STAFF REPORT
Meeting Date:
October 28, 2025
BUSINESS
23 SUBJECT: DOWNTOWN SPECIFIC PLAN PHASE II AMENDMENTS
RECOMMENDATION: It is recommended that the City Council:
1. Review the proposed Downtown Specific Plan Phase II amendments summarized in the agenda report and the attached outline, receive public input, and provide direction on the proposed amendments; and
2. Find that the recommended action is categorically exempt from the California Environmental Quality Act pursuant to CEQA Guidelines Section 15306 (Information Collection).
SUMMARY OF THE MATTER
In 2019, the City Council decided to complete the comprehensive update to the Downtown Specific Plan (“DSP”) in two phases. Phase I, adopted in 2020 and implemented in 2022, included streamlining of the business permitting process and new parking standards for non-residential uses. The housing, building height, and parcel merger components of the DSP update were bifurcated, to be addressed separately and in coordination with the Housing Element update as Phase II. The Housing Element update was completed and certified by the California Department of Housing and Community Development in February of 2023.
The City Council has directed staff to prepare a Program Environmental Impact Report (“EIR”) to initiate Phase II of the DSP (DSP Phase II) update, which is now underway as of October, 2025. In order to prepare an adequate environmental analysis, the City must first define the scope of the Specific Plan update.
BACKGROUND
On October 5, 2023, the City was awarded a $200,000 competitive grant from the Southern California Association of Governments (“SCAG”) via its Sustainable Communities Program to substantially fund the EIR and associated public outreach efforts. The consultant selection process for the EIR was delayed for a time due to potential state budget deficits affecting the SCAG grant and difficulties in securing consultant services for the project. On May 1, 2025, funding was re-secured and the City and SCAG selected CSG Consultants (“CSG”) to prepare the EIR with the assistance of a subconsultant team to provide support on technical studies, renderings, and a 3D computer model. The services to be provided are detailed in the attached scope of work (Attachment 5).
The kick-off meeting with City staff, SCAG, and CSG occurred on October 14, 2025. The EIR is projected to be ready for presentation to decision-making bodies within 11 months of this kick-off date.
In order to prepare an adequate environmental analysis, the City must first solidify the scope of the DSP Phase II update. City staff presented an outline of the draft Phase II updates to the City Council, Planning Commission, and Housing and Human Services Committee between December 12, 2023, and February 28, 2024. Due to the amount of time that has lapsed since City Council last provided direction to staff on the scope of this project, staff is returning to the City Council to confirm prior direction and request additional direction.
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October 28, 2025
DISCUSSION
The Phase II update implements the following program from the 2021-2029 6th Cycle Housing Element.
Table 1
Housing Element Program 5.2-4
Action Time Frame and Objectives
a. Provide more permissive development standards for affordable housing. With adoption of DSP Phase II, include incentives such as: increased densities, increased height limits, higher lot coverage, lower parking requirements, allowances for off-site parking, allowances for lot assemblage and, and removal of upper story residential use limitations to assist in the development of housing for lower-income households,
including extremely low-income households and households with special needs, persons experiencing homelessness;
farmworkers; persons with disabilities, including
developmental; and elderly.
Start environmental analysis in
2023 to investigate the best
pathway to increase the number
of potential housing sites and
improve the economic feasibility
of developing residential units
Downtown.
b. With adoption of DSP Phase II, designate additional locations for residential/mixed use development.
Begin Phase 2 of Downtown
Specific Plan in 2024.
As indicated by Table 1 above, Program 5.2-4 identifies specific land use tools that can help facilitate the creation of new housing units, with an emphasis on affordable units. The City’s assigned share of the regional housing need requires that it plan to facilitate production of 394 housing units through 2029, of which 277 would be affordable to extremely low- to moderate-income households. The City is not responsible for building these units through City-sponsored projects, but it is required to adequately plan for these units by addressing constraints to housing development that are within the City’s control. This includes evaluating regulatory barriers through amendments to the City’s Zoning Ordinance, which includes the DSP. It is anticipated that the DSP Phase II amendments would promote the production of all housing types in the Downtown, including market rate housing.
In addition to addressing a housing shortage that is of statewide concern, adding new housing units in the Downtown area would provide a variety of environmental, economic, social, and health benefits. These include reduced auto dependency in favor of greater foot traffic, increased economic opportunity for both residents and Downtown businesses, and fostering a sense of community by bringing more individuals into shared pedestrian environments that allows them to interact face-to-face both socially and professionally.
Greater housing density would also promote a village-style mix of resident-serving businesses to serve the larger resident population that would be located within short walking distance of many commercial uses.
The Downtown is the commercial, political, economic, and social center of Laguna Beach. It is important that the DSP Phase II update preserve these important functions. As the City continues to encourage nonresidential uses on the ground floor in most areas of the Specific Plan, it is envisioned that the greatest Downtown Specific Plan Phase II Amendments
October 28, 2025
opportunities for new housing is found in the potential to enlarge existing single-story commercial buildings through upper-level additions that create second- or third-story rental housing. An existing restriction that limits most Downtown buildings to a single-story, 12-foot height is a primary barrier to adding new residential density. Infill housing opportunities could also be created by addressing the zoning constraints that impact the feasibility of converting upper-level commercial space to a residential use (i.e., new housing units). Regardless of the form that future development may take, the DSP Phase II update will need to balance changes to the development standards with the need to preserve the visual character of the Downtown. Lastly, because many of the buildings in the Downtown were not originally developed with onsite parking, many properties cannot accommodate new uses that would increase the parking requirement.
This is another key barrier to housing production that will be addressed by the DSP Phase II update.
Project Timeline and Outreach
As directed by the City Council on July 25, 2023, the City’s environmental document will be a Program EIR, which will streamline housing production by allowing future housing projects to “tier” from the EIR, incorporating by reference the general discussions from the broader EIR, and limiting the scope of any additional environmental review that would be needed for the later project.
To draft the Program EIR, the City must first prepare an accurate and stable project description that can be consistently described and analyzed throughout the document. An EIR scoping meeting would occur during the 30-day Notice of Preparation public review period, which is likely to take place in December of 2025.
The scoping meeting is designed to examine a proposed project early in the process to identify the range of issues and impacts that should be analyzed, which will guide the scope and content of the EIR. Staff is also proposing to organize a community workshop, which would be timed around the completion of project renderings illustrating changes in the streetscape conditions. These renderings would show the impact if buildings at various locations were to receive second- or third-level additions.
The draft Program EIR is anticipated to be completed during the summer of 2026, at which time a complete draft of the DSP Phase II updates will be available for public review. The Planning Commission would review the project over the course of two public meetings. City Council review and local adoption must occur by December 2026 in order to utilize the grant funding secured through SCAG. At the same time, the City Council will be asked to adopt a resolution approving a Local Coastal Program Amendment, which would then be transmitted to the California Coastal Commission for certification.
Staff will be utilizing an interested parties list developed for the DSP Phase I update to notify stakeholders of upcoming meetings and distribute documents for public review. The Planning Division also maintains a Downtown Specific Plan Phase II Update Webpage. Staff will provide email updates to interested parties in coordination with updates to the project webpage, where the public can access downloadable materials like agenda reports, environmental documents, and the DSP.
Phase II Amendments
As previously mentioned, the DSP Phase I draft amendments had initially included several housing-related provisions, including building height increases, and parcel mergers. At its December 17, 2019 meeting, the City Council directed staff to defer the housing-related changes to the DSP Phase II update that would be processed in conjunction with an EIR. The October 21, 2019 DSP public review draft contained both the Downtown Specific Plan Phase II Amendments
October 28, 2025
residential and non-residential updates and will be used as a reference point for the DSP Phase II project.
A detailed outline of the potential DSP Phase II changes is provided as Attachment 1, with key changes summarized below. Each heading in Attachment 1 includes a hyperlink to the first page of the referenced section as it currently reads in the 2022 adopted and certified version of the DSP. On December 12, 2023, staff received the feedback below from City Council. Since nearly two years has passed since feedback was provided, Staff is seeking confirmation and/or additional direction on the proposed amendments.
Attachment 2 provides a summary of the City Council’s December 12, 2023, direction and the public comments delivered at or prior to the City Council meeting. Meeting minutes are provided as Attachment
3. The City Council’s direction included the following: (1) consider expanding the areas where groundfloor residential would be allowed, provided that requirements for a ground-floor commercial street presence are met; (2) to maximize future flexibility and demonstrate to the State that good-faith efforts are being undertaken to locally address a share of the regional housing need, consider allowing multi-story development throughout the entire Downtown, potentially up to a maximum of three stories; (3) explore a potential northward expansion of the DSP boundary along Laguna Canyon Road to incorporate the Laguna College of Art + Design Main Campus (2222 Laguna Canyon Road);1 (4) broaden eligibility for lot mergers, which are currently proposed to be limited to 100-percent affordable housing projects, to include some market-rate developments, potentially with an inclusionary housing component; (5) reduce the residential parking requirement to 0.5 spaces per market-rate or affordable unit; (6) prepare a 3D model of the DSP area depicting taller infill development; (7) develop standards for converting upper-level commercial space to housing; and (8) set a standard for maximum residential density. Much of this direction has now been incorporated into the proposed amendments for the Phase II update. Changes made to the scope since the December 12, 2023 meeting are denoted in the summary provided below with underline and strikethrough bold text.
Summary of Key Phase II Specific Plan Updates
• Changes to height restrictions:
o Existing regulation: most areas are restricted to a 12-foot height (one story), with an additional six feet allowed for roof structures, mechanical equipment, and other limited improvements.
o Proposed regulation: variable maximum building heights (12, 24, or 36 feet) based on location. It is anticipated that most areas would be eligible for the 24-foot building height allowance.
• Changes to maximum residential density:
o Existing regulation:
▪ One unit per 2,000 square feet of lot area in the CBD-1, CBD-2, and CBD-Office Districts, except for the following:
1 Laguna Canyon is being studied for potential rezoning to accommodate a greater mix of land uses – including housing – as part of the Comprehensive Zoning Code Update (“CZCU”). The CZCU is now underway, and staff recommends that any rezoning or changes to development standards for properties in Laguna Canyon remain part of the CZCU project. This will allow for a broader study encompassing all Laguna Canyon neighborhoods. The Laguna Canyon neighborhoods generally share a common setting and land use issues and may benefit from being studied as holistically. This would mirror the approach taken with the Laguna Canyon Planning Study, which was completed in 2017.
Downtown Specific Plan Phase II Amendments
October 28, 2025
• Historically significant homes may add units at a density of one unit per 1,000 square feet.
• Residential units in the CBD-Office District where at least 50-percent of the units are committed to low-income, senior, and/or disabled housing may provide units at a density of one unit per 1,000 square feet. ▪ One unit per 1,000 square feet of lot area in the CBD Visitor Commercial District. ▪ One unit per 2,000 square feet of lot area in the CBD Multiple-Family District. o Proposed regulation:
▪ No maximum residential density
▪ Density cap for two-story properties (residential on one upper floor only): 700 square feet of lot area per unit (62 dwelling units per acre)3 ▪ Density cap for three-story properties (residential on two upper floors) and the Multiple-Family District: 500 square feet of lot area per unit (87 dwelling units per acre)4
▪ Average unit size: 800 square feet maximum5
• Changes to lot merger regulations:
o Existing regulation: parcels shall not be merged together for development purposes that exceed 5,000 square feet except for City-ownership projects and when a Planned Integrated Development is proposed in the Central Bluffs District. o Proposed regulation: a new provision would be added to allow lots to be merged for a combined area over 5,000 square feet on Broadway, in the Arts District, and in the CBD Office District for affordable housing projects and market-rate residential projects that provide on-site inclusionary housing in accordance with the requirements of Laguna Beach Municipal Code (“LBMC”) Section 25.96.070.
6 • Changes to the urban design guidelines:
o Downtown projects subject to the Planning Commission’s design review approval must be found to comply with the urban design guidelines. Several revisions are proposed:
▪ New/amended urban design guidelines:
• Amendments to ensure that upper-level additions are adequately addressed. • Where the more generalized design review criteria established by Section
25.04.040 of the Municipal Code do not have an urban design guideline 3 While lot sizes vary throughout the Downtown, 2,100 square feet is a typical lot size on Forest Avenue and Ocean Avenue. On a 2,100-square-foot lot, this density standard would provide sufficient flexibility for 2-3 small units. The density standards assume an average unit size of 600-700 square feet (including circulation) to encourage 1-bedroom and studio units. 4 This standard would support approximately 4 small units (e.g., studios or 1-bedrooms) on a 2,100-square-foot lot. 5 With the goal of creating compact, infill residential above commercial in the downtown core, an average unit size requirement would encourage a mix of unit sizes that include smaller units that, while market rate, are more affordable by design. Larger lots in particular would be able to provide greater flexibility with unit layout and mix, while still being required to provide smaller studio and 1-bedroom units.
6 The City’s inclusionary housing provisions apply when an applicant proposes a development that would result in 10 or more residential units. In a for-sale project, 15% must be moderate-income. Rental housing projects require 15% moderate-income or 10% very-low or low-income. Applicants that propose to pay an in-lieu housing fee instead of providing affordable (inclusionary) units on-site would not be eligible for the lot merger provisions.
Downtown Specific Plan Phase II Amendments
October 28, 2025
equivalent, staff proposes to update the guidelines to incorporate those topics into the DSP. These include view equity.
▪ New objective design standards:
• Certain types of housing development projects must be reviewed against objective design and development standards in accordance with State law. A new set of objective design standards would be created to ensure that these projects are held to high architectural standards.
• Changes to the allowed uses:
o Allow residential uses in the Arts District and Central Bluffs by right, without a Conditional Use Permit (currently disallowed).
o Allow artist work/live units with a Conditional Use Permit in the Visitor Commercial and Multiple-Family Residential zones (currently disallowed). o Restrict residential uses to above the ground floor or behind a commercial storefront on the ground floor in certain areas where pedestrian orientation and the quality of the shopping experience are primary goals.
• Changes to parking requirements:
o Existing regulation:
▪ Single- and two-family dwellings: two covered spaces per dwelling unit plus an additional space when the gross floor area of each residence is 3,600 or more square feet.
▪ Multi-family dwellings: 1.5 spaces for every studio or one-bedroom unit; two spaces for every unit with two or more bedrooms and one additional guest space for four units and every four thereafter.
o Proposed regulation: one0.5 spaces per market-rate dwelling unit and 0.5 spaces for each or affordable dwelling unit, which may be covered or uncovered.11 Building Height Restrictions
The existing human-scale patterns of development are a defining characteristic of the Downtown and significantly contribute to the walking experience. Today, buildings are restricted to a 12-foot, single-story height in most areas of the Downtown, creating many non-conforming conditions. The intent of this restriction is to preserve the existing building height diversity. The DSP Phase II update would ease these restrictions by allowing two- and three-story building heights in more areas of the Downtown. This change will be studied carefully over the course of the project to ensure that the pedestrian orientation of the area is maintained, and that any proposed development projects such as upper-level additions enrich the environment with attractive, high-quality architecture. The goal will be to maximize infill housing opportunities at those locations where additional building height would maintain an appropriate scale and form.
Figures 1 and 2 below compare existing building heights and the building height increases that staff proposes to carefully study for compatibility with a pedestrian-friendly environment.12 Some of these 11 Properties in the Downtown Specific Plan area may purchase in-lieu parking certificates (currently $23,000 per certificate) if the required off-street parking cannot be provided.
12 Refer to Attachment 4 for the full-size figures.
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recommended height increases may be reduced based on the forthcoming analysis to further study the compatibility between increasing building height while maintaining a pedestrian-friendly environment, in addition to feedback received through outreach efforts and direction from the City Council.
Figures 1 and 2. Left: existing building heights. Open space and parking areas are colored grey. Right: Staff-proposed building heights to be studied.
FINANCIAL ANALYSIS
The recommended action has no financial impact. The City was awarded State and regional grant funding totaling $200,000 to help cover the environmental review costs. The City Council budgeted $160,000 for Fiscal Year 2024-2025 for this project. No funds have been expended to date; therefore, the full amount will roll over into Fiscal Year 2025-2026. Additionally, the Community Development Department’s current Fiscal Year 2025-2026 operating budget will cover the remaining cost of $17,388 as authorized through Agreement #25-69 approved by City Council on August 12, 2025.
Downtown Specific Plan Phase II Amendments
October 28, 2025
ENVIRONMENTAL ANALYSIS
The recommended action is exempt under the California Environmental Quality Act under CEQA Guidelines Section 15306 because it consists of basic data collection, research, experimental management, and resource evaluation activities which do not result in a serious or major disturbance to an environmental resource. The recommended action is strictly for information gathering purposes, or as part of a study leading to an action which a public agency has not yet approved, adopted, or funded. Here, the recommended action meets the exemption because the City Council is providing direction on the scope of the Downtown Specific Plan (“DSP”) Phase II amendments so that an accurate and stable project description can be developed. The project description will be used to consistently describe and analyze the DSP Phase II update in the Program Environmental Impact Report. Upon taking the recommended action, City staff will cause to be filed within five calendar days a notice of exemption with the County and State Clearinghouse.
ATTACHMENTS
1. Phase II Amendments Summary (Pgs. 9-17)
2. 12/12/23 City Council Hearing Summary (Pgs. 18-20)
3. 12/12/23 City Council Meeting Minutes (Pgs. 21-42)
4. Building Heights (Existing and Proposed for Study) (Pg. 43)
5. CSG Scope of Work (Pgs. 44-94)
Submitted By: Matthew Schneider
Matthew Schneider, Director of Community
Development
Approved: Gavin Curran, for
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Kate Kazama, Associate Planner Anthony Viera, Planning Manager