HomeMy WebLinkAbout2025-01-16; Housing Development that is Permitted as a "Use By Right" (Districts - All); Barberio, GaryTo the members of the:
CITY COUNCIL
Date \/ l ~/~CA ✓ CC i,/ /
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January 16, 2025
Council Memorandum
To:
From:
Honorable Mayor Blackburn and Members of the City Council
Gary Barberio, Deputy City Manager
Via:
{city of
Carlsbad
Memo ID# 2025009
Re:
Jeff Murphy, Community Dev~ment Director
Geoff Patnoe, City Manager ~
Housing Development that is Permitted as a "Use By Right" (Districts -All)
This memorandum provides information on a provision of state housing law that requires
jurisdictions to approve certain housing development projects as a "by-right" use.
Background
The California legislature first enacted the Housing Accountability Act in 1982 to help streamline
permit approval processes and promote housing development throughout the state. Over the
years, the state legislature passed various revisions and amendments to the Housing
Accountability Act, with the most significant amendment occurring in 2020 with the passage of
Senate Bill 330 (also known as the Housing Crisis Act). SB 330 was based on the premise that the
lack of housing production, and the reason behind the state-wide housing crisis, is largely due to
local regulatory requirements, permit processing delays, local opposition to new housing
development, and the application of excessive development impact and service fees.
In response, SB 330 created several new procedures, mandatory processing requirements, and
legislative limitations with the goal of streamlining the entitlement process by slashing the time
and cost it takes to secure permits for housing. As previously reported (Attachment A), SB 330 is
directly attributed to the city's inability to enforce the housing caps set forth in the city's Growth
Management Plan (GMP) or impose moratoria or limitations on new housing development that
exceeds GMP performance standards on essential services such as circulation, sewer, water and
parks.
Put another way, the city's GMP limited the total number of homes that could be built within its
borders. Once the cap was reached, the city would be considered "built-out" and no new housing
development would be permitted. As such, the facilities and infrastructure that have been
designed and installed over the decades were sized and positioned to adequality serve build-out
assumptions -these assumptions never contemplated the additional housing growth mandated
by the state nor the additional housing units afforded to developers under state density bonus
law, which now allows up to a 100% increase (doubling) in density above city maximums.
Under these circumstances, the city is increasingly challenged with ensuring that existing public
facilities and services are readily available to serve new housing development that was never
previously contemplated or anticipated when the public infrastructure was initially designed and
installed.
Community Service Branch
Community Development Department.
1635 Faraday Avenue I Carlsbad, CA 92008 I 442-339-2600 t
Council Memo -Housing Development that is Permitted as a "Use By Right" (Districts -All)
January 16, 2025
Page 2
To complicate matters, housing developments where at least 20% of the units are affordable to
lower-income households and proposed on sites rezoned by the local jurisdiction to meet its
Regional Housing Needs Assessment1 requirements, must be considered a "use by right" under
state law; namely, Government Code §65583.2(h). What this means is that eligible housing
developments must be treated ministerially -jurisdictions can only apply fixed standards or
objective measurements that are not open to interpretation or debate, much like a building
permit. Housing developments eligible for "use by right" processing cannot be required to obtain
a conditional use permit, planned unit development permit, or other discretionary approval which
would constitute a "project" for purposes of the California Environmental Quality Act. This means
that the city cannot use CEQA to impose project specific mitigation measures (conditions) on the
project to address project-related environmental impacts such as traffic or utilities. However,
subdivision of a "use by right" site is still subject to all laws, including the Subdivision Map Act and
Title 20 of the Carlsbad Municipal Code (Subdivisions).
To summarize, Government Code §65583.2{h) requires that sites which were rezoned to meet
RHNA requirements be granted "use by right" status if a residential project is proposed on the site
with at least 20% of the units restricted to lower-income affordable households. In that case, the
city would be required to process the housing application as a "use by right" and cannot exercise
any discretionary review of the project, including CEQA review. Failure to comply with the
requirements of Government Code §65583.2{h) could result in a violation of the Housing
Accountability Act and decertification of the city's Housing Element. In addition, if it was ever
determined that the city does not have sufficient remaining sites to meet its housing allocation
throughout the planning period, the city could be required to rezone comparable sites within 180
days. The State Department of Housing and Community Development may also enforce these
requirements pursuant to Government Code section 65585, including referral to the State
Attorney General.
Discussion
The City Council adopted on January 30, 2024, the Housing Element Rezone Program, a critical
requirement of Carlsbad's state certified 2021-2029 Housing Element (Attachment B). As part of
that action, a total of 16 different properties located throughout the city were selected to make up
for a shortfall in the city's existing housing capacity when compared to the RHNA (Attachment C).
Following the City Council action on January 30, 2024, development interest on the rezone sites
has ranged from general inquiries and questions to the active processing of a proposed housing
development application.2
Appropriate city departments and districts have been and will continue to be consulted and
involved in the review of these applications. If services are found deficient, off-cycle or mid-year
1 A Regional Housing Needs Assessment (RHNA) is a state-mandated process in California that estimates the future housing needs
for a region with the purpose of ensuring cities and counties plan for enough housing to meet the needs of all community
members. Refer to Attachment B for more information on how the state assigns housing units.
2 As of the date on this memorandum, one application is currently in process (Fairfield Apartment Homes @ Bressi Ranch; Site 11,
District 2, 320 total units/4 & 5 stories applying a 50% state density bonus) and a pre-application has recently been submitted (Salk
Avenue Apartment; Site 7, District 2, 397 total units/5-stories applying a 36% state density bonus).
Council Memo -Housing Development that is Permitted as a "Use By Right" (Districts -All)
January 16, 2025
Page 3
additions or modifications to the city's Capital Improvement Program {CIP) projects may be
necessary to accelerate specific infrastructure/utility service projects to maintain level of service
standards, while considering available financing sources and reasonable schedules for project
completion. Information on any such city CIP projects will be brought forward by the lead
department/district under separate actions.
Currently, only one of the housing development applications (Fairfield Apartments in Bressi Ranch)
is eligible for processing under the "use by right" provisions of Government Code §65583.2(h).
Being the first application in the city to utilize this state housing law, questions have arisen over
the interpretation of certain aspects of the state law, specifically:
• City staff believe that the 20% affordability requirement specified in Government Code
§65583.2(h) applies to the total number of units proposed in the housing development, which
includes any density bonus units authorized under Government Code §65915. The applicant
originally contended that the 20% standard only applies to the base density figure (in other
words, the density bonus units should be excluded from the calculation).
• The city interprets the term "lower income households" as used in Government Code
§65583.2(h) as restricted to the low, very low or extremely low-income categories. Units that
fall within in the moderate-income category do not qualify.
• City staff believe that a housing development project is not eligible for ministerial processing
as a "use by right" under Government Code §65583.2(h) if the project utilizes Government
Code §65915 (Density Bonus law) resulting in a project density that is greater than the
maximum density allowed under the city's rezoning designation, thereby resulting in
environmental impacts not previously analyzed.
Staff prepared a letter addressed to the California Department of Housing & Community
Development soliciting their confirmation that staff's understanding and application of state
housing laws is accurate and appropriate (Attachment D).
Next Steps
Staff will continue to process private projects consistent with state and local laws and policies. The
city remains committed to following a coordinated process for considering and building capital
projects necessary to adequality provide utilities and services to sites zoned for housing
development. Also, staff will provide an updated City Council memorandum once the response
letter from the California Department of Housing & Community Development is received .
Attachments:
A. City Council staff report, dated April 6, 2021 (on file with the City Clerk's Office)
B. City Council staff report, dated January 30, 2024 (on file with the City Clerk's Office)
C. Housing Sites Approved for Rezoning
D. HCD Letter dated January 13, 2025
Council Memo -Housing Development that is Permitted as a "Use By Right" (Districts -All)
January 16, 2025
Page 4
cc: Sheila Cobian, Assistant City Manager
Cindie McMahon, City Attorney
Allegra Frost, Senior Assistant City Attorney
Paz Gomez, Deputy City Manager
Tom Frank, Transportation Director/City Engineer
Amanda Flesse, Utilities Director
Dave Padilla, Assistant Utilities Director
Laura Rocha, Deputy City Manager, Administrative Services
Zach Zorach, Finance Director
Tina Ray, Communication & Engagement Director
Mike Strong, Assistant Director Community Development
Eric Lardy, City Planner
Robert Efird, Principal Planner
Scott Donnell, Senior Planner
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properties that already allow housing
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Attachment C
Jan. 13, 2025
Ms. Shannon West, Housing Accountability Unit Chief
Ms. Melinda Coy, HCD Policy Specialist
Department of Housing and Community Development
Division of Housing Policy Development
2020 W. El Camino Avenue, Suite 500
Sacramento, CA 95833
Attachment D
{c ity of
Carlsbad
HOUSING PROJECTS UTILIZING GOVERNMENT CODE §65583.2{h) AND §65915
Dear Ms. West and Ms. Coy:
The City of Carlsbad has and continues to actively implement its HCD certified 2021-2029
Housing Element and appreciates HCD's willingness to consider questions from jurisdictions to
ensure ongoing compliance with state housing laws. The focus of this technical assistance
request is to help confirm the city's understanding of the following:
1. The 20% affordability requirement specified in Government Code §65583.2(h)
applies to the total number of units proposed in the housing development,
including any density bonus units authorized under Government Code §65915.
2. The term "lower income households" as used in Government Code §65583.2(h) is
restricted to the low, very low or extremely low-income categories.
3. A housing development project is not eligible for ministerial processing as a "use
by right" under Government Code §65583.2(h) if the project utilizes Government
Code §65915 resulting in a project density that is greater than the maximum
density allowed under the city's rezoning designation and analyzed in the
associated environmental document.
Pursuant to Program 1.1 of the city's 2021-2029 Housing Element, the city timely rezoned 16
residential sites with minimum density and development standards to satisfy the program
requirements of CA Government Code §65583.2(h). The sites are zoned to permit owner-
occupied and rental multifamily residential use by right for developments in which at least 20%
of the total housing units are affordable to lower income households.
1. 20% AFFORDABILITY REQUIREMENT
Government Code §65915, commonly referred to as density bonus law, sets forth the
standards and allowances for a developer to increase density allowed on a property
above the maximum set under a city's general plan by as much as 100%. In addition,
qualifying housing developments may receive reductions from required local
Community Development Department
1635 Faraday Avenue 'f Carlsbad, CA 92008 'f 760-602-2710 t
Ms. Shannon West, Housing Accountability Unit Chief
Ms. Melinda Coy, HCD Policy Specialist
Jan. 13, 2025
Page 2
development standards such as setbacks and height limits when those local standards
prevent the housing development from achieving the density allowed under state law.
In exchange for these benefits, a certain number of the new dwelling units within the
development project must be reserved for lower-income households, seniors, or the
other eligible affordable housing projects.
The housing affordability calculation in §65915 requires that the percentage of required
affordable units apply to the maximum base density allowed under the city's general
plan. In other words, the calculation is not applied to the total units authorized under
density bonus law ---a combination of base density units and density bonus units.
However, this type of calculation is specific to §65915 and is not referenced anywhere
else in state housing law, including §65583.2.
As such, the city is seeking HCD confirmation that for a housing development to be a
"use by right" pursuant to Government Code §65583.2(h), at least 20% of the total
residential housing units, which includes base density units and density bonus units in
situations where the housing development is applying Density Bonus Law, must be
reserved as affordable to lower income families.
2. AFFORDABLE TO LOWER INCOME HOUSEHOLDS
Government Code §65583.2(h), requires a housing element rezoning program to
accommodate 100 percent of the need for housing for "lower income households",
allocated by the Regional Housing Needs Assessment (Section 65584) for which site
capacity was not identified in the Housing Element Inventory on sites that are zoned to
permit residential use by right for developments in which at least 20 percent of the units
are "affordable to lower income households." The term "lower income households" is
not defined in Section 65583.2, but Section 65582 (Definitions) and 65584, which
subsection (h) references, define the term "lower income" as meaning low, very low and
extremely low income, but not including moderate income.
Carlsbad Municipal Code §21.85.020 also includes a definition of "affordable housing"
which includes the following income-categories which the City will apply to §65583.2(h)
eligible housing developments.
• Extremely low-income, rental or ownership units: the product of thirty percent
times thirty percent of the county median income, adjusted for household size;
• Very low-income, rental and ownership units: the product of thirty percent times
fifty percent of the county median income, adjusted for household size;
• Low-income, ownership units: the product of thirty percent times eighty percent of
the county median income, adjusted for household size; and
Ms. Shannon West, Housing Accountability Unit Chief
Ms; Melinda Coy, HCD PoUcy Specialist
Jan. 13, 2025
Page 3
• Low-income, rental units: the product of thirty percent times seventy percent of
the county median income, adjusted for household size.
Based on Section 65583.2 and the City's Municipal Code, the City interprets the term
"lower income households" as used in Government Code §65583.2(h) as restricted to
the low, very low or extremely low-income categories. Put another way, the city is
seeking HCD confirmation that units reserved for moderate-income households do not
count towards the 20% requirement of subsection (h).
3. DENSITY BONUS PROJECTS WHICH EXCEED THE MAXIMUM DENSITY FOR THE SITE
In enacting §65583.2, the State Legislature removed constraints related to rezoned
properties so that the rezoned sites would develop with new housing to accommodate
the city's regional housing need allocation during the planning period. The City
interprets Section 65583.2, subsection (h), as requiring owner-occupied and rental
multifamily residential projects to be granted "use by right" status if at least 20 percent
of the units are affordable to lower income households. However, it is the City's
understanding that if the project uses Density Bonus Law resulting in a density above
that which is allowed by the zone, the project will not qualify as a "use by right".
The City's interpretation is based on Section 65583.2, subsection (b)(5)(B) which
requires parcels included in the inventory to have sufficient water, sewer, and dry
utilities available and accessible to support development or be included in an existing
program to secure sufficient utility supply to support housing development. Similarly,
subsection (c)(2) requires each site on the inventory to adjust the number of units that
can be accommodated on each site based on the "realistic development capacity for the
site", including the current or planned availability of utilities.
If subsection (h) were read as granting "use by right" status to any project with at least
20 percent of the units restricted to lower income households, regardless of whether it
exceeds the underlying maximum density, it would be challenging for cities to ensure
adequate utility service as required to be included on the site inventory analysis. That is
because Density Bonus Law allows for up to a 100 percent increase in density making
utility capacity planning a challenge for "use by right" projects.
In other words, if subsection (h) is interpreted as requiring use by right status for
Density Bonus projects which exceed the underlying maximum density, cities/utilities
may need to assume inventory sites will be 100 percent Density Bonus projects in order
to plan for adequate utility service. As such, the city is seeking HCD confirmation that
development projects utilizing Density Bonus Law that result in a density above that
which is allowed by the zone (and analyzed in the CEQA document), do not qualify as a
"use by right" under §65583.2(h).
Ms. Shannon West, Housing Accountability Unit Chief
Ms. Melinda Coy, HCD Policy Specialist
Jan. 13, 2025
Page 4
We again appreciate HCD's willingness to consider this letter and look forward to hearing from
you soon regarding our understanding of the application of state housing laws.
JEFF MURPHY
Community Development Director
cc: Geoff Patnoe, City Manager
Cindy McMahon, City Attorney
Allegra Frost, Senior Assistant City Attorney
Gary Barberio, Deputy City Manager
Mandy Mills, Housing & Homeless Services Director
Mike Strong, Assistant Director
Eric Lardy, City Planner
Robb Efird, Principal Planner