Cotati City Council
Agenda Staff Report
Item type: PUBLIC HEARINGS (ACTION)
To: City Council
Subject: INTRODUCTION AND FIRST READING OF AN ORDINANCE
TO REZONING MULTIPLE PARCELS TO THE TRANSIT
ORIENTED COMMUNITIES (TOC) AND SANTERO WAY (SW)
ZONING DISTRICTS AND MAKE ANY FURTHER NEEDED
REVISIONS TO IMPLEMENT THE TOC LAND USE
POLICIES.
Date: March 24, 2026
Written by: Noah Housh, Director of Community Development Recommendation
It is recommended the City Council introduce and conduct the first reading of an ordinance to rezone the specific parcels identified in the TOC and Santero Way Ordinance to the TOC and SW zoning districts and make other clarifying changes to the Cotati Municipal Code to finalize TOC policy compliance.
Background
In August 2001, the Santero Way Specific Plan (SWSP) was adopted, and originally envisioned a mixed-use office neighborhood adjacent to the SMART rail station. The primary objective of the original SWSP was to increase the number of residents and employees within walking distance (1/2 mile) of the SMART station. Specifically, the original Plan envisioned the development of 198 new dwelling units, 339,200 square-feet of office and institutional uses, 68,000 square-feet of retail uses, and 57,000 square feet of supporting parkland/open space.
On August 8, 2023, in response to stalled development within the Plan area, the City Council authorized the City Manager to enter into a professional services agreement with 4LEAF Inc. and several subconsultants to provide planning consulting services to complete the Santero Way Specific Plan Update.
In September 2023, the Association of Bay Area Governments (ABAG) and Metropolitan Transportation Commission (MTC) published draft administrative guidance on their Transit- Oriented Communities (TOC) policies. These policies are intended to intensify land uses within ½ mile of transit hubs with the primary goal of increasing the overall supply of housing while also supporting the creation of jobs and increasing transit ridership, in keeping with the Plan Bay Area 2050. For Cotati, this area primarily covers properties along East Cotati Avenue. These criteria essentially serve to increase residential and commercial densities, support alternative transportation, and reduce the perceived impediments to development. While adoption of the TOC policies is voluntary for Bay Area jurisdictions, TOC compliance by 2026 was initially touted as required to maintain eligibility for One Bay Area Grant (OBAG) funds, which have amounted to approximately $1,000,000 in annual funding for the City of Cotati in recent years.
In April 2024, staff identified a potential opportunity for the environmental analysis being prepared for the SWSP Update to be expanded to additionally analyze the potential impacts of implementing ABAG/MTC TOC policies on the other eligible parcels within the ½ mile radius surrounding the Cotati SMART station (graphic attached). Including this analysis in the environmental impact report (EIR) already underway was approved in order to provide significant cost savings, expedite the analysis, and prepare the City for future adoption of the TOC policies.
In February of 2025 the Santero Way Specific Plan (SWSP) was adopted after 18 months of public engagement, environmental analysis and policy development. One of the core themes of the SWSP is the focus on the neighborhood’s proximity to the SMART station and the benefits of intensified land uses around the train station. These themes are captured through a range of policy ideas often labeled Transit Oriented Development. As was discussed during the review of the Santero Way Specific Plan (SWSP), some of the policies adopted with the SWSP were influenced by the ABAG/MTC TOC policy, which comes from their regional planning tool to manage growth in the nine counties of the San Francisco Bay Area, Plan Bay Area 2050+.
Plan Bay Area 2050+ is similar to a General Plan for a city or county but considers and plans for growth on a regional scale. ABAG/MTC identify goals and priorities to guide and manage Bay Area growth and use various methods to achieve compliance with the policies and programs, including allocation of grant funding such as the One Bay Area Grant (OBAG). In Cotati, OBAG provided significant funding for road infrastructure projects in recent years. For local jurisdictions seeking to comply with the Plan Bay Area, TOC has become one of the most impactful planning policies to come out of the 2050+ update process. This policy seeks to intensify land use in close proximity to transit stations and also standardize transit oriented development criteria throughout the Bay Area.
Because of the unique variety of jurisdictions and transit throughout the region, creation of the TOC policy implementation metrics has been an ongoing and iterative process spanning several years. Since the SWSP project was approved, implementation focus has moved from land use requirements within a ½ mile radius of the SMART station, to more broad policy requirements such as “The Three P’s of Housing”: Production, Preservation, and Protection; automotive and bicycle parking management; and efforts to facilitate circulation and station access. Required implementation of TOC policy is generally limited to the ½ mile radius around the transit stop (see pg. 27 MTC TOC Policy Version 1.1 May 2025), however the nature of some of the policy requirements make limiting enforcement to this geographic area of the City challenging.
In May 2025 the ABAG/MTC TOC policy guidance document was finalized allowing Community Development department staff to pivot their TOC policy efforts to the remaining properties within the broader half-mile radius from the SMART station not within the SWSP boundary. Due to the unique geography of the City, this primarily encompassed properties on East Cotati Avenue, from La Salle Avenue east to the SWSP. While demonstrating compliance with TOC policy direction is important to grant infrastructure funding, taking a thoughtful and community-informed approach to the land use changes in this established area is also critical to the successful implementation of these policies.
On June 25, 2025, staff built upon the outreach and engagement efforts of the SWSP, inviting all residents and property owners within a 500-foot radius of the remaining TOC parcels to a neighborhood meeting at Cotati City Hall. Four people attended the meeting and several others called in to ask questions and voice their perspectives. Generally, interested individuals were supportive of the policy efforts to get more homes constructed and to generate more business activity, but were concerned about parking impacts that could result from these intensified business activities (given the inability of the City to require any parking minimums under the proposed policies).
On September 15, 2025, the Planning Commission considered the strategy and code changes proposed by staff to implement the TOC policy at a workshop. After receiving the staff report and presentation, the Commission discussed the proposed policy changes and voted unanimously to support the staff recommendation, making a few additional recommendations. Specifically, the Commission recommended that the City Council incorporate a micro-distillery land use into the CMC and ensure vintage clothing stores are permissible as a land use in the TOC area.
On September 23, 2025, the City Council received the Planning Commission recommendation regarding the strategy and code changes proposed by staff to implement TOC policy and make other proposed Cotati Municipal Code (CMC) revisions, also through a workshop format. After receiving the staff report and presentation, the Council similarly discussed the proposed policy changes and voted unanimously to support the staff recommendation, including the Commission recommendation to incorporate micro-distillery land use into the CMC and to ensure vintage clothing stores are a permissible land use in the TOC area.
On November 3, 2025, the Planning Commission held a public hearing to consider a draft ordinance to implement comprehensive set of code amendments to comply with the ABAG/MTC TOC policies as well as make some modifications to the CMC to resolve identified challenges and to implement policy direction received from the Planning Commission and City Council.
After considering the ordinance and receiving the public comment, the Commission voted 2-1 to recommend that the City Council introduce the ordinance. Additional details on the Planning Commission consideration are provided below.
On Dec. 9, 2025, the City Council held a public hearing to introduce and conduct the first reading of a draft ordinance to implement comprehensive set of code amendments to comply with the ABAG/MTC TOC policies as well as make some modifications to the CMC to resolve identified challenges and to implement policy direction received from the Planning Commission and City Council. After considering the ordinance and receiving the public comment, the Commission voted 4-0 to introduce the ordinance and requested that staff review potential impacts to the Oliver’s Shopping Center property. Additional details on the City Council consideration are provided below.
On January 13, 2026, the City Council held a public hearing to consider the ordinance and receive the public comment on the final TOC ordinance;. After considering all factors, the Council directed staff to remove the unbundled parking policy and the 7.61 acre Oliver’s Shopping Center property from the proposed TOC zoning district. All other elements of the Ordinance were supported and the Council conducted the second reading approving the TOC Ordinance.
On February 25, 2026, the ABAG/MTC board met to consider changes to the TOC policy requirements as they relate to the One Bay Area Grant Funding. Additional details as to the vote and discussion are provided below.
On March 2, 2026, the Planning Commission reviewed the draft ordinance, voting unanimously (4-0-1) to recommend that the City Council support the draft ordinance.
Analysis/Discussion
Land Use and Planning Considerations
As identified, the City Council has approved the SWSP Update and introduced and adopted the Santero Way and TOC policy rezoning ordinance, both of which intensify commercial and residential land uses within a half-mile of the Cotati SMART Station. While many of the policy and zoning district changes were implemented with this past ordinance, the individual parcels to be rezoned to the newly created SW and TOC Districts were not identified as a part of the previous ordinance. The ordinance proposed with this effort will rezone the individual parcels to these updated Districts.
Separately, since the initial consideration of the SW/TOC Rezoning Ordinance, concerns from developer groups has been shared regarding changes to the City’s condominium conversion ordinance (CMC Section 17.34.030). The City’s current condominium conversion ordinance provides robust protection for tenants and significant requirements for proposed conversions, however the TOC compliance measures required by AGAB/MTC specify one-to-one unit replacement in most instances, which the current code language does not mandate.
Developer Concern-Preventing the (future) conversion of multi-family residential rental projects to for-sale condominiums could be problematic for financing of these projects. Developer input has indicated that lenders often see the potential for future conversion of multi-family housing rental units into for-sale condominiums as an opportunity to manage risk. If the lender has to foreclose on the development, the option of converting the individual units to condominiums is an opportunity to sell the units to individual residents if they cannot sell the larger project.
February 25, 2026, ABAG MTC Meeting
Contrary to the direction provided by MTC staff over the past two years, all jurisdictions in the Bay Area are now anticipated to qualify for OBAG grant funding regardless of their compliance with TOC policies. To maintain some incentive for jurisdictions to comply with TOC policies, the MTC Commission adopted a $45 million Transit-Oriented Communities (TOC) Incentive Program (MTC Resolution No. 4754) as part of OBAG 4 (MTC Resolution No. 4740). Their adopted resolution includes the TOC Evaluation Framework and Program Guidelines (details below).
TOC Incentive Program Structure
· Performance-based formula with minimum and maximum awards scaled by jurisdictions number of TOC areas and the jurisdiction population.
· Funds may be used for any project eligible for the OBAG 4 County Program, including planning and capital for roadway, transit, and active transportation projects.
Eligibility Threshold
· 85-point minimum jurisdiction-wide average score to be eligible for the TOC Incentive Program.
· Jurisdictions scoring below 85 points remain eligible for all other OBAG 4 county and regional funds.
Evaluation Framework Adjustments for OBAG 4
· Extended Deadline but No Work-in-Progress Credit: Extended to July 1, 2027; however, given the fully incentive-based structure and extended timeline, credit will not be provided for work-in-progress.
· SB 79 Density Credit: All TOC areas subject to SB 79 will receive full credit for the Maximum Allowable Residential Density standard. (Cotati is exempt from SB 79) Housing Protection Policies:
· Jurisdictions may receive credit for one TOC housing protection policy (4 points) through participation in a countywide protection program or a local policy/program. Credit for the second policy (4 points) must be based on a local policy/program. · Additionally, jurisdictions may not receive TOC credit for Protection Policy 2 (No Net Loss and Right of Return), given recent changes in state law.
MTC will publish revised TOC Administrative Guidance reflecting these actions and provide additional modifications to improve clarity, flexibility, and administrability. The Commission also directed staff to return this spring with proposed amendments to the TOC Policy (MTC Resolution No. 4530) to provide flexibility for certain transit extension projects and to further consider the long-term role of the TOC Policy at the start of the next OBAG cycle.
March 2, 2026, Planning Commission Meeting
Due to the timing of the MTC meeting and the publication of the Commission agenda, staff presented the outcome of the MTC meeting verbally to the Planning Commission for their consideration at the March 2 meeting. Because OBAG grant funding is no longer being explicitly tied to TOC compliance, and because the timeline for compliance has been extended to July 1, 2027, Community Development staff recommended that the remaining steps needed to achieve TOC compliance be delayed until the finalized guidance has been received from MTC. This was originally considered to be finalizing the condominium conversion ordinance but could evolve to need additional policy revisions based on the finalized policy guidance from MTC and the City’s compliance score.
The Planning Commission agreed with a “wait and see” approach, given the moving nature to the compliance requirements, and voted unanimously (4-0-1) to recommend that the City Council introduce an ordinance to rezone all of the parcels identified to the Santero Way (SW) and Transit Oriented Communities (TOC), but to remove any other policy changes from the ordinance until the TOC compliance requirements are better documented by MTC. The ordinance has been updated to remove the previously proposed changes to the condominium conversion.
General Plan Consistency
These changes have been reviewed for compliance and consistency with the Cotati General Plan.
Including the Housing Element. Initial analysis has identified the following General Plan policies and actions as supporting the proposed changes to the municipal code and other policy implementation strategies:
GP 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.
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.
GP Policy CON 3.10: Ensure that the layout and design of new development and significant remodels encourages the use of transportation modes other than automobiles and trucks.
GP Policy LU 2.5: Locate medium and higher density housing within easy walking or bicycling distance of public facilities, services, transit, and major employers.
GP Policy LU 2.10: Encourage mixed-use, pedestrian-, and transit-oriented development, with a focus on the Hub and major corridors.
GP Policy LU 2.7: Encourage social interaction between neighbors in new residential developments by providing opportunities for community gathering in common areas, parks, and neighborhood commercial centers.
Housing Element
Policy H-2.6 Encourage mixed use development, including residential and live/work uses in commercial and office areas where the viability of the nonresidential activities would not be adversely affected.
Policy H-2.11 Encourage housing development on existing infill sites in order to efficiently utilize existing infrastructure.
Program 4-1: Anti-Displacement Actions-The City shall take measures to reduce the risk of displacement through the City, especially in areas of increased investment and development, including:
Explore a Condominium Conversion ordinance to limit the loss of rental housing stock, with a goal of conserving 10 rental units that may otherwise be converted as reflected in the City’s Quantified Objectives.
Staff response: The proposed map and text amendments will help to further the established goals, policies, and implementation programs of the General Plan, including the Housing Element and Santero Way Specific Plan to reduce greenhouse gas production and improve air quality by providing additional opportunities for alternative transportation and walkability; maintaining the supply of developable land and expand housing opportunities through increased density and increased development certainty, including on infill sites along E. Cotati Avenue and Santero Way; directing that the layout and design of new development encourages social interaction among neighbors through the use of shared and alternative transportation; conserving resources by encouraging the efficient use of land and allowing more intense development of both residential and commercial land uses; and using land appropriately by increasing the intensity of development in close proximity to the train station and along one of the City’s primary commercial corridors. Further, this policy change directly implements Housing Element (HE) Program 4-1 Anti-Displacement Action at it would update the condominium conversion ordinance to limit the loss of rental housing stocks.
Financial Considerations
There are no identified direct impacts to the 2026/27 fiscal budget associated with the ordinance to rezone the SW and TOC parcels to their respective zoning districts. However, future TOC incentive grant funding could become available and staff will present options for compliance and funding opportunities for future fiscal years as they become available.
Environmental Issues
In keeping with CEQA Guidelines Section 15168(a), a Program Environmental Impact Report (PEIR) was prepared to analyze and evaluate the environmental impacts associated with the Santero Way Specific Plan Update and implementation of the Transit Oriented Communities (TOC) zoning updates. In accordance with CEQA Guidelines Section 15094(d), after the City Council approved adoption of the Specific Plan Update, the city filed a Notice of Determination with the County Clerk. Following adoption of the updated SWSP, proposed development projects that are consistent with the Specific Plan would undergo a streamlined CEQA review process. The proposal to adopt an ordinance implementing the TOC policies is seen as consistent with the EIR analysis and determination, as well as the environmental impact analysis of the Cotati General Plan EIR.