Cotati City Council
Agenda Staff Report
Item type: PUBLIC HEARINGS (ACTION)
To: City Council
Subject: COTATI DENSITY BONUS ORDINANCE UPDATE
Date: August 27, 2024
Written by: Noah Housh, Director of Community Development Recommendation
It is recommended by the Community Development Department and the Planning Commission that the City Council introduce and conduct a first reading of the draft ordinance amending Chapter 17.32 Density Bonuses of the Cotati Municipal Code.
Background
I. Project Description
City Council consideration, introduction and first reading of a draft ordinance amending and updating Chapter 17.32 Density Bonuses of the Cotati Municipal Code to establish compliance with changes in state density bonus law.
II. Background and Previous Action
California Density Bonus law provides a mechanism for developers of residential housing projects to request additional units (above those allowed under the “base” density) in exchange for constructing a percentage of a project as deed restricted affordable housing. The general concept is that granting additional market rate units helps to offset the costs of providing the below market rate affordable housing units. Historically, the granting of density bonus was at the discretion of the individual cities/counties where the projects were being built.
The recent changes to statewide housing legislation intended to promote construction of additional housing have included several changes to the state density bonus law. Some of the most influential changes have included making granting of a density bonus required when a development meets certain criteria; expanding on the number of “incentives and concessions” from local development regulations developers may request to further support the construction of the affordable housing units; and modifying the percentages of affordable and market rate housing units that make up the density bonus formula.
Although changes at the state level are legally binding and affect all jurisdictions throughout the state, it is expected that each local jurisdiction adopt “implementing legislation” to incorporate these statewide requirements into local ordinances and municipal codes. This update to the City of Cotati Density Bonus ordinance is in response to recent changes in state density bonus requirements.
On June 14, 2024, the Planning Commission held a public hearing to consider the proposed code changes and a resolution making a recommendation to the City Council regarding introduction of the ordinance. At this meeting the Planning Commission voted 4-0-1 (Commissioner Gilardi absent) to recommend the City Council adopt the draft ordinance.
Analysis/Discussion
III. Land Use and Planning Considerations
Historically, local regulations intended to implement state density bonus legislation were written to copy exactly the state law language including affordability formulas, parking requirements and the criteria for granting incentives and concessions for density bonus projects. Additional language specific to the jurisdiction’s process or unique elements was then added onto the copied language to make up a local ordinance. This approach generally worked because the requirements and regulations adopted by the state rarely changed so the jurisdiction’s versions of these regulations did not have to change often to remain in compliance.
However, in recent times, the state legislature has been focused on making significant changes to housing law in an effort to spur housing development and has continued to iterate on these changes as in subsequent years. With regards to state density bonus law, there have been no fewer than eight bills passed by the state legislature modifying these regulations since 2018 (SB 1227; SB 1085; SB 728; AB 634; SB 728; SB 290 (2021); AB 2345 and SB 290 (2022)). This constant change to the rules governing policies must be implemented through local amendments to adopted regulations using the ordinance process for local regulations to be in compliance.
Given the need for constant revision and limited staff resources, staff is proposing a change in how staff drafts, and the Council, adopts the required implementing legislation.
Rather than copy the language of state law verbatim, the ordinance before the City Council simply references the requirements of the state legislation. Further, this draft ordinance language does not identify the specific code sections of state law, rather it limits any references to state legislation the subject matter being discussed (and does not identify the government code sections in question). The goal of this approach is that as the state legislation continues to be updated and reorganized in response to newly adopted bills at the state level, the adopted Cotati legislation will remain compliant. Staff is proposing this approach to keeping the local regulations compliant both in response to the pace of change at the state level, as well as the culture of compliance being prioritized by the Department of Housing and Community Development (HCD).
Separate from this “housekeeping” effort to update the City’s Density Bonus ordinance to ensure compliance with state law, staff has maintained the previously adopted “Mixed-Use Density Bonus” and included a reference to the “Cotati Density Bonus”, discussed at the May 28, 2024, housing workshop. These two Cotati specific density bonus options allow density bonus units (up to 100%) above and beyond those available through state density bonus law (generally a maximum of 50%). The intent of these allowances is to create a process that is more of an incentive than what is provided by the State for projects that meet the development requirements of Cotati.
It is worth noting that the City of Cotati “inclusionary housing requirement” (i.e. the number of affordable housing units required to be built within any “market rate” project), is 15-percent.
This percentage coincides with the state density bonus formula for projects to receive a density bonus (15 percent moderate income=10 percent density bonus; 15 percent low income=27.5 percent density bonus; 15 percent very low income=50 percent density bonus). The local mandate for 15 percent of the units of any project to be affordable housing, has resulted in nearly all projects proposed (since these changes) being “density bonus” projects. Providing a local “density bonus” option beyond those identified in state law is intended to incentivize developers to meet the City’s development criteria, and to provide more flexibility in the affordable unit mixes being proposed in local projects. Some questions to considered with the local density bonus are: (A) Should the city request a higher percentage of the units be deed restricted as affordable (20-percent), in exchange for this increased Cotati Density Bonus? (B) Should the city require the equal spread of affordability levels, or provide an option to vary from this as RHNA or other needs dictate? (C) Does the City Council want to set a number of concessions or incentives, or should the city be silent on this given that it is fully at City Council discretion and allow the variances to be determined on a case by case basis, depending on the quality of the proposed development?
Lastly, this ordinance also identifies that the use of a “land-trust” model is the City’s preferred method for managing the initial sale, re-sale and compliance monitoring for for-sale affordable housing units within the City of Cotati. This model essentially puts a non-profit land trust entity onto the title of below market rate units sold to qualifying residents. Having this additional entity on the title of the property ensures an agent of the City is involved with every transaction of that property. This agent can then help to monitor compliance with the affordability criteria as properties are bought and sold on the private market, a transaction the City is rarely involved with. Codifying this model as the preference for managing the for-sale affordable housing stock within the City is a step toward implementing Program 1-3 (Non-Profit and Agency Coordination) and Program 1-5 Preservation of Affodable Housing of the Housing Element.
IV. General Plan Consistency
The amendments to CMC Title 17 in the proposed ordinance are consistent with and will further established goals, policies, and implementation programs of the General Plan, including the Housing Element, to expand housing opportunities, conserve resources, and use land appropriately.
Specifically, these amendments are consistent with and implement the following Housing Element policies and programs:
Program 1-8: Residential Building Decarbonization: Continue to permit and encourage mixed uses and higher densities on in-fill and vacant sites in Priority Development Areas (PDAs) with public serving facilities, such as medical clinics, schools, and grocery stores, to discourage sprawl and encourage short vehicle trips and/or alternative forms of transportation.
Program 3-1: Zoning for a Variety of Housing Types: Amend the City’s Zoning Code to use the maximum parking requirements in Government Code Section 65915 (State Density Bonus) for all multifamily projects without the need for any developer request by December 2023.
In addition, these amendments are consistent with and implement the following General Plan policies and programs:
Policy CON 2.1: Improve air quality through continuing to require a compact development pattern that focuses growth in and around existing urbanized areas, locating new housing near places of employment, encouraging alternative modes of transportation, and requiring projects to mitigate significant air quality impacts.
Policy LU 2.5: Locate medium and higher density housing within easy walking or bicycling distance of public facilities, services, transit, and major employers.
Policy LU 2.10: Encourage mixed-use, pedestrian-, and transit-oriented development, with a focus on the Hub and major corridors.
Staff Response: Staff finds that the proposed amendments to Chapter 17.32 Density Bonuses implement the above referenced Housing Element and General Plan policies in that additional density allowed in density bonus projects will increase incentives for in-fill development and provide additional residential units in close proximity to local amenities and employment opportunities; further support implementation of the density bonus parking allowances; support increased compact development and housing near local employment and supporting the use of alternative transportation methods; and further encourage mixed use and transit oriented development through clarifying the increased allowable density, including around the Hub and major corridors.
Planning Commission Review
During their June 17, 2024, review of the code changes, the Planning Commission was generally supportive of the changes and approach being recommended by City staff. In addition to supporting formally identifying the “land trust” model as the most appropriate for the City, Commissioners saw the benefits of the City providing incentives beyond those offered through the State Density Bonus program. Specifically, identifying the creation of a mechanism to gain compliance with Cotati development standards, providing options to secure a greater variety of affordable housing and allowing additional housing units to be constructed when the City determines it appropriate. After their discussion, the Commission voted 4-0 (one commissioner absent) to recommend the City Council adopt the ordinance.
Issues
One issue to discuss is the Attorney’s Office recommendation to include the specific state government code sections being referenced in the City’s ordinance. The City Attorney’s office recommended specifically including a definition that any reference to state density bonus laws includes reference to 65915 et seq., even if we are removing specific section references throughout the ordinance. Although there were not specific legal concerns with the lack of any reference, it was recommended for clarity and staff has incorporated one such reference in response.
Financial Considerations
There are no anticipated direct financial impacts to the General Fund associated with the proposed ordinance. Staff time allocated to this effort was included in the adopted budget.
Environmental Issues
In conformance with California Environmental Quality Act (CEQA), the Community Development Department, Planning Division staff finds that the proposed amendments to the Cotati Land Use Code related to density bonus are consistent with and implement the goals, policies, and objectives of the 2015 General Plan, the 2023-2031 Housing Element and state density bonus law. Given this staff finds that these proposed revisions conform to CEQA Guidelines Section 15183, which provides a streamlined review of the environmental impacts of the project by tiering from the program level analysis prepared for the Cotati General Plan and its certified EIR, and other previously completed environmental analysis. Section 15183 of the CEQA Guidelines mandates that projects which are determined to be consistent with the development expectations established by existing zoning, community plan, or general plan policies for which an EIR was certified, shall not require additional environmental review, except as might be necessary to examine project-specific significant effects which are peculiar to the project or its site. This focused analysis should be limited to potential environmental impacts of the project not anticipated or analyzed in the Cotati General Plan’s program level EIR.
Staff finds that all adopted mitigating General Plan policies, mitigation measures identified in the 2015 General Plan EIR and Housing Element Mitigated Negative Declaration will address any potential environmental impacts of the proposed code changes. Further, these changes are being mandated by updates to state density bonus law and future project-specific environmental analysis of any housing development proposed under the amended Code will be required and will allow project-specific impacts not previously identified or anticipated to be addressed.