1. The UAIZ shall not be established in areas that are outside the City of San Jose's USA/UGB.

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1 /13/ COUNCIL AGENDA: 8/23/16 ITEM: CITY OF SAN JOSE CAPITAL OF SILICON VALLEY Memorandum TO: HONORABLE MAYOR AND CITY COUNCIL FROM: Harry Freitas SUBJECT: SEE BELOW DATE: August 1, 2016 Approved Date SUBJECT: FILE NO. PP RESOLUTION CONSENTING TO THE ESTABLISHMENT OF URBAN AGRICULTURE INCENTIVE ZONES (UAIZ) IN CERTAIN UNINCORPORATED COUNTY AREAS IN SAN JOSE'S SPHERE OF INFLUENCE (SOI) SUBJECT TO CONDITIONS AND CONSISTENT WITH THE URBAN AGRICULTURE INCENTIVE ZONES ACT (ASSEMBLY BILL 551) AND SUPERSEDING RESOLUTION NO RECOMMENDATION Planning staff recommends that the Council adopt a resolution consenting to the establishment of the Urban Agriculture Incentive Zone (UAIZ) in certain unincorporated Santa Clara County (County) areas in the City of San Jose's Urban Service Area/Urban Growth Boundary (USA/UGB) consistent with State Assembly Bill 551 that supersedes Resolution No and maintains the inclusion of the following conditions from Resolution No , which was adopted by Council on November 17, 2015: 1. The UAIZ shall not be established in areas that are outside the City of San Jose's USA/UGB. 2. The UAIZ shall be established only in areas and for parcels where the land use designation under the City of San Jose General Plan supports agriculture or urban agriculture use including but not limited to Open Hillside, Lower Hillside, Rural Residential, Residential Neighborhood, and Neighborhood/Community Commercial. 3. In compliance with the Santa Clara County Code of Ordinances, including but not limited to Section (City General Plan Conformance), Section (Properties subject to Annexation), and Section CI-52 (Properties subject to annexation), the County shall complete or require the completion of a Contiguity/Annexation Statement form and refer the proposal for the UAIZ incentive and contract for such parcels to the City of San Jose for the City's determination as to whether the proposed use will require annexation.

2 HONORABLE MAYOR AND CITY COUNCIL August 1, 2016 Subject: Resolution to Consent to County's Designation of Urban Agriculture Incentive Zone in City's SOI Page 2 4. The production, cultivation, growing and harvesting of marijuana shall be prohibited in the UAIZ. 5. The raising of livestock (except poultry for egg laying), fur-bearing animals, and dairyproducing animals shall be prohibited in the UAIZ. Based on a letter from the California Department of Housing and Community Development (HCD) dated April 28, 2016 (see Attachment 1), Planning staff now recommends eliminating the following condition that was included in Resolution No : Parcels that are identified as adequate sites for housing in the Housing Element Inventory of the City of San Jose General Plan Housing Element certified by the California Department of Housing and Community Development (HCD) shall not be included within a UAIZ. OUTCOME If the Council adopts the proposed resolution, as described above, the UAIZ in Unincorporated County areas in the City's USA/UGB could include more eligible parcels. Specifically, the UAIZ could include parcels that are identified as adequate sites for housing in the Housing Element Inventory of the City's General Plan Housing Element. BACKGROUND This memorandum summarizes Planning staffs follow-up analysis in response to correspondence on this item with staff from HCD, the County Planning Department, and stakeholders from the public. ANALYSIS AND GENERAL PLAN CONSISTENCY Consenting to establishment of the UAIZ in Unincorporated County areas that are within the City's SOI in compliance with the conditions listed in staffs recommendation will allow the UAIZ to be implemented while maintaining consistency with the Envision San Jose 2040 General Plan (General Plan) Goals and Policies related to fiscally sustainable land uses, urban development, and agriculture, and with the General Plan Housing Element certified by HCD. As the letter from HCD dated April 28, 2016 states: "The City could annually monitor the adequacy of the sites inventory in the most recent annual report (GC Section 65400). Absent major changes to the inventory, the annual report could be utilized at the time of consideration of each conversion request/uaiz contract to comply with GC Section (c)-no net loss. The updated inventory could include consideration of any of the following since the last annual report: General Plan

3 HONORABLE MAYOR AND CITY COUNCIL August 1,2016 Subject: Resolution to Consent to County's Designation of Urban Agriculture Incentive Zone in City's SOI Page 3 amendments; rezonings; prior approved conversions/contracts to allow urban agriculture; and conversions/contracts that have expired or been cancelled." In April 2016, Planning staff documented for HCD that the City has adequate sites remaining in its eligible sites' inventory excluding the sites identified for the County's UAIZ that are in the City's USA. Based on this documentation and HCD's correspondence, staff proposes a new resolution that would supersede Resolution No to respond to the County's request to eliminate from Resolution No the condition that requires that "parcels that are identified as adequate sites for housing in the Housing Element Inventory of the City of San Jose General Plan Housing Element certified by the California Department of Housing and Community Development (HCD) shall not be included within a UAIZ." With the exclusion of the above condition, while including in the proposed resolution the other conditions in Resolution No , the County's UAIZ should be consistent with the General Plan and be compatible with neighboring land uses. EVALUATION AND FOLLOW-UP Staff intends to return to the City Council with recommendations on UAIZs in the City, itself, in the fall of 2016, which addresses item no. 12 on the City Council's ordinance and policy priorities list. POLICY ALTERNATIVES Alternative #1: Do not adopt the resolution. Cons: By not adopting the resolution, the County would not be able to include parcels that are identified as adequate sites for housing in the Housing Element Inventory of the City of San Jose General Plan Housing Element within the County's UAIZ. Pros: Potentially, fewer parcels identified as adequate sites for housing in the Housing Element Inventory of the City of San Jose General Plan Housing Element would be under UAIZ agreements with the County that would temporarily preclude residences on these parcels. Reason for not recommending: This alternative does not support Council direction to coordinate with the County and HCD to facilitate urban agriculture on the subject parcels in the County's UAIZ.

4 HONORABLE MAYOR AND CITY COUNCIL August 1, 2016 Subject: Resolution to Consent to County's Designation of Urban Agriculture Incentive Zone in City's SOI Page 4 PUBLIC OUTREACH/INTEREST Public outreach for this proposal is consistent with the City Council Public Outreach Policy. Prior to the City Council hearing, a notice of the public hearing for this resolution will be ed to a list of interested individuals and posted on the City's website. COORDINATION This report and the proposed resolution were coordinated with the City Attorney's Office. CEOA Exempt, File No. PP / s/ HARRY FREITAS, DIRECTOR Planning, Building and Code Enforcement For questions please contact Jenny Nusbaum, Supervising Planner, at Attachment: Letter from HCD dated April 28, 2016

5 STATE OF CALIFORNIA - RUSINESS. CONSUMER SERVICES AND HOUSING AflENOY DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF HOUSING POLICY DEVELOPMENT 2020 W. El Camino Avenue, Suite 500 Sacramento, CA (916) / FAX (916) FDMUNin G. RROWN.1R Gnvnrnnr April 28, 2016 MAY CITY OF SAN JCSE PLANNING, BUILDING AND CODE ENFORCEMENT Ms. Jenny Nusbaum, Supervising Planner Planning Division, Department of PBCE City of San Jose 200 E. Santa Clara St. San Jose, CA Dear Ms. Nusbaum: RE: Urban Agriculture Incentive Zones and Housing Requirements. This letter is to provide guidance regarding San Jose's housing element, housing requirements and urban agriculture incentive zones (UAIZ). The Department recognizes AB 551 (Chapter 406, statutes of 2013), which allows local governments to establish Urban Agricultural Incentive Zones, provides a tremendous opportunity to activate vacant and underutilized land. UAIZs have many community benefits ranging from developing community and neighborhood cohesiveness and increasing access to healthy food. UAIZs can also reduce blight and crime, act as a catalyst for learning and engagement, create new jobs, and improve public health. The Department fully supports and encourages the City's pursuit of UAIZ. Specifically, this correspondence addresses state housing element requirements for: 1) unincorporated UAIZ eligible sites and 2) a city-wide or similar UAIZ approach. Unincorporated UAIZ Eligible Sites The City and the County adopted resolutions authorizing several parcels in the unincorporated area of the County to be eligible under the County's UAIZ ordinance. The Department understands the City resolution omits some County's UAIZ parcels that were included in the inventory of sites that could accommodate the City's projected housing needs or regional housing need allocation (RHNA). Since the adoption of the City resolution, City staff has provided a list of unincorporated housing inventory sites that would not be UAIZ eligible under the City resolution and updated information on recent rezonings and General Plan amendments. Based on the submitted information, the City continues to demonstrate adequate sites to accommodate its share of the regional housing need with the inclusion of the previously described omitted sites. In short, adding the omitted sites would not negatively impact compliance with Housing Element law.

6 Ms. Jenny Nusbaum, Supervising Planner Urban Agriculture Incentive Zones and Housing Requirements Page 2 Citv-wide UAIZ Approach The Department understands San Jose may be considering a city-wide or large geographic area approach within the City for a UAIZ. The Department encourages the City to continue these efforts. While the City should amend its element if fundamentally revising its contents, adopting a city-wide UAIZ ordinance does not necessarily require an amendment to the housing element. For example, UAIZs are voluntary in nature, the large scale conversion of identified capacity is unlikely and an ordinance in of itself does not remove sites from the inventory. However, the City must maintain sites to accommodate its regional housing need allocation pursuant to Government Code (GC) Section Maintaining Adequate Sites: Local governments must maintain adequate sites to accommodate the remaining regional housing need by income group throughout the planning period (GC Section 65863). Applying a UAIZ to a parcel may not impact site availability or constrain or reduce development potential. However, a property owner entering into a contract restricting the use of a site to a nonresidential use could be considered to impact development potential and availability and trigger the requirements of GC Section (No Net Loss Law). To manage sites being utilized for urban agriculture while maintaining adequate sites to accommodate the housing need, the City should make findings of consistency with the general plan and maintenance of adequate sites to accommodate San Jose's remaining regional housing need. See Attachment 1 for the No Net Loss Law. The City could conduct an aggregate analysis utilizing the assumptions in the approved housing element. To illustrate, refer to Attachment 2. The City could annually monitor the adequacy of the sites inventory in the most recent annual report (GC Section 65400). Absent major changes to the inventory, the annual report could be utilized at the time of consideration of each conversion request/uaiz contract to comply with GC Section 65863(c) - no net loss. The updated inventory could include consideration of any of the following since the last annual report: General Plan amendments; rezonings; prior approved conversions/contracts to allow urban agriculture; and conversions/contracts that have expired or been cancelled. In addition to maintaining adequate sites as noted above, the City can navigate meeting housing requirements and furthering urban agriculture incentive zoning in a variety of other ways. For example, the City could take a strategic approach to adopting an incentive zone. The City could adopt an overlay agricultural incentive zone that avoids 6r mitigates key sites utilized to demonstrate adequate sites to accommodate the remaining regional housing need. An agricultural incentive overlay could avoid sites utilized to accommodate the lower income need and priority or other strategic development areas or cap the number of converting sites in strategic development areas.

7 Ms. Jenny Nusbaum, Supervising Planner Urban Agriculture Incentive Zones and Housing Requirements Page 3 The Department appreciates the opportunity to provide this information to assist the City in its decision-making and encourages the City to pursue UAIZ. If you have any questions or would like additional assistance, please contact me at Sincerely, Paul McDougall I Housing Policy Manager

8 Attachment 1 (Government Code Section No Net Loss) (a) Each city, county, or city and county shall ensure that its housing element inventory described in paragraph (3) of subdivision (a) of Section or its housing element program to make sites available pursuant to paragraph (1) of subdivision (c) of Section can accommodate its share of the regional housing need pursuant to Section 65584, throughout the planning period. (b) No city, county, or city and county shall, by administrative, quasi-judicial, legislative, or other action, reduce, or require or permit the reduction of, the residential density for any parcel to, or allow development of any parcel at, a lower residential density, as defined in paragraphs (1) and (2) of subdivision (g), unless the city, county, or city and county makes written findings supported by substantial evidence of both of the following: (1) The reduction is consistent with the adopted general plan, including the housing element.. (2) The remaining sites identified in the housing element are adequate to accommodate the jurisdiction's share of the regional housing need pursuant to Section (c) If a reduction in residential density for any parcel would result in the remaining sites in the housing element not being adequate to accommodate the jurisdiction's share of the regional housing need pursuant to Section 65584, the jurisdiction may reduce the density on that parcel if it identifies sufficient additional, adequate, and available sites with an equal or greater residential density in the jurisdiction so that there is no^ net loss of residential unit capacity. (d) The requirements of this section shall be in addition to any other law that may restrict or limit the reduction of residential density. ' (e) This section requires that a city, county, or city and county be solely responsible for compliance with this section, unless a project applicant requests in his or her initial application, as submitted, a density that would result in the remaining sites in the housing element not being adequate to accommodate the jurisdiction's share of the regional housing need pursuant to Section In that case, the city, county, or city and county may require the project applicant to comply with this section. The submission of an application for purposes of this subdivision does not depend on the application being deemed complete or being accepted by the city, county, or city and county. (f) This section shall not be construed to apply to parcels that, prior to January 1, 2003, were either (1) subject to a development agreement, or (2) parcels for which an application for a subdivision map had been submitted.

9 Attachment 1 (Government Code Section No Net Loss) (g) (1) If the local jurisdiction has adopted a housing element for the current planning period that is in substantial compliance with Article 10.6 (commencing with Section 65580) of Chapter 3, for purposes of this section, "lower residential density" means the following: (A) For sites on which the zoning designation permits residential use and that are identified in the local jurisdiction's housing element inventory described in paragraph (3) of subdivision (a) of Section 65583, fewer units on the site than were projected by the jurisdiction to be accommodated on the site pursuant to subdivision (c) of Section (B) For sites that have been or will be rezoned pursuant to the local jurisdiction's housing element program described in paragraph (1) of subdivision (c) of Section 65583, fewer units for the site than were projected to be developed on the site in the housing element program. (2) (A) If the local jurisdiction has not adopted a housing element for the current planning period within 90 days of the deadline established by Section or the adopted housing element is not in substantial compliance with Article 10.6 (commencing with Section 65580) of Chapter 3 within 180 days of the deadline established by Section 65588, "lower residential density" means any of the following: (i) For residentially zoned sites, a density that is lower than 80 percent of the maximum allowable residential density for that parcel. (ii) For sites on which residential and nonresidential uses are permitted, a use that would result in the development of fewer than 80 percent of the number of residential units that would be allowed under the maximum residential density for the site. (B) If the council of governments fails to complete a final housing need allocation pursuant to the deadlines established by Section , then for purposes of this paragraph, the deadline pursuant to Section shall be extended by a time period equal to the number of days of delay incurred by the council of governments in completing the final housing need allocation. (Amended by Stats. 2008, Ch. 709, Sec Effective January 1, 2009.)

10 l Attachment 2 (Maintaining Adequate Sites) I ' 1 Very Low Moderate Above Total 1 Low Moderate RHNA Remaining RHNA Available. Capacity, Additional Rezone Capacity Subtotal Urban Ag Eligible Capacity Urban Ag Converted Capacity Urban Ag Opt Out Capacity Subtotal GRAND TOTAL Note: Capacity assume densities appropriate to accommodate housing needs for lower income households consistent with housing element (XX units per acre)

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