Carmel-by-the-Sea City Council
July 7, 2026

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL AGENDA
Contact: 831.620.2000 www.ci.carmel.ca.us
Mayor Dale Byrne
Councilmembers Jeff Baron, Hans Buder, Bob Delves, and
Alissandra Dramov
All meetings are held in the City Council Chambers
East Side of Monte Verde Street
Between Ocean and 7th Avenues
Regular Meeting
Tuesday, July 7, 2026
4:30 PM
ADDENDUM TO AGENDA FOR CITY COUNCIL MEETING ON JULY 7, 2026 Mayor Pro Tem Robert Delves will be attending this City Council Meeting by teleconference from 757 Market Street, San Francisco, California pursuant to Government Code Section 54953(b).

HYBRID MEETING ATTENDANCE OPTIONS
This meeting will be held in person and via teleconference ("hybrid"). The public is welcome to attend the meeting in person or remotely via Zoom, however, the meeting will proceed as normal even if there are technical difficulties accessing Zoom. The City will do its best to resolve any technical issues as quickly as possible. To view or listen to the meeting from home, you may also watch the live stream on the City's YouTube page at: https://www.youtube.com/@CityofCarmelbytheSea/streams. To participate in the meeting via Zoom, copy and paste the link below into your browser and enter the passcode. https://ci-carmel-ca-us.zoom.us/j/83138976374
Webinar ID: 831 3897 6374
Passcode: 862068
Dial in: (253) 215-8782

HOW TO OFFER PUBLIC COMMENT
The public may give public comment at this meeting in person, or use the Zoom teleconference module, provided that there is access to Zoom during the meeting. Zoom comments will be taken after the inperson comments. The public can also email comments to [email protected]. Comments must be received at least 2 hours before the meeting in order to be provided to the legislative body. Comments received after that time and up to the beginning of the meeting will be made part of the record.

CALL TO ORDER AND ROLL CALL

PLEDGE OF ALLEGIANCE
Volunteer/Non-Profit Spotlight - Point Lobos Foundation Presentation on the Role of the City Clerk

PUBLIC APPEARANCES
Members of the public are entitled to speak on matters of municipal concern not on the agenda during Public

Appearances. Each person's comments shall be limited to 3 minutes, or as otherwise established by the Chair.

While stating your name is optional, it helps to identify speakers in the meeting minutes. Under the Brown Act, public comment for matters on the agenda must relate to that agenda item, and public comments for matters not on the agenda must relate to the subject matter jurisdiction of this legislative body. Remote or in-person participants who do not comply with the requirements of the Brown Act will be muted.

ANNOUNCEMENTS
City Administrator Announcements
City Attorney Announcements
Councilmember Announcements

PUBLIC HEARINGS
1) Resolution 2026-053 adopting an Addendum to the adopted Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program for the 6th cycle 2023-2031 Housing Element Amendment; and, Resolution 2026-054 amending the General Plan by adopting the 6th cycle 2023-2031 Housing Element Amendment in compliance with State Housing Element Law. 2) Consideration of Adoption of Fee Schedule Amendment to the Fiscal Year 2026- 2027 Fee Schedule, including updating fees citywide, Community Planning and Building, Public Safety, and Public Works; and Discussion and Direction regarding a Fee Waiver Policy

ORDERS OF BUSINESS
Orders of Business are agenda items that require City Council discussion, debate, direction to staff, and/or action.
3) Discuss Primary Arguments In Favor of Ballot Measures for Transient Occupancy Tax and Transactions and Use Tax (Sales) and Approve by Motion the Proposed Primary Arguments or Provide Other Direction
4) Discussion and Direction on Financial Stewardship Workgroup ad hoc 5) City Attorney update regarding executive recruitment firm selection process for a City Administrator and provide direction to staff
6) Update and Request for Direction Regarding Architectural Services for the New Police and Public Works Facilities Project
RECESS
The City Council will take a 30-minute break around 6:30 p.m.

FUTURE AGENDA ITEMS

ADJOURNMENT

This agenda was posted at City Hall, Monte Verde Street between Ocean Avenue and 7th Avenue, Harrison Memorial Library, located on the NE corner of Ocean Avenue and Lincoln Street, the Carmel-bythe-Sea Post Office, 5th Avenue between Dolores Street and San Carlos Street, and the City's webpage (http://www.ci.carmel.ca.us) in accordance with applicable legal requirements.

CORRESPONDENCE RECEIVED AFTER THE POSTING OF THE AGENDA Any correspondence or supplemental materials related to items on this agenda that are received after the agenda has been posted will be distributed to the City Council and made available for public review at City Hall (Monte Verde Street between Ocean and Seventh Avenues) during regular business hours. Written comments emailed to the City Clerk will not be read aloud, but will be posted online with the related agenda at: https://carmelbytheseaca.portal.civicclerk.com/.

SPECIAL NOTICES TO PUBLIC
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk's Office at 831-620-2000 at least 48 hours prior to the meeting to ensure that reasonable arrangements can be made to provide accessibility to the meeting (28CFR

35.102-35.104 ADA Title II).

CITY OF CARMEL-BY-THE-SEA
City Council
Staff Report
July 7, 2026

PUBLIC HEARINGS
TO: Honorable Mayor and City Council Members
SUBMITTED BY: Marnie R. Waffle, AICP, Principal Planner APPROVED BY: Brandon Swanson, Acting City Administrator SUBJECT: Resolution 2026-053 adopting an Addendum to the adopted Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program for the 6th cycle 2023-2031 Housing Element Amendment; and, Resolution 2026-054
amending the General Plan by adopting the 6th cycle 2023-2031 Housing Element Amendment in compliance with State Housing Element Law.

RECOMMENDATION:

Staff recommends the City Council:

1. Adopt Resolution 2026-053 (Attachment 1) adopting an Addendum (Exhibit A) to the adopted Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program for the 6th cycle 2023-2031 Housing Element Amendment; and

2. Adopt Resolution 2026-054 (Attachment 2) amending the General Plan by adopting the 6th cycle 2023-2031 Housing Element Amendment (Exhibit A) in compliance with State Housing Element Law.

BACKGROUND / SUMMARY:

Executive Summary:

The City Council is considering the Planning Commission’s recommendation and reviewing an amendment to the adopted 6th cycle 2023-2031 Housing Element including the associated environmental document. The Housing Element was adopted by the City Council in April 2024 and at the direction of the City Council staff and the

community group Affordable Housing Alternatives, or AHA, have been exploring alternative affordable housing strategies for the past two years that would disperse the City’s Regional Housing Needs Allocation (RHNA) throughout the community rather than concentrate the majority of affordable housing units on city-owned parking lots at the Sunset Center and Vista Lobos. The alternative strategies developed and proposed for the Amendment include accessory dwelling units, hotel-to-residential conversions, a mixed-use incentive program, the creation of a new live/work housing type, and facilitating housing on property owned by religious facilities. The State Department of Housing and Community Development (HCD) has reviewed the alternative strategies and issued a determination that the City’s proposed Housing Element Amendment substantially complies with State Housing Element Law. The Planning Commission reviewed the Housing Element Amendment and associated environmental document at its meeting on June 10th and adopted resolutions recommending City Council approval.

The next step is for the City Council to consider the Planning Commission’s recommendation to adopt the Housing Element Amendment. If adopted, the Housing Element Amendment will be submitted to the State for final certification.

Background/Summary:

On April 8, 2024, the City Council adopted the 6th Cycle Housing Element, which covers the 2023-2031 planning period. The city is responsible for planning for 349 new housing units by 2031.

On April 25, 2024, the State Department of Housing and Community Development (HCD) certified the City's Housing Element. Two city-owned sites, Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3), were included as potential affordable housing sites to provide capacity to meet the City’s RHNA and achieve certification (Housing Element Program 1.1.B: City-Owned Sites).

On July 8, 2024, in response to community concerns regarding the redevelopment of the city-owned sites, the City Council passed Resolution 2024-062 directing staff to begin work immediately on exploring and developing alternative affordable housing sites and programs, and submit a formal general plan housing element amendment that provides alternative affordable housing opportunities and removes the need for housing units at Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3). Additionally, City staff were directed to return to the City Council in September and October 2024 with updates on progress.

On September 10, 2024, October 1, 2024, and December 3, 2024, the City Council received updates on the joint efforts of the Affordable Housing Alternatives (AHA) community group and City staff to explore strategies to provide affordable housing in lieu of developing city-owned sites. The following five strategies emerged from extensive analysis: 1) Hotel-to-Residential Conversions, 2) Mixed-Income Incentive Program, 3) Live/Work Program, 4) Accessory Dwelling Units, and 5) Housing on Religious Facility Property.

The proposed revisions to the adopted Housing Element were presented for review and

feedback at the Planning Commission's regular meeting on May 14, 2025, and at a joint Planning Commission/City Council meeting on May 20, 2025.

On October 20, 2025, the Planning Commission reviewed and received public comment on the draft amendments to the City's adopted 6th-cycle Housing Element, and provided comments for the City Council's consideration in advance of a formal submittal to HCD.

On November 4, 2025, the City Council reviewed and received public comment on the draft amendments to the City's adopted 6th-cycle Housing Element, including the Planning Commission’s comments, and directed City staff to proceed with the formal submittal to HCD.

Formal Submittal to HCD:

On November 13, 2025, the City formally submitted the Housing Element Amendment to HCD for a 60-day review. The submittal was preceded by a 7-day public review and comment period pursuant to State law. A Response to Public Comments report (Attachment 3) was submitted with the Housing Element Amendment on November 13th.

On January 13, 2026, the City received a comment letter from HCD (Attachment 4).

The Housing Element programs and associated analysis were revised to address HCD’s comments and on March 27, 2026, the City resubmitted the Housing Element Amendment to HCD for another 60-day review. Again, the submittal was preceded by a 7-day public review and comment period pursuant to State law. A Response to Public Comments report (Attachment 5) was submitted with the Housing Element Amendment on March 27th.

On April 28, 2026, City staff met with HCD to receive informal comments on the resubmitted Housing Element Amendment. HCD asked for minor modifications to language in Chapters 1 and 2. The revisions were posted for a second 7-day public review period from May 6, 2026, to May 13, 2026. On May 19, 2026, the revisions were resubmitted to HCD for review prior to completion of the 60-day review period along with a Response to Public Comments report (Attachment 6).

HCD provided a letter dated May 28, 2026, finding the City’s Housing Element Amendment in substantial compliance with State law (Attachment 7).

On June 10, 2026, the Planning Commission reviewed the Housing Element Amendment and associated environmental document and adopted two resolutions (Attachments 8 and 9, without exhibits) recommending City Council adoption of an addendum to the environmental document and a General Plan amendment for the 6th cycle Housing Element Amendment.

City of Carmel-by-the-Sea and State HCD Collaboration:

Since December 2024, regular meetings with HCD have provided an opportunity for City staff and AHA representatives to present and receive feedback on the revised strategies, ensuring that the Housing Element Amendment retains the necessary components to remain in substantial compliance with State law. Each revised program was reviewed and discussed with HCD and feedback received was incorporated into the draft Amendment.

On June 2, 2025, the City provided an informal copy of the revised Chapter 2 and new Appendix C to HCD for a ‘friendly’ review. The purpose of this review was to get more substantive comments from HCD as the City moved towards a complete submittal for a formal amendment to the adopted housing element. On July 11, 2025, City staff met with HCD to receive feedback on the ‘friendly’ review. HCD identified areas requiring additional analysis to ensure compliance with State law. The extensive and ongoing collaboration with HCD has been instrumental in preparing the Housing Element Amendment.

Affordable Housing Alternatives (AHA) Community Group:

Since July 2024, City staff has been working closely with the community group Affordable Housing Alternatives, or AHA, to develop strategies that disperse the city’s share of regional housing needs throughout the community rather than concentrate them on the Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3) parking lots. As each strategy was developed, City staff and AHA representatives met with HCD staff to review the strategy to ensure that it met the requirements of State housing element law. Additional analysis was undertaken, and the strategies were further refined to demonstrate viability and conformance to State statutes.

The strategies were developed based on unique local conditions and specialized community knowledge. Traditional methods of accommodating affordable housing in high-density multi-story buildings were viewed as incongruent with the historic fabric of the City and its location within the coastal zone and developing alternatives to meet the needs of lower-income households without undoing decades of careful planning and preservation of the village was viewed as paramount.

The result is creative and innovative programs that allow for the integration of affordable housing without the demand for significant public subsidy, which can be underfunded, competitive, and time-consuming to secure, often delaying projects for years.

The Housing Element Amendment is intended to spur the creation of affordable housing in the near term, integrate housing units throughout the community, eliminate the burden of large public subsidy, incentivize rehabilitation of existing properties, and maintain and enhance existing community character, while preserving city-owned sites for future use.

The innovative strategies contained in the Housing Element Amendment require a

commitment to developing and pursuing new ideas, creating checkpoints to evaluate their effectiveness during implementation, and pivoting when needed in order to improve outcomes. The success of the strategies depends on the City taking a proactive stance; engaging property owners, developers and stakeholders; promoting programs; and, being open to hearing what is needed to achieve the housing goals and then taking the appropriate action.

Timeline Summary:

November 13, 2025: Housing Element Amendment submitted to HCD January 11, 2026: City receives HCD comment letter
March 13-20, 2026: 7-day public comment period on revisions to the Amendment March 27, 2026: Housing Element Amendment resubmitted to HCD April 29, 2026: City receives mid-review comments from HCD May 6-13, 2026: 7-day public comment period revisions based on preliminary comments
May 15, 2026: Housing Element Amendment resubmitted to HCD May 28, 2026: City receives letter of substantial compliance from HCD What changed in the Housing Element Amendment?
The following summarizes the revisions to the Housing Element Amendment in response to comments received from HCD. For a full discussion of the Housing Element Amendment, refer to the November 4, 2025, City Council staff report.

Revisions to the Housing Element Amendment made on March 13th in response to the January 11th letter are reflected as track changes (different color text with underline and strike through) in the excerpts below. Revisions made on May 6th in response to the April 28th mid-review comments are highlighted in yellow. A complete redlined version of the revised draft Housing Element Amendment can be found in Attachment

10. Chapter 1 - Introduction
A new section, “2025 Amendment to the Adopted Housing Element”, was added to reflect public outreach and engagement throughout the Amendment process. The March 13th revisions expanded on public review and engagement to include direct mailing of letters and tribal consultation. The May 6th revisions expanded further by listing the organizations contacted. Refer to Attachment 11 to see all three versions of the edits to Chapter 1.

Chapter 2 - Goals, Policies, and Programs
Program 1.1.B: Development on Small Sites
March 13th Revisions (in track changes):
• The timeframe was changed from June 2028 to June 2027. • Text was added to the first paragraph specifying that incentives and concessions

would include modification of development standards to facilitate achieving maximum allowable densities.

May 6th Revision (in yellow highlight):
• Further refined the text referenced above to replace “including modification of” with “and modify”
Figure 1. Program 1.1.B Revisions
Program 1.1.C: Live/Work Housing
March 13th Revisions (in track changes):
• Text was added to include engagement of lower income households in the development of the program.

May 6th Revision (in yellow highlight):
• None.

Figure 2. Program 1.1.C Revisions

Program 1.1.D: Mixed-Income Incentive Program (MIIP)
March 13th Revisions (in track changes):
• The timeframe was changed from June 2028 to June 2027. • Text was added to include engagement of households at all income levels in the development of the program.
• Text was added to specify that the City will offer modified development standards to facilitate achieving maximum allowable densities.

May 6th Revision (in yellow highlight):
• None.

Figure 3. Program 1.1.D Revisions

Program 1.1.E: Affordable Housing on Religious Facility Properties No revisions.

Program 1.1.F: Hotel-to-Residential Conversion
March 13th Revisions (in track changes):
• Text was added to include engagement of lower income and special needs households in the development of the program.

May 6th Revision (in yellow highlight):
• None.

Figure 4. Program 1.1.F Revisions
Program 1.1.G: Hotel Employee Housing Program

March 13th Revisions (in track changes):
• Text was added to include engagement of lower income households in the hospitality sector in the development of the program.

May 6th Revision (in yellow highlight):
• None.

Figure 5. Program 1.1.G Revisions
Program 1.1.H: Accessory Dwelling Units
March 13th Revisions (in track changes):
• Text was added to the Timeframe, expanding the monitoring and reporting on ADU production to monitor “production, affordability, and occupancy of ADUS” May 6th Revision (in yellow highlight):
• Text was added to the first bullet under Program Description to clarify that the City would not only complete revisions to the local ADU ordinance but also amend the Carmel Municipal Code consistent with State law and submit a Local Coastal Program amendment to the California Coastal Commission to be certified within 6 months of adoption (June 2027).

Figure 6. Program 1.1.H Revisions

Chapter 2 Revisions
For a side-by-side comparison of program changes and timelines between the adopted Housing Element (dated April 2024) and the proposed Housing Element Amendment (dated November 2025), as revised through May 2026, refer to Attachment 12.

Appendix A — Housing Needs and Fair Housing Report: No changes.

Appendix B — Housing Constraints: No Changes.

Appendix C — Housing Sites Inventory Analysis
March 13th Revisions (in track changes):

Appendix C has been entirely rewritten due to the extensive analysis required to support the identification of alternative sites and strategies for affordable housing.

Revisions in response to comments received in the January 11, 2026, State HCD Letter are identified with track changes. These revisions were posted for public review and comment in March 2026 and are summarized below.
• Updated the current status of the JB Pastor project on Dolores Street (page C-5 and C-6)
• Corrected a hotel APN (page C-12)
• Corrected a hotel location (page C-13)
• Provided additional supporting information for Church of the Wayfarer (page CPage 13 of 652 16)
• Added table footnotes (pages C-19, C-28, and C-33)
• Added clarifying language regarding recycled sites not being used for lower income RHNA (page C-34)
• Removed two recycled sites from Table C-18 (page C-40) • Added information for Site #S-1 Forest Cottages Specific Plan (page C-41) • Added information for Site #S-2 Court of the Fountains (page C-42) • Deleted Site #S-3 First American Title (page C-43)
• Added information for Site #S-4 Office Building (page C-45) • Added information for Site #S-5 Yafa (page C-46)
• Deleted Site #S-6 Three Garages (page C-47)
• Added information for Site #S-7 Carmel Realty Office (page C-49) • Added information for Site #S-8 Parashis/Millard Building (page C-50) • Added information for Site #S-9 The Agency (page C-52) • Added information for Site #S-10 Enzos (page C-53)
• Added information for Site #S-11 Paseo San Carlos Square (page C-55) • Added information for Site #S-12 Carmel Office Supply & Business Center (page C-56)
• Updated Table C-38 Summary of Sites Inventory
May 6th Revision (in yellow highlight):
• None.

A summary table of the revised Housing Sites Inventory is provided below. Across the five strategies, several sites have been identified that can accommodate the city’s RHNA and allow for the removal of Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3) from the sites inventory.

Table C-38 Summary of Sites Inventory

Environmental Review:

The California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., “CEQA”), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the “CEQA Guidelines”) and City Environmental Regulations (CMC

17.60) require that certain projects be reviewed for environmental impacts and that environmental documents be prepared. On April 8, 2024, the City Council adopted Resolution 2024-028, adopting a Mitigated Negative Declaration for the 6th cycle Housing Element (2023-2031). In July 2024, the City began an effort to explore amending the adopted Housing Element, which is a “project” under CEQA.

The Housing Element Amendment is an amendment to the General Plan and, as such, tribal consultation is required by State law (AB 52 and SB 18). In accordance with Public Resources Code § 21080.3.1 (AB 52) and Government Code § 65352.3 (SB 18), the City of Carmel-by-the-Sea initiated formal notification to California Native American tribes traditionally and culturally affiliated with the project area regarding the Housing Element Amendment. Formal notification letters were issued on February 6, 2026, providing the 30-day and 90-day statutory windows for requesting consultation (Attachment 13). The City, led by Principal Planner Marnie R. Waffle, engaged in a good-faith "government-to-government" dialogue with responding tribes to identify potential tribal cultural resources and ensure the implementation of appropriate mitigation measures. Two tribes responded to the invitation for consultation. City staff met with one tribe in person and received written correspondence from a second tribe.

As of May 22, 2026, the consultation process has been completed in compliance with all State requirements, ensuring the protection of cultural heritage within the project area.

City staff prepared an addendum to the adopted Initial Study/Mitigated Negative Declaration for the Housing Element Amendment. Under State law, an Addendum is not required to be circulated for public review prior to consideration at a public hearing.

Pursuant to the CEQA Guidelines Section 15164, an addendum to a previously adopted negative declaration may be prepared if some changes or additions are necessary, but none of the conditions described in Section 15162 calling for preparation of a subsequent EIR or negative declaration have occurred. The Addendum analyzes the changes to the Housing Element under the Housing Element Amendment, including the removal of Sunset Center (Site 1: North Lot and Site 2:

South Lot) and Vista Lobos (Site 3) from the Housing Element’s Housing Sites Inventory (Appendix C), redistribution of the 149 units lost through removal of these sites and deletion of the adopted Housing Element Program 1.1.B – City Owned Sites, the total increase in housing units from 410 to 434, and a decrease in projected population from 734 to 607. In addition, the Addendum analyzes the deletion of Programs 1.1.E, 1.3.E, 1.3.I, and 3.2.C and the addition of Programs 1.1.C, 1.1.D,

1.1.E, 1.1.F., 1.1.G, 1.1.H, and 1.4.C.

The Addendum concludes that none of the triggers under CEQA Guidelines Section 15162 are present and, therefore, no additional CEQA review is required.

FISCAL IMPACT:

On September 6, 2024, the City entered into a Professional Services Agreement with Veronica Tam & Associates to provide technical assistance to inform an amendment to the adopted 6th cycle Housing Element. On December 1, 2025, the City Council approved Amendment No. 2 to the Agreement and authorized a budget increase of $17,250 for a total not-to-exceed contract amount of $77,249. The total cost expended to date is $64,252.50.

PRIOR CITY COUNCIL ACTION:

On April 8, 2024, the City Council adopted Resolution 2024-029, adopting a General Plan Amendment to repeal the 2015-2023 Housing Element and adopt the 2023-2031 Housing Element of the General Plan in compliance with state housing element law.

On July 9, 2024, the City Council adopted Resolution 2024-062, directing staff to immediately explore and develop alternative affordable housing sites and programs to submit a formal general plan housing element amendment that provides alternative affordable housing opportunities and removes the need for housing units at Vista Lobos and Sunset Center.

On November 4, 2025, the City Council reviewed the draft Housing Element Amendment prior to formal submittal to the State Department of Housing and Community Development (HCD).

ATTACHMENTS:

1. Attachment 1 CC HE CEQA Reso

2. Attachment 1 Exhibit A ISMND Addendum Final v3

3. Attachment 2 CC HE GPA Reso

4. Attachment 2 Exhibit A HE6 Amendment

5. Attachment 3 HE6A Response to Comments 11.2025

6. Attachment 4 HCD Letter dated 01.13.26

7. Attachment 5 HE6A Response to Comments 03.27.26

8. Attachment 6 HE6A Response to Comments 05.13.26

9. Attachment 7 HCD Letter dated 05.28.26

10. Attachment 8 Resolution 2026-25-PC

11. Attachment 9 Resolution 2026-26-PC

12. Attachment 10 Housing Element Amendment Redline Version

13. Attachment 11 Chapter 1 Versions

14. Attachment 12 Side by Side Comp 05.19.26

15. Attachment 13 Tribal Notification Letter dated 02.20.26

ATTACHMENT 1

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
CITY COUNCIL RESOLUTION NO. 2026-XX

A RESOLUTION OF THE CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ADOPTING A RESOLUTION

APPROVING AN ADDENDUM TO THE ADOPTED MITIGATED NEGATIVE DECLARATION AND ASSOCIATED MITIGATION MONITORING AND REPORTING PROGRAM FOR THE 6TH CYCLE 2023- 2031 HOUSING ELEMENT AMENDMENT
WHEREAS, State Housing Element Law (Government Code Sections 65580 et seq.) requires that the City of Carmel-by-the-Sea City Council adopt a Housing Element for the eightyear planning period 2023-2031 to accommodate the City’s regional housing need allocation (RHNA) of 349 housing units, comprised of 113 very low-income units, 74 low-income units, 44 moderate-income units, and 118 above moderate-income units; and WHEREAS, as provided in Government Code Section 65350 et. seq., amending the Housing Element constitutes a General Plan Amendment; and WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., “CEQA”), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the “CEQA Guidelines”) and City Environmental Regulations (CMC 17.60) require that certain projects be reviewed for environmental impacts and that environmental documents be prepared; and
WHEREAS, the City of Carmel-by-the-Sea City Council adopted a Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program by City Council Resolution 2024-028 (the “IS/MND”); and
WHEREAS, in compliance with State Housing Element Law, the City of Carmel-by-the-Sea City Council adopted the 2023-2031 Housing Element on April 8, 2024, by City Council Resolution 2024-028 and the State Department of Housing and Community Development certified the adopted 2023-2031 Housing Element on April 25, 2024; and WHEREAS, on July 8, 2024, in response to community concerns regarding the redevelopment of the city-owned sites, the City Council passed Resolution 2024-062 directing staff to begin work immediately on exploring and developing alternative affordable housing sites and programs, and submit a formal general plan housing element amendment that provides alternative affordable housing opportunities and removes the need for housing units at Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Lot 3); and WHEREAS, as provided in Government Code Section 65350 et. seq., amending the Housing Element constitutes a General Plan Amendment; and

Resolution 2026-XX ATTACHMENT 1
July 7, 2026

WHEREAS, the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., “CEQA”), together with State Guidelines (14 California Code Regulations §§ 15000, et seq., the “CEQA Guidelines”) and City Environmental Regulations (CMC 17.60) require that certain projects be reviewed for environmental impacts and that environmental documents be prepared; and
WHEREAS, as provided in Government Code Sections 65352.3 the City of Carmel-by-theSea consulted with California Native American Tribes that are on the contact list maintained by the Native American Heritage Commission for the purpose of preserving or mitigating impacts to places, features, and objects described in Public Resources Code Sections 5097.9 and 5097.993 that are located within the city’s jurisdiction; and
WHEREAS, two California Native American Tribes responded with a request for consultation and were provided with information, including documents, website resources, and notification of public meetings, as of May 22, 2026, the consultation process has been completed in compliance with all State requirements, ensuring the protection of cultural heritage within the project area; and
WHEREAS, an addendum to the adopted Mitigated Negative Declaration has been prepared (Exhibit A); and

WHEREAS, on June 10, 2026, the Planning Commission conducted a duly and properly noticed public hearing and adopted Resolution 2026-XX-PC recommending that the City Council adopt an Addendum to the Mitigated Negative Declaration; and WHEREAS, on June 26, 2026, a notice of the public hearing scheduled for July 7, 2026, was published in the Carmel Pine Cone in compliance with State law (California Government Code Section 65091) and provided to all parties requesting notice indicating the date and time of the public hearing; and
WHEREAS, on or before July 3, 2026, the meeting agenda was posted in three locations in compliance with State law indicating the date and time of the public hearing; and WHEREAS, on July 7, 2026, the City Council conducted a duly and properly noticed public hearing to receive public testimony and consider this Resolution regarding the proposed Housing Element Amendment, reviewed the amended Housing Element Amendment and all pertinent maps, documents and exhibits, including HCD’s findings, the City’s response to HCD’s findings, public comments and the City’s response to public comments, the staff report dated July 7, 2026 and all attachments, and oral and written public comments provided at the public hearing.

NOW, THEREFORE, BE IT RESOLVED, that the City of Carmel-by-the-Sea City Council hereby finds that, based on substantial evidence in the record:

1. The foregoing recitals are true and correct and are incorporated by reference into this action.

Resolution 2026-XX ATTACHMENT 1
July 7, 2026

2. The City Council hereby finds that the Housing Element Amendment was considered within the IS/MND. No subsequent EIR is required because none of the circumstances requiring a subsequent EIR exist (CEQA Guidelines Section 15162):
a. No substantial changes are proposed in the project which will require major revisions of the previous IS/MND due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects. The Housing Element Amendment does not create any additional environmental impacts.
b. No substantial changes have occurred with respect to the circumstances under which the project is undertaken. The IS/MND was adopted in April 2024, and no substantial evidence has been submitted showing any change in the circumstances applicable to the project.
c. No new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the IS/MND was adopted, has been submitted to the City.

3. The City Council does hereby adopt a Resolution adopting the Addendum to the adopted Initial Study/Mitigation Negative Declaration and associated Mitigation Monitoring and Reporting Program for the 6th cycle 2023-2031 Housing Element Amendment attached hereto as Exhibit A and incorporated by this reference.

PASSED, APPROVED, AND ADOPTED BY THE PLANNING COMMISSION OF THE CITY OF CARMEL-BY-THE-SEA this 7th day of July 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED: ATTEST:
_________________________ _________________________
Dale Byrne Nova Romero, MMC
Mayor City Clerk

Addendum Pursuant to
the California Environmental Quality Act
Article 11, Section 15164
6th Cycle Housing Element Amendment
Introduction
The 6th Cycle Housing Element Update (2023-2031) was adopted by the City Council on April 8, 2024 (City Council Resolution No. 2024-029) and certified by the State Department of Housing and Community Development on April 25, 2024 (herein referred to as “adopted Housing Element”). This Housing Element planned for 410 housing units, approximately 17% more than the City’s 349 Regional Housing Needs Allocation (RHNA). Two city-owned sites, Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3), were included as potential affordable housing sites (Program 1.1.B: City-Owned Sites), which had a total of 149 units (78 very low, 46 low and 25 moderate).

Environmental review for the adopted Housing Element Update included the preparation of an Initial Study/Mitigated Negative Declaration (IS/MND). No potential impacts to agriculture and forestry, mineral resources, population and housing, and wildfire were identified. Potential impacts to aesthetics, cultural resources, energy, greenhouse gas emissions, hazards and hazardous materials, land use planning, noise, public services, recreation, transportation and utilities and service systems were identified as less than significant. Potential impacts to air quality, biological resources, and geology and soils were identified as less than significant with mitigation measures incorporated.

At the direction of the City Council, staff and the community group Affordable Housing Alternatives (“AHA”) explored alternative affordable housing solutions that would disperse the City’s RHNA throughout the community rather than concentrate the units in a few locations, namely city-owned properties at the Sunset Center and Vista Lobos parking lots. The alternative strategies developed and incorporated into the Housing Element Amendment (“Amendment”) include accessory dwelling units, hotel-to-residential conversions, a mixed-use incentive program, the creation of a new live/work housing type and facilitating housing on property owned by religious facilities.

The Housing Element Amendment includes 434 housing units, which is approximately 24 percent more than the RHNA of 349 units and 24 additional units than the 410 units in the adopted Housing Element. However, the number of people per household has dropped from

1.79 to 1.40, resulting in a smaller population increase from 734 people to 607 people between the adopted Housing Element and the Amendment.

2 of 10
This technical addendum (“Addendum”) has been prepared pursuant to Article 11, Section 15164 of the California Environmental Quality Act Guidelines to make minor technical changes to the project analyzed in the IS/MND, adopted April 8, 2024, by City Council Resolution No. 2024-028. None of the conditions described in CEQA Guidelines Section 15162 calling for preparation of a subsequent EIR or negative declaration have occurred, as discussed in more detail below.

Scope and Purpose of this Addendum
It has been determined that none of the conditions described in Section 15162 of the CEQA Guidelines calling for preparation of a subsequent Environmental Impact Report (EIR) or negative declaration have occurred. There are no new significant environmental effects or increase in the severity of previously identified significant effects per Section 15162(a)(1) and (2) of the CEQA Guidelines, and there is no new information of substantial importance that was not known at the time the previous IS/MND was adopted, per Section 15162(a)(3) of the CEQA Guidelines.

Documents reviewed for this Addendum included the IS/MND prepared and adopted for adopted Housing Element as well as associated technical reports and materials. Based upon this review, it was determined that the proposed Amendment will not have the potential to significantly degrade the quality of the environment, will have no significant impact on longterm environmental goals, will have no significant cumulative effect upon the environment, and will not cause substantial adverse effects on human beings, either directly or indirectly.

This Addendum includes the following changes to the adopted Housing Element as a result of the Amendment:

A. Removal of Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3) from the Housing Element’s Housing Sites Inventory (Appendix C) and Deletion of Program

1.1.B – City-Owned Sites. Implementation of this program is planned to provide 78 very low, 46 low and 25 moderate income units with a target land use entitlements issuance date of December 2028. The program also includes consideration of implementing outreach opportunities with housing developers, requests for proposals, development incentives, fee waivers, priority process, and financial assistance (when available) to facilitate and incentivize development.
i. Site No. 1 of the adopted Housing Element – Sunset Center North Lot. This site is located at the east side of San Carlos between 8th and 10th Avenues and is approximately 1.02 acres in size. The adopted Housing Element identified an applied density of 33 dwelling units per acre resulting in a maximum capacity of 33 units.

The baseline condition of this site is an improved public parking lot with a few trees planted in perimeter and interior parking islands.

3 of 10
ii. Site No. 2 of the adopted Housing Element – Sunset Center South Lot. This site is located at the east side of San Carlos between 8th and 10th Avenues and is approximately 1.84 acres in size. The adopted Housing Element identified an applied density of 33 dwelling units per acre resulting in a maximum capacity of 60 units.

The baseline condition of this site is an improved public parking lot with a few trees planted in perimeter and interior parking islands.
iii. Site No. 3 of the adopted Housing Element – City Public Works Site (Vista Lobos).

This site is comprised of 2 parcels located off Torres between 3rd and 4th Avenues and off Junipero between 3rd and 4th Avenues. In total, Site No. 3 is approximately

1.28 acres in size. The adopted Housing Element identified an applied density of 44 dwelling units per acre resulting in a maximum capacity of 56 units. The baseline condition of Vista Lobos is an improved public parking lot with a two-story split level structure adjacent to Junipero Avenue.

B. Deletion of Program 1.1.E – City Partnership with the Carmel Foundation to Develop Affordable Housing. Implementation of this program is planned to provide 11 very low and 10 low income units with a target land use entitlements issuance date of June 2028. i. Site No. 8 of the adopted Housing Element– Carmel Foundation. This site is located at the northeast corner of Lincoln and 8th Avenues and is 0.64 acres in size. The adopted Housing Element identified an applied density of 33 dwelling units per acre resulting in a maximum capacity of 21 units. The site is comprised of 4 parcels with a baseline condition of each lot being improved establishing the Carmel Foundation campus.
ii. In order to enable the development of 21 lower-income residential units on Site No. 8, this program requires the City meet annually with the Carmel Foundation to identify funding sources to support redevelopment of the site with affordable residential units; provide guidance on the housing needs of the community to construct housing types/units that meet the need; and support the Foundation’s efforts to serve Carmel-by-the-Sea community members. If at mid-cycle (2027), land entitlements and building permits are not completed, the anticipated 21 units for Site No. 8 will be reallocated to the City-owned sites or another available public or private site.

C. Deletion of Program 1.3.E – Amend the “A-2” Zoning District. Implementation of this program would facilitate development of the 50 very low, 35 low and 5 moderate income units planned for the Sunset Center sites. Adoption of code amendments is targeted for December 2025.
i. The A-2, or Community and Cultural Center, zoning district allows senior housing as a permitted use. However, development standards for the A-2 zone are not codified

4 of 10
nor is there a requirement for approval of a Design Review permit, resulting in uncertainty and the potential for a lengthy development process. ii. Only 2 properties within the city are zoned A-2, Sunset Center North Lot (Site No. 1) and Sunset Center South Lot (Site No. 2). See discussion in subsection A, above. iii. This program requires amending the Carmel-by-the-Sea Municipal Code (CMC) to include clear setbacks, height and objective design standards to add clarity, remove development constraints and encourage development of affordable senior housing.

D. Deletion of Program 1.3.I – Implement State Law SB10, Opportunities to Maximize Feasibility of Development in Strategic Locations. Implementation of this program is planned to provide 19 housing units with a target date to adopt code amendments of December 2024.
i. SB10 encourages strategic density within neighborhoods and the adopted Housing Element identified 3 underutilized sites (Site Nos. 5 – First Church of Christ Parking Lot, 6 – American Red Cross and 9 – American Legion) zoned R-1. These sites are located on the periphery of the commercial district and contain non-residential uses.
ii. This program requires the city to work with the property owners to rezone these sites for development under the provisions of SB 10, including a by-right process.

Rezoning of the sites would allow the establishment of multi-family housing.

E. Deletion of Program 3.2.C – Local Universal Design Standards. The objective of the program is to ensure accessible housing for all residents and adopt the standards by June 2026. i. Universal Design Standards address the full life cycle use of housing and are intended to accommodate a wide range of individual preferences and functional abilities (e.g. aging in place).
ii. This program requires the city to adopt Universal Design Standards that incorporate accessibility design features that exceed current building code requirements.

F. Addition of Program 1.1.C – Live/Work Housing. Implementation of this program is planned to provide 8 extremely low, 31 very low and 39 low income units with a target date to adopt code amendments of June 2026. If development trends do not meet the program objectives by June 2028, the city is required to modify the program and/or utilize alternative strategies.
i. The Amendment identifies 266 off-street storefronts in the downtown area that were either vacant or underutilized. This program requires the city to amend the CMC and add a “live/work” classification to the existing categories of approved uses

5 of 10
in the downtown area. Implementation of this program would result in interior remodel of existing commercial spaces resulting in maintaining the commercial use/space in the front and establishing a residential unit in the back. ii. This program incentivizes participation by prioritizing water allocation, expediting permit processing, waiving or reducing fees and offering free pre-application development meetings.
iii. The added units identified in Program 1.1.C absorbs a portion of the 149 units lost through deletion of the adopted Housing Element Program 1.1.B – City Owned Sites.

G. Addition of Program 1.1.D – Mixed-Income Incentive Program. Implementation of this program is planned to provide 2 very low, 2 low, 2 moderate and 6 above moderate units with a target date to adopt code amendments by June 2027. i. The intent of this program is to incentivize the creation of mixed-income housing in the downtown area through adaptive re-use or redevelopment. ii. This program incentivizes participation by offering higher density (up to 88 du/ac) and a FAR bonus, prioritizing water allocation, expediting permit processing, waiving or reducing fees and offering free pre-application development meetings. iii. The added units identified in Program 1.1.D absorbs a portion of the 149 units lost through deletion of the adopted Housing Element Program 1.1.B – City Owned Sites.

H. Addition of Program 1.1.E – Affordable Housing on Religious Facility Properties.

Implementation of this program is planned to provide 6 extremely low, 29 very low and 30 low income units. This program requires the city to work with individual churches to submit formal applications by June 2028. If development trends do not meet the objectives of this program by that date, the city will modify the program and/or utilize alternative strategies. i. This program replaces adopted Housing Element Program 1.1.D – Allow Religious Institution Affiliated Housing Development, which planned for 9 residential units on Site No. 5 (First Church of Christ Parking Lot). Program 1.1.D required an amendment to the CMC to allow religious institution-affiliated housing development projects by-right as an accessory to a religious institution use with a density of up to 33 du/ac and modifying parking standards consistent with state law. ii. Program 1.1.E in the Amendment is essentially the same concept as adopted Housing Element Program 1.1.D as it relates to working with individual churches.

However, with the adoption of SB 4, the State requires that housing development on religious facilities are allowed by right. Therefore, this program implements SB 4 requirements without the need for a zoning amendment.

6 of 10
iii. The increase in units identified in Program 1.1.E absorbs a portion of the 149 units lost through deletion of the adopted Housing Element Program 1.1.B – City Owned Sites.

I. Addition of Program 1.1.F – Hotel-to-Residential Conversion. Implementation of this program is planned to provide 40 very low, 40 low, 40 moderate and 41 above moderate income units. This program requires the city to adopt an ordinance by December 2026. The program shall be monitored, and progress shall be reported to the City Council annually. If development trends do not meet the objectives of this program by that date, the city will modify the program and/or utilize alternative strategies. i. The Amendment identifies that there are a significant number of underperforming overnight visitor accommodations within the city. Further, the city has a selfimposed cap of 948 hotel rooms. ii. The program provides an opportunity for property owners and developers to convert underperforming hotels into mixed-income multifamily rentals. The primary incentive to participate in the program is the ability to transfer hotel keys from the converted hotel to other sites in the city.
iii. This program also incentivizes participation by prioritizing water allocation, allowing a modest increase in FAR on hotel sites that are converted, offering expediting permit processing, waiving or reducing fees and offering free pre-application development meetings.
iv. An additional incentive to participate in the program is the “hotel residential suites”.

The City will explore the possibility of allowing purchasers of hotel keys to designate a subset of newly established hotel rooms as hotel residential suites. These suites would be sold to private individuals and for a portion of the year be owner-occupied and returned to the hotel inventory for the remaining part of the year. Although these suites are not included in the Sites Inventory and would not be credited to the city’s RHNA, appealing from a fiscal standpoint.
v. The projected units identified in Program 1.1.F absorbs a portion of the 149 units lost through deletion of the adopted Housing Element Program 1.1.B – City Owned Sites.

J. Addition of Program 1.1.G – Hotel Employee Housing Program. i. Replaces adopted Housing Element Program 1.3.D – Overnight Visitor Accommodation – Employee Housing Program.

7 of 10
K. Addition of Program 1.1.H – Accessory Dwelling Units. Implementation of this program is planned to provide 70 ADUs (7 extremely low, 14 very low, 21 low, 21 moderate and 7 above moderate income units).
i. This program replaces adopted Housing Element Program 1.3.C – Accessory Dwelling Units, which was planned to provide 34 ADUs (10 very low, 10 low, 10 moderate and 4 above moderate income units. This program also included adoption of an updated ADU ordinance and providing pre-approved ADU plans. ii. Program 1.1.H is essentially the same as 1.3.C; however, it is a much more robust program resulting in an increase of the projected number of units (based on a historical average of 10 ADUs per year) from 34 to 70. Additional incentives such ongoing outreach and education, as pre-sales inspections, an amnesty program and renter match program are also provided.
iii. The increase in ADU units identified in Program 1.1.H absorbs a portion of the 149 units lost through deletion of the adopted Housing Element Program 1.1.B – City Owned Sites.

L. Addition of Program 1.4.C – By-Right Approval. Implementation of this program includes a CMC amendment requiring ministerial approval for housing development that includes 20% of units as affordable to lower income households on vacant reuse sites identified in 2 or more previous and consecutive Housing Element cycles, nonvacant reuse sites identified in the 5th Cycle Housing Element and sites redesignated/rezoned. i. This program acknowledges State law regarding reuse sites. None of the reuse sites in the Housing Element Amendment were used in previous cycles to fulfill lower income RHNA requirements.

Subsequent Negative Declarations
None of the conditions described in Section 15162 of the CEQA Guidelines calling for the preparation of a Subsequent Initial Study or EIR have occurred:

A. 15162(a)(1): There is no change to the project location. As demonstrated in Sections 1 and 2 above, the Amendment would increase the number of housing units identified in the 6th cycle from 410 to 434. Although the adopted Housing Element included housing sites scattered throughout the city, 149 units were planned on 3 city-owned lots (see Program 1.1.B City-Owned Sites of the adopted Housing Element). The Amendment includes a change in strategy resulting in removing these city-owned sites and instead, dispersing the 149 units within existing developed areas. As demonstrated below, the Amendment does not include substantial changes requiring major revisions to the IS/MND due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects.

8 of 10
i. Air Quality – The IS/MND identified the potential to expose sensitive receptors to toxic air contaminant (TAC) emissions from construction equipment exhaust.

Sensitive receptors typically include residences, hospitals and schools where a human population, especially children, seniors, and sick persons could be continuously exposed to TACs. This impact will be reduced to a less than significant level with implementation of Mitigation Measure (MM) AQ-1. This mitigation requires submittal and approval of a Construction Management Plan requiring the use of California Air Resources Board’s Truck and Bus Regulation compliant heavy duty diesel vehicles, avoiding and limiting idling, proper maintenance of construction equipment, and utilizing equipment meeting Tier 3 Federal emission standards. The Amendment results in removal of the Sunset Center (Site 1: North Lot and Site 2:

South Lot) and Vista Lobos (Site 3) from the Housing Element’s Housing Sites Inventory (Appendix C), redistribution of the 149 units lost through removal of these sites and deletion of the adopted Housing Element Program 1.1.B – City Owned Sites, the total increase in housing units from 410 to 434, and a decrease in projected population from 734 to 607. This change does not increase the severity of the air quality impacts previously identified and implementation of MM AQ-1 would continue to adequately reduce impacts to a less than significant level. ii. Biology – The IS/MND included a search of the California Natural Diversity Database (CNDDB) and identified the potential for the monarch butterfly, obscure bumble bee, western bumble bee, special-status bats and nesting bird to occur within the project area. Therefore, potential impacts to special status wildlife species and their habitat were identified. This impact will be reduced to a less than significant level through implementation of the following mitigation measures:

MM BIO-1 requires mandatory environmental awareness training for all construction personnel by a qualified biologist prior to ground disturbance. The training shall include identifying special status species, and their habitats, known to occur in the area, best management practices and mitigation measures related to biological resources.

MM BIO-2 requires a preconstruction survey for monarch butterflies by a qualified biologist if ground disturbance would occur in the late fall/early winter. If overwintering Monarchs are identified, this mitigation requires avoidance until their absence is confirmed.

MM BIO-3 requires a preconstruction survey by a qualified biologist if work occurs during the optimal flight period for the obscure bumble bee and western bumble bee (April 1 – July 31) and prior to ground disturbance activities. If nests are detected, the area shall be fenced off, avoided and monitored. If avoidance is not feasible, the qualified biologist shall coordinate with California Fish and Wildlife to determine the appropriate method for relocation or eviction of the nests.

9 of 10
MM BIO-4 requires a habitat assessment for bats and potential roosting sites in trees approved for removal. The assessment, or survey, shall occur 14 days prior to ground disturbance or tree removal and shall include areas 50 feet outside of the construction site. If bats are found roosting outside of the nursery season (May 1 – October 1), California Fish and Wildlife shall be consulted. If avoidance/postponement is not feasible, a Bat Eviction Plan shall be submitted to California Fish and Wildlife and written approval of the plan shall be obtained prior to project implementation.

MM BIO-5 first requires avoidance of construction activities, including vegetation removal and ground disturbance, during bird nesting season (February 1 – September 15). If avoidance is not feasible, 2 nesting bird surveys by a qualified biologist shall occur; the first, within 7 days, and the second, within 48 hours prior to commencement of construction. If nests are found, the biologist shall establish an appropriate buffer which shall be marked, monitored and maintained until the young have fledged and are foraging independently.

The Amendment results in removal of Sunset Center (Site 1: North Lot and Site 2:

South Lot) and Vista Lobos (Site 3) from the Housing Element’s Housing Sites Inventory (Appendix C), redistribution of the 149 units lost through removal of these sites and deletion of the adopted Housing Element Program 1.1.B – City Owned Sites, the total increase in housing units from 410 to 434, and a decrease in projected population from 734 to 607. This change does not increase the severity of the biological impacts previously identified and implementation of MMs BIO-1 through BIO-5 would continue to adequately reduce impacts to a less than significant level.

iii. Geology and Soils – The IS/MND did not identify known paleontological resources within the city. The nearest known resource is approximately 2 miles south, at the Point Lobos State Reserve. Therefore, the IS/MND identified a potential impact, either directly or indirectly, to destroy a unique paleontological resource or site or unique geologic feature by the accidental discovery during destruction. This impact will be reduced to a less than significant level with MM GEO-1 incorporated, which requires a note be placed on all grading permits stating that if paleontological resources are accidently uncovered, all construction work shall halt within 100 feet of the find until a qualified paleontologist can make and assessment, and if necessary, develop appropriate next steps. The Amendment results in removal of Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3) from the Housing Element’s Housing Sites Inventory (Appendix C), redistribution of the 149 units lost through removal of these sites and deletion of the adopted Housing Element Program 1.1.B – City Owned Sites, the total increase in housing units from 410 to 434, and a decrease in projected population from 734 to 607. This change does not increase the severity of the geology and soils impacts previously identified and implementation of MM GEO-1 would continue to adequately reduce impacts to a less than significant level.

10 of 10
B. 15162(a)(2): As demonstrated Section 3.A above, the Amendment does not include changes with respect to the circumstances under which the project is undertaken which will require major revisions of the previous IS/MND due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects.

C. 15162(a)(3): There is no new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the previous IS/MND was adopted.

Revision to the Adopted IS/MND
None of these changes discussed in this Addendum affect the analysis and conclusions of the previously adopted IS/MND. All potential impacts previously identified, conclusions and mitigation measures remain adequate and are incorporated herein by reference.

Conclusion
An IS/MND was prepared, circulated, considered, and adopted for the adopted Housing Element, which found that all physical impacts associated with the project were less than significant.

The City of Carmel-by-the-Sea has considered the Housing Element Amendment and determined its scope does not alter the conclusions in the adopted IS/MND prepared for adopted 6th Cycle Housing Element. As discussed in the previous IS/MND, the City of Carmelby-the-Sea’s standard conditions of approval were required to ensure compliant exterior lighting, tree protection, archaeological resource protection, erosion and sediment control, hazardous material removal, stormwater drainage, and water supply regulations. These conditions of approval will apply to adoption of the Amendment.

Based on review of the Amendment, no other potentially significant issues were identified for the proposed project. The proposal reduces the overall potential impacts (reduced population increase) and does not alter the analysis or conclusions reached by the previous environmental document.

Attachment and Incorporated by Reference:

Attachment A – Initial Study/Mitigated Negative Declaration for 6th Cycle Housing Element Update (2023-2031), dated February 20, 2024 and adopted April 8, 2024.

Attachment A
6th Cycle Housing Element Update
Initial Study/Mitigated Negative Declaration
Access the attachment at the following link:
https://ci.carmel.ca.us/sites/main/files/fileattachments/mitigated_negative_declaration_of_he6_update.pdf?1782516940

ATTACHMENT 2

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
CITY COUNCIL RESOLUTION NO. 2026-XX

A RESOLUTION OF THE CITY OF CARMEL-BY-THE-SEA CITY COUNCIL ADOPTING A RESOLUTION TO AMEND THE GENERAL PLAN BY ADOPTING THE 6TH CYCLE 2023-2031 HOUSING ELEMENT

AMENDMENT IN COMPLIANCE WITH STATE HOUSING ELEMENT LAW
WHEREAS, the California Legislature has found that “California has a housing supply and affordability crisis of historic proportions. The consequences of failing to effectively and aggressively confront this crisis are hurting millions of Californians, robbing future generations of the chance to call California home, stifling economic opportunities for workers and businesses, worsening poverty and homelessness, and undermining the state’s environmental and climate objectives” (Government Code Section 65589.5.); and
WHEREAS, the Legislature has further found that “Among the consequences of those actions are discrimination against low-income and minority households, lack of housing to support employment growth, imbalance in jobs and housing, reduced mobility, urban sprawl, excessive commuting, and air quality deterioration” (Government Code Section 65589.5.); and WHEREAS, the Legislature adopted the Housing Crisis Act of 2019 (SB 330), which states that “In 2018, California ranked 49th out of the 50 states in housing units per capita… California needs an estimated 180,000 additional homes annually to keep up with population growth, and the Governor has called for 3.5 million new homes to be built over 7 years”; and WHEREAS, State Housing Element Law (Government Code Sections 65580 et seq.) requires that the City of Carmel-by-the-Sea City Council adopt a Housing Element for the eightyear planning period 2023-2031 to accommodate the City’s regional housing need allocation (RHNA) of 349 housing units, comprised of 113 very low-income units, 74 low-income units, 44 moderate-income units, and 118 above moderate-income units; and WHEREAS, in compliance with State Housing Element Law, the City of Carmel-by-the-Sea City Council adopted the 2023-2031 Housing Element on April 8, 2024, by City Council Resolution 2024-028 and the State Department of Housing and Community Development certified the adopted 2023-2031 Housing Element on April 25, 2024; and WHEREAS, the adopted 2023-2031 Housing Element identifies adequate sites to accommodate a range of housing types to meet the City’s RHNA; and WHEREAS, on July 8, 2024, in response to community concerns regarding the redevelopment of the city-owned sites, the City Council passed Resolution 2024-062 directing staff to begin work immediately on exploring and developing alternative affordable housing sites and programs, and submit a formal general plan housing element amendment that provides

Resolution 2026-XX ATTACHMENT 2
July 7, 2026

alternative affordable housing opportunities and removes the need for housing units at Sunset Center (Site 1: North Lot and Site 2: South Lot) and Vista Lobos (Site 3); and WHEREAS, as provided in Government Code Section 65350 et. seq., amending the Housing Element constitutes a General Plan Amendment; and WHEREAS, as provided in Government Code Sections 65352.3 the City of Carmel-by-theSea consulted with California Native American Tribes that are on the contact list maintained by the Native American Heritage Commission for the purpose of preserving or mitigating impacts to places, features, and objects described in Public Resources Code Sections 5097.9 and 5097.993 that are located within the city’s jurisdiction; and
WHEREAS, two California Native American Tribes responded with a request for consultation and were provided with information, including documents, website resources, and notification of public meetings, as of May 22, 2026, the consultation process has been completed in compliance with all State requirements, ensuring the protection of cultural heritage within the project area; and
WHEREAS, the preparation, adoption, and implementation of the Housing Element Amendment requires a diligent effort to include all economic segments of the community; and WHEREAS, the amendment was developed in close collaboration with the Affordable Housing Alternatives (AHA) resident group over a period of 24 months involving weekly or biweekly meetings; joint community workshop presentations; data collection, research, and analysis; program drafting; meetings with the State Department of Housing and Community Development; and, presentations to the Planning Commission and City Council; and WHEREAS, the preparation of the amendment included various forms of outreach including several meetings with hotel owners, affordable housing developers, and hotel developers to discuss the Hotel-to-Residential Conversion Program; engagement of the five local churches to discuss the Affordable Housing on Religious Facility Properties program; targeted outreach to property owners of housing opportunity sites, service providers and affordable housing developers; two Community Meetings; two Planning Commission meetings; and, seven City Council meetings; and
WHEREAS, in accordance with Government Code Section 65585 (b), on October 16, 2025, the City of Carmel-by-the-Sea publicly posted the draft Housing Element Amendment and requested public comment for a 7-day review period from October 16 to November 5, 2025; and WHEREAS, on November 13, 2025, after considering all public comments received and preparing written responses to the public comments in a report titled Housing Element Amendment Public Comment Responses (dated November 2025), which is hereby incorporated by reference, the City of Carmel-by-the-Sea submitted the draft Housing Element Amendment to the State Department of Housing and Community Development (HCD) for its review; and

Resolution 2026-XX ATTACHMENT 2
July 7, 2026

WHEREAS, on January 13, 2026, the City of Carmel-by-the-Sea received a letter from HCD providing its findings regarding the draft Housing Element Amendment; and WHEREAS, on March 13, 2026, the City of Carmel-by-the-Sea posted a revised draft Housing Element Amendment responding to HCD’s findings for a 7-day public review and comment period from March 13 to March 20, 2026; and
WHEREAS, on March 27, 2026, after considering all of the public comments received and preparing written responses to the public comments in a report titled Housing Element Public Comment Responses (dated March 27, 2026) the City of Carmel-by-the-Sea re-submitted the draft Housing Element Amendment to the HCD for its review; and WHEREAS, on April 28, 2026, the HCD provided minor comments requiring revision and reposting of the Housing Element Amendment for a second 7-day public review and comment period which took place from May 6 to May 13, 2026; and WHEREAS, on May 19, 2026 after considering all public comments received and preparing written responses to the public comments in a report titled Housing Element Amendment Public Comment Responses (dated May 13, 2026), which is hereby incorporated by reference, the City of Carmel-by-the-Sea submitted the revised draft Housing Element Amendment to HCD for the completion of its review; and
WHEREAS, on May 28, 2026, the City of Carmel-by-the-Sea received a letter from the HCD stating that the draft Housing Element Amendment is in substantial compliance with State Housing Element Law; and
WHEREAS, on June 10, 2026, the Planning Commission conducted a duly and properly noticed public hearing and adopted Resolution 2026-XX-PC recommending that the City Council adopt the Housing Element Amendment; and
WHEREAS, on June 26, 2026, a notice of the public hearing scheduled for July 7, 2026, was published in the Carmel Pine Cone in compliance with State law (California Government Code Section 65091) and provided to all parties requesting notice indicating the date and time of the public hearing; and
WHEREAS, on or before July 3, 2026, the meeting agenda was posted in three locations in compliance with State law indicating the date and time of the public hearing; and WHEREAS, on July 7, 2026, the City Council conducted a duly and properly noticed public hearing to receive public testimony and consider this Resolution regarding the proposed Housing Element Amendment, reviewed the amended Housing Element and all pertinent maps, documents and exhibits, including HCD’s findings, the City’s response to HCD’s findings, public

Resolution 2026-XX ATTACHMENT 2
July 7, 2026

comments and the City’s response to public comments, the staff report dated June 10, 2026 and all attachments, and oral and written public comments provided at the public hearing; and WHEREAS, on July 7, 2026, the City Council adopted Resolution 2026-XX adopting an Addendum to the adopted Mitigated Negative Declaration and Associated Mitigation Monitoring and Reporting Program for the 6th Cycle 2023-2031 Housing Element Amendment.

NOW, THEREFORE, BE IT RESOLVED, that the City of Carmel-by-the-Sea City Council hereby makes the following findings, based on substantial evidence in the record:

1. The foregoing recitals are true and correct and are incorporated by reference into this action.

2. The City has considered the requests for additional information from the State Department of Housing and Community Development and information has been included in the 2023-2031 Housing Element Amendment that responds to these requests.

3. Based on substantial evidence in the record, the Housing Element Amendment is consistent with state and local law, including the City of Carmel-by-the-Sea General Plan and municipal code.

4. Based on substantial evidence in the record, the non-vacant sites identified in the Housing Element Amendment sites inventory to accommodate the RHNA do not constitute an impediment to planned residential development during the 2023-2031 planning period.

Section 65583.2(g)(2) of the Government Code requires that any jurisdiction relying on non-vacant sites to meet more than 50 percent of the RHNA for lower-income households must make findings that the existing use on the non-vacant site is not an impediment to residential development during the planning period. The findings must be based on substantial evidence that the existing use is likely to be discontinued during the planning period. The City has provided substantial evidence in the Housing Element that the existing uses have already been or are likely to be discontinued during the planning period. This analysis is based on objective criteria such as owner interest, utilization, age of structure, condition of structure, floor area ratio, and improvement to land value ratio.

Additional criteria such as, physical characteristics, existing uses, vacancy rates, location and context, local knowledge, and environmental and infrastructure constraints were considered.

The sites inventory analysis demonstrates that all of the selected sites represent the best opportunities to add residential units to the City’s housing stock and possess the highest potential for becoming available for development over the 8-year planning period.

Resolution 2026-XX ATTACHMENT 2
July 7, 2026

Several non-vacant parcels selected to accommodate lower-income units where a property owner or developer has stated recent interest to the City in developing residential uses include, Su Vecino Court, GBG Building, Serena Court, Doud Arcade, Villa Carmel, Eastwood Building, El Prado de Su Vecino, Stonehouse Terrace, All Saints Episcopal Church, First Church of Christ Scientist, and Church of the Wayfarer.

The sites inventory analysis identified non-vacant parcels that already contain discontinued uses which have a greater likelihood of being redeveloped with residential units, such as Serena Court, Doud Arcade, Villa Carmel, Eastwood Building, El Prado de Su Vecino, and Stonehouse Terrace.

The sites inventory analysis identified multiple underutilized non-vacant parcels which have the potential for additional development. Sites with newer business or known longterm leases were not included, as they have a lower probability of redeveloping within the current housing cycle. These sites are listed in Appendix C, Table C-18, Additional Scattered Sites of the Housing Element Amendment. The age of construction, building conditions, vacancy rate, under-developed/under-utilized nature of the site, improvement-to-land value ratio, and floor area ratio, were analyzed for each site and support reuse of these sites with housing or mixed-use development during the planning period.

5. As required by Government Code Section 65585(e), the Planning Commission has considered the findings in the letter addressed to the City from HCD dated May 28, 2026, as required by Government Code Section 65585(f). The City has incorporated revisions to the Housing Element Amendment to address HCD’s findings. As such, the Housing Element Amendment substantially complies with all requirements of State Housing Element Law as interpreted by HCD, as substantiated in the May 28, 2026, letter.

6. The Housing Element Amendment substantially complies with Housing Element Law, as provided in Government Code 65580 et seq. and contains all provisions required by State Housing Element Law.

7. The Planning Commission recommended and the City Council hereby takes the following actions:
a. Adopt 2023-2031 Housing Element Amendment in substantially the form attached hereto as Exhibit “A”.
b. Authorize the Community Planning & Building Director to submit the amended Housing Element and all supporting documentation to HCD following City Council Adoption, with a request for certification.
c. Authorize the Community Planning & Building Director to make any nonsubstantive changes to the amended Housing Element that may be required by

Resolution 2026-XX ATTACHMENT 2
July 7, 2026

the State to achieve certification or that may be necessary to ensure internal consistency with other planning documents.
d. Authorize the Community Planning & Building Director to distribute and make available copies of the amended Housing Element in the manner provided in Government Code Sections 65357 (requiring that copies be provided to specific public entities and persons submitting comments, as well as made available to the general public) and 65589.7 (requiring that copies be submitted to water and sewer service providers).

PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BYTHE-SEA this 7th day of July 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED: ATTEST:
_________________________ _________________________
Dale Byrne Nova Romero, MMC
Mayor City Clerk

6th Cycle Housing Element
(2023-2031)

CITY OF CARMEL-BY-THE-SEA

Adopted April 8, 2024
Amended July 7, 2026

Prepared by
EMC Planning Group
Amended by
Veronica Tam & Associates, Inc.

ADOPTED
6TH CYCLE HOUSING ELEMENT
(2023-2031)

CI TY OF CARME L-BY-THE -SEA

PREPARED FOR
City of Carmel-by-the-Sea
Marnie Waffle, AICP, Principal Planner
City of Carmel-by-the-Sea
P.O. Box CC
Carmel-by-the-Sea, CA 93921
Tel 831.620.2000

PREPARED BY
EMC Planning Group Inc.
601 Abrego Street
Monterey, CA 93940
Tel 831.649.1799
Fax 831.649.8399
Anastazia Aziz, AICP, Principal
[email protected]
www.emcplanning.com

AMENDED BY
Veronica Tam & Associates, Inc.
122 E. Foothill Blvd, Suite A, #332
Arcadia, CA 91006
Tel 626.304.0440
Veronica Tam, AICP, Principal
[email protected]
Adopted April 8, 2024
Amended July 7, 2026

Introduction
1 CHAPTER

Chapter 1.0 – Introduction 1-0
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Table of Contents

1.0 Introduction.............................................................................................................................................................1-1

1.1 Introduction.........................................................................................................................................................1-1

1.2 California’s Housing Crisis................................................................................................................................1-2

1.3 Regional Housing Needs Allocation................................................................................................................1-3

1.4 Affirmatively Furthering Fair Housing............................................................................................................1-4

1.5 Overview of Planning Efforts...........................................................................................................................1-8

1.6 Public Participation.......................................................................................................................................... 1-12

Chapter 1.0 – Introduction 1-1
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026

1.0 Introduction

1.1 Introduction
Carmel-by-the-Sea is a community with a high quality of life, a healthy environment, and renowned architecture. The long-term vitality of Carmel-by-the-Sea and the local economy depend upon the availability of various types of housing to satisfy the community’s local housing needs while continuing to be a vacation destination for all. As Carmel-by-the-Sea looks towards the future, increasing the range and diversity of housing options is integral to the City’s success. This Housing Element serves as a continuation of the City’s commitment to ensuring new opportunities for residential development, as well as preserving and enhancing existing neighborhoods, and continuing to protect the natural environment.

Located on the Monterey Peninsula and incorporated in 1916, Carmel-by-the-Sea is a bijou coastal community boasting sweeping views of the Pacific Ocean, acclaimed architecture, and a strong residential character. The City has nearly 50 historic properties within the centralized commercial district, primarily dating to the turn of the 20th century and the 1920-1930s period. Residences throughout the one-square-mile village span a range of construction eras but are collectively appreciated for their architectural aesthetic. As a result of its beauty, the City is a popular tourism and second-home destination. Approximately 51 percent of housing units are for seasonal, recreational, or occasional use, creating high barriers of entry to the housing market for local renters.

This 2023-2031 Housing Element represents the City of Carmel-by-the-Sea’s intent to plan for the housing needs of the community while meeting the State’s housing goals as set forth in Article 10.6 of the California Government Code (§§65580-65589.11). The California State Legislature has identified the attainment of a decent home and a suitable living environment for every Californian as the State's major housing goal. The Carmel-by-the-Sea 6th Cycle Housing Element represents a sincere and creative effort to meet State housing mandates within the constraints of an established and nearly built-out community with limited land availability, coastal hazards, and extraordinarily high costs of land and housing.

Pursuant to state law, the Housing Element must be updated periodically according to statutory deadlines. This 6th Cycle Housing Element covers the planning period 2023 through 2031 and replaces the City's 5th Cycle Housing Element that covered the period 2015 through 2023.

Chapter 1.0 – Introduction 1-2
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Per State Housing Element law, the document must be periodically updated to:
▪ Outline the community’s housing production objectives consistent with State and regional growth projections;
▪ Describe goals, policies and implementation strategies to achieve local housing objectives; ▪ Examine the local need for housing with a focus on special needs populations; ▪ Identify adequate sites for the production of housing serving various income levels; ▪ Analyze potential constraints to new housing production; ▪ Evaluate the Housing Element for consistency with other General Plan elements; and ▪ Evaluate Affirmatively Furthering Fair Housing.

1.2 California’s Housing Crisis
The 6th Cycle Housing Element update comes at a critical time because California is experiencing a housing crisis, and as is the case for all jurisdictions in California, Carmel-by-the-Sea is committed to playing its part in meeting the growing demand for housing. In the period 2020 through 2045, the Association of Monterey Bay Area Governments (AMBAG) region is projected to add 36,544 jobs,1 which represents a 9 percent increase. These changes will increase demand for housing across all income levels, and if the region can’t identify ways to significantly increase housing production, it risks worsening the burden for existing lower-income households, many of whom do not have the luxury or skill set to move to a new job center but that are nonetheless faced with unsustainable increases in housing cost.

If the region becomes less competitive in attracting workers and increasingly unaffordable to lowerincome workers and seniors, then social and economic segregation will worsen, only exacerbating historic patterns of housing discrimination, racial bias, and segregation. This potentiality has become so acute in recent years that the California Legislature addressed the issue with new legislation in 2018.

Assembly Bill (AB) 686 requires all state and local agencies to explicitly address, combat, and relieve disparities resulting from past patterns of housing segregation to foster more inclusive communities. 1 Source: AMBAG, November 18, 2022. “Final 2022 Regional Growth Forecast”.

Chapter 1.0 – Introduction 1-3
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 This is commonly referred to as Affirmative Furthering Fair Housing, or AFFH (more on this in Section 1.4 below).

Carmel-by-the-Sea has had moderate success in meeting its housing needs. In the last Housing Element cycle (2015 to 2022-2023 pending2), for example, 18 housing units were constructed in the City, which represented 58 percent of its Regional Housing Needs Allocation (RHNA) of 31 new housing units. Of the units built, none were affordable to lower- and moderate-income households,3 and 100 percent were affordable to above moderate-income households.

1.3 Regional Housing Needs Allocation
For the 8-year time frame covered by this Housing Element Update (2023-2031), the Department of Housing and Community Development (HCD) identified the region’s housing need as 33,274 units.

The total housing units assigned by HCD is separated into four income categories that cover housing types for all income levels, from very low-income households to market rate housing.4 This calculation is based on population projections produced by the California Department of Finance as well as adjustments that incorporate the region’s existing housing need. Per Government Code §65583(a), the Housing Element must also provide quantification and analysis of projected housing needs for extremely low-income households. The number of units for the extremely low-income level is not assigned by HCD, but is left for quantification by the local jurisdiction. This calculation is based on the HCD approved methodology,5 assuming that 50 percent of very low-income households qualify as extremely low-income households.

Almost all jurisdictions in the Monterey Bay Area received a larger RHNA this cycle compared to the last cycle, primarily due to changes in state law that led to a considerably higher Regional Housing Needs Determination (RHND) compared to previous cycles.

On November 8, 2022, AMBAG’s adopted RHNA Methodology was approved by HCD. For Carmelby-the-Sea, the RHNA to be planned for this cycle is 349 units, a substantial increase from the last 2 Source: November 8, 2022 HCD letter to AMBAG. Local governments may credit new units approved, permitted, and/or built beginning from the start date of the RHNA projection period, June 30, 2023, towards their RHNA. 3 Source: City of Carmel-by-the-Sea HCD Annual Reports and City staff. 4 HCD divides the RHND into the following four income categories:

Very Low income: 0-50% of Area Median Income; Low income: 50-80% of Area Median Income; Moderate income:
80-120% of Area Median Income; Above Moderate income: 120% or more of Area Median Income 5 https://www.hcd.ca.gov/planning-and-community-development/housing-elements/building-blocks/extremely-lowincome-housing-needs

Chapter 1.0 – Introduction 1-4
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 cycle. Table 1-1, Regional Housing Needs Allocation shows the RHNA for Carmel-by-the-Sea for the period 2023 through 2031.

Table 1-1 Regional Housing Needs Allocation
Income Group
Percentage of Area Median Income
(AMI) Share
Extremely Low Income* <30 57
Very Low Income <50 56
Low Income 51-80 74
Moderate Income 81-120 44
Above Moderate Income 121 + 118
Total 349
Source: AMBAG
*Extremely low-income RHNA is found as a subset within the very low-income category for all other tables in this document

1.4 Affirmatively Furthering Fair Housing
In 2018, Assembly Bill (AB) 686, established an independent state mandate to affirmatively further fair housing (AFFH). Assembly Bill (AB) 686 extends requirements for federal grantees and contractors to “affirmatively further fair housing,” including requirements in the Federal Fair Housing Act, to public agencies in California. Affirmatively furthering fair housing is defined specifically as taking meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity by replacing segregated living patterns with truly integrated and balanced living patterns; transforming racially and ethnically concentrated areas of poverty into areas of opportunity; and fostering and maintaining compliance with civil rights and fair housing laws.

Assembly Bill (AB) 686 requires public agencies to:
▪ Administer their programs and activities relating to housing and community development in a manner to affirmatively further fair housing;
▪ Not take any action that is materially inconsistent with the obligation to affirmatively further fair housing;
▪ Ensure that the program and actions to achieve the goals and objectives of the Housing Element affirmatively further fair housing; and

Chapter 1.0 – Introduction 1-5
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ Include an assessment of fair housing in the Housing Element.

The requirement to Affirmatively Further Fair Housing (AFFH) is derived from The Fair Housing Act of 1968, which prohibited discrimination concerning the sale, rental, and financing of housing based on race, color, religion, national origin, or sex—and was later amended to include familial status and disability. The 2015 U.S. Department of Housing and Urban Development (HUD) Rule to Affirmatively Further Fair Housing and California Assembly Bill (AB)686 (2018) mandate that each jurisdiction takes meaningful action to address significant disparities in housing needs and access to opportunity. AB 686 requires that jurisdictions incorporate AFFH into their Housing Elements, which includes inclusive community participation, an assessment of fair housing, a site inventory reflective of AFFH, and the development of goals, policies, and programs to meaningfully address local fair housing issues.

An AFFH analysis was prepared and is included as Appendix A to this Housing Element.

Defining Segregation
Segregation is the separation of different demographic groups into different geographic locations or communities, meaning that groups are unevenly distributed across geographic space. This report examines two spatial forms of segregation: neighborhood-level segregation within a local jurisdiction and city-level segregation between jurisdictions in the Monterey Bay Area.

Neighborhood-level segregation (within a jurisdiction, or intra-city): Segregation of race and income groups can occur from neighborhood to neighborhood within a city. For example, if a local jurisdiction has a population that is 20 percent Latinx, but some neighborhoods are 80 percent Latinx while others have nearly no Latinx residents, that jurisdiction would have segregated neighborhoods.

City-level segregation (between jurisdictions in a region, or inter-city): Race and income divides also occur between jurisdictions in a region. A region could be very diverse with equal numbers of White, Asian, Black, and Latinx residents, but the region could also be highly segregated with each city comprised solely of one racial group.

There are many factors that have contributed to the generation and maintenance of segregation.

Historically, racial segregation stemmed from explicit discrimination against people of color, such as restrictive covenants, redlining, and discrimination in mortgage lending. This history includes many overtly discriminatory policies made by federal, state, and local governments (Rothstein 2017).

Chapter 1.0 – Introduction 1-6
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Segregation patterns are also affected by policies that appear race-neutral, such as land use decisions and the regulation of housing development.

Segregation has resulted in vastly unequal access to public goods such as quality schools, neighborhood services and amenities, parks and playgrounds, clean air and water, and public safety (Trounstine 2015).

This generational lack of access for many communities, particularly people of color and lower income residents, has often resulted in poor life outcomes, including lower educational attainment, higher morbidity rates, and higher mortality rates (Chetty and Hendren 2018, Ananat 2011, Burch 2014, Cutler and Glaeser 1997, Sampson 2012, Sharkey 2013).

Segregation Patterns in the Monterey Bay Area
Across the Monterey Bay Area, Hispanic and Black residents are significantly more segregated from other racial and income groups. The highest levels of racial segregation occur between the Hispanic and Black populations. The analysis completed for this report indicates that the amount of racial segregation both within Monterey Bay Area cities and across jurisdictions in the region has slightly increased since the year 2010.

Segregation and Land Use
It is difficult to address segregation patterns without an analysis of both historical and existing land use policies that impact segregation patterns. Land use regulations influence what kind of housing is built in a city or neighborhood (Lens and Monkkonen 2016, Pendall 2000). These land use regulations in turn impact demographics: they can be used to affect the number of houses in a community, the number of people who live in the community, the wealth of the people who live in the community, and where within the community they reside (Trounstine 2018). Given disparities in wealth by race and ethnicity, the ability to afford housing in different neighborhoods, as influenced by land use regulations, is highly differentiated across racial and ethnic groups (Bayer, McMillan, and Reuben 2004).6 6 For the source data, see U.S. Census Bureau, American Community Survey 5-Year Data (2015-2019), Table B19013B, Table B19013D, B19013H, and B19013I.

Chapter 1.0 – Introduction 1-7
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Segregation in the Carmel-by-the-Sea
The following are highlights of demographics as they apply to Carmel-by-the-Sea. For further information regarding the history of racial segregation, please refer to Appendix A (AFFH). ▪ As of 2019, White residents are the most segregated compared to other racial groups as measured by the isolation index. White residents live in neighborhoods where they are less likely to come into contact with other racial groups;
▪ As of 2019, Non-Hispanic White individuals comprise 87 percent of Carmel-by-the-Sea’s population followed by Hispanic or Latino (8 percent) and Asian populations (5 percent); ▪ The City has no populations identifying as American Indian, Alaska Native, Native Hawaiian or Other Pacific Islander; and
▪ Black or African American non-Hispanic individuals represent less than 1 percent of the City’s population.

Carmel-by-the-Sea’s General Plan and Municipal Code historically emphasized single-family residential development patterns and consequently, the City offers a limited variety of housing types with 87 percent single family detached units. Historically, this type of development contributed to segregation patterns, including in Carmel-by-the-Sea, due to, among other factors, the higher purchase costs that accompany single-family homes. Financing for single-family properties favored educated higher income earners and as a result purchasing property in the City remained out of reach for many lower income households and led to the demographics seen in the City today. While Carmel-by-the-Sea’s population demographics are not as diverse as other jurisdictions within Monterey County and restrictive covenants were not enacted specifically in the City, enacting policies and programs that promote AFFH and highlight the community’s assets could attract individuals to the area, encourage those that work in the City to live there as well, and assist lower-income households that are currently living in the community. Currently, 28 percent of households within Carmel-by-the-Sea are considered lowerincome.

Chapter 1.0 – Introduction 1-8
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Regional Segregation
The following are highlights of regional segregation metrics as they apply to Carmel-by-the-Sea. ▪ The City has a higher share of White residents than other jurisdictions in the Monterey Bay Area as a whole, a lower share of Latinx residents, a lower share of Black residents, and a lower share of Asian/Pacific Islander residents; and
▪ Regarding income groups, the City has a lower share of very low-income residents than other jurisdictions in the Monterey Bay Area as a whole, a lower share of low-income residents, a lower share of moderate-income residents, and a higher share of above moderate-income residents.

1.5 Overview of Planning Efforts
This section provides an overview of planning and legislative efforts that provide the context for development of the 6th Cycle Housing Element.

Effectiveness of Previous Housing Element
The 2015 Housing Element identified a Regional Housing Needs Allocation of 31 housing units in Carmel-by-the-Sea between 2015 and 2023. The RHNA was divided into the following income categories.
▪ 7 units affordable to extremely low- and very low-income households; ▪ 5 units affordable to low-income households;
▪ 6 units affordable to moderate-income households; and ▪ 13 units affordable to above moderate-income households.

During the 2015–2023 planning period, 18 new above moderate-income units were added to the City’s housing stock, and no units were added in the moderate, low or very low-income categories.7 This indicates that residential growth for extremely and very low-income households was slower than anticipated, which may be in part due to a lack of water resources, the COVID pandemic, the cost of land and construction, and the overall lack of interest to develop affordable housing in the community. 7 RHNA Progress Report -5th Cycle RHNA Progress Report - California Open Date Portal

Chapter 1.0 – Introduction 1-9
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 As a result, housing costs continued to increase substantially due to low supply, and affordability became more elusive.

The goals, objectives, policies, and actions in the 2015 Housing Element complied with State Housing Law and provided proper guidance for housing development in the City. In the 2023 Housing Element update, objectives for each of the goals will be modified as appropriate to more specifically respond to the housing environment in Carmel-by-the-Sea from 2023-2031. Policies will also be modified as needed to respond to current Housing Element Law and existing and anticipated residential development conditions. See Appendix E for a complete review and analysis of Carmel-by-the-Sea’s 5th Cycle Housing Element (2015-2023).

New State Laws Affecting Housing
While the City has taken steps throughout the 5th Cycle to increase housing production locally, the State passed numerous laws to address California’s housing crisis during the same period. As the State passes new legislation in the remainder of the 5th Cycle and during the 6th Cycle, the City will continue to amend the Municipal Code; to monitor and evaluate policies and programs designed to meet State requirements; and to proactively implement new policies and programs to help increase housing production citywide.

In 2019, several bills were signed into law that include requirements for local density bonus programs, the Housing Element, surplus lands, accessory dwelling unit (ADU) streamlining, and removing local barriers to housing production. The City implemented changes required by state law, through amendments to the Municipal Code. The following is a summary of recent legislation and proposed City activities that will further the City’s efforts to increase housing production during the 6th Cycle.

Please see the section above for a discussion of Assembly Bill (AB) 686 (Affirmatively Furthering Fair Housing).

Climate Change and RHNA Methodology
Per statute, Assembly Bill (AB) 1445 (2023) amends California Government Code §65584.04 and would require Councils of Governments to consider including the impacts of climate change as a factor when developing the methodology for allocating regional housing need. Regions would specifically need to consider emergency evacuation route capacity, wildfire risk, and sea level rise, but could also consider any other climate change-related factor. Although this does not apply to the current RHNA, it could affect the 7th Cycle allocation.

Chapter 1.0 – Introduction 1-10
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Incentives for Accessory Dwelling Units
In 2020, AB 686, AB 587, AB 671, AB 881, and SB 13 further incentivize the development of accessory dwelling units (ADUs) through streamlined permits, reduced setback requirements, increased allowable square footage, reduced parking requirements, and reduced fees. The City last amended the Municipal Code in 2017 to address ADUs and is currently following state law while preparing additional amendments to the Municipal Code.

In 2023, the City intends to further amend the standards for ADUs and JADUs, consistent with state Law, to encourage conversion of guest houses to ADUs and promote construction of new units.

Further the City will develop pre-approved, standardized ADU plans to make construction more affordable and will continue to include the HD ADU handbook on the City’s website.

Low-Barrier Navigation Centers
AB 101 (2019) requires jurisdictions to allow “low-barrier navigation centers” by-right in areas zoned for mixed uses and in nonresidential zones permitting multifamily uses, if the center meets specified requirements. A low-barrier navigation center is a service-enriched shelter focused on moving unhoused people into permanent housing. The center provides temporary living facilities while casemanagers connect individuals to public benefits, health services, and housing. The City’s Municipal Code will be amended to comply with state law.

Surplus Public Land
AB 1255 and AB 1486 (2020) seek to identify and prioritize state and local surplus lands available for housing development affordable to lower-income households. City-owned land was considered through preparation of the adequate sites inventory of the 6th Cycle Housing Element. These sites may be developed over time or possibly leased for development.

In 2019, Governor Gavin Newsom signed an executive order to identify State owned sites to help address the California housing crisis.

Accelerated Housing Production
Assembly Bill (AB) 2162 (2018) and Senate Bill (SB) 2 (2019) address various methods and funding sources that jurisdictions may use to accelerate housing production.

Chapter 1.0 – Introduction 1-11
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Priority Processing
SB 330 (2019) enacts changes to local development policies, permitting, and processes that will be in effect through January 1, 2025. SB 330 places new criteria on the application requirements and processing times for housing developments; prevents localities from decreasing the housing capacity of any site, such as through downzoning or increasing open space requirements, if such a decrease would preclude the jurisdiction from meeting its RHNA housing targets; prevents localities from establishing non-objective standards; and requires that any proposed demolition of housing units be accompanied by a project that would replace or exceed the total number of units demolished.

Additionally, any demolished units that were occupied by lower-income households must be replaced with new units affordable to households with those same income levels.

Housing and Public Safety
In response to SB 379 (2015) and other recent state legislation, local jurisdictions must update their safety element to comprehensively address climate adaptation and resilience (SB 379 and SB 1035, 2018) and identify evacuation routes (SB 99 and AB 747, both 2019). These updates are triggered by the 6th Cycle Housing Element update. This Housing Element will contain an evaluation of the existing safety element and programming actions to update the safety element to satisfy the new state requirements. Also, as sites are identified and analyzed for inclusion in the City’s housing site inventory, special attention will be paid to the risk of wildfire and the need for evacuation routes. In this way, the City will coordinate updates between the elements, so that future development is directed into areas that avoid or reduce unreasonable risks while also providing needed housing and maintaining other community planning goals.

Disadvantaged Communities
In 2011, the Governor signed SB 244 which requires local governments to make determinations regarding “disadvantaged unincorporated communities,” defined as a community with an annual median income that is less than 80 percent of the statewide annual median household income. The City has determined that there are no unincorporated islands or fringe or legacy communities that qualify as disadvantaged communities inside or near its boundaries.

Chapter 1.0 – Introduction 1-12
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Consistency with General Plan
The City of Carmel-by-the-Sea adopted a comprehensive update to its General Plan in 2003 in conjunction with the adoption of their Local Coastal Plan. Additional, element-specific, updates were completed in 2009 and 2015. The General Plan is a long-range planning document that serves as the “blueprint” for development for local jurisdictions in California. All development-related decisions in the City must be consistent with the General Plan, and if a development proposal is not consistent with the plan, then it must be revised or the plan itself must be amended.

State law requires a community’s General Plan to be internally consistent. This means that the Housing Element, although subject to special requirements and a different schedule of updates, must function as an integral part of the overall General Plan, with consistency between it and the other General Plan elements. From an overall standpoint, the development projected under this Housing Element is consistent with the other elements in the City’s current General Plan.

Many housing needs can only be addressed on a comprehensive basis in concert with other community concerns such as infill development or mixed-use incentives, for example, which must consider land use, traffic, parking, design, and other concerns as well.

The City’s Housing Element is being updated at this time in conformance with the 2023-2031 6th Cycle update for jurisdictions in the Association of Monterey Bay Area Governments (AMBAG) region. The Housing Element builds upon the other General Plan elements and contains policies to ensure that it is consistent with other elements of the General Plan. As portions of the General Plan are amended in the future, the plan (including the Housing Element) will be reviewed to ensure that internal consistency is maintained.

1.6 Public Participation
The primary purpose of this chapter is to describe the effort made by the City of Carmel-by-the Sea to engage all economic segments of the community (including residents and/or their representatives) in the development and update of the Housing Element. This public participation effort also includes formal consultation, pursuant to Government Code §65352.3, with representatives from the Tribal Nations that are present and active in Monterey County. It is also responsive to AB 686 (2018, Affirmatively Furthering Fair Housing), which requires local jurisdictions, as they update their Housing

Chapter 1.0 – Introduction 1-13
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Elements, to conduct public outreach to equitably include all stakeholders in the Housing Element public participation program.

The 6th Cycle RHNA numbers are a monumental change for all California communities, and the success of the update process hinges in part on a community outreach and engagement program that was robust, inclusive, and meaningful. The City’s community engagement program has included an initial presentation to the City Council, a series of Housing Ad Hoc Committee community meetings, stakeholder outreach, direct contact with interested residents and property owners, and online/virtual participation. Key components of the interactive engagement plan included the Housing Element website, http://www.HOMECarmelbytheSea.com8 where all updates were provided, as well as community engagement opportunities.

H.O.M.E. Carmel-by-the-Sea Website
Housing Opportunities Made Easier (HOME) at H.O.M.E. Carmel (homecarmelbythesea.com8) was a dedicated website that provided a portal to all of the Housing Element-related public engagement activities that were available to members of the public. This included information on housing element basics, a community ideas board, property owner interest forms, site surveys, site selection details, and materials from community workshops.
▪ Q&A. Received questions in a managed space that accommodated messages throughout the iterative brainstorming process.
▪ Ideas Board. Promoted brainstorming among community members to suggest creative ways to achieve our RHNA goals.
▪ Interactive Site Inventory Mapping. Allowed community members an opportunity to examine proposed housing sites and suggest alternative solutions via an interactive online mapping tool. The site inventory mapping tool was advertised on the H.O.M.E. Carmelby-the-Sea8 website in addition to other City communication outlets. ▪ Surveys. Encouraged community members to voice their opinions in a convenient way that also helped City staff understand what areas of the City need more encouragement to participate. Aggregate data also helped the City understand generally who was participating 8 This website was active during the Housing Element development process. It is no longer active after the adoption of the Housing Element. All relevant documents have migrated to https://ci.carmel.ca.us/post/long-range-planninginitiatives.

Chapter 1.0 – Introduction 1-14
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 with the outreach tools. All surveys were advertised on the H.O.M.E. Carmel-by-the-Sea website in addition to other City communication outlets. City staff also walked the City and handed out flyers to hospitality workers in an effort to increase the demographics of community members taking the Stakeholder Survey. The Stakeholder Survey was available in English and Spanish.
▪ Stakeholder Survey. Released for public engagement on May 24, 2023 to solicit input from Carmel-by-the-Sea residents, property owners, business owners, employees, community activists, and visitors. The stakeholder survey closed July 6, 2023. The Housing Element will contain updated policies and programs as guided by the public’s perspective. ▪ Property Owner Interest Form. Released for public engagement on April 6, 2023 to develop a list of property owners interested in building an accessory dwelling unit (ADU) or junior accessory dwelling unit (JADU). A list of interested property owners will be added to Appendix C (Sites Inventory) when the survey is closed July 6, 2023.

Community Meetings
The City hosted a series of community meetings to inform and educate the public on the 2023-2031 6th Cycle Housing Element Update planning process and collect community feedback. These meetings are ongoing and continue to guide the policies and programs to ensure Carmel-by-the-Sea’s character and values are upheld.
▪ November 17, 2022 Housing Ad Hoc Committee Community Meeting. Hosted to introduce the 2023-2031 6th Cycle Housing Element Update to community residents. ▪ February 7, 2023 City Council Meeting. Presentation on preliminary housing feasibility report and Housing Element update status.
▪ February 28, 2023 Housing Ad Hoc Committee Community Meeting. Hosted to discuss development constraints and potential incentives. ▪ April 6, 2023 Housing Ad Hoc Committee Community Meeting. Hosted to discuss current 5th Cycle Housing Element policies and programs, H.O.M.E. Carmel unveiling and walk through, and introduction to AFFH.

Chapter 1.0 – Introduction 1-15
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ May 24, 2023 Housing Ad Hoc Committee Community Meeting. Hosted to discuss housing needs, fair housing, sites inventory, and policies and programs to address the needs.
▪ June 15, 2023 Joint City Council/Planning Commission/Housing Ad Hoc Community Meeting. Hosted to discuss the Public Draft Housing Element, the 30-day Public Comment Period, and next steps in the planning process. ▪ July 11, 2023 City Council Meeting. Update on the Housing Element Public Review Draft and discuss revision to the document after the 30-day comment period and review the City’s response to public comments on the Public Draft. ▪ August 1, 2023 City Council Meeting. Update on the Housing Element planning process and review of full Initial Draft Housing Element prior to submittal to HCD for 90-day review.
▪ November 13, 2023 Housing Ad Hoc Community Meeting. Hosted to review the comment letter from HCD.
▪ January 9, 2023 City Council Meeting. Update on revisions to the Housing Element in response to the comment letter from HCD, and next steps in the certification process. ▪ March 5, 2024 City Council Meeting. Update on revisions to the Housing Element in response to February 7, 2024 review meeting with HCD, and next steps in the certification process.

Public Participation to Affirmatively Furthering Fair Housing The Carmel-by-the-Sea public participation program was also responsive to AFFH, which requires local jurisdictions to conduct public outreach to equitably include all stakeholders in the Housing Element public participation program (see the discussion above for more complete information on AFFH).

The organizations listed in Appendix H (Stakeholder Survey) were contacted initially with an invitation to further connect. There were more opportunities for deeper connection with some of the Community Based Organizations (CBOs) included with the list.

The City emphasized the power of public participation during the public draft 30-day review period.

Community members were informed that their comments would be included in the public record that

Chapter 1.0 – Introduction 1-16
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 will be read by decision-makers and reviewed by HCD, with transparent obligation to be responsive to comments as part of the preliminary draft submittal to HCD.

Further, the City has maintained outreach with interested community members through constant contact email blasts, updating the community on the progress of the Housing Element Update planning process. This includes updates related to community workshops; Housing Ad Hoc Committee, Planning Commission, and City Council meetings; draft housing element revisions; meetings with HCD reviewers; and CEQA noticing. Additionally, the City has made extensive efforts to ensure the community is able to easily understand the content within this Housing Element and follow the revisions process by providing “Reader’s Summary Guides,” which breakdown complex sections of the element. These include sections such as, the AFFH analysis; goals, policies, and programs; and the sites inventory.

Tribal Consultation
This public participation effort also includes formal consultation, pursuant to Government Code §65352.3, with representatives from the Esselen Nation that is present and active in Monterey County.

Consultation is in process.

Public Review of Draft and Final Housing Element
Public Comment Review Period
As required by HCD, the Draft Housing Element was available for 30-days of public review from June 5, 2023 to July 6, 2023. The Draft Housing Element was posted on the City of Carmel website and the dedicated Housing Element website (homecarmelbythesea.com9), and a number of public comments were received. Additionally, a joint City Council and Planning Commission Committee meeting was held on June 15, 2023 where verbal public comments were accepted on the Draft Housing Element.

Public comments received during the 30-day public review period can be found in the Public Comment Report, along with responses. The HCD Initial Draft has been updated as needed to reflect the comments received by the public.
9 This website was active during the Housing Element development process. It is no longer active after the adoption of the Housing Element. All relevant documents have migrated to https://ci.carmel.ca.us/post/long-range-planninginitiatives.

Chapter 1.0 – Introduction 1-17
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Stakeholder Survey
The City of Carmel-by-the-Sea published a Stakeholder Survey to gather input from community members. The goal of the survey was to inform the City of Carmel-by-the-Sea what housing needs exist and to solicit community members input on how to achieve the RHNA. The survey was made available in English and Spanish and was posted on the dedicated Housing Element website (homecarmelbythesea.com9). The Stakeholder Survey was available from May 24, 2023 to July 6, 2023.

One response was received in Spanish, and 156 responses were received in English. See Appendix H (Stakeholder Survey) for an in-depth discussion of the Stakeholder Survey results.

Overall, survey respondents indicated a need for more diverse housing types within the City (apartments, condominiums, ADUs and senior housing). Survey respondents encourage the use of second story buildings for housing within the Commercial District, especially for affordable units, and indicate a need for expanded City services to distribute information about affordable units.

When asked if property owners would consider adding an ADU to their property, many responded that lots are too small, however, a number of property owners did indicate interest if the permitting was streamlined, fees were lowered, or financial assistance was provided. 2025 Amendment to the Adopted Housing Element
Outreach
In 2024, the City of Carmel-by-the-Sea began exploring strategies to further enhance the City’s ability in delivering affordable housing opportunities throughout the community, and developing alternative strategies that present near-term potential for affordable units. The detailed additional public outreach conducted during the development stage of these alternative strategies has been summarized in Appendix C (Sites Inventory).

Public Review of the 6th Cycle Housing Element Amendment Pursuant to State law, the 6th Cycle Housing Element Amendment was made available for a 7-day public review from October 16 through October 23, 2025. The City conducted a special Planning Commission meeting on October 20, 2025, and a City Council meeting on November 3, 2025, to review the 6th Cycle Housing Element Amendment and to receive public comments.

Following the public review, the 6th Cycle Housing Element Amendment, accompanied by a response

Chapter 1.0 – Introduction 1-18
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 to public comments report, was submitted to the State Department of Housing and Community Development (HCD) for a mandatory 60-day review.

On January 13, 2026, the City received a comment letter from HCD and revised the Amendment to address the comments provided. Public outreach was conducted through mailed letters to all hotel property owners, updating them on the status of the Housing Element amendment, specifically the hotel-to-residential program and the employee housing program, and encouraging their participation in the amendment process. A copy of the draft programs was also provided for their review. One property owner responded to receive additional information on the programs.

Additional public outreach was conducted through mailed letters to all property owners of potential housing opportunity sites, encouraging them to continue participating in the amendment process. One property owner responded to receive additional information on the programs.

Letters were also mailed to service providers and affordable housing developers with an advanced copy of the Goals, Policies, and Programs, with personal invitations to meet and discuss how the city’s programs align with the needs of the people they serve; whether there are any regulatory or physical barriers the City has overlooked; and how the City can better partner with nonprofits to facilitate housing. The following service providers and affordable housing developers were contacted:

The Carmel Foundation
Alliance on Aging
Central Coast for Independent Living
The Coalition of Homeless Service Providers
Housing Resource Center of Monterey County
Interfaith Homeless Emergency Lodging Program (I-HELP)
Interim, Inc
Community Human Services
United Way of Monterey County
Veterans Transition Center of California
Revision West
MidPen Housing
Community Housing Improvement Systems and Planning Association, Inc (CHISPA)

Chapter 1.0 – Introduction 1-19
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 The following is a summary of the feedback received:

The Carmel Foundation continues to maintain a waitlist for affordable senior housing and supports the City’s efforts to facilitate more housing. The Veterans Transition Center acknowledged the work the City is undertaking and will continue to monitor progress. Revision West is interested in opportunities to provide affordable housing in Carmel.

The Amendment was again made available for a 7-day public review from March 13, 2026, through March 20, 2026 and from May 6, 2026 through May 13, 2026. Following the public review, the Amendment, accompanied by a response to public comments report, was submitted to HCD for a mandatory 60-day review.

Tribal Consultation
This public participation effort also includes formal consultation pursuant to Government Code §65352.3 with representatives of the Costanoan Rumsen Carmel Tribe, which is present and active in Monterey County. Consultation is in process.

Goals, Policies, and Programs 2

CHAPTER

Chapter 2.0 – Goals, Policies, and Programs 2-0
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Table of Contents

2.0 Goals, Policies, and Programs ................................................................................................................................. 1

2.1 Introduction............................................................................................................................................................ 1

2.2 AFFH in the 6th Cycle ........................................................................................................................................... 3

2.3 Program Overview and Quantified Objectives................................................................................................. 4

2.4 Goals, Policies, and Programs.............................................................................................................................. 4

2.5 Summary of Quantified Objectives...................................................................................................................48 Tables
Table 2-1 Quantified Objectives (2023-2031) 2-39

Chapter 2.0 – Goals, Policies, and Programs 2-1
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026

2.0 Goals, Policies, and Programs

2.1 Introduction
Under state Housing Element Law, the City is responsible for enabling the production of housing by reducing regulatory barriers, providing incentives, and supporting programs that create or preserve housing, especially for vulnerable populations. To enable the construction of quality housing, the City has identified the following goals:
▪ Goal H-1 Facilitate Housing Construction
▪ Goal H-2 Protect Affordable Housing and Improve the Housing Stock ▪ Goal H-3 Provide Opportunities for New Affordable and Other Special Needs Housing ▪ Goal H-4 Exemplify Sustainable Development and Energy Conservation ▪ Goal H-5 Publicize Housing Needs and Resources
The City’s demographic and housing needs assessment, which included an analysis of factors contributing to housing disparities, played a major role in informing program development. Highlights include: the predominant age group in 2019 was between 65 to 74 years of age; the population was composed of over 85 percent White individuals; the unemployment rate was 0.1 percent; abovemoderate income households made up the majority of households at 62 percent; and 57 percent of total households were owner occupied and 43 percent renter occupied. Of note, 23 percent of households are cost burdened and a further 23 percent are severely cost burdened. Detailed information is provided in Appendix A (Housing Needs & Fair Housing Report).

The majority of the sites identified in the Sites Inventory were not identified in the 5th Cycle Housing Element. The policies and programs below are intended to reduce the regulatory barriers to redevelopment of these sites and to demonstrate that the City is taking measures to ensure construction of more units in the 6th Cycle.
2025 Amendment Process
The 6th Cycle Housing Element (2023-2031) for Carmel-by-the-Sea was adopted on April 8, 2024 and deemed in substantial compliance with State law by the State HCD on April 25, 2024. Beginning in Summer 2024, the City of Carmel-by-the-Sea began exploring strategies to further enhance the City’s ability in delivering affordable housing opportunities throughout the community, and developing

Chapter 2.0 – Goals, Policies, and Programs 2-2
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 alternative strategies that present near-term potential for affordable units. These efforts culminated in the amendment to the adopted Housing Element.

The City is proud of the policies and programs that follow below. They represent an honest desire by both the local government and residents of Carmel to create real affordable housing opportunities in what, by all accounts, is an unaffordable place to live. This shared desire is evidenced by how these policies and programs came together. Of course, creation of the 6th Cycle Housing Element included all of the requisite community meetings (over 14) and outreach (e.g., tabling at the City’s farmer’s market), which yielded a wealth of feedback that helped to shape the City’s approach. However, this Housing Element also benefited from something uniquely Carmel – a highly motivated group of residents willing to learn and be deeply involved in crafting policies that will actually work. Concerned about the housing challenges confronting the village, these residents partnered with City staff in an effort to help the City find creative solutions tailored to Carmel’s unique circumstances. Calling themselves the Affordable Housing Alternatives Group, or “AHA”, the AHA Group provided literally thousands of volunteer hours, met with City staff on a weekly basis, leveraged community connections to identify property owner interest, attended meetings with HCD, and genuinely dedicated themselves to finding housing solutions with the best chance of becoming reality. The list of direct positive contributions from the AHA Group is long. One of their most notable contributions was the ‘safari’ effort, which is likely one of the most unique l community-driven Housing Element research projects ever undertaken. The safaris were a highly organized, boots-on-the-ground effort in which 17 volunteers canvassed the commercial district of the City to collect data on every property and leasable space in downtown Carmel. These volunteers, utilizing a mobile app set up by a lead AHA member, catalogued 218 properties and nearly 1,000 leasable spaces, collecting unique data for each site, such as current use, vacancy status, and property condition, to help better understand housing development potential.

When compiled with City and Assessor records, this data helped form the most complete understanding of Carmel’s downtown inventory in history, and ultimately helped to inform the development of many of the creative policies and programs described below.

It is hard to overstate the value of the collaborative community approach taken to develop the City’s 6th Cycle Housing Element. Aside from supercharging capacity to gather data, the approach also garnered massive community buy-in for creating real housing solutions. Most of all though, it leveraged the knowledge of both residents and City staff, making it possible to turn Carmel’s unique constraints into opportunities for the creation of new housing.

Chapter 2.0 – Goals, Policies, and Programs 2-3
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026

2.2 AFFH in the 6th Cycle
This section provides an overview of how the City of Carmel-by-the-Sea is working to affirmatively further fair housing in the community and in the broader Monterey Bay Area.

Affirmatively Furthering Fair Housing
The 6th Cycle Housing Element Update process includes a new state mandate to address historic patterns of economic and racial segregation. In 2018, the California Legislature passed legislation requiring communities in California to take proactive steps to affirmatively further fair housing (AFFH). The 6th Cycle Housing Element is the first time that the City of Carmel-by-the-Sea has addressed AFFH. Affirmatively furthering fair housing is defined specifically as taking meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity by replacing segregated living patterns with truly integrated and balanced living patterns; transforming racially and ethnically concentrated areas of poverty into areas of opportunity; and fostering and maintaining compliance with civil rights and fair housing laws.

Contributing Factors
The following contributing factors that impact fair housing and affirmatively furthering fair housing (AFFH) within the City were identified and prioritized as follows.

High Priority
▪ Lack of affordable housing;
▪ Lack of adequate housing stock that meets the needs of residents; ▪ Jobs-worker imbalance;
▪ Lack of accessible units for individuals with disabilities; ▪ Lack of Transitional and Supportive Housing/Emergency Shelters; ▪ Lack of developable land and additional coastal zone regulations; ▪ Lack of racial and ethnic diversity within the City; and ▪ Cost of land, materials, and labor, which drive up the cost of housing development.

Medium Priority
▪ Lack of access to information about fair housing rights; and ▪ Limited knowledge of fair housing by residents.

Chapter 2.0 – Goals, Policies, and Programs 2-4
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 The City of Carmel-by-the-Sea is adopting new policies and programs through the update of this 6th Cycle Housing Element to align with the state’s new AFFH mandate. Policies and programs that support this alignment are identified with the letters “AFFH.” More detailed AFFH information can be found in Appendix A (Housing Needs & Fair Housing Report).

2.3 Program Overview and Quantified Objectives
Quantified Objectives estimate the number of units likely to be constructed, rehabilitated, or preserved, by income level, during the planning period. The Quantified Objectives are not required to match the City’s Regional Housing Needs Allocation (RHNA). They are a goal for the jurisdiction to work towards, based on identified needs constraints, and available resources. These objectives will focus communication between the City and HCD vis-a-vis future Annual Progress Reports (APRs). HCD does not require that all objectives must be met; instead, these objectives create a framework for evaluating program effectiveness, so the City can make informed determinations as to whether it should continue, modify, or eliminate programs in the next Housing Element update cycle.

2.4 Goals, Policies, and Programs
The purpose of this section is to set forth goals, policies, and programs to further the development of housing for households of all income levels in the community. The Implementation Programs listed below provide a work plan for programs to ensure timely implementation and tracking. The following programs will be implemented city-wide, unless otherwise specified below.

Community input has always been an integral part of crafting public policy in the City of Carmel-bythe-Sea. The development of the 6th Cycle Housing Element was no exception. The policies and programs below were informed by feedback received through community outreach events, correspondence with individual residents, over a dozen formal public meetings, and direct input from the AHA resident volunteer group. These programs and policies represent the desire of the residents of Carmel to create high quality affordable housing within the City.

Chapter 2.0 – Goals, Policies, and Programs 2-5
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Goal H1 Facilitate Housing Construction
Policy 1.1: Ensure adequate sites are available to meet the City’s projected housing growth needs.

Program 1.1.A: Adequate Sites
Quantified Objective: 113 Very Low, 74 Low, 44 Moderate, and 118 Above Moderate income housing units
Timeframe: Maintain adequate sites to meet the RHNA through December 2031 Responsible Party: Community Planning and Building Department Funding Source: General Fund
The City has a Regional Housing Needs Allocation (RHNA) of 349 units, of which 187 units must be affordable to lower income households, 44 units must be affordable to Moderate income households, and 118 units must be made available as Above Moderate income units.

The Sites Inventory identifies adequate sites to meet the City’s RHNA throughout the planning period.

The City’s Community Planning and Building Department will actively monitor the sites identified on the Sites Inventory to remain in compliance with no-net loss requirements of Government Code Section 65863 and will report to the Planning Commission and the City Council annually on the City’s progress in meeting its Housing Element objectives.

Program 1.1.B: Development on Small Sites - AFFH
Quantified Objective: 2 Very Low, 2 Low, 2 Moderate, and 12 Above Moderate Income Housing Units (these units are also accounted for under Program 1.1.D)
Timeframe: Adopt Municipal Code amendments by June 2027 Responsible Party: Community Planning and Building Department Funding Source: General Fund
In recognition of the fact that small sites can be difficult to develop, the City will continue to offer incentives and concessions and modify development standards that facilitate achieving maximum allowable densities on small sites in the commercial and multifamily districts. Most notable among these incentives is a density bonus for mixed-income projects that include deed-restricted affordable units allowing for development up to a total of 88 du/ac, inclusive of all state and local bonuses.

Chapter 2.0 – Goals, Policies, and Programs 2-6
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Another challenge in developing small sites is achieving compliance with parking requirements.

Presently, Carmel Municipal Code Section 17.14.060 - “Central Commercial (CC) District Regulations Applicable”, waives off-street parking entirely for apartments in the CC district. In the Service Commercial (SC) District the required parking for a market rate unit is 1 space per unit, and in the Residential and Limited Commercial (RC) District and Multi-Family (R4) District it is 1.5 spaces per market rate unit. However, for an affordable housing unit in any of these four Districts, the requirement is already reduced to one-half space per unit and is reduced even further to one-third space per unit for senior housing units (senior housing also has a guest parking requirement of 1 space per 4 housing units). The City will further evaluate the residential parking requirements in the Service Commercial (SC) and Residential & Limited Commercial (RC) zoning districts to help facilitate the development of market rate housing. Alternative parking programs such as bike and/or car share, and free or discounted bus passes, will also be evaluated to offset potential reductions in parking requirements.

Program 1.1.C: Live/Work Housing - AFFH
Quantified Objective: 8 Extremely Low, 35 Very Low, 35 Low Income Units Timeframe: Adopt Municipal Code amendments by June 2026.

If by June 2028 the City is not trending to meet its established objectives for this program, the City will modify the program and/or utilize alternative strategies within six months to ensure that the City could fully accommodate its RHNA.

Responsible Party: Community Planning and Building Department Funding Source: General Fund
Issues and Opportunities
At first glance, downtown Carmel appears to be thriving, but a closer inspection reveals “a tale of two downtowns.” The prime street-front commercial spaces are, in fact, healthy, with high foot traffic and low vacancy, but Carmel’s numerous alleys and courtyards contain a great many small, impaired commercial spaces that are not a good fit for traditional retail or commercial uses, as evidenced by the high proportion of these spaces that are either vacant or under-utilized. Walking through these offstreet areas, it is common to see empty and for lease storefronts, by-appointment-only signs, storefronts being used for storage, and other evidence of inactivity and a lack of economic viability.

Chapter 2.0 – Goals, Policies, and Programs 2-7
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Indeed, in cataloguing leasable spaces downtown, the resident volunteers on the Safari teams identified 266 off-street, upper story, or peripherally located storefronts that were either vacant or under-utilized.

Program Description
The City will add a new “live/work” classification to the existing categories of approved uses for space in the downtown. These live/work spaces will be hybrid units, with a storefront with commercial space in front and residential space in the rear. Property owners will only be allowed to convert a space to a live/work use if they deed restrict the residential portion of the live/work unit at an affordable rental level. The City will engage lower-income households through targeted stakeholder interviews that could benefit from a live/work arrangement to participate in developing the program to ensure their needs are considered prior to adoption of any code amendments.

As detailed in the analysis in Appendix C (Sites Inventory), the lack of demand for under-utilized offstreet and upper-story commercial spaces results in rents that are sufficiently low that a property owner could make more money renting that space as a deed-restricted live/work unit than as a strictly commercial space.

The City will offer the following incentives to spur participation in the program:
▪ Prioritize water allocations. The City will prioritize water allocations for any commercial spaces that are converted into deed-restricted live/work units through this program. ▪ Expedited processing. Expedited processing (i.e., jumping to the front of the queue for review by City staff) will be made available to applications for conversion of existing commercial space into one or more live/work units. In the event that a project which includes the creation of a live/work unit requires Planning Commission review, that project will also jump to the front of the queue for Planning Commission review. ▪ Waived or reduced fees. The City will waive or reduce permitting fees associated with the conversion of existing commercial spaces to live/work units. ▪ Free Pre-Application Development Meeting. The City will offer an in-person preapplication meeting, at no charge to applicants, which will bring together all departments responsible for review of the project (e.g., Planning, Building, Public Works, Fire).

Applicants will receive early feedback on the project concept in order to help expedite the submission and review process.

Chapter 2.0 – Goals, Policies, and Programs 2-8
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program Benefits
The live/work program will have the following benefits:
▪ By creating an economic incentive for property owners to convert existing commercial space into live/work space, the program is designed to create affordable housing without requiring any public funding (which tends to be either scarce and/or competitive). Indeed, there would be a high likelihood of property owners opting into these conversions, because of the opportunity that the program would afford to achieve a higher rent, and to increase the net operating income, and thereby the value of, their property. Given prevailing cap rates, every incremental dollar of net operating income for a building in downtown Carmel translates into a building that is 25-30 dollars more valuable. Thus, it would make economic sense for the building owner to invest the funds to convert the space from a purely commercial use into a live/work space.
▪ This program has the potential to return Carmel to its roots by once again making it a haven for local creatives, shopkeepers, and entrepreneurs who could showcase their wares or services in these unique live/work spaces.
▪ While the live/work units would command a higher rent than the existing purely commercial space, renting such a unit would actually reduce the overall rent burden on a local artist or shopkeeper because they would go from paying two rents (a commercial rent and a residential rent) to paying a single rent, with their total monthly rent payment going down substantially.
▪ The program has the potential to activate the less well-trodden alleys and courtyards that are a unique staple of the physical fabric of downtown Carmel. ▪ By combining a tenant’s commercial rent and residential rent into one lower rent, and by capping that rent, the program has the potential to bring service businesses back to Carmel that cater to local residents rather than tourists (e.g., a single chair salon, a small tutoring space for local children, a therapist’s office, a tailor, or a cobbler). ▪ To the extent that the program reduces the level of vacancy and under-utilization in these off-street commercial spaces, it will boost the City’s sales tax revenue and generate additional resources to support the development of affordable housing.

Chapter 2.0 – Goals, Policies, and Programs 2-9
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 1.1.D: Mixed-Income Incentive Program - AFFH
Quantified Objective: See Program 1.1.B
Timeframe: Adopt Municipal Code amendments by June 2027 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Issues and Opportunities
In keeping with the community’s expressed desire to distribute new housing throughout the community, the City and the AHA Group explored a variety of potential strategies for incentivizing the creation of new housing units in the downtown area. Since the Live/Work Program and the Hotel-toResidential Conversion Program (described in Program 1.1.F below) tend to have relevance for a narrower subset of properties, one of the goals that emerged was to create a program with broader applicability—i.e., that virtually any downtown property owner could opt into. After extensive discussion and analysis, the City and AHA determined that such a program should be guided by four core principles:

1. It should be inspired by the physical layout of Trevvett Court. A 14-unit senior housing development built in 2010 on an 8,000 square foot parcel near the Post Office in downtown Carmel, Trevvett Court demonstrates that higher density housing can be designed in such a way as to seamlessly blend into the built environment of the village. While Trevvett Court itself has a density of 76 du/ac, space programming work by local architects on the AHA team pointed to 88 du/ac as an ideal density that would maximize housing creation while retaining a Trevvett Court-like feel and many of the most important hallmarks of properties in downtown Carmel: e.g., first floor commercial space, a two story floor plan, and an interior courtyard.

2. It should incentivize the creation of mixed-income housing. Newly constructed units should be a blend of Above Moderate income (i.e., market rate), Moderate income, Low income, and Very Low income units.

3. It should be designed to make projects economically viable in the absence of public funding. Given the scarcity and competitiveness of public funding and the importance of ensuring that housing ultimately gets built, it was determined that the program should be designed to make projects financially viable for a property owner without reliance on public funding.

Chapter 2.0 – Goals, Policies, and Programs 2-10
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026

4. It should incentivize the creation of housing that can accommodate families with children. As noted elsewhere in this document, between 2016 and 2024 the population of Carmel-by-the-Sea dropped from 3,905 to 3,122, with the median age increasing during that same timeframe from 53 to 65. Similarly, between 2012 and 2024, the number of students from Carmel-bythe-Sea attending the local public elementary school (Carmel River School) declined from 270 to 129 students. In light of these alarming trends, creating new housing that can accommodate families with children was determined to be an important priority.

Program Description
The City will develop a Mixed-Income Incentive Program to incentivize the creation of mixed-income housing in the downtown area, either through adaptive re-use or redevelopment. Units created through this program will include a range of income levels, including both market rate units and deed-restricted affordable units. The City will engage households at all income levels through targeted stakeholder interviews to participate in developing the program to ensure their needs are considered prior to adoption of any code amendments.

In exchange for deed-restricting a subset of the newly created units at affordable levels, the City will offer modified development standards that facilitate achieving maximum allowed densities for qualifying projects including one or more of the following incentives:
▪ Higher density. The City will offer qualified projects up to a total of 88 du/ac, inclusive of all state and local bonuses and incentives.
▪ FAR bonus. The City will offer projects that qualify under the Mixed-Income Incentive Program an incremental FAR bonus over and above the existing FAR bonus that the City offers for qualifying affordable development.
▪ Prioritize water allocations. The City will prioritize the necessary water allocations required to build both the deed-restricted affordable units as well as the market rate units needed to make the investment economically viable.
▪ Expedited processing. The City will offer expedited processing to applications taking advantage of this program, with those applications jumping to the front of the queue for review by City staff, and, if applicable, by the Planning Commission. ▪ Waived or reduced fees. The City will waive or reduce permitting fees for projects that participate in this program.

Chapter 2.0 – Goals, Policies, and Programs 2-11
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ Free Pre-Application Development Meeting. The City will offer an in-person preapplication meeting, at no charge to applicants, which will bring together all departments responsible for review of the project (e.g., Planning, Building, Public Works, Fire).

Applicants will receive early feedback on the project concept in order to help expedite the submission and review process.

Program Benefits
▪ The program will help to incentivize the creation of mixed-income housing in downtown Carmel, and is in keeping with the City’s desire to distribute housing for various income groups throughout the village.
▪ The income mix and the incentives in the program will be carefully calibrated to ensure that potential projects will be economically viable without any public funding required.

Making these projects profitable for property owners will help to ensure that new housing ultimately gets built.
▪ This program will give the City the opportunity to incentivize the construction of muchneeded larger bedroom count units, which will help to reverse the decline in the number of families with children in the village.

Program 1.1.E: Affordable Housing on Religious Facility Properties - AFFH Quantified Objective: 6 Extremely Low, 29 Very Low, 30 Low Income Units Timeframe: Continue working with individual churches to submit formal applications by June 2028. If by June 2028 the City is not trending to meet its established objectives for this program, the City will modify the program and/or utilize alternative strategies within 6 months to ensure that the City could fully accommodate its RHNA. Annual Outreach to assess progress (December 2031)
Responsible Party: Community Planning & Building Department Funding Source: General Fund
Issues and Opportunities
The State of California and the City of Carmel-by-the-Sea have both adopted new rules, regulations, and policies in recent years to facilitate the development of housing on properties owned by religious

Chapter 2.0 – Goals, Policies, and Programs 2-12
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 institutions. For example, eligible housing proposals on property owned by religious institutions qualify for:
▪ Exemptions from environmental (CEQA) review [2023 Senate Bill SB-4] ▪ Reduction or elimination of parking requirements [2022 Assembly Bill AB-1851] ▪ Increased density [2023 Assembly Bill AB-1287 & Government Code §§65915-65918] ▪ “By-right” design approvals without planning commission review [2023 SB-4 & Government Code §§65589.5]
▪ Priority water allocations [Housing Element Program 1.2.A.] ▪ Expedited application processing [Housing Element Program 3.1.F.] ▪ Reduction in entitlement and development fees [Housing Element Program 3.1.D.] ▪ Direct financial support through Carmel’s affordable housing trust fund [Housing Element Program 2.1.D.]
▪ Partnership facilitation for tenant selection and program management [City of Carmel] If the above accommodations prove insufficient, Government Code §§65915-65918 allows a church to receive bonuses and concessions for projects that are 100 percent affordable. These include:
▪ Additional density bonuses to establish more residential units; ▪ Reductions in setback and building height requirements; ▪ Reductions in parking requirements;
▪ Approval of mixed-use zoning compatible with the location; and ▪ Other regulatory incentives or concessions proposed by the developer.

Program Description
In 2023, the California legislature passed Senate Bill (SB) 4, the Affordable Housing on Faith and Higher Education Lands Act of 2023. The Act requires a housing development project be allowed byright when located on land owned by a religious institution. The housing units, exclusive of manager’s units, must be 100 percent affordable to lower income households, except that 20 percent may be for Moderate-income households and 5 percent may be for staff of the religious institution that owns the land. Projects submitted pursuant to SB4 are also eligible for a density bonus, incentives, concessions, and waivers or reductions of development and parking standards.

The City will continue conducting outreach to the five religious institutions located within the jurisdictional boundaries of Carmel-by-the-Sea to evaluate potential housing opportunities. The City

Chapter 2.0 – Goals, Policies, and Programs 2-13
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 will educate the local churches about the benefits of SB4 and Density Bonus Law and look for opportunities to connect them with resources and interested affordable housing developers that will support the development of housing on their property.

Program Benefits
▪ The program encourages the natural synergy between supportive faith communities and those most in need of this support.
▪ The program leverages properties that are some of the largest in the village. ▪ The program provides a vehicle for translating the expressed interest and enthusiasm of the local religious community into concrete action.

Program 1.1.F: Hotel- to-Residential Conversion (Hotel ‘Key’ Transfer) - AFFH Quantified Objective: 40 Very Low, 40 Low, 40 Moderate, 41 Above Moderate Income Units Timeframe: Outreach for developer interest by December 2025 Create/amend Municipal codes to support the program by December 2026. Monitor and report to the City Council the City’s progress in facilitating hotel-to-residential conversions annually. Based on results of the monitoring, if by June 2028 the City is not trending to meet its established objectives for this program, the City will modify the program and/or utilize alternative strategies within six months to ensure that the City could fully accommodate its RHNA.

Responsible Party: Community Planning and Building Department Funding Source: General Fund
Issues and Opportunities
Carmel has a significant number of older, underperforming overnight visitor accommodations (hotels/motels, inns, bed and breakfasts, and other various lodging options) distributed throughout the City in the CC, RC, and SC, and R-1 zoning districts. These properties are ideal candidates for conversion to multifamily housing, both because they tend to have physical layouts that lend themselves to such a conversion (indeed, several hotels and motels in Carmel were originally built as apartment buildings), and because their relatively low net operating income means that they can be acquired at a more modest price point. The City will engage lower-income and special needs

Chapter 2.0 – Goals, Policies, and Programs 2-14
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 households that could benefit from a hotel-to-residential conversion to participate in developing the program through targeted stakeholder interviews to ensure their needs are considered prior to adoption of any code amendments.

One unique feature of the hospitality landscape in Carmel-by-the-Sea is that the City has a self-imposed cap in the General Plan on the number of hotel rooms permitted to operate in the city (948 rooms as of January 1, 2025.) Were the City to allow a hotel owner to sell the rights to these hotel rooms in the event of a hotel-to-residential conversion, these “hotel keys” would command a significant market value (approximately $438,000 per room).

Program Description
The City will create a program providing opportunities for property owners and developers to convert underperforming hotels into mixed-income multifamily rentals with a deed restricted affordable component. Such conversions would be accomplished through adaptive re-use or redevelopment. To incentivize participation in the program, the City will allow the owners of converted hotel properties to sell and transfer the hotel keys from the converted hotel to facilitate the construction of the same number of new hotel rooms on other sites within Carmel-by-the-Sea’s commercial zoning districts (CC, SC, or RC)–either as new hotels or as additions to existing hotels. While such conversions could be partially financed through public funding programs such as the Low-Income Housing Tax Credit (LIHTC) program, the City’s intent in allowing the sale of the hotel keys is to maximize housing production by making these conversions economically viable without any reliance on public funding.

The ultimate goal is to make conversion to multifamily residential the highest and best use of the property, and one that would allow purchasers with this business plan to outbid other purchasers.

In the absence of any public subsidy, a property owner would be unlikely to convert a hotel into deedrestricted affordable housing because the result would be lower net operating income and a reduction in the value of the property. However, as the analysis in Appendix C (Sites Inventory) illustrates, by combining the value of the hotel keys with the residual value of the converted hotel, participating property owners and developers will be able to achieve an above market return. Put another way, the program is designed to allow participating owners and developers to “sell the property twice.” The program is designed to be flexible and to allow for a variety of potential scenarios. For example, the existing owner could convert the hotel to mixed-income residential themself and sell the hotel keys to a hotel developer to be used to construct a new hotel or to add hotel rooms to another property within the City’s commercial districts (CC, SC, or RC). Or the existing owner could convert the hotel to

Chapter 2.0 – Goals, Policies, and Programs 2-15
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 mixed-income residential themself and retain the keys to add hotel rooms to another property within the City’s commercial districts (CC, SC, or RC). Alternatively, and perhaps most likely, the existing owner—who may lack expertise in development – could sell the underperforming hotel to an affordable or multifamily developer, who could in turn convert the hotel to mixed-income residential and then either sell the hotel keys or retain them for use on another site within the City’s commercial districts (CC, SC, or RC). These various permutations are outlined visually in the following graphic. ▪ Transferable development rights. Hotel owners that convert their hotel into mixed-income multifamily housing through the program will be allowed to sell the hotel keys and transfer the hotel rights to other parcels in the City’s commercial districts (CC, SC, or RC) (particularly valuable due to Carmel's General Plan cap of 948 hotel rooms). ▪ Water rights. In recognition of the fact that the sale of the hotel keys drives the production of affordable housing, the City will create opportunities for purchasers of hotel keys to receive the water allocation required to create new hotel rooms on other sites within the village. The City will require that the water rights associated with the converted hotels stay with the property–i.e., once the property is converted into mixed-income multifamily housing through the program.
▪ Increased development potential. The City will grant a modest increase in FAR on hotel sites that are converted into mixed-income multifamily housing through the program.

Chapter 2.0 – Goals, Policies, and Programs 2-16
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ Hotel residential suites (HRS). The City will explore the possibility of allowing purchasers of hotel keys to designate a subset of the newly established hotel rooms as “hotel residential suites” – hybrid units that would be owner-occupied as market rate residential suites for a portion of the year and that would be required to be added to the hotel inventory for the rest of the year. The ability to sell these hotel residential suites would help to expand the universe of potential hotel key purchasers to include existing hotel owners (as opposed to just ownership groups newly acquiring hotels) by providing a near-term opportunity to recoup the capital invested to purchase the hotel keys and construct the new hotel rooms. These hotel residential suites are not included in the Sites Inventory or towards the City’s RHNA.
▪ Qualified projects will benefit from streamlined review, expedited permitting, and reduced permit fees.

Program Benefits
By unlocking the value associated with the limited number of hotel keys available in the City, the program will offer property owners an above market rate of return, which will encourage widespread participation and significantly increase the likelihood of generating a substantial number of new housing units.

With its focus on the conversion of small, scattered site hotel properties, the program will integrate affordable housing into the physical and social fabric of the village.

The program is mixed-income at the property level, and is designed to create housing units for Above Moderate (i.e., market rate), Moderate, Low, and Very Low income households.

By creating an investment opportunity with a return on investment that is substantially higher than what the market would typically offer, the City can explore ways to divert resources from these transactions to other affordable housing programs with less financial viability.

The Hotel residential suites created through this program have the potential to help stem the tide of population loss by providing an alternative to the purchase of a single-family residence as a second home, many of which remain vacant for much of the year, and which would be better utilized as homes for permanent residents. Hotel residential suites would offer prospective second home buyers an alternative that would be dramatically less expensive and that would offer a number of other benefits:

Chapter 2.0 – Goals, Policies, and Programs 2-17
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 e.g., lower maintenance requirements, enhanced security, easy access to restaurants and shops in the downtown area, and shared amenities.

The same number of overnight visitor accommodating rooms to serve coastal visitor access in the City will be retained while increasing the amount of multifamily housing in the village.

The transfer of hotel keys from underperforming hotels to upgraded hotel rooms at new or existing hotels will dramatically increase the City’s transient occupancy tax (TOT) revenue.

Program 1.1.G – Hotel Employee Housing Program - AFFH
Quantified Objective: 5 Affordable Units (not included in RHNA capacity) Timeframe: Amend the Carmel Municipal Code by June 2027 Responsible Party: Community Planning and Building Department Funding Source: General Fund
The City has a number of overnight visitor accommodation properties (motels, hotels, inns) that would benefit from incorporating affordable on-site employee housing. These units would alleviate the current lack of housing many Carmel hospitality employees face. Therefore, the City will create a voluntary program to incentivize the generation of on-site employee housing at hotels, motels, and inns around the village. These potential units are not used to meet the City’s RHNA adequate sites requirements.

If the owner of an overnight visitor serving accommodation converts one or more legal guestrooms into a deed restricted affordable employee unit, the City will grant the owner the legal right to replace the hotel room on-site, sell the “hotel key”, or transfer it to another site, similar to Program 1.1.F, the Hotel-to-Residential Conversion (Hotel ‘Key’ Transfer) Program. The City will engage lower-income households within the hospitality sector that could benefit from the hotel employee housing program to participate in developing the program through targeted stakeholder interviews to ensure their needs are considered prior to adoption of any code amendments.

As noted above, Carmel’s General Plan caps the number of hotel rooms permitted to operate in the city (948 rooms as of Jan 1, 2025.) This cap is currently exceeded, meaning no additional rooms can be built in the City. This program leverages the scarcity of hotel rooms created by the General Plan cap to incentivize the development of affordable rental housing and offset the loss of revenues for participating hotel owners–all while maintaining visitor-serving coastal access. Qualifying projects may also be eligible for priority access to water allocations, expedited review, and reduced permit fees.

Chapter 2.0 – Goals, Policies, and Programs 2-18
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 1.1.H: Accessory Dwelling Units - AFFH
Quantified Objective: 7 Extremely Low, 14 Very Low, 21 Low, 21 Moderate, 7 Above Moderate Income Units
Timeframe: December 2025 to December 2031
Monitor production, affordability, and occupancy of ADUs and report to the City Council the City’s progress in facilitating ADU production annually. Based on results of the monitoring, if by June 2028 the City is not trending to meet its established objectives for this program, the City will modify the program and/or utilize alternative strategies within six months to ensure that the City could fully accommodate its RHNA.

Responsible Party: Community Planning and Building Department Funding Source: General Fund
Issues and Opportunities
The City’s ADU ordinance was last updated in 2017 (Ord. 2017-10 §1 (Exh. A), 2017). Carmel-by-theSea is currently following the requirements of state law in the review and approval of ADUs and JADUs. The City is in the process of updating its ADU Ordinance to incorporate state laws that have expanded since 2017, and to clarify the ADU permitting process for property owners.

Program Description
The City recognizes that ADUs provide affordable housing options for family members, seniors, students, in-home health care providers, couples, small families, and friends. ADUs can also be useful to generate additional rental income for the homeowner. The City also recognizes that there are many misconceptions surrounding development regulations and water restrictions for ADUs. For example, it is not widely known that ADUs do not need a new water meter, or that the Monterey Peninsula Water Management District (MPWMD) does not charge a service connection fee for an ADU. To help combat this lack of public knowledge, the City maintains a dedicated housing webpage that includes the California Department of Housing and Community Development Accessory Dwelling Unit Handbook and that serves as a source of technical assistance to property owners.

To facilitate ADU development the City will complete the following actions between 2024 and 2031:
▪ The City will complete revisions to its local ADU Ordinance, incorporate guidance from the recent Senate Bill 1077, and amend the Carmel Municipal Code consistent with State

Chapter 2.0 – Goals, Policies, and Programs 2-19
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 law (December 2026). The City will submit a Local Coastal Program amendment to the California Coastal Commission to be certified within 6 months of adoption (June 2027). ▪ As new relevant state laws are adopted during the planning cycle, the City will amend the Carmel Municipal Code in a timely manner to reflect applicable changes in the law. ▪ The City will develop a process for reviewing plans submitted for pre-approval pursuant to AB 1332 (2023). (June 2026)
▪ The City will develop a procedure for the review and approval of unpermitted ADUs pursuant to AB 2533 (2024) also known as the amnesty program. (June 2026) ▪ The City will pursue implementing a pre-sales inspection program to identify unpermitted ADUs and refer them to the amnesty program. (December 2027) ▪ If the program is determined to be feasible, establish a program within six months. (June 2028)
▪ The City will establish a renter match program for ADUs. (December 2029) ▪ The program may also employ a citywide survey of ADU rental rates to help connect tenants with property owners charging more affordable rates. ▪ Outreach activities will include promoting ADU availability to local workers. ▪ The City will promote affordability and increase workforce housing by developing a program to incentivize homeowners to create ADUs that are affordable to, and occupied by, lower income households. One incentive could be providing the necessary water credits to serve the ADU. Other incentives would also be explored during the development of the program. (December 2026)
▪ The City will conduct outreach and education on an ongoing basis, including but not limited to the following efforts: holding community workshops, promoting the Property Owners Guide to Building an ADU (prepared by the AHA community group in coordination with the City of Carmel) and updating it as needed, maintaining a dedicated webpage on the City’s website with information on ADUs, conducting outreach and providing education to local architects andrealtors, and sending educational information through the mail to property owners about working with the City to develop ADUs, and clarifying common misconceptions about water availability.

Chapter 2.0 – Goals, Policies, and Programs 2-20
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program Benefits
▪ Legalize unpermitted ADUs to ensure they meet minimum health and safety regulations. ▪ Provide affordable housing options for the local workforce. ▪ Provide additional housing options for local seniors. ▪ Increase the proportion of ADUs that are occupied through a renter match program. ▪ Increase the permanent housing stock.
▪ Encourage full-time residency within the village.

Policy 1.2: Continue to monitor and work cooperatively with regional agencies to augment infrastructure in a manner that provides adequate capacity for existing and new housing needs while preserving and improving the unique visual character of the City.

Program 1.2.A: Water Distribution Prioritization for Affordable Housing – AFFH Quantified Objective: 13 Extremely Low, 98 Very Low, 113 Low, 50 Moderate, 59 Above Moderate Income Units
Timeframe: Adopt Water Allocation Resolution by December 2025 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Historically, the greatest constraint to housing production in Carmel-by-the-Sea has been limited water resources. The City’s Regional Housing Needs Allocation (RHNA) of 349 units for the 2023-2031 planning period is estimated to require approximately 40 acre feet of water. On January 27, 2025, the Monterey Peninsula Water Management District (MPWMD) adopted Ordinance 197 allocating 14 acre feet of water to the City of Carmel-by-the-Sea. The Ordinance took effect on March 1, 2025 and the water is estimated to become available at the end of 2025 or early 2026.

Potable water is a fundamental infrastructure need for housing and has historically been a limited resource in Carmel-by-the-Sea. Water is regulated by the State Water Resources Control Board (SWRCB) and the Monterey Peninsula Water Management District (MPWMD). Few developed sites have available water credits sufficient to accommodate construction of additional residential units.

Although additional water resources are anticipated to become available in late 2025/early 2026, the

Chapter 2.0 – Goals, Policies, and Programs 2-21
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 current State imposed cease-and-desist order in Carmel remains in effect and California American Water (Cal-Am) is not permitted to install new water meters at this time. In an effort to address water constraints, the City will:
▪ Support efforts by the MPWMD to expand the water supply with new water sources that will support affordable housing development.
▪ Work cooperatively with MPWMD to implement water conservation methods through the building permit process (e.g., low-flow fixtures, instant hot water heaters, cisterns/rain gardens) to augment water for new development projects. The City has already received many building permit applications for remodels of older homes, which would result in water conservation.
▪ Update the City’s water allocations by land use in accordance with the Water Management Program (Carmel Municipal Code Chapter 17.50) to include the recent allocation from MPWMD of 14 acre feet. In establishing these allocations, the City will prioritize the allocation of water for affordable housing.

Program 1.2.B: Address Infrastructure Constraints
Quantified Objective: See below in bullets
Timeframe: City’s 5-Year Capital Improvement Plan through December 2031 Responsible Party: Public Works Department
Funding Source: General Fund
Ensuring the City’s infrastructure is modernized and can accommodate future growth is a critical charge of local governments. The City’s infrastructure is continuously aging, with deferred maintenance still remaining from the COVID Pandemic. Crafting capital improvement programs to effectively address this maintenance backlog and manage the City’s infrastructure into the future is imperative. The City’s Public Works Department continues to improve City infrastructure, including roads and storm drains, through the City’s 5-Year Capital Improvement Plan process. The City will continue to work cooperatively with outside agencies, including the Pacific Gas and Electric Company (PG&E), the Carmel Area Wastewater District (CAWD), and California American Water (Cal-AM), to continue to maintain and upgrade the City’s infrastructure.

Chapter 2.0 – Goals, Policies, and Programs 2-22
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 The City of Carmel proposes the following actions and timeline to address infrastructure constraints during the 6th Cycle.
▪ The City of Carmel, whenever possible, will collaborate with and support the undergrounding of electrical wires by PG&E in an effort to provide consistent power. The City is working with PG&E to develop an undergrounding plan, with the work estimated to be complete within 10-15 years for a small portion of the City. With a desire to underground the remainder of overhead electrical wires in the next 20-30 years, the City will continue to work with PG&E to develop a long term plan.

Quantified Objective: Underground a small portion of the electrical wires by December 2034, and work with PG&E to underground the remainder over the next 20-30 years) ▪ The City will implement drainage and street improvements, including ADA ramps and sidewalk slope improvements through the 5-year Capital Improvement Plan.

Quantified Objective: The City will invest $2.334 million in drainage improvements and $4.969 million in street improvements by December 2026) Policy 1.3: Reduce or eliminate governmental constraints on the provision of affordable housing. Direct public funding resources to the conservation of existing housing units in neighborhoods where continued residential use is appropriate.

Program 1.3.A: Condominium Conversions
Quantified Objective: N/A
Timeframe: Continued ordinance implementation through December 2031 Responsible Party: Community Planning and Building Department Funding Source: General Fund
The City will continue to implement the condominium conversion ordinance, which restricts the conversion of apartments to condominiums to preserve lower-cost rental housing options (i.e., apartments) within the City. Apartments cannot be converted to condominiums unless a new apartment is being created to offset the conversion.

Chapter 2.0 – Goals, Policies, and Programs 2-23
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 1.3.B: Employee Housing - AFFH
Quantified Objective: N/A
Timeframe: Adoption of Municipal Code amendments by June 2026 Responsible Party: Community Planning and Building Department Funding Source: General Fund
As stated in Appendix A (Housing Needs & Fair Housing Report) there is no farmwork or agricultural employment in Carmel-by-the-Sea. Accordingly, the City has not identified a need for specialized farmworker housing beyond overall programs for housing affordability.

In compliance with the Employee Housing Act (Health and Safety Code §17000 et seq.) Sections 17021.5 and 17021.6, the City of Carmel-by-the-Sea will amend the Carmel Municipal Code to include a definition for employee housing that permits employee housing for six or fewer employees to be treated as a single-family structure and permitted in the same manner as other dwellings of the same type in the same zone.

Program 1.3.C: Manufactured Homes on a Foundation System Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2026 Responsible Party: Community Planning and Building Department Funding Source: General Fund
The City currently permits manufactured homes on a foundation system on lots zoned for conventional single-family residential dwellings pursuant to California Government Code §65852.3. Manufactured homes represent an affordable and cost-effective form of housing. The City will amend the Carmel Municipal Code to include manufactured homes as a permitted use in the R-1 zoning district subject to the same development standards to which a conventional single-family residential dwelling on the same lot would be subject.

Chapter 2.0 – Goals, Policies, and Programs 2-24
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 1.3.D: Senate Bill 35 and Senate Bill 423 Processing Procedure Quantified Objective: N/A
Timeframe: Adopt a procedure by December 2026
Responsible Party: Community Planning and Building Department Funding Source: General Fund
According to Senate Bill (SB) 35 (2017), jurisdictions that have insufficient progress toward their lowerincome RHNA units must employ a streamlined ministerial approval process for proposed developments with at least 50 percent affordability. Early implementation of SB 35 did not apply to cities in the coastal zone. However, in October 2023, SB 423 was signed into law, expanding SB 35 measures to include cities located in the coastal zone and extending the operation of the streamlined ministerial approval process to January 1, 2036.

In compliance with SB 35 and SB 423, the City will establish a standard procedure for processing eligible development projects.

Program 1.3.E: Emergency Shelters
Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2026 Responsible Party: Community Planning and Building Department Funding Source: General Fund
In compliance with AB 2339 (2022), the City will amend Title 17 of the Carmel Municipal Code to define emergency shelters and clearly state they are a permitted use by-right, requiring no discretionary review in the CC, SC, and RC commercial districts.

California Government Code §65583 requires the identification of one or more zoning designations that allow residential uses, including mixed uses, where emergency shelters are allowed as a permitted use without a conditional use or other discretionary permit and that are suitable for residential uses.

The Carmel Municipal Code includes emergency shelters within the definition of Community Social Service Facilities and reads as follows: “Any noncommercial housing facility, such as homeless shelters or emergency shelters, which may also provide meals, showers, and/or laundry facilities. Specialized programs and services related to the needs of the residents may also be provided. This classification excludes transitional housing facilities that provide long-term living accommodations.”

Chapter 2.0 – Goals, Policies, and Programs 2-25
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Carmel Municipal Code Chapter 17.14, Commercial Zoning Districts, Schedule II-B: Commercial Districts - Use Regulations, includes Community Social Service Facility as a permitted use in the Central Commercial (CC), Service Commercial (SC), and Residential and Limited Commercial (RC) Districts.

Pursuant to Subparagraph (G) of §65583, a local government with an existing ordinance or ordinances that comply with this paragraph shall not be required to take additional action to identify zoning designations for emergency shelters. The housing element must only describe how existing ordinances, policies, and standards are consistent with the requirements of this paragraph.

The City does not currently have objective standards that govern the operation and management of emergency shelters such as the maximum number of beds or persons to be permitted to be served nightly by the facility, sufficient parking to accommodate all staff working at the shelter, size and location of intake areas, provision of onsite management, proximity to other emergency shelters, length of stay, lighting, and security during the hours the shelter is in operation.

The City will amend the Carmel Municipal Code to create objective operational standards for emergency shelters.

Program 1.3.F: Forest and Beach Commission Required Findings Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2026 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Carmel Municipal Code §17.48.070, Findings Required for Significant Trees prohibits the removal of significant trees to facilitate construction or development unless one of the two following findings is met:

1. That removal of the tree is required to protect public health or safety; or

2. That the following four conditions exist:
a. The existing site is vacant or is developed to an extent less than one-third of the base floor area allowed by the zoning applicable to the site; and b. The available land area of the site not occupied by significant trees (including land within six feet of the trunk of significant trees) does not adequately and practically

Chapter 2.0 – Goals, Policies, and Programs 2-26
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 provide space for development of at least one-third of the base floor area allowed by the zoning for the site; and
c. The issuance of a variance for development in one or more setbacks has been considered and would not provide a remedy or would be inappropriate due to a significant overriding inconsistency with another policy or ordinance of the LCP; and d. Failure to authorize removal of the tree(s) would deprive the owner of all reasonable economic use of the property.

The findings in 2.a and 2.b have been identified as a potential constraint to the development of multifamily housing. The City will review the findings to ensure they do not impede multifamily development in the commercial and multifamily districts.

Policy 1.4: Improve Development Review and Approval Processes Program 1.4.A: Modify or Eliminate Onerous Use Permits - AFFH Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2027 Responsible Party: Community Development Department
Funding Source: General Fund
Multifamily and duplex housing units constitute approximately 13 percent of Carmel’s housing stock.

The use permit (UP) (AKA conditional use permit (CUP)) requirement is implemented as an additional regulatory tool and adds extra regulations, review, and required findings, to a variety of development standards that affect multifamily development. Carmel Municipal Code Chapter 17.64 Findings Required for Permits and Approvals includes a broad list of applicable conditional uses and incentives.

There are opportunities to reduce redundancies and facilitate residential construction while still enabling development to meet City regulations.

To address this potential constraint to the development of multifamily residential units, the City will pursue replacing subjective language in the required findings for Use Permits with objective findings, or eliminating these Use Permits altogether.

Chapter 2.0 – Goals, Policies, and Programs 2-27
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 1.4.B: Objective Design and Development Standards - AFFH Quantified Objective: N/A
Timeframe: Adopt Objective Design Guidelines by June 2027 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Carmel Municipal Code Chapter 17.58, Design Review describes a discretionary review process for the construction of new buildings and additions to existing buildings in the commercial districts.

There are three findings for approval: 1) Conformance to the applicable policies of the General Plan and the Local Coastal Program; 2) Compliance with all applicable provisions of the Municipal Code; and 3) Consistency with the applicable adopted design review guidelines.

In November 2023, the City received an $85,000 REAP 2.0 Local Suballocation Grant, which will be used to pursue the creation and adoption of Objective Design and Development Standards (ODDS) to reduce governmental constraints presently limiting the production of multifamily housing. The City's expectation, and desired intent, is that having ODDS in place will incentivize and accelerate the construction of qualifying affordable multifamily housing projects in the City's downtown area, including the Central Commercial (CC), Service Commercial (SC), Residential & Limited Commercial (RC), and Multifamily Residential (R-4) Districts.

Program 1.4.C: By-Right Approval - AFFH
Quantified Objective: N/A
Timeframe: Amend the Municipal Code to comply with state by-right requirements by December 2027
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Pursuant to Government Code §65583.2(h)(i) (AB 1397 passed in 2017), the City will amend the Carmel Municipal Code to require by-right approval without discretionary review for a housing development that includes 20 percent of the units as affordable to lower income households, applicable to the following types of sites:
▪ Vacant sites being used to meet the RHNA adequate sites requirements that represent a “reuse” of sites identified in two or more previous and consecutive Housing Element cycles.

Chapter 2.0 – Goals, Policies, and Programs 2-28
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ Nonvacant sites being used to meet the RHNA adequate sites requirements that represent a “reuse” of sites identified in the previous cycle of Housing Element. ▪ Sites being redesignated/rezoned after the statutory deadline of the Housing Element to accommodate the RHNA shortfall. By-right approval of these sites would be triggered by the rezoning.

For the 6th Cycle Housing Element, the City does not anticipate the need to rezone sites or utilize any sites that may be considered reuse sites to meet its RHNA. “By-right” means a jurisdiction shall not require:
▪ A Conditional Use Permit;
▪ A Planned Unit Development Permit;
▪ Design review, other than Objective Development Design Standards; or ▪ Other discretionary, local government review or approval that would constitute a “project” as defined in Section 2100 of the Public Resources Code (California Environmental Quality Act “CEQA”)
Goal H2 Protect Affordable Housing and Improve the Housing Stock Policy 2.1: Maintain and encourage expansion of permanent residential housing stock in the Residential and Commercial Districts.

Program 2.1.A: Incentives for Mixed-Use Development - AFFH Quantified Objective: Five Moderate Income units (accounted for under Program 1.1.B and Program 1.1.D.)
Timeframe: Adopt Municipal Code amendments by June 2027 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Providing additional development capacity of any type increases project feasibility. In order to better incentivize affordable residential development, the City will amend the Municipal Code to increase the floor area bonuses from 0.15 to up to 0.25 for projects in the CC, SC, and RC Districts that include housing for Moderate, Low, or Very-Low-income households. The City will also distribute informational materials promoting the floor area bonus and other applicable incentives.

Chapter 2.0 – Goals, Policies, and Programs 2-29
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 2.1.B: Permanent Housing - AFFH
Quantified Objective: N/A
Timeframe: Continued ordinance implementation through December 2031 Responsible Party: Community Planning & Building Department/City Administrator Funding Source: General Fund
Short-term rentals can provide valuable coastal visitor-serving access; however, units used as short-term rentals preclude the establishment of permanent housing. The City also has a significant percentage of the housing stock that remains vacant for part of the year due to second home ownership. This creates a significant barrier for current and potential residents to enter the local housing market and further limits opportunities to correct the housing crisis, address diversity, and provide inclusive housing options.

The City’s ordinance prohibiting short-term, transient rentals, fractional ownership, and timeshares of residential dwellings in the R-1 District and allowing a limited number of short-term rentals in the commercial areas has successfully limited the proliferation of these uses. The City will continue to implement these ordinances. In an effort to address the high rate of second home ownership, the City will promote Accessory Dwelling Units and Junior Accessory Dwelling Units (see Program 1.1.G) to add affordable rental units on properties that may otherwise lie vacant, and will establish an Affordable Housing Trust Fund (see Program 2.1.D).

Program 2.1.C: Monitor Affordable Housing Stock - AFFH
Quantified Objective: Monitor 50 lower income units
Timeframe: Develop a program by June 2026
Responsible Party: Community Planning and Building Department Funding Source: General Fund
The City will develop a City-managed Affordable Housing Oversight Program and continue to monitor affordable housing projects and work with the owners to preserve affordability through identification of funding sources and/or opportunities for partnerships with other housing providers. The program will formalize annual monitoring of the affordable housing stock throughout the city to ensure affordable housing is being protected and provided as required by California Government Code Section 65590. This may also include partnering with a qualified entity, like The Carmel Foundation, that already actively manages, monitors, and provides reporting for affordable housing units in the City. The

Chapter 2.0 – Goals, Policies, and Programs 2-30
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 City will update its databases to better track data on new construction, demolition, conversion, and replacement of housing units for Lower- and Moderate-income households including the following indicators:
▪ The number of new housing units approved for construction; ▪ The number of Lower- and Moderate-income housing units required to be provided in new housing developments;
▪ The number of existing residential dwelling units occupied by Lower- and Moderateincome households that have been authorized to be demolished or converted; and ▪ The number of Lower- and Moderate-income housing units required to be replaced (of those units being demolished or converted).

Additionally, in compliance with AB 1397, the City will adopt a policy to require replacement housing units subject to the requirements of Government Code §65915, subdivision (c)(3) when any new housing development project occurs on a site meeting the any of the following conditions:

1. The site currently has residential uses or within the past five years has had residential uses that have been vacated or demolished;

2. The site was subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of Low or Very Low-income; or

3. The site is subject to any other form of rent or price control through a public entity’s valid exercise of its police power, or is occupied by Low or Very Low-income households.

Program 2.1.D: Establish Affordable Housing Trust Fund - AFFH Quantified Objective: $1 million
Timeframe: Establish a Fund by December 2026
Responsible Party: City Administrator
Funding Source: General Fund
The City currently relies on outside agencies and organizations to fund affordable housing projects.

However, in an effort to establish a City-funded source dedicated to supporting the creation, maintenance, and rehabilitation of affordable units, the City will pursue the creation of an Affordable Housing Trust Fund. The Trust would be funded by the City, either through a dedicated revenue source or via the General Fund.

Chapter 2.0 – Goals, Policies, and Programs 2-31
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Policy 2.2: Preserve and protect the scale of established neighborhoods while encouraging property improvement
Program 2.2.A: Historic Preservation Educational Programs Quantified Objective: 25 referrals/materials distributed annually Timeframe: Continued education and ordinance implementation through December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Cities have unique characteristics that develop over time. Carmel-by-the-Sea has a distinctive design tradition and form that existing residents cherish and that serves to attract new residents and visitors. In an effort to continue to encourage improvements to the existing housing stock, the City will continue to promote education programs that improve public understanding of the City’s rich cultural and design heritage, and provide zoning flexibility and incentives to facilitate rehabilitation of historic resources.

The City will continue to use the Historic Building Code to facilitate residential rehabilitation of historic residences.

Policy 2.3: Preserve and expand affordable and rental housing opportunities to enable local employees to live in the community where they work.

Program 2.3.A: Preserve and Increase Upper Floor Residential Uses - AFFH Quantified Objective: These units are accounted for under Program 1.1.B (Development on Small Sites), Program 1.1.C (Live/Work Housing), and Program 1.1.D (Mixed-Income Incentives Program)
Timeframe: Proactive outreach through December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Fund
The retail and office landscape is shifting and the City continues to experience retail and office vacancies. This shift represents an opportunity to increase the supply of housing as a preferred development form in all Commercial Districts. The City currently prohibits the conversion of existing second-floor residential units to commercial use and requires all newly constructed second-floor space to be used as residential units. Housing over first-floor commercial uses is a particularly suitable

Chapter 2.0 – Goals, Policies, and Programs 2-32
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 solution for underutilized second-floor space. Therefore, the City will proactively work with property owners to encourage the conversion of vacant or underutilized upper floors to residential use.

Policy 2.4: Preserve the existing housing stock
Program 2.4.A: Housing Rehabilitation and Maintenance Information - AFFH Quantified Objective: 25 referrals/materials distributed annually Timeframe: Proactive outreach through December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Fund
To stay habitable and energy efficient, all buildings need maintenance. When buildings fall into an extreme state of disrepair, a more comprehensive rehabilitation is needed. Over the past few years, inflation and building supply chain issues have dramatically increased the cost of building materials.

Labor costs have also risen significantly due to a shortage of skilled construction workers and ongoing cost-of-living increases. This results in very costly rehabilitation projects.

In order to assist low-income property owners, the City will distribute information on inspection services, housing rehabilitation programs, and alternative ways to finance home repairs. Based on Code Compliance reports, the City will specifically monitor and conduct outreach to owners of residential units in need of rehabilitation and maintenance throughout the city with a focus on the southern region of the city.

Chapter 2.0 – Goals, Policies, and Programs 2-33
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Goal H3 Provide Opportunities for New Affordable and Other Special Needs Housing
Policy 3.1: Incentivize affordable housing development, with an emphasis on affordable housing built to accommodate Extremely-Low and Low-income residents.

Encourage the private sector to produce affordable housing.

Program 3.1.A: Mixed-Use Affordable Housing - AFFH
Quantified Objective: 10 Low Income Units
Timeframe: Proactive outreach through December 2031; Revise guidelines and approval processes by June 2027
Responsible Party: Community Planning and Building Department Funding Source: General Fund
The shifting retail and office landscape represents an opportunity to encourage mixed-use developments (housing over first-floor commercial uses) as a preferred development form via community outreach. The City will proactively work with property owners, property managers, and realtors to promote and incentivize upper-floor housing opportunities, including the potential of allowing a third-floor mezzanine for affordable housing. Such development would be subject to the City’s 30-foot height limit.

The City has identified the following regional affordable housing organizations to include in the discussion of revising design guidelines to promote mixed-use affordable housing in the City. ▪ County of Monterey Housing Authority Development Corporation (HDC); ▪ Woodman Development Company, Inc.;
▪ Community Housing Improvement Systems and Planning Association, Inc. (CHISPA); ▪ Eden Housing;
▪ EAH Housing; and
▪ Mid-Peninsula Housing.

Based on the feedback received by City Staff from the development community, the City will implement the following actions:
▪ Revise design guidelines based on community and developer feedback;

Chapter 2.0 – Goals, Policies, and Programs 2-34
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ Revise approval processes if constraints are identified during feedback gathering; and ▪ Annually host outreach and FAQ forums for developers and community members.

Program 3.1.B: Housing for Extremely-Low Income Households - AFFH Quantified Objective: 2 Extremely Low Income Units
Timeframe: Outreach efforts ongoing through December 2031 Responsible Party: Planning and Building Department
Funding Source: General Fund
Providing housing units for Extremely-Low Income (ELI) Households earning 30 percent or less of the Area Median Income (AMI) for Monterey County has proved challenging for the City. The City will continue to place specific emphasis on the provision of multifamily housing and non-traditional housing types such as single-room-occupancy units and transitional housing. The City will encourage development of housing for ELI households through a variety of activities such as targeted outreach to for-profit and non-profit housing developers on at least an annual basis, providing in-kind technical assistance, fee deferrals, expedited/priority processing, identifying grant and funding opportunities, applying for or supporting applications for funding on an ongoing basis, reviewing and prioritizing local funding for developments that include housing for ELI households, and/or offering additional incentives to supplement the density bonus provisions in state law.

The City also has a variety of programs to encourage development of ELI units, including Accessory Dwelling Units–a portion of which are designed to provide affordable housing for Extremely-Low Income Households–and employee housing. The City has also funded a full-time permanent Associate Planner position through the General Fund to focus on long-range planning and housing needs.

Program 3.1.C: Density Bonus - AFFH
Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by December 2031 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Density bonuses can provide a significant incentive to build affordable housing units. By increasing the number of units permitted to be built on a property, the financial investment required to bring the development to fruition has a higher likelihood of seeing a positive return. Given the high cost of

Chapter 2.0 – Goals, Policies, and Programs 2-35
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 materials, labor, and borrowing costs, increasing the number of units can make the housing project financially feasible.

Pursuant to Government Code §§65915-65918, the City will amend the City’s Density Bonus provisions to be consistent with recent changes to State Density Bonus Law. Additionally, the City will further review and revise local bonus density ordinances to clarify the regulations and increase certainty of applicability.

Program 3.1.D: Reduced Entitlement and Development Fees - AFFH Quantified Objective: Reduced fees for developments with affordable units Timeframe: Adopt a Fee Schedule by July 2026
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Entitlement and development fees paid by project applicants assist in the City’s ability to recover administrative and operating costs; however, these fees may have the unintended consequence of increasing the cost of housing. To encourage the development of affordable housing, the City will reduce the planning and building permit fees for affordable housing units in commercial areas.

Program 3.1.E: Reduced Parking Requirements - AFFH
Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2026 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Carmel Municipal Code Chapter 17.38, Off-Street Parking Requirements, Table A: Minimum Parking Requirements provides parking factors for land uses by zoning district. In the Central Commercial (CC), Service Commercial (SC), Residential and Limited Commercial (RC) and Multi-Family Residential (R-4) districts, the parking requirement for affordable housing is one-half space per unit. For senior housing, it is one-third space per unit plus 1 guest space for every 4 units. Other permanent residential uses are required to provide 1 parking space per unit in the SC District, and 1.5 spaces in the RC and R4 Districts. No parking is required in the CC District.

The City recognizes that parking requirements increase the cost of residential development and take up valuable space that can be used for housing, and has maintained a low parking ratio for residential uses.

Chapter 2.0 – Goals, Policies, and Programs 2-36
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 The City will continue to offer reduced parking requirements for affordable housing developments.

Additionally, the City will clarify that affordable units are exempt from parking in-lieu fees.

Program 3.1.F: Expedited Processing Procedures - AFFH
Quantified Objective: N/A
Timeframe: Hire a consultant by December 2026; Adopt Municipal Code amendments by June 2027
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Faster permit processing times reduce overall project timelines and allow a project to get to the construction stage in a timely manner.

To enable a more efficient permit processing system, the City is committed to contracting with a qualified consultant to review the Planning Division’s current permitting procedures to identify inefficiencies and make recommendations on process improvements to streamline the permitting process. Based on the consultant’s recommendations, the City will update existing permitting procedures, including, but not limited to, the following:
▪ Implement concurrent permit processing for projects that incorporate several land uses or features that would typically require two or more permit applications, to be concurrently reviewed and approved or disapproved by the highest-level review authority or joint meetings. This will expedite the review process for complex development projects. ▪ Allow an option for affordable multifamily projects to utilize 3-D modeling or other comparable methods, in lieu of story poles, that provide objective information for the City to assess impacts of development on important coastal scenic view resources. ▪ Prioritize projects with affordable units, assign a dedicated planner to facilitate the development process, and schedule joint public hearings when multiple decision-making bodies are involved.

Chapter 2.0 – Goals, Policies, and Programs 2-37
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 3.1.G: Establish Minimum Densities - AFFH
Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2028 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Establishing a minimum density can be utilized as a tool to ensure the limited available land in a City is used in an efficient manner and lower densities are avoided. The City’s intention for establishing a minimum density in the Commercial and Multi-Family Residential Districts is rooted in enabling the development of more dense housing in the City. Currently, the Commercial District (CC, SC, and RC) permits residential densities of 0-22 dwelling units per acre and the Multi-Family Residential District (R4) permits a maximum of 33 dwelling units per acre. Establishing a minimum density in these districts will result in higher yields of residential units. Recent residential developments in the City’s Commercial District have ranged in density from 22-33 dwelling units per acre. The City will revise the Municipal Code for commercial districts (CC, SC and RC) and the Multifamily Residential (R-4) District to establish a minimum density of 22 dwelling units per acre, as part of the base zoning and a maximum allowable density of 40 units per acre, with a total maximum capacity of 88 units per acre, inclusive of all local and State density bonuses. Additionally, the City will prohibit new single-family development in the R-4, CC, SC, and RC Districts. Existing single-family dwellings in these districts will be considered legal nonconforming uses. Recognizing that there is a need for housing to accommodate families, and to try and increase the mix of housing types, the City will pursue options for incentivizing the development of two- and three-bedroom units.

The City is committed to modifying development standards in the commercial and multi-family districts to ensure the standards support the minimum density and do not function as a constraint to meeting the minimum density, as necessary.

Chapter 2.0 – Goals, Policies, and Programs 2-38
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Policy 3.2: Recognize the special needs of persons with disabilities and the need to retain flexibility in the design review process to accommodate these needs.

Program 3.2.A: Reasonable Accommodation Procedures - AFFH Quantified Objective: Process 8 applications
Timeframe: Adopt a revised policy and Municipal Code amendment by December 2025
Responsible Party: Community Planning and Building Department Funding Source: General Fund
A reasonable accommodation is any change, exception, or adjustment to a rule, policy, practice or service that allows a person with a disability to have an equal opportunity to participate. Information on reasonable accommodation procedures will continue to be provided at City Hall and on the City’s website. As of September, 2025 the City is already underway evaluating and revising Policy C11-01, which describes procedures to provide reasonable accommodation, and has explored reduced or waived permit fees for persons with disabilities in compliance with the provisions of SB 520, in an effort to remove any additional barriers and encourage those with disabilities to apply. Initial conversations with the Planning Commission and City Council have been supportive of revising the policy. To eliminate subjectivity from the required findings for requests for reasonable accommodation, the City will amend the Municipal Code to remove the findings requirement for requested accommodations stating, “the requested accommodation will not result in a significant and unavoidable negative impact on adjacent uses or structures.” and develop a finding to allow for the reasonable accommodations that adequately addresses the need with the least intrusive impacts.

Further, the City will amend the definition of aggrieved parties and the appeal process in the Municipal Code, to ensure that appeals of reasonable accommodation permits do not create an undue additional barrier.

Chapter 2.0 – Goals, Policies, and Programs 2-39
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 3.2.B: Housing Mobility - AFFH
Quantified Objective: 78 live/work units (Program 1.1.C); 18 mixed income units (Program

1.1.D); 65 units on religious properties (Program 1.1.E); and 161 units through Hotel to Residential Conversion (Program 1.1.F); 5 hotel employee housing (Program 1.1.G); and 70 ADUs (Program 1.1.H) Timeframe: December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Plan
The City of Carmel-by-the-Sea is committed to promoting a diverse array of housing options for all income groups throughout the community. To improve housing mobility and promote more housing choices and affordability, the City will employ a suite of strategies to create and/or enhance opportunities in various neighborhoods, including in lower density neighborhoods and in downtown Carmel. This initiative represents an effort to increase housing mobility, and extends beyond programs to meet the City's RHNA. Actions and strategies are detailed in individual programs above and include:
▪ Homesharing: Research and pursue a homesharing program, including coordination with non-profits and other organizations to assist with matching tenants with existing homeowners. Typically, homesharing is a service provided by nonprofit organizations to assist in matching a homeowner with a tenant. This homesharing process can also include helping homeowners rent out their ADUs. The process of identifying and screening potential tenants, developing lease agreements, and understanding the rights and responsibilities of being a landlord can be onerous. The City may facilitate presentations at The Carmel Foundation Senior Center, and other outreach assistance. The City will market and take other actions as necessary, at least annually, with the goal of generating five opportunities per year.
▪ Program 1.1.C: Live/Work Housing
▪ Program 1.1.D: Mixed-Income Incentive Program
▪ Program 1.1.E: Affordable Housing on Religious Facility Properties ▪ Program 1.1.F: Hotels to Residential Development
▪ Program 1.1.G: Hotel Employee Housing
▪ Program 1.1.H: Accessory dwelling units (ADUs)

Chapter 2.0 – Goals, Policies, and Programs 2-40
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ Marketing of housing resources and opportunities: Provide housing resources and information available through various City and regional in-person and virtual outlets. The City will provide this information in multiple languages based on the languages spoken by Carmel-by-the-Sea residents, as indicated in the U.S. Census Bureau's American Community Survey.

Program 3.2.C: Family Friendly Housing – AFFH
Quantified Objective: 5 Very Low, 5 Low, 5 Moderate Income Units Timeframe: Develop Regulatory Incentive (June 2028); Implement Family Friendly Design Guidelines (June 2028)
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Carmel-by-the-Sea is suffering from a rapid and accelerating decline in the number of families with children living within the village. Between 2012 and 2023, the number of students from Carmel-by-theSea attending Carmel River School (the local public elementary school) declined from 270 to 129.

Similarly, from 2016 to 2024, the number of students from Carmel-by-the-Sea attending Carmel Middle School and Carmel High School declined from 53 to 27 and from 90 to 47, respectively. Overall, between 2015 and 2024 the median age of residents increased from 53 to 65.

To counter this trend, the City will promote multifamily housing designs to attract households with children and larger multi-generational households by encouraging developers to include unit mixes with higher bedroom counts (including four-bedroom units) as well as other family friendly features and onsite amenities, such as usable outdoor open space for multigenerational use, and multipurpose rooms that can be used for after-school homework clubs, computer, art, or other resident activities. To boost the number of families with children residing in the village and to address potential displacement of households with four or more persons, the City will create incentives to encourage the development of larger units with multiple bedrooms.

Chapter 2.0 – Goals, Policies, and Programs 2-41
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Policy 3.3: Facilitate the provision of transitional and supportive housing in appropriate districts in the community.

Program 3.3.A: Zoning for Transitional and Supportive Housing – AFFH Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2026 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Senate Bill (SB) 2 (2007) revised Housing Element law requiring that transitional and supportive housing be permitted as a residential use, subject only to restrictions that apply to other residential dwellings of the same type in the same zone. In compliance with SB 2, the City will continue to allow transitional/supportive housing as a residential use. The City’s Municipal Code permits transitional and supportive housing by-right in all districts that permit residential uses, including the CC, SC, RC and R4 Districts, regardless of the number of persons in the facility.

Program 3.3.B: Low-Barrier Navigation Centers – AFFH
Quantified Objective: N/A
Timeframe: Adopt Municipal Code amendments by June 2026 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Assembly Bill (AB) 101 (2019) provides a pathway to permanent housing for people experiencing homelessness. A “Low Barrier Navigation Center” is a housing first, low-barrier, service-enriched shelter focused on moving people into permanent housing. The shelter provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing. In order to comply with state law, the City will amend the Municipal Code to include the definition of a “Low Barrier Navigation Center” and will develop By Right procedures for processing low barrier navigation centers.

Chapter 2.0 – Goals, Policies, and Programs 2-42
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 3.3.C: Unlicensed Residential Care Facilities – AFFH Quantified Objective: N/A
Timeframe: Adopt Municipal Code Amendments by June 2026 Responsible Agency: Community Planning and Building Department Funding Source: General Fund
State law requires local governments to treat licensed residential care facilities (e.g. group homes) with six or fewer residents as a residential use and subject to the same development standards as a singlefamily dwelling. Furthermore, no conditional use permit, variance, or other zoning clearance shall be required of a residential care facility that serves six or fewer persons that is not also required of a singlefamily dwelling of the same type in the same zone. The residents and operators of a residential care facility shall be considered a family for the purposes of any law or zoning ordinance that relates to the residential use of a property. However, “six or fewer persons” does not include the operator, the operator’s family, or persons employed as staff. These facilities are licensed and regulated by the State of California.

The City defines Residential Care Facilities as facilities that require or are licensed by the State of California to provide living accommodations and 24-hour, primarily nonmedical care and supervision for persons in need of personal services, supervision, protection, or assistance. Living accommodations are shared living quarters with or without separate kitchens or bathrooms for each room or unit. This classification includes facilities that are operated for profit as well as those operated by public or nonprofit institutions.

Residential Care, General. A residential care facility providing 24-hour nonmedical care for more than six persons in need of personal services, supervision, protection, or assistance. This classification includes hospices, board and care homes, and similar establishments that are licensed by the State of California. These types of facilities are conditionally permitted in the SC and RC Districts.

Residential Care, Limited. A residential care facility providing 24-hour nonmedical care for six or fewer persons in need of personal services, supervision, protection, or assistance essential for sustaining the activities of daily living. This classification includes only those facilities licensed for residential care by the State of California. These types of facilities are subject to the same regulations as apply to other family residential dwellings in the CC, SC, and RC Districts. In the R-1 District, they are permitted in single-family homes. In the R-4 District, they are permitted by-right with no restrictions.

Chapter 2.0 – Goals, Policies, and Programs 2-43
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Residential Care, Senior. A residential care facility providing 24-hour medical or nonmedical care for more than six persons 60 years of age or older in need of personal services, supervision, protection, or assistance for sustaining the activities of daily living. This classification includes nursing homes for the elderly, life care or continuing care homes, and similar facilities licensed for residential care by the State of California. These types of facilities are conditionally permitted in the SC, RC, and R-4 Districts.

Recognizing that larger facilities provide necessary supportive environments for a variety of households, the City will amend the Zoning Ordinance to allow unlicensed facilities as a permitted use subject only to the requirements that apply to other residential uses of the same type in the same zone.

Program 3.3.D: Single Room Occupancy (SRO) Units – AFFH Quantified Objective: N/A
Timeframe: Adopt Municipal Code Amendments by June 2026 Responsible Party: Community Planning & Building Department Funding Source: General Fund
Government Code §65583 and §65583.2 require that a city plan for a variety of housing types, including single-room occupancy units or SROs. An SRO consists of a single room dwelling unit that is the primary residence of its occupant(s). One example of an SRO could be the proposed Live/Work units in Program 1.1.C. To support the creation of SROs, the City will take the following actions:
▪ Adopt a definition of “single room occupancy unit” in the Carmel Municipal Code. ▪ Amend the Carmel Municipal Code to identify the districts where SROs would be permitted as a residential use subject only to those regulations that apply to other residential dwellings of the same type in the same zone. The City may adopt specific, objective development standards applicable to SROs such as maximum number of occupants, minimum or maximum unit size, and requirements relating to food preparation facilities, and sanitation facilities.

Chapter 2.0 – Goals, Policies, and Programs 2-44
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Goal H4 Exemplify Sustainable Development and Energy Conservation Policy 4.1: Support energy and water conservation programs to reduce the consumption of these resources in housing and to reduce housing costs.

Program 4.1.A: Water Conservation
Quantified Objective: 25 referrals/materials distributed annually Timeframe: Implement the water management program through December 2031 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Even with a recent allocation of water from the Monterey Peninsula Water Management District (MPWMD), potable water remains a finite, and tightly regulated resource in the City and California at large. To responsibly allocate the City’s limited water allocation to maximize as many new residential units as possible, the City will continue to implement the Water Management Program (Carmel Municipal Code Chapter 17.50) through the building permit process, and provide information to the community on water conservation retrofits and best practices. In addition, the City will provide information on and promote water conservation education through outreach and community engagement, and retrofit rebates provided by the MPWMD.

Program 4.1.B: Energy Conservation and Green Building
Quantified Objective: 25 referrals/materials distributed annually Timeframe: Continued education and compliance through December 2031 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Conserving energy to reduce stress on the electrical grid and reduce the effects of climate change (i.e. wildfire and flooding) is increasingly critical. The City experienced significant power outages during the 2022-23 winter storms, adjacent areas were flooded, and the past few wildfire seasons have significantly impacted air quality and resulted in evacuations of neighboring communities. The City will continue to review applications for new construction and substantial alterations, taking into consideration solar orientation and access to sunlight. The City will also continue to require compliance with current state building standards for energy efficiency in all new homes. The City will further disseminate information by updating the website annually with related energy conservation and green building information.

Chapter 2.0 – Goals, Policies, and Programs 2-45
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Goal H5 Publicize Housing Needs and Resources
Policy 5.1: Support and enforce fair housing laws. Expand fair housing choice by promoting housing opportunities and removing impediments to fair housing.

Program 5.1.A: Fair Housing Services – AFFH
Quantified Objective: 25 referrals/materials distributed annually Timeframe: Proactive outreach through December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Fund
The Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. The California Department of Fair Employment and Housing and the Conflict Resolution and Mediation Center of Monterey County provide fair housing services and information. These agencies advise persons in need of information on housing and employment, mediate landlord/tenant disputes and research complaints about discriminatory housing practices. The City will coordinate with these agencies to provide printed information about fair housing services at City Hall, on the City’s website, and in other public buildings such as the City’s two libraries. The City will also refer inquiries related to fair housing to these agencies and provide fair housing resources at outreach events.

Program 5.1.B: Housing Choice Voucher Program – AFFH
Quantified Objective: 25 referrals/materials distributed annually Timeframe: Proactive outreach through December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Created by the Housing and Community Development Act of 1978, the Housing Choice Voucher program, formerly known as Section 8, provides assistance to eligible Low- and Moderate-Income families to rent housing in the private market. Eligibility for this program is based on the family’s gross annual income and family size. The Housing Choice Voucher rental assistance program is administered by the Housing Authority of the County of Monterey. The City will continue to facilitate use of the Housing Choice Voucher program in the community by distributing information for the program at City Hall and the Library and making referrals to the Housing Authority.

Chapter 2.0 – Goals, Policies, and Programs 2-46
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Program 5.1.C: Shared Housing Information – AFFH
Quantified Objective: 25 referrals/materials distributed annually Timeframe: Proactive outreach through December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Shared housing is another important tool to provide affordable housing options. Shared housing is generally more affordable because a portion of a residence is rented as opposed to an entire unit.

Shared housing can provide safe and secure affordable housing in a high-cost market. This model can also financially help low-income individuals who own their homes, while alleviating loneliness. The City will continue to distribute informational materials from the Housing Authority of the County of Monterey and The Carmel Foundation, and will display information at City Hall, other public buildings, and on the City’s website. The City will also seek out other shared housing providers and resources to expand this housing option.

Program 5.1.D: Farmworker Housing – AFFH
Quantified Objective: N/A
Timeframe: December 2031
Responsible Party: Community Planning and Building Department Funding Source: General Fund
Although the City does not have agricultural uses, and therefore, no housing designated specifically for farmworkers, the City supports the County of Monterey’s efforts to educate the public on resources that are available for agricultural workers. The City has identified the following resources that are available throughout the region for agricultural employees:
▪ Spanish Farmworkers Resource Line – provides information on a variety of resources such as legal help and medication services, stress management, support for farmworkers with disabilities.
▪ The Center for Community Advocacy – an organization whose mission is to support and build leadership within the community and in particular for farmworkers and their families. The Center has worked side by side with farmworkers to help improve their living conditions and advocate for more affordable housing and access to health services and resources.

Chapter 2.0 – Goals, Policies, and Programs 2-47
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 ▪ Farm and Food Worker Relief Program – Catholic Charities Diocese Monterey is providing direct financial relief to eligible farmworkers in the counties of Monterey, Santa Cruz, San Benito, and San Luis Obispo. The purpose of this program is to provide direct financial relief to eligible field workers, meatpacking workers, livestock workers, and grocery store workers.

Policy 5.2: Promote public awareness and foster pride in the history of the village.

Program 5.2.A: Support Community Organizations – AFFH
Quantified Objective: N/A
Timeframe: Proactive outreach and partnerships through December 2031 Responsible Party: Community Planning and Building Department Funding Source: General Fund
Community organizations play a pivotal role to provide outreach and services to those facing housing issues. The City will continue to support community organizations that promote neighborhood involvement, including but not limited to the Carmel Residents Association, The Carmel Foundation, and the Carmel Heritage Society. The City will develop partnerships with these organizations to promote neighborhood enhancement programs, conduct and improve outreach and education, and solicit community input.

Chapter 2.0 – Goals, Policies, and Programs 2-48
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026

2.5 Summary of Quantified Objectives
Table 2-1 Quantified Objectives (2023-2031)
Program
Extremely
Low
Very
Low Low Moderate
Above
Moderate Total

1.1.A: Adequate Sites 113 74 44 118 349

1.1.B: Development on Small Sites 2 2 2 12 18

1.1.C: Live/Work housing 8 35 35 78

1.1.E: Affordable Housing on Religious
Facility Properties
6 29 30 65

1.1.F: Hotel-to-Residential Conversion 40 40 40 41 161

1.1.G: Hotel Employee Housing 5 5

1.1.H: Accessory Dwelling Units 7 14 21 21 7 70

1.2.A: Water Distribution Prioritization for
Affordable Housing
13 98 113 50 59 333

3.1.A: Mixed Use Affordable Housing 10 10

3.1.B: Housing for Extremely Low Income
Households
2 2

Housing Needs and
Fair Housing Report
A

APPENDIX

Appendix A – Housing Needs and Fair Housing Report A-ii Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Table of Contents
Appendix A Housing Needs and Fair Housing Report...................................................................................................A-1 A.1 Introduction........................................................................................................................................................A-1 A.2 Population, Employment, and Household Characteristics...........................................................................A-7 A.3 Disproportionate Housing Needs................................................................................................................. A-31 A.4 Special Needs Groups..................................................................................................................................... A-40 A.5 Access to Opportunity.................................................................................................................................... A-58 A.6 Housing Stock Characteristics....................................................................................................................... A-70 A.7 Fair Housing Enforcement and Outreach Capacity ................................................................................... A-84 A.8 Fair Housing Recommendations ................................................................................................................ A-100 A.9 Conclusion...................................................................................................................................................... A-104 Tables
Table A-1 - Population Growth Forecast by Jurisdiction, 2015-2045 .........................................................................A-8 Table A-2 - Population Age Distribution by Jurisdiction, 2019....................................................................................A-9 Table A-3 - Population by Race by Jurisdiction, 2019................................................................................................. A-11 Table A-4 - Employment Growth Forecast by Jurisdiction, 2015-2045 .................................................................. A-20 Table A-5 - Employment by Sector, Carmel-by-the-Sea, 2010 and 2019................................................................. A-21 Table A-6 - Unemployment Rate, Carmel-by-the-Sea, 2019 ...................................................................................... A-23 Table A-7 - Regional Housing Needs Allocation ......................................................................................................... A-23 Table A-8 - Occupations by Mean Salary, Monterey County, 2019 .......................................................................... A-24 Table A-9 - Housing Forecast by Jurisdiction, 2015-2045.......................................................................................... A-25 Table A-10 - Households by Income Category, Carmel-by-the-Sea, 2019............................................................... A-27 Table A-11 - Overview of Special Needs Groups........................................................................................................ A-40 Table A-12 - Extremely Low-Income Households, Carmel-by-the-Sea, 2015-2019.............................................. A-42 Table A-13 - Disability Status by Age, Carmel-by-the-Sea, 2021............................................................................... A-48 Table A-14 - Population with Developmental Disabilities by Age, Carmel-by-the-Sea, 2021.............................. A-48 Table A-15 - Population with Developmental Disabilities by Residence, Carmel-by-the-Sea, 2021 ................... A-49 Table A-16 - Homeless Population by Jurisdiction, 2017-2022................................................................................. A-57 Table A-17 - Homelessness by Household Type and Shelter Status, Monterey County, 2019 ............................ A-57 Table A-18 - Housing Unit Growth Trends by Jurisdiction, 2010-2019.................................................................. A-70 Table A-19 - Housing Units by Type by Jurisdiction, 2019........................................................................................ A-71 Table A-20 - Housing Units by Type and Tenure, Carmel-by-the-Sea, 2019.......................................................... A-72 Table A-21 - Household Size by Tenure by Jurisdiction, 2019.................................................................................. A-73 Table A-22 - Vacant Housing Units by Type, Carmel-by-the-Sea, 2019.................................................................. A-75

Appendix A – Housing Needs and Fair Housing Report A-iii Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Table A-23 - Housing Permits by Income Group, Carmel-by-the-Sea, 2015-2021................................................ A-75 Table A-24 - Inventory of Assisted Rental Housing.................................................................................................... A-77 Table A-25 - Median Home Value by Jurisdiction, 2019-2022 .................................................................................. A-82 Table A-26 - Average Rent by Number of Bedrooms, Carmel-by-the-Sea, 2023................................................... A-82 Table A-27 - Housing Affordability, Carmel-by-the-Sea, 2022.................................................................................. A-83 Table A-28 - Distribution of Potential Hotel- to- Residential Conversion Opportunity Sites by LMI Population (2024)...................................................................................................................................... A-94 Table A-29 - Distribution of RHNA Units by LMI Population (2024) ................................................................... A-94 Table A-30 - Distribution of Potential Hotel- to- Residential Conversion Opportunity Sites by Cost Burdened Renters (2022).......................................................................................................................... A-97 Table A-31 - Distribution of RHNA Units by Cost Burdened Renters (2022)....................................................... A-97 Table A-32 - Fair Housing Issues, Contributing Factors, and AFFH Programmatic Actions ........................... A-102 Figures
Figure A-1 - Major Public and Legal Actions that Influence Fair Access to Housing..............................................A-3 Figure A-2 - Population Growth, Carmel-by-the-Sea, 2010-2019................................................................................A-8 Figure A-3 - Population Distribution by Age, Carmel-by-the-Sea, 2010-2019...........................................................A-9 Figure A-4 - Population by Race Compared to the County, 2019............................................................................. A-10 Figure A-5 - Population by Race, Carmel-by-the-Sea, 2010-2019 ............................................................................. A-11 Figure A-6 - Regional Non-White vs. White Population, 2010-2019........................................................................ A-13 Figure A-7 - Diversity Index, Carmel-by-the-Sea, 2018 .............................................................................................. A-15 Figure A-8 - R/ECAP by Census Tract, Carmel-by-the-Sea, 2009-2013 ................................................................. A-17 Figure A-9 - RCAAs by Census Tract, Carmel-by-the-Sea, 2015-2019 .................................................................... A-18 Figure A-10 - Percent Non-White by Block Group, Carmel-by-the-Sea, 2018....................................................... A-19 Figure A-11 - Worker Earnings by Place of Residence and Place of Work, Carmel-by-the-Sea, 2019............... A-22 Figure A-12 - Household by Type by Jurisdiction, 2019............................................................................................. A-25 Figure A-13 - Changes in Household Type, Carmel-by-the-Sea, 2010-2019 ........................................................... A-26 Figure A-14 - Households by Household Size by Jurisdiction, 2019........................................................................ A-26 Figure A-15 - Median Household Income by Jurisdiction, 2019............................................................................... A-28 Figure A-16 - Regional Median Household Income, 2010-2019 ............................................................................... A-28 Figure A-17 - Income by Category, Carmel-by-the-Sea, 2019.................................................................................... A-29 Figure A-18 - Median Income by Block Group, Carmel-by-the-Sea, 2015-2019.................................................... A-30 Figure A-19 - Housing Tenure by Jurisdiction, 2019................................................................................................... A-31 Figure A-20 - Housing Problems by Tenure, Carmel-by-the-Sea, 2015-2019......................................................... A-32 Figure A-21 - Severe Housing Problems by Tenure, Carmel-by-the-Sea, 2015-2019 ............................................ A-33 Figure A-22 - Overcrowding by Severity by Jurisdiction, 2019.................................................................................. A-34

Appendix A – Housing Needs and Fair Housing Report A-iv Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-23 - Overcrowding by Tenure and Severity, Carmel-by-the-Sea, 2019.................................................... A-34 Figure A-24 - Overcrowded Households, Carmel-by-the-Sea ................................................................................... A-35 Figure A-25 - Cost Burden Severity by Jurisdiction, 2015-2019 ................................................................................ A-36 Figure A-26 - Cost Burden by Tenure, Carmel-by-the-Sea, 2015-2019.................................................................... A-37 Figure A-27 - Cost Burden by Home Owners, Carmel-by-the-Sea, 2015-2019...................................................... A-38 Figure A-28 - Cost Burden by Renter Households, Carmel-by-the-Sea, 2015-2019 .............................................. A-39 Figure A-29 - Percent Living Below the Poverty Line by Race and Ethnicity, Carmel-by-the-Sea, 2019........... A-43 Figure A-30 - Senior Population by Jurisdiction, 2019................................................................................................ A-44 Figure A-31 - Senior Housing by Tenure, Carmel-by-the-Sea, 2019......................................................................... A-45 Figure A-32 - Senior Households by Income, Carmel-by-the-Sea, 2019.................................................................. A-45 Figure A-33 - Population by Disability Status by Jurisdiction, 2021 ......................................................................... A-47 Figure A-34 - Trends in Persons with Disabilities, Carmel-by-the-Sea, 2012-2021................................................ A-47 Figure A-35 - Households by Size and Tenure, Carmel-by-the-Sea, 2019 ............................................................... A-50 Figure A-36 - Single-Parent Households by Jurisdiction, 2019.................................................................................. A-51 Figure A-37 - Trends in Single-Parent Households, Carmel-by-the-Sea, 2010-2019 ............................................. A-52 Figure A-38 - Hired Farm Labor, Monterey County, 2002-2017 .............................................................................. A-54 Figure A-39 - TCAC Opportunity Composite Score, Carmel-by-the-Sea, 2022..................................................... A-60 Figure A-40 - TCAC Opportunity Economic Score, Carmel-by-the-Sea, 2022...................................................... A-61 Figure A-41 - Jobs Proximity Index, Carmel-by-the-Sea............................................................................................. A-63 Figure A-42 - TCAC Opportunity Education Score, Carmel-by-the-Sea, 2022...................................................... A-64 Figure A-43 - TCAC Opportunity Environmental Score, Carmel-by-the-Sea, 2022 ............................................. A-66 Figure A-44 - Social Vulnerability Index, Carmel-by-the-Sea, 2018.......................................................................... A-67 Figure A-45 - Housing by Type in Carmel-by-the-Sea, 2010-2019 ........................................................................... A-71 Figure A-46 - Housing Stock by Number of Bedrooms, Carmel-by-the-Sea, 2019 ............................................... A-72 Figure A-47 - Household Tenure by Race, Carmel-by-the-Sea, 2019....................................................................... A-73 Figure A-48 - Vacancy Rates by Jurisdiction, 2019 ...................................................................................................... A-74 Figure A-49 - Vacancy Trends, Carmel-by-the-Sea, 2010-2019................................................................................. A-74 Figure A-50 - Housing Stock by Age, Carmel-by-the-Sea, 2019................................................................................ A-79 Figure A-51 - Displacement Risk, Carmel-by-the-Sea, 2022 ...................................................................................... A-80 Figure A-52 - FHEO Cases Total, Monterey County, 2020....................................................................................... A-86 Figure A-53 - FHEO Cases, Disability Bias, Monterey County, 2020...................................................................... A-87 Figure A-54 - Sites Inventory........................................................................................................................................... A-91 Figure A-55 - Sites Inventory and Non-White Population by Block Group (2022)............................................... A-93 Figure A-56 - Sites Inventory and LMI Population by Block Group (2024)........................................................... A-95 Figure A-57 - Sites Inventory and Cost Burdened Renters by Tract (2022)............................................................ A-98 Figure A-58 - Sites Inventory and Displacement Risk by Tract (2022).................................................................... A-99

Appendix A – Housing Needs and Fair Housing Report A-1
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Appendix A
Housing Needs and Fair Housing Report
A.1 Introduction
The following report provides both the City of Carmel-by-the-Sea Housing Needs Assessment and Fair Housing Assessment. This analysis primarily utilizes U.S. Census Bureau American Community Survey (ACS) 5-Year Estimate data1 and California Department of Housing and Community Development (HCD) data.

Housing Needs Assessment
The Housing Needs Assessment for the City of Carmel-by-the-Sea provides an in-depth analysis of the City’s population, employment, economics, household, and housing stock conditions and characteristics. This assessment develops context for the City’s goals, programs, and policies for the 6th Cycle Housing Element.

Fair Housing Assessment
In 2018, Governor Brown signed Assembly Bill (AB 686) which requires departments and agencies to administer programs relating to housing in a way that affirmatively furthers fair housing (AFFH).2 As of January 1, 2019, AB 686 extends the obligation to affirmatively further fair housing to all public agencies in the State of California. This affirmative duty is not limited to those agencies with relationships with the federal government and is to be broadly applied throughout agencies at the state and local level. Now, all public agencies must both (1) administer programs and activities relating to housing and community development in a manner that affirmatively furthers fair housing, and (2) take no action inconsistent with this obligation.3 AB 686 also made changes to Housing Element Law, requiring Housing Elements and General Plans to incorporate AFFH requirements.

Such requirements include an analysis of fair housing outreach and capacity, integration and segregation, access to opportunity, disparate housing needs, and current fair housing practices. 1 The primary reason for using 2019 data is because this is the data that was primarily being used by HCD in their AFFH datasets for the majority of housing needs data, including data that is pulled from CHAS datasets which range from 2013-2019. Additionally, 2020-2021 Census data may not be representative due to the COVID-19 pandemic. Largely, the data is reported for 2019 as this aligns with the supplemental data HCD has provided and allows for consistent reporting.
2 Public agencies receiving funding from the U.S. Department of Housing and Urban Development (HUD) are also required to demonstrate their commitment to AFFH. The federal obligation stems from the fair housing component of the federal Civil Rights Act mandating federal fund recipients to take “meaningful actions” to address segregation and related barriers to fair housing choice.
3 California Department of Housing and Community Development Guidance, 2021, page 9.

Appendix A – Housing Needs and Fair Housing Report A-2
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Affirmatively Furthering Fair Housing
“Affirmatively furthering fair housing” means taking meaningful actions, in addition to combating discrimination, that overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to opportunity based on protected characteristics.

Specifically, affirmatively furthering fair housing means taking meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity, replacing segregated living patterns with truly integrated and balanced living patterns, transforming racially and ethnically concentrated areas of poverty into areas of opportunity, and fostering and maintaining compliance with civil rights and fair housing laws. The duty to affirmatively further fair housing extends to all of a public agency’s activities and programs relating to housing and community development. (Gov. Code, §8899.50, subd. (a)(1).)” Source: California Department of Housing and Community Development Guidance, 2021, page 14.

History of Segregation in the Region
The United States’ oldest cities have a history of mandating segregated living patterns. Exclusive zoning practices were common in the early 1900s – courts struck down only the most discriminatory and allowed those that would be considered today to have a “disparate impact” on classes protected by the Fair Housing Act. For example, the 1926 case Village of Euclid v. Amber Realty Co. (272 U.S. 365) supported the segregation of residential, business, and industrial uses, justifying separation by characterizing apartment buildings as “mere parasite(s)” with the potential to “utterly destroy” the character and desirability of neighborhoods. At that time, multifamily apartments were the only housing options for people of color, including immigrants.

The Federal Fair Housing Act was not enacted until nearly 60 years after the first racial zoning ordinances appeared in U.S. cities. This coincided with a shift away from federal control over lowincome housing toward locally-tailored approaches (block grants) and market-oriented choice (Section 8 subsidies, now called Housing Choice Vouchers) – the latter of which is only effective when adequate affordable rental units are available.

Figure A-1 on the following page provides a timeline of major legal and public actions that have influenced fair access to housing beginning in 1910.

Appendix A – Housing Needs and Fair Housing Report A-3
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-1 - Major Public and Legal Actions that Influence Fair Access to Housing Source: Root Policy Research

Appendix A – Housing Needs and Fair Housing Report A-4
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Monterey County and the Monterey Bay region also have an interesting past, as far as the fight to end racial segregation is concerned. Some of the segregation in the Monterey Bay area can be attributed to historically discriminatory practices, such as racial covenants,4 redlining,5 and discriminatory mortgage approvals. While Carmel-by-the-Sea itself does not have a history of racial covenants, the City’s racial characteristics do reflect persistent “structural inequities” in society, and “self-segregation” (i.e., preferences to live near similar people).

Kent Seavey’s 2007 book Carmel: A History in Architecture details the history of Carmel-by-the-Sea, from its early settlement by Spanish explorers, to its marketing as a “seaside resort for Catholics” in the 1880s, to the development of the City’s more contemporary history and architectural design.

Similar to other jurisdictions within Monterey County, Carmel-by-the-Sea does not have a high level of diversity.

Harold and Ann Gilliam describe the history of Carmel in their 1996 book Creating Carmel, The Enduring Vision. Carmel started as an artist town, with notable writers, artists and poets Mary Austin, Sinclair Lewis, Jack London and Robinson Jeffers settling in Carmel-by-the-Sea. They were drawn to Carmelby-the-Sea for its natural beauty, a quiet town among Monterey pine forest, scenic, rocky coastline, and white sand beaches. The early small cottages of the early 1900s reflect these humble beginnings, and the evolution of Carmel’s architecture, including Comstock’s notable fairy-tale style buildings, mirrors the community of artists who resided in Carmel-by-the-Sea. As Carmel-by-the-Sea grew and became a globally known tourist destination land prices began to increase. Gilliam writes, "[a]s expensive homes have replaced Carmel’s traditional cottages, the town’s demographics have changed. The artists and writers who carried on the Sterling tradition… and the low-to-middle-income residents in the old redwood cottages, have been gradually replaced by upscale business people and professionals able to afford the fantastically escalating prices of land”. In addition to historical discriminatory practices that embedded segregated living patterns throughout the Monterey Bay area, it’s also necessary to recognize the historical impacts of colonization and genocide on Indigenous populations and how the effects of those atrocities are still being felt today. Historically, the Monterey Peninsula has been home to indigenous populations for more than 10,000 years. The original inhabitants of present-day Monterey County were the Ohlone (Costanoan), Salinan, and Esselen tribes who have “…lived in communities related by language, family, and custom.”6 However, “[d]ue to the devastating policies and practices of a succession of explorers, missionaries, settlers, and various levels of government over the centuries since European expansion, these tribes have lost the vast majority of their population as well as their land.”7 4 Racial covenants are clauses that were inserted into property deeds to prevent people who were not White from buying or occupying land.
5 Redlining is the practice of denying credit to individuals based on race, ethnicity, or other discriminatory practices. 6 From Racial Beachhead: Diversity and Democracy in a Military Town, by Carol Lynn McKibben, 2012, Stanford University Press.
7 From Indigenous Peoples of San Mateo County. San Mateo County Office of Education.

Appendix A – Housing Needs and Fair Housing Report A-5
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 The lasting influence of these policies and practices have contributed directly to the disparate housing and economic outcomes collectively experienced by Native populations today.8 The Monterey County Weekly news outlet highlights the past and present effects of restrictive covenants, along with other housing issues such as “the lack of affordable housing, generational wealth inequities and zoning issues,” as potential contributing factors to segregation within the County.9 Though restrictive racial covenants were never enacted specifically in Carmel-by-the-Sea (unlike nearby Pebble Beach and Pacific Grove), the City’s population demographics are less diverse than other jurisdictions within Monterey County. Carmel-by-the-Sea’s General Plan and Zoning Ordinance have long emphasized single-family residential patterns and consequently, the City offers a limited variety of housing types with 87 percent single family detached units. Historically, this type of development contributed to segregation patterns in part due to higher purchase costs that accompany single-family homes. Because financing for single-family properties favored educated higher income earners, purchasing property in the City remained out of reach for many lower income households and likely contributed to the demographics seen in the City today.

Enacting policies and programs that promote AFFH and highlight the community’s assets could attract a broader demographic to the area, and encourage those that work in the City to live here as well. As reflected by the 2021 Proclamation of the City Council of Carmel-by-the-Sea: Carmel-by-the-Sea has been and will continue to be enriched and enhanced in its cultural fabric, economic prosperity, and personal understanding of others by having a principled and respectful community standard towards all people.

Overview of Carmel-by-the-Sea
Over the past 10 years, Carmel-by-the-Sea has experienced growth in both population and jobs,10 which means more housing of various types and sizes is needed to ensure that residents across all income levels, ages, and abilities have a place to call home. While the number of people drawn to the City has steadily increased, housing production has not kept pace with demand, contributing to the housing shortage in the City. The following Housing Needs and Fair Housing Assessment develops context for the goals, programs, and policies that Carmel-by-the-Sea will implement to address inequities in the 6th Cycle Housing Element.

Summary of Population, Employment, Household and Housing Stock Characteristics The following provides a brief overview of population, employment, household, and housing stock characteristics in Carmel-by-the-Sea. These statistics help inform the existing housing needs in Carmel8 From Systemic Inequality: Displacement, Exclusion, and Segregation, by Danyelle Solomon, et al., 2019, Center for American Progress.
9 From Ribakoff, S. (2022, November 24) A new group sets out to explore the history of racist housing covenants in Monterey County. Monterey County Weekly.
10 From AMBAG Regional Growth Forecast 2022; 2010 (population: 3,722); 2015 (population 3,854); 2020 (population:
3,949).

Appendix A – Housing Needs and Fair Housing Report A-6
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 by-the-Sea, as well as highlighting past trends and future forecasts to develop proactive policies and programs to address the needs of the community.
 Between 2010-2019, Carmel-by-the-Sea’s population increased by 2.8 percent.11  According to the Association of Monterey Bay Area Governments (AMBAG) 2022 Regional Growth Forecast, Carmel-by-the-Sea, the population is forecast to grow by approximately three (3) percent between 2015 to 2045.
 In 2019, the predominant age group was individuals between 65 to 74 years of age.  In 2019, the population was comprised of the following racial and ethnic groups: nonHispanic White individuals (86.5 percent), Hispanic or Latino (8.2 percent), Asian populations (5.2 percent), and Black or African American (0.1 percent).  According to the AMBAG 2022 Regional Growth Forecast, Carmel-by-the-Sea is projected to experience an employment growth of 17 percent (562 new jobs) between 2015-2045.  In 2019, the unemployment rate was 0.1 percent; approximately 5 percent less than the County.
 According to the AMBAG 2022 Regional Growth Forecast, Carmel-by-the-Sea is forecast to have a household growth of approximately one (1) percent by 2045 – an increase of 42 housing units.
 In 2019, the largest household type was married-couple family households (47 percent) single-person households (40 percent), female-headed households (6 percent), Other nonfamily households (5 percent), and male-headed households (2 percent).  In 2019, above moderate-income households made up the majority of households in the City (62 percent) followed by lower-income households (28 percent), and moderate-income households (10 percent).
 In 2019, the housing stock was predominantly occupied by owner households (57 percent), compared to renter households (43 percent).
 In 2019, the majority of households (94 percent) do not experience overcrowding. Six (6) percent of households in Carmel-by-the-Sea are severely overcrowded and zero percent are moderately overcrowded.
 In 2019, 23 percent of households are cost burdened and 23 percent are severely cost burdened.
 The 2015-2019 Comprehensive Housing Affordability Strategy (CHAS) data indicates there were approximately 310 extremely low- and very low-income households living in Carmelby-the-Sea. There are approximately 140 extremely low-income households in Carmel-bythe-Sea, 100 of which are owner-occupied households and 40 extremely low-income renteroccupied households.  In 2019, senior households makeup 43 percent of all households; 15 percent of seniors rent their homes.
 In 2019, 12 percent of people in Carmel-by-the-Sea have a disability of some kind. 11 From U.S. Census Bureau, ACS 5-Year Estimate, 2010-2019

Appendix A – Housing Needs and Fair Housing Report A-7
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026  In 2019, Carmel-by-the-Sea had 70 large households, of which 57 percent are renteroccupied households. Renter-occupied households makeup the majority of all 3-5+ person households.
 In 2019, female-headed family households comprised 75 percent of single-parent households and male-headed households accounted for 25 percent. No single-parent households fell below the poverty level.
 The number of households experiencing homelessness has decreased between 2017 to 2022 from 16 persons to one (1), respectively.
 In 2019, Carmel-by-the-Sea had 3,832 housing units, an approximate 6 percent increase from the 3,606 units that existed in 2010.
 Between 2015 and 2022, 18 housing units were issued permits in Carmel-by-the-Sea which represents 58 percent of the RHNA number of 31 units assigned in the 5th Cycle Housing Element.
 In 2019, the housing stock included the following unit types: 87 percent of homes were single-family detached; 10 percent were multifamily; 2 percent were mobile homes; and 1 percent were single-family attached.
 From 2010 to 2019, the City has experienced a stable vacancy average of 51 percent as a result of tourism and second-home ownership.
 As of 2019, 80 percent of Carmel-by-the-Sea’s vacant units were for seasonal, recreational, or occasional (second home) use.
 In 2022, the median home value was estimated to be $2,070,835. Home prices increased by 59 percent from 2019 to 2022. This reflects a 20 percent higher increase than the County, which is similar to nearby cities.12
 As of 2023, the average rent for an apartment in Carmel-by-the-Sea ranged from $2,200 (studio) to $5,459 (three bedrooms).13
A.2 Population, Employment, and Household Characteristics Population characteristics impact current and future housing needs in a community. A city’s population growth, age composition, and race and ethnicity composition help to determine the type and extent of housing needed. The following section provides analysis of population characteristics and local trends that affect housing demand in Carmel-by-the-Sea.

Population Growth
Table A-1 shows population projections through 2045 according to the Association of Monterey Bay Area Governments (AMBAG) 2022 Regional Growth Forecast. In Carmel-by-the-Sea, the population is forecast to grow approximately 3 percent between 2015 to 2045. This reflects 11 percent less than the County, 1 percent more than Pacific Grove and 56 percent less than Del Rey Oaks.14 Population 12 From Zillow Home Value Index, December 2019-2022
13 From Zillow Rental Price Index, March 2023
14 These two cities have been chosen for comparison throughout the document based on having comparable population sizes to Carmel-by-the-Sea.

Appendix A – Housing Needs and Fair Housing Report A-8
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 growth forecasts provide critical insight to the future demands of communities in terms of housing needs, employment, and more.

Table A-1 Population Growth Forecast by Jurisdiction, 2015-2045 Jurisdictions
Population Change 2015-2045
2015 2020 2025* 2030* 2035* 2040* 2045* Numeric %
Monterey County 430,310 441,143 452,761 467,068 476,028 483,884 491,443 61,133 14% Carmel-by-the-Sea 3,854 3,949 3,946 3,954 3,964 3,974 3,984 130 3% Del Rey Oaks 1,663 1,662 1,693 1,734 1,859 2,330 2,650 987 59% Pacific Grove 15,460 15,265 15,290 15,395 15,530 15,676 15,817 357 2% Source: AMBAG Regional Growth Forecast, 2022 NOTE: *Projected growth values Figure A-2 illustrates population growth in Carmel-by-the-Sea between 2010-2019. Carmel-by-the- Sea’s population increased by 2.8 percent from 2010 to 2019. The City’s population steadily increased from 2010 to 2017 before experiencing a sharp decline through 2019.

Figure A-2 Population Growth, Carmel-by-the-Sea, 2010-2019 Source: U.S. Census Bureau, ACS 5-Year Estimate, 2010-2019 Age Characteristics
A community’s housing needs are partly determined by preferences of age groups and household types (e.g., age, family/non-family, female-headed). When seeking housing, households may prioritize factors such as size, accessibility, and price. For instance, younger and middle-aged households may seek homes that can accommodate a growing household size, whereas older adults may seek to downsize to an apartment with assistive care services or a smaller, more affordable single-family home. Disabled persons may seek homes that are accessible and include universal design or visitability features. Overall, the life stages of a population determine the housing stock that is needed in a community.

In 2010, Carmel-by-the-Sea’s predominant age group was individuals between 65 and 74 years of age (19 percent). Figure A-3 shows that between 2010 and 2019, the general age of the population has been slowly increasing, with the most populous age groups in the City being individuals between 55 and 84

Appendix A – Housing Needs and Fair Housing Report A-9
Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 years of age. The City’s median age has changed little since 2010, ranging from 56 in 2010, 54 in 2015, and 59 in 2019. Overall, the City’s aging trend suggests a demand for housing geared toward middleaged to senior groups.

Figure A-3 Population Distribution by Age, Carmel-by-the-Sea, 2010-2019 Source: U.S. Census Bureau, ACS 5-Year Estimates, 2010, 2015, 2019 Table A-2 shows population age distribution revealing that Carmel-by-the-Sea’s most populous age group in 2019 was individuals 65 to 74 years of age (21 percent). Compared to the County and nearby cities, Carmel-by-the-Sea has the largest 55 to 85+ age group (43 percent) followed by Pacific Grove (27 percent), Del Rey Oaks (23 percent), and the County (13 percent). Since 2010, Carmel-by-the-Sea’s smallest age demographic are those aged 0-14.

Table A-2 Population Age Distribution by Jurisdiction, 2019 Jurisdiction
Population Age
0-4 5-14 15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
Monterey County 7.3% 14.8% 14.3% 14.4% 13.0% 11.8% 11.1% 7.7% 3.6% 1.9% Carmel-by-the-Sea 1.4% 9.7% 1.4% 8.1% 10.6% 11.4% 14.3% 21.3% 14.9% 7% Del Rey Oaks 5.7% 8.3% 5.7% 12.6% 12.5% 13% 18.9% 15.9% 4.4% 2.9% Pacific Grove 3.5% 12.2% 8.5% 10.0% 10.4% 13.3% 14.7% 16.5% 6.6% 4.3% Source: U.S. Census Bureau, ACS 5-Year Estimates, 2019
Race and Ethnicity Characteristics
Examining the demographic, ethnic, and racial composition of a region is integral to understanding fair housing concerns including access to economic opportunity and safe and affordable housing. Historic exclusionary governmental policies, biased mortgage lending practices, and other tactics have caused

Appendix A – Housing Needs and Fair Housing Report A-10 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 racial and ethnic segregation and spatial inequities. This section provides an overview of racial/ethnic composition and segregation patterns within Monterey County and the City of Carmel-by-the-Sea.

Understanding the racial and ethnic composition of a city is vital to ensuring equal opportunity to housing for all groups, inclusive of cultural norms and preferences. Figure A-4 illustrates the racial and ethnic composition of Carmel-by-the-Sea compared to the County.

Figure A-4 Population by Race Compared to the County, 2019 Source: U.S. Census Bureau, ACS 5-Year Estimates, 2019
When comparing the City and the County, non-Hispanic White and Hispanic or Latino populations are the most represented; however, the County presents more diversity than Carmel-by-the-Sea.

Non-Hispanic White individuals comprise 87 percent of Carmel-by-the-Sea’s population followed by Hispanic or Latino (8 percent) and Asian populations (5 percent). In contrast, the County’s largest population is Hispanic or Latino individuals (60 percent) followed by non-Hispanic White (31 percent).

The City has no populations identifying as American Indian or Alaska Native or Native Hawaiian or Other Pacific Islander. Black or African American non-Hispanic individuals represent less than 1 percent of the City’s population.

Table A-3 provides a comparison of racial and ethnic composition by jurisdiction. In 2019, Carmel-bythe-Sea (87 percent) and the neighboring City of Pacific Grove (83 percent) had the largest nonHispanic White populations compared to Del Rey Oaks (75.5 percent) and the County (30.8 percent).

Compared to surrounding cities and the County, Carmel-by-the-Sea had the lowest Asian population (5 percent). Overall, Carmel-by-the-Sea is one of the least diverse when compared to the County and the nearby cities of Del Rey Oaks and Pacific Grove.

Appendix A – Housing Needs and Fair Housing Report A-11 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Table A-3 Population by Race by Jurisdiction, 2019
Jurisdiction
American
Indian or
Alaska
Native
Asian,
Alone
Black or
African
American,
NonHispanicWhite, NonHispanicSome Other
Race
Hispanic or
Latino
Native
Hawaiian and
Other Pacific
Islander
Monterey County 0.2% 5.5% 2.5% 30.8% 0.1% 60.3% 0.5%
Carmel-by-the-Sea 0.0% 5.2% 0.1% 86.5% 0.0% 8.2% 0.0%
Del Rey Oaks 0.0% 7.1% 2.5% 75.5% 0.0% 13% 0.3%
Pacific Grove 0.2% 5.8% 1.0% 82.8% 0.0% 10.3% 0.1%
Source: U.S. Census Bureau, ACS 5-Year Estimates, 2019
When analyzing race and ethnicity in a city, it’s important to understand how demographics have changed over time. Figure A-5 illustrates changes in population by race between 2010-2019 in Carmelby-the-Sea. During this time frame, Carmel-by-the-Sea’s population composition experienced fluctuations in nearly all populations, and by 2019 saw a decline in each population except nonHispanic White. In 2015, the non-Hispanic White population experienced a 2 percent decrease in size, while the Asian and Hispanic or Latino populations increased 2 percent and 3 percent, respectively. In 2019, Carmel-by-the-Sea experienced a 7 percent increase in the non-Hispanic White population, and a decline in both the Asian and Hispanic or Latino populations by 4 percent and 3 percent, respectively.

Since 2015, population levels have remained less than 1 percent for Black or African American, American Indian or Alaska Native, Native Hawaiian, and Other Pacific Islander populations in Carmelby-the-Sea.

Figure A-5 Population by Race, Carmel-by-the-Sea, 2010-2019 Demographic characteristics such as the racial and ethnic composition of a city are necessary to inform the housing needs of a community inclusive of cultural norms and preferences.

Appendix A – Housing Needs and Fair Housing Report A-12 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Integration and Segregation
To inform priorities, policies, and actions, the housing element must include an analysis of integration and segregation, including patterns and trends. Integration generally means a condition in which there is not a high concentration of persons of a particular race, color, religion, sex, familial status, national origin, or having a disability or a particular type of disability in a specific geographic area. Segregation generally means the opposite condition, where concentrations of the characteristics described above are high in a specific geographic area.

Integration and Segregation
“Integration generally means a condition in which there is not a high concentration of persons of a particular race, color, religion, sex, familial status, national origin, or having a disability or a particular type of disability when compared to a broader geographic area.

Segregation generally means a condition in which there is a high concentration of persons of a particular race, color, religion, sex, familial status, national origin, or having a disability or a type of disability in a particular geographic area when compared to a broader geographic area.” Source: California Department of Housing and Community Development Guidance, 2021, page 31.

Residential segregation and exclusion, whether by race, ethnicity, disability, or income, is a result of numerous housing policies, practices, and procedures – both public and private – that have had enduring and pervasive negative impacts. Overt and covert housing discrimination through land use policy, shifting housing markets, and patterns of investment and disinvestment, have restricted meaningful fair housing choice and equitable access to opportunity, particularly for communities of color. Historic patterns of segregation persist in California despite the long-standing federal mandate, established by the Fair Housing Act of 1968, that federal agencies and federal grantees affirmatively further the purposes of the FHA.

Past and present discriminatory policies and practices, including long-term disinvestment, have resulted in neighborhoods with concentrated poverty and poor housing stock, limited access to opportunity, unsafe environmental conditions, underfunded schools, dilapidated infrastructure, and other disproportionately experienced problems. In addition, governmental policies have subsidized the development of segregated, high-resourced suburbs in metropolitan areas by constructing new highway systems—often through lower income communities of color— to ensure access to job opportunities in urban centers. This physical and policy infrastructure supports patterns of discrimination and high levels of segregation that continue to persist in California and across the country. All of these conditions persist despite the over 50-year-old obligation to prohibit discrimination and affirmatively further fair housing.15
15 California Department of Housing and Community Development. 2021. AFFH Guidance Memo. https://www.hcd.ca.gov/community-development/affh/docs/affh_document_final_4-27-2021.pdf

Appendix A – Housing Needs and Fair Housing Report A-13 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-6 shows the percentage of non-White and White populations throughout the region from 2010 to 2019.

Figure A-6 Regional Non-White vs. White Population, 2010-2019 Source: U.S. Census Bureau, ACS 5-Year Estimates, 2010, 2015, 2019 As of 2019, the City of Carmel-by-the-Sea has the highest percentage (86.5 percent) of White residents and the lowest percentage of Non-White residents (13.5 percent) when compared to the County, and the cities of Del Rey Oaks and Pacific Grove. Given the City’s status as being a “Highest Resource” city (see Figure A-17), having the highest median household income (see Figure A-16), and being a majority Senior community, Carmel-by-the-Sea recognizes the need to attract a more diverse population into the City and has identified various community resources and organizations to assist individuals that may have disparities in access to opportunity, and fall into the “special needs” category. A complete breakdown of service providers and community organizations that are available to the special needs populations is available in Section A.4 (“Special Needs Groups”) of this Appendix.

Diversity Index
The Diversity Index measures the degree to which the five major ethnic populations (non-Hispanic White, non-Hispanic Black, Asian and Pacific Islander, Hispanic, and Two or more races) are evenly distributed across a geographic area. The index ranges from 0 to 1 – where 0 is low diversity, meaning only one group is present and 1 is high diversity, meaning an equal proportion of all five groups is present).

Figure A-7 below depicts the level of diversity within the City. Carmel-by-the-Sea, along with neighboring jurisdictions have the lowest levels of diversity within the region. Carmel-by-the-Sea has a low level of diversity with 86.5 percent of the population identifying as non-Hispanic White.

Appendix A – Housing Needs and Fair Housing Report A-14 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Racially or Ethnically Concentrated Areas of Poverty and Affluence A Racially Concentrated Area of Poverty or an Ethnically Concentrated Area of Poverty (R/ECAP) and a Racially Concentrated Area of Affluence (RCAAs) represent opposing ends of the segregation spectrum from racially or ethnically segregated areas with high poverty rates to affluent predominantly White neighborhoods. Historically, HUD has paid particular attention to R/ECAPs as a focus of policy and obligations to AFFH. Recent research out of the University of Minnesota Humphrey School of Public Affairs argues for the inclusion of RCAAs to acknowledge current and past policies that created and perpetuate these areas of high opportunity and exclusion.16 R/ECAPs
HCD and HUD’s definition of a Racially/Ethnically Concentrated Area of Poverty is:

A census tract that has a non-White population of 50 percent or more (majority-minority) or, for non-urban areas, 20 percent, AND a poverty rate of 40 percent or more; OR A census tract that has a non-White population of 50 percent or more (majority-minority) AND the poverty rate is three times the average tract poverty rate for the County, whichever is lower.

Source: California Department of Housing and Community Development Guidance, 2021. 16 From Goetz, E. G., Damiano, A., & Williams, R. A. (2019). Racially Concentrated Areas of Affluence: A Preliminary Investigation. Cityscape: A Journal of Policy Development and Research, 21(1), 99–124

Appendix A – Housing Needs and Fair Housing Report A-15 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-7 Diversity Index, Carmel-by-the-Sea, 2018
Source: California Department of Housing and Community Development, AFFH Data Viewer

Appendix A – Housing Needs and Fair Housing Report A-16 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 It is important to note that R/ECAPs and RCAAs are not areas of focus because of racial and ethnic concentrations alone. This study recognizes that racial and ethnic clusters can be a part of fair housing choice if they occur in a non-discriminatory market. Rather, R/ECAPs are meant to identify areas where residents may have historically faced discrimination and continue to be challenged by limited economic opportunity, and conversely, RCAAs are meant to identify areas of particular advantage and exclusion.

RCAAs
HCD and HUD’s definition of an RCAA is a census tract 1) with a percentage of its total White population that is 1.25 times higher than the average percentage of the COG region’s White population; and 2) has a median income that is 2 times higher than the COG Area Median Income (AMI). Generally, these are understood to be neighborhoods in which there are both high concentrations of non-Hispanic White households and high household income rates.

Source: California Department of Housing and Community Development Guidance, 2023 As can be seen in the Figure A-8 and Figure A-9, the City of Carmel-by-the-Sea is not considered a R/ECAP; nor, is the City considered an RCAA. As highlighted previously, Carmel-by-the-Sea does not have a majority-minority population and thus cannot be labelled as a R/ECAP. Figure A-10 shows that less than or equal to 20 percent of the City’s population is non-White. Though Carmel-by-the-Sea’s percentage of exclusively White population and AMI are higher than the County-wide average, the median income in the City is not high enough for the jurisdiction to be considered an RCAA.17 17 To be considered an RCAA, census tracts must have a Location Quotient (LQ) of more than 1.25 and a median income

1.5 times higher than the COG AMI or 1.5 times higher than the State AMI, whichever is lower. In this case, Carmel’s median income would need to be 1.5 times greater than the State AMI of $69,021.

Appendix A – Housing Needs and Fair Housing Report A-17 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-8 R/ECAP by Census Tract, Carmel-by-the-Sea, 2009-2013 Source: California Department of Housing and Community Development, AFFH Data Viewer

Appendix A – Housing Needs and Fair Housing Report A-18 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-9 RCAAs by Census Tract, Carmel-by-the-Sea, 2015-2019 Source: California Department of Housing and Community Development, AFFH Data Viewer

Appendix A – Housing Needs and Fair Housing Report A-19 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-10 Percent Non-White by Block Group, Carmel-by-the-Sea, 2018 Source: California Department of Housing and Community Development, AFFH Data Viewer

Appendix A – Housing Needs and Fair Housing Report A-20 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Employment
Employment characteristics can significantly impact the housing needs and trends of a community from income and wage scale to job location and industry. Employment and income are determinates of a population’s ability to purchase housing including the type of housing and size, both of which can induce negative effects such as overpayment and overcrowding. Table A-4 summarizes projected employment growth for Carmel-by-the-Sea, the County, and nearby cities from 2015-2045.

Table A-4 Employment Growth Forecast by Jurisdiction, 2015-2045 Jurisdictions
Population Change 2015-2045
2015 2020 2025* 2030 2035* 2040* 2045* Numeric Percent
Monterey County 225,268 243,015 245,054 249,613 253,918 258,553 263,437 38,169 17% Carmel-by-the-Sea 3,353 3,566 3,593 3,674 3,752 3,833 3,915 562 17% Del Rey Oaks 705 748 753 774 794 815 834 129 18%
Pacific Grove 7,470 8,016 8,061 8,152 8,244 8,343 8,445 975 13% Source: AMBAG Regional Growth Forecast, 2022
Note: *Projected growth values
According to the AMBAG 2022 Regional Growth Forecast, Carmel-by-the-Sea was projected to experience an employment growth of 17 percent (562 new jobs) between 2015-2045. This projected employment growth mirrors the County (17 percent) and is 4 percent higher than Pacific Grove (13 percent), but reflects 1 percent lower than Del Rey Oaks (18 percent). This projected increase in job growth presents an opportunity for cities to construct additional housing options for the existing and future workforce.

Table A-5 shows 2010 and 2019 employment data for Carmel-by-the-Sea by sector. Key findings in employment data include the following:
 Education services, healthcare, and social assistance industries were the largest employers of Carmel-by-the-Sea (28 percent) in both 2010 and 2019, followed by arts, entertainment, recreation, accommodation, and food services (19 percent and 15 percent, respectively);  Information industries experienced the greatest increase between 2010 and 2019 (585 percent), followed by construction (276 percent);
 Five sectors experienced drastic declines in employment between 2010 and 2019 including finance and insurance, real estate, and rental leasing (137 percent), professional, scientific, management, and administrative services (61 percent), public administration (54 percent), arts, entertainment, recreation, accommodation and food services (35 percent), and education services, healthcare, and social assistance (20 percent);  Wholesale trade (2 percent) and agriculture, forestry, fishing and hunting, and mining (0 percent) industries experienced the least amount of growth; and  Overall, there was a 19 percent decrease in employment for Carmel-by-the-Sea residents between 2010 and 2019.

Appendix A – Housing Needs and Fair Housing Report A-21 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Table A-5 Employment by Sector, Carmel-by-the-Sea, 2010 and 2019 Industry Sector
2010 2019 Percent
Change
2010-2019
People
Employed
Percent of City
Employment
People
Employed
Percent of City
Employed
Agriculture, forestry, fishing and
hunting, and mining
0 0% 0 0% 0%
Construction 25 1% 94 7% 276%
Manufacturing 40 2% 67 5% 68%
Wholesale Trade 0 0% 26 2% 2%
Retail Trade 247 14% 213 15% 14%
Transportation and warehousing, and
utilities
63 4% 95 7% 51%
Information 14 1% 96 7% 585%
Finance and insurance, real estate,
and rental leasing
172 10% 73 5% -137%
Professional, scientific, management,
and administrative services
273 15% 106 7% -61%
Education services, healthcare, and
social assistance
493 28% 394 28% -20%
Arts, entertainment, recreation,
accommodation, and food services
330 19% 216 15% -35%
Public Administration 112 6% 52 4% -54%
Total Employment 1,769 100% 1,432 100% -19%
Source: U.S. Census Bureau, ACS 5-Year Estimates, 2010, 2019 Balance of Jobs to Workers
A city houses employed residents who either work in the community where they live, or work elsewhere in the region. Conversely, a city may have job sites that employ residents from the same city but more often employ workers commuting from outside of it. One measure of local imbalance is the relationship between workers and jobs. A city with a surplus of workers, “exports” workers to other parts of the region, while a city with a surplus of jobs must conversely “import” them.

Smaller cities will typically have more employed residents than jobs and will export workers as a result, while larger cities tend to have a surplus of jobs and will import workers. To some extent, the regional transportation system is set up for this flow of workers to the region’s core job centers. At the same time, as the housing affordability crisis has illustrated, local imbalances may be severe, where local jobs and worker populations are out of sync at a sub-regional scale.

A community may offer employment for relatively low-income workers but have relatively few housing options for those workers. Conversely, it may house residents who are low-wage workers but offer few employment opportunities for them. Such relationships may cast extra light on potentially pent-up demand for housing in particular price categories. A relative surplus of jobs relative to residents in a given wage category suggests the need to import those workers, while conversely, surpluses of workers mean the community will export those workers to other jurisdictions. Such flows are not inherently bad, though over time, sub-regional imbalances may appear.

Appendix A – Housing Needs and Fair Housing Report A-22 Carmel-by-the-Sea 6th Cycle Housing Element Amendment July 7, 2026 Figure A-11 illustrates earnings of workers in comparison to worker place of residence and place of work in Carmel-by-the-Sea. In 2019, Carmel-by-the-Sea had more low-wage jobs than low-wage residents (where low-wage refers to jobs paying less than $25,000). At the high end of the wage spectrum (i.e., wages over $75,000 per year), the City had more high-wage jobs than high-wage residents.18 This indicates the City is a net-importer of workers for both low- and high-wage jobs. It should be noted that the minimum wage has increased since 2019, from $12 to $15.50, thus increasing the annual incomes of full-time workers as well.

Figure A-11 Worker Earnings by Place of Residence and Place of Work, Carmel-by-the-Sea, 2019
Source: U.S. Census Bureau, ACS 5-Year Estimates, 2019
According to U.S. Census Bureau data reported in a Housing Feasibility Study for the City of Carmelby-the-Sea by ECONorthwest,19 a mere 2.6 percent of workers live and work in Carmel-by-the-Sea, while approximately half of all workers live within 10 miles of the City and 26 percent commute from more than 25 miles away.20 Concentrations in hospitality and leisure services may create obstacles for local workers that earn lower-incomes and cannot afford to live in the community. Such imbalances of jobs to housing impacts an individual’s ability to integrate into the community due to long distance travel, excessive costs of travel, and reduced personal time.

Unemployment rates21 are essential to understanding the affordability needs of a community when determining housing options. Table A-6 provides a breakdown of unemployment rates for Carmel-bythe-Sea, the County, and nearby cities. Compared to the County and nearby cities, Carmel-by-the-Sea 18 The source table is top-coded at $75,000, precluding more fine-grained analysis at the higher end of the wage spectrum. 19 From ECONorthwest, Housing Feasibility Study, 2023
20 From U.S. Census Bureau Longitudinal Employer-Household Dynamics Data 21 The term unemployment refers to a person who is actively searching for employment but is not able to find work.