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Staff Reporto x F MEETING DATE: 05105115 ITEM NO. i o �0s sat s COUNCIL AGENDA REPORT DATE: APRIL 27, 2015 TO: MAYOR AND TOWN COUNCIL FROM: LES WHITE, INTERIM TOWN MANAG SUBJECT: 2015 -2023 HOUSING ELEMENT (GENERAL PLAN AMENDMENT APPLICATION GP -14 -002) AND ADDENDUM TO THE GENERAL PLAN FINAL EIR RECOMMENDATION: Adopt a resolution adopting the 2015 -2023 Housing Element (General Plan Amendment Application GP -14 -002) and Addendum to the General Plan Final EIR; and refer the recommendations from the Housing Element Advisory Board and Planning Commission to the Strategic Goals discussion in June 2015. BACKGROUND: 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) determine 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. The public hearing draft of the 2015 -2023 Housing Element is contained in Exhibit 1 of Attachment 1. PREPARED BY: LAUREL R. PREVETTI��'" v" /�%�vW� Assistant Town Man ager irector oaf Community Development Reviewed by: N/A Assistant Town Manager —W own aA / Yown Attorney N IA Finance N:\DEV\TC REPORTS12015\11cusing Elemengpedits.dw Revised: 4/29/15 1:06 PM PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 All cities and counties in California are given housing targets for the planning period of the Housing Element known as the Regional Housing Need Allocation (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. T The Town's Regional Housing Need Allocation 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 Need Allocation for 2015 — 2023 RIINA i 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 specific goals, policies, and programs to eliminate barriers and facilitate housing production on the planned sites. <50 %Area Bank Teller, Preschool Teacher, Very Low Median Income $53,030 Home Health Aide, Restaurant Cook (AMI) 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 Physician, Aerospace Engineer Moderate > 120 %AMI Over $126,600 The Town's Regional Housing Need Allocation 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 Need Allocation for 2015 — 2023 RIINA i 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 specific goals, policies, and programs to eliminate barriers and facilitate housing production on the planned sites. PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 ANALYSIS: Public 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 Planning Commission 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 provided an important opportunity for the public to participate in the Housing Element process. All meetings were held in the evening and the public was provided opportunities to present information and viewpoints to the HEAB for its consideration. Adequate Sites to Meet the Housing Need The HEAB worked with staff to identify sites to meet the RHNA and reviewed drafts of the Housing Element. In June 2014, the HEAB decided to satisfy the RHNA primarily with existing Affordable Housing Overlay Zone (AHOZ) sites (see Table 3). 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 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 (see Table 4). On March 5, 2015, a majority of the HEAB voted to recommend adoption of the Housing Element, with some additional changes, to the Planning Commission and Town Council (Smith and Hudes opposed). PAGE 4 MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 Table 3: Housing Element Advisory Board Initial Ontinnc to Mnnf RwNA a,.no Ime) Table 4: Housing Element Advisory Board Final nntianc t., Moaf RHNA fk4..,...6 Inic. Very Low, Mod. Above Total RHNA — Total Units Needed (2015 -2023) Low 112 132 Mod. 619 RHNA — Total Units Needed (2015 -2023) 201 112 132 174 619 Approved Units 0 0 2 14 16 Existing Affordable Housing Overlay Zoning 0 28 0 28 Sites (AHOZ) 144 86 112 86 428 Second Units Under the Town's Existing 156 84 98 26 364 Program 0 0 28 0 28 Proposed Enhanced Second Unit Program: 202 113 132 174 621 Non - Conforming Lots & Hillside Lots 0 27 0 0 27 Proposed North 40 Specific Plan 57 0 0 0 57 Vacant Housing Element Sites Oka Road Sites 0 0 0 74 74 Total Units 201 1 113 142 174 630 Units Above RHNA 0 +1 +10 0 +11 Table 4: Housing Element Advisory Board Final nntianc t., Moaf RHNA fk4..,...6 Inic. Very Low Low Mod. Above Mod. Total RHNA — Total Units Needed (2015 -2023) 201 112 132 174 619 Approved Units 0 2 6 49 57 Oak Rim/N. Blossom Hill (AHOZ) 46 0 0 0 46 Second Units under the Town's Existing Program 0 0 28 0 28 Proposed Enhanced Second Unit Program: Non- Conforming Lots & Hillside Lots 0 27 0 0 27 Proposed North 40 Specific Plan 156 84 98 26 364 Vacant Housing Element Sites (based on existing zoning): Oka Road Sites 0 0 0 99 99 Total Units 202 113 132 174 621 Units Above RHNA +1 +1 0 0 +2 PAGE MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 Proposed Programs to Reduce or Eliminate Barriers The Housing Element is required to identify specific programs to reduce or eliminate barriers to the construction of affordable housing. Based on the comments from HCD, the Housing Element includes several programs to meet State law and to facilitate housing on the RHNA sites. Among the programs are: • Modify the Town Code to change the affordability requirements for the Oak Rim/N. Blossom Hill AHOZ site to a minimum of 40 percent low and very low income units. • Amend the Town Code to add findings for by -right development. • Adopt the North 40 Specific Plan and rezone 18.2 acres at a minimum density of 20 units per acre to yield 364 units. • Amend the Town Code to provide for an enhanced second unit program. Additional Information The HEAB considered a wide range of information as it formulated its decisions regarding adequate sites and programs. All HEAB materials, including redlined versions of the draft Housing Element, are posted to the Town's website: httv:Hca-losizatos2.civicplus.com/DocumentCenter/Index/412 The Planning Commission conducted a workshop on the Housing Element and the materials provided to the Commission are contained in Attachments 3 and 4. These materials include questions and answers regarding density bonus, by right development, and other issues. Other HEAB Recommendations In addition to the recommendation on the Housing Element, the HEAB identified four topics for future Town Council consideration (perhaps during the annual Strategic Goals discussion or future General Plan Update): • Complete an assessment of the needs for housing for households earning between 120 and 200% of County median income (i.e., "workforce" or entry level housing) and determine policies, potential Code changes, and programs to meet this need. • Evaluate the Town's requirements under State law to provide housing near planned transit stations, even if the stations are not expected for 35 years. • Examine the jobs /housing balance in the Town and identify actions to address any concerns. • Expand the AHOZ design guidelines to include multi - family residential or be designated as multi - family residential guidelines so that they may apply to other appropriate buildings sites. PAGE 6 MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 The HEAB also discussed the possibility of retaining a community forum to discuss housing issues. After some discussion, the Board recognized that such a forum already exists in the Town in the form of the General Plan Committee. The GPC would be the appropriate body to consider housing policy issues and the public would be welcome to provide testimony. The HEAB also considered identifying potential replacement sites if one of the RHNA sites does not yield the planned level of housing. After much discussion, the HEAB decided that the Town would address this situation if and when it occurs. Plannine Commission Discussion and Recommendation The Planning Commission conducted a noticed public hearing on the Housing Element on April 8, 2015. Two members of the HEAB and one community member provided testimony and recommended adoption of the Housing Element with the sites identified by the HEAB. A fourth speaker asked clarifying questions about the Housing Element to which staff responded. Verbatim minutes of the proceedings are contained in Attachment 5. After closing the public portion of the public hearing, the Commission discussed the Draft Housing Element. Commissioner Erekson recommended reinserting a goal regarding a jobs and housing balance that is contained in the current Housing Element (Goal 7). He also pointed out an inconsistency between Action Items HOU -1.7 and HOU -2.2, which staff explained was an oversight. The Planning Commission unanimously recommended to the Town Council that it adopt the Housing Element, the associated General Plan Amendment Application GP -14 -002, the Addendum to the General Plan Final EIR, and the four recommendations from the Housing Element Advisory Board (Commissioner O'Donnell absent). As part of the motion, the Commission recommended that the Council modify the Housing Element and reinsert a goal for a jobs- housing balance in the Town (see Additional Revisions in Attachment 6). In addition, the Commission made the following suggestions in the same manner as the HEAB for consideration during the Strategic Goals setting session: Consider modifying the Town's Design Guidelines to encourage first floor master bedrooms in new housing developments designated to meet the needs of the Town's growing senior population; • Send the AHOZ back to the General Plan Committee to determine: • Does the Town still need the AHOZ assuming that the Town has identified adequate sites for the Housing Element? • Do we want to keep the AHOZ sites not used in the Housing Element? • Should the AHOZ Design Guidelines be modified to remove single- family homes and other lower density housing types? PAGE 7 MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 The Commission also discussed the Town finding solutions for providing affordable housing by seeking to go beyond the legal requirements. This discussion ultimately was not included in the motion and instead was expected to be the context for the GPC's work on AHOZ or other housing issues as directed by the Council. Discussions with the California Department of Housing and Community Development (HCD) Throughout the Housing Element update process, Planning staff has been in communication with HCD. HCD reviewed the Public Hearing Draft Housing Element and found minor modifications were still needed before HCD could determine that it could certify the document as complete and in compliance with State law. Staff responded by submitting additional text modifications to HCD in response to the comments (see Attachment 6). At the time of this report's preparation, the Town is awaiting written confirmation from HCD that the proposed revisions together with the Draft document meet State law. HCD staff verbally indicated that the Town's Housing Element was compliant. If the letter is received prior to the Council meeting, it will be provided as a Desk Item. Adequate Sites In light of the Council's recent discussions and motions regarding the North 40 Specific Plan, the Council may choose to revise the identified sites to meet the Regional Housing Need Allocation to reflect a maximum of 270 units in the Specific Plan. Table 5 on the next page shows a deficit of 92 units with the reduced Specific Plan yield. The Town's existing AHOZ sites could be considered as replacement sites in the Housing Element. The Council may choose to retain the Oak Rim/N. Blossom Hill site and add one or more of the remaining AHOZ sites: • Southbay (7.4 acres): 148 units • Los Gatos Lodge Site A (1.5 acres): 30 units • Los Gatos Lodge Site B (7 acres): 140 units • Higgins Business Park (3.2 acres): 64 units Alternatively, the Council may remove the Oak Rim/N. Blossom Hill site and replace the cumulative total of 138 units with one or more AHOZ sites. It is acceptable for the Housing Element to identify sites that would yield more housing than required by the RHNA. The distribution across income categories can be achieved as needed because all of the sites meet the required minimum density of 20 units per acre and therefore are considered affordable for purposes of the Housing Element. PAGE MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 Table 5: Revised Sites with Reduced Units in North 40 Specific Plan ALTERNATIVES: In light of the recent motions pertaining to the North 40 Specific Plan, the Council may modify the identified sites to meet the Town's RHNA as discussed in the Analysis section of this report. The Council may also add Action Items or make other modifications to the document. Staff will make the corresponding edits to the Housing Element Public Hearing Draft and environmental clearance document prior to submittal to HCD. Modification of the document is preferable over not adopting the Town's 2015 -2023 Housing Element. COORDINATION: The preparation of the Housing Element was completed in close coordination with the Town Attorney and staff from the California Department of Housing and Community Development. FISCAL IMPACT: There is no anticipated fiscal impact by adopting the Housing Element. The implementation of the Action Items will be incorporated into the work plan for the Community Development Department. Very Low Mod. Mae Total Low RHNA — Total Units Needed (2015 -2023) 201 112 132 174 619 Approved Units 0 2 6 49 57 Oak Rim/N. Blossom Hill (AHOZ) 46 0 0 0 46 Second Units under the Town's Existing 0 0 28 0 28 Program Proposed Enhanced Second Unit Program: Non- 0 27 0 0 27 Conforming Lots & Hillside Lots Proposed North 40 Specific Plan 156 84 30 0 270 Vacant Housing Element Sites (based on 0 0 0 99 99 existing zoning): Oka Road Sites Total Units 202 113 64 148 527 Units Above RHNA +1 +1 -68 -26 -92 ALTERNATIVES: In light of the recent motions pertaining to the North 40 Specific Plan, the Council may modify the identified sites to meet the Town's RHNA as discussed in the Analysis section of this report. The Council may also add Action Items or make other modifications to the document. Staff will make the corresponding edits to the Housing Element Public Hearing Draft and environmental clearance document prior to submittal to HCD. Modification of the document is preferable over not adopting the Town's 2015 -2023 Housing Element. COORDINATION: The preparation of the Housing Element was completed in close coordination with the Town Attorney and staff from the California Department of Housing and Community Development. FISCAL IMPACT: There is no anticipated fiscal impact by adopting the Housing Element. The implementation of the Action Items will be incorporated into the work plan for the Community Development Department. PAGE 9 MAYOR AND TOWN COUNCIL SUBJECT: HOUSING ELEMENT APRIL 27, 2015 CEO A: Addendum to the 2020 General Plan Final Environmental Impact Report (EIR). Attachments: 1. April 8, 2015 Planning Commission Staff Report (including Exhibit 1: Public Hearing Draft 2015 -2023 Housing Element and Exhibit 2: Addendum to the General Plan Final EIR) 2. April 8, 2015 Planning Commission Addendum Report (includes Exhibits) 3. March 25, 2015 Planning Commission Housing Element Workshop Report 4. March 25, 2015 Planning Commission Housing Element Workshop Desk Item Report 5. April 22, 2015 Planning Commission Verbatim Minutes regarding the Housing Element 6. Additional revisions containing proposed text modifications to the Housing Element 7. Draft resolution to adopt the Housing Element and Addendum LRP:cg THIS PAGE INTENTIONALLY LEFT BLANK