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Item2.Desk Item with Attachment 11 (PDF) PREPARED BY: Jocelyn Shoopman and Erin Walters Associate Planner and Associate Planner 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov MEETING DATE: 07/20/2023 ITEM NO: 2 DESK ITEM TOWN OF LOS GATOS GENERAL PLAN COMMITTEE REPORT DATE: July 20, 2023 TO: General Plan Committee FROM: Joel Paulson, Community Development Director SUBJECT: Make a Recommendation to Planning Commission on a Request to Amend the General Plan to Include a Description of the Housing Element Overlay Zone; Amend the General Plan Land Use Designation of 16492 Los Gatos Boulevard and Assessor Parcel Number 532-07-086 from Low Density Residential to Neighborhood Commercial; Amend the General Plan Land Use Designation of Caltrans Right-of-Way Adjacent to 14685 Oka Road from Low Density Residential to Medium Density Residential; Amend the Town Code to modify the Affordable Housing Overlay Zone Division 5 of Article VIII Overlay Zones and Historic Preservation; Amend the Town Code to incorporate the Housing Element Overlay Zone as Division 6 of Article VIII Overlay Zones and Historic Preservation; and Apply the Housing Element Overlay Zone to the Sites Included in the Sites Inventory Analysis of the 2023-2031 Housing Element. An Environmental Impact Report (EIR) was prepared and certified for the 2040 General Plan Update on June 30, 2022, which included the proposed Genera l Plan Amendments. No Further Environmental Analysis is Required. Zoning Code Amendment Application Z-23-002 and General Plan Amendment Application GP-23-002. PROPERTY OWNERS: Princeton Garden Properties LLC and California Department of Transportation, Caltrans. APPLICANT: Town of Los Gatos. PROJECT PLANNERS: Jocelyn Shoopman and Erin Walters. REMARKS: Attachment 11 contains Committee Member comments. ATTACHMENTS: Previously Received with the July 20, 2023, Staff Report: 1. Appendix D, Sites Inventory Analysis of the March 2023 Draft Revised Housing Element 2. Location Maps – 16492 Los Gatos Boulevard (Showing Existing and Proposed General Plan Designations) PAGE 2 OF 2 SUBJECT: Housing Element Overlay Zone/Z-23-002 and GP-23-002 DATE: July 20, 2023 ATTACHMENTS (continued): 3. Location Maps – Parcel 532-07-086 (Showing Existing and Proposed General Plan Designations) 4. Location Maps – Caltrans Right-of-Way (Showing Existing and Proposed General Plan Designations) 5. Draft Zoning Code Ordinance Amendments, Division 6. Housing Element Overlay Zone 6. Draft General Plan Amendment Received with the July 19, 2023, Addendum: this Addendum Report: 7. Public Comments received between 11:01 a.m., Thursday, July 13, 2023, and 11:00 a.m., Wednesday, July 19, 2023 8. Appendix H, Sites Inventory Form 9. Table 10-3 of the July 2023 Interim Working Version of the Draft Revised Housing Element 10. 2020 General Plan and HEOZ Comparison Table Received with this Desk Item Report: 11. Committee Member Comments From: Melanie Hanssen Sent: Thursday, July 20, 2023 10:55 AM To: Jennifer Armer <JArmer@losgatosca.gov>; Joel Paulson <jpaulson@losgatosca.gov> Subject: Desk Item for GPC meeting [EXTERNAL SENDER] Hi Jennifer and Joel, Here is a document I wrote regarding production of smaller units for the Desk Item for the GPC meeting. Is it still possible to include it? Melanie ATTACHMENT 11 Encouraging the production of smaller units to meet RHNA in Los Gatos I am writing to bring up a thought for consideration as the Town is beginning the process of amending the General Plan to create an overlay zone for the Town’s 6th Cycle Housing Element 2023-2031, currently under review and revision for certification. Much of the discussion and ultimately policies proposed during the General Plan 2040 preparation process and now the Housing Element process have focused on natural affordability via smaller units. While the GP 2040 Land Use and Community Design elements have been suspended and the GP 2020 Land Use and Community Design Elements are now the governing documents, the Housing Element, in an effort to plan for RHNA of 1993 units between 2023 and 2031, which is more than 3X of the last Housing Element cycle, has also focused on the production of smaller units with some of the policies proposed. Why smaller units? We know that size of units is a major factor in market valuation. So, it translates that a 1,000 sq. ft. unit will be significantly less expensive than a 2,500 sq. ft. unit. That, of course, assumes quality, location and other factors are the same and it is just the size variable. In addition, we know that there are two major trends occurring—young adults are wanting to purchase their first home, but the average selling price in Los Gatos is over $ 2 million. Not only is this not affordable for them, but we know from research we have seen that young adults are much more willing to consider and may prefer smaller units, especially if they are in walking distance to amenities. Smaller units could be even less than 1,000 sq. ft. The same is true for aging seniors for different dynamics. We know that many seniors wish to age in place in Los Gatos but do not want to maintain a 4-6 thousand sq. ft. home and would want to downsize into a smaller home that is more affordable with their post-retirement income. So, both of these populations are not currently well-served in Los Gatos and sadly, these are current residents or perhaps adult children of current residents. Finally, we have to submit a number of sites where housing can be built and zone for that in the Housing Element. If we were to plan for smaller units, it would take up that much less space and cause less disruption than many more locations/developments with larger units. What does it take to encourage the production of smaller units? When the Town started the process of looking at the much large RHNA for the 6th cycle Housing Element of 1993 units plus buffer, we had some feedback, albeit limited, that it would be hard for smaller units to pencil out financially for developers without increasing either density or height. Now, in 2023, we have recently received proposals, either through the Conceptual Development Advisory Committee or more recently under SB330 (pre-application) fo r housing that would include units mainly under 1000 sq ft. In both cases, either the density or height or both would need to increase to accommodate the smaller units over what is even planned for the proposed Housing Element Overlay Zone that we are considering tonight for a recommendation. The CDAC concept presented in June 2023 would need a density of over 60 DU per acre and the SB330 pre-application for downtown would need a density of over 80 DU per acre along with height well over the 45- foot maximum in order to these concepts to work financially for the developers. I would ask that our citizens leave aside the location of these proposed denser developments for the moment and consider the benefit of producing many smaller units in fewer locations. The proposed densities and heights in the Housing Element Overlay Zone are for High Density Residential or Mixed Use 30-40 DU per acre with 45 feet in height. For other zones it is proposed to be much less. For sites in High Density or Mixed Use, even the 40 DU per acre will fall far short of what is needed to encourage smaller units in select locations. The Town will have an updated Density Bonus Ordinance as part of this process so it is possibly for developers to get additional density and height but that is still to be done so we don’t know what it will look like. So, if there is consensus for the need to produce smaller units, somewhere in this process, we need a mechanism to enable developers to pencil out these higher density and higher height proposals or they won’t happen and we won’t be serving some important groups of residents and we will be building on more sites than necessary. This Page Intentionally Left Blank