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5oWN F ` Y.411 t 1pS�p,�pS COUNCIL AGENDA REPORT DATE: JANUARY 9, 2013 TO: MAYOR AND TOWN COUNCIL Oq FROM: GREG LARSON, TOWN MANAGER MEETING DATE: 1/22/13 ITEM NO: C SUBJECT: ZONING CODE AMENDMENT A -12 -003: GENERAL PLAN AMENDMENT GP -12 -004. APPLICANT: TOWN OF LOS GATOS. A. CONSIDER A REQUEST FOR APPROVAL TO AMEND THE TOWN CODE TO INCORPORATE THE AFFORDABLE HOUSING OVERLAY INTO DIVISION 5, TO ARTICLE VIII OVERLAY ZONES AND HISTORIC PRESERVATION CONSIDER A REQUEST FOR APPROVAL OF A DEVELOPMENT AGREEMENT. B. CONSIDER A REQUEST FOR APPROVAL TO CHANGE THE GENERAL PLAN DESIGNATION OF THE PROPERTY LOCATED ON THE NORTHWEST CORNER OF KNOWLES DRIVE AND CAPRI DRIVE (APN 406 -28 -032) FROM PUBLIC TO OFFICE. C. CONSIDER A REQUEST FOR APPROVAL TO ADOPT AHOZ DESIGN GUIDELINES AND APPLICATION OF AN AFFORDABLE HOUSING OVERLAY TO FIVE PROPERTIES GENERALLY LOCATED AT: 1. NORTHWEST CORNER OF KNOWLES DRIVE AND CAPRI DRIVE. APN 406 -28 -032. 2. KNOWLES DRIVE EAST OF WINCHESTER BOULEVARD. APN 424 -32 -077. 3. WEST SIDE OF OKA ROAD, NORTH OF THE JEWISH COMMUNITY CENTER. APN 424 -08 -074. 4. EAST SIDE OF OKA ROAD, SOUTH OF THE LOS GATOS SWIM AND RACQUET CLUB. APN 424 -08 -057, 5. EAST SIDE OF OKA ROAD, EAST OF THE LANDMARK AND LOS GATOS GARDENS APARTMENTS. APN 424 -08 -021. D. CONSIDER ADOPTION OF THE ADDENDUM TO THE GENERAL PLAN ENVIRONMENTAL IMPACT REPORT (EIR). PREPARED BY: Wendie R. Rooney, Strategic Project Director Reviewed by: _PM Assistant Town Manager Town Attorney Finance N:\DEV\TC REPORTS\201MAHOZ.TC 1- 22- 13.Pinal.doex Reformatted: 5130/02 PAGE MAYOR AND TOWN COUNCIL SUBJECT: Zoning Code Amendment A -12- 002 /General Plan Amendment GP -12 -004 January 9, 2013 RECOMMENDATION: After opening and closing the public hearing, and asking the Clerk Administrator to read the title of the proposed ordinances, it is recommended the Town Council: 1. Accept the Planning Commission's findings and recommendations in the form of meeting minutes (Attachment 3). 2. Adopt the Addendum to the General Plan Environmental Impact Report (EIR) (Exhibit 10 of Attachment 1). 3. Adopt the Resolution amending the General Plan by re- designating property at 375 Knowles and 14205 Capri Drives from Public -Quasi Public to Office Professional (Attachment 6). 4. Make the required finding that the proposed Zoning Code amendments are consistent with the General Plan and its Elements (Attachment 4). 5. Introduce the Ordinance of the Town of Los Gatos effecting the Zoning Code amendment (Attachment 5). 6. Make the required finding that the proposed Zoning Code Map amendments applying the AHOZ designation are consistent with the General Plan and its Elements (Attachment 4). 7. Adopt the five ordinances applying the AHOZ to five sites listed in this report (Attachments 7 through 11). 8. Adopt the Resolution approving the Affordable Housing Overlay Zone Design Guidelines (Attachment 12). BACKGROUND: The Town Council recently adopted the 2007 -14 Housing Element. California state law requires local governments to include programs in the Housing Element to meet existing and projected housing, including its share of the regional housing need, which is known as the Regional Housing Needs Allocation (RHNA). The RHNA, which is mandated by State Housing Element Law, is the projected regional need for housing (over an eight -year planning period) expressed as the number of dwelling units that are allocated among four income categories required to meet that need. While each jurisdiction within the state is required to plan for affordable housing, it is not required to guarantee that the housing will be built. The jurisdiction's responsibility is to plan for and ensure adequate opportunities for housing development on suitably zoned sites with available infrastructure. The Town's adjusted 2007 -14 RHNA is 452 units in five income categories, including extremely low, very low, low, moderate, and above moderate. Please see the Santa Clara County 2012 Area Median Income, for the income limits for the categories included in the AHOZ (Exhibit 14 of Attachment 1). The key implementation program for meeting the RHNA in the Town and State approved 2007- 14 Housing Element is Action HOU -2.1. Action HOU -2.1 requires amendment of the Town Code to include an Affordable Housing Overlay Zone (AHOZ). For the past year, the General Plan Committee (GPC) has overseen the drafting of the AHOZ. The GPC completed its work on the program in August 2012, and unanimously recommended approval of the AHOZ for five specific sites and approval of the AHOZ Design Guidelines. PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: Zoning Code Amendment A -12- 002 /General Plan Amendment GP -12 -004 January 9, 2013 Lastly, with the recent sale of the former county property at 375 Knowles and 14205 Capri Drives and the termination of the public uses at the site, it is recommended that the General Plan designation of the property be changed from Public /Quasi Public to Office Professional. The Public /Quasi Public designation is intended for public uses, such as schools, libraries, police and fire stations, and faith communities. The re- designation is consistent with General Plan designations to the north and west of the subject site and would accommodate office uses, where the AHOZ would allow residential uses, subject to the conditions of the AHOZ. The Town Council held a joint study session with the Planning Commission on the AHOZ components and the Design Guidelines on October 15, 2012. Please see Exhibit 11 of Attachment 1 for a thorough discussion of the AHOZ goals and components, and Exhibit 12 of Attachment 1 for the meeting minutes. The report to the Planning Commission (Attachment 1), addresses the questions raised at the October 15 study session; provides an analysis of the recommended re- designation of the 375 Knowles and 14205 Capri Drives; summarizes the Addendum EIR analysis; and responds to public inquiries raised regarding the AHOZ site selection and consequences of not approving the AHOZ. As noted in the Planning Commission report (Attachment 1), the state certified the Town's Housing Element as meeting state law based on its review of the draft AHOZ ordinance. If this key implementation program is not approved, the state would require the Town to reassess how to address the RHNA requirements, which would most likely result in significant rezoning and possibly decertifying the Town's Housing Element. Without a valid Housing Element, the Town would be limited in its ability to fully evaluate future development proposals and to maintain the authority to make land use decisions or approve development applications. In one recent case, a Bay Area community lost its ability to approve any new commercial development until its Housing Element was brought into compliance with state law. The certified Housing Element also preserves the presumption that the Element complies with state law. This last point is most notable since noncompliant Housing Elements make attractive legal targets for parties who seek to invalidate local land use or redevelopment decisions. The certified Housing Element will also allow the Town to remain eligible for housing grants and transportation funds. Moreover, the Town would be vulnerable to applicants using the State's Density Bonus law on these properties that are zoned residential, which could result in greater densities (up to 35% bonus). The Town would have no authority to deny these applications. DISCUSSION: A. Project Summary The AHOZ was specifically designed not to rezone the five properties where the overlay is applied. By leaving the existing zoning intact, the property owner has the option to develop either under the existing zoning and applicable development standards or alternatively, under the AHOZ, but not a combination of both. In the case of the five properties, the Courthouse is zoned Office, Southbay Development is zoned Commercial Manufacturing, and the three Oka Road properties are zoned residential. With the exception of the Courthouse property, the AHOZ also does not replace any of the existing General Plan Designations. As a former PAGE MAYOR AND TOWN COUNCIL SUBJECT: Zoning Code Amendment A- 12- 002 /General Plan Amendment GP -12 -004 January 9, 2013 public institutional use, the Courthouse property has a Public General Plan Designation, which is no longer appropriate. It is recommended that this property be changed to an Office General Plan Designation. The office designation is consistent with the property's current office zoning, is more compatible with the surrounding uses to the west and north, and will allow either office or residential development consistent with the Town Council's intent for the property, which is formally documented through Resolution 2011 -063 (Attachment 2 to Exhibit 11 of Attachment 1). To further encourage the property owner to utilize the AHOZ, the Town is processing all the necessary applications to implement the AHOZ, including the text amendment to the Town Code to incorporate the AHOZ development standards and affordability ratios and a Zoning Map amendment to incorporate the AHOZ overlay on the five properties. As noted above, a General Plan Amendment to redesignate the former Courthouse and County office building property is also proposed with the implementation actions. The Town has processed an Addendum to the General Plan Environmental Impact Report (EIR) to assess whether the removal of five of the previously identified ten sites from the AHOZ and the potential additional units on two of the remaining five sites through granting a density bonus and higher base density on the Southbay Development site would create any additional impacts that were not anticipated in the General Plan EIR. A traffic analysis was conducted and concluded that the removal of the five sites and the potential additional units on the Southbay Development and Courthouse properties resulted in a maximum of seven additional units over the number that was studied in the General Plan EIR. No new impacts were identified, and accordingly the Town is processing an Addendum to the EIR. If the aforementioned actions are approved, an AHOZ site applicant would be responsible for processing an Architecture and Site application and any applicable site - specific environmental documentation, which would be subject to further review by Planning Commission with a recommendation to Town Council for a final decision. See the November 14, 2012, Planning Commission Staff Report (Attachment 1) and the October 15, 2012, Town Council Study Session Report (Exhibit 11 to Attachment 1) for additional information regarding these amendments and proposed guidelines. B. Planning Commission On November 14, 2012, the Planning Commission considered the proposed amendments and guidelines and recommended adoption of the amendments and approval of the guidelines with direction that Town staff meet with interested parties regarding this matter prior to the Town Council public hearing. See Attachment 3 for the Commission's full discussion. Attachment 13 contains five letters that were submitted to the Planning Commission during the November 14, 2012, meeting. PAGE 5 MAYOR AND TOWN COUNCIL SUBJECT: Zoning Code Amendment A -12- 002 /General Plan Amendment GP -12 -004 January 9, 2013 C. Community Outreach Meeting The Town held a Community Outreach meeting on December 18, 2012. The meeting was advertised via two quarter page ads published in the Weekly Times the two weeks leading up to the meeting, a full story appearing in the Weekly Times on December 11, 2012, public notice cards mailed to all residents within 500 feet of each of the five AHOZ sites, and also through a stakeholders email distribution list that was established to keep the community informed of the AHOZ process. Approximately 80 community members attended the meeting. Notes from the meeting are included in Attachment 14. The meeting included a 30 minute presentation and 90 minutes of questions and answers. The principal concerns noted are traffic impacts near and around the Oka Road and Lark intersection and Knowles and Winchester, including in the neighborhoods and along major roads connecting to and from the freeways; school impacts, including both the Los Gatos and Campbell School Districts; and the belief that the majority of the affordable and multi - family housing is currently located and planned for the northern portion of the community. Regarding the concern that the majority of the affordable housing is located in the northern portion of the community, the Town prepared and presented an exhibit at both the November 14, 2012 Planning Commission meeting and the December 18, 2012 Community meeting that illustrated the locations of affordable housing within the Town that was either constructed as a result of the Town's Below Market Price Program inclusionary housing requirement or by a non - profit affordable housing developer (Attachment 16). The map illustrates affordable non - profit rental housing, market -rate rental, and mixed market and affordable development, as well as the constraints on locating housing, such as the hillsides and resource conservation areas. The other constraint that is not illustrated on the map that affects the location of housing is the commercial areas in the Downtown and along Los Gatos Boulevard and Santa Cruz. Finally, the community has continued to be updated on the process via the stakeholders email distribution and the "What's New" Section on the Town's Web Site, where various resource documents have been made available for the community's review. PUBLIC COMMENTS: Significant public discussion has occurred over the past four months, including emails and letters contained in Attachment 15 and four meetings between staff and community members. CONCLUSION: The AHOZ meets the Town's goals of achieving compliance with the RHNA; could result in quality mixed income residential development; and is consistent with the Town's recently adopted and state Certified Housing Element. The GPC spent considerable time thoroughly analyzing and discussing the development standards, affordability ratios, incentives, and PACE MAYOR AND TOWN COUNCIL SUBJECT: Zoning Code Amendment A -12- 002 /General Plan Amendment GP -12 -004 January 9, 2013 architecture and site guidelines. The implementation of the AHOZ will establish a base from which to develop the next Housing Element that will commence in 2013/2014. The Town was recently issued 617 RHNA units for the upcoming 2014 — 22 Housing Element cycle. One of the most important benefits of the AHOZ is that if it is approved, the five AHOZ sites that are not developed prior to 2014 will help fulfill this forthcoming RHNA requirement. Provided none of the sites are developed before 2014, the Town would only need to designate land that would accommodate a minimum of 52 additional units for the 2014 — 22 Housing Element cycle. ENVIRONMENTAL ASSESSMENT An Addendum to the General Plan EIR has been prepared that describes the revised Affordable Housing Overlay Zone and evaluates the changes to the project that have occurred since the General Plan EIR was certified in September 2010 (Exhibit 10 of Attachment 1). Based on studies, including an updated traffic study, the Addendum determines that the revised Affordable Housing Overlay would not create any new or significant environmental impacts that were not already evaluated in the General Plan EIR, and would not increase the severity of any previously identified significant impacts. FISCAL IMPACT: With the recent approval of the Sustainable Communities Strategy, the Bay Area's program for compliance with SB 375, eligibility for future transportation funds to local agencies are dependent on a number of factors, including a State Certified Housing Element. If the Town were to not approve the AHOZ and the State decertified the Housing Element, the Town would not be eligible for any future transportation funds until it secured a Certified Housing Element. Although actual amounts vary, in the past Los Gatos has received approximately $500,000 to $1,000,000 in transportation funding annually for pavement rehabilitation and roadway reconstruction type projects. The AHOZ was developed primarily by Town staff with assistance from the Town Architect. The General Plan Implementation Fund was used to finance the "Affordable Housing Overlay Zone Design Guidelines." Attachments: Received Under Separate Cover 1. November 14, 2012, Staff Report to the Planning Commission 2. November 14, 2012, Desk item to the Planning Commission 3. Excerpt of the Planning Commission verbatim meeting minutes of November 14, 2012 PAGE 7 MAYOR AND TOWN COUNCIL SUBJECT: Zoning Code Amendment A -12- 002 /General Plan Amendment GP -12 -004 January 9, 2013 Received with this Report 4. Required Findings 5. Draft Zoning Ordinance Amendment 6. Draft Resolution for General Plan Amendment GP -12 -004 7. Ordinance Applying the AHOZ Designation to APN: 406 -28 -032 8. Ordinance Applying the AHOZ Designation to APN: 424 -32 -077 9. Ordinance Applying the AHOZ Designation to APN: 424 -08 -074 10. Ordinance Applying the AHOZ Designation to APN: 424 -08 -057 11. Ordinance Applying the AHOZ Designation to APN: 424 -08 -021 12. Draft Resolution Approving Affordable Housing Overlay Zone Design Guidelines 13. Five Letters Submitted to Planning Commission During the November 14, 2012, Meeting 14. December 18, 2012, Community Meeting Notes 15. Public Comments Received between October 2012 and 12:00 p.m. January 17, 2013 (Emails and Letters) 16. Town of Los Gatos Affordable Housing Map WR:ct N:\DEV \TC REPORTS\2013\AHOKTC 1- 22- 13.Fiaal.docx This Page Intentionally Left Blank