Housing Element Workshop - Memo MEMORANDUM
To: Planning Commission
From: Laurel Prevetti, Assistant Town Manager/Director of Community Development
Subject: Housing Element Study Session
Date: March 22, 2015
______________________________________________________________________________
BACKGROUND
Upon the request of the Chair and Vice Chair, the Housing Element workshop is intended to:
(1) Provide an overview of the general requirements of the Housing Element,
(2) Describe the Town’s process for preparing the Element,
(3) Explain some of the issues explored by the Housing Element Advisory Board (HEAB)
(such as density bonus and by right development), and
(4) Give the Planning Commission an opportunity to ask questions of staff and the Town
Attorney
The formal public hearing on the Housing Element scheduled for the Planning Commission
meeting of April 8, 2015. The Commission is required to make a recommendation to the Town
Council on the Housing Element. The Council is the final deciding body, and is scheduled
tentatively to conduct its own public hearing on May 5, 2015.
WHAT IS THE HOUSING ELEMENT?
Under California law, the Housing Element is one of the required elements of the General Plan.
Unlike other elements, the Housing Element is updated on a specific schedule set by legislation.
State law requires that all Bay Area communities adopt an update Housing Element by May 31,
2015. If a community fails to do so, it is required to update its Housing Element every four years
instead of the typical eight year cycle.
After adoption, the California Department of Housing and Community Development (HCD)
determines if each city and county has prepared their Housing Element in conformance with
State law. If HCD determines that the Housing Element is in compliance, then it is “certified”
by HCD, enabling the community to be eligible for grants and/or infrastructure funding.
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All cities and counties in California are given housing targets for the planning period of the
Housing Element known as the Regional Housing Needs Assessment (RHNA) numbers.
Through a methodology that is adopted by the Association of Bay Area Governments (ABAG),
each city and county in the Bay region received its fair share allocation for very low, low,
moderate, and above moderate income housing. Table 1 below provides the income ranges for
each category and sample occupations for Santa Clara County.
Table 1: Income Categories and Sample Occupations, Santa Clara County
Income
Category
Approximate
Range
Income Limit
(Family of Four)
Sample Occupations
(Santa Clara Co.)
Very Low
< 50% Area
Median Income
(AMI)
$53,030
Bank Teller, Preschool Teacher,
Home Health Aide, Restaurant
Cook
Low 51-80% AMI $84,900 Real Estate Agent, Social Worker,
Fire Dispatcher
Moderate 81-120% AMI $126,600 Optometrist, Police Officer,
Electrical Engineer
Above
Moderate > 120%AMI Over $126,600 Physician, Aerospace Engineer
The Town’s Regional Housing Needs Assessment for the 2015 – 2023 planning period is 619
housing units distributed across the income categories as shown in Table 2.
Table 2: Town of Los Gatos Regional Housing Needs Assessment for 2015 – 2023
Income Category
RHNA
2015-2023
(Units)
Very Low 201
Low 112
Moderate 132
Above Moderate 174
The Housing Element is required to identify specific properties that are planned to accommodate
the RHNA during the planning period. The Housing Element must also contain an assessment of
the housing needs of a community, identify potential barriers to housing production, and describe
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specific goals, policies, and programs to eliminate barriers and facilitate housing production on
the planned sites.
TOWN PROCESS FOR PREPARING THE HOUSING ELEMENT
The Town Council appointed a Housing Element Advisory Board (HEAB) to assist in the
preparation of the Housing Element. The Board consisted of the General Plan Committee (GPC)
and four members of the community. Former Planning Commissioner and current Council
Member Sayoc served as chair and Mayor Jensen as Vice Chair. Because its work overlapped
Town Council and Planning Commission terms and their respective membership to the GPC, the
Board had some membership changes early in 2015 with Commissioner Talesfore being added
and Vice Mayor Spector leaving the HEAB.
All other members were the same even though their affiliation changed. For example, Council
Member Sayoc replaced Vice Mayor Spector on the GPC; Commissioner Hanssen was appointed
to the GPC (freeing up a community member seat); and former Chair Smith switched to serving
as one of the community members. Commissioner Erekson remained on the General Plan
Committee and served the entire time on the HEAB. The other community members were Maria
Ristow, Jeff Loughridge, and John Bourgeois.
The HEAB worked with staff to identify sites to meet the RHNA as well as review drafts of the
Housing Element. In June 2014, the HEAB decided to satisfy the RHNA primarily with existing
Affordable Housing Overlay Zone (AHOZ) sites. These sites formed the basis of the draft
Housing Element that was provided to the Planning Commission in late August 2014 and
Council in early September, and was formally submitted to the California Department of
Housing and Community Development (HCD) in September for its review.
After receiving comments from HCD in November, the HEAB had extensive discussions
regarding density bonuses, by right development, and other technical issues, resulting in the
selection of a different set of sites to accommodate the RHNA with the North 40 Specific Plan
playing a larger role. On March 5, 2015, a majority of the HEAB voted to recommend adoption
of the Housing Element, with some additional changes, by the Planning Commission and Town
Council (Smith and Hudes opposed). The final draft Housing Element, incorporating all of the
HEAB’s comments, is expected to be posted to the Town’s website later this week. All of the
HEAB materials, including redlined versions of the draft Housing Element, are posted to the
Town’s website: http://ca-losgatos2.civicplus.com/DocumentCenter/Index/412
DENSITY BONUS, BY RIGHT DEVELOPMENT, AND OTHER TECHNICAL ISSUES
Due to the volume of materials available on the HEAB website, the remainder of this
memorandum highlights some of the technical issues discussed by the HEAB that can be
explored in greater detail at the Planning Commission workshop/study session.
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A. Provide information regarding density bonus and explain the implications for the
Affordable Housing Overlay Zoning (AHOZ) sites.
Density bonus on the AHOZ sites was important in the HEAB deliberations. The HEAB
requested a table that shows existing AHOZ development potential and development
potential using the State Density Bonus (up to 35 percent); current Below Market Price
(BMP) requirements (20 percent); the General Plan Density Bonus Policy (up to 100
percent).
As preface to the table, it should be noted that AHOZ is governed by the Town Code, and
Section 29.80.515 identifies five properties with the AHOZ designation:
1. Southbay Development, Knowles Drive east of Winchester Boulevard, APN 424-32-
077
2. Los Gatos Lodge, 50 Los Gatos Saratoga Road, APN 529-24-032
3. Los Gatos Lodge, 50 Los Gatos Saratoga Road, APN 529-24-001
4. Higgins Business Park, 400 Blossom Hill Road, APN 529-16-071
5. Los Gatos Oaks Apts., 517 Blossom Hill Road, APN 529-16-042
The Town Code incorporates the State density bonus requirements and Section 29.10.410(b)
states that an “applicant who elects to proceed with a housing development using the State
law density bonus shall not be eligible for any density increases under the Town's General
Plan Density Bonus Policy or the General Plan Below Market Price (BMP) Program as set
forth in the Town's Housing Element portion of the General Plan.” Even though the Town
Code does not allow more than one density bonus, upon closer review of State density bonus
law, the AHOZ sites are eligible for State density bonus because the only density provided by
AHOZ is 20 units per acre (DU/ac).
Table 3 contains the calculations for each AHOZ site using the AHOZ yields, maximum
State density bonus, the Town’s BMP, and General Plan maximum density bonus.
Government Code Section 65915(f)(i) identifies a sliding scale for the density bonus
depending upon the proposed number of affordable units. With a proposed 40% affordability
requirement (instead of the current Code income requirements), all AHOZ sites would
qualify for the maximum State density bonus.
If a property is removed from AHOZ and is considered a site for inclusion in the Housing
Element, then the minimum density of the site would be 20 DU/ac and the developer would
be eligible to participate in the Town’s BMP or General Plan density programs (see last two
columns of Table 3).
State density bonuses can be requested for any residentially zoned property whether or not it
is identified as part of the Housing Element.
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Table 3: AHOZ Sites and Density Bonus Options
Site
(Acres; Base
Zone)
Density
(20
DU/ac)
AHOZ
Very Low,
Low, and
Moderate
(40%)
AHOZ
Above
Moderate
(60%)
AHOZ Total =
State Density
Bonus
(up to 35%)
BMP
Density
Bonus (up
to 20%)
GP
Density
Bonus (up
to 100%)
Southbay
Development
(7.4 acres:
RM-12:20)
148 60 140 200 178 296
Los Gatos
Lodge Site A
(1.5 acres;
CH:PD)
30 12 29 41 34
60
Los Gatos
Lodge Site B
(7 acres;
CH:PD)
140 56 133 189 168
280
Higgins
Business Park
(3.2 acres; 0)
64 26 61 87 76
128
Oak Rim/N.
Blossom Hill
(3.8 acres;
RM-5:12)
46 19 43 62 54
92
Total
Potential
Units
428 173 406 579 510
856
B. Where does the minimum density of 20 DU/ac come from?
The minimum density for affordable housing in a “suburban” community, such as Los Gatos,
is 20 DU/acre (Government Code Section 65583.2(c)(3)(B)(iii)].
C. The Town’s AHOZ sites qualify for the maximum State density bonus. Could the Town
use this maximum capacity to satisfy its RHNA? Why or why not?
HCD does not allow potential density bonus units to be counted for the RHNA because it is
speculative. Density bonuses are elective; developers may or may not request a density bonus
and the Town cannot require a development to use it. However, if the Town approves a
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project that contains density bonus units, those units can be counted toward the RHNA like
any other project.
D. Provide information regarding “by right” requirements.
State Government Code Section 65583.2(i) defines “use by right” as meaning “that the local
government’s review of the owner-occupied or multifamily residential use may not require a
conditional use permit, planned unit development permit, or other discretionary local
government review or approval that would constitute a ‘project’ for purposes” of the
California Environmental Quality Act (CEQA). This same Government Code Section
identifies that “design review shall not constitute a ‘project’” under CEQA. Even though
there is no environmental review, Government Code Section 65589.5(f)(1) acknowledges
that local agencies may require the development project to comply with “objective,
quantifiable, written development standards, conditions, and policies appropriate to, and
consistent with, meeting the jurisdiction’s share of the regional housing need.”
For example, if the North 40 Specific Plan is approved, then it contains objective standards
for Architecture and Site application review. Similarly, the AHOZ Design Guidelines
provide objective standards for those properties.
After a site is rezoned for housing and identified as a RHNA site, then the by right provisions
would apply for affordable and mixed income housing projects. If a site is not included to
satisfy RHNA, then the by right provisions do not apply.
The second mention of use by right in Housing Element law pertains to a situation in which a
jurisdiction fails to rezone a site identified as part of the RHNA strategy within three years of
the Housing Element adoption by the Council [Government Code Section 65583(g)(1)] and
there is a proposed housing development that contains at least 49 percent Very Low, Low,
and/or Moderate Income units [Government Code Section 65583(g)(4)] and meets all
General Plan, zoning, and design review standards for the property. In this circumstance, the
jurisdiction could not disapprove the project unless the jurisdiction makes specific findings
that the project would have a “specific, adverse impact upon the public health or safety
unless the project is disapproved or approved at a lower density” [Government Code Section
65583(g)(2)(A) and (B)].
E. Provide options for “by right” to only include rental units on AHOZ sites.
The best option for the Town is to include a program in the Housing Element that would
require modification of the Code and the AHOZ Design Guidelines to eliminate single-
family housing types. Two family and multifamily are typically rental products.
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F. Why does the Town need to change the income requirements for AHOZ in the Code?
HCD is now aware of the income requirements contained in Town Code Section 29.80.520.
Based on the public comments received on the draft Housing Element, the existing
percentages are considered a constraint to the development of affordable housing because
developments would not be eligible for State tax credits to finance an affordable project. If
the Town does not modify the percentages to approximately 40 percent, HCD is unlikely to
certify the Town’s Housing Element.
In December, Town staff discussed the viability of an 80 percent affordability limit and HCD
rejected it as too high and resulting in a constraint to the production of affordable housing. In
the conversation, staff explored other percentages and 40 percent was the number HCD staff
was most comfortable. The Town’s current BMP requirements are 10 to 20 percent and to
ensure the creation of affordable housing, AHOZ should be as high as practically possible.
The 40 percent minimum affordability requirement would replace the existing affordability
limits in the Town Code Section 29.80.520. This percentage does not increase or affect the
overall density or yield of the sites because each site has a density of 20 dwelling units
(DU)/ac per Town Code (29.80.540).
G. What is statute that requires the North 40 Specific Plan adoption within three years?
Government Code Section 65583(c)(1)(A) requires the zoning of properties identified as part
of a RHNA strategy within three years of the Council’s adoption of the Housing Element.
H. Is there a requirement for the Housing Element to include additional units above
RHNA (i.e., a buffer)?
No, State law does not contain a buffer requirement. In staff’s experience, HCD evaluates a
community’s available sites inventory to ensure the housing production goals can be met and
additional sites or programs to deliver additional housing can help demonstrate a
community’s commitment to the provision of affordable housing opportunities.
I. What is legal vulnerability if a developer tries to use the argument that the Town has
too many constraints?
If the Housing Element is certified by HCD, the Town is less vulnerable to legal attacks by
individual developers.
J. What happens if the Housing Element identifies a site or a number of units for a
specific income category and the units come in at a different income level? Does the
Town get a credit if additional affordable housing is produced beyond the identified
sites in the Housing Element?
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Every year, the Town is required to provide a status report to the State on affordable housing
approvals in the context of the certified Housing Element. All housing approvals, BMP
units, and other information are reported and the Town is recognized for its efforts in
implementing its Housing Element. If Housing Element sites come in with units in different
income categories, that information is duly reported. If a development is approved with a
minimum density of 20 DU/ac on a non-Housing Element site, the Town is recognized for its
extra efforts to provide affordable housing. There is no need to modify the Housing Element
to reduce the available sites.
K. If one of the RHNA sites is pending approval for a project that won’t deliver as much
affordable housing as the Town identified in its Housing Element, then the Council
needs to make a finding that there is a replacement site as part of its approval of that
project. Which Government Code section stipulates a timetable for the completion of
the rezoning, CEQA, and other work to prepare the replacement site for affordable
housing?
Staff did not locate a specific time frame required to identify a replacement site in State law.
When staff spoke with HCD they were not aware of a time frame for identification of
replacement sites. However, jurisdictions are expected to always have adequate capacity to
meet the RHNA. Government Code Section 65863(a) states, “Each city, county, or city and
county shall ensure that its housing element inventory… can accommodate its share of the
regional housing need pursuant to Section 65584, throughout the planning period.”
L. Provide more information regarding what sites in the Housing Element strategy require
replacement sites and what the process and timing of that look like.
Government Code Section 65583 requires the identification of adequate sites and “scheduled
programs” for the development of housing. If any of the sites identified for the RHNA
strategy are developed for a use other than affordable housing, replacement sites would need
to be designated by the Town Council through an amendment to the Housing Element.
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