Item 10C 1 of 69

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1 MEETING DATE: August 17, 2016 PREPARED BY: Diane S. Langager, Principal Planner ACTING DEPT. DIRECTOR: Manjeet Ranu, AICP DEPARTMENT: Planning & Building CITY MANAGER: Karen P. Brust SUBJECT: Public Hearing to consider the introduction of Draft City Council Ordinance No , which proposes changes to the City s density bonus ordinance. The proposed ordinance will amend the City s zoning regulations and Local Coastal Program. Project No POD. RECOMMENDATION: Staff and the Planning Commission recommend that the City Council take the following actions. 1. Receive the staff report; 2. Conduct the public hearing; and, 3. Introduce draft Ordinance No titled, An Ordinance of the City of Encinitas, amending Chapter C (Density Bonus Regulations) of the Encinitas Municipal Code as reflected in Attachment CC-1 for the reasons specified in the Agenda Report. STRATEGIC PLAN: The action before the Council is to consider changes to the density bonus ordinance, which coincides with the Community Planning Focus Area of the City s Strategic Plan. FISCAL CONSIDERATIONS: There are no direct fiscal impacts associated with this report or the adoption of the draft ordinance. BACKGROUND: On July 21, 2016, the Planning Commission considered proposed changes to the City s existing density bonus regulations as set forth in draft Ordinance No The Commission voted (4-0-0 with Vice Chairman Brandenburg absent) to recommend approval of the ordinance, as presented by staff, with no modifications. There were no public speakers. The Planning Commission recommendation is documented in Resolution No. PC (Attachment CC-4) Item 10C 1 of 69

2 ANALYSIS: Density bonus is a state law (Government Code 65915; Attachment CC-3) that allows a property owner to increase density (the number of new, market-rate homes) on their property above the maximum set under a city s local land use plan. In exchange for these additional units, a certain number of the new homes must be reserved for very low, low or moderateincome households. The requirement for a local density bonus ordinance is stipulated under state density bonus law, as reflected below (a) All cities shall adopt an ordinance that specifies how compliance with this section will be implemented. Failure to adopt an ordinance shall not relieve a city from complying with this section. A. Proposed Density Bonus Ordinance Update It is important to note that a jurisdiction may not enact local laws that conflict with state law or prohibit what the legislature intends to authorize. 1 The proposed ordinance in Attachment CC-1 complies with the requirements of state density bonus law. A strikeout-underline version depicting the proposed amendments is included herein as Attachment CC-2. Highlights of the proposed ordinance are below. Application Requirements. For the most part, the application requirements remain the same with the proposed amendments; the primary change is that the word evidence is replaced with the word information. [ C.4.b] Base Density Calculation. The proposed ordinance requires that fractional units in the base density calculation shall be rounded up to the nearest whole number. As proposed, the ordinance specifies that in each component of the density calculations, both base density and bonus density, fractional units shall be separately rounded up to the next whole number. [ C.5.a & b] Findings. The proposed amendments would require that any proposed incentives reduce housing costs. It has been difficult for the City to interpret the existing language requiring that incentives provide identifiable, financially sufficient, and actual cost reductions. This modification will be easier for applicants to demonstrate and easier for the City to verify. Note that a similar change is likely to be made in state law. [ C.8] The rounding up of base density is the primary change that occurs with the proposed ordinance. As Council is aware, this provision has been the subject of several lawsuits. The City Council has agreed to consider revising this provision in light of the likely passage of AB 2501 (Bloom), which would require the City to round up base density, and the legal uncertainty regarding the existing requirement to round down. No revisions are proposed to the provisions related to Affordable and Senior Housing Agreements and/or Design and Quality standards. 1 Cal Const Art XI, Section 7; Northern Cal. Psychiatric Soc y v. City of Berkeley (1986) 178 CA 3d Item 10C 2 of 69

3 EMC Applicability The proposed amendments qualify as a Regular Amendment under EMC , but do not meet the intent or purpose of a Citizen Participation Plan as specified under the Municipal Code. Pursuant to EMC Section (Applicability), a Citizen Participation Plan (CPP) is intended for discretionary actions involving development or construction. The purpose of the CPP is to notify residents of a proposed development project near their properties (typically within 500 feet) in order to enhance community awareness, solicit input and feedback on potential issues and concerns, and explain how the development project was modified to address the noted concerns and issues. The proposed ordinance update, which is citywide, involves changes and modifications to existing code that are not associated with, or directly impact a private or public development/construction project. ENVIRONMENTAL CONSIDERATIONS The City finds that the proposed amendments to the City s Municipal Code are exempt from environmental review pursuant to General Rule, Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines since there would be no possibility of a significant effect on the environment. The ordinance being considered specifies how the City will comply and implement State density bonus law, which is required pursuant to Government Code 65915(a) and does not permit any bonuses, incentives, or waivers other than those permitted by State law. ATTACHMENTS: CC-1 Draft City Ordinance No , titled An Ordinance of the City of Encinitas Amending Chapter C (Density Bonus Regulations) of the Encinitas Municipal Code CC-2 Strike-out/Underline Version of Proposed Amendments included in draft Ordinance No CC-3 Government Code Section (State Density Bonus Law) CC-4 Planning Commission Resolution No. PC (excluding Exhibit A) CC-5 Planning Commission Agenda Report for July 21, 2016 CC-6 Public Notice for the August 17, 2016 City Council meeting CC-7 Public Correspondence Item 10C 3 of 69

4 ATTACHMENT CC-1 Draft Ordinance No , titled An Ordinance of the City of Encinitas Amending Chapter C (Density Bonus Regulations) of the Encinitas Municipal Code Item 10C 4 of 69

5 DRAFT ORDINANCE NO AN ORDINANCE OF THE CITY OF ENCINITAS AMENDING CHAPTER C (DENSITY BONUS REGULATIONS) OF THE ENCINITAS MUNICIPAL CODE SECTION ONE. The City Council of the City of Encinitas does hereby finds and declares as follows: WHEREAS, California Government Code Section 65915(a) requires that all cities adopt an ordinance that specifies how compliance with State Density Bonus Law will be implemented; and, WHEREAS, the City finds that the proposed amendments to the City s Municipal Code are exempt from environmental review pursuant to General Rule, Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines since there would be no possibility of a significant effect on the environment. The ordinance being considered specifies how the City will comply with and implement State density bonus law, and adoption is required pursuant to Government Code 65915(a). The bonuses, incentives, and waivers permitted by the ordinance are required by State law, and this ordinance does not permit any bonuses, incentives, or waivers other than those required by State law. WHEREAS, a Public Notice of Availability of proposed Local Coastal Plan Amendments (LCPA) was issued which opened a six-week public review period that ran from July 8, 2016 to August 19, 2016; this public notice of availability replaced the original notice of availability, published on July 1, 2016, to allow for required mailings; and WHEREAS, the Planning Commission conducted a Public Hearing on July 21, 2016 for the purpose of considering amendments to Section C, Density Bonus Regulations, of the Encinitas Municipal Code and considered public testimony and made a recommendation to the City Council to adopt the proposed amendments; and, WHEREAS, the City Council conducted a Public Hearing on August 17, 2016 for the purpose of considering amendments to Section C, Density Bonus Regulations, of the Encinitas Municipal Code; and, WHEREAS, the City Council has duly considered all evidence, including testimony and the evaluation and recommendations by staff, presented at said hearing; and, WHEREAS, notices of said public hearings were made at the time and in the manner required by law; and, WHEREAS, the City Council finds that this Ordinance is intended to be carried out in a manner in full conformance with the California Coastal Act of 1976 and the Planning and Building Director is hereby authorized to submit this Ordinance as part of the Local Coastal Program Amendment to the California Coastal Commission for their review and adoption, and, NOW, THEREFORE, the City Council of the City of Encinitas, California, hereby ordains as follows: Draft Ordinance ; POD Item 10C 5 of 69

6 SECTION TWO. The following provisions of Chapter C of the Encinitas Municipal [Zoning] Code shall be amended to read as follows. Section C.4 Application Requirements. a. Any applicant requesting a density bonus and any incentive(s), waiver(s), or parking reductions provided by State Density Bonus Law shall submit a Density Bonus Report as described below concurrently with the filing of the planning application for the first discretionary permit required for the housing development. The requests contained in the Density Bonus Report shall be processed concurrently with the planning application. b. The Density Bonus Report shall include the following minimum information: i. Requested Density Bonus. (A) (B) (C) (D) (E) (F) Summary table showing the maximum number of dwelling units permitted by the zoning and general plan excluding any density bonus units, proposed affordable units by income level, proposed bonus percentage, number of density bonus units proposed, total number of dwelling units proposed on the site, and resulting density in units per acre. A tentative map and/or preliminary site plan, drawn to scale, showing the number and location of all proposed units, designating the location of proposed affordable units and density bonus units. The zoning and general plan designations and assessor's parcel number(s) of the housing development site. Calculation of the maximum number of dwelling units permitted by the City s zoning regulations and general plan for the housing development, excluding any density bonus units. A description of all dwelling units existing on the site in the five-year period preceding the date of submittal of the application and identification of any units rented in the five-year period. If dwelling units on the site are currently rented, income and household size of all residents of currently occupied units. If any dwelling units on the site were rented in the five-year period but are not currently rented, the income and household size of residents occupying dwelling units when the site contained the maximum number of dwelling units, if known. Description of any recorded covenant, ordinance, or law applicable to the site that restricted rents to levels affordable to very low or lower income households in the five-year period preceding the date of submittal of the application. (G) If a density bonus is requested for a land donation, the location of the land to be dedicated, proof of site control, and information that each of the requirements included in Government Code Section 65915(g) can be met. ii. Requested Incentive(s). In the event an application proposes incentives pursuant to State Density Bonus Law, the Density Bonus Report shall include the following minimum information for each incentive requested, shown on a site plan if appropriate: Draft Ordinance ; POD Item 10C 6 of 69

7 (A) (B) (C) The City's usual development standard and the requested development standard or regulatory incentive. Except where mixed-use zoning is proposed as an incentive, in order to ensure that the granted incentives have value to the applicant, provide information that any requested incentive will reduce the cost of the housing development. If approval of mixed use zoning is proposed, provide information that nonresidential land uses will reduce the cost of the housing development, that the nonresidential land uses are compatible with the housing development and the existing or planned development in the area where the proposed housing development will be located, and that mixed use zoning will provide for affordable rents or affordable sales prices. iii. Requested Waiver(s). In the event an application proposes waivers of development standards pursuant to State Density Bonus Law, the Density Bonus Report shall include the following minimum information for each waiver requested on each lot, shown on a site plan if appropriate: (A) (B) The City's usual development standard and the requested development standard. Information that the development standards for which a waiver is requested will have the effect of physically precluding the construction of a development at the densities or with the concessions or incentives permitted by Government Code Section iv. Requested Parking Reduction. In the event an application proposes a parking reduction pursuant to Government Code Section 65915(p), a table showing parking required by the zoning regulations and parking proposed under Section 65915(p). v. Child Care Facility. If a density bonus or incentive is requested for a child care facility, information that all of the requirements included in Government Code Section 65915(h) can be met. vi. Condominium Conversion. If a density bonus or incentive is requested for a condominium conversion, information that all of the requirements included in Government Code Section can be met. vii. Fee. Payment of any fee in an amount set by resolution of the City Council for staff time necessary to determine compliance of the Density Bonus Plan with State Density Bonus Law. Section C.5 Density Bonus. a. In determining the total number of units to be granted, each component of any density calculation, including base density and bonus density, resulting in fractional units shall be separately rounded up to the next whole number. b. When calculating the number of affordable units needed for a given density bonus, any fractions of affordable dwelling units shall be rounded up to the next whole number. c. Each housing development is entitled to only one density bonus. If a housing development qualifies for a density bonus under more than one income category or additionally as senior housing, the applicant shall select the category under which the density bonus is granted. Density bonuses from more than one category may not be combined. Draft Ordinance ; POD Item 10C 7 of 69

8 d. The density bonus units shall not be included in determining the number of affordable units required to qualify a housing development for a density bonus pursuant to State Density Bonus Law. e. The applicant may elect to accept a lesser percentage of density bonus than the housing development is entitled to, but no reduction will be permitted in the percentages of required affordable units contained in Government Code Sections 65915(b), (c), and (f). Regardless of the number of affordable units, no housing development shall be entitled to a density bonus of more than 35%. Section C.8 Review Procedures. All requests for density bonus, incentives, parking reductions, or waivers shall be considered and acted upon by the approval body with authority to approve the housing development, with right of appeal to the City Council. a. Eligibility for Bonus, Incentive(s), Parking Reduction, and/or Waiver(s). To ensure that the application conforms with the provisions of State Density Bonus Law and the Coastal Act, the staff report presented to the decision-making body shall state whether the application conforms to the following requirements of state law:: i. The housing development provides the affordable units or senior housing required by State Density Bonus Law to be eligible for the density bonus and any incentives, parking reduction, or waivers requested, including the replacement of units rented or formerly rented to low and very low income households. ii. Any requested incentive will reduce the cost of the housing development; except that, if a mixed-use development is requested, the application must instead meet all of the requirements of Government Code Section 65915(k)(2). iii. The development standards for which a waiver is requested would have the effect of physically precluding the construction of a development at the densities or with the concessions or incentives permitted by Government Code Section iv. If the housing development is in the coastal zone, the requested density bonus and any requested incentive(s) or waiver(s) are consistent with all applicable requirements of the certified Encinitas Local Coastal Program, with the exception of density. v. If the density bonus is based all or in part on donation of land, all of the requirements included in Government Code Section 65915(g) have been met. vi. If the density bonus or incentive is based all or in part on the inclusion of a child care facility, all of the requirements included in Government Code Section 65915(h) have been met. vii. If the density bonus or incentive is based all or in part on the inclusion of affordable units as part of a condominium conversion, all of the requirements included in Government Code Section have been met. b. The decision-making body shall grant the concession or incentive requested by the applicant unless it makes a written finding, based upon substantial evidence of any of the following: Draft Ordinance ; POD Item 10C 8 of 69

9 i. The proposed incentive is not required to provide for affordable housing costs, as defined in Section of the Health and Safety code, or for affordable rents, as defined in Section of the Health and Safety Code; or, ii. The proposed incentive would be contrary to state or federal law; or iii. The proposed incentive would have a specific, adverse impact upon public health or safety or the physical environment or on any real property that is listed in the California Register of Historic Resources, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the housing development unaffordable to low and moderate income households. For the purpose of this subsection, "specific adverse impact" means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified, written public health or safety standards, policies, or conditions as they existed on the date that the application for the housing development was deemed complete. c. The decision-making body shall grant the waiver of development standards requested by the applicant unless it makes a written finding, based upon substantial evidence, of any of the following: i. The proposed waiver would be contrary to state or federal law; or ii. The proposed waiver would have an adverse impact on any real property listed in the California Register of Historic Resources; or iii. The proposed waiver would have a specific, adverse impact upon public health or safety or the physical environment, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the housing development unaffordable to low and moderate income households. For the purpose of this subsection, "specific adverse impact" means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified, written public health or safety standards, policies, or conditions as they existed on the date that the application for the housing development was deemed complete. d. If any density bonus, incentive, parking reduction, or waiver is approved pursuant to this chapter, the applicant shall enter into an Affordable Housing Agreement or Senior Housing Agreement with the City pursuant to subsection C.9. SECTION THREE: Severability. If any section, subsection, sentence, clause, phrase or word of this Ordinance is for any reason held to be invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed and adopted this Ordinance, and each and all provisions hereof, irrespective of the fact that one or more provisions may be declared invalid. SECTION FOUR: Public Notice and Effective Date. The City Clerk is directed to prepare and have published a summary of the ordinance no less than five days prior to consideration of its adoption, and again within 15 days following adoption, indicating the votes cast. For property located within the Coastal Zone, this Ordinance will become effective following certification by the California Coastal Commission as being consistent with the Local Coastal Program for the City of Encinitas and California Coastal Act For property located outside the Coastal Zone, this Ordinance shall take effect 30 days after its adoption by the City Council. Draft Ordinance ; POD Item 10C 9 of 69

10 SECTION FIVE: This Ordinance was introduced on August 17, PASSED AND ADOPTED this day of, 2016 by the following vote to wit: AYES: NAYS: ABSTAIN: ABSENT: Kristin Gaspar, Mayor, City of Encinitas ATTESTATION AND CERTIFICATION: I hereby certify that this is a true and correct copy of Ordinance No which has been published pursuant to law. Kathy Hollywood, City Clerk Draft Ordinance ; POD Item 10C 10 of 69

11 ATTACHMENT CC-2 Strike-out/Underline Version of Proposed Amendments included in Draft Ordinance No Item 10C 11 of 69

12 DRAFT ORDINANCE Proposed Code Revisions In Strikeout/Underline Format Draft Ordinance proposes amendments to Chapter C of Title 30, Zoning, of the Encinitas Municipal Code. The proposed code revisions included in draft Ordinance are found below in Strikeout/Underline Format. SECTION TWO. The following provisions of Chapter C of the Encinitas Municipal [Zoning] Code shall be amended to read as follows. Section C.4 Application Requirements. a. Any applicant requesting a density bonus and any incentive(s), waiver(s), or parking reductions provided by State Density Bonus Law shall submit a Density Bonus Report as described below concurrently with the filing of the planning application for the first discretionary permit required for the housing development. The requests contained in the Density Bonus Report shall be processed concurrently with the planning application. b. The Density Bonus Report shall include the following minimum information: i. Requested Density Bonus. (A) (B) (C) (D) (E) Summary table showing the maximum number of dwelling units permitted by the zoning and general plan excluding any density bonus units, proposed affordable units by income level, proposed bonus percentage, number of density bonus units proposed, total number of dwelling units proposed on the site, and resulting density in units per acre. A tentative map and/or preliminary site plan, drawn to scale, showing the number and location of all proposed units, designating the location of proposed affordable units and density bonus units. The zoning and general plan designations and assessor's parcel number(s) of the housing development site. Calculation of the maximum number of dwelling units permitted by the City s zoning ordinance regulations and general plan for the housing development, excluding any density bonus units. A description of all dwelling units existing on the site in the five-year period preceding the date of submittal of the application and identification of any units rented in the five-year period. If dwelling units on the site are currently rented, income and household size of all residents of currently occupied units. If any dwelling units on the site were rented in the five-year period but are not currently rented, the income and household size of residents occupying dwelling units when the site contained the maximum number of dwelling units, if known. Draft Ordinance Strikeout Underline Version Item 10C 12 of 69

13 (F) Description of any recorded covenant, ordinance, or law applicable to the site that restricted rents to levels affordable to very low or lower income households in the five-year period preceding the date of submittal of the application. (G) If a density bonus is requested for a land donation, the location of the land to be dedicated, proof of site control, and evidence information that each of the requirements included in Government Code Section 65915(g) can be met. ii. Requested Incentive(s). In the event an application proposes incentives pursuant to State Density Bonus Law, to ensure that each incentive contributes significantly to the economic feasibility of the proposed affordable housing, the Density Bonus Report shall include the following minimum information for each incentive requested, shown on a site plan if appropriate: (A) (B) (C) The City's usual development standard and the requested development standard or regulatory incentive. Except where mixed-use zoning is proposed as an incentive, demonstrate that any requested incentive results in identifiable, financially sufficient, and actual cost reductions to the housing development and is required in order to provide for affordable rents or affordable sales pricesin order to ensure that the granted incentives have value to the applicant, provide information that any requested incentive will reduce the cost of the housing development. If approval of mixed use zoning is proposed as an incentive, provide evidence information that nonresidential land uses will reduce the cost of the housing development, that the nonresidential land uses are compatible with the housing development and the existing or planned development in the area where the proposed housing development will be located, and that mixed use zoning is required in order towill provide for affordable rents or affordable sales prices. iii. Requested Waiver(s). In the event an application proposes waivers of development standards pursuant to State Density Bonus Law, the Density Bonus Report shall include the following minimum information for each waiver requested on each lot, shown on a site plan if appropriate: (A) (B) The City's usual development standard and the requested development standard. Information that the development standards for which a waiver is requested will have the effect of physically precluding the construction of a development at the densities or with the concessions or incentives permitted by Government Code Section Evidence that each development standard for which a waiver is requested will have the effect of physically precluding the construction of the housing development with the density and incentives that the applicant is entitled to. iv. Requested Parking Reduction. In the event an application proposes a parking reduction pursuant to Government Code Section 65915(p), a table showing parking required by the zoning ordinance regulations and parking proposed under Section 65915(p). Draft Ordinance Strikeout Underline Version Item 10C 13 of 69

14 v. Child Care Facility. If a density bonus or incentive is requested for a child care facility, evidence information that all of the requirements included in Government Code Section 65915(h) can be met. vi. Condominium Conversion. If a density bonus or incentive is requested for a condominium conversion, evidence information that all of the requirements included in Government Code Section can be met. vii. Fee. Payment of any fee in an amount set by resolution of the City Council for staff time necessary to determine compliance of the Density Bonus Plan with State Density Bonus Law. Section C.5 Density Bonus. a. In determining the total number of units to be granted, each component of any density calculation, including base density and bonus density, resulting in fractional units shall be separately rounded up to the next whole number. A density bonus for a housing development means a density increase over the otherwise maximum allowable residential density under the applicable zoning and land use designation as of the date a Density Bonus Plan is submitted to the City. Where the density allowed under the zoning ordinance is inconsistent with the density allowed under the land use element, the maximum density allowed under the land use element shall prevail. b. In determining the number of density bonus units to be granted, any fractions of dwelling units obtained by multiplying the maximum allowable residential density by the allowable percentage density increase shall be rounded up to the next whole number. When calculating the number of affordable units needed for a given density bonus, any fractions of affordable dwelling units shall be rounded up to the next whole number. c. Each housing development is entitled to only one density bonus. If a housing development qualifies for a density bonus under more than one income category or additionally as senior housing, the applicant shall select the category under which the density bonus is granted. Density bonuses from more than one category may not be combined. d. The density bonus units shall not be included in determining the number of affordable units required to qualify a housing development for a density bonus pursuant to State Density Bonus Law. e. The applicant may elect to accept a lesser percentage of density bonus than the housing development is entitled to, but no reduction will be permitted in the percentages of required affordable units contained in Government Code Sections 65915(b), (c), and (f). Regardless of the number of affordable units, no housing development shall be entitled to a density bonus of more than 35%. Section C.8 Review Procedures. All requests for density bonus, incentives, parking reductions, or waivers shall be considered and acted upon by the approval body with authority to approve the housing development, with right of appeal to the City Council. a. Eligibility for Bonus, Incentive(s), Parking Reduction, and/or Waiver(s). To ensure that the application conforms with the provisions of State Density Bonus Law and the Coastal Act, the staff Draft Ordinance Strikeout Underline Version Item 10C 14 of 69

15 report presented to the decision-making body shall state whether the application conforms to the following requirements of state law:: i. The housing development provides the affordable units or senior housing required by State Density Bonus Law to be eligible for the density bonus and any incentives, parking reduction, or waivers requested, including the replacement of units rented or formerly rented to low and very low income households. ii. Any requested incentive would result in identifiable, financially sufficient, and actual cost reductions based upon the documentation providedwill reduce the cost of the housing development; except that, if a mixed-use development is requested, the application must instead meet all of the requirements of Government Code Section 65915(k)(2). iii. The development standards for which a waiver is requested would have the effect of physically precluding the construction of the housing development with the density bonus and incentive(s) that the housing development is eligible fora development at the densities or with the concessions or incentives permitted by Government Code Section iv. If the housing development is in the coastal zone, the requested density bonus and any requested incentive(s) or waiver(s) are consistent with all applicable requirements of the certified Encinitas Local Coastal Program, with the exception of density. v. If the density bonus is based all or in part on donation of land, all of the requirements included in Government Code Section 65915(g) have been met. vi. If the density bonus or incentive is based all or in part on the inclusion of a child care facility, all of the requirements included in Government Code Section 65915(h) have been met. vii. If the density bonus or incentive is based all or in part on the inclusion of affordable units as part of a condominium conversion, all of the requirements included in Government Code Section have been met. b. The decision-making body may deny an application for an incentive only if it makes one of the following written findings, supported by substantial evidenceshall grant the concession or incentive requested by the applicant unless it makes a written finding, based upon substantial evidence of any of the following: i. The proposed incentive is not required to provide for affordable housing costs, as defined in Section of the Health and Safety code, or for affordable rents, as defined in Section of the Health and Safety Code; or, ii. The proposed incentive would be contrary to state or federal law; or iii. The proposed incentive would have a specific, adverse impact upon public health or safety or the physical environment or on any real property that is listed in the California Register of Historic Resources, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the housing development unaffordable to low and moderate income households. For the purpose of this subsection, "specific adverse impact" means a significant, quantifiable, direct, and unavoidable impact, based on objective, Draft Ordinance Strikeout Underline Version Item 10C 15 of 69

16 identified, written public health or safety standards, policies, or conditions as they existed on the date that the application for the housing development was deemed complete. c. The decision-making body may deny an application for a waiver only if it makes one of the following written findings, supported by substantial evidenceshall grant the waiver of development standards requested by the applicant unless it makes a written finding, based upon substantial evidence, of any of the following: i. The proposed waiver would be contrary to state or federal law; or ii. The proposed waiver would have an adverse impact on any real property listed in the California Register of Historic Resources; or iii. The proposed waiver would have a specific, adverse impact upon public health or safety or the physical environment, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the housing development unaffordable to low and moderate income households. For the purpose of this subsection, "specific adverse impact" means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified, written public health or safety standards, policies, or conditions as they existed on the date that the application for the housing development was deemed complete. d. If any density bonus, incentive, parking reduction, or waiver is approved pursuant to this chapter, the applicant shall enter into an Affordable Housing Agreement or Senior Housing Agreement with the City pursuant to subsection C.9. Draft Ordinance Strikeout Underline Version Item 10C 16 of 69

17 ATTACHMENT CC-3 Government Code Section (State Density Bonus Law) Item 10C 17 of 69

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29 ATTACHMENT CC-4 Planning Commission Resolution No. PC (excluding Exhibit A) Item 10C 29 of 69

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32 ATTACHMENT CC-5 Planning Commission Agenda Report for July 21, Item 10C 32 of 69

33 PLANNING COMMISSION AGENDA REPORT Planning and Building Department Agenda Item: Project Name: Request: Discretionary Actions: CEQA Recommendation: STAFF RECOMMENDATION: 8A Density Bonus Ordinance Amendments A public hearing to consider proposed changes to the City s density bonus ordinance (Draft Ordinance No ). Zoning Ordinance Amendment Local Coastal Program Amendment Exempt RECOMMEND APPROVAL Project Number: Location: Community: APN: POD Citywide Citywide N/A Applicant: Representative: Project Planner: City of Encinitas Department of Planning and Building Diane S. Langager, Principal Planner, dlangager@encinitasca.gov. Commission Meeting Date: July 21, 2016 City Council Hearing Required? Report Approval: Recommended Actions: Yes Manjeet Ranu, AICP, Acting Director 1. Conduct the public hearing; and 2. Open public hearing and receive and consider public testimony; and, 3. Make recommendation to the City Council to adopt Ordinance No \04\ Item 10C 33 of 69

34 PLANNING COMMISSION AGENDA ITEM #8A JULY 21, 2016 SUMMARY AND KEY CONSIDERATIONS The City Council has requested that the Planning Commission consider amendments to the City s density bonus ordinance. The Planning Commission is being requested to review the proposed changes, consider comments and testimonies received during the public hearing process and make a final recommendation (with edits as it deems appropriate) to the City Council for consideration and action. The proposed ordinance is included as Exhibit A within the draft Planning Commission Resolution, which is drafted to document the Commission s recommendation. Both are found in Attachment 2; a strikeout underline version, which depicts the proposed amendments is included herein as Attachment 3. PROJECT DESCRIPTION & ANALYSIS Density bonus is a state law (Government Code 65915; Attachment 1) that allows a property owner to increase density (the number of new, market-rate homes) on their property above the maximum set under a city s local land use plan. In exchange for these additional units, a certain number of the new homes must be reserved for very low, low or moderate-income households. The requirement for a local density bonus ordinance is stipulated under state density bonus law, as reflected below (a) All cities shall adopt an ordinance that specifies how compliance with this section will be implemented. Failure to adopt an ordinance shall not relieve a city from complying with this section. A. Proposed Density Bonus Ordinance Amendments It is important to note that a jurisdiction may not enact local laws that conflict with state law or prohibit what the legislature intends to authorize. 1 The proposed ordinance in Attachment 3 complies with the requirements of state density bonus law. Highlights of the proposed ordinance are below. Application Requirements. For the most part, the application requirements remain the same with the proposed amendments; the primary change is that the word evidence is replaced with the word information.[ C.4.b] Base Density Calculation. The proposed ordinance requires that fractional units in the base density calculation shall be rounded up to the nearest whole number. As proposed, the ordinance specifies that in each component of the density calculations, both base density and bonus density, fractional units shall be separately rounded up to the next whole number. [ C.5.a & b] Findings. The proposed amendments would require that any proposed incentives reduce housing costs. It has been difficult for the City to interpret the existing language requiring that incentives provide identifiable, financially 1 Cal Const Art XI, Section 7; Northern Cal. Psychiatric Soc y v. City of Berkeley (1986) 178 CA 3d \04\ Item 10C 34 of 69

35 1849\04\ PLANNING COMMISSION AGENDA ITEM #8A JULY 21, 2016 sufficient, and actual cost reductions. This modification will be easier for applicants to demonstrate and easier for the City to verify. Note that a similar change is likely to be made in state law. [ C.8] The rounding up of base density is the primary change that occurs with the proposed ordinance. As the Commission is aware, this provision has been the subject of several lawsuits. After consideration, the City Council has agreed to consider revising this provision in light of the likely passage of AB2501, which would require the City to round up base density and the legal uncertainty regarding the existing requirement to round down. No revisions are proposed to the provisions related to Affordable and Senior Housing Agreements and/or Design and Quality standards. PUBLIC NOTICE AND PARTICIPATION Local Coastal Program Amendment/Notice of Availability The City s Local Coastal Program (LCP) consists of two parts: - 1) a Land Use Plan and 2) an Implementation Plan. The City s Zoning Code, Title 30 of the Municipal Code, is a component of the LCP Implementation Plan; therefore, any amendments to this document warrant a Local Coastal Program Amendment (LCPA) subject to review and approval by the California Coastal Commission. A Public Notice of Availability opened a six-week public review period, which will run from July 8, 2016 to August 19, 2016 (it was first published on July 1 and subsequently re-published on July 8 to allow for required mailings) and is required to elapse prior to any final action being taken by the City Council on the LCPA. If the City Council approves the LCPA, the proposed LCPA will be submitted to the California Coastal Commission for review and approval. The LCPA will not become effective until after formal certification by the California Coastal Commission. Public Notice Notice of this public hearing was published on July 8, 2016 by placing a display advertisement in the Coast News and to anyone who requested such notice in writing, in compliance with Government Code Sections, 65090, and 65092, as applicable. Additionally, the notice was posted at City Hall and on the Planning and Building Department's Internet site under "Public Notices". Public Correspondence To date, no public correspondence has been received specific to the proposed amendments. EMC APPLICABILITY The proposed amendments qualify as a Regular Amendment under EMC , but do not meet the intent or purpose of a Citizen Participation Plan as specified under the Municipal Code. Pursuant to EMC Section (Applicability), a Citizen Participation Plan is intended for discretionary actions involving development or construction. The purpose of the CPP is to notify residents of a proposed development project near their property (typically within 500 feet) in order to bring community awareness, solicit input and feedback on potential issues and concerns and explain how the development project was modified to address the noted concerns and issues. The proposed ordinance update, which is citywide, involves changes and modifications to existing code that are not associated with, or directly impact a private or public development/construction project Item 10C 35 of 69

36 PLANNING COMMISSION AGENDA ITEM #8A JULY 21, 2016 ENVIRONMENTAL CONSIDERATIONS The City finds that the proposed amendments to the City s Municipal Code are exempt from environmental review pursuant to General Rule, Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines since there would be no possibility of a significant effect on the environment. The ordinance being considered specifies how the City will comply with and implement State density bonus law, which is required pursuant to Government Code 65915(a); and does not permit any bonuses, incentives, or waivers other than those permitted by State law. ATTACHMENTS 1. Government Code Section (State Density Bonus Law) 2. Draft PC Resolution, including, as Exhibit A, Draft Ordinance No , titled An Ordinance of the City of Encinitas Amending Chapter C (Density Bonus Regulations) of the Encinitas Municipal Code. 3. Strike-out/Underline Version of Proposed Amendments included in draft Ordinance No Public Notice/Notice of Availability 1849\04\ Item 10C 36 of 69

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49 ATTACHMENT 2 Draft PC Reso No XX, including, as Exhibit A, Draft Ordinance No , titled An Ordinance of the City of Encinitas Amending Chapter C (Density Bonus Regulations) of the Encinitas Municipal Code Item 10C 49 of 69

50 RESOLUTION NO. PC 2016-XX A RESOLUTION OF THE CITY OF ENCINITAS PLANNING COMMISSION RECOMMENDING APPROVAL OF CITY COUNCIL DRAFT ORDINANCE AMENDING CHAPTER C (DENSITY BONUS REGULATIONS) OF TITLE 30 (ZONING) OF THE ENCINITAS MUNICIPAL CODE (CASE NO POD; CITY-WIDE) WHEREAS, California Government Code Section 65915(a) requires that all cities adopt an ordinance that specifies how compliance with State Density Bonus Law will be implemented; and, WHEREAS, the City Council has requested that the Planning Commission consider amendments to the City s Density Bonus Ordinance as set forth in draft Ordinance included herein as Exhibit A ; and, WHEREAS, the Planning Commission conducted a duly noticed public hearing on July 21, NOW, THEREFORE, BE IT RESOLVED that the Encinitas Planning Commission hereby RECOMMENDS APPROVAL of City Council draft Ordinance ; based on the following Environmental Determination: Section 1. California Environmental Quality Act Determination The Planning Commission, in its independent judgment, finds that the proposed amendments to the Encinitas Municipal Code are exempt from environmental review pursuant to General Rule, Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines since there would be no possibility of a significant effect on the environment. The ordinance being considered specifies how the City will comply with and implement State density bonus law, and adoption is required pursuant to Government Code 65915(a). The bonuses, incentives, and waivers permitted by the ordinance are required by State law, and this ordinance does not permit any bonuses, incentives, or waivers other than those required by State law. Section 2. Findings. law. The Planning Commission finds that this Ordinance is necessary to comply with State Item 10C 50 of 69

51 AYES: NOES: ABSTAIN: ABSENT: PASSED AND ADOPTED this 21st day of, July, 2016 by the following vote, to wit: ATTEST: Michael Glenn O Grady, Chair Manjeet Ranu, AICP Secretary Item 10C 51 of 69

52 EXHIBIT A DRAFT ORDINANCE NO AN ORDINANCE OF THE CITY OF ENCINITAS AMENDING CHAPTER C (DENSITY BONUS REGULATIONS) OF THE ENCINITAS MUNICIPAL CODE SECTION ONE. The City Council of the City of Encinitas does hereby finds and declares as follows: WHEREAS, California Government Code Section 65915(a) requires that all cities adopt an ordinance that specifies how compliance with State Density Bonus Law will be implemented; and, WHEREAS, the City finds that the proposed amendments to the City s Municipal Code are exempt from environmental review pursuant to General Rule, Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines since there would be no possibility of a significant effect on the environment. The ordinance being considered specifies how the City will comply with and implement State density bonus law, and adoption is required pursuant to Government Code 65915(a). The bonuses, incentives, and waivers permitted by the ordinance are required by State law, and this ordinance does not permit any bonuses, incentives, or waivers other than those required by State law. WHEREAS, a Public Notice of Availability of proposed Local Coastal Plan Amendments (LCPA) was issued which opened a six-week public review period that ran from July 8, 2016 to August 19, 2016; this public notice of availability replaced the original notice of availability, published on July 1, 2016, to allow for required mailings; and WHEREAS, the Planning Commission conducted a Public Hearing on July 21, 2016 for the purpose of considering amendments to Section C, Density Bonus Regulations, of the Encinitas Municipal Code and considered public testimony and made a recommendation to the City Council to adopt the proposed amendments; and, WHEREAS, the City Council conducted a Public Hearing on, 2016 for the purpose of considering amendments to Section C, Density Bonus Regulations, of the Encinitas Municipal Code; and, WHEREAS, the City Council has duly considered all evidence, including testimony and the evaluation and recommendations by staff, presented at said hearing; and, WHEREAS, notices of said public hearings were made at the time and in the manner required by law; and, WHEREAS, the City Council finds that this Ordinance is intended to be carried out in a manner in full conformance with the California Coastal Act of 1976 and the Planning and Building Director is hereby authorized to submit this Ordinance as part of the Local Coastal Program Amendment to the California Coastal Commission for their review and adoption, and, Draft Ordinance ; POD Item 10C 52 of 69