Attachment 15 - Additional information from the applicant, received July 29, 2016gold fa rb 1300 Clay St reet , Eleventn Floo r
I i p m a n Oakla nd, Califor'1iO 9 4 6 12
a tto rney s s1o 83 6-6336
M David Kroot July 29, 2016
Lynn Hutchins BY E~MAIL
Karen M. Tiedemann
Thomas H. Webber
Dionne Jackson Mclean
Michelle D. Brewer
Jennifer K. Be ll
Robe rt C. Mills
Robert Schultz, Town Attorney
Town of Los Gatos
11 0 E. Main Street
Los Gatos, CA 95030
Isabel L. Brown Re: Issues Ra ised at Planning C ommission H eari ngs
James T. Diamond, Jr.
Margaret F. Jung
Heather J. Gould
William F. DiCamillo
Amy DeVoudreuil
Barbara E. Kautz
Erica Williams Orcharton
luis A. Rodriguez
Rafael Yaqui6n
Cel io W . Lee
Dolores Bastion Dolton
Joshua J. Mason
Vincent L. Brown
Hone A. Ha rdy
Caroline Naselle
Eric S. Ph i ll ips
Elizabeth Klueck
Daniel S. Maroon
Justin D. Bigelow
San Francisco
415 788-6336
los Angeles
213 627 -6336
San Diego
619 239-6336
Goldfarb & Lipman LLP
Dear Town Attorney Schultz:
We represent the interests of Grosvenor USA Limited and Summerhill Homes
(collectively, the "Applicants") in relation to Architecture and Site Application S-13-
090 and Vesting Tentative Map M-13-014 (collectively the "Planning Applications")
for 320 residences and 66,000 gross sq. ft . of neighborhood commercial space located in
the North Forty Specific Plan area (the "Project"). This letter responds to issues raised
at the Planning Commission hearings on the North Forty that we had not discussed in
previous correspondence. In particular, we are responding to issues raised regarding: (1)
whether Project approval with 50 affordable, income-restricted units and 270 market-
rate units is consistent with the Town's Housing Element; (2) the Project's eligibility
for a density bonus; (3) how the Town can enforce the affordable rent requirements for
the senior affordable units; and ( 4) issues arising under the California Environmental
Quality Act (CEQA).
To summarize the detailed disc ussion below:
(1) Consistency with the Housing Element. Project approval with 50 affordable,
income-restricted units and 270 market-rate units is consistent with the Town 's Housing
Element and would not create a need for rezoning of additional sites . Please see
attached e~mail correspondence from the California Department of Housing and
Community Development confirming this conclusion.
(2) Eligibility for a Density Bonus. The Project is eligible for a density bonus . The
seniors who will be occupying the affordable senior housing are "persons and families "
with very low incomes ; the density allowed without a density bonus was calculated
correctly; and the bonus must be calculated based on all of the properties included in
one development application.
(3) Enforcement of Affordable Rent in Senior Units. The Applicants will enter into an
agreement with the Town restricting rents in the affordable, income-restricted units in
exchange for a density bonus , as required by State law.
1588\03\192785 4.2 ~ATTACHMENT 1 5
Robert Schultz, Town Attorney
Town of Los Gatos
July 29, 2016
Page 2
(4) CEQA Conformance. Because the Project review must be 'by right ,' the
Architecture and Site Application is not a "project" and is not subject to any review
under CEQA . Consequently the Vesting Tentative Map application qualifies for the
"common sense exemption" under CEQA.
Consistency with the Housing Element
In preparing the 2015-2023 Housing Element, the Town needed to designate sites zoned
at 20 units per acre, which is considered to be the "appropriate" dens ity for lower
income hou sing in Los Gatos. (Gov 't Code §65583.2(c)(3)(B)(iii).) To meet thi s
requirement, the Town committed to rezoning 13.5 acres on the North Forty property to
20 units per acre-270 units total --and to allow housing 'by right' on the property .
By adopting the Specific Plan and rezoning the site to allow multifamily housing by
right on 13.5 acres of the site at 20 units per acre (270 units total), the Town has created
a site that is appropriate for 270 units of lower income housing. State law regards any
land zo ned at 20 units per acre or more in Los Gatos as being appropriate for lower
income hous ing and therefore meeting the Housing Element's requirement that the
Town make enough land available at appropriate densities to meet its s hare of regional
housing needs.
Speakers at the Planning Commission meeting a sked if the Town would be required to
find another s ite for lower income housing if only 50 affordable units are built as part of
the Project.
There is no requirement that the housing constructed on a site appropriate for affordable
housing actually be affordable to lower income hou seho lds and no requirement that the
Town provide additional sites zoned at 20 units per acre if th e hou si ng built on the
North Forty site is not affordable. The only requirements after adoption of the housing
element are contained in Government Code Section 65863. That provision requires only
that the number of unit s shown in the Hous ing Element not be reduced.
The Project proposes 50 units of affordable, income-restricted hou sing and 270 unit s of
ma rket-rate hous ing (with a density bonus), all at a dens ity of 20 units p e r acre. This
more than meets the Town's obligation to a llow 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
Housi ng Element obligations. Please see attached e-mail correspondence from Glen
Campara, Assistant Deputy Director, Hous ing Policy Divi sion , Californi a Department
of Housing and Community Development.
1588\03\1927854.2
Robert Schultz, Town Attorney
Town of Los Gatos
July 29,2016
Page 3
Eligibility for a Density Bonus
Mr. Peter Dominick provided e-mail correspondence and oral testimony to the Planning
Commission on July 13, 2016 s tating that the Project is not eligible for a density bonus.
Below we have summarized hi s comments and responded.
Comment #I : The senior affordable housing is not intended for very low income
households, which include "persons and families" ofvery low in come (Health & Safety
Code §50 105(a)), because the senior units will be age-restricted. As a consequence, the
Project is not entitl ed to a density bonus for very low income housing.
Response: Very low income seniors who will re s ide in the proposed affordable housing
are "persons and families" with very low incomes and so are very low income
households. "Persons" are single persons and unrelated persons who elect t o live
together as one household. "Fam ili es" are related persons who live together; in sen ior
housing these are typically married couples. All of the seniors who will live in the
proposed housing will be "households" with very low incomes, and so the senior
housing will be occupied by very low income households, and the Project i s entitled to a
density bonu s for providing very low income housing.
Comment #2: The d ensity bonus should be calculated over a base density of 223 units,
rather than a base density of 237 units, because 237 units cannot be obtained without a
wa iver of some height requirements.
Response: The definition of a "density bonus" is:
"A density increase over the otherwise maximum allowa ble residential density
as of the date of application by the app li cant to the c it y." (Gov't Code
§65915(£).) (emphasis added.)
"Max imum allowab le residential density" is defined as:
"[T]he density allowed und er the zon ing ordinance and l and use element of the
general plan, or, if a range of density is permitted, means the maximum
allowable density for the specifi c zoning range and land use element of the
general plan applicable to the project. Where the density allowed under the
zoning ordinance is in cons istent with the density allowed under the land use
e lement of the gener al plan, the general plan density shall prevail." (Gov 't Code
§65915(o)(2).)
Under this definition, the base density over which the bonus is calculated is effectively
determined by looking at the maximum density permitted by the land use e lement of the
general plan, which overrides any zoning limitat ions.
1588\03\1927854.2
Robert Schultz, Town Attorney
Town of Los Gatos
July 29, 2016
Page 4
The Town's land use element of the general plan, as amended by the Town Council on
June 17 ,20 15, states that the maximum capacity of the North Forty site is 270 units.
There are 17 existing units, so the Applicants could have claimed 253 units as the base
density and proposed a project of 342 units with the maximum 35 percent density
bonus. The proposed project with a base density of 237 units is smaller than allowed by
state law, not large r.
Comment #3: The proj ec t does not qualify for a density bonus because there is more
than one applicant.
Response: A densi ty bonus is provided for a "housing development." (Gov't Code
§§65915(a), (b)(l), (f).) The definition of "housing development" contained in the
density bonus statute states that:
"For the purpose of calculating a density bonus, the residential units shall be on
contiguous sites that are the subject of one devel opment application, but do no t
have to be based upon indi vidual subdivision maps or parcels." (Section
65915(i).)
The requested North Forty density bonus is for re sidenti al units located on co ntiguous
sites that are the subject of one development application. Therefore the bonu s ha s been
calculated properly, for one development application. The fact that the s ingl e
development application is submitted by more than one entity, who are together the
"applicant," is irrelevant to calculating the density bonus.
Enforcement of Affordable Housing Requirements
Mr. Rod Teague provided correspondence dated June 20, 2016 asking whether the
Town could require the senior units to be affordable under Palmer/Sixth Street
Properties v. City of Los Angeles, and also asking whether Eden Housing, as a non-
profit developer, is eligible to provide affordable housing and to enter into a contract
with the Town.
Response. Palmer interpreted the Costa Hawkins Rental Housing Act and found that
cities could not impose rent limitations as a condition of planning approval.
However, under Costa Hawkins, the Town may limit rents where the owner has "agree d
by contract with a public agency in consideration for a direct financial contribution or
any other forms of assistance specified in [state density bonus law]." (Civil Code
Section 1954.52(b ).)
Summerhill and Grosvenor are requesting a density bonus for the No rth Forty.
Consequently the Town may limit the re nts in the proposed affordable unit s.
1588\03\1927854.2
Robert Schultz, Town Attorney
Town of Los Gatos
Jul y 29,2016
Page 5
Summerhill and Grosvenor have agreed to enter into an agreement with t he Town to
provide the affordable units in exchange for the density bonus. Typically communities
add a condition of approval requiring that the agreement be entered into prior to
issuance of a building permit or final/parce l map approval.
In addition, Eden Housing intends to receive a "direct financial contribution" in the
form of tax credits and other loans and will be required to enter into additional contracts
to li mit rents. This is also permitted under Costa Hawkins.
There is no requirement that the affordable units be privately funded ; in fact, Costa
Hawkins anticipates public agency funds to make units affordable. There is also no
requirement that the developer be a for-profit entity; most affordable hou sing
developers are non-profits.
Project's Status under CEQA
The Town has concluded that no additional environmental review is required under
CEQA because the Project 's environmental impacts were adequately reviewed in the
EIR completed for the North Forty Specific Plan. This conclusion was challenged at the
Planning Commission meeting.
Under state law, the Architecture and Site Application is not a "project" and so is not
s ubject to any revi ew under CEQA. The Town's Housi ng Element states that approval
of housing on the North Forty will be "by ri ght." Government Code Section 65583.2(i)
provides:
"[T]he phrase 'use by right' s h a ll me an that the local gove rnme nt's review of
the owner-occupied or multifamily residential use may not re quir e a co nditi onal
use permit, planned unit development permit, or other discreti o nary local
gove rnment review or approval that would constit ute a 'project' for purposes of
[CEQA]. Any subdivision of the sites shall be subject to all laws ... A local
ordinance may provide that 'use by right' does not exempt the use from design
review. However, that design review shall not constitute a 'proje ct 'for purposes
of[CEQA]." (emphasis added)
Although the Vesting Tentative Map is subject to CEQA, it qualifies for the "common
sense exempt ion" (CEQA Guidelines Section 15061 (b )(3 )) because it merely
implements the exact plan shown in the Architecture and Si te App lication . (See Muzzy
Ranch Co. v. Solano County Airport Land Use Com . (2007) 41 Cal. 41h 372, 389
(common sense exemption app li cable where airport land use plan merely incorpora ted
existing general plan and zoning provisions).)
1588\03\1927854.2
Robert Schultz, Town Attorney
Town of Los Gatos
July 29, 2016
Page6
If you have any questions, please feel free to contact us .
Sincerely,
(~y, R &~~N ~ +
BARBARA E. KAUTZ
cc : Don Capobres, Harmonie Park Development Co.
(representing Grosvenor USA Limited)
Wendi Baker, Summerhill Homes
Andy Faber, Berliner Cohen LLP
Laurel Prevetti, Town Manager
Joel Paul son , Community Development Director
1588\03\1927854.2
Barbara Kautz
From:
Sent:
To:
Subject:
Ms . Kautz :
Campara, Glen @HCD <G ien.Campora @hcd.ca .g ov >
Thursday, Jul y 2 8, 20 16 12:55 PM
Barbara Kautz
HCD cl arification of RHNA and Housing Element requirements
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 sit es 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 oth e r mechanisms that ensure affordability (e .g., MHP, HOME , or
LIHTC financed projects , inclusionary units or other requirements); or
• actual rents or sale prices.
more information is available at: http://www.hcd.ca .gov/housing-policy-development/housing-
element/hn phn regional.php
Glen A . Campora
Assistant Deputy Director, Hous ing Policy Division (HPD), Suite 500
CA Department o f Housing & Community Deve lopment (H CD)
2020 West El Ca mino Avenue
Sacramento, CA 95833
Office Phone: 916.263 -7427 Fa x: 916.263-7453
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2
Barbara Kautz
From:
Sent:
To:
Subject:
Attachments:
Glen -
Barbara Kautz <bkautz@ goldfarblipman.com>
Wednesday , July 27, 2016 7:48 PM
Campara, Glen@HCD
Requirements f or Development on Site Appropriate for Lower Income Housi ng
Los Gatos Adopted Ho using Element 2015.PDF
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 prom ised.
The project proposed on th e s ite by Grosve nor and SummerHill would contain 50 senior affordable un its (49
very low in co me units , and 1 moderate-income manager's unit) and 270 market-rate un its , for a total of 320
un its , 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 re quired 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 th at our understanding is correct? Thanks for your help .
Barbara E . Kautz
bkau i z@ g o lcif a rbliprnan .co m
Goldfarb & Lipman LLP
1 ~)00 C lay St r eet I E l e v e nt h F l oor J O a k la n d CA 9 l l6 1 2
5H.l.H3b.6~i36 I go ldfnrblipmmt.co m
Barbara Kautz
From:
Sent:
To:
Subject:
Glen-
Barbara Kautz < bkautz@goldfarblipman.com >
Thursday, July 21, 2016 5:58 PM
Campara, Glen@HCD
"RHNA Credi t " for Housing Construction
Thanks for the discussion last week about "R HNA 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 affo rd able 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 e lement 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 1 00-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. Th e RHNA is no longer reduced by the number of units bui lt.
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 thei r RHNA for lower income households,
they need to zone enough sites at appropriate densities (usua lly 20 to 30 un it s 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 la n d 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 bu ilt on a site suitable for lower i ncome housing, the city or
county is not required to find another site suitable tor lower income housing. However, the number of units
shown on the site in the Housing El ement 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 C ode
Section 65863 .)
For instance , if a city designates a site as suitable for lower income housing and states that it ca n
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 th e city to re duce the proposed density even if the c ity finds another site.)
Construction of affordable housing in on e planning period does not reduce a city or county's RHNA in the next
planning period . For instance , if affordable housing is co nstructed in 2016 in the ABAG area, that would not
reduce a community's RHNA for the next hou s ing element due in 2023. Constructing mark et rate ho using on a
si te 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 s ummarize:
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. Afte r the housing ele ment is adopted , the RHNA can no longer be reduced. Communities mu st 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 t o lower income
housing on sites that are suitable for lower income housing.
Barbara E. Kautz
bka ut z@ goldfnrblipman.com
Goldfarb & Lipman LLP
1 300 C l ay St r eet I El e v enth Fl oo r I Oa k land C A 9 4 6 12
5 10 .836.6336 I go ldfarbliprna n .com
2
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