permitted, and/or built since the start of the RHNA projection period and
before and after adoption of an housing element determined to comply with statutory
requirements. From our conversation (July 13, 2016) and emails (July 22 and 28), I am in agreement
with the positions you summarized. Following are additional clarifications.
RHNA is a housing need "capacity" planning requirement (sites, zoning, and densities) to
accommodate and facilitate housing development, among four income categories, by private sector
housing developers; RHNA is not a "production" requirement. Government Code 65583(b)(2)
expressly states "It is recognized that the total housing needs ... may exceed available resources and
the community's ability to satisfy this need within the content of the general plan requirements ...."
Once the adopted housing element satisfactorily identifies and establishes housing sites (zoning,
densities, and program actions) for all income category RHNA, the local government is responsible to
maintain equivalent "established" capacity in the event the local government makes subsequent
changes (zoning and densities) to established sites before development is proposed. For by right'
sites, the local government is further responsible to ensure the site is developed at the minimum
density required by State law. After a Developer has acquired an established site, the Developer can
choose to propose a housing project with a different configuration of unit rent or sale levels for
different income categories resulting in some or all of the development not satisfying the RHNA
income category goals applicable to a particular site. In such situations, the local government is not
responsible to establish additional comparable sites for any remaining (unmet) income category
RHNA.
During the housing element update process until adoption of a compliant housing element, RHNA
credit for units approved, permitted, or built (since the start of the RHNA projection period) is allowed
to enable the local government to plan and update the housing element for fewer units (reduction in
RHNA after RHNA credit). RHNA credit is allowed since the start of the RHNA projection period
which generally precedes the Housing Element planning period and adoption due date by at least two
years in allowing one year for the regional planning agency to plan and distribute RHNA shares to
each local government and one year for local governments to update and adopt the housing
element. RHNA credit can be taken for each income category upon the local government
demonstrating unit credit for a particular income category was taken based on:
• subsidies, financing or other mechanisms that ensure affordability (e.g., MHP, HOME, or
LIHTC financed projects, inclusionary units or other requirements); or
i
• actual rents or sale prices.
more information is available at: http://www.hcd.ca.gov/housing-policy-development/housing-
element/hn phn regional.php
6/en A. Campora
Assistant Deputy Director, Housing Policy Division (HPD), Suite 500
CA Department of Housing & Community Development (HCD)
2020 West El Camino Avenue
Sacramento, CA 95833
Office Phone: 916.263-7427 Fax: 916.263-7453
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2
Barbara Kautz
From: Barbara Kautz <bkautz@goldfarblipman.com>
Sent: Wednesday, July 27, 2016 7:48 PM
To: Campora, Glen@HCD
Subject: Requirements for Development on Site Appropriate for Lower Income Housing
Attachments: Los Gatos Adopted Housing Element 2015.PDF
Glen —
Our clients Grosvenor Americas and SummerHill Homes have proposed a project on a site designated in the
Town of Los Gatos Housing Element as appropriate for 240 units of lower income housing and 30 units of
moderate income housing. (Table H-2, page 21; Housing Element attached.) The Town promised to rezone
13.5 acres of the site to permit 270 units at a density of 20 units per acre. (Action HOU-1.7, page 27.) It has
adopted a specific plan that has rezoned the site as promised.
The project proposed on the site by Grosvenor and SummerHill would contain 50 senior affordable units (49
very low income units, and 1 moderate -income manager's unit) and 270 market -rate units, for a total of 320
units, including an 83-unit density bonus. All of the units are being developed at a density of 20 units per acre.
This proposal exceeds the number of units (270) shown on the site in the Housing Element.
Members of the public are concerned that, because only 50 units are affordable, the Town will be required to
zone another site at 20 units per acre to accommodate 220 units (the required 270 units minus 50 units).
It is our understanding that the only requirement now imposed by Section 65863 is to ensure that the number
of units shown in the Housing Element is not reduced. There is no requirement that units actually be
affordable. The current proposal by Grosvenor and SummerHill exceeds the number of units shown in the
Housing Element. Therefore, approval of the current application will not create any new obligations for the
Town of Los Gatos to rezone other sites.
Can you please confirm that our understanding is correct? Thanks for your help.
Barbara E. Kautz
bkautz1 Cgoldfarblipman.Com
Goldfarb & Lipman LLP
1300 Cl :7 tf'e :t I Eleventh Floor I Oakland CA 94612
510.836.6936 j goldfar)I'kpman,COm
1
Barbara Kautz
From: Barbara Kautz <bkautz@goldfarblipman.com>
Sent: Thursday, July 21, 2016 5:58 PM
To: Campora, Glen@HCD
Subject: "RHNA Credit" for Housing Construction
Glen —
Thanks for the discussion last week about "RHNA Credit" issues. As I mentioned, this is one of the most
frequent questions we are asked by clients, usually either: "Does the city/county get RHNA credit if it approves
this affordable housing project" or "Does the city/county lose RHNA credit if it approves this project?"
Below is my understanding of the "RHNA Credit" issue. Please let us know if this is correct! Thanks for your
help.
Before Housing Element Adopted
Before a city's or county's housing element is adopted, the city or county can reduce its share of the regional
housing need (i.e., receive RHNA `credit') for any units built between the start of the `projection period' (the
period in which housing need was determined) and the date the housing element was due. (Gov't Code
Section 65583.1(d).) For instance, in the ABAG area, the `projection period' started on January 1, 2014, but
housing elements were not due until January 2015, so cities and counties could receive a credit for any units
built between January 1, 2014 and the housing element due date.
To receive this RHNA credit for lower income units, any units built must actually be affordable based on actual
or projected rents and sales prices. For instance, if a 100-unit project with 20 low-income units and 80 market -
rate units had been built in a city in the ABAG area between January 1, 2014 and the housing element due
date, the city could have reduced its RHNA by 20 low-income units and 80 above moderate -income units.
After Housing Element Adopted
After the Housing Element is adopted, cities and counties are required to implement the policies adopted in the
Housing Element. The RHNA is no longer reduced by the number of units built.
In preparing their housing elements, cities and counties need to demonstrate that they have adequate sites to
accommodate their RHNA at each income level. To accommodate their RHNA for lower income households,
they need to zone enough sites at appropriate densities (usually 20 to 30 units per acre) to accommodate the
need. (Gov't Code Sections 65583(c), (c)(1); 65583.2(c).)
For instance, if a community's lower income RHNA is 300 units, and the sites must be zoned at 20 units per
acre, the community must zone at least 15 acres at 20 units per acre. State law regards any land zoned at the
appropriate density or higher densities as being appropriate for affordable housing and therefore meeting the
Housing Element's requirement that the community make enough land available at appropriate densities to
meet its share of regional housing needs.
There is not a requirement that all of the housing constructed on sites suitable for lower income housing
actually be affordable. If non -affordable housing is built on a site suitable for lower income housing, the city or
county is not required to find another site suitable for lower income housing. However, the number of units
shown on the site in the Housing Element cannot be reduced unless consistent with the housing element and
unless there are other sites zoned at the same density adequate to accommodate the lost RHNA. (Gov't Code
Section 65863.)
1
For instance, if a city designates a site as suitable for lower income housing and states that it can
accommodate 300 units at 20 units per acre, the city must ensure that any approved development includes at
least 300 units at 20 units per acre. However, the housing developed on the site is not required to be
affordable. The density cannot be reduced below 300 units unless another site is zoned at 20 units per acre to
make up the shortfall. (Other statutes, such as density bonus law and the Housing Accountability Act, may not
allow the city to reduce the proposed density even if the city finds another site.)
Construction of affordable housing in one planning period does not reduce a city or county's RHNA in the next
planning period. For instance, if affordable housing is constructed in 2016 in the ABAG area, that would not
reduce a community's RHNA for the next housing element due in 2023. Constructing market rate housing on a
site suitable for lower income housing, but with the specified density and number of units, also does not
increase a community's RHNA for the next housing element.
Summary
To summarize:
1. Before a housing element is adopted, communities may reduce their RHNA by the number of housing
units actually constructed at each income level between the start of the `projection period' and the
housing element due date.
2. After the housing element is adopted, the RHNA can no longer be reduced. Communities must ensure
that the number and density of units constructed on designated housing element sites is consistent with
what is shown in the housing element, but they are not required to limit construction to lower income
housing on sites that are suitable for lower income housing.
Barbara E. Kautz
bkautz@goldfarbliprrman.com
Goldfarb & Lipman LLP
1300 Clay Street Eleventh Floor ( Oakland CA 94612
510.836,6336 1 goldfarblipman.com
2
Exhibit B
JOHN BUR,NS
(ZEAL ESTATE CONSULTING
August, 2016
North 40
SummerHill Homes
Consumer Analysis
Los Gatos, California
www.realestateconsulting.com
7840 Madison Ave., Suite 187 I Fair Oaks, CA 95628 I (916) 647-3263
Background and Objective
JOHN rj )BUR S
PEAL ESTATE CONSULTING
BACKGROUND:
SummerHill Homes ("Client") has commissioned John Burns Real Estate Consulting ("JBREC") to perform this consumer and
financial analysis of a market opportunity relating to the development of the North 40 project ("Subject" or "LGN40") in Los
Gatos, CA. North 40 will consist of 260 market -rate condominiums (253 will be built by SummerHill Homes), in addition to 10
market -rate apartments (built by Grosvenor) and 50 senior affordable apartments (built by Eden Housing). This report will focus
primarily on the SummerHill Homes' market -rate condominium homes. Current plans call for a variety of product types including
attached cluster condominiums, row townhomes, and garden cluster lofts. Planned unit sizes as currently configured range from
approximately 900 — 2,000 square feet (SF), averaging 1,567 SF among the for -sale product types (1,393 SF average
community -wide), and feature one to three bedrooms. The Town of Los Gatos Planning Commission has recommended the
Client reconfigure the current plans to a smaller average unit size of 1,000 SF or less. Client has asked JBREC to evaluate the
Town of Los Gatos' request in terms of a market acceptance and consumer preference perspective.
OBJECTIVE:
The objective of this assignment is to provide a brief overview in the potential market acceptance of and consumer preferences
toward the Subject as envisioned by the Town (in terms of a less than 1,000 SF average unit size parameter).
CONTACT INFORMATION:
This analysis was prepared by John Burns Real Estate Consulting.
Dean Wehrli, Senior Vice President, served as Project Manager and Aaron Stubblefield, Consultant, gathered data and provided
analysis. Follow-up questions should be directed to us at:
Dean Wehrli: dean@jbrec.com
www.realestateconsulting.com
SummerHill Product Array
JOHN BURNS
R AL ESTATE CONSULTING
This table details the current product mix to be constructed by SummerHill Homes at the Subject. The 253 units will all be
attached, multi -story, for -sale product with an average of 1.94 bedrooms per unit.
Gross Area
Net area
Coverd
Parking
provided
## of plans
Total Gross
Area *
# of 6edreonls
Total 6edroonns
Garden Cluster
Building type area range
918 sq. ft_ -1999 sq. ft_
Plan 1
1214
11._3.
1
9
10926
1
9
Plan lx
1687
1= _E
2
4
6748
2
S
Plan 2
1416
1? 3S
2
9
12744
2
18
Plan 2x
915
855
1
11
10098
1
11
Plan 3
1722
161C
2
7
12054
2.+ den
14
Plan 4
1=1
1351
1
9
12978
1+ den
9
Plan 5
141V
1323
1
9
12762
1
9
Plan 6
1945
1779
2
9
17505
3
27
Plan 7
1998
1789
2
9
17982
3 + den
27
Garden Cluster Total
75
113797
132
Condominium Cluster
Building type area range
996 sq. ft. - 1999 sq. ft.
Plan 1
996
940
2
20
19920
2
40
Plan 2
1255
1176
1
10
12550
1+ den
10
Plan 3
1570
1415
1
10
15700
1+den
10
Plan 4
1608
1477
1
10
16080
1+den
10
Plan 5
1832
1696
2
10
18320
2+den
20
Plan 6
1942
1731
2
13
19420
2+den
20
Plan 7
1995
1867
2
13
19990
3
30
Condominium Cluster Total
8i 1
121390
140
Rt......horroes
EL ding type area range
1=:_:c sq.ft. -1944sq.ft.
Plan 1
1628
1455
2
36
58608
2+ den
72
Plant
1500
1393
2
37
55500
2
74
Plan 3
1944
1742
2
2=
46656
a
72
Roo homes Total
97
160764
218
TOTALS
253
396541
4.90
Average sq. ft. (Gross)
1567
Average bedroom oom cC!unt
1.94
Source: SummerHill Homes
www.realestateconsulting.com
Executive Summary and Key Conclusions
4
www.realestateconsulting.com
Executive Summary
JOHN a )"BUR S
R AL ESTATE CONSULTING
Executive Summary of Findings
• Our consumer preference survey shows that home shoppers in Santa Clara County and the nation prefer home
sizes significantly larger than the +/- 1,000 SF or smaller units as envisioned by the Town. Prospective home buyers
typically are looking for three to four bedrooms and homes ranging from 1,500 to 2,500 SF. Based on this survey, few are
searching for a home under 1,500 SF and virtually no home buyers would be satisfied with a home under 1,000 SF.
Though Santa Clara County home shoppers are slightly more accepting of smaller homes than the national sample, the
trends are very similar and clearly indicate a lack of market acceptance of very small homes in the for -sale market.
• Attached townhomes built over the last 10 and 25 years in Los Gatos and a slightly larger Competitive Market Area
(CMA) of like communities near Los Gatos are universally larger than 1,000 SF. Townhomes — that is, attached multi-
level floorplans like that to be built at the Subject — average about 1,500+ SF across the CMA and 1,900 to over 2,000 SF
in Los Gatos. There have been no transactions over the last three years for townhomes under about 1,100 SF. That is, the
shape of the existing market in Los Gatos and the CMA strongly implies there would be limited, if any, market acceptance
of very small townhome units. In truth, plans at about 1,000 SF or smaller are far more suited to the apartment market.
This is a very different user than most for -sale home shoppers, particularly in a highly upscale, older skewing community
like Los Gatos.
• Los Gatos is a very affluent community even by Bay Area standards, with a median household income of over $126,000.
The city's address cachet allows it to support very strong home pricing with even attached product typically selling for
well over $1 million. There is currently unmet demand for more for -sale, entry-level homes in Los Gatos, which the current
product array of the Subject will help satisfy while remaining appropriate for the market and location.
• Residents of Los Gatos skew older, with a median age of 46, indicative of a large proportion of DINKS (dual -income, no
kids), empty nesters, and some retirees. While these life stages don't require large homes (as they don't have to
accommodate children), they typically have the desire and means to live in a more conventional sized residence.
• In sum, from a consumer, market, and demographic perspective, our analysis indicates that very small units are
poorly suited for the Subject, would diminish if not erase its marketability and financing opportunities, and would
limit its value.
www.realestateconsulting.com
Consumer Preference and Market Summary
6
www.realestateconsulting.com
JBREC Product and Consumer Insights Survey
JOHN a )BUR S
REAL ESTATE CONSULTING
John Burns Real Estate Consulting conducts an annual nationwide product and consumer survey among new home shoppers
that have registered interest with new home builders online or in their sales office. The questions are primarily focused on future
home preferences. We have extracted respondents located within Santa Clara County in order to refine the results more closely
to Los Gatos consumer preferences. The table below shows the results of preferred future home sizes at both a National and
Santa Clara County level. There is a clear illustration of preference towards more conventional homes sizes. The
overwhelming majority (83%) of new home buyers in Santa Clara County are seeking a 3 or 4 bedroom home, while less than
0.5% favor a single bedroom. In terms of unit size, Santa Clara County does prefer smaller homes relative to that of the National
Average, however, they primarily prefer homes in the range of 1,500 — 2,500 SF. Though 6.7% of buyers in Santa Clara County
are in the market for a home sized 1,000 — 1,499 SF, less than 0.5% would be interested in a home of under 1,000 SF. Based
on these results, an alteration of the average unit size at the Subject development to 1,000 SF or less would limit demand to an
extraordinary small niche within this submarket.
How many bedrooms do you want?
2
3
4
6 or more
National Average Santa Clara County
•
13,780
0%
114E
414E
35%
11%
7
0%
8%
43%
41%
8%
0%
224
What size of home do you expect to buy next? 15,390 255
Less than LOGO square feet I 196 I 096
1,000-1,499 square feet . of, VI 7%
1,500-1,999 square feet 30$
2,000— 2,499 square feet 1 3396
2.500-2,999 square feet 17%
3,000— 3,999 square feet 11%
4,000-4,999 square feet '696 111 2%
5.000 square feet or more 1 396 I 0'46
What will your next home be relative
to your € urrent home?
Smaller in size
Equal in size
Larger in size
www.realestateconsulting.com
15,103 251
FIL 28% I —I 16 96
—3b % 2196
4394 63%
National Sample
21,848
Santa Clara County
389
1 00÷
questions
ide
sample
7
Current Housing Inventory of Los Gatos
Currently, the active new home projects in Los Gatos are targeted toward a very
wealthy niche market buyer. Sorellas (SummerHill Homes) and The Highlands
of Los Gatos (Davidon Homes) both offer luxury single family homes with
substantial lots, often highlighted by spectacular views. Unit sizes at these
projects are very large, typically over 4,000 SF, touting three — seven bedrooms
and prices ranging from $4 million.
The table below displays median statistics for recent (last three year) townhouse
sale transactions within Los Gatos, as well as the wider CMA defined as the
combined cities of Los Gatos, Saratoga, Cupertino, Los Altos, and Palo Alto.
Whereas product in this market tends to be substantially older, we restricted our
assessment to include only townhomes constructed in 1990 and newer, as well
as 2005 and newer in order to better represent housing inventory competitive
with new homes.
Of newer townhomes in Los Gatos, the median unit size is over 1,900 SF.
including three bedrooms and 21/2 bathrooms. When assessing only townhomes
built in the last ten years, the median unit size is even larger at + / - 2,100 SF. At
a weighted average size of 1,393 SF, the current product array at the Subject is
substantially smaller than the recently constructed townhome inventory of Los
Gatos, and the wider CMA. In fact, the smallest townhome in the CMA is just
under 1,100 SF.
Median Statistics
8/1/2013
Los
Townhomes 1990+
1,935
to 8/1/2016 Townhome
Gatos
Townhomes 2005+
2,116
Sales
Competitive
Townhomes 1990+
1,589
Market Area
Townhomes 2005+
1,519
Unit Size
Bed Count
3.0
3.0
3.0
3.0
Bath Count
2.5
2.8
2.5
2.5
Year Built
1997
2016
2008
2009
Price
$1,290,000
$1,875,000
$1,425,000
$1,450,000
$/SF
$823
$887
$878
$889
Days on Market
15
4
10
10
JOHN u)"BUR S
R, AL ESTATE CONSULTING
The Highlands of Los Gatos
Townhome inventory example in Los Gatos
Source: Multiple Listing Service (MLS)
www.realestateconsulting.com
Los Gatos Demographics
JOHN a )"BUR S
REAL ESTATE CONSULTING
• Los Gatos is situated along the foothills of the Santa Cruz Mountains,
just southwest of San Jose. The Town offers a historically less dense
residential profile than other core Bay Area cities, while still providing a
quick commute to the vast employment of the Silicon Valley.
• The Town is markedly older than the wider Bay Area region with a
median age of 46 years. This is indicative of more "Move -Up"
households, with approximately 32% of residents aged between 45 —
64 (compared to the nationwide average of 26%).
• Household sizes are slightly smaller than the national average, with a
median of 2.4 residents per household. Though there are families in
Los Gatos, the city has many DINKS (dual -income, no kids), empty
nesters (adult children that have left the household), and retirees.
• Los Gatos is a very affluent town even relative to Bay Area standards.
The city has a median income of $126,000 per household (over twice
the national average), average net worth of $1.7 million (three times the
national average), and a median home value of $1,000,000 (five times
the national average). According to Bloomberg Businessweek, Los
Gatos is the 33rd wealthiest city in the United States.
Los Gatos (2016 Statistics)
Population 30,919
Households 12,818
Avg. Household Size 2.39
Median Age 46.0
Source: ESRI
www.realestateconsulting.com
Median Household Income $126,008
Median Home Value $1,000,001
Average Net Worth $1,708,677
Edu. Attainment (Bachelors or Higher) 69%
Limiting Conditions
www.realestateconsulting.com
10
Limiting Conditions
JOHN rj )BURJNS
REAL ESTATE CONSULTING
The conclusions and recommendations presented in this report are based on our analysis of the information available to us from
our own research and from the client as of the date of this report. We assume that the information is correct and reliable and that
we have been informed about any issues that would affect project marketability or success potential.
Our conclusions and recommendations are based on current and expected performance of the national, and/or local economy
and real estate market. Given that economic conditions can change and real estate markets are cyclical, it is critical to monitor
the economy and real estate market continuously, and to revisit key project assumptions periodically to ensure that they are still
justified.
We have no responsibility to update our product analysis for events and circumstances occurring after the date of our report.
Depth and Breadth of Experience
Established in 2001, JBREC performs 600+ market studies annually.
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11