Agenda packet — Arroyo Grande City Council, September 13, 2022 (part 2 of 2)

Item 9.a.

City Council
Discuss and Consider Introduction of an Ordinance Amending Title 16 of the Arroyo Grande Municipal Code (AGMC) Regarding Accessory Dwelling Units; Development Code Amendment 20-001 and Consideration of a Fee Waiver Program for Certain Accessory Dwelling Units
September 13, 2022

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Objective Design Standards
State law allows agencies to develop objective design and development standards for ADUs that include, but are not limited to, parking, height, setbacks, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Resources.

However, these standards must be sufficiently objective to allow ministerial review of an ADU. Objective standards are those that involve no personal or subjective judgment by a public official and are uniformly verifiable.

During its discussion of the ADU Ordinance on February 8, 2022, Council directed staff to develop objective design standards to make ADUs compatible with existing residential development on the property on which they are constructed. The revised Ordinance presented to Council on July 26, 2022, and recommended by the Planning Commission for adoption (Attachment 1), contains proposed objective design standards. These standards require design considerations for new detached ADUs such as matching colors to the primary dwelling and requiring all ADUs to adhere to these standards if located in the front yard. Garage conversions to ADUs require that the garage door opening shall be replaced with exterior wall coverings, or residential windows and doors, to match the existing exterior garage wall covering and detailing.

Although the proposed Ordinance includes objective design standards, it also limits the application of these standards to the following ADUs:
 Non-“By-Right” ADUs
 ADUs constructed within a front yard (see discussion on ADUs in front yards below)
 ADUs proposed within the Historic Village Overlay District  ADUs that do not utilize a pre-approved ADU plan developed through the regional pre-approved ADU plan program
 ADUs that are not pre-fabricated
While objective design standards are proposed in the draft ordinance, certain “By-Right” ADUs may not be subject to design standards. For example, an agency cannot apply design and development standards to ADUs created under subdivision (e) of Government Code 65852.2. This section regulates ADUs created through:
 Conversion of space within an existing single-family dwelling, new construction ADUs;
 New construction ADU of up to 800 square feet that does not exceed four-foot side and rear setbacks and a height limitation of 16 feet;
 Conversion of existing non-habitable space within multifamily structures; and

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 Construction of up to two detached ADUs on lots developed with existing multifamily dwellings, subject to four-foot side and rear setbacks, and a 16-foot height limit.

Additionally, the regional pre-approved ADU plan program will provide ADU plans of six different sizes ranging from approximately 300-1,200 square feet, and four different architectural themes. Due to the regional nature of the program, not all of the architectural styles may be compatible with every homeowner’s existing residence. Imposing design standards that require the same cladding and colors as the primary unit is likely to discourage use of the pre-approved plans, which are intended to provide property owners an avenue to construct an ADU with reduced costs associated with planning and design.

For example, the predominant siding material for each of the architectural styles in the draft pre-approved ADU plans are either horizontal or vertical siding, whereas stucco is the predominant siding material for most residential buildings in the City. Council also encouraged pre-fabricated units as another option for property owners to add an ADU at reduced costs. While these units are a viable option for ADU creation, they are less customizable than a traditionally built unit. The nature of pre-fabricated units makes them less likely to be compatible with an existing primary unit and make compliance with the proposed objective design standards difficult and impractical.

Additionally, staff recommends that the objective design standards apply to new ADUs within the Historic Village Overlay District. The Design Guidelines and Standards for the Historic Character Overlay District (D-2.4) also contain a number of standards that are objective in nature, which staff has included in the draft ordinance, as follows:

Building Design:
 Second floor living area shall be setback 5 feet from ground floor footprint.

Construction Materials:
 Window sashes and doorframes shall be made of wood or vinyl that looks like wood. Unfinished aluminum is not allowed.
 New or replacement doors shall be wood or an approved substitute material that simulates the appearance of original materials.

Colors:
 The use of fluorescent “neon,” “day-glo,” or bright primary colors as the predominant shade on building facades is not permitted.

Pre-fabricated ADUs
Council also directed staff to revise the proposed Ordinance to allow pre-fabricated units to serve as ADUs. The draft Ordinance now specifically identifies that factory-built housing (FBH) is allowed as a type of ADU. The State Department of Housing and Community Development (HCD) defines FBH as “residential structures manufactured

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wholly or partially offsite, in sections, or in building components which are assembled at the installation site to form part of or most of a completed unit.” Laws and regulations require the manufacturer to obtain the services of HCD-approved third-party design approval and inspection approval entities, and to document methods of quality control.

Compliance with the rules and regulations for FBH is demonstrated through the placement of an HCD “Insignia of Approval” on each unit. State law establishes that the permitting jurisdiction must verify the presence of the HCD Insignia of Approval and inspect the installation of the unit when FBH is proposed. The Building Official may not require review of any FBH plans, require alterations to an approved FBH, or charge plan check fees when plans have already been approved by HCD or an HCD-approved third party reviewer. The proposed Ordinance includes provisions addressing these requirements of a FBH to qualify as a permitted ADU. Allowing FBH as ADUs could accelerate ADU development due to reduced plan review time and costs. As mentioned above, a FBH ADU would not be subject to the objective design standards developed for the Ordinance.

Restriction on Front Yard ADUs
Under current State law, an agency may apply front yard setbacks for ADUs, but front yard setback requirement cannot unduly constrain the creation of all types of ADUs.

Therefore, an outright prohibition of ADUs in the front setback is not proposed in the attached draft Ordinance. However, Section D of the draft ordinance clarifies that ADUs shall only be permitted in the front yard if no feasible alternative exists. The proposed Ordinance further provides that feasibility is determined as whether a By-Right ADU, as described in Section D of the draft ordinance, can physically be constructed behind the primary dwelling. If a by-right ADU can be constructed behind the primary dwelling, the ADU cannot be located in the front yard setback. Due to the potential for ADUs in the front yard setback to be more visually prominent, the draft ordinance also clarifies in Section D that these ADUs will be subject to the Objective Design Standards.

Fee Waiver Program
Council also directed staff to consider a program that would waive all fees associated with permitting and construction of ADUs proposed to be less than 500 square feet, to further encourage and incentivize creation of units that will be affordable for low-income households. Although it is not codified in the Ordinance, the Program would waive permit processing fees for ADUs that are 500 square feet or less in exchange for an agreement that the unit will be rented to lower income households for a period of 10 years. The affordability restriction will be recorded against the title of the property, and monitored by staff annually to ensure compliance. The use of a deed restriction as a mechanism to ensure affordability is similar to the process by which affordable units established through conditions of approval for larger housing developments are managed. This program is not codified, but rather implemented through a policy adopted by Council. A draft resolution

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describing the parameters of the program is included as Attachment 6 to this report. The resolution is provided to obtain feedback from Council, with the intent to adopt the resolution at its next meeting on September 27, 2022.

The program will transfer money from the Inclusionary Affordable Housing Trust Fund (Trust Fund) to recoup the loss of revenue associated with waiving fees for plan review, inspections, and utility connection fees, if such fees are otherwise applicable to the new units. Pursuant to Arroyo Grande Municipal Code Section 16.80, the sole purpose of the Trust Fund is to increase the supply of affordable housing units. The Trust Fund is administered under the supervision of the Community Development Director and funds may be used to offset the costs of producing affordable units, including permitting costs.

Providing financial assistance for the creation of affordable units is consistent with Housing Element programs A.3-1, A.3-2, A-3.3, and C.1-1 related to the development of affordable housing. Offsetting revenue losses created by a fee waiver program with funding from Trust Fund will enable the City, in certain situations like this where there is a clear nexus to affordable housing, to provide financial assistance for new low-income housing without impacting other City services or permit applicants. Council discussed the potential implications to the Trust Fund as a result of this program on July 26, 2022, and directed staff to provide an annual report of the status of the program as it relates to the Trust Fund, rather than establishing a limit to the funding that would be dedicated to this program. The direction to provide an annual report to Council on the status of the program is included in the draft resolution. Other aspects of the program, such as procedures for establishing rental limits and income limits for renters will be specified in the individual affordable housing agreements created for each individual property.

It is important to note that under California Labor Code Section 1720(a), prevailing wage requirements apply to any public works project, which is defined to include any construction project “paid for all or in part out of public funds.” Per Labor Code Section 1720(b)(4), a construction project is paid for in part out of public funds when “fees…are paid, reduced, charged at less than fair market value, waived, or forgiven” by the City.

Accordingly, recipients of ADU fee waivers must require their contractors and subcontractors to pay State prevailing wage rates to their employees for ADUs costing over $25,000 or more. This requirement will certainly affect the economic benefits of the fee waiver program and discourage some from participating.

Housing Element Direction
The sixth cycle Housing Element prioritizes development of ADUs as a strategy to meet housing needs and the Regional Housing Needs Allocation assigned to the City. Housing Element Program A-2.1 calls for an update of the ADU provisions in the Development Code and for the City to publicize the ADU program to increase public awareness. During the Housing Element Update, staff received comments from both the Planning

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Commission and City Council about the desire to update the ADU regulations to encourage the creation of more ADUs. The Housing Element relies heavily on the creation of ADUs to meet the City’s Regional Housing Needs Allocation (RHNA).

Specifically, it assumes that there is potential for the development of 236 ADUs, which equates to approximately thirty-four percent (34%) of the City’s total sixth cycle RHNA.

The proposed Ordinance will allow the City to promote the creation of ADUs.

The SLO County ADU Task Force, a volunteer group promoting development of ADUs in the region, has also identified obstacles in the planning and permitting process that this update hopes to resolve. For example, the Ordinance will clarify requirements for maximum unit sizes, parking requirements, and utility connections.

Next Steps
Introduction of the Ordinance is the first step towards enacting updates to the ADU regulations. Adoption of the ADU amendments and the resolution to implement the fee waiver program are proposed to occur at the next Council meeting, scheduled for September 27, 2022, unless Council directs staff to make significant changes to either.

After adoption, staff will submit the Ordinance to the State Department of Housing and Community Development (HCD) for review. HCD will review the adopted Ordinance and notify the City if it complies with State ADU law. If the Ordinance is found to be out of compliance, HCD will provide findings detailing what changes are required to be compliant.

ALTERNATIVES:

The following alternatives are provided for the Council’s consideration:

1. Introduce the attached Ordinance approving Development Code Amendment 20- 001;

2. Modify as appropriate and introduce the attached Ordinance approving Development Code Amendment 20-001;

3. Do not introduce the Ordinance, and provide direction to staff on specific revisions to the Ordinance; or

4. Provide other direction to staff.

ADVANTAGES:

Amending the City’s ADU regulations will bring them into compliance with State law, allow for a streamlined review process, and facilitate the development of new ADUs in the City consistent with the goals, policies, and programs identified in the City’s Housing Element.

DISADVANTAGES:

None identified.

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ENVIRONMENTAL REVIEW:

In compliance with the California Environmental Quality Act (CEQA), the Community Development Department has determined that the project is statutorily exempt per Section 15282(h) of the Guidelines regarding projects involving the adoption of an ordinance regarding second units in a single-family or multifamily residential zone by a city to implement provisions of Government Code Section 65852.2.

PUBLIC NOTIFICATION AND COMMENTS:

A notice of public hearing was published in the Tribune and posted at City Hall and on the City’s website on September 2, 2022. The meeting Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.

Attachments:

1. Proposed Ordinance

2. Staff Report and Minutes from the February 8, 2022 City Council Meeting

3. Staff Report and Minutes from the July 26, 2022 City Council Meeting

4. Staff Report and Minutes from the August 16, 2022 Planning Commission Meeting

5. Planning Commission Resolution 22-2269

6. Fee Waiver Program - Draft Resolution

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ATTACHMENT 1
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL ADOPTING
AMENDMENTS TO TITLE 16 OF THE ARROYO GRANDE

MUNICIPAL CODE (AGMC) REGARDING ACCESSORY
DWELLING UNITS; LOCATION- CITYWIDE
WHEREAS, Section 16.52.150 of the Arroyo Grande Municipal Code (AGMC) contains the City’s existing regulations for Accessory Dwelling Units (ADUs); and WHEREAS, AGMC Section 16.52.150 of the Arroyo Grande Municipal was last amended in 2017, after the State legislature had amended Government Code §65852.2 and also added Government Code §65852.22 to provide an option for Junior Accessory Dwelling Units (JADUs), however, the 2017 amendment to AGMC 16.52.150 did not include an option for JADUs at that time; and
WHEREAS, in 2019, the California Legislature approved, and the Governor signed into law a number of bills ("New ADU Laws") that, among other things, amended Government Code Section 65852.2 and 65852.22 to impose new limits on local authority to regulate ADUs and JADUs; and
WHEREAS, the New ADU Laws mandate that cities with accessory dwelling unit ordinances that are inconsistent with the State laws apply the State standards for ADU and JADU approval; and
WHEREAS, according to the State Department of Housing and Community Development website the New ADU Laws were adopted to promote the development of ADUs and JADUs, and include allowing ADUs and JADUs to be built concurrently with a single-family dwelling, opening areas where ADUs can be created to include all zoning districts that allow single-family and multifamily uses, modifying fees from utilities such as special districts and water corporations, limited exemptions or reductions in impact fees, and reduced parking requirements; and WHEREAS, the New ADU Laws took effect January 1, 2020, and because the City's ADU ordinance did not comply with the New ADU Laws, the City's ordinance became null and void on that date as a matter of law; and
WHEREAS, the City desires to amend its local regulatory scheme for the construction of ADUs and provide for JADUs to comply with the amended provisions of Government Code sections 65852.2 and 65852.22; and
WHEREAS, the approval of ADUs and JADUs based solely on the default statutory standards, without local regulations governing height, setback, landscape, architectural review, among other things, would threaten the character of existing neighborhoods, and negatively impact property values and personal privacy; and

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RESOLUTION NO.

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WHEREAS, on August 16, 2022, the Planning Commission of the Arroyo Grande recommended to the City Council amending Section 16.52.150 of the Arroyo Grande Municipal Code; and
WHEREAS, the City Council of the City of Arroyo Grande has, after giving notice thereof as required by law, held a public hearing on September 13, 2022, concerning proposed amendments to AGMC Section 16.52.150; and
WHEREAS, the City Council of the City of Arroyo Grande, at its regularly scheduled public meeting on September 13, 2022 introduced this Ordinance to amend Section

16.52.150 of the Arroyo Grande Municipal Code; and
WHEREAS, the City Council has carefully considered all pertinent testimony and the staff report, its attachments and all supporting materials referenced therein or offered in the matter as presented at the public hearing.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS:

SECTION 1. The above recitals and findings are true and correct and are incorporated herein by this reference.

SECTION 2. Section 16.52.150 of the Arroyo Grande Municipal Code is hereby amended in its entirety to read as follows:

A. Definitions/Prohibited Units.

1. Accessory Dwelling Unit (ADU): An attached or detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation and shall be located on the same parcel as the primary dwelling or multi-family development. An ADU also includes an efficiency unit and manufactured home as provided in Government Code Section 65852.2(j). An ADU may serve as a rental unit for more than 30 days or be occupied by a person or persons including, but not limited to family members, guests, or caretakers.

2. Junior Accessory Dwelling Unit (JADU): A residential dwelling unit, as defined in Government Code Section 65852.22, that is no more than 500 square feet in size and contained entirely within an existing or proposed single-family structure. A JADU shall include an efficiency kitchen, and may include separate sanitation facilities or share sanitation facilities with the existing dwelling. A JADU may serve as a rental unit for more than 30 days.

Owner-occupancy of either primary dwelling or JADU is required by state law.

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3. Mobile homes, as defined in Section 18008 of the Health and Safety Code, recreational vehicles, trailers, or similar units, shall not be allowed as ADUs.

4. Factory-built housing as defined by California Health and Safety Code Section 19971 shall be allowed as ADUs.

B. Where Permitted/Establishment.

1. ADUs are permitted in all zoning districts allowing single-family or multifamily use on lots developed with existing or proposed dwellings.

2. An ADU may be established by the following methods:
a. Attached to, or located within, an existing or proposed primary dwelling.
b. A new detached structure, or located within or attached to an accessory structure, including detached garages or similar structures. c. Conversion of permitted existing attached or detached accessory structures, including garages, storage areas, or similar structures. d. Reconstruction of a permitted existing structure or living area that is proposed to be converted to an ADU, or a portion thereof, in the same location and to the same dimensions and setbacks as the existing structure.

3. A Junior Accessory Dwelling Unit (JADU) may be established within the space of the primary dwelling, including an attached garage or attached accessory structure.

4. A JADU may be established within the space of the primary dwelling in combination with the construction of one detached, new construction ADU not exceeding 850 square-feet and a height of 16 feet with four-foot side and rear setbacks.

5. An existing unit may be converted to an ADU, in conjunction with the construction of a new primary dwelling unit built, if all applicable zoning requirements are met.

6. ADUs shall be permitted on lots developed with existing multi-family dwellings subject to the following provisions:
a. The property shall be developed with an existing multi-family structure(s).

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b. A minimum of one ADU may be constructed, or up to 25 percent of the existing unit count, within non-livable space, including, but not limited to, storage rooms, passageways, attics, basements, or closets. c. The construction of two detached ADUs with a maximum size of 850 square feet, or 1,000 square feet with more than one bedroom, shall be permitted in addition to ADUs created within non-livable space, subject to a maximum height of 16 feet, and four-foot side and rear setbacks. These ADUs may be attached to each other, but must be detached from the existing multi-family dwelling units. d. Existing livable space of multi-family dwelling units shall not be converted to ADUs.

C. Permit Requirements:

1. The City shall ministerially review and act on a building permit application for an ADU or JADU within 60 days after receiving the application. An ADU or JADU proposed with a permit application for a new primary dwelling shall not be approved until the primary dwelling receives approval. Occupancy for an ADU or JADU shall not be issued before occupancy is granted for the primary dwelling.

2. Unless otherwise preempted by state law, the design and construction of all newly constructed ADUs and JADUs shall comply with all applicable building, housing, zoning and site development standards of the Arroyo Grande Development Code, including but not limited to standards regarding setbacks, floor area ratio standards, height, lot coverage, and in the surrounding neighborhood that are listed in the California Register of Historic Places. Applicants shall also comply with all applicable fee and charge requirements, and other applicable zoning requirements.

3. Pursuant to Government Code Section 65852.2(e) (2), the City shall not require the correction of nonconforming zoning conditions as a condition for ministerial approval.

D. Development Standards.

1. ADU Type, Location & Size.
a. Attached Unit: An ADU attached to an existing primary dwelling shall have a minimum size of 150 square feet and shall not exceed 50 percent of the total existing or proposed living area of the primary dwelling, except as provided by the By-Right Provision below.

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b. Detached Unit: An ADU structurally independent and detached from the existing primary dwelling shall have a minimum size of 150 square feet and shall not exceed 1,200 square feet.
c. Conversion of Existing Structure: An ADU constructed within the footprint of an existing dwelling or attached or detached structure shall not be subject to a maximum square-footage of living area. Expansion of an existing structure proposed to be converted to an ADU is limited to 150 square feet for purposes of accommodating ingress and egress. d. By-Right Provision: An attached or detached ADU with a maximum size of 850 square-feet or 1,000 square-foot with more than one bedroom shall be permitted in any circumstance subject to a maximum height of 16 feet, four-foot side and rear setbacks, and compliance with the front setback requirement of the underlying zoning district, and all building codes. No minimum lot size or lot coverage requirement shall apply.
e. ADUs shall have independent exterior access from the primary dwelling.
f. Maximum Slope. The building site upon which the accessory dwelling unit will be constructed shall not have an average slope in excess of twenty (20) percent. A topographic map and slope analysis, as recommended by the community development director, shall be stamped and signed by either a registered civil engineer, registered architect, or registered landscape architect. Average slope is defined as follows:

S = I x L x 100
A x 43,560
Where
S = average natural slope, in percent.

I = interval, in feet, of the contour lines.

L = the sum, in feet, of the length of the contour lines, at selected contour interval "I".

A = the total area, in acres, of the site.
g. ADUs shall not be required to provide fire sprinklers if they are not required for the primary residence.

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2. JADU Location and Size.
a. A JADU shall be constructed entirely within an existing or proposed primary dwelling and shall not exceed 500 square-feet.
b. JADUs shall have an independent exterior entrance from the primary dwelling, but may also include shared access between the two units.

3. Required Setbacks.
a. An attached or detached ADU not exceeding 850 square feet or 1,000 square feet with more than one bedroom, and a height no greater than 16 feet shall provide a minimum setback of four feet from the side and rear property lines and comply with the front setback for the zoning district. ADUs exceeding the maximum square footage or height specified in this provision shall be subject to compliance with setbacks of the underlying zoning district.
b. Cornices and eaves may project into the required yards by no more than one foot.
c. ADUs shall comply with the front yard setback and be located on the rear portion of a parcel unless no feasible alternative exists. Feasibility is determined whether a by-right ADU can physically be constructed behind the primary dwelling due to the presence of maximum slope, other structures, existing easements, or drainage features. d. When an ADU is created within an existing structure, the side and rear setbacks must be sufficient for fire safety as determined by the Building Official and Fire Department.
e. No setback shall be required for an existing garage or accessory structure converted, or portion thereof, to an ADU and no setback shall be required for a new structure constructed in the same location and same dimensions as an existing structure.
f. An ADU constructed above an existing garage or dwelling unit, exceeding 16-feet in height, shall meet the side and rear setbacks of the underlying zoning district.
g. Roof top decks shall not be permitted on any detached ADU.

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h. Staircases serving an ADU shall provide a minimum setback of four feet from the side and rear property lines subject to approval by the Building Official and Fire Department.

4. Height and Maximum Lot Coverage.

ADUs exceeding 850 square feet or 1,000 square feet with more than one bedroom, and/or a height of 16 feet shall comply with the height, floor-area ratio, and maximum lot coverage of the underlying zoning district.

5. Parking.
a. One additional off-street parking space shall be required per unit; with exceptions per subsection g, below.
b. No parking space shall be required for an ADU or JADU established within an existing structure.
c. Parking spaces shall be a minimum dimension of 9 foot by 18 foot except as specified below.
d. Parking spaces may be located in any configuration on the same lot as the ADU, including, but not limited to, as covered spaces, uncovered spaces, tandem spaces, or by the use of mechanical automobile parking lifts.
e. Required off-street parking shall be permitted in front, side, and rear setback areas subject to the following:
i. Parking may be located on an existing driveway but shall not block sidewalk access or encroach into the public right-of-way. ii. Parking spaces location wholly or partially within a side yard must have a minimum clear space width of 10-feet. Vehicles shall not block exterior windows or doors of a dwelling or access to utility boxes or meters.
iii. Vehicles must be parked on an acceptable surface of concrete, asphalt, gravel, brick, permeable paver or other stable, dust-free surface.
iv. No more than 50% of a front yard shall be dedicated to vehicle parking.
v. No parking shall be allowed in front yard landscaping areas.

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vi. Access to on-site parking spaces shall be provided via an approved driveway location only.
f. When a garage, carport, or covered parking structure that provides the required spaces for the primary dwelling is demolished or converted in conjunction with the construction of an ADU, no replacement parking shall be required.
g. Parking Exemption: As required by Government Code Section 65852.2(d), parking space for an ADU shall not be required in any of the following instances:
i. The ADU is located within one-half mile walking distance of public transit.
ii. The ADU is located within an architecturally and historically significant historic district.
iii. The ADU is located within an existing or proposed primary residence or an existing accessory structure.
iv. When on-street parking permits are required but not offered to the occupant of the ADU.
v. When there is a car share vehicle located within one block of the ADU.

6. Objective Design Standards
a. The colors of the exterior walls, roof, eaves, and windows and doors of a new, detached ADUs must match the appearance and architectural design of those of the primary dwelling.
b. If a garage is converted to an ADU, the garage door opening shall be replaced with exterior wall coverings, or residential windows and doors, to match the existing exterior garage wall covering and detailing. c. ADUs created under the By-Right Provisions of this Section are exempt from the Objective Design Standards, as are ADUs created through the use of pre-approved plans and factory-built housing that meet the standards of a By-Right unit.
d. Where ADUs are to be located within the front yard setback in accordance with Section D.3.c, the Objective Design Standards shall apply.

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e. ADUs located in the D-2.4 Historic Character Overlay District shall comply with the Objective Design Standards.
a. Second floor living area shall be setback 5 feet from the ground floor footprint.
b. Window sashes and doorframes shall be made of wood or vinyl simulating the appearance of wood. Unfinished aluminum is not allowed.
c. New or replacement doors shall be wood or an approved substitute material that simulates the appearance of original materials. d. The use of fluorescent “neon”, “day-glo”, or bright primary colors as the predominant shade on building facades is not permitted.

7. Impact Fees & Utilities.
a. An ADU under 750 square feet shall not be charged development impact fees. An ADU equal to or greater than 750 square feet may be charged development impact fees. These development impact fees shall be proportional to the square footage of the main dwelling and calculated using the ADU square footage.
b. ADUs and JADUs shall comply with water and sewer requirements as determined by the Public Works Department.
c. The City shall not require a new or separate utility connection or impose a related connection fee or capacity charge for ADUs or JADUs that are contained within an existing residence or accessory structure. Pursuant to Government Code Section 65852.2(f)(5) an ADU not built within the existing space of a single family house or accessory structure may be required to obtain a new or separate utility connection as determined by the Public Works Department and may be subject to connection fees and capacity charges based on either its square footage as a proportion to the square footage of the primary unit, or the number of its drainage fixtures unit values, as determined by the Public Works Department.

E. Conditions.

1. An ADU/JADU shall not be sold or otherwise conveyed separate from the primary residence.

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2. An ADU/JADU may serve as a rental unit or be occupied by family members, guests, or in-home health care providers, and others at no cost.

3. Neither the ADU/JADU nor the primary dwelling unit shall be rented for a term of less than 31 days. ADUs on multi-family properties shall be subject to this provision, except the restriction shall not apply to existing multifamily units

4. Owner-occupancy shall be required for a property developed with a JADU.

The owner may reside in either the primary dwelling or the JADU.

The property owner shall record a covenant, approved as to form by the City Attorney, declaring compliance with each and every condition referenced in this section.

SECTION 3. This Ordinance is exempt from the California Environmental Quality Act in accordance State CEQA Guidelines, Article 18: Statutory Exemptions, Section 15282(h).This section of CEQA provides a statutory exemption for “the adoption of an ordinance regarding second units [accessory dwelling units] in a single-family or multifamily residential zone by a city or county to implement the provisions of Sections 65852.1 and 65852.2 of Government Code as set forth in Section 21080.17 of the Public Resources Code.” The City Clerk shall file a Notice of Exemption from CEQA review in accordance with CEQA Guidelines.

SECTION 4. A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text of the proposed Ordinance shall be posted in the office of the City Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the names of those City Council members voting for and against the Ordinance shall be published again, and the City Clerk shall post a certified copy of the full text of such adopted Ordinance.

SECTION 5. This Ordinance shall take effect and be in full force and effect thirty (30) days after its passage.

SECTION 6. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any 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 this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.

On motion by Council Member ______, seconded by Council Member _______, and by the following roll call vote to wit:

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AYES:

NOES:

ABSENT:
the foregoing Ordinance was adopted this ____ day of _______, 2022.

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RESOLUTION NO.

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___________________________________

CAREN RAY RUSSOM, MAYOR
ATTEST:
___________________________________

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
___________________________________
WHITNEY McDONALD, CITY MANAGER
APPROVED AS TO FORM:
___________________________________
TIMOTHY J. CARMEL, CITY ATTORNEY

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ATTACHMENT 2
Attachment 2 – Staff Report and Minutes from the February 8, 2022 City Council Meeting are available as links:

ADU Introduction Staff Report
Minutes from the February 8, 2022 City Council Meeting

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ATTACHMENT 3
Attachment 3 – Staff Report and Minutes from the July 26, 2022 City Council Meeting are available as links:

ADU Study Session Staff Report
Minutes from the July 26, 2022 City Council Meeting

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ATTACHMENT 4
Attachment 4 – Staff Report and Minutes from the August 16, 2022 City Council Meeting are available as links:

ADU Ordinance Update Staff Report
Minutes from the August 16, 2022 PC Meeting

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ATTACHMENT 5
RESOLUTION NO. 22-2269

A RESOLUTION OF THE PLANNING COMMISSION OF

THE CITY OF ARROYO GRANDE RECOMMENDING THE

CITY COUNCIL ADOPT ORDINANCES APPROVING
DEVELOPMENT CODE AMENDMENT NO. 20-001;
AMENDMENTS TO TITLE 16 OF THE ARROYO GRANDE

MUNICIPAL CODE (AGMC) REGARDING ACCESSORY
DWELLING UNITS; LOCATION- CITYWIDE
WHEREAS, Section 16.52.150 of the Arroyo Grande Municipal Code (AGMC) contains the City’s existing regulations for Accessory Dwelling Units (ADUs); and WHEREAS, AGMC Section 16.52.150 of the Arroyo Grande Municipal was last amended in 2017, after the State legislature had amended Government Code §65852.2 and also added Government Code §65852.22 to provide an option for Junior Accessory Dwelling Units (JADUs), however, the 2017 amendment to AGMC 16.52.150 did not include an option for JADUs at that time; and
WHEREAS, in 2019, the California Legislature approved, and the Governor signed into law a number of bills ("New ADU Laws") that, among other things, amended Government Code Section 65852.2 and 65852.22 to impose new limits on local authority to regulate ADUs and JADUs; and
WHEREAS, the New ADU Laws mandate that cities with accessory dwelling unit ordinances that are inconsistent with the State laws apply the State standards for ADU and JADU approval; and
WHEREAS, according to the State Department of Housing and Community Development website the New ADU Laws were adopted to promote the development of ADUs and JADUs, and include allowing ADUs and JADUs to be built concurrently with a single-family dwelling, opening areas where ADUs can be created to include all zoning districts that allow single-family and multifamily uses, modifying fees from utilities such as special districts and water corporations, limited exemptions or reductions in impact fees, and reduced parking requirements; and WHEREAS, the New ADU Laws took effect January 1, 2020, and because the City's ADU ordinance did not comply with the New ADU Laws, the City's ordinance became null and void on that date as a matter of law; and
WHEREAS, the City desires to amend its local regulatory scheme for the construction of ADUs and provide for JADUs and to comply with the amended provisions of Government Code sections 65852.2 and 65852.22; and
WHEREAS, the City of Arroyo Grande has duly initiated amendments to AGMC

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Sections 16.52.150; and
WHEREAS, the Planning Commission of the City of Arroyo Grande, after giving notices thereof as required by law, held a public hearing on August 16, 2022 concerning this code amendment and carefully considered all pertinent testimony and the staff report offered in the case as presented; and
NOW, THEREFORE, BE IT RESOLVED that the Planning Commission of the City of Arroyo Grande hereby recommends the City Council adopt Ordinances approving Development Code Amendment 20-001 amending Title 16 of the Arroyo Grande Municipal Code as attached hereto as Exhibit “A” and incorporated herein by this reference.

On motion by Commissioner ________, seconded by Commissioner _______, and by the following roll call vote, to wit:

AYES:

NOES:

ABSENT:
the foregoing Resolution was adopted this 16th day of August, 2022.

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_______________________________

GLENN MARTIN
CHAIR
ATTEST:
_______________________________

PATRICK HOLUB

SECRETARY TO THE COMMISSION
AS TO CONTENT:
_______________________________

BRIAN PEDROTTI

COMMUNITY DEVELOPMENT DIRECTOR

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EXHIBIT ‘A’
WHEREAS, Section 16.52.150 of the Arroyo Grande Municipal Code (AGMC) contains the City’s existing regulations for Accessory Dwelling Units (ADUs); and WHEREAS, AGMC Section 16.52.150 of the Arroyo Grande Municipal was last amended in 2017, after the State legislature had amended Government Code §65852.2 and also added Government Code §65852.22 to provide an option for Junior Accessory Dwelling Units (JADUs), however, the 2017 amendment to AGMC 16.52.150 did not include an option for JADUs at that time; and
WHEREAS, in 2019, the California Legislature approved, and the Governor signed into law a number of bills ("New ADU Laws") that, among other things, amended Government Code Section 65852.2 and 65852.22 to impose new limits on local authority to regulate ADUs and JADUs; and
WHEREAS, the New ADU Laws mandate that cities with accessory dwelling unit ordinances that are inconsistent with the State laws apply the State standards for ADU and JADU approval; and
WHEREAS, according to the State Department of Housing and Community Development website the New ADU Laws were adopted to promote the development of ADUs and JADUs, and include allowing ADUs and JADUs to be built concurrently with a single-family dwelling, opening areas where ADUs can be created to include all zoning districts that allow single-family and multifamily uses, modifying fees from utilities such as special districts and water corporations, limited exemptions or reductions in impact fees, and reduced parking requirements; and WHEREAS, the New ADU Laws took effect January 1, 2020, and because the City's ADU ordinance did not comply with the New ADU Laws, the City's ordinance became null and void on that date as a matter of law; and
WHEREAS, the City desires to amend its local regulatory scheme for the construction of ADUs and provide for JADUs to comply with the amended provisions of Government Code sections 65852.2 and 65852.22; and
WHEREAS, the approval of ADUs and JADUs based solely on the default statutory standards, without local regulations governing height, setback, landscape, architectural review, among other things, would threaten the character of existing neighborhoods, and negatively impact property values and personal privacy; and WHEREAS, the City desires to preserve its cultural, historical, and architectural heritage and resources as living parts of community life that benefit and enrich the lives of its present and future residents; and

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WHEREAS, the Planning Commission of the City of Arroyo Grande, after giving notices thereof as required by law, held a public hearing on August 16, 2022 concerning this code amendment and carefully considered all pertinent testimony, the staff report, its attachments and all supporting materials referenced therein or offered in the matter as presented; and
WHEREAS, on August 16, 2022, the Planning Commission of the Arroyo Grande recommended to the City Council amending Section 16.52.150 of the Arroyo Grande Municipal Code; and
WHEREAS, the City Council of the City of Arroyo Grande has, after giving notice thereof as required by law, held a public hearing on __________, 2022, concerning proposed amendments to AGMC Section 16.52.150; and
WHEREAS, the City Council of the City of Arroyo Grande, at its regularly scheduled public meeting on __________, 2022 introduced this Ordinance to amend Section

16.52.150 of Title 16, Chapter 52 of the Arroyo Grande Municipal Code; and WHEREAS, the City Council has carefully considered all pertinent testimony and the staff report, its attachments and all supporting materials referenced therein or offered in the matter as presented at the public hearing.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS:

SECTION 1. The above recitals and findings are true and correct and are incorporated herein by this reference.

SECTION 2. Section 16.52.150 of the Arroyo Grande Municipal Code is hereby amended in its entirety to read as follows:

A. Definitions/Prohibited Units.

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include separate sanitation facilities or share sanitation facilities with the existing dwelling. A JADU may serve as a rental unit for more than 30 days.

Owner-occupancy of either primary dwelling or JADU is required by state law.

3. Mobile homes, as defined in Section 18008 of the Health and Safety Code, recreational vehicles, trailers, or similar units, shall not be allowed as ADUs.

4. Factory-built housing as defined by California Health and Safety Code Section 19971 shall be allowed as ADUs.

B. Where Permitted/Establishment.

1. ADUs are permitted in all zoning districts allowing single-family or multifamily use on lots developed with existing or proposed dwellings.

3. A Junior Accessory Dwelling Unit (JADU) may be established within the space of the primary dwelling, including an attached garage or attached accessory structure.

5. The existing unit may be considered the ADU, in conjunction with the construction of a new primary dwelling unit built, if all applicable zoning requirements are met.

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6. ADUs shall be permitted on lots developed with existing multi-family dwellings subject to the following provisions:
a. The property shall be developed with an existing multi-family structure(s).
b. A minimum of one ADU may be constructed, or up to 25 percent of the existing unit count, within non-livable space, including, but not limited to, storage rooms, passageways, attics, basements, or closets. c. The construction of two detached ADUs with a maximum size of 850 square feet, or 1,000 square feet with more than one bedroom, shall be permitted in addition to ADUs created within non-livable space, subject to a maximum height of 16 feet, and four-foot side and rear setbacks.
d. Existing livable space of multi-family dwelling units shall not be converted to ADUs.

C. Permit Requirements:

1. The City shall ministerially review and act on a building permit application for an ADU or JADU within 60 days after receiving the application. An ADU or JADU proposed with a permit application for a new primary dwelling shall not be approved until the primary dwelling receives approval. A certificate of occupancy for an ADU or JADU shall not be issued before occupancy is granted for the primary dwelling.

3. Pursuant to Government Code Section 65852.2(e) (2), the City shall not require the correction of nonconforming zoning conditions as a condition for ministerial approval.

D. Development Standards.

1. ADU Type, Location & Size.

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a. Attached Unit: An ADU attached to an existing primary dwelling shall have a minimum size of 150 square feet and shall not exceed 50 percent of the total existing or proposed living area of the primary dwelling, except as provided by the By-Right Provision below. b. Detached Unit: An ADU structurally independent and detached from the existing primary dwelling shall have a minimum size of 150 square feet and shall not exceed 1,200 square feet.
c. Conversion of Existing Structure: An ADU constructed within the footprint of an existing dwelling or attached or detached structure shall not be subject to a maximum square-footage of living area. Expansion of an existing structure proposed to be converted to an ADU is limited to 150 square feet for purposes of accommodating ingress and egress. d. By-Right Provision: An attached or detached ADU with a maximum size of 850 square-feet or 1,000 square-foot with more than one bedroom shall be permitted in any circumstance subject to a maximum height of 16 feet, four-foot side and rear setbacks, and compliance with all building codes. No minimum lot size or lot coverage requirement shall apply.
e. ADUs shall have independent exterior access from the primary dwelling. No passageway to the primary dwelling shall be required. f. Maximum Slope. The building site upon which the accessory dwelling unit will be constructed shall not have an average slope in excess of twenty (20) percent. A topographic map and slope analysis, as recommended by the community development director, shall be stamped and signed by either a registered civil engineer, registered architect, or registered landscape architect. Average slope is defined as follows:

S = I x L x 100
A x 43,560
Where
S = average natural slope, in percent.

I = interval, in feet, of the contour lines.

L = the sum, in feet, of the length of the contour lines, at selected contour interval "I".

A = the total area, in acres, of the site.

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g. ADUs shall not be required to provide fire sprinklers if they are not required for the primary residence.

3. Required Setbacks.
a. An attached or detached ADU not exceeding 850 square feet or 1,000 square feet with more than one bedroom, and a height no greater than 16 feet shall provide a minimum setback of four feet from the side and rear property lines. ADUs exceeding the maximum square footage or height specified in this provision shall be subject to compliance with setbacks of the underlying zoning district.
b. Cornices and eaves may project into the required yards by no more than one foot.
c. ADUs shall comply with the front yard setback and be located on the rear portion of a parcel whenever possible. unless no feasible alternative exists. Feasibility is determined whether a by-right ADU can physically be constructed behind the primary dwelling due to the presence of maximum slope, other structures, existing easements, or drainage features.
d. When an ADU is created within an existing structure, the side and rear setbacks must be sufficient for fire safety as determined by the Fire Department.
e. No setback shall be required for an existing garage or accessory structure converted, or portion thereof, to an ADU and no setback shall be required for a new structure constructed in the same location and same dimensions as an existing structure.
f. An ADU constructed above an existing garage or dwelling unit, exceeding 16-feet in height, shall meet the side and rear setbacks of the underlying zoning district.

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g. Roof top decks shall not be permitted on any detached ADU. h. Staircases serving an ADU shall provide a minimum setback of four feet from the side and rear property lines subject to approval by the Fire Department.

4. Height and Maximum Lot Coverage.

5. Parking.
a. One additional off-street parking space shall be required per unit; with exceptions per subsection g, below.
b. No parking space shall be required for an ADU or JADU established within an existing structure.
c. Parking spaces shall be a minimum dimension of 9 foot by 18 foot except as specified below.
d. Parking spaces may be located in any configuration on the same lot as the ADU, including, but not limited to, as covered spaces, uncovered spaces, tandem spaces, or by the use of mechanical automobile parking lifts.
e. Required off-street parking shall be permitted in front, side, and rear setback areas subject to the following:
i. Parking may be located on an existing driveway but shall not block sidewalk access or encroach into the public right-of-way. ii. Parking spaces within a side yard must have a minimum clear space width of 10-feet. Vehicles shall not block exterior windows or doors of a dwelling or access to utility boxes or meters. iii. Vehicles must be parked on an acceptable surface of concrete, asphalt, gravel, brick, permeable paver or other stable, dust-free surface.
iv. No more than 50% of a front yard shall be dedicated to vehicle parking.

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v. No parking shall be allowed in front yard landscaping areas. vi. Access to on-site parking spaces shall be provided via an approved driveway location only.
f. When a garage, carport, or covered parking structure that provides the required spaces for the primary dwelling is demolished or converted in conjunction with the construction of an ADU, no replacement parking shall be required.
g. Parking Exemption: As required by Government Code Section 65852.2(d), parking space for an ADU shall not be required in any of the following instances:
i. The ADU is located within one-half mile walking distance of public transit.
ii. The ADU is located within an architecturally and historically significant historic district.
iii. The ADU is part of the existing or proposed primary residence or an existing accessory structure.
iv. When on-street parking permits are required but not offered to the occupant of the ADU.
v. When there is a car share vehicle located within one block of the ADU.

6. Objective Design Standards
a. The colors of the exterior walls, roof, eaves, and windows and doors of a new, detached ADUs must match the appearance and architectural design of those of the primary dwelling.
b. If a garage is converted to an ADU, the garage door opening shall be replaced with exterior wall coverings, or residential windows and doors, to match the existing exterior garage wall covering and detailing. c. ADUs created under the By-Right Provisions of this Section are exempt from the Objective Design Standards, including ADUs with preapproved plans and factory-built housing. d. Where ADUs are to be located within the front yard setback in accordance with Section D.3.c, the Objective Design Standards shall apply.

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e. ADUs located in the D-2.4 Historic Character Overlay District shall comply with the Objective Design Standards.
a. Second floor living area shall be setback 5 feet from the ground floor footprint.
b. Window sashes and doorframes shall be made of wood or vinyl simulating the appears of wood. Unfinished aluminum is not allowed.
c. New or replacement doors shall be wood or an approved substitute material that simulates the appearance of original materials. d. The use of fluorescent “neon”, “day-glo”, or bright primary colors as the predominant shade on building facades is not permitted.

7. Impact Fees & Utilities.
a. An ADU under 750 square feet shall not be charged development impact fees. An ADU equal to or greater than 750 square feet may be charged development impact fees. These development impact fees shall be proportional to the square footage of the main dwelling and calculated using the ADU square footage.
b. ADUs and JADUs shall comply with water and sewer requirements as determined by the Public Works Department.
c. The City shall not require a new or separate utility connection or impose a related connection fee or capacity charge for ADUs or JADUs that are contained within an existing residence or accessory structure. Pursuant to Government Code Section 65852.2(f)(5) an ADU not built within the existing space of a single family house or accessory structure may be required to obtain a new or separate utility connection as determined by the Public Works Department and may be subject to a connection fee or capacity charge based on its square footage or the number of its drainage fixtures unit values.

E. Conditions.

1. An ADU/JADU shall not be sold or otherwise conveyed separate from the primary residence.

2. An ADU/JADU may serve as a rental unit or be occupied by family members, guests, or in-home health care providers, and others at no cost.

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4. Owner-occupancy shall be required for a property developed with a JADU.

The owner may reside in either the primary dwelling or the JADU.

The property owner shall record a covenant, approved as to form by the City Attorney, declaring compliance with each and every condition referenced in this section.

SECTION 5. This Ordinance shall take effect and be in full force and effect thirty (30) days after its passage.

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On motion by Council Member ______, seconded by Council Member _______, and by the following roll call vote to wit:

AYES:

NOES:

ABSENT:
the foregoing Ordinance was adopted this ____ day of _______, 2022.

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___________________________________

CARON RAY RUSSOM, MAYOR
ATTEST:
___________________________________

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
________________________________
WHITNEY McDONALD, CITY MANAGER
APPROVED AS TO FORM:
___________________________________
TIMOTHY J. CARMEL, CITY ATTORNEY

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ATTACHMENT 6
DRAFT RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE PROVIDING FOR AN ACCESSORY

DWELLING UNIT FEE WAIVER PROGRAM
WHEREAS, Section 16.52.150 of the Arroyo Grande Municipal Code (AGMC) contains the City’s regulations for Accessory Dwelling Units and Junior Accessory Dwelling Units (collectively, “ADUs”) consistent with the requirements of Government Code Sections 65852.2 and 65852.22, and ADUs present an opportunity to develop more affordable housing in the City; and
WHEREAS, the City Council of the City of Arroyo Grande wishes to further the policies, goals and programs of the Housing Element of the City's General Plan and to help facilitate the development of affordable housing within the City by creating an ADU Fee Waiver Program under which building permit fees and utility connection fees can be waived for ADUs that are 500 square feet or less and the property owners agree to rent the ADU to either low income or very low income households; and WHEREAS, the City Council finds that providing a variety of housing options to workers of all income levels is socially and economically beneficial to the City and its residents; and
WHEREAS, to the extent that building permit fees and utility connection fees present a barrier to the development of affordable ADUs, the ADU Fee Waiver Program will provide an incentive to their construction and making them available to low-income or very lowincome households.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande as follows:

SECTION 1. The City Council hereby finds and determines that the foregoing recitals are true and correct and are incorporated herein by this reference.

SECTION 2. ADU FEE WAIVER PROGRAM.

City Staff is hereby authorized to implement an ADU Fee Waiver Program. Building permit fees and utility connection fees for Accessory Dwelling Units of 500 square feet or less shall be waived when:

A. The property owner agrees to rent the ADU to either a low-income household for a period of ten (10) years, or a very low-income household for a period of seven (7) years. Prior to receiving a building permit, the ADU owners shall execute and record an “Accessory Dwelling Unit Affordable Housing Declaration of Covenants and Land Use Restrictions - Fee Waivers” in a form approved by the City Attorney.

B. In implementing this ADU Fee Waiver program, the City shall rely on affordable

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rental limits established by San Luis Obispo County and published each month.

C. The Accessory Dwelling Unit Affordable Housing Declaration of Covenants and Land Use Restrictions - Fee Waivers, shall provide that the property owner shall annually provide the City with evidence that rents collected comply with affordable limits.

D. Money from the City of Arroyo Grande Inclusionary Housing Affordable Housing Trust Fund shall be used to offset and recoup the revenue that otherwise would have been due to the City for building and connection fees as a result of the ADU Fee Waiver Program. Staff shall provide an annual update to the Council on the status of the Program and impacts to the Trust Fund.

SECTION 3. If any section, subsection, sentence, clause, phrase or provision of this Resolution or the application thereof to any person or circumstances is held invalid or unconstitutional by any court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity of any other provision or applications, and to this end the provisions of this Resolution are declared to be severable. The City Council hereby declares that it would have passed this Resolution and each section, subsection, sentence, clause, phrase or provision thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases or provisions thereof be declared invalid or unconstitutional.

SECTION 4. This Resolution shall be effective immediately upon its adoption.

On motion by Council Member _________, seconded by Council Member _______, and on the following roll call vote, to wit:

AYES:

NOES:

ABSENT:

The foregoing Resolution was passed and adopted this 13th day of September, 2022.

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PAGE 3
__________________________________

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
_________________________________

WHITNEY MCDONALD, CITY MANAGER
APPROVED AS TO FORM:
_________________________________
TIMOTHY J. CARMEL, CITY ATTORNEY

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Item 9.b.

MEMORANDUM
TO: City Council
FROM: Brian Pedrotti, Community Development Director
BY: Patrick Holub, Associate Planner
SUBJECT: Introduction of Ordinance Amending Title 16 of the Arroyo Grande Municipal Code Regarding Short Term Rentals (Vacation Rentals and Homestays); Development Code Amendment 22-002
DATE: September 13, 2022
SUMMARY OF ACTION:

Introduction of the proposed amended Ordinance regulating short term rentals.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

In accordance with Chapter 3.24 of the Arroyo Grande Municipal Code (AGMC), Short Term Rentals are required to pay the City’s transient occupancy tax (TOT) in the amount of 13.5% of the rent charged by the operator, 10% of which is retained by the City, 2% is provided to the Arroyo Grande Tourism Business Improvement District (AGTBID), and

1.5% is provided to the San Luis Obispo County Tourism Marketing District (SLOTMD) (Visit SLO Cal). The City currently received an estimated $150,000 in FY 2021-22 in TOT from Short Term Rentals.

RECOMMENDATION:

Introduce an Ordinance amending Title 16 of the AGMC regarding short term rentals.

BACKGROUND:

On June 10, 2014, the City Council adopted Ordinance No. 663, establishing vacation rentals and homestays (Short Term Rentals or STRs) as permitted land uses in the City’s residential zoning districts, subject to the approval of a Minor Use Permit-Plot Plan Review (Attachment 2). A vacation rental is defined as a structure being rented for less than thirty (30) days without concurrently being occupied by the owner/operator, while a homestay is defined as an owner-occupied dwelling unit where a maximum of two shortterm lodging rooms are provided for compensation. These two uses are collectively known as Short Term Rentals or STRs.

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City Council
Introduction of Ordinance Amending Title 16 of the Arroyo Grande Municipal Code Regarding Short Term Rentals (Vacation Rentals and Homestays); Development Code Amendment 22-002
September 13, 2022

Page 2 ends

During the development of Ordinance 663, both the Planning Commission and City Council discussed potential issues related to noise, parking, and other general nuisances.

Ultimately, both bodies came to the conclusion that these concerns could be addressed by compliance with the performance standards and abiding by conditions of approval.

Additionally, these issues were found to be similar to instances when long-term renters, homeowners, and private guests of homeowners are the cause of these types of nuisances. Performance standards were adopted to address these issues when an STR is reviewed and considered for approval. For example, Ordinance 663 requires applicants to provide a local contact to address noise and general disturbance issues that may arise from the STR. A 300-foot buffer between rentals on the same street is required to prevent the oversaturation of STRs in a neighborhood.

Arroyo Grande Municipal Code Section 16.52.230 lists the performance standards required to be complied with in order to receive approval for and to operate a vacation rental, which are as follows:

1. Operators of vacation rentals are required to obtain a minor use permit-plot plan review (Section 16.16.080) and a business license.

2. Any proposed vacation rental shall be compatible with the neighborhood in which it is located in terms of landscaping, scale and architectural character. The use shall be harmonious and compatible with the existing uses with the neighborhood.

3. All Building Code and Fire Code requirements for the level of occupancy of the vacation rental shall be met.

4. All environmental health regulations shall be met.

5. The operator of the vacation rental shall, at all times while the property is being used as a vacation rental, maintain a contact person/entity within a fifteen-minute drive of the property. The contact person or entity must be available via telephone twenty-four (24) hours a day, seven days a week, to respond to complaints regarding the use of the vacation rental. The contact person or entity shall respond, either in person or by return telephone call, with a proposed resolution to the complaint within three hours between seven a.m. and nine p.m., and within thirty (30) minutes between nine p.m. and seven a.m.

6. The operator of the vacation rental shall annually, at the time of renewal of the business license, notify the community development department of the name, address and telephone number of the contact person required in subsection (C)(6).

7. A written notice shall be conspicuously posted inside each vacation rental unit setting forth the name, address and telephone number of the contact person required in subsection (C)(6). The notice shall also set forth the address of the vacation rental, the maximum number of occupants permitted to stay overnight in the unit, the maximum number of vehicles allowed to be parked on-site, and the day(s) established for garbage collection. The notice shall also provide the nonemergency number of the Arroyo Grande Police Department.

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8. On-site advertising of the vacation rental is prohibited.

9. The number of overnight occupants shall be limited to two persons per bedroom and two additional persons. A bedroom shall meet the minimum size requirements as defined in the Building Code.

10.All refuse shall be stored in appropriate containers and placed at the curb for collection every week.

11.The operator of the vacation rental shall pay transient occupancy tax as required by Arroyo Grande Municipal Code Section 3.24.030.

12.Establishment of a vacation rental within three hundred (300) feet of an existing vacation rental on the same street shall not be permitted.

13.Violations. Violation of these requirements shall constitute grounds for revocation of the minor use permit pursuant to Section 16.16.220.

Arroyo Grande Municipal Code Section 16.52.240 lists the performance standards required to be complied with in order to receive approval for and to operate a homestay, which are as follows:

1. Operators of homestays are required to obtain a minor use permit-plot plan review (Section 16.16.080) and a business license.

2. Any proposed homestay shall be compatible with the neighborhood in which it is located in terms of landscaping, scale and architectural character. The use shall be harmonious and compatible with the existing uses with the neighborhood.

3. All Building Code and Fire Code requirements for the level of occupancy of the homestay shall be met.

4. All environmental health regulations shall be met.

5. The operator shall reside on the premises.

6. Individual guest stays shall be limited to fourteen (14) days, with a seven-day period between stays.

7. On-site advertising of the homestay is prohibited.

8. A bedroom shall meet the minimum size requirements as defined in the Building Code.

9. The operator of the homestay shall pay transient occupancy tax as required by Arroyo Grande Municipal Code Section 3.24.030.

10.Establishment of a homestay within three hundred (300) feet of an existing homestay on the same street shall not be permitted.

11.Violations. Violation of these requirements shall constitute grounds for revocation of the minor use permit pursuant to Section 16.16.220.

On September 3, 2019, the Planning Commission received a status report on the City’s STR regulations and made a number of recommendations including:

1. Implementation of parking requirements for STRs;

2. Administrative fines for non-permitted STRs;

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3. Utilization of compliance technology to address non-permitted STRs; and

4. Reconsideration of current buffer distances or methods.

On October 12, 2021, the City Council directed staff to bring back a discussion item at a future meeting to evaluate Ordinance 663 after receiving public comment expressing concerns regarding the recent proliferation of STRs, the application and appeal process associated with STRs, and other related issues such as the same street buffer.

On March 22, 2022, the City Council conducted a study session regarding the existing short term rental ordinance. The Council made a number of recommendations, including:
 Establishing a cap on the overall number of vacation rental approvals that can be granted;
 Contracting with an enforcement company to identify unpermitted rentals;  Altering the methodology for how the buffer distance between rentals is calculated;  Establishing objective revocation triggers;
 Requiring that all mailing labels for vacation rentals be provided by the City and paid for by the applicant;
 Improving performance standards to ensure greater compatibility with the neighborhood;
 Consider an expiration clause; and
 Considering whether to impose a parking requirement.

A Resolution containing a draft Ordinance was developed from these discussion points for the Planning Commission’s consideration. On August 2, 2022, the Planning Commission conducted a noticed public hearing to consider the proposed revisions to AGMC Sections 16.52.230 and 16.52.240 and adopted a Resolution recommending the City Council adopt an ordinance amending the regulations regarding short term rentals.

Their recommendations included the following amendments:

1. Establish a cap on vacation rentals of 120.

2. Increase the buffer between short term rentals of all kinds to 500 feet and provide a buffer from all schools of 500 feet.

3. Initiate revocation procedures if a designated emergency contact is unresponsive three consecutive times or if a citation is issued to a short-term rental tenant by the Police Department.

4. Require that short term rental permits expire at the point of sale of the property.

5. Require that any unit previously occupied by a long-term renter within the past year be ineligible to become a short-term rental.

6. Incorporate the same proposed performance standards for homestays as vacation rentals.

7. Provide two parking spaces off-street for all short-term rentals. The parking spaces can be covered or uncovered.

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ANALYSIS OF ISSUES:

Trends
When Ordinance 663 went into effect in 2014, it was a first of its kind in San Luis Obispo County. While drawing on existing regulations implemented sporadically throughout the County, the Ordinance addressed the growing trend in home sharing by regulating both vacation rentals and homestays.

Since the Ordinance’s implementation, the City has permitted eighty-six (86) vacation rentals and forty-seven (47) homestays. The following list represents the number of shortterm rentals approved per year:
 2014 – Two (2) vacation rental approvals; five (5) homestay approvals  2015 – Two (2) vacation rental approvals; one (1) homestay approval  2016 – Six (6) vacation rental approvals; two (2) homestay approvals  2017 – Five (5) vacation rental approvals; seven (7) homestay approvals  2018 – Seven (7) vacation rental approvals; six (6) homestay approvals  2019 – Eighteen (18) vacation rental approvals; seven (7) homestay approvals  2020 – Ten (10) vacation rental approvals; four (4) homestay approvals  2021 – Nineteen (19) vacation rental approvals; six (6) homestay approvals  2022 – Seventeen (17) vacation rental approvals; nine (9) homestay approvals* *Approvals listed for 2022 reflect approvals granted though the end of August.

STR Appeals
Since the adoption of the Ordinance, nine (9) permits that were approved by the Community Development Director for the establishment of a vacation rental have been appealed to the Planning Commission, and zero (0) permits that were approved for the establishment of a homestay have been appealed. All nine (9) of the appeals were denied by the Commission and the Community Development Director’s decision was upheld. Of the nine (9) appeals that were denied by the Planning Commission, two (2) approvals were further appealed to the City Council. Both of those appeals were later denied by the City Council. In addition to the nine (9) appeals filed by community members, the Planning Commission voted to appeal a vacation rental approval at its August 2, 2022 meeting.

That appeal will be held before the Planning Commission and is currently scheduled for September 20, 2022.

Housing Needs
The City’s General Plan is the blueprint for how development activities are to occur within City limits. Housing Element Policy B.6. states: “The City shall continue to regulate the use of existing residences on residentially zoned properties for vacation rentals.” Housing Element Program B.6-1 states: “The City shall monitor the loss of permanent workforce housing from vacation rentals and consider modifying the Development Code to adjust for this loss.”

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The most recent data available from the United States Census Bureau estimates that there are 7,847 housing units in the City, and 2,169 of those are rental units. Analysis of the ownership information of properties where vacation rentals are permitted indicates that a majority of the vacation rentals are rented on a part time basis when owners are absent. The current number of vacation rentals (86) comprises approximately 4% of the City’s total rental housing market. While this may not appear to be a significant impact on the City’s housing stock at this time, analysis was completed utilizing the City’s Geographic Information System (GIS) that estimate a total of 716 vacation rentals could be permitted under the current regulations. This would constitute 33% of the City’s rental housing stock.

Financial Impact
Operators of vacation rentals and homestays are required to obtain a Business License from the City every year, as well as remit Transient Occupancy Tax (TOT). TOT is assessed to any short-term occupancies in the City, whether it be at a hotel, motel, bed and breakfast, vacation rental, or homestay, at a rate of 13.5% of fees charged for lodging.

Ten percent (10%) of this tax goes into the City’s General Fund, which, among other things, is used for the maintenance of City streets and services being used by the shortterm occupants of these facilities. Two percent (2%) of the tax is allocated to the AGTBID for the purpose of marketing and promotional efforts for the local lodging industry and the final one and one-half percent (1.5%) of the tax is remitted to the SLOTMD (Visit SLO Cal) for the purpose of marketing and promotional efforts for the County lodging industry.

The Mid-Cycle Budget for FY 2022-23 projects that the City will receive approximately $1,300,000 in TOT. It is estimated that $155,000 will come from STRs during this fiscal year. In FY 2021-22, the City received an estimated $150,000 in TOT from STRs.

Unpermitted STRs
One of the most difficult issues associated with implementation of the Ordinance is enforcement associated with non-permitted rentals. At any given time, searches can be done on many of the popular internet vacation rental sites that show rentals operating outside of City regulations. However, efforts necessary to find, geo-locate, track, build a case of facts, and attempt to rectify illegal rentals are significantly time consuming.

Currently, City staff will monitor and rectify noncompliant rentals when there is a complaint, or when staff resources are available, which is infrequent.

The City advertised a Request for Proposals (RFP) to select a firm to assist with ensuring short term rental hosts are compliant with the City’s regulations and to help the City identify unpermitted rentals that are operating within the City. This RFP closed on August 4, 2022. Staff has since reviewed the proposals and interviewed the top three (3) firms.

Contract negotiations with the top firm are underway and a contract is expected to be fully

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executed in September. Based on estimates provided by one company, there may be between 150-200 unpermitted STRs operating in the City. Services from the selected consultant will help ensure that these STRs either come into compliance with City regulations or cease operations. It is anticipated that these efforts will increase collection of TOT revenue and either significantly or entirely offset the cost of the consultant’s services.

ORDINANCE REVISIONS
Cap on Total Number of VRs
During the study session on March 22, 2022, the City Council recommended capping the total number of permitted vacation rentals at one-hundred twenty (120), which represents approximately 1.5% of the housing units within the City.

On August 2, 2022, the Planning Commission concurred that the cap for approved vacation rentals within the City should be one-hundred twenty (120). As of August 31, 2022, a total of eighty-six (86) vacation rentals have been granted approval to operate.

After reaching the cap, the City could keep a waiting list of property owners wishing to entitle a vacation rental until there is another available opening. The Planning Commission did not express a preference as to whether the waiting list should be implemented through a first-come-first served or through a lottery approach. Staff is recommending that a waiting list be created, and has included this in the draft ordinance.

Short Term Rental Buffer
At the study session on March 22, the City Council recommended changing the methodology for calculating vacation rental eligibility to preclude the approval of a vacation rental within a three-hundred-foot (300’) radius of another vacation rental, regardless of the street address for each application. This recommendation did not address the fact that under the existing code, the buffer only applies to vacation rentals.

Homestays are subject to their own three-hundred-foot (300’) radius from each other; therefore, vacation rentals and homestays can be located next to each other.

On August 2, 2022, the Planning Commission recommended expanding the buffer distance between any type of short-term rentals to five-hundred feet (500’) regardless of street address and recommended that this restriction also apply to both vacation rentals and homestays. Additionally, the Planning Commission recommended establishing a fivehundred-foot (500’) buffer from all schools for both short term rental types. Staff has included this additional buffer into the draft ordinance.

Revocation Process
During the March study session, the City Council discussed the objective triggers that could be utilized to revoke permits that are operating out of compliance with their performance standards. Council requested that the Planning Commission suggest

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specific triggers involving a number of verified complaints that are received regarding a particular property.

During its meeting on August 2, 2022, the Planning Commission suggested that revocation procedures be initiated against any permit holder whose emergency contact was unresponsive three consecutive times. Additionally, the Planning Commission recommended initiating revocation procedures against any permit holder whose shortterm rental guests’ behavior resulted in a citation from the Arroyo Grande Police Department. Staff has included this recommendation into the draft ordinance.

Expiration
There is currently only one way that a short-term rental approval can expire separately from the revocation process. Short term rental approvals are conditioned to expire two years from the date of approval if a Business License has not been issued. During the short-term rental study session on March 22, 2022, the City Council suggested adding an additional expiration threshold where approvals would automatically expire if an operator does not remit TOT to the City for a consecutive period of twelve (12) months.

In addition to the expiration clause recommended by the City Council, the Planning Commission recommended that short term rental permits be conditioned to automatically expire at the point at which the property is sold to a new owner. Following discussions with the City Attorney, staff is not recommending that this recommendation from the Planning Commission be included. Short-term rentals permits run with the land, and a permit expiration based on change in ownership is inconsistent with the City’s approval process of a MUP-Plot Plan Review. Regarding expiration, the proposed ordinance does not include language requiring the automatic expiration of an approval upon sale.

It should also be noted that existing short-term rentals will have the status of being legal nonconforming uses under AGMC Section 16.48.110(B)(1), which provides as follows:

Right to Continue a Nonconforming Use. A use lawfully occupying a structure or a site, that does not conform with the use regulations and site area regulations for the district in which it is located shall be deemed to be a nonconforming use and may be continued, except as otherwise provided by this section. Continuation of a nonconforming use may include a change of ownership, tenancy or management if the building, structure, land use or activity is substantially unchanged.

One approach to address the legal nonconforming status would be to provide an amortization period to provide a reasonable time period before the permit holder subject to loss of its legal status has to conform to the new requirements in consideration of the investment involved in the use. In that regard, it is noted that owners of short-term rentals

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would still have the use of their property and could also rent them out on a long-term basis. If the City Council would like an amortization period to be considered, further direction to staff would be appropriate.

Performance Standards
During the March 22, 2022 study session, the City Council asked that the Planning Commission develop objective performance standards with the goal of making the revocation process simpler to initiate for properties that are not operating in a way that is compliant with the City’s short-term rental regulations. Additionally, the City Council suggested that the performance standards be amended to require that vacation rental applicants be required to purchase the required mailing labels from the City to ensure proper noticing is performed for each application.

At their meeting on August 2, 2022, the Planning Commission recommended that the amended short term rental ordinance include provisions that homestays not be approved within Planned Unit Developments, aligning with staff’s recommendation that vacation rentals be prohibited in PUDs. Additionally, the Commission recommended that any new performance standards that are applied to vacation rentals also apply to homestays. The proposed ordinance includes requirements that applicants purchase mailing labels directly from the City, that vacation rentals be prohibited in PUDs, that the buffer distance between short term rentals be increased to five-hundred feet (500’) and that no shortterm rental of any type be approved within five-hundred feet of another short-term rental or school. Additionally, the draft ordinance includes language which caps the total number of vacation rentals allowed within the City at one-hundred-twenty (120), allows staff to initiate revocation procedures of a vacation rental’s emergency contact is non-responsive three times or if the property is issued a citation for guest behavior by the AGPD and requires that short term rental operators remit TOT to the City at least once every twelve (12) months. Lastly, the draft ordinance includes language which requires vacation rentals to provide two (2) off-street parking spaces and requires homestays to provide one (1) off-street parking space per bedroom rented.

Parking
During the March 22, 2022 study session, the City Council asked the Planning Commission to consider the application of a parking requirement for short term rentals.

At its meeting on August 2, 2022, the Planning Commission recommended that a parking requirement of two (2) parking spaces be provided for each vacation rental, and one (1) off-street parking space per rented bedroom for each homestay. The parking spaces could be covered or un-covered, but must be provided off-street.

Definitions

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Staff is recommending that the definitions of both vacation rentals and homestays be amended to allow staff to more easily define short term rentals that occur on properties with multiple units and to further clarify that a homestay requires the property owner not only to classify the property as their primary residence, but also that the property owner is physically present on-site while renting a portion of their residence.

Each of the preceding amendments is included in the proposed amended Ordinance except where noted regarding expiration at point of sale. Redlines showing the proposed changes from the existing ordinance are also included as a separate attachment.

Introduction of the proposed ordinance amending the City’s Short Term Rental regulations will enable the ordinance to be adopted at a future City Council meeting.

ALTERNATIVES:

1. Introduce an Ordinance amending the short-term rental regulations within the City;

2. Revise and introduce an Ordinance amending the short-term rental regulations within the City; or

3. Provide other direction to staff.

ADVANTAGES:

Introduction of the amended Ordinance will allow the City to further regulate short term rentals in a manner that is harmonious with the existing character of the neighborhoods in which the rentals currently or will exist.

DISADVANTAGES:

If the proposed ordinance is ultimately adopted, it will establish a cap on Short Term Rentals that will reduce potential TOT revenue from new STRs.

ENVIRONMENTAL REVIEW:

In compliance with the California Environmental Quality Act (CEQA), the Community Development Department has determined that the adoption of an ordinance to implement amendments to the short-term rental regulations is categorically exempt from CEQA pursuant to Section 15305 – Minor Alterations in Land Use Limitations.

PUBLIC NOTIFICATION AND COMMENTS:

The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.

Attachments:

1. Proposed Ordinance

2. Proposed Ordinance with redlines

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3. Minutes from the September 3, 2019 Planning Commission meeting

4. Minutes from the October 12, 2021 City Council meeting

5. Minutes, staff report and attachments from the March 22, 2022 City Council meeting

6. Minutes from the August 2, 2022 Planning Commission meeting

7. Staff report and attachments from the August 2, 2022 Planning Commission meeting

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ATTACHMENT 1
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE AMENDING TITLE 16 OF THE ARROYO GRANDE

MUNICIPAL CODE REGARDING VACATION RENTALS AND

HOMESTAYS
WHEREAS, the City of Arroyo Grande (“City”) currently regulates vacation rentals or homestays as established by Ordinance No. 663; and
WHEREAS, due to the increasing popularity of vacation rentals and homestays, the City Council held a study session on March 22, 2022 to discuss impacts and complaints associated with short term rentals; and
WHEREAS, Council directed staff to amend existing regulations to ensure that impacts are addressed and mitigated and that the character of existing neighborhoods is maintained, while providing an expanded type of lodging facility available within the City; and
WHEREAS, it is the purpose of this Ordinance to protect the public health, safety, and welfare within the City by establishing rules and requirements for vacation rentals and homestays; and
WHEREAS, the City of Arroyo Grande has duly initiated amendments to the Arroyo Grande Municipal Code (“AGMC”); and
WHEREAS, the Planning Commission of the City of Arroyo Grande, after giving notices thereof as required by law, held a public hearing on August 2, 2022 concerning this code amendment and carefully considered all pertinent testimony and the staff report offered in the matter as presented; and
WHEREAS, on August 2, 2022, the Planning Commission of the Arroyo Grande recommended to the City Council amending Sections 16.52.230 and 16.52.240 of the Arroyo Grande Municipal Code; and
WHEREAS, the City Council has, after giving notice thereof as required by law, held a public hearing on September 13, 2022, concerning the proposed amendments to AGMC Sections 16.52.230 and 16.52.240; and
WHEREAS, the City Council, at its regularly scheduled public meeting on September 13, 2022 introduced this Ordinance to amend Sections 16.52.230, 16.52.240 and 16.04.070 of the AGMC; and
WHEREAS, the City Council has carefully considered all pertinent testimony and the staff report, its attachments and all supporting materials referenced therein or offered in the matter as presented at the public hearing.

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ORDINANCE NO.

PAGE 2
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Arroyo Grande as follows:

SECTION 1: The above recitals and findings are true and correct and incorporated herein by this reference.

SECTION 2: Arroyo Grande Municipal Code Section 16.52.230 is hereby amended as follows:

SECTION 16.52.230 – VACATION RENTALS
A. Purpose and intent. The purpose of these regulations is to ensure that vacation rentals located in the city conform to the existing character of the neighborhood in which they are located and do not create an adverse impact on adjacent properties.

B. Applicability. Vacation rentals may be permitted only with approval of a minor use permit. Vacation rentals shall comply with the property development standards of the underlying district and the performance standards and special conditions listed in Section 16.52.230.C.

C. Performance standards and conditions for vacation rentals.

1. Operators of vacation rentals are required to obtain a minor use permit-plot plan review (Section 16.16.080) and a business license.

3. All Building Code and Fire Code requirements for the level of occupancy of the vacation rental shall be met.

4. All environmental health regulations shall be met.

5. The operator of the vacation rental shall, at all times while the property is being used as a vacation rental, maintain a contact person/entity within a fifteen (15) minute drive of the property. The contact person or entity must be available via telephone twenty-four (24) hours a day, seven (7) days a week, to respond to complaints regarding the use of the vacation rental. The contact person or entity shall respond, either in person or by return telephone call, with a proposed resolution to the complaint within three (3) hours between 7:00 am and 9:00 pm, and within thirty (30) minutes between 9:00 pm and 7:00 am. Vacation rental applicants shall be required to pay the City’s fee at the time of application to generate mailing labels for all property owners within 300 feet.

6. The operator of the vacation rental shall annually, at the time of renewal of the business license, notify the Community Development Department of the name, address and telephone number of the contact person required in subsection

16.52.230.C.5.

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ORDINANCE NO.

PAGE 3

7. A written notice shall be conspicuously posted inside each vacation rental unit setting forth the name, address and telephone number of the contact person required in subsection 16.52.230.C.5. The notice shall also set forth the address of the vacation rental, the maximum number of occupants permitted to stay overnight in the unit, the maximum number of vehicles allowed to be parked onsite, and the day(s) established for garbage collection. The notice shall also provide the non-emergency number of the Arroyo Grande Police Department.

8. On-site advertising of the vacation rental is prohibited.

9. The number of overnight occupants shall be limited to two persons per bedroom and two additional persons. A bedroom shall meet the minimum size requirements as defined in the Building Code.

10.All refuse shall be stored in appropriate containers and timely placed at the curb for collection every week.

11.The operator of the vacation rental shall pay Transient Occupancy Tax (“TOT”) as required by Arroyo Grande Municipal Code Section 3.24.030.

12.Establishment of a vacation rental within five-hundred feet (500’) of an existing short term rental or school shall not be permitted.

13.Violations – violation of these requirements shall constitute grounds for revocation of the minor use permit pursuant to Section 16.16.220.

14.Vacation rentals shall not be approved within Planned Unit Developments (PUDs).

15.The total number of approved vacation rentals within the City shall not exceed onehundred twenty (120). Once the cap is reached, complete applications will be added to a waiting list that will be processed on a first-come-first-served basis if new approvals become available.

16.Vacation rentals must remit TOT to the City at least once every twelve (12) months, otherwise the approval will automatically expire.

17.The listed emergency contact for a vacation rental shall not be un-responsive to neighborhood complaints three (3) consecutive times, otherwise revocation proceedings shall be initiated.

18.Revocation proceedings shall be initiated if one (1) citation is issued by the Arroyo Grande Police Department due to rental guest behavior.

19.Vacation rentals shall be required to provide two (2) off-street parking spaces for use by rental guests. These spaces shall be kept free and clear and the rental guest shall be made aware of their location for preferred use during the duration of the stay.

SECTION 3: Arroyo Grande Municipal Code Section 16.52.240 is hereby amended as follows:

SECTION 16.52.240 – HOMESTAYS
A. Purpose and Intent. The purpose of these regulations is to ensure that homestays located in the city conform to the existing character of the neighborhood in which they are located and do not create an adverse impact on adjacent properties.

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ORDINANCE NO.

PAGE 4
B. Applicability. Homestays may be permitted only with approval of a minor use permit. Homestays shall comply with the property development standards of the underlying district and the performance standards and special conditions listed in subsection (C).

C. Performance Standards and Conditions for Homestays.

1. Operators of homestays are required to obtain a minor use permit-plot plan review (Section 16.16.080) and a business license.

3. All Building Code and Fire Code requirements for the level of occupancy of the homestay shall be met.

4. All environmental health regulations shall be met.

5. The operator shall reside on the premises during the entire duration of the rental stay.

6. Individual guest stays shall be limited to fourteen (14) days, with a seven-day period between stays.

7. On-site advertising of the homestay is prohibited.

8. A bedroom shall meet the minimum size requirements as defined in the Building Code.

9. The operator of the homestay shall pay Transient Occupancy Tax (“TOT”) as required by Arroyo Grande Municipal Code Section 3.24.030.

10.Establishment of a homestay within five-hundred (500) feet of an existing short term rental or school shall not be permitted.

11.Violations. Violation of these requirements shall constitute grounds for revocation of the minor use permit pursuant to Section 16.16.220.

12.Homestays must remit TOT to the City at least once every twelve (12) months, otherwise the approval will automatically expire.

13.Revocation proceedings shall be initiated if one (1) citation is issued by the Arroyo Grande Police Department due to rental guest behavior.

14.Homestays shall be required to provide one (1) off-street parking space per rented bedroom for use by rental guests. These spaces shall be kept free and clear and the rental guest shall be made aware of their location for preferred use during the duration of the stay.

SECTION 4: Arroyo Grande Municipal Code Section 16.04.070 is hereby amended as follows:

16.04.070.C. Definitions
“Homestay” means a structure on an owner-occupied parcel where a maximum of two (2) short-term lodging rooms are provided for compensation while the property owner is present on-site.

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ORDINANCE NO.

PAGE 5
“Vacation rental” means a structure or structures on a property being rented for less than thirty (30) days without concurrently being occupied by the owner/operator where the short-term lodging is provided for compensation.

SECTION 5: Upon adoption of this Ordinance, the City Clerk shall file a Notice of Exemption pursuant to 14 CCR § 15062.

SECTION 6: A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text of the proposed Ordinance shall be posted in the office of the City Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the names of those City Council Members voting for and against the Ordinance shall be published again, and the City Clerk shall post a certified copy of the full text of such adopted Ordinance.

SECTION 7: If any provision of this Ordinance or the application thereof to any person or circumstance is for any reason held to be invalid or unconstitutional by a decision of any 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 this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.

SECTION 8: This Ordinance shall take effect thirty (30) days from the date of adoption.

On motion of Council Member , seconded by Council Member , and on the following roll call vote to wit:

AYES:

NOES:

ABSENT:

The foregoing Ordinance was adopted this ___ day of _________, 2022.

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ORDINANCE NO.

PAGE 6
___________________________________

CAREN RAY RUSSOM, MAYOR
ATTEST:
___________________________________

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ATTACHMENT 2
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE AMENDING TITLE 16 OF THE ARROYO GRANDE

MUNICIPAL CODE REGARDING VACATION RENTALS AND

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ORDINANCE NO.

PAGE 2
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Arroyo Grande as follows:

SECTION 1: The above recitals and findings are true and correct and incorporated herein by this reference.

SECTION 2: Arroyo Grande Municipal Code Section 16.52.230 is hereby amended as follows:

C. Performance standards and conditions for vacation rentals.

1. Operators of vacation rentals are required to obtain a minor use permit-plot plan review (Section 16.16.080) and a business license.

3. All Building Code and Fire Code requirements for the level of occupancy of the vacation rental shall be met.

4. All environmental health regulations shall be met.

16.52.230.C.5.

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