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Item3.Addendum with Attachment PREPARED BY: ERIN WALTERS AND JOCELYN SHOOPMAN Associate Planner and Associate Planner 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov MEETING DATE: 12/16/2021 ITEM: 3 ADDENDUM TOWN OF LOS GATOS HOUSING ELEMENT ADVISORY BOARD REPORT DATE: December 15, 2021 TO: Housing Element Advisory Board FROM: Joel Paulson, Community Development Director SUBJECT: Review and Discuss Portions of the Draft Housing Element Appendices REMARKS: Attachment 5 contains public comments received after the completion of the Staff Report. Previously received with the December 16, 2021 Staff Report: 1. Additional Housing Element Update Process Information Provided to the HEAB 2. Draft Housing Element Outline 3. Draft Appendix 2 – Housing Needs Assessment 4. Draft Appendix 5 – Review of Previous Housing Element Received with this Addendum Report: 5. Public Comments received between 11:01 a.m., Friday, December 10, 2021 and 11:00 a.m., Wednesday, December 15, 2021 This Page Intentionally Left Blank From: Sent: Wednesday, December 15, 2021 10:17 AM To: Maria Ristow <MRistow@losgatosca.gov>; Marico Sayoc <MSayoc@losgatosca.gov>; Rob Rennie <RRennie@losgatosca.gov>; Matthew Hudes <>; Mary Badame <MBadame@losgatosca.gov>; Town Manager <Manager@losgatosca.gov>; Joel Paulson <jpaulson@losgatosca.gov> Subject: Correcting Misconceptions about Capacity and Time Scale as Applied to the Housing Element Town Council and Staff I have attached our "White Paper" opinion as it pertains to Misconceptions about Capacity and Time Scale found in the Housing Element. We would like to assist the Town when we find errors and have forwarded the document attached to HEAB for their meeting on 12/16/21. It is always our desire to be accurate, but we can make mistakes and ask that should staff or Council find that we are in error, to please notify us. We will admit and correct any errors that you bring to our attention to keep the public accurately informed. -- Jak Van Nada - Los Gatos Community Alliance Facts Matter; Transparency Matters; Honesty Matters www.lgca.town Page 1 of 3 Correcting Misconceptions about Capacity and Time Scale as Applied to the Housing Element Executive Summary: 1. Our opinion is that the difference in "capacities" is not due to different timescales as stated by the consultants 2. The implication was that since the Housing Element must be amended by state law every 8 years while the draft 2040 General Plan employs a 20-year planning horizon 3. The Housing Element must include an inventory of land suitable and available for residential development to meet the Town's RHNA allocation by income level 4. The Housing Element establishes The Towns' strategy to plan for and facilitate the development of housing over an eight-year planning period 5. The Government Code requires a development capacity analysis of each site included in the Housing Element's land inventory 6. The example below shows the difference between "capacity" as computed by the Housing Element (49 units) compared to the capacity computed under the Land Use Element (100 units). Simply put, Housing Element capacity does not change based on timescale. Timescale plays no factor in determining capacity. 7. The theoretical land use capacity can only change if new land uses are created, or zoning densities are changed - not because of changes in timescale. Simply put, the Land Use Element's development capacity measures the maximum allowable development capacity under the approved land uses and zoning densities in place as opposed to what could be developed over the General Plan's planning horizon At the most recent Housing Element Advisory Committee meeting, the consultants presented this slide which states that the dwelling unit capacity for the Housing Element (1,993) was smaller in number than the capacity for the Land Use Element (3,738) "due to timescale" differences. The implication was that since the Housing Element must be amended by state law every 8 years while the draft 2040 General Plan employs a 20- year planning horizon, the "capacities" for the elements are different solely because of different planning horizons (8 years vs. 20 years). Page 2 of 3 But is the difference in "capacities" due to different timescales? We think not, and here's why. First, we need to explain one of the central purposes of the Housing Element in the General Plan. Among other requirements, the Housing Element must include an inventory of land suitable and available for residential development to meet the Town's RHNA allocation by income level. Scarcity of land with adequately zoned capacity is a significant contributor to increased land prices and housing development costs. The Housing Element establishes The Towns' strategy to plan for and facilitate the development of housing over an eight-year planning period by providing an inventory of available land adequately zoned or planned to be zoned for housing and programs to implement the strategy. The purpose of the Housing Element's site inventory is to identify and analyze specific sites that are suitable and available for residential development. The site inventory enables the Town to determine whether there are sufficient adequate sites to accommodate the RHNA allocation by income category. This will determine whether program actions must be adopted to make more sites available with appropriate zoning, development standards, and infrastructure capacity to accommodate the new development needed. The Government Code further requires a development capacity analysis of each site included in the Housing Element's land inventory. The Town must determine the realistic number of housing units that can be developed for each site. In determining development capacity, the Town must consider factors such as realistic development capacity, typical densities of existing developments at a similar affordability level in the Town, and current and planned availability and accessibility of sufficient sewer, water and utilities. Here is an example of how the actual development capacity calculation of a particular site can be computed: Site size 2.5 acres Zoning High Density Residential Allowable Density 30 - 40 dwelling units per acre RHNA affordability Lower Income Existing Use Vacant Maximum Allowable Capacity 2.5 acres x 40 units = 100 units Capacity Adjustment Factors: Land use control 95% - adjustment for net acreage due to on-site improvements Typical densities 55% - adjustment based on past development trends for HDR Realistic Capacity utilizing factors 100 x (.95) x (.55) x (.95) = 49 units Page 3 of 3 This example shows the difference between "capacity" as computed by the Housing Element (49 units) compared to the capacity computed under the Land Use Element (100 units). Simply put, Housing Element capacity does not change based on timescale. Timescale plays no factor in determining capacity. Rather the Housing Element capacity is the summation of the realistic development capacity of each site identified by the Housing Element land inventory. This is a number that does not change depending on timescale, and which in aggregate can then be determined to be sufficient or insufficient to accommodate the RHNA allocation by income level. The Housing Element capacity is calculated independently from the RHNA allocation, which is determined every 8 years. If the RHNA allocation changed, either increasing or decreasing in amount or timeframe (e.g., every 5 years), the Housing Element capacity would remain constant. Timeframe has no impact on determining capacity. Let's now quickly discuss the concept of housing capacity as used in the Land Use Element. The Land Use Element designates among other items, the proposed general distribution, location, and extent of land uses for housing, business, and industry and the extent of housing density and intensity. As part of the Land Use Element, the Town is required to provide a development capacity or "build-out analysis" that represents an estimate of the total amount of housing capacity that may be built in an area under certain assumptions, including applicable land use laws and zoning policies and environmental constraints. Calculating the acreage within each land use category and multiplying that number by the applicable density and intensity factor provides a theoretical development capacity. The time horizon at which this theoretical development potential is achieved is not specified or anticipated by the General Plan. Development capacity is not a forecast and has no planning horizon. Rather the build-out analysis is a static measurement of maximum allowable development that could occur under the land use laws and zoning policies that are in place. The theoretical land use capacity can only change if new land uses are created, or zoning densities are changed - not because of changes in timescale. Simply put, the Land Use Element's development capacity measures the maximum allowable development capacity under the approved land uses and zoning densities in place as opposed to what could be developed over the General Plan's planning horizon, whether that is 8 years, 10 years, or 20 years. What is driving the massive increase in Los Gatos’ RHNA allocation? 4th Cycle – 562 units 5th cycle – 619 units 6th Cycle – 1,993 units Background Each California city is required to plan for new housing to accommodate a share of regional needs. The Regional Housing Needs Assessment (“RHNA”) is the process established in State law by which housing needs are determined. Prior to each planning cycle the total new housing need for each region of California is determined by the California Department of Housing and Community Development (HCD) based largely upon economic and demographic trends. HCD is responsible for determining the number of housing units for which each region must plan, known as the Regional Housing Needs Determination (RHND). The RHND is based on a population forecast for the region from the California Department of Finance (DOF). Los Gatos is located within the Association of Bay Area Governments (ABAG) region, which includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma counties. The total housing need for the ABAG region is distributed to cities and counties by ABAG based upon objectives and criteria established in State law. In 2021 HCD determined that the total new housing need for the entire ABAG region in the 6th Housing Element cycle (2023 – 2031) is 441,176 units. The 6th cycle RHND is significantly larger than the previous 4th cycle and 5th cycles. For comparison the 5th cycle RHND (2015 – 2023) was 187,990 units and the 4th cycle (2006 – 2014) was 214,500. The 6th cycle represents a 2.4x increase over the 5th cycle and 2.1x increase over the 4th cycle. What’s different in the 6th cycle RHND from the 5th and 4th cycles? For the 6th cycle the State made major modifications to the process for determining RHND. In prior RHND cycles total housing was based primarily only on projected population growth. However, for the 6th cycle the State added existing need to the total RHND calculation. Existing need includes households that are currently overcrowded (defined as more than on person per room) or are overpaying for housing (defined as more than 30% of gross income). Additionally, the 6th cycle made a major modification to the region’s current vacancy percentage to provide healthy market vacancies to facilitate housing availability and resident mobility. The total 6th cycle RHND for the ABAG region is comprised of the sum of projected growth, existing need, and a vacancy adjustment as follows: Projected growth 223,550 Existing need 118,827 Vacancy adjustment 98,799 Total 6th Cycle RHND 441,176 The important point to note is the need for additional housing units based on projected population growth is only 50% of the total 6th cycle RHND with the other half coming from first-time adjustments ATTACHMENT 5 the State has made to address existing needs and to improve regional vacancy rates. As seen from this breakdown, if these adjustments were excluded (as was the case in prior RHND cycles) the total need for the 6th cycle would be 223,550 which is very similar to the 4th cycle RHND of 214,500 and only a 19% increase over the 5th cycle. Los Gatos 6th Cycle RHNA Allocation Explained Once the RHND has been determined, ABAG must now allocate the 441,176 new housing units to each jurisdiction beginning with a share of the RHND. This allocation process is called the Regional Housing Needs Allocation (RHNA). The baseline allocation used to begin the assignment is the jurisdiction’s total number of forecasted households for the year 2050, which was determined by the Plan Bay Area 2050 Blueprint. For Los Gatos, the baseline allocation was .3% of the 223,550 projected growth in regional units. The .3% represents Los Gatos’ share of Bay Area Households in year 2050. The calculation is as follows: 223,550 Projected growth x .003 = 671 units This number is very similar to the 5th cycle RHNA of 619 units. The next step is to allocate the existing need and vacancy adjustment of 217,626 new units to Los Gatos. Again, using the baseline allocation of .3%, the additional units assigned to the Town is computed as follows: 217,626 existing need and vacancy adjustment x .003 = 653 units This amount combined with the projected growth increased the RHNA to 1,324 new units. The ABAG methodology also places greater emphasis on assigning new housing units to those areas which have been determined to be a High Opportunity Area or areas that are in proximity to jobs and public transit rather than vacant deployable land. This methodology shifts the regional growth pattern, with more household growth directed to transit-rich, high resource places to support the Pan Bay Area 2050 Blueprint. Since Los Gatos has been determined to be a High Opportunity Area and having proximity to jobs, the RHNA methodology allocates more housing than the baseline percentage. This results in an additional 669 units being allocated to Los Gatos. In summary, the 6th cycle RHNA allocation for Los Gatos is compromised of the following elements: Projected growth 671 Existing need and vacancy adjustment 653 High Opportunity and Job allocation 669 Total 6th cycle RHNA 1,993 Conclusion It is important to understand how the 6th cycle RHNA was constructed especially if one is trying to project future RHNA allocations for the Town. First, the 6th cycle has embedded in it a long-term element since the baseline allocation is based on the Town’s projected share of Bay Area households in 2050. Secondly, the number of new units required based on projected population growth is 671 units, which is very close to the 4th and 5th cycle RHNA allocations. If one is trying to project future RHNA allocations, it would be prudent to only use the units required based on population growth since it is impossible to determine what the State may want to do regarding future existing need and access to opportunity areas. The last point is the adjustments made by the State in the 6th cycle, were done to compel local governments to take immediate action to implement policies, strategies, and zoning changes to accommodate their RHNA allocations. The 6th cycle RHNA allocation will establish a pattern of housing growth in the near term (2023 to 2031) that will anchor the foundation for how the Bay Area jurisdictions move forward on implementing the longer-term vision in Plan Bay Area 2050. The hope is that these adjustments will be made in the near term and that future RHNA will only reflect the population growth as done in prior cycles. From: Phil Koen Sent: Monday, December 13, 2021 6:43 AM To: Shelley Neis <sneis@losgatosca.gov> Cc: Laurel Prevetti <LPrevetti@losgatosca.gov>;; Joel Paulson <jpaulson@losgatosca.gov>; Rick Van Hoesen ; David Weissman Subject: Figure 2.5 in draft Housing Element - Agenda item #3 - December 16 meeting Shelley, Would you please pass the note below to the HEAB for their consideration and action. Thank you. LGCA Dear HEAB, The number of jobs present in graph 2-5 of the draft Housing Element does not agree with the data published in the current Housing Element (see attached). The graph suggests for 2010 there were approximately 15,500 jobs in Los Gatos. The current Housing Element states there were 26,630 according to ABAG. This is a material difference. I would suggest that the data presented in figure 2.5 be verified and if it is found to be correct, an explanation needs to be provided as to why the number reported in the current Housing Element is wrong. Obviously getting the proper jobs number is critical to the analysis being presented in the draft Housing Element. Thank you. Los Gatos Community Alliance From: Phil Koen <> Sent: Saturday, December 11, 2021 11:52 PM To: Shelley Neis; Laurel Prevetti Subject: Housing Element Advisory Board - Dec 16 meeting - Verbal Communications EXTERNAL SENDER Hello Shelley, Could you please include the attached in the agenda package for the HEAB. Thank you. Los Gatos Community Alliance Housing Element and Land Use Element Capacities – what do they mean? At the most recent Housing Element Advisory Committee meeting, the consultants presented the attached slide which states that the dwelling unit capacity for the Housing Element (1,993) was smaller in number than the capacity for the Land Use Element (3,738) “due to timescale” differences. The implication was that since the Housing Element must be amended by state law every 8 years while the draft 2040 General Plan employs a 20-year planning horizon, the “capacities” for the elements are different solely because of different planning horizons (8 years vs. 20 years). But is the difference in “capacities” due to different timescales? We think not, and here’s why. First, we need to explain one of the central purposes of the Housing Element in the General Plan. Among other requirements, the Housing Element must include an inventory of land suitable and available for residential development to meet the Town’s RHNA allocation by income level. Scarcity of land with adequately zoned capacity is a significant contributor to increased land prices and housing development costs. The Housing Element establishes The Towns’ strategy to plan for and facilitate the development of housing over an eight-year planning period by providing an inventory of available land adequately zoned or planned to be zoned for housing and programs to implement the strategy. The purpose of the Housing Element’s site inventory is to identify and analyze specific sites that are suitable and available for residential development. The site inventory enables the Town to determine whether there are sufficient adequate sites to accommodate the RHNA allocation by income category. This will determine whether program actions must be adopted to make more sites available with appropriate zoning, development standards, and infrastructure capacity to accommodate the new development needed. The Government Code further requires a development capacity analysis of each site included in the Housing Element’s land inventory. The Town must determine the realistic number of housing units that can be developed for each site. In determining development capacity, the Town must consider factors such as realistic development capacity, typical densities of existing developments at a similar affordability level in the Town, and current and planned availability and accessibility of sufficient sewer, water and utilities. Here is an example of how the actual development capacity calculation of a particular site can be computed: Site size 2.5 acres Zoning High Density Residential Allowable Density 30 – 40 dwelling units per acre RHNA affordability Lower Income Existing Use Vacant Maximum Allowable Capacity 2.5 acres x 40 units = 100 units Capacity Adjustment Factors: • Land use control 95% - adjustment for net acreage due to on-site improvements • Realistic capacity 55% - adjustment based on past development trends for HDR • Typical densities 95% - affordable housing projects are built out to almost max density Realistic Capacity utilizing factors 100 x (.95) x (.55) x (.95) = 49 units This example shows the difference between “capacity” as computed by the Housing Element (49 units) compared to the capacity computed under the Land Use Element (100 units). Simply put, Housing Element capacity does not change based on timescale. Timescale plays no factor in determining capacity. Rather the Housing Element capacity is the summation of the realistic development capacity of each site identified by the Housing Element land inventory. This is a number that does not change depending on timescale, and which in aggregate can then be determined to be sufficient or insufficient to accommodate the RHNA allocation by income level. The Housing Element capacity is calculated independently from the RHNA allocation, which is determined every 8 years. If the RHNA allocation changed, either increasing or decreasing in amount or timeframe (e.g., every 5 years), the Housing Element capacity would remain constant. Timeframe has no impact on determining capacity. Let’s now quickly discuss the concept of housing capacity as used in the Land Use Element. The Land Use Element designates among other items, the proposed general distribution, location, and extent of land uses for housing, business, and industry and the extent of housing density and intensity. As part of the Land Use Element, the Town is required to provide a development capacity or “build-out analysis” that represents an estimate of the total amount of housing capacity that may be built in an area under certain assumptions, including applicable land use laws and zoning policies and environmental constraints. Calculating the acreage within each land use category and multiplying that number by the applicable density and intensity factor provides a theoretical development capacity. The time horizon at which this theoretical development potential is achieved is not specified or anticipated by the General Plan. Development capacity is not a forecast and has no planning horizon. Rather the build-out analysis is a static measurement of maximum allowable development that could occur under the land use laws and zoning policies that are in place. The theoretical land use capacity can only change if new land uses are created, or zoning densities are changed – not because of changes in timescale. Simply put, the Land Use Element’s development capacity measures the maximum allowable development capacity under the approved land uses and zoning densities in place as opposed to what could be developed over the General Plan’s planning horizon, whether that is 8 years, 10 years, or 20 years. From:Phil Koen To:Phil Koen Subject:Housing Element Date:Friday, December 10, 2021 4:52 50 PM Attachments:IMG 1684.PNG This Page Intentionally Left Blank