Los Altos Hills City Council
October 16, 2025

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 5 2025/08/08
The following summarizes key results:

1. Heat pumps are significantly more efficient than gas furnaces, requiring less than half the energy to meet the heating load. However, despite this reduction in heating energy use, the cost of heating a home using electricity (heat pump) could be higher than the cost to heat that same home with natural gas (furnace), depending on the electricity tariffs relative to the gas tariffs. Therefore, while a heat pump measure could be deemed as cost-effective over its lifecycle, installing a heat pump could result in a decrease or an increase in utility costs in the first years relative to a gas furnace and AC system.

2. The study assumes utility rates escalate over time. Because it is very difficult to predict how the rates will change, the analysis presents two escalation scenarios (modest and high gas escalation) to represent a range of outcomes.

3. The LSC metric most often produces more favorable cost-effectiveness results relative to the results produced using actual utility costs (On-Bill). When the analysis assumes a higher escalation rate for natural gas costs relative to electricity in future years (high gas escalation), the On-Bill results are more favorable in some cases. a. In the oldest (pre-1978) vintage, all three measures (dual fuel heat pump with existing furnace, standard heat pump space heater, and high efficiency heat pump space heater) are cost-effective using the LSC metric in all climate zones. When using the On-Bill metric, the measures remain cost-effective in most climate zones.
b. In the newer (1978-1991 and 1992-2010) vintages, the dual fuel heat pump (DFHP Existing Furnace) and the standard efficiency HPSH are cost-effective based on LSC in all cases except for Climate Zone 15 when using both the standard and California Alternate Rates for Energy (CARE) tariff.

4. Using the CARE tariff results in higher cost savings and cost-effectiveness relative to standard rates, with almost all cases yielding first year utility cost savings. The DFHP Existing Furnace is On-Bill cost-effective based on the high gas escalation scenario in all cases in the pre-1978 vintage, and almost all cases in the 1978-1991 and 1992-2010 vintage. It is also On-Bill cost-effective in most climate zones for the modest gas escalation scenario across all vintages. In Climate Zones 5, 8, 9, 10, 14, and 15, cost-effectiveness declines relative to other areas, and in some cases is not cost-effective from an On-Bill perspective. This is the case for both the CARE tariff and the standard rate.

5. The analysis also modeled the cost impact of using a standard time-of-use electricity tariff versus switching to a newer electrification tariff, designed to reduce costs in homes with heat pumps and/or electric vehicles. Older homes tend to be the least efficient and achieve the most savings from improving equipment efficiency. In most of the state, because older homes tend to use more electricity than a similarly sized, newer vintage home, they realize more costs savings under the electrification tariff.

Newer homes tend to use less electricity and therefore do not realize the same cost ITEM 6A ATTACHMENT 3

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savings from switching tariffs; they generally perform better under the standard tariff.

This trend is different in milder climate zones in SCE territory (excluding CZ 15), where newer homes realize more cost savings. Both the standard and electrification tariffs in SCE territory include a daily allocation of lower-cost baseline electricity and a second, higher-priced tier when the baseline is exceeded. In many newer homes, a higher percentage of overall electricity use is within the baseline allocation, resulting in greater cost savings.

6. Higher efficiency equipment reduces utility costs in all cases and improves costeffectiveness in many climate zones in the oldest vintage relative to standard efficiency equipment. However, in more efficient newer homes, where costeffectiveness is generally lower, the savings are insufficient to offset the roughly $3,000 increase in incremental cost.

7. Given the adopted Bay Area Air Quality Management District (BAAD) Zero NOx rule, and the proposed California Air Resource Board or South Coast Air Quality Management District (SCAQMD) Zero-NOx rules, and gas furnaces are no longer available or less available to be installed in 2030, a sensitivity analysis was performed for the Zero NOx scenario and found that cost-effectiveness declines in many cases except in Climate Zones 8-10, some results improve enough to become cost-effective. The improved cost-effectiveness in Climate Zones 8-10 is due to the higher baseline cost when a HPSH must be installed at year 10 when the furnace must be replaced. However, the overall magnitude of 30-year On-Bill costeffectiveness is lower because there are only 10 years of utility cost savings. After year 10 the base case and upgrade measures are both heat pumps.

This report documents the key results and conclusions from the Reach Codes Team analysis. A full dataset of all results can be downloaded at https://localenergycodes.com/content/resources. Results alongside policy options can also be explored using the Cost-effectiveness Explorer at https://explorer.localenergycodes.com/.

Model ordinance language and other resources are posted on the C&S Reach Codes Program website at LocalEnergyCodes.com. Local jurisdictions that are considering adopting an ordinance may contact the program for further technical support at [email protected].

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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 7 2025/08/08
1 Introduction
The California Codes and Standards Reach Codes program, also known as the Local Energy Codes program, provides technical support to local governments considering adopting a local ordinance intended to support meeting local and/or statewide energy efficiency and greenhouse gas (GHG) reduction goals. The program facilitates adoption and implementation of the code when requested by local jurisdictions by providing resources such as cost-effectiveness studies, model language, sample findings, and other supporting documentation.

Local jurisdictions may adopt ordinances that amend different parts of the California Building Standards Code or may elect to amend other state or municipal codes. The decision regarding which code to amend will determine the specific requirements that must be followed for an ordinance to be legally enforceable. For example, reach codes that amend Part 6 of the California Building Code (the Energy Code) (CEC, 2025) and require energy performance beyond state code minimums must demonstrate the proposed changes are cost-effective and obtain approval from the Energy Commission as well as the Building Standards Commission (BSC). Amendments to Part 11, such as requirements for increased water efficiency or electric vehicle infrastructure only require BSC approval and do not require the Energy Commission approval. Although a cost-effectiveness study is only required to amend Part 6 of the California Building Code, this study provides valuable context for jurisdictions pursuing other ordinance paths to understand the economic impacts of the policy decision. This study documents the estimated costs, benefits, energy impacts and greenhouse gas emission reductions that may result from implementing an ordinance based on the results to help residents, local leadership, and other stakeholders make informed policy decisions.

This report is an update to the 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) focused on an ordinance structure that encourages air conditioner (AC) to heat pump replacement. The methodology, prototype characteristics, and relevant measure packages are retained from the main study referenced above. The study includes updated utility rates, revised costs based on the TECH Clean California1 incremental cost study data, estimated costs for the AC path, updated and expanded AC path options, and a new cost-effectiveness scenario that considers upcoming proposed zero-NOx emission regulations (SCAQMD, 2025) (California Air Resources Board, 2022) (BAAD, 2025).

Local jurisdictions in California may consider adopting local energy ordinances to achieve energy savings beyond what will be accomplished by enforcing building efficiency requirements that apply statewide.

Local jurisdictions may also adopt ordinances that amend different parts of the California Building Standards Code or may elect to amend other state or municipal codes. The 1 https://techcleanca.com/
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decision regarding which code to amend will determine the specific requirements that must be followed for an ordinance to be legally enforceable. Although a cost-effectiveness study is only required to amend Part 6 of the CA Building Code, it is important to understand the economic impacts of any policy decision. This study documents the estimated costs, benefits, energy impacts and greenhouse gas emission reductions that may result from implementing an ordinance based on the results to help local leadership, residents, and other stakeholders make informed policy decisions.

This report was developed in coordination with the California Statewide Investor-Owned Utilities (IOUs) Codes and Standards Program, the California Energy Commission (CEC), key consultants, and engaged cities—collectively known as the Statewide Reach Codes Team. Model ordinance language and other resources are posted on the C&S Reach Codes Program website at LocalEnergyCodes.com. Local jurisdictions that are considering adopting an ordinance may contact the program for further technical support at [email protected].

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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 9 2025/08/08
2 Methodology and Assumptions
This study evaluates a potential reach code that encourages a heat pump or dual fuel system that includes a heat pump combined with a furnace when an air conditioner is replaced or installed new in existing single family homes. The ordinance structure and this analysis is based on the voluntary requirements adopted in 2025 Title 24, Part 11 California Green Building Standards Code (CALGreen), Section A4.204.1.1 for heat pump space conditioning alterations in single family homes (California Energy Commission, 2025). The proposed reach code also defines pathways for air conditioning equipment to be installed combined with additional efficiency measures. The heat pump path requires the heat pump as the primary heat source, with backup heating allowable either provided by electric resistance or natural gas. In cases where the existing furnace remains, the heat pump is installed alongside the existing furnace with integrated controls to allow for the furnace to provide backup heating. In alignment with the 2025 Energy Code requirements the heat pump must be sized to satisfy the heating load at the design heating temperature without the use of backup heat.

All methodology and assumptions are consistent with prior statewide analysis (Statewide Reach Codes Team, 2024) with the following exceptions:

1. Updated utility rates to January 2025

2. Equipment costs based on TECH data where available; the original report was based on Statewide contractor survey costs

3. Cost estimates were obtained for the AC path

4. Expanded AC path options

5. Cost-effectiveness results for the scenario if gas furnaces are no longer available for sale in California in 2030

2.1 Modeling
The Reach Codes Team performed energy simulations using the 2025 research version of the Residential California Building Energy Code Compliance software (CBECC). The 2025 version of CBECC includes updated weather files, metrics, and the weather stations were changed in Climate Zones 4 and 6 from San Jose to Paso Robles and Torrance to Los Angeles International Airport, respectively. Note that at the time of this report, the Energy Commission was working on integrating a new heat pump model into the CBECC-Res software to better reflect the actual energy use of heat pumps. The updated model results in lower heating energy use than is currently estimated. Once the revised software is released, the reach codes team plans to update this analysis.

Three unique building vintages are included: pre-1978, 1978-1991, and 1992-2010. The vintages were defined based on review of historic building code requirements and defining periods with distinguishing features. The proposed measures were modeled to determine the projected site energy (therm and kWh), source energy, GHG emissions, and long-term systemwide cost (LSC) impacts. Annual utility costs were calculated using hourly data ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 10 2025/08/08
output from CBECC, and updated (as of 1/1/2025) electricity and natural gas tariffs for each of the investor-owned utilities (IOUs) as appropriate for that climate zone.

Site energy results are similar between CBECC-Res 2022 and 2025. The 2025 compliance metrics include assumptions that more appliances will be electric in the future. This is predicted to result in higher natural gas retail rates as a result of gas utilities continuing to maintain safe and reliable infrastructure amidst declining natural gas use.

Equivalent CO2 emission reductions were calculated based on outputs from the CBECCRes simulation software. Electricity emissions vary by region and by hour of the year.

CBECC-Res applies two distinct hourly profiles, one for Climate Zones 1 through 5 and 11 through 13 and another for Climate Zones 6 through 10 and 14 through 16. Natural gas emissions do not vary hourly. To compare the mixed-fuel and all-electric cases side-by-side, GHG emissions are presented as pounds of CO2-equivalent (CO2e) emissions.

The Statewide Reach Codes Team designed the approach and selected measures for evaluation based on the 2019 existing building single family reach code analysis (Statewide Reach Codes Team, 2021) and supporting analysis used in the 2025 Energy Code development cycle as well as from outreach to architects, builders, and engineers.

2.2 Prototype Characteristics
The Energy Commission defines building prototypes which it uses to evaluate the costeffectiveness of proposed changes to Energy Code requirements. Average home size has steadily increased over time, and the Energy Commission single family new construction prototypes are larger than many existing single family homes across California. For this analysis, a 1,665 square foot prototype was evaluated. Table 2 describes the basic characteristics of the single family prototype. Additions are not evaluated in this analysis as they are already addressed in Section 150.2 of the Energy Code. In the 2025 Energy Code heat pumps are prescriptively required for space and water heating for additions (California Energy Commission, 2023).

Table 2. Residential Prototype Characteristics
Climate Zone Specification
Existing Conditioned Floor Area 1,665 ft2
Num. of Stories 1
Num. of Bedrooms 3
Window-to-Floor Area Ratio 13%
Attached Garage 2-car garage
Three building vintages were evaluated to determine sensitivity of existing building performance on cost-effectiveness of upgrades. For example, it is widely recognized that adding attic insulation in an older home with no insulation is cost-effective, however, newer homes will likely have existing attic insulation reducing the cost-effectiveness of an incremental addition of insulation. The building characteristics for each vintage were ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 11 2025/08/08
determined based on either prescriptive requirements from the building code that were in effect or standard construction practice during that time period. For example, homes built under 2001 Title 24 are subject to prescriptive envelope code requirements very similar to homes built under the 2005 code cycle, which was in effect until January 1, 2010.

Table 3 summarizes the assumptions for each of the three vintages. Additionally, the analysis assumed the following features when modeling the prototype buildings. • Efficiencies were defined by year of the most recent equipment replacement based on standard equipment lifetimes.
• Individual space conditioning and water heating systems, one per single family building.
• Split-system air conditioner with natural gas furnace. • Gas cooktop, oven, and clothes dryer.

The methodology applied in the analyses begins with a design that matches the specifications as described in Table 3 for each of the three vintages. Heat pump space conditioning measures were modeled to determine the projected energy performance and utility cost impacts relative to the baseline vintage.

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Table 3. Efficiency Characteristics for Three Vintage Cases Building Component Efficiency
Feature Pre-1978 Vintage 1978-1991 Vintage 1992-2010 Vintage Envelope
Exterior Walls 2x4, 16-inch on center wood frame,
R-02
2x4 16 inch on center wood frame,
R-11
2x4 16 inch on center wood frame,
R-13
Foundation Type & Insulation Uninsulated slab (CZ 2-15) Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-19 (CZ 1 & 16)
Ceiling Insulation & Attic Type
Vented attic, R-5 @ ceiling level for CZ
6 & 7,
Vented attic, R-11 @ ceiling level
(all other CZs)
Vented attic, R-19 @ ceiling level Vented attic, R-30 @ ceiling level Roofing Material & Color Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Radiant Barrier No No No
Window Type: U-factor/SHGC3 Metal, single pane: 1.16/0.76 Metal, dual pane: 0.79/0.70 Vinyl, dual pane Low-E: 0.55/0.40 House Infiltration at 50 Pascals 15 ACH50 10 ACH50 7 ACH50 HVAC Equipment
Heating Efficiency 78 AFUE (assumes 2 replacements) 78 AFUE (assumes 1 replacement) 78 AFUE Cooling Efficiency 10 SEER (assumes 2 replacements) 10 SEER (assumes 1 replacement) 13 SEER, 11 EER Duct Location & Details Attic, R-2.1, 30% leakage at 25 Pa Attic, R-2.1, 25% leakage at 25 Pa Attic, R-4.2, 15% leakage at 25 Pa Whole Building Mechanical
Ventilation None None None
Water Heating Equipment
Water Heater Efficiency 0.575 Energy Factor (assumes 2
replacements)

0.575 Energy Factor (assumes 1
replacement) 0.575 Energy Factor
Water Heater Type 40-gallon gas storage 40-gallon gas storage 40-gallon gas storage Pipe Insulation None None None
Hot Water Fixtures Standard, non-low flow Standard, non-low flow Standard, non-low flow 2 Pre-1978 wall modeled with R-5 cavity insulation to better align wall system performance with monitored field data and not overestimate energy use. 3 Window type selections were made based on conversations with window industry expert, Ken Nittler. If a technology was entering the market during the time period (e.g., Low-E during 1992-2010 or dual-pane during 1978-1991) that technology was included in the analysis. This provides a conservative assumption for overall building performance and additional measures may be cost-effective for buildings with lower performing windows, for example buildings with metal single pane windows in the 1978-1991 vintage
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 13 2025/08/08

2.3 Cost-Effectiveness Approach

2.3.1 Benefits
This analysis used two different metrics to assess the cost-effectiveness of the proposed upgrades. Both methodologies require estimating and quantifying the incremental costs and energy savings associated with each energy efficiency measure. The main difference between the methodologies is the way they value energy impacts:
• On-Bill: Customer-based lifecycle cost approach that values energy based upon estimated site energy usage and customer On-Bill savings using electricity and natural gas utility rate schedules over a 30-year duration, accounting for a three percent discount rate and energy cost inflation per Appendix 6.3.7. • Long-term Systemwide Cost (LSC): Formerly known as Time Dependent Valuation (TDV) energy cost savings, LSC reflects the Energy Commission’s current lifecycle cost (LCC) methodology, which is intended to capture the total value or cost of energy use over 30 years. This method accounts for the hourly cost of marginal generation, transmission and distribution, fuel, capacity, losses, and cap-and-tradebased CO2 emissions (California Energy Commission, 2023). This is the methodology used by the Energy Commission in evaluating cost-effectiveness for measures in the 2025 Energy Code.

Energy simulations were completed using the 2025 research version of the Residential California Building Energy Code Compliance software (CBECC).

2.3.2 Costs
The Reach Codes Team assessed the incremental costs and savings of the packages over the lifecycle of 30-years. Incremental costs represent the equipment, installation, replacement, and maintenance costs of the proposed measure relative to the 2025 Energy Code minimum requirements or standard industry practices.

In February 2024, the TECH Clean California statewide program completed an incremental cost study from cost data collected from 64 contractor participants (Opinion Dynamics, 2024). This report directly uses the TECH costs for all the scenarios for which there was TECH cost data available. These costs were supplemented with measure costs the Reach Codes Team obtained from a contractor survey conducted in the summer of 2023. Additional detail on the contractor cost survey is available in the prior existing building statewide study (Statewide Reach Codes Team, 2024). The following summarizes key assumptions in this costing approach.
• Average statewide costs from the TECH Study were used, no regional specific costs were applied.
• Costs for 3-ton and 4-ton units were scaled for smaller and larger systems based on linear interpolation between the 3-ton and 4-ton costs.

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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 14 2025/08/08
• The TECH study provided cost for a minimum efficiency 60,000 Btu/h gas furnace.

However, beginning in 2028, newly installed residential gas furnaces must comply with updated federal efficiency standards requiring a minimum of 95% AFUE4 .

Because the TECH study did not include cost estimates for a 95% AFUE condensing furnace, an adjustment was made using data from the statewide contractor cost survey. For systems requiring larger furnace capacities, cost estimates were derived as follows:
o 80,000 Btu/h furnaces (serving systems sized 3 tons): The cost difference between the minimum efficiency and 95% AFUE versions of the 80,000 Btu/h furnace and the cost difference between the minimum efficiency 80,000 Btu/h furnace and the minimum efficiency 60,000 Btu/h furnace, as reported in the contractor survey, was added to the TECH cost for the 60,000 Btu/h unit. o 100,000 Btu/h furnaces (serving systems 4 tons and larger): The same method was applied using the corresponding cost differential for 100,000 Btu/h units.
• At time of replacement for the heat pump, based on heating loads and contractor feedback it is assumed an electric resistance backup coil would be installed with the air handler for Climate Zones 1 and 16. The CBECC-Res software applies back up electric resistance heating for all climate zones whenever it is assumed that the heat pump cannot meet the heating load based on the performance of currently available products (Heinemeier, 2025).The TECH costs did not include this option. The $819 incremental cost from the statewide study was added in this case. • At the time of replacement for a furnace when it fails, the statewide study assumed a fan motor replacement. The TECH costs did not include this option. A $1,200 incremental cost was added to the TECH cost.
• At time of replacement for high efficiency heat pump, the sum of the TECH cost for standard efficiency heat pump and the incremental cost difference from the statewide study for high efficiency and standard efficiency heat pump was applied.

Costs were applied based on the system capacity from heating and cooling load calculations in CBECC-Res as presented in Table 4. Air conditioner nominal capacity was calculated as the CBECC-Res cooling load, rounded up to the nearest half ton. Heat pump nominal capacity was calculated as the maximum of either the CBECC-Res heating or cooling load, rounded up to the nearest half ton. In both cases a minimum capacity of 1.5- ton was applied as this represents the typical smallest available split system heat pump equipment. Load calculations revealed that Climate Zones 2 through 15 were coolingdominated, whereas Climate Zones 1 and 16 were heating-dominated. In these heating4 https://www.energy.gov/articles/doe-finalizes-energy-efficiency-standards-residential-furnaces-saveamericans-15- billion#:~:text=These%20furnace%20efficiency%20standards%20were,heat%20for%20the%20livin g%20space.

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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 15 2025/08/08
dominated zones, the heat pump was upsized compared to an air conditioner designed solely for cooling to ensure adequate heating performance.

Table 4. System Sizing by Climate Zone
Climate
Zone
Air Conditioner
Capacity (tons)
Heat Pump
Capacity (tons)
1 1.5 3.0
2 3.5 3.5
3 2.5 2.5
4 3.5 3.5
5 3.0 3.0
6 3.0 3.0
7 3.0 3.0
8 4.0 4.0
9 4.0 4.0
10 4.0 4.0
11 4.5 4.5
12 4.0 4.0
13 4.5 4.5
14 4.0 4.0
15 5.0 5.0
16 3.5 4.0

2.3.3 Metrics
Cost-effectiveness is presented using net present value (NPV). • NPV: The Reach Codes Team uses net savings (NPV benefits minus NPV costs) as the cost-effectiveness metric. If the net savings of a measure or package is positive, it is considered cost effective. Negative net savings represent net costs to the consumer. A measure that has negative energy cost benefits (energy cost increase) can still be cost effective if the costs to implement the measure are even more negative (i.e., construction and maintenance cost savings).

Improving the energy performance of a building often requires an initial investment. In most cases the benefit is represented by annual On-Bill utility or LSC savings, and the cost by incremental first cost and replacement costs. However, some packages result in initial construction cost savings (negative incremental cost), and either energy cost savings (positive benefits), or increased energy costs (negative benefits). In cases where both construction costs and energy-related savings are negative, the construction cost savings are treated as the benefit while the increased energy costs are the cost. In cases where a measure or package is cost-effective immediately (i.e., upfront construction cost savings and lifetime energy cost savings).

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2.3.4 Utility Rates
In coordination with the CA IOU rates team (comprised of representatives from Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E)) and two Publicly-Owned-Utilities (POUs) (Sacramento Municipal Utility District (SMUD) and City of Palo Alto Utilities (CPAU)), the Reach Codes Team determined appropriate utility rates for each climate zone to calculate utility costs and determine On-Bill cost-effectiveness for the proposed measures and packages. The utility tariffs, summarized in Table 5 and Table 6 with details in Section 6.2.26.2.2, were determined based on the appropriate rate for each. Utility rates were applied to each climate zone based on the predominant IOU serving the population of each zone, with a few climate zones evaluated multiple times under different utility scenarios. Climate Zones 10 and 14 were evaluated with both SCE for electricity and Southern California Gas Company (SoCalGas) for gas and SDG&E tariffs for both electricity and gas since each utility has customers within these climate zones. Climate Zone 5 is evaluated under both PG&E and SoCalGas natural gas rates. Two POU or municipal utility rates were also evaluated: SMUD in Climate Zone 12 and CPAU in Climate Zone 4.

First-year utility costs were calculated using hourly electricity and natural gas output from CBECC-Res and applying the utility tariffs summarized in Table 5 and Table 6. Homes with a heat pump in IOU territory are eligible for either the electrification or the standard tariff. Utility costs were calculated under both tariffs with results presented using the one that yielded the lower annual utility cost. The electrification tariff resulted in better utility costs savings when there was high kWh usage, typically in older, less efficient homes. Conversely, newer homes which are more efficient, tend to benefit more under the standard tariff. However, in SCE’s milder climate zones, older homes benefit more under the standard tariff. Annual costs were also estimated for IOU customers eligible for the CARE tariff discounts on both electricity and natural gas bills.

Table 5. Investor-Owned Utility Tariffs Used Based on Climate Zone Climate
Zones
Electric / Gas
Utility
Electricity
Tariff:

Standard
Rate
Electricity
Tariff:

Electrification
Rate
Natural Gas
Tariff
1-5,11-13,16 PG&E / PG&E E-TOU-C E-ELEC G1
5 PG&E / SoCalGas E-TOU-C E-ELEC GR
6, 8-10, 14, 15 SCE / SoCalGas TOU-D-4-9 TOU-D-PRIME GR 7, 10, 14 SDG&E / SDG&E TOU-DR-1 EV-TOU-5 GR
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Table 6. Publicly Owned Utility Tariffs Used Based on Climate Zone Climate
Zones
Electric / Gas Utility
Electricity Tariff: Standard
Rate
Electricity
Tariff:

Electrification
Rate
Natural Gas
Tariff
4 CPAU / CPAU E-1 G1
12 SMUD / PG&E R-TOD G1
Utility rates are assumed to escalate over time. Because it is very difficult to predict how rates will change, two escalation scenarios are presented in this study to represent a range of outcomes. See Appendix 6.3.7 Fuel Escalation Assumptions for details. 1) Modest Gas Escalation: This scenario is based on assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates throughout the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 Energy Code TDV factors developed by the Energy Commission (California Energy Commission. 2021b).
2) High Gas Escalation: This scenario is based on escalation rates developed by the Energy Commission and used within the 2025 Energy Code LSC factors (LSC replaces TDV in the 2025 Energy Code) which assumed steep increases in gas rates in the latter half of the analysis period.

Electricity tariff structures will evolve over time. Most recently, the CPUC approved an income-graduated fixed charge intended to benefit low-income customers and support electrification measures.5 The IOUs are currently developing tariffs that meet the direction given by the CPUC in this proceeding. These tariffs were not available at the time of this study, but this analysis may be re-evaluated later in 2025 once the rates are finalized. 5 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-responsedr/demand-flexibility-rulemaking ITEM 6A ATTACHMENT 3

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2.4 Measure Details and Cost
This section describes the details of the measures and documents incremental costs. All measure costs were obtained from the TECH cost survey and contractor survey unless otherwise noted. These surveys reflect the cost to the customer and include equipment, labor, permit fees, and required HERS testing.

The following heat pump space heater (HPSH) measures were evaluated as described below. All included HERS verified refrigerant charge, 10% duct sealing, and 300 CFM/ton airflow, aligned with the proposed code requirements for the 2025 Title 24 code. 1) Dual Fuel Heat Pump (DFHP Existing Furnace): Replace existing ducted AC with an electric heat pump and install controls to operate the heat pump as the primary space conditioning source and to use the existing gas furnace (78 AFUE) for backup heat when heating demands cannot be met by the heat pump. In this report, dual fuel heat pumps were modeled to disable furnace operation above an outdoor temperature of 35°F in compliance with Energy Code Section 150.0(h)7, which requires this lockout for any heat pump with supplemental heating. A minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pump was evaluated.

Savings are compared to a new AC (14.3 SEER2, 11.7 EER2) alongside the existing furnace (78 AFUE). A new evaporator coil is assumed to be installed with the AC system.
2) HPSH: Replace existing ducted AC and natural gas furnace with an electric heat pump and air handler. Minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7 EER2, 80 AFUE).
3) High Efficiency HPSH: Replace existing ducted AC and natural gas furnace with an electric heat pump and air handler. Higher efficiency (17 SEER2, 12.48 EER2, 9.5 HSPF2) heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7 EER2, 80 AFUE).

Over the 30-year analysis period, certain changes are assumed when the equipment is replaced that impact both lifetime costs and energy use. Table 7 and Table 8 present the lifetime scenario for the DFHP Existing Furnace and HPSH measures, respectively. The analysis assumed a 20-year effective useful lifetime (EUL) for a furnace, a 15-year EUL for an air conditioner and a 15-year EUL for a heat pump. Lifetimes are based on the Database for Energy Efficient Resources (DEER) (California Public Utilities Commission, 2021b). The existing furnace is assumed to be halfway through its EUL at the beginning of the analysis period. After 10 years when the furnace reaches the end of its life and needs to be replaced, it will be subject to new federal efficiency standards for residential gas furnaces that go into effect in 2028 requiring 95 AFUE6
. Five years later the air conditioner reaches the end of its life and is replaced with a new air conditioner.
6 https://www.energy.gov/articles/doe-finalizes-energy-efficiency-standards-residential-furnaces-saveamericans-15- billion#:~:text=These%20furnace%20efficiency%20standards%20were,heat%20for%20the%20livin g%20space.

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For the DFHP upgrade case, after 10 years when the furnace fails it’s expected that the furnace is abandoned in place since the heat pump serves primary heating and was sized to provide the full design heating load. In this case it is assumed that the fan motor is replaced with a new aftermarket unit and operates another five years until the heat pump fails and is replaced with a new heat pump and air handler. Table 7 through Table 8 present the lifecycle incremental cost breakdown for a 4-ton system. The heat pump is sized for each climate zone based on the heating and cooling load as shown in Table 4, and the 4-ton system was selected as an example to show the lifecycle cost breakdown.

Table 7. Lifecycle Incremental Cost Breakdown for a 4-Ton DFHP Existing Furnace Calendar
Year
Baseline AC
Replacement
Schedule
Baseline
Future
Cost
Baseline
Present
Value
Cost
Heat Pump
Heat
Pump
Future
Cost
Heat
Pump
Present
Value
Cost
2026 AC fails, install new
AC, keep existing
furnace
$10,431 $10,431 AC fails, install new
HP, keep existing
furnace
$12,347 $12,347
2036 Furnace fails, install
new 95AFUE
furnace
$7,879 $5,863 Furnace fails,
replace fan motor
$1,200 $893
2041 AC fails, install new
AC
$10,431 $6,695 HP fails, install new
HP and air handler
$14,529 $9,326
Total $22,989 $22,566
Incremental Cost -$424
Table 8. Lifecycle Incremental Cost Breakdown for 4-Ton HPSH Calendar
Year
Baseline AC
Replacement
Schedule
Baseline Future
Cost
Baseline
Present
Value
Cost
Heat Pump
Heat Pump
Future
Cost
Heat
Pump
Present
Value
Cost
2026 AC fails, install
new AC &
furnace
$13,808 $13,808 AC fails,
install new

HP & AHU
$14,529 $14,529
2041 AC fails, install
new AC
$10,431 $6,695 HP fails,
install new

HP & AHU
$13,529 $8,684
2046 Furnace fails,
install new
95AFUE
furnace
$7,879 $4,363
- - -
2056 Remaining
useful life for
furnace
- -$1,623
- - -
Total $23,243 $23,213
Incremental Cost -$30
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 20 2025/08/08
Table 9 presents estimated first and lifetime costs for the baseline and heat pump scenarios for 4-ton equipment. Costs include all material and installation labor including providing new 240 V electrical service to the air handler location for all new air handler installations and decommissioning of the furnace for the cases where the furnace is removed. DFHP costs incorporate controls installation and commissioning to ensure the heat pump and the furnace communicate properly and don’t operate at the same time. Future replacement costs do not include any initial costs associated with 240V electrical service or furnace decommissioning.

Table 9. HVAC Measure Cost Assumptions – 4-Ton Electric Replacements Measure Case
AC +
Evaporator
Coil
Gas
Furnace
/AC
DFHP Existing
Furnace HPSH
High
Efficiency
HPSH
Base Case - - AC +
Evaporator Coil
Gas
Furnace
/AC
Gas
Furnace
/AC
First Cost $10,431 $13,808 $12,347 $14,529 $17,506
Replacement Cost
(Future Value) $18,310 $18,310 $15,729 $13,529 $16,506
Replacement Cost
(Present Value) $12,558 $11,058 $10,219 $8,684 $10,594
Remaining Value at
Year 30 $0 -$1,623 $0 $0 $0
Total Lifecycle Cost $22,989 $23,243 $22,566 $23,213 $28,100 Incremental Cost - - -$424 -$30 $4,857

2.4.1 Lifecycle Cost Assuming Zero-NOx Standards for Space Heating After 2030
The California Air Resource Board proposed a strategy for reducing emissions in their 2022 Scoping Plan for Achieving Carbon Neutrality that includes a zero-emission standard for space and water heaters sold in California that would go into effect in 2030 (California Air Resources Board, 2022).

The South Coast Air Quality Management District (SCAQMD) proposed Rule 1111 for the Reduction of NOx Emissions from Natural Gas-Fired Furnaces. This rule applies to furnaces less than 175,000 Btu/hr and sets compliance goals for manufacturers with the proposed dates in Table 10. The sale of gas furnaces above the compliance target will incur a mitigation fee (SCAQMD, 2025).

Table 10. SCAQMD Rule 1111 Proposed Manufacturer Compliance Targets Target Dates 2027-2028 2029-2032 2033-2035 2036 and after NOx Emitting Units (e.g. gas) 70% 50% 25% 10%
Zero-Emission Units 30% 50% 75% 90%
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 21 2025/08/08
The Bay Area Air Quality Management District (BAAD) adopted Rule 9-4 that similarly requires zero NOx standards for space heating systems sold in the Bay Area.

Implementation for residential furnaces will begin January 2029 (BAAD, 2025).

The BAAD Rule 9-4 has been adopted, but both the California Air Resources Board and SCAQMD Rule 1111 are proposed rules that have not yet been adopted, but given the implications these rulings would have on the 30-year cost-effectiveness if gas furnaces were very limited or no longer available in 2030, a sensitivity analysis for this scenario is included in this study for the DFHP Existing Furnace scenario. The other heat pump measures would also be impacted by this ruling; however, for simplicity the team selected one measure to give a sense of the impact on the results. The following costs reflect the scenario where gas furnaces are not available in 2030. This 30-year lifecycle analysis assumes that in 10 years when the furnace reaches the end of its useful life and needs to be replaced, it will be subjected to the SCAQMD Rule 1111 or California Air Resources Board proposal and will be replaced with a heat pump.

Table 11. Lifecycle Incremental Cost Breakdown for 4-Ton System with no Gas Furnaces after 2030
Calendar
Year
Baseline AC
Replacement
Schedule
Baseline
Future
Cost
Baseline
Present
Value
Cost
Heat Pump
Heat
Pump
Future
Cost
Heat
Pump
Present
Value
Cost
2026
AC fails, install new
AC, keep existing
furnace
$10,431 $10,431
AC fails, install new
HP, keep existing
furnace
$12,347 $12,347
2036 Furnace fails, install
new HP $14,529 $10,811 Furnace fails, replace fan motor $1,200 $893 2041 - - - HP fails, install new
HP and air handler $14,529 $9,326
2051 HP fails, install new
HP $13,529 $6,462 - - -
2056 Remaining useful
life for HP - -$4,459 - - -
Total $23,244 $22,566
Incremental Cost -$679
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 22 2025/08/08
3 Results
The primary objective of the evaluation is to identify cost-effective HPSH upgrade measures for existing single family buildings, to support the design of local ordinances encouraging installation of a heat pump when replacing an air conditioner. While this section focuses primarily on the results of the cost-effectiveness analysis, it is important to highlight that the associated greenhouse gas (GHG) emissions savings are significant – averaging a 25% annual reduction across the climate zones and vintages. A full dataset of all results, including site energy, source energy, LSC and GHG emissions, can be downloaded at https://localenergycodes.com/content/resources. Results alongside policy options can also be explored using the Cost-effectiveness Explorer at https://explorer.localenergycodes.com/.

3.1 Cost-Effectiveness Results
Table 12 through Table 14 present results across the 16 climate zones for the 1992-2010 vintage using standard tariffs and Table 15 through Table 17 present results across the 16 climate zones and three vintages using CARE tariffs. Results show the incremental cost and utility bill savings for the first year along with cost effectiveness results for LSC and On-Bill under both the modest and high gas escalation scenarios. Results for additional vintages using standard tariffs are in Appendix 6.2 Cost-Effectiveness Results.

ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 23 2025/08/08

3.1.1 Cost Effectiveness Results Using Standard Tariffs Table 12. [1992-2010] DFHP Existing Furnace
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $60 $10,843 $5,471 $21,616
CZ02 PGE $1,670 ($86) $8,462 $2,312 $12,767
CZ03 PGE $1,178 $15 $8,302 $4,810 $13,877
CZ04 PGE $1,670 ($68) $7,396 $1,955 $10,123
CZ04 CPAU $1,670 ($9) $7,396 $2,207 $7,179
CZ05 PGE $1,424 ($12) $6,848 $3,425 $11,150
CZ05 PGE/SCG $1,424 ($195) $6,848 ($1,864) $2,099
CZ06 SCE/SCG $1,424 ($34) $2,647 $675 $1,468
CZ07 SDGE $1,424 ($36) $2,691 $599 $1,734
CZ08 SCE/SCG $1,916 ($65) $2,028 ($662) $311
CZ09 SCE/SCG $1,916 ($90) $2,749 ($1,037) $437
CZ10 SCE/SCG $1,916 ($79) $2,444 ($833) $543
CZ10 SDGE $1,916 $54 $2,444 $2,350 $4,857
CZ11 PGE $2,162 $68 $7,672 $4,713 $14,750
CZ12 PGE $1,916 $44 $8,466 $4,851 $15,371
CZ12 SMUD/PGE $1,916 $353 $8,466 $11,771 $22,513
CZ13 PGE $2,162 $76 $5,318 $3,972 $11,212
CZ14 SCE/SCG $1,916 ($179) $4,803 ($2,215) $1,489
CZ14 SDGE $1,916 ($22) $4,803 $1,431 $7,207
CZ15 SCE/SCG $2,408 ($133) ($122) ($3,289) ($3,060)
CZ16 PGE $2,243 ($66) $8,842 $1,260 $11,982
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 24 2025/08/08
Table 13. [1992-2010] Standard Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 ($145) $10,949 ($34) $17,899
CZ02 PGE $652 ($229) $9,362 ($702) $11,825
CZ03 PGE $514 ($62) $8,244 $2,373 $11,665
CZ04 PGE $652 ($205) $8,680 ($572) $10,753
CZ04 CPAU $652 ($85) $8,680 $556 $7,194
CZ05 PGE $583 ($113) $6,957 $752 $9,206
CZ05 PGE/SCG $583 ($316) $6,957 ($5,101) ($811)
CZ06 SCE/SCG $583 ($37) $2,134 ($63) $716
CZ07 SDGE $583 ($39) $2,156 ($149) $981
CZ08 SCE/SCG $721 ($79) $1,812 ($1,356) ($371)
CZ09 SCE/SCG $721 ($118) $2,589 ($2,038) ($524)
CZ10 SCE/SCG $721 ($103) $2,311 ($1,723) ($259)
CZ10 SDGE $721 $34 $2,311 $1,533 $4,218
CZ11 PGE $790 ($35) $8,817 $2,833 $14,504
CZ12 PGE $721 ($94) $9,199 $1,812 $13,563
CZ12 SMUD/PGE $721 $363 $9,199 $12,027 $24,107
CZ13 PGE $790 $6 $5,948 $2,558 $10,687
CZ14 SCE/SCG $721 ($412) $6,635 ($6,964) ($1,073)
CZ14 SDGE $721 ($107) $6,635 $166 $10,249
CZ15 SCE/SCG $859 ($139) ($112) ($3,434) ($3,186)
CZ16 PGE $2,095 ($385) $13,600 ($2,842) $19,424
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 25 2025/08/08
Table 14. [1992-2010] High Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $56 $9,783 ($350) $17,727
CZ02 PGE $3,606 ($94) $7,527 ($2,544) $10,080
CZ03 PGE $3,422 $59 $5,701 $312 $9,692
CZ04 PGE $3,606 ($61) $6,961 ($2,193) $9,235
CZ04 CPAU $3,606 $0 $6,961 ($2,389) $4,310
CZ05 PGE $3,514 $4 $4,176 ($1,450) $7,088
CZ05 PGE/SCG $3,514 ($199) $4,176 ($7,303) ($2,929)
CZ06 SCE/SCG $3,514 ($14) ($2,162) ($4,367) ($3,567)
CZ07 SDGE $3,514 ($12) ($2,090) ($4,312) ($3,191)
CZ08 SCE/SCG $3,698 $13 ($1,660) ($4,217) ($3,149)
CZ09 SCE/SCG $3,698 ($26) ($750) ($4,883) ($3,284)
CZ10 SCE/SCG $3,698 ($4) ($844) ($4,418) ($2,864)
CZ10 SDGE $3,698 $132 ($844) ($1,068) $1,587
CZ11 PGE $3,789 $186 $7,738 $2,845 $14,675
CZ12 PGE $3,698 $88 $7,575 $996 $12,879
CZ12 SMUD/PGE $3,698 $422 $7,575 $8,459 $20,580
CZ13 PGE $3,789 $208 $4,419 $2,165 $10,439
CZ14 SCE/SCG $3,698 ($219) $5,760 ($7,575) ($1,506)
CZ14 SDGE $3,698 $77 $5,760 ($424) $9,604
CZ15 SCE/SCG $3,881 $50 ($2,144) ($4,209) ($3,786)
CZ16 PGE $5,071 ($97) $14,557 ($1,291) $21,181
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 26 2025/08/08

3.1.2 Cost Effectiveness Results Using CARE Tariffs
Table 15. [1992-2010] DFHP Existing Furnace CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $153 $10,843 $6,436 $19,266
CZ02 PGE $1,670 $18 $8,462 $3,916 $12,233
CZ03 PGE $1,178 $73 $8,302 $5,493 $12,696
CZ04 PGE $1,670 $14 $7,396 $3,217 $9,716
CZ04 CPAU $1,670 $0 $7,396 $786 $786
CZ05 PGE $1,424 $47 $6,848 $4,198 $10,337
CZ05 PGE/SCG $1,424 ($98) $6,848 $23 $3,191
CZ06 SCE/SCG $1,424 ($18) $2,647 $967 $1,600
CZ07 SDGE $1,424 ($16) $2,691 $1,000 $1,887
CZ08 SCE/SCG $1,916 ($38) $2,028 ($136) $644
CZ09 SCE/SCG $1,916 ($52) $2,749 ($301) $879
CZ10 SCE/SCG $1,916 ($45) $2,444 ($182) $920
CZ10 SDGE $1,916 $51 $2,444 $2,147 $4,112
CZ11 PGE $2,162 $115 $7,672 $5,068 $13,039
CZ12 PGE $1,916 $103 $8,466 $5,436 $13,792
CZ12 SMUD/PGE $1,916 $418 $8,466 $12,488 $21,071
CZ13 PGE $2,162 $100 $5,318 $4,013 $9,760
CZ14 SCE/SCG $1,916 ($98) $4,803 ($700) $2,268
CZ14 SDGE $1,916 $23 $4,803 $2,156 $6,677
CZ15 SCE/SCG $2,408 ($88) ($122) ($2,307) ($2,111)
CZ16 PGE $2,243 $33 $8,842 $2,737 $11,267
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 27 2025/08/08
Table 16. [1992-2010] Standard Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 $33 $10,949 $2,703 $16,973
CZ02 PGE $652 ($59) $9,362 $2,211 $12,188
CZ03 PGE $514 $25 $8,244 $3,685 $11,074
CZ04 PGE $652 ($53) $8,680 $2,048 $11,067
CZ04 CPAU $652 $0 $8,680 $255 $255
CZ05 PGE $583 ($13) $6,957 $2,389 $9,117
CZ05 PGE/SCG $583 ($173) $6,957 ($2,232) $1,208
CZ06 SCE/SCG $583 ($20) $2,134 $249 $872
CZ07 SDGE $583 ($18) $2,156 $279 $1,161
CZ08 SCE/SCG $721 ($47) $1,812 ($728) $62
CZ09 SCE/SCG $721 ($70) $2,589 ($1,094) $122
CZ10 SCE/SCG $721 ($61) $2,311 ($892) $281
CZ10 SDGE $721 $39 $2,311 $1,509 $3,612
CZ11 PGE $790 $60 $8,817 $4,141 $13,421
CZ12 PGE $721 $22 $9,199 $3,592 $12,940
CZ12 SMUD/PGE $721 $471 $9,199 $13,622 $23,292
CZ13 PGE $790 $61 $5,948 $3,234 $9,693
CZ14 SCE/SCG $721 ($241) $6,635 ($3,632) $1,098
CZ14 SDGE $721 ($5) $6,635 $1,996 $9,885
CZ15 SCE/SCG $859 ($91) ($112) ($2,414) ($2,201)
CZ16 PGE $2,095 ($92) $13,600 $2,163 $19,892
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 28 2025/08/08
Table 17. [1992-2010] High Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $164 $9,783 $813 $15,177
CZ02 PGE $3,606 $28 $7,527 ($683) $9,357
CZ03 PGE $3,422 $104 $5,701 $674 $8,120
CZ04 PGE $3,606 $41 $6,961 ($703) $8,383
CZ04 CPAU $3,606 $0 $6,961 ($4,595) ($4,595)
CZ05 PGE $3,514 $62 $4,176 ($727) $6,056
CZ05 PGE/SCG $3,514 ($98) $4,176 ($5,348) ($1,853)
CZ06 SCE/SCG $3,514 ($5) ($2,162) ($4,219) ($3,583)
CZ07 SDGE $3,514 ($0) ($2,090) ($4,112) ($3,235)
CZ08 SCE/SCG $3,698 $15 ($1,660) ($4,248) ($3,401)
CZ09 SCE/SCG $3,698 ($8) ($750) ($4,603) ($3,330)
CZ10 SCE/SCG $3,698 $6 ($844) ($4,300) ($3,065)
CZ10 SDGE $3,698 $103 ($844) ($1,892) $191
CZ11 PGE $3,789 $203 $7,738 $2,425 $11,808
CZ12 PGE $3,698 $141 $7,575 $1,351 $10,784
CZ12 SMUD/PGE $3,698 $471 $7,575 $8,735 $18,405
CZ13 PGE $3,789 $192 $4,419 $1,255 $7,809
CZ14 SCE/SCG $3,698 ($111) $5,760 ($5,632) ($783)
CZ14 SDGE $3,698 $115 $5,760 ($98) $7,755
CZ15 SCE/SCG $3,881 $36 ($2,144) ($4,549) ($4,220)
CZ16 PGE $5,071 $95 $14,557 $1,460 $19,324

3.2 Zero-NOx Scenario Results
This section presents cost-effectiveness results for the DFHP Existing Furnace under the scenario where proposed air quality district zero-NOx rules go into effect over the next 10 years. In the base case, at time of replacement of the gas furnace at year 10 a heat pump is installed. The energy profile between the base case and the heat pump upgrade case are subsequently identical for the remaining 20 years of the 30-year analysis period. As a result, energy and cost savings only persist for the first 10 years.

Table 18 shows the On-Bill NPV cost-effectiveness results assuming high gas escalation.

The high gas escalation was used for the zero-NOx analysis because the high gas escalation is built on the assumption that gas furnaces are no longer available to be installed due to zero-NOx regulations or similar policies. Table 19 shows the LSC costeffectiveness results for all three vintages. 2025 LSC savings were calculated using individual year multipliers for the first 10 years, 2026 through 2035.

ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 29 2025/08/08
Table 18. DFHP Existing Furnace On-Bill NPV with High Gas Escalation (Zero-NOx Rule) Climate
Zone
Electric/
Gas Utility
On-Bill NPV
Pre-1978 1978-1991 1992-2010
CZ01 PGE $5,473 $4,136 $2,349
CZ02 PGE $1,785 $1,031 $1,101
CZ03 PGE $2,863 $2,097 $2,052
CZ04 PGE $2,133 $1,162 $1,019
CZ04 CPAU $2,340 $1,599 $1,213
CZ05 PGE $1,918 $1,486 $1,576
CZ05 PGE/SCG ($1,308) ($834) ($491)
CZ06 SCE/SCG $401 $605 $635
CZ07 SDGE $1,473 $999 $641
CZ08 SCE/SCG ($125) $99 $195
CZ09 SCE/SCG ($563) ($183) $22
CZ10 SCE/SCG ($259) $53 $110
CZ10 SDGE $2,985 $2,261 $1,430
CZ11 PGE $3,287 $2,866 $2,279
CZ12 PGE $2,935 $2,578 $2,202
CZ12 SMUD/PGE $7,877 $5,978 $5,040
CZ13 PGE $2,927 $2,556 $2,053
CZ14 SCE/SCG ($864) ($943) ($543)
CZ14 SDGE $2,204 $1,655 $1,064
CZ15 SCE/SCG $1,338 $396 ($688)
CZ16 PGE $1,192 $1,071 $1,096
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 30 2025/08/08
Table 19. DFHP Existing Furnace LSC Savings (Zero-NOx Rule) Climate
Zone
Electric/
Gas Utility

LSC NPV
Pre-1978 1978-1991 1992-2010
CZ01 PGE $3,019 $2,510 $1,558
CZ02 PGE $1,256 $1,025 $1,006
CZ03 PGE $1,460 $1,120 $1,036
CZ04 PGE $1,242 $949 $887
CZ04 CPAU $1,242 $949 $887
CZ05 PGE $1,127 $816 $820
CZ05 PGE/SCG $1,127 $816 $820
CZ06 SCE/SCG $545 $318 $251
CZ07 SDGE $639 $403 $314
CZ08 SCE/SCG $428 $279 $244
CZ09 SCE/SCG $608 $424 $372
CZ10 SCE/SCG $469 $320 $293
CZ10 SDGE $469 $320 $293
CZ11 PGE $1,871 $1,475 $1,263
CZ12 PGE $1,924 $1,539 $1,356
CZ12 SMUD/PGE $1,375 $1,090 $939
CZ13 PGE ($206) ($186) $50
CZ14 SCE/SCG ($206) ($186) $50
CZ14 SDGE $127 $60 $38
CZ15 SCE/SCG ($185) ($12) $77
CZ16 PGE $3,019 $2,510 $1,558

3.3 AC Pathways for Heat Pump Replacements
Many jurisdictions are interested in seeing alternative pathways for residents who may prefer to replace an air conditioner with similar equipment, rather than migrating to a heat pump system. Alternative packages analyzed to support this request include air conditioning equipment combined with additional efficiency measures resulting in options that are reasonably energy or LSC cost equivalent to a heat pump system, to the extent feasible.

Figure 1 shows two AC pathways, one with an existing duct system and another path with a new duct system, alongside the heat pump pathways. The figure presents the proposed efficiency upgrade measures that would be part of a reach code (solid blue) along with the relevant requirements from Title 24, Part 6 that are triggered as part of equipment replacements (white or gradient blue). A reach code that establishes requirements when an air conditioner is replaced or installed new could allow for either a heat pump to be installed or an AC as long as the performance measures listed below are met.

ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 31 2025/08/08
Figure 1. AC vs. Heat Pump Pathway Requirements
The heat pump only and two AC pathways are presented in Figure 2 comparing total LSC energy use relative to the existing home for the 1992-2010 vintage. The heat pump path is represented by the DFHP Existing Furnace scenario. In most climate zones, the heat pump path results in higher energy savings, in the milder climates the AC and new ducts and New AC Only paths save marginally more energy.

Figure 2. AC vs. Heat Pump Energy Comparison
ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 32 2025/08/08
Though the AC path does not need to meet cost-effectiveness criteria to be adopted as a reach code since it’s an alternative path, in order to understand the implications of the AC path on the customer, Table 20 and Table 21 present estimated costs for the new AC only and the new AC + new ducts paths respectively.

Table 20. New AC Only Path Cost Estimates
New AC Only Path Pre-1978 1978-1991 1992-2010
Fan Efficacy: 0.45 W/CFM - - -
Refrigerant Charge Verification $100 $100 $1007
R-49 Attic Insulation $5,483 $3,612 $1,827
Air Sealing $1,963 $1,963 $1,963
Total $7,546 $5,675 $3,790
Table 21. New AC/Furnace and New Ducts Path Cost Estimates New AC and New Ducts Path Pre-1978 1978-1991 1992-2010
New R-8 Ducts $6,311 $6,311 $6,311
Furnace $5,951 $5,951 $5,951
Fan Efficacy: 0.35 W/CFM $500 $500 $500
Refrigerant Charge Verification $100 $100 $100
Total $12,862 $12,862 $12,862
7 This is an incremental cost and in some climate zones, refrigerant charge verification is required so there is no incremental cost added.

ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 33 2025/08/08
4 Recommendations and Discussion
This analysis evaluated the feasibility and cost-effectiveness of AC to heat pump measures in California existing homes built before 2010. To meet the needs of jurisdictions evaluating this option, Statewide Reach Codes Team used both On-Bill and LSC-based lifecycle cost approaches to evaluate cost-effectiveness and quantify the energy cost savings associated with energy efficiency measures compared to the incremental costs associated with the measures.

Conclusions and Discussion:

1. Heat pumps are significantly more efficient than gas furnaces, requiring less than half the energy to meet the heating load. However, despite this reduction in heating energy use, the cost of heating a home using electricity (heat pump) could be higher than the cost to heat that same home with natural gas (furnace), depending on the electricity tariffs relative to the gas tariffs. Therefore, while a heat pump measure could be deemed as cost-effective over its lifecycle, installing a heat pump could result in a decrease or an increase in utility costs in the first years relative to a gas furnace and AC system. For example, the heat pump space heater measure in climate zone 12 in the newest vintage results in the customer saving money on their utility bill in SMUD territory but paying more on their utility bill in PG&E territory. Both PG&E and SMUD territory use PG&E gas rates, but SMUD has lower electricity rates than PG&E. With fuel switching measures like the AC to HP measure, the electricity to gas ratio has a significant impact on the savings or costs the customer will see by switching from gas to an electric heat pump space heater.

2. The LSC metric most often produces more favorable cost-effectiveness results relative to the results produced using actual utility costs (On-Bill). When the analysis assumes a higher escalation rate for natural gas costs relative to electricity in future years (high gas escalation), the On-Bill results are more favorable in some cases. a. In the oldest (pre-1978) vintage, all three measures (dual fuel heat pump with existing furnace, standard heat pump space heater, and high efficiency heat pump space heater) are cost-effective using the LSC metric in all climate zones. When using the On-Bill metric, the measures remain cost-effective in most climate zones.
b. In the newer (1978-1991 and 1992-2010) vintages, the dual fuel heat pump (DFHP Existing Furnace) and the standard efficiency HPSH are cost-effective based on LSC in all cases except for Climate Zone 15 when using both the standard and California Alternative Rates for Energy (CARE) tariff.

3. Using the CARE tariff results in higher cost savings and cost-effectiveness relative to standard rates, with almost all cases yielding first year utility cost savings. The DFHP Existing Furnace is On-Bill cost-effective based on the high gas escalation scenario in all cases in the pre-1978 vintage, and almost all cases in the 1978-1991 and 1992-2010 vintage. It is also On-Bill cost-effective in most climate zones for the ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 34 2025/08/08
modest gas escalation scenario across all vintages. In Climate Zones 5, 8, 9, 10, 14, and 15, cost-effectiveness declines relative to other areas, and in some cases is not cost-effective from an On-Bill perspective. This is the case for both the CARE tariff and the standard rate.

4. The analysis also modeled the cost impact of using a standard time-of-use electricity tariff versus switching to a newer electrification tariff, designed to reduce costs in homes with heat pumps and/or electric vehicles. Older homes tend to be the least efficient and achieve the most savings from improving equipment efficiency. In most of the state, because older homes tend to use more electricity than a similarly sized, newer vintage home, they realize more costs savings under the electrification tariff.

Newer homes tend to use less electricity and therefore do not realize the same cost savings from switching tariffs; they generally perform better under the standard tariff.

This trend is different in milder climate zones in SCE territory (excluding CZ 15), where newer homes realize more cost savings than older homes. Both the standard and electrification tariffs in SCE territory include a daily allocation of lower-cost baseline electricity and a second, higher-priced tier when the baseline is exceeded.

In many newer homes, a higher percentage of overall electricity use is within the baseline allocation, resulting in greater cost savings.

5. Higher efficiency equipment reduces utility costs in all cases and improves costeffectiveness in many climate zones in the oldest vintage relative to standard efficiency equipment. However, in more efficient newer homes, where costeffectiveness is generally lower, the savings are insufficient to offset the roughly $3,000 increase in incremental cost.

6. Given the adopted Bay Area Air Quality Management District Zero NOx rule, and the proposed California Air Resource Board or South Coast Air Quality Management District (SCAQMD) Zero-NOx rules, and gas furnaces may not be available to be installed in 2030, a sensitivity analysis was performed for the Zero NOx scenario and found that cost-effectiveness decreases in many cases except in Climate Zone 15.

The improved cost-effectiveness is due to the higher baseline cost when HPSH must be installed at year 10 when the furnace must be replaced. It is also important to note that Climate Zone 15 is the only climate zone that utilizes a 5-ton HPSH, which has a much higher cost than the smaller sized systems, resulting in costeffectiveness improvements under the Zero-Nox rules.

7. While not evaluated in this report, the 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) shows it is beneficial to combine a heat pump space conditioning system with photovoltaics (PV) because the additional electricity required by the heat pump can be met by the PV system and result in reduced utility bills.

8. In this study the dual fuel heat pump is evaluated with an existing furnace, however the homeowner could choose to replace the existing furnace with a new furnace at this time as well. This measure (DFHP New Furnace) was evaluated in the 2022 ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 35 2025/08/08
Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) but found to be less cost-effective than the DFHP Existing Furnace case.

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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 36 2025/08/08
5 References
BAAD. (2025, May 7). Rules 9-4 and 9-6 Building Appliances. Retrieved from Bay Area Air District: https://www.baaqmd.gov/en/rules-and-compliance/ruledevelopment/building-appliances California Air Resources Board. (2022, August 12). 2022 State Strategy for the State Implementation Plan (2022 State SIP Strategy). Retrieved from California Air Resources Board Web site: https://ww2.arb.ca.gov/sites/default/files/2022- 11/Proposed_2022_State_SIP_Strategy.pdf
California Energy Commission. (2017). Rooftop Solar PV System. Measure number: 2019- Res-PV-D Prepared by Energy and Environmental Economics, Inc. Retrieved from https://efiling.energy.ca.gov/getdocument.aspx?tn=221366 California Energy Commission. (2021b). Final Express Terms for the Proposed Revisions to the 2022 Energy Code Reference Appendices. Retrieved from https://efiling.energy.ca.gov/Lists/DocketLog.aspx?docketnumber=21-BSTD-01 California Energy Commission. (2023). 2025 Energy code Hourly Factors. Retrieved from https://www.energy.ca.gov/files/2025-energy-code-hourly-factors California Energy Commission. (2023). Draft 2025 Energy Code Express Terms. Retrieved from
https://efiling.energy.ca.gov/GetDocument.aspx?tn=252915&DocumentContentId=88 051
California Energy Commission. (2025). Final Express Terms for the Proposed Revisions to 2025 Title 24, Part 11 (CALGreen). Retrieved from
https://efiling.energy.ca.gov/GetDocument.aspx?tn=261229&DocumentContentId=97 592
California Public Utilities Commission. (2021a). Utility Costs and Affordability of the Grid of the Future: An Evaluation of Electric Costs, Rates, and Equity Issues Pursuant to P.U. Code Section 913.1. Retrieved from https://www.cpuc.ca.gov/-/media/cpucwebsite/divisions/office-of-governmental-affairs-division/reports/2021/senate-bill-695- report-2021-and-en-banc-whitepaper_final_04302021.pdf
California Public Utilities Commission. (2021b). Database for Energy-Efficient resources (DEER2021 Update). Retrieved April 13, 2021, from
http://www.deeresources.com/index.php/deer-versions/deer2021 Department of Energy. (2023). DOE Finalizes Energy Efficiency Standards for Residential Furnaces to Save Americans $1.5 Billion In Annual Utility Bills. Retrieved from www.energy.gov: https://www.energy.gov/articles/doe-finalizes-energy-efficiencystandards-residential-furnaces-save-americans-15-billion ITEM 6A ATTACHMENT 3

Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 37 2025/08/08
E-CFR. (2020). https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt1

0.3.431&r=PART&ty=HTML#se10.3.431_197. Retrieved from Electronic Code of Federal Regulations: https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt1

0.3.431&r=PART&ty=HTML#se10.3.431_197
Heinemeier, K. (2025). Residential HVAC Performance. Retrieved from https://title24stakeholders.com/wp-content/uploads/2025/03/Residential-HVACPerformance.pdf SCAQMD. (2025). Proposed Amended Rules (PAR) 1111 and 1121. Retrieved from aqmd.gov.

SCAQMD. (2025, February 21). Space and Water Heating Building Appliances. Retrieved from South Coast AQMD: https://www.aqmd.gov/docs/defaultsource/Agendas/ssc/ssc-agenda-2-21-2025.pdf Statewide CASE Team. (2023). Multifamily Domestic Hot Water. Retrieved from https://title24stakeholders.com/wp-content/uploads/2023/08/2025_T24_CASEReport-_MF-DHW-Final-1.pdf Statewide CASE Team. (2023). Residential HVAC PErformance. Retrieved from https://title24stakeholders.com/wpcontent/uploads/2023/11/Revised_2025_T24_Final-CASE-Report-RES-HVACPerformance.pdf Statewide Reach Codes Team. (2021). 2019 Cost-Effectiveness Study: Existing Single Family Residential Buidling Upgrades. Retrieved from
https://localenergycodes.com/content/resources
Statewide Reach Codes Team. (2024). 2022 Cost-Effectiveness Study: Existing Single Family Building Upgrades. Prepared by Frontier Energy. Retrieved from https://localenergycodes.com/download/1222/file_path/fieldList/Single%20Family%2 0Retrofits%20CostEff%20Report.pdf
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 38 2025/08/08
6 Appendices

6.1 Map of California Climate Zones
Climate zone geographical boundaries are depicted in Figure 3. The map in Figure 3 along with a zip-code search directory is available at:
https://ww2.energy.ca.gov/maps/renewable/building_climate_zones.html Figure 3. Map of California climate zones.

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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 39 2025/08/08

6.2 Cost-Effectiveness Results

6.2.1 Standard Rates
The following tables present results across the 16 climate zones for the pre-1978 (Table 22 through Table 24) and the 1978-1991 (Table 25 through Table 27) vintages supplementing the results in Section 3.

Table 22. [Pre-1978] DFHP Existing Furnace
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $155 $25,223 $14,524 $51,831
CZ02 PGE $1,670 ($81) $11,625 $4,391 $20,880
CZ03 PGE $1,178 $39 $11,599 $7,167 $21,825
CZ04 PGE $1,670 ($7) $10,648 $5,023 $18,395
CZ04 CPAU $1,670 $63 $10,648 $5,251 $14,605
CZ05 PGE $1,424 ($29) $9,462 $4,574 $16,955
CZ05 PGE/SCG $1,424 ($314) $9,462 ($3,674) $2,838
CZ06 SCE/SCG $1,424 ($70) $4,223 $179 $1,795
CZ07 SDGE $1,424 $41 $4,278 $2,725 $5,055
CZ08 SCE/SCG $1,916 ($111) $3,365 ($1,358) $524
CZ09 SCE/SCG $1,916 ($168) $4,387 ($2,351) $274
CZ10 SCE/SCG $1,916 ($133) $3,904 ($1,625) $923
CZ10 SDGE $1,916 $201 $3,904 $6,324 $10,832
CZ11 PGE $2,162 $93 $12,045 $7,668 $25,025
CZ12 PGE $1,916 $46 $12,451 $7,097 $24,339
CZ12 SMUD/PGE $1,916 $584 $12,451 $19,146 $36,775
CZ13 PGE $2,162 $112 $8,254 $6,448 $18,815
CZ14 SCE/SCG $1,916 ($244) $6,795 ($2,777) $3,481
CZ14 SDGE $1,916 $65 $6,795 $4,352 $13,446
CZ15 SCE/SCG $2,408 $80 $550 $1,655 $2,681
CZ16 PGE $2,243 ($199) $17,538 $2,333 $25,276
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 40 2025/08/08
Table 23. [Pre-1978] Standard Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 ($127) $27,155 $7,800 $48,445
CZ02 PGE $652 ($242) $13,342 $1,420 $21,282
CZ03 PGE $514 ($46) $11,946 $4,614 $19,670
CZ04 PGE $652 ($139) $13,059 $3,274 $21,888
CZ04 CPAU $652 ($48) $13,059 $3,194 $15,372
CZ05 PGE $583 ($131) $9,998 $2,045 $15,648
CZ05 PGE/SCG $583 ($449) $9,998 ($7,152) ($94)
CZ06 SCE/SCG $583 ($76) $3,860 ($652) $931
CZ07 SDGE $583 $35 $3,876 $1,901 $4,218
CZ08 SCE/SCG $721 ($128) $3,305 ($2,112) ($199)
CZ09 SCE/SCG $721 ($219) $4,415 ($3,839) ($1,141)
CZ10 SCE/SCG $721 ($188) $3,982 ($3,168) ($483)
CZ10 SDGE $721 $166 $3,982 $5,200 $10,049
CZ11 PGE $790 ($74) $14,045 $4,727 $24,836
CZ12 PGE $721 ($179) $13,850 $2,374 $21,622
CZ12 SMUD/PGE $721 $601 $13,850 $19,845 $39,654
CZ13 PGE $790 ($14) $9,394 $3,998 $17,858
CZ14 SCE/SCG $721 ($450) $10,103 ($6,294) $4,015
CZ14 SDGE $721 ($66) $10,103 $2,757 $18,994
CZ15 SCE/SCG $859 $68 $643 $1,364 $2,430
CZ16 PGE $2,095 ($484) $27,492 $2,918 $49,419
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 41 2025/08/08
Table 24. [Pre-1978] High Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $249 $30,518 $11,401 $52,316
CZ02 PGE $3,606 ($24) $13,354 $1,431 $21,449
CZ03 PGE $3,422 $100 $10,768 $3,122 $18,282
CZ04 PGE $3,606 $118 $13,537 $4,185 $22,984
CZ04 CPAU $3,606 $101 $13,537 $1,665 $13,950
CZ05 PGE $3,514 $10 $8,416 $384 $14,087
CZ05 PGE/SCG $3,514 ($308) $8,416 ($8,814) ($1,654)
CZ06 SCE/SCG $3,514 $3 $380 ($3,709) ($2,052)
CZ07 SDGE $3,514 $114 $430 ($1,063) $1,230
CZ08 SCE/SCG $3,698 $31 $1,065 ($3,478) ($1,420)
CZ09 SCE/SCG $3,698 ($40) $2,358 ($4,759) ($1,897)
CZ10 SCE/SCG $3,698 $6 $2,191 ($3,746) ($882)
CZ10 SDGE $3,698 $344 $2,191 $4,481 $9,276
CZ11 PGE $3,789 $283 $15,614 $7,801 $28,167
CZ12 PGE $3,698 $152 $14,490 $4,899 $24,385
CZ12 SMUD/PGE $3,698 $708 $14,490 $17,350 $37,236
CZ13 PGE $3,789 $326 $10,164 $6,697 $20,802
CZ14 SCE/SCG $3,698 ($173) $11,876 ($5,041) $5,522
CZ14 SDGE $3,698 $244 $11,876 $5,111 $21,254
CZ15 SCE/SCG $3,881 $335 $393 $2,323 $3,635
CZ16 PGE $5,071 $45 $34,043 $9,856 $56,737
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 42 2025/08/08
Table 25. [1978-1991] DFHP Existing Furnace
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $99 $20,184 $10,746 $40,368
CZ02 PGE $1,670 ($114) $9,216 $2,259 $14,435
CZ03 PGE $1,178 $3 $8,952 $5,020 $15,543
CZ04 PGE $1,670 ($68) $8,234 $2,394 $11,893
CZ04 CPAU $1,670 $18 $8,234 $3,236 $9,492
CZ05 PGE $1,424 ($32) $7,070 $3,268 $11,902
CZ05 PGE/SCG $1,424 ($238) $7,070 ($2,666) $1,747
CZ06 SCE/SCG $1,424 ($39) $2,941 $614 $1,557
CZ07 SDGE $1,424 $1 $3,046 $1,512 $2,837
CZ08 SCE/SCG $1,916 ($78) $2,294 ($877) $294
CZ09 SCE/SCG $1,916 ($116) $3,127 ($1,506) $271
CZ10 SCE/SCG $1,916 ($89) $2,755 ($947) $720
CZ10 SDGE $1,916 $139 $2,755 $4,470 $7,469
CZ11 PGE $2,162 $103 $9,192 $6,313 $18,851
CZ12 PGE $1,916 $60 $9,753 $5,919 $18,655
CZ12 SMUD/PGE $1,916 $430 $9,753 $14,208 $27,211
CZ13 PGE $2,162 $111 $6,312 $5,317 $14,322
CZ14 SCE/SCG $1,916 ($230) $5,080 ($3,128) $1,188
CZ14 SDGE $1,916 $35 $5,080 $2,942 $9,420
CZ15 SCE/SCG $2,408 ($17) $50 ($658) ($161)
CZ16 PGE $2,243 ($161) $14,397 $1,740 $20,318
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 43 2025/08/08
Table 26. [1978-1991] Standard Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 ($128) $21,427 $5,043 $37,346
CZ02 PGE $652 ($235) $10,428 ($90) $14,711
CZ03 PGE $514 ($67) $8,999 $2,767 $13,608
CZ04 PGE $652 ($164) $9,984 $1,062 $14,605
CZ04 CPAU $652 ($66) $9,984 $1,535 $9,914
CZ05 PGE $583 ($132) $7,290 $703 $10,264
CZ05 PGE/SCG $583 ($361) $7,290 ($5,939) ($1,104)
CZ06 SCE/SCG $583 ($43) $2,450 ($151) $775
CZ07 SDGE $583 ($3) $2,539 $747 $2,065
CZ08 SCE/SCG $721 ($96) $2,111 ($1,658) ($472)
CZ09 SCE/SCG $721 ($152) $3,022 ($2,659) ($831)
CZ10 SCE/SCG $721 ($121) $2,672 ($2,017) ($239)
CZ10 SDGE $721 $114 $2,672 $3,568 $6,801
CZ11 PGE $790 ($46) $10,682 $3,545 $18,156
CZ12 PGE $721 ($110) $10,747 $2,278 $16,574
CZ12 SMUD/PGE $721 $445 $10,747 $14,697 $29,392
CZ13 PGE $790 $1 $7,141 $3,112 $13,232
CZ14 SCE/SCG $721 ($398) $7,556 ($6,191) $1,058
CZ14 SDGE $721 ($53) $7,556 $1,909 $13,834
CZ15 SCE/SCG $859 ($25) $71 ($848) ($322)
CZ16 PGE $2,095 ($445) $22,236 $708 $37,873
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 44 2025/08/08
Table 27. [1978-1991] High Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $169 $23,092 $6,895 $39,412
CZ02 PGE $3,606 ($75) $9,242 ($1,370) $13,547
CZ03 PGE $3,422 $53 $6,872 $675 $11,602
CZ04 PGE $3,606 $26 $9,114 $463 $14,143
CZ04 CPAU $3,606 $43 $9,114 ($868) $7,590
CZ05 PGE $3,514 ($16) $4,859 ($1,522) $8,122
CZ05 PGE/SCG $3,514 ($246) $4,859 ($8,164) ($3,246)
CZ06 SCE/SCG $3,514 ($1) ($1,546) ($4,024) ($3,059)
CZ07 SDGE $3,514 $47 ($1,407) ($2,879) ($1,576)
CZ08 SCE/SCG $3,698 $37 ($828) ($3,608) ($2,300)
CZ09 SCE/SCG $3,698 ($17) $232 ($4,573) ($2,623)
CZ10 SCE/SCG $3,698 $20 $82 ($3,764) ($1,856)
CZ10 SDGE $3,698 $251 $82 $1,869 $5,060
CZ11 PGE $3,789 $259 $10,685 $5,452 $20,283
CZ12 PGE $3,698 $138 $10,023 $2,954 $17,430
CZ12 SMUD/PGE $3,698 $525 $10,023 $11,609 $26,363
CZ13 PGE $3,789 $289 $6,612 $4,624 $14,951
CZ14 SCE/SCG $3,698 ($188) $7,697 ($6,429) $1,012
CZ14 SDGE $3,698 $182 $7,697 $2,525 $14,378
CZ15 SCE/SCG $3,881 $193 ($1,111) ($992) ($267)
CZ16 PGE $5,071 ($30) $26,407 $5,118 $42,581
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 45 2025/08/08

6.2.2 CARE tariffs
Table 28. [Pre-1978] DFHP Existing Furnace CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $364 $25,223 $16,641 $46,300
CZ02 PGE $1,670 $64 $11,625 $6,507 $19,628
CZ03 PGE $1,178 $128 $11,599 $8,167 $19,817
CZ04 PGE $1,670 $90 $10,648 $6,273 $16,909
CZ04 CPAU $1,670 $0 $10,648 $786 $786
CZ05 PGE $1,424 $69 $9,462 $5,901 $15,746
CZ05 PGE/SCG $1,424 ($157) $9,462 ($613) $4,598
CZ06 SCE/SCG $1,424 ($37) $4,223 $776 $2,067
CZ07 SDGE $1,424 $42 $4,278 $2,609 $4,434
CZ08 SCE/SCG $1,916 ($63) $3,365 ($446) $1,060
CZ09 SCE/SCG $1,916 ($97) $4,387 ($983) $1,121
CZ10 SCE/SCG $1,916 ($75) $3,904 ($511) $1,528
CZ10 SDGE $1,916 $160 $3,904 $5,112 $8,649
CZ11 PGE $2,162 $183 $12,119 $8,564 $22,361
CZ12 PGE $1,916 $152 $12,451 $8,275 $21,982
CZ12 SMUD/PGE $1,916 $686 $12,451 $20,229 $34,321
CZ13 PGE $2,162 $160 $8,329 $6,744 $16,567
CZ14 SCE/SCG $1,916 ($126) $6,795 ($630) $4,382
CZ14 SDGE $1,916 $101 $6,795 $4,679 $11,801
CZ15 SCE/SCG $2,408 $60 $550 $1,131 $1,937
CZ16 PGE $2,243 $34 $17,538 $5,963 $24,236
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 46 2025/08/08
Table 29. [Pre-1978] Standard Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 $205 $27,155 $12,440 $44,777
CZ02 PGE $652 ($16) $13,342 $5,095 $20,910
CZ03 PGE $514 $76 $11,946 $6,319 $18,293
CZ04 PGE $652 $41 $13,059 $6,031 $20,843
CZ04 CPAU $652 $0 $13,059 $255 $255
CZ05 PGE $583 $12 $9,998 $4,285 $15,110
CZ05 PGE/SCG $583 ($240) $9,998 ($2,978) $2,679
CZ06 SCE/SCG $583 ($42) $3,860 ($7) $1,259
CZ07 SDGE $583 $37 $3,876 $1,837 $3,652
CZ08 SCE/SCG $721 ($75) $3,305 ($1,076) $457
CZ09 SCE/SCG $721 ($131) $4,415 ($2,095) $72
CZ10 SCE/SCG $721 ($110) $3,982 ($1,649) $504
CZ10 SDGE $721 $139 $3,982 $4,305 $8,106
CZ11 PGE $790 $94 $14,045 $7,108 $23,108
CZ12 PGE $721 $20 $13,850 $5,506 $20,829
CZ12 SMUD/PGE $721 $772 $13,850 $22,326 $38,189
CZ13 PGE $790 $89 $9,394 $5,347 $16,369
CZ14 SCE/SCG $721 ($241) $10,103 ($2,418) $5,836
CZ14 SDGE $721 $62 $10,103 $4,832 $17,541
CZ15 SCE/SCG $859 $52 $643 $930 $1,769
CZ16 PGE $2,095 $16 $27,492 $10,883 $47,907
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 47 2025/08/08
Table 30. [Pre-1978] High Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $450 $30,518 $13,096 $45,609
CZ02 PGE $3,606 $126 $13,354 $3,405 $19,322
CZ03 PGE $3,422 $172 $10,768 $3,678 $15,720
CZ04 PGE $3,606 $209 $13,537 $4,926 $19,859
CZ04 CPAU $3,606 $0 $13,537 ($4,595) ($4,595)
CZ05 PGE $3,514 $103 $8,416 $1,521 $12,412
CZ05 PGE/SCG $3,514 ($148) $8,416 ($5,742) ($19)
CZ06 SCE/SCG $3,514 $11 $380 ($3,634) ($2,319)
CZ07 SDGE $3,514 $89 $430 ($1,774) $25
CZ08 SCE/SCG $3,698 $33 $1,065 ($3,586) ($1,955)
CZ09 SCE/SCG $3,698 ($10) $2,358 ($4,304) ($2,027)
CZ10 SCE/SCG $3,698 $21 $2,191 ($3,628) ($1,354)
CZ10 SDGE $3,698 $255 $2,191 $2,127 $5,893
CZ11 PGE $3,789 $327 $15,614 $7,382 $23,549
CZ12 PGE $3,698 $236 $14,490 $5,437 $20,914
CZ12 SMUD/PGE $3,698 $772 $14,490 $17,439 $33,302
CZ13 PGE $3,789 $310 $10,164 $5,378 $16,558
CZ14 SCE/SCG $3,698 ($54) $11,876 ($3,161) $5,265
CZ14 SDGE $3,698 $263 $11,876 $4,651 $17,300
CZ15 SCE/SCG $3,881 $232 $393 ($35) $970
CZ16 PGE $5,071 $360 $34,043 $13,682 $50,953
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 48 2025/08/08
Table 31. [1978-1991] DFHP Existing Furnace CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $273 $20,184 $12,619 $36,168
CZ02 PGE $1,670 $12 $9,216 $4,240 $13,931
CZ03 PGE $1,178 $76 $8,952 $5,930 $14,293
CZ04 PGE $1,670 $23 $8,234 $3,777 $11,336
CZ04 CPAU $1,670 $0 $8,234 $786 $786
CZ05 PGE $1,424 $40 $7,070 $4,285 $11,150
CZ05 PGE/SCG $1,424 ($122) $7,070 ($400) $3,130
CZ06 SCE/SCG $1,424 ($21) $2,941 $952 $1,705
CZ07 SDGE $1,424 $9 $3,046 $1,631 $2,667
CZ08 SCE/SCG $1,916 ($45) $2,294 ($246) $693
CZ09 SCE/SCG $1,916 ($67) $3,127 ($563) $861
CZ10 SCE/SCG $1,916 ($50) $2,755 ($208) $1,125
CZ10 SDGE $1,916 $110 $2,755 $3,621 $5,975
CZ11 PGE $2,162 $155 $9,192 $6,617 $16,577
CZ12 PGE $1,916 $128 $9,753 $6,583 $16,702
CZ12 SMUD/PGE $1,916 $506 $9,753 $15,028 $25,418
CZ13 PGE $2,162 $135 $6,312 $5,245 $12,393
CZ14 SCE/SCG $1,916 ($128) $5,080 ($1,202) $2,261
CZ14 SDGE $1,916 $65 $5,080 $3,272 $8,344
CZ15 SCE/SCG $2,408 ($9) $50 ($504) ($107)
CZ16 PGE $2,243 $28 $14,397 $4,676 $19,471
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Table 32. [1978-1991] Standard Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 $146 $21,427 $8,941 $34,641
CZ02 PGE $652 ($47) $10,428 $3,076 $14,864
CZ03 PGE $514 $33 $8,999 $4,259 $12,882
CZ04 PGE $652 ($10) $9,984 $3,558 $14,338
CZ04 CPAU $652 $0 $9,984 $255 $255
CZ05 PGE $583 ($18) $7,290 $2,586 $10,196
CZ05 PGE/SCG $583 ($199) $7,290 ($2,659) $1,219
CZ06 SCE/SCG $583 ($24) $2,450 $215 $956
CZ07 SDGE $583 $6 $2,539 $898 $1,929
CZ08 SCE/SCG $721 ($57) $2,111 ($896) $57
CZ09 SCE/SCG $721 ($91) $3,022 ($1,455) $13
CZ10 SCE/SCG $721 ($71) $2,672 ($1,035) $390
CZ10 SDGE $721 $96 $2,672 $2,939 $5,474
CZ11 PGE $790 $74 $10,682 $5,209 $16,830
CZ12 PGE $721 $30 $10,747 $4,418 $15,794
CZ12 SMUD/PGE $721 $573 $10,747 $16,567 $28,332
CZ13 PGE $790 $72 $7,141 $4,003 $12,047
CZ14 SCE/SCG $721 ($224) $7,556 ($2,880) $2,930
CZ14 SDGE $721 $42 $7,556 $3,476 $12,809
CZ15 SCE/SCG $859 ($13) $71 ($639) ($219)
CZ16 PGE $2,095 ($25) $22,236 $7,529 $37,120
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 50 2025/08/08
Table 33. [1978-1991] High Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $339 $23,092 $8,460 $34,300
CZ02 PGE $3,606 $57 $9,242 $547 $12,409
CZ03 PGE $3,422 $111 $6,872 $1,228 $9,907
CZ04 PGE $3,606 $113 $9,114 $1,472 $12,340
CZ04 CPAU $3,606 $0 $9,114 ($4,595) ($4,595)
CZ05 PGE $3,514 $58 $4,859 ($544) $7,120
CZ05 PGE/SCG $3,514 ($124) $4,859 ($5,789) ($1,857)
CZ06 SCE/SCG $3,514 $5 ($1,546) ($3,963) ($3,196)
CZ07 SDGE $3,514 $39 ($1,407) ($3,143) ($2,122)
CZ08 SCE/SCG $3,698 $32 ($828) ($3,800) ($2,766)
CZ09 SCE/SCG $3,698 ($0) $232 ($4,336) ($2,784)
CZ10 SCE/SCG $3,698 $25 $82 ($3,803) ($2,290)
CZ10 SDGE $3,698 $184 $82 $124 $2,631
CZ11 PGE $3,789 $272 $10,685 $4,725 $16,488
CZ12 PGE $3,698 $191 $10,023 $3,148 $14,639
CZ12 SMUD/PGE $3,698 $573 $10,023 $11,680 $23,445
CZ13 PGE $3,789 $259 $6,612 $3,262 $11,441
CZ14 SCE/SCG $3,698 ($82) $7,697 ($4,629) $1,311
CZ14 SDGE $3,698 $195 $7,697 $2,166 $11,452
CZ15 SCE/SCG $3,881 $133 ($1,111) ($2,349) ($1,794)
CZ16 PGE $5,071 $245 $26,407 $8,685 $38,470
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6.3 Utility Rate Schedules

6.3.1 Pacific Gas & Electric
The following pages provide details on the PG&E electricity and natural gas tariffs applied in this study. Table 34 describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.03396/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between February 2024 and January 2025.

Table 34. PG&E Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ01 V
CZ02 X
CZ03 T
CZ04 X
CZ05 T
CZ11 R
CZ12 S
CZ13 R
CZ16 Y
The PG&E monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 35. The gas rates were developed based on the latest available gas rate for January 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from PG&E’s monthly residential tariffs between 2015 and 2024. 12-month curves were created from monthly gas rates for each of the ten years. The ten annual curves were then averaged to arrive at an average normalized annual curve. The baseline and excess transmission charges were found to be consistent over the course of a year and applied for the entire year based on January 2025 rates. The costs presented in Table 35 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months relative to the January rates.

Corresponding CARE tariffs reflect the 20 percent discount per the GL-1 tariff.

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Table 35. PG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.63 $3.15
February $2.64 $3.16
March $2.41 $2.94
April $2.24 $2.77
May $2.21 $2.74
June $2.23 $2.77
July $2.26 $2.80
August $2.36 $2.90
September $2.42 $2.98
October $2.52 $3.07
November $2.63 $3.17
December $2.70 $3.23
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6.3.2 Southern California Edison
The following pages provide details on the SCE electricity tariffs applied in this study. Table describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.01532/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between February 2024 and January 2025.

Table 36. SCE Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ06 6
CZ08 8
CZ09 9
CZ10 10
CZ14 14
CZ15 15
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6.3.3 Southern California Gas
Following are the SoCalGas natural gas tariffs applied in this study. Table 37 describes the baseline territories that were assumed for each climate zone.

Table 37. SoCalGas Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ05 2
CZ06 1
CZ08 1
CZ09 1
CZ10 1
CZ14 2
CZ15 1
The SoCalGas monthly gas rate in $/therm applied in this analysis is shown in Table 38. The gas rates were developed based on the latest available gas rate for January 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from SoCalGas’s monthly residential tariffs between 2015 and 2024. 12-month curves were created from monthly gas rates for each of the ten years. The ten annual curves were then averaged to arrive at an average normalized annual curve.

Long-term historical natural gas rate data was only available for SoCalGas’ procurement charges.8 The baseline and excess transmission charges were found to be consistent over the course of a year and applied for the entire year based on January 2025 rates. The costs presented in Table 38 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months relative to the January rates. CARE tariffs reflect the 20 percent discount per the GR tariff.
8 The SoCalGas procurement and transmission charges were obtained from the following site:
https://www.socalgas.com/for-your-business/energy-market-services/gas-prices RES2023.xlsx (live.com)
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Table 38. SoCalGas Monthly Gas Rate ($/therm)
Month Procurement
Charge
Transportation Charge Total Charge
Baseline Excess Baseline Excess
January $0.45 $0.98 $1.40 $1.43 $1.85
February $0.31 $0.98 $1.40 $1.29 $1.71
March $0.26 $0.98 $1.40 $1.24 $1.66
April $0.21 $0.98 $1.40 $1.19 $1.62
May $0.22 $0.98 $1.40 $1.20 $1.62
June $0.25 $0.98 $1.40 $1.23 $1.65
July $0.26 $0.98 $1.40 $1.24 $1.66
August $0.29 $0.98 $1.40 $1.27 $1.70
September $0.27 $0.98 $1.40 $1.25 $1.67
October $0.26 $0.98 $1.40 $1.24 $1.66
November $0.29 $0.98 $1.40 $1.27 $1.69
December $0.33 $0.98 $1.40 $1.31 $1.73

6.3.4 San Diego Gas & Electric
Following are the SDG&E electricity and natural gas tariffs applied in this study. Table 39 describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.01837/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between February 2024 and January 2025.

Table 39. SDG&E Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ07 Coastal
CZ10 Inland
CZ14 Mountain
The SDG&E monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 40. The gas rates were developed based on the latest available gas rate for January 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from SDG&E’s monthly residential tariffs between 2015 and 2024. 12-month curves were created from monthly gas rates for each of the ten years. The ten annual curves were then averaged to arrive at an average normalized annual curve. The baseline and excess transmission charges were found to be consistent over the course of a year and applied for the entire year based on January 2025 rates. The costs presented in Table 40 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months relative to the January rates.

CARE tariffs reflect the 20 percent discount per the G-CARE tariff.

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Table 40. SDG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.07 $2.36
February $2.01 $2.30
March $1.93 $2.22
April $1.86 $2.16
May $1.88 $2.18
June $1.94 $2.24
July $1.95 $2.25
August $2.02 $2.32
September $1.97 $2.27
October $1.94 $2.24
November $1.97 $2.27
December $2.07 $2.37
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6.3.5 City of Palo Alto Utilities
Following are the CPAU electricity and natural gas tariffs applied in this study. The CPAU monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 41. The gas rates were developed based on the latest available gas rate for January 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from CPAU’s monthly residential tariffs between 2018 and 2024. 12-month curves were created from monthly gas rates for each of the seven years. The seven annual curves were then averaged to arrive at an average normalized annual curve. The baseline and excess transmission charges were found to be consistent over the course of a year and applied for the entire year based on January 2025 rates. The costs presented in Table 41 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point and then using the normalized curve to estimate the cost for the remaining months relative to the January rates. The monthly service charge applied was $16.93 per month per the January 2025 G-1 tariff.

Table 41. CPAU Monthly Gas Rate ($/therm)
Month G1 Volumetric
Total Baseline
G1 Volumetric
Total Excess
January $1.74 $3.02
February $1.33 $2.53
March $1.24 $2.43
April $1.21 $2.39
May $1.21 $2.39
June $1.23 $2.42
July $1.31 $2.64
August $1.37 $2.71
September $1.36 $2.71
October $1.38 $2.72
November $1.45 $2.80
December $1.57 $2.96
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6.3.6 Sacramento Municipal Utilities District (Electric Only) Following are the SMUD electricity tariffs applied in this study. The rates effective January 2025 were used.

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6.3.7 Fuel Escalation Assumptions
The average annual escalation rates in Table 42 and Table 43 were used in this study. Table 42 rates are based on assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates through the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 TDV factors. No data was available to estimate electricity escalation rates for CPAU and SMUD, therefore electricity escalation rates for PG&E and statewide natural gas escalation rates were applied. Table 43 rates are based on the escalation rate assumptions within the 2025 LSC factors from 2026 through 2055.9 These rates were developed for electricity use statewide (not utility-specific) and assume steep increases in gas rates in the latter half of the analysis period. Data was not available for the year 2026 and so the CPUC En Banc assumptions were applied for those years using the average rate across the three IOUs for statewide electricity escalation.
9https://www.energy.ca.gov/files/2025-energy-code-hourly-factors. (California Energy Commission, 2023). Actual escalation factors were provided by consultants E3.

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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 77 2025/08/08
Table 42. Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Electric Residential Average Rate
(%/year, real)

PG&E SCE SDG&E
2026 4.6% 1.8% 1.6% 2.8%
2027 4.6% 1.8% 1.6% 2.8%
2028 4.6% 1.8% 1.6% 2.8%
2029 4.6% 1.8% 1.6% 2.8%
2030 4.6% 1.8% 1.6% 2.8%
2031 2.0% 0.6% 0.6% 0.6%
2032 2.4% 0.6% 0.6% 0.6%
2033 2.1% 0.6% 0.6% 0.6%
2034 1.9% 0.6% 0.6% 0.6%
2035 1.9% 0.6% 0.6% 0.6%
2036 1.8% 0.6% 0.6% 0.6%
2037 1.7% 0.6% 0.6% 0.6%
2038 1.6% 0.6% 0.6% 0.6%
2039 2.1% 0.6% 0.6% 0.6%
2040 1.6% 0.6% 0.6% 0.6%
2041 2.2% 0.6% 0.6% 0.6%
2042 2.2% 0.6% 0.6% 0.6%
2043 2.3% 0.6% 0.6% 0.6%
2044 2.4% 0.6% 0.6% 0.6%
2045 2.5% 0.6% 0.6% 0.6%
2046 1.5% 0.6% 0.6% 0.6%
2047 1.3% 0.6% 0.6% 0.6%
2048 1.6% 0.6% 0.6% 0.6%
2049 1.3% 0.6% 0.6% 0.6%
2050 1.5% 0.6% 0.6% 0.6%
2051 1.8% 0.6% 0.6% 0.6%
2052 1.8% 0.6% 0.6% 0.6%
2053 1.8% 0.6% 0.6% 0.6%
2054 1.8% 0.6% 0.6% 0.6%
2055 1.8% 0.6% 0.6% 0.6%
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 78 2025/08/08
Table 43. Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis Year
Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Statewide
Electricity
Residential
Average Rate
(%/year, real)
2026 4.6% 2.1%
2027 4.2% 0.6%
2028 3.2% 1.9%
2029 3.6% 1.6%
2030 6.6% 1.3%
2031 6.7% 1.0%
2032 7.7% 1.2%
2033 8.2% 1.1%
2034 8.2% 1.1%
2035 8.2% 0.9%
2036 8.2% 1.1%
2037 8.2% 1.1%
2038 8.2% 1.0%
2039 8.2% 1.1%
2040 8.2% 1.1%
2041 8.2% 1.1%
2042 8.2% 1.1%
2043 8.2% 1.1%
2044 8.2% 1.1%
2045 8.2% 1.1%
2046 8.2% 1.1%
2047 3.1% 1.1%
2048 -0.5% 1.1%
2049 -0.6% 1.1%
2050 -0.5% 1.1%
2051 -0.6% 1.1%
2052 -0.6% 1.1%
2053 -0.6% 1.1%
2054 -0.6% 1.1%
2055 -0.6% 1.1%
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 79 2025/08/08
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ITEM 6A ATTACHMENT 3

RESOLUTION NUMBER XX-XX

RESOLUTION OF THE TOWN OF LOS ALTOS HILLS CONFIRMING CITY POLICY ON

GREENHOUSE GAS EMISSION REDUCTIONS EMANATING FROM BUILDINGS WHEREAS, Section 17958(b) of the California Health and Safety Code generally restricts local agencies from adopting changes applicable to residential units in the provisions adopted pursuant to Section 17922 and published in the California Building Standards Code unless the changes meet an exception; and
WHEREAS, Section 17958 (b) (5) of the California Health and Safety Code specifies that local changes applicable to residential units in the provisions adopted pursuant to Section 17922 and published in the California Building Standards Code may be adopted if the changes or modifications are necessary to implement a local code amendment that is adopted to align with a general plan approved on or before June 10, 2025, and that permits mixed-fuel residential construction consistent with federal law while also incentivizing all-electric construction as part of an adopted greenhouse gas emissions reduction strategy; and WHEREAS, the Town of Los Altos Hills adopted a General Plan on April 26, 2007; and WHEREAS, Goal 8 of the Town of Los Altos Hills General Plan is to promote energy-efficient construction; and
WHEREAS, the adopted Town of Los Altos Hills General Plan specifies that other measures may be proposed by the Town’s Environmental Initiatives Committee; and WHEREAS, the Town of Los Altos Hills Environmental Initiatives Committee presented a Climate Action Plan to the Town Council of the Town of Los Altos Hills, which was adopted by the Town Council on October 21, 2021, that calls for the reduction in natural gas use through electrifying homes as a major measure to reduce greenhouse gas emissions; and WHEREAS, the Town of Los Altos Hills Environmental Initiatives Committee has proposed and recommended that the Los Altos Hills Town Council adopt an ordinance that requires new and replaced air conditioning units to be capable of both heating and cooling; and WHEREAS, buildings constitute a significant source of greenhouse gas emissions in the Town of Los Altos Hills, and taking reasonable regulatory actions to reduce greenhouse gas emissions from buildings is an important component of the Town’s strategy to reduce greenhouse gas emissions; and
WHEREAS, the Town intends to adopt ordinances making changes to the provisions adopted pursuant to Section 17922 and published in the California Building Standards Code for residential units that require new and replaced air conditioning units to be capable of both heating and cooling.

ITEM 6A ATTACHMENT 4

NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Los Altos Hills that the Town Council finds that:

1. As described in the Town’s Climate Action Plan, it is the Town’s policy to reduce greenhouse gas emissions, including by reducing greenhouse gas emissions from buildings.

2. The Town’s proposed changes to the provisions adopted pursuant to Section 17922 and published in the California Building Standards Code for residential units are a part of the Town’s adopted greenhouse gas emissions reduction strategy in its Climate Action Plan.

PASSED AND ADOPTED at a regular meeting of the City Council held on the 20th day of November 2025, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

BY: _______________________________
Kavita Tankha, Mayor
ATTEST:
______________________________
Arika Miller, City Clerk
ITEM 6A ATTACHMENT 4

From: Anand Ranganathan
To: City Council
Subject: Comment on #6A
Date: Wednesday, October 15, 2025 9:48:58 PM
Dear Council
Please approve the modest updates to our reach codes at your next meeting. As presented to you at your last meeting our town is at great risk of not meeting the very conservative green house gas emission goals that we set for ourselves five years ago. These updates will slightly bend the curve and every little bit helps.

Thank you
Anand
ITEM 6A, Supplement 1

TOWN OF LOS ALTOS HILLS October 16, 2025
Staff Report to the City Council
SUBJECT: CONSIDERATION OF A RESOLUTION ADOPTING AN
AMENDMENT TO THE GENERAL PLAN LAND USE ELEMENT;

WAIVER OF READING AND INTRODUCTION OF AN ORDINANCE
MAKING AMENDMENTS TO CHAPTER 1 (ZONING) OF TITLE 10
(ZONING AND SITE DEVELOPMENT) OF THE LOS ALTOS HILLS

MUNICIPAL CODE TO REZONE CERTAIN PARCELS IDENTIFIED
IN THE 2023–2031 HOUSING ELEMENT FROM RESIDENTIALAGRICULTURAL (R-A) TO MULTI-FAMILY (MF), MULTI-FAMILY

OVERLAY (MFO), AND FLOATING MULTI-FAMILY OVERLAY
(FMFO) ZONES AND TO ESTABLISH MULTI-FAMILY
DEVELOPMENT STANDARDS; AND A RESOLUTION APPROVING

OBJECTIVE DESIGN STANDARDS FOR MULTI-FAMILY
DEVELOPMENTS.

FROM: Jay Bradford, Community Development Director
APPROVED: Peter Pirnejad, City Manager
RECOMMENDATION:

Staff recommends that the City Council take the following actions:

1. Adopt a resolution amending the General Plan Land Use Element to ensure consistency with the 2023–2031 Housing Element and multifamily rezoning (Attachment 1).

2. Waive reading and introduce an ordinance amending Chapter 1 (Zoning) of Title 10 of the Los Altos Hills Municipal Code to rezone parcels identified in the certified Housing Element from residential-agricultural (R-A) to multi-family (MF), multi-family overlay (MFO), and floating multi-family overlay (FMFO) and to establish multifamily development standards (Attachment 2).

3. Adopt a resolution approving Objective Design Standards (ODS) for multifamily development (Attachment 3).

BACKGROUND:

Housing Element and Rezoning Requirements
As previously presented to the Planning Commission and City Council, California Housing Element Law (Government Code section 65580 et seq.) requires each jurisdiction to identify in their housing elements and have sufficient land zoned to accommodate their Regional Housing Need Allocation (“RHNA”) share by unit number and also by income category, including ITEM 7A STAFF REPORT

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Multifamily Zoning, Objective Design Standards, & Land Use Element Amendment October 16, 2025
extremely low-, very low- and low-income units, during an eight-year planning period. There are also additional requirements in the Housing Element Law, including Government Code sections 65583, 65583.2, and 65863, that govern the required rezoning, minimum density, and maintenance of adequate sites to accommodate RHNA throughout the planning period.

The RHNA obligation for the Town of Los Altos Hills (“Town”) during the 2023-2031 planning period is 489 units including 197 extremely low-, very low- and low-income units. Consistent with Housing Element Law, if a site is developed below the density projected in the Housing Element, or at a different income than projected, the Town must have adequate sites available to accommodate the remaining balance of the RHNA, or it must identify and rezone new sites that can accommodate the remaining need. This is commonly referred to as the “no-net-loss” rule. For these reasons, the Housing Element included a buffer of 15 percent above RHNA in each income category, for a total planned capacity of 563 units with 227 lower (low and very low) income units in its site inventory.

The Town adopted its 2023-2031 Housing Element as a part of the General Plan in January 2023.

It has since been engaged in numerous efforts to implement the goals and programs set forth in the Housing Element to facilitate housing production and working towards meeting its RHNA goals including the no-net-less buffer. As a part of its RHNA strategy, the Housing Element analyzed and identified three sites in the Town, identified as portions of Foothill College (“Foothill Site”), portions of St. Nicholas School (“St. Nicholas Site”), and several parcels located in northwest Los Altos Hills along Arastradero Road that collectively are known as the “Twin Oaks” property (“Twin Oaks Site”), to be rezoned from their current Residential-Agricultural (R-A) zoning district to respective Multi-Family and Multi-Family Overlay zones to facilitate multi-family development.

The Housing Element analyzed rezoning approaches for all three sites, including identifying portions of the properties with highest development potentials, taking steep slopes, easements, and other site constraints into account, establishing development standards to facilitate housing construction, and considering realistic development capacities when calculating maximum unit yield projections. The Housing Element projected an anticipated yield of 210 units for the Foothill Site, 75 units for the St. Nichlas Site, and 92 units for the Twin Oaks Site.

Program A-1 of the Town’s Housing Element sets forth the schedule of action to rezone these inventory sites by January 30, 2026. It is imperative that the Town meet this rezoning deadline to maintain its Housing Element certification and its ability to make progress in meeting RHNA goals.

Relatedly, Programs A-4 and A-5 also require the Town to (1) comply with Government Code section 65583.2(h) and (i) to permit by-right housing developments with 20 percent units affordable to lower-income on sites “reused” from a prior planning cycle housing element site inventory; and (2) establish minimum densities for lower-income developments consistent with Government Code section 65583.(2)(h), respectively.

ITEM 7A STAFF REPORT

City Council
Multifamily Zoning, Objective Design Standards, & Land Use Element Amendment October 16, 2025
In relation to assigning RHNA obligations, state housing laws have also implemented a number of requirements to streamline housing production and development review timeframes, in order to facilitate the increase in housing supply. For example, the Housing Crisis Act of 2019 (Government Code section 66300 et seq.) prohibits local governments from imposing or enforcing design standards established on or after January 1, 2020, that are not objective standards. The Housing Accountability Act (Government Code section 65589.5) also limit local authority to disapprove a housing development or impose conditions that render the project infeasible if the housing development project complies with applicable objective standards and regulations. As defined by statute, “objective standards” are those that involve no personal or subjective judgment by a public official and being uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both a development applicant or proponent and the public official. The Town’s 2023-2031 Housing Element included Program B-4 to adopt objective design and development standards to promote certainty in the planning approval process and streamline housing production.

In response to the rezoning deadline and these legislative mandates, the Town has prepared (1) an Ordinance to rezone the Foothill and St. Nicholas Sites to multi-family overlay zones, and the Twin Oaks Site to a multi-family zone, and to establish zoning and development standards for these new land use districts (“MF Rezoning”) (Exhibit A to Attachment 2); (2) a Land Use Element Amendment to align that part of the General Plan with the proposed multi-family zoning districts and projected multi-family development (“LUE Amendment”) (Exhibit A to Attachment 1); and (3) a set of Objective Design Standards that would apply to multi-family developments in the new multi-family zones (“MF ODS”) (Exhibit A to Attachment 3).

DISCUSSION
The proposed LUE Amendment, MF Rezoning, and MF ODS before the City Council are the result of a year-long process of study, hearings, and public engagement. Beginning in early 2025, the Planning Commission held a series of meetings to refine both the zoning framework and the associated design standards. These discussions addressed central issues such as density ranges, net buildable area calculations, slope thresholds, circulation and parking requirements, and landscaping standards. Consultant analysis, public input, and legal guidance all shaped successive drafts of the zoning ordinance and ODS.

The City Council also guided the effort at critical points. In March 2025, the Council reviewed initial zoning concepts and directed staff to concentrate higher density on flatter areas of the Twin Oaks site, while ensuring Land Use Element amendments were advanced in parallel with zoning changes. In April 2025, the Ad Hoc Housing Element Committee confirmed that multifamily rezoning and ODS would be finalized through the Planning Commission process before returning to Council for action (Attachments 13–14).

At the same time, the state legislative landscape evolved. In 2025, Senate Bill 131 (SB 131) was passed and signed into law as a part of the budget trailer bills, amending the Public Resources Code to provide a new statutory exemption under the California Environmental Quality Act (CEQA) for Housing Element implementation measures. The statutory exemption under SB 131 ITEM 7A STAFF REPORT

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Multifamily Zoning, Objective Design Standards, & Land Use Element Amendment October 16, 2025
took effect immediately and reflects the Legislature’s intent deeming housing element rezonings as actions that do not have significant effects on the environment and thus exempt from additional analysis under CEQA. Because the proposed legislative actions qualify for this statutory exemption, as explained more fully in the Environmental Review section below, the Town has determined that it may utilize this exemption as well as the exemption under CEQA Guidelines 15061(b)(3), instead of preparing an environmental impact report.

Planning Commission Review
From February through September 2025, the Planning Commission conducted an extended series of study sessions, special meetings, and hearings to refine the multifamily zoning framework and Objective Design Standards. Public workshops and consultant presentations, including those by Michael Baker International, helped frame the discussion within both the General Plan and state housing mandates.

Key milestones included:
• February 26, 2025 (Special Meeting): The Commission discussed the proposed R-20 framework, including density ranges, net buildable area calculations, and the interaction of state density bonus law with local zoning. Commissioners requested legal and consultant input on the feasibility of development at constrained sites (Attachment 5. • March 12, 2025 (Special Meeting): The Commission reviewed initial drafts of Objective Design Standards (ODS), focusing on measurable requirements for building form, setbacks, slope considerations, and site planning. The Commission emphasized the need to distinguish between zoning regulations and design standards while establishing clear application requirements (Attachment 6).
• May 1, 2025 (Regular Meeting): Michael Baker International presented draft guiding principles and a framework for integrating multifamily zoning with ODS. Commissioners and the public provided input on architectural quality, landscaping requirements, and the relationship between multifamily zoning and General Plan policies (Attachment 7). • June 5, 2025 (Regular Meeting): Staff returned with revisions incorporating prior comments, including adjustments to density at the Twin Oaks site and refinements to development standards to reduce overconcentration of units on constrained terrain (Attachment 8).
• July 10, 2025 (Special Meeting): The Commission reviewed Version 3 of the draft ordinance and ODS, including a detailed comment matrix. Refinements addressed slope thresholds, buildable areas, and site-specific constraints (Attachment 9). • July 24, 2025 (Special Meeting): Version 4 of the ordinance and standards were presented, along with draft General Plan Land Use Element amendments. This version introduced ITEM 7A STAFF REPORT

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overlay zoning for institutional sites such as St. Nicholas School and Foothill College (Attachment 10).
• August 7, 2025 (Regular Meeting): The Commission reviewed Version 5, incorporating extensive public and commissioner feedback, particularly on landscaping, parking, and circulation design (Attachment 11).
• September 4, 2025 (Regular Meeting): The Commission held a noticed public hearing and adopted a resolution recommending that the City Council approve the multifamily rezoning ordinance, Objective Design Standards, and Land Use Element amendments. This action concluded the Commission’s work and transmitted the final draft package to the Council (Attachment 12).

City Council Review
The City Council also provided direction at key junctures:
• March 20, 2025: The Council reviewed Housing Element amendments and multifamily zoning concepts. Council directed staff to focus higher density on flatter portions of the Twin Oaks site and to proceed with zoning and Land Use Element amendments (Attachment 13).
• May 15, 2025: The Council received an update from the Ad Hoc Housing Element Committee confirming that multifamily zoning and ODS would be refined through the Planning Commission before being returned for final Council action (Attachment 14).

The actions before the Council today represent the culmination of this iterative work and the integration of legislative, environmental, and local planning requirements. Together, the multifamily rezoning, Land Use Element amendments, and adoption of Objective Design Standards directly implement Housing Element Programs A-1, A-4, A-5 and B-4, which requires adoption of multifamily zoning by January 31, 2026 and comply with the requirements under Government Code section 65583.2, as well as adopt objective standards.

The subsections below provide an overview of the MF Rezoning, LUE Amendment, and MF ODS.

MF Rezoning Ordinance
The proposed rezoning ordinance contains the following categories of legislative actions, as described more fully in Attachment 2 and Exhibit A to Attachment 2.

Rezoning of Identified Sites: Rezoning applies to the Twin Oaks Site based on contiguous buildable area, St. Nicholas Site, and the Foothill Site, implementing Housing Element commitments and consistent with Planning Commission recommendations.

Creation of MF, MFO, and FMFO Zones: Establishes a multifamily zoning district for the Twin Oaks site meeting minimum density requirements, and separate overlay districts for the Foothill ITEM 7A STAFF REPORT

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and St. Nicholas sites to provide flexibility for institutional properties and future multi-family development uses.

Creation of Multi-Family Development Standards: the rezoning ordinance establishes development standards for the proposed multi-family zoning districts. Main components of these standards are highlighted as follows:
• Specifying permitted primary and accessory uses, conditional uses, and prohibited uses in the new multi-family zones.
• Allow multifamily developments to be “by right” (i.e. no discretionary review required) if the development proposes at least 20 percent affordable to lower income households during the 2023-2031 planning period. This is a requirement under Government Code section 65583.2(h) and (i).
• Establish definitions for various terms and uses in the multi-family zoning districts. • Establish a minimum density of 20 dwelling units per acre and maximum density of 24 dwelling units per acre in the multi-family zoning districts. This is consistent with Gov.

Code section 65583.2 and the 2023-2031 Housing Element to produce the projected unit yields on the inventory sites.
• Establish a minimum lot size of 3.5 acres in the multi-family zones. • Establish developments standards such as unit size, unit mix, front/side/rear setbacks, structure height, private and common recreation space, paths and walkways, and preservation of steep hillsides/ridgelines/hilltops/creeks. • Amending the Town’s zoning map to include multi-family zoning designations.

Land Use Element Amendment
The revisions to the Land Use Element is to include multi-family designation and update the land use diagram to reflect those permitted uses. Various development standards, policies and narratives are also revised to incorporate multi-family designation and description of uses. These updates align land use designations with rezoning actions, ensuring consistency across the General Plan, Housing Element, and Zoning Code.

Multi-Family Objective Design Standards
The proposed ODS provide standards that do not require subjective exercise of discretion and meet the definition of “objective” under state law (i.e. Gov. Code section 65589.5(h)). Standards include:
• Private and common recreation space
• Parking, access and circulation
• Grading and retaining wall design standards
• Building orientation, form and massing, materials and colors, windows and doors, and roof design
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• Landscape, screening, fencing and walls
• Lighting and signage
• Utility and service area location and screening
• To further streamline and incentivize development, the ODS provides for a local process for applicants to seek exceptions for up to five standards, to be approved by the Planning Commission.

Together, these standards ensure high-quality design and compatibility with neighborhood character while complying with state law requirements prohibiting subjective review with respect to residential developments. The ODS is intended to serve as a standalone document that would be adopted, and later amended as desired/necessary, by resolution of the City Council. The ODS will apply to multi-family development projects once adopted. The proposed MF Rezoning also requires compliance with the ODS under section 10-1.1603 in Exhibit A of Attachment 2.

Consistency with 2023-2031 Housing Element
It is important to note that the proposed rezoning, including the designation of 20-24 dwelling units per acre described above, is consistent with the 2023-2031 Housing Element and its goals, policies, and programs to accommodate projected unit yields as a part of the Town’s strategy to meet its RHNA obligation. Specifically, the Housing Element analyzed rezoning approaches for the Twin Oaks, Foothill, and St. Nicholas sites, including identifying portions of the properties with highest development potentials, taking steep slopes, easements, and other site constraints into account, establishing development standards to facilitate housing construction, and considering realistic development capacities when calculating maximum unit yield projections. The Housing Element intends that rezoning would be based on and incorporate these site constraints and developable areas.

Consequently, the Housing Element projected an anticipated yield of 210 units for the Foothill Site, 75 units for the St. Nicholas Site, and 92 units for the Twin Oaks Site. Program A-1 of the Housing Element sets forth a schedule of actions to create multi-family infill overlay zones on portions of the institutional Foothill College and St. Nicholas School Sites, and to rezone the Twin Oaks Site to a new multi-family zoning district, all at a minimum density of 20 dwelling units per acre and at a maximum density appropriate to facilitate development to achieve these projected yields. As such, the proposed rezoning currently before the City Council is consistent with the approach already identified in the Housing Element.

While the Town is separately pursuing an amendment to the Housing Element, such amendment is intended to provide clarification to the rezoning components and better align these land use documents. The proposed amendment is not a change to the Town’s rezoning approach or projected yields currently identified in the Housing Element, and is not a reduction in projected units or downzoning. The Housing Element already contemplated that rezoning these inventory sites would take into account various site constraints and be based on developable areas to achieve the projected unit yields. The proposed rezoning continues to achieve this objective independent of the housing element amendment proposal. Adopting the MF Rezoning Ordinance and the LUE ITEM 7A STAFF REPORT

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Multifamily Zoning, Objective Design Standards, & Land Use Element Amendment October 16, 2025
Amendment does not create any inconsistencies between those documents and the Housing Element.

Other Supporting Materials
In addition to the milestone meeting reports, the attachments provide staff analyses, public comment summaries, and consultant input that informed the drafting of the ordinance, General Plan amendments, and ODS. Collectively, these materials demonstrate that the rezoning program has been vetted through multiple iterations and is ready for Council consideration. Adoption of these measures is essential to maintain certification of the Town’s Housing Element, preserve local control over land use decisions, and avoid state enforcement actions. Collectively, they provide a comprehensive framework for accommodating multifamily housing while protecting environmental resources, respecting site constraints, and preserving community character.

ENVIRONMENTAL REVIEW:

The proposed MR Rezoning, LUE Amendment, and MF ODS are evaluated to be exempt from the California Environmental Quality Act (CEQA) under Public Resources Code (PRC) §21080.085 and CEQA Guidelines §15061(b)(3). s. First, PRC §21080.085, which recently went into effect on June 30, 2025 through SB 131, created a new statutory exemption for a rezoning that “implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code” unless the rezoning allows for the construction of an oil or gas distribution center, or if it rezones “natural and protected lands” defined by statute. The Town, with assistance from Michael Baker International, prepared an SB 131 Exemption Report dated October 2025 (Attachment 4) analyzing eligibility criteria under section 21080.085. As explained in that report, the proposed MF Rezoning qualifies for the statutory exemption under CEQA because it is a rezoning implementing the Housing Element and Gov. Code section 65583, and does not otherwise allow oil and gas distribution centers or rezoning of natural and protected lands. Similarly, the LUE Amendment and the MF ODS are both necessary to, and support the rezoning action as they provide consistency across land use documents and establish regulations that would implement multi-family zoning designations and uses. Therefore, the proposed legislative actions qualify for the statutory exemption.

Further, the proposed LUE Amendment and MF ODS also qualify for an exemption under CEQA Guidelines section 15061(b)(3), because it can be seen with certainty that there is no possibility that the proposed LUE Amendment and ODS may have a significant impact on the environment.

The proposed LUE Amendment only involve revisions for conformance with the Town’s certified 2023-2031 Housing Element and multi-family rezoning, as required by state law. The amendment does not approve any development projects, or issue any entitlements, but are regulatory actions taken by the Town for internal horizontal general plan consistency. The proposed Objective Design Standards would only introduce objective standards and be in compliance with state housing laws including the Housing Crisis Act of 2019 and the Housing Accountability Act requiring the use of objective standards for housing development reviews. The proposed Multi-Family ODS would not alter any land use classifications or approve any particular project. They also would not impact the physical allowances for development projects. Both actions are a part of and support the Town’s rezoning action under the Housing Element, which is statutorily exempt from CEQA. As such, it ITEM 7A STAFF REPORT

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can be seen with certainty that the proposed LUE Amendment and MF ODS do not have a significant impact on the environment.
2024-25 CITY COUNCIL WORK PLAN:

This LUE Amendment, MF Rezoning, and MF ODS is consistent with the Town’s adopted Workplan, which categorizes the action under Quality of Life / Community Character. The Workplan directs completion of multifamily rezoning and Objective Design Standards under Programs A-1, A-4, A-5 and B-4, with adoption by January 31, 2026 to ensure compliance with state law and maintain certification by HCD.

FISCAL IMPACT:

No direct fiscal impact. Costs for staff and consultant work have been budgeted in FY 2024–25 and FY 2025–26.

ATTACHMENTS

1. Resolution Adopting an Amendment to the Land Use Element of the General Plan

2. Ordinance Amending Title 10 of the Municipal Code to Create Multi-Family Zoning Districts

3. Resolution Adopting Objective Standards for Multi-Family Zoning Districts

4. SB 131 Exemption Report dated October 2025

5. Planning Commission Staff Report – February 26, 2025 (Multifamily Zoning Framework)

6. Planning Commission Staff Report – March 12, 2025 (Objective Design Standards)

7. Planning Commission Staff Report – May 1, 2025 (Study Session with Michael Baker International)

8. Planning Commission Staff Report – June 5, 2025 (Revisions to Draft Standards)

9. Planning Commission Staff Report – July 10, 2025 (Version 3 Standards)

10. Planning Commission Staff Report – July 24, 2025 (Version 4 Standards; Land Use Amendments; Overlay Mapping)

11. Planning Commission Staff Report – August 7, 2025 (Version 5 Standards; Public Input)

12. Planning Commission Staff Report – September 4, 2025 (Public Hearing & Recommendation)
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Multifamily Zoning, Objective Design Standards, & Land Use Element Amendment October 16, 2025

13. City Council Staff Report – March 20, 2025 (Housing Element Amendment Discussion)

14. City Council Meeting Minutes – May 15, 2025 (Ad Hoc Housing Element Committee Update)
ITEM 7A STAFF REPORT

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF LOS ALTOS HILLS

ADOPTING AN AMENDMENT TO THE LAND USE ELEMENT OF THE GENERAL

PLAN TO INCORPORATE MULTI-FAMILY LAND USE DESIGNATIONS, ZONING,

AND RELATED POLICIES AND STANDARDS
WHEREAS, a severe housing crisis exists in the State of California with the demand for housing outstripping supply; and
WHEREAS, California Housing Element Law (Government Code section 65580 et seq.) requires each jurisdiction to have sufficient land zoned to accommodate their fair share of the regional housing need by unit number and also by income category, including extremely low-, very low- and low-income units, during an eight-year planning period. This obligation, known as the Regional Housing Need Allocation (“RHNA”) is determined by the State Department of Housing and Community Development and allocated by the Association of Bay Area Governments in the Bay Area; and
WHEREAS, Government Code sections 65583 and 65583.2 require cities to include in their housing elements a program setting forth a schedule of actions during the planning period to, among other things, identify and rezone as necessary to make sites available during the planning period with appropriate zoning and development standards, and to maintain an inventory of sites that can realistically accommodate a portion of RHNA units, including lower-income housing; and WHEREAS, Government Code section 65863 (commonly referred to as “No Net Loss Law”) also requires cities to ensure that their housing element site inventory and program to make sites available and able to accommodate, at all times throughout the planning period, the remaining unmet RHNA share from the current and prior planning period; and WHEREAS, the adopted and state-certified 2023-2031 Housing Element (“Housing Element”) of the Town of Los Altos Hills (“Town”) contains numerous goals, policies and programs to meet its RHNA obligations, including an inventory of sites in the Town suitable to accommodate housing units at various income levels under RHNA, programs to rezone such sites to multi-family zoning districts to accommodate RHNA units and to ensure that parcels would be developed at appropriate minimum densities, and to streamline residential development projects and promote housing opportunities and mobility; and
WHEREAS, the Town’s RHNA obligation for the 2023-2031 planning period is 489 units including 197 extremely low-, very low- and low-income units. Consistent with Housing Element Law and No Net Loss Law, if a site is developed below the density projected in the Housing Element, or at a different income than projected, the Town must have adequate sites available to accommodate the remaining balance of the RHNA, or it must identify and rezone new sites that can accommodate the remaining need. For these reasons, the Housing Element includes a buffer of 15 percent above the RHNA in each income category, for a total planned capacity of 563 units with 227 lower (low and very low) income units in its site inventory; and WHEREAS, as required by Government Code section 65583 and as a part of the Town’s housing strategies to meet RHNA, the Housing Element analyzed and identified three sites in the ITEM 7A ATTACHMENT 1

Town, identified as portions of Foothill College (“Foothill Site”), portions of St. Nicholas School (“St. Nicholas Site”), and several parcels located in northwest Los Altos Hills along Arastradero Road that collectively are known as the “Twin Oaks” property (“Twin Oaks Site”), to be rezoned from their current Residential-Agricultural (R-A) zoning district to respective Multi-Family and Multi-Family Overlay zones to facilitate multi-family development to accommodate a portion of the RHNA obligations including the No-Net-Loss buffer. The Housing Element provided extensive site-specific evaluation of parcel characteristics, development capacity and potential, constraints, and abilities to accommodate the RHNA by unit count and income levels; and WHEREAS, the Housing Element also analyzed rezoning approaches for all three sites, including identifying portions of the properties with highest development potentials, taking steep slopes, easements, and other site constraints into account, establishing development standards to facilitate housing construction, and considering realistic development capacities when calculating maximum unit yield projections. The Housing Element projected an anticipated yield of 210 units for the Foothill Site, 75 units for the St. Nichlas Site, and 92 units for the Twin Oaks Site (collectively, the “Projected Yields”); and
WHEREAS, Program A-1 of the Housing Element sets forth a schedule of actions to create multi-family infill overlay zones on portions of the institutional Foothill College and St. Nicholas School Sites, and to rezone the Twin Oaks Site to a new multi-family zoning district, all at a minimum density of 20 dwelling units per acre and at a maximum density appropriate to facilitate development to achieve the Projected Yields and meet portions of the Town’s RHNA obligations, as required by Housing Element Law including Government Code section 65583.2; and WHEREAS, Programs A-4 and A-5 also require the Town to (1) comply with Government Code section 65583.2(h) and (i) to permit by-right housing developments with 20 percent units affordable to lower-income on sites “reused” from a prior planning cycle housing element site inventory; and (2) establish minimum densities for lower-income developments consistent with Government Code section 65583.(2)(h), respectively; and WHEREAS, the rezoning required by Program A-1 must be completed by January 31, 2026, and the related actions required by Programs A-4 and A-5 are required to be completed by Q1 2026; and
WHEREAS, to effectuate new multi-family land use designations, zoning, and related policies and standards, and to provide internal and horizontal consistency between the governing land use documents of the Town, the Town has prepared certain amendments to the Land Use Element of its General Plan, consistent with the introduction of multi-family zoning to Los Altos Hills, attached hereto as Exhibit A (LUE Amendment”); and WHEREAS, by separate ordinance and resolution, respectively, the Town has prepared (1) a set of amendments to Title 10 of the Los Altos Hills Municipal Code pertaining to zoning and site development regulations, to create Multi-Family Overlay and Multi-Family Zoning districts and establish related zoning and development standards to implement Programs A-1, A-4, and A5 (the “Multi-Family Rezoning Ordinance”), and (2) a set of Objective Design Standards for MultiFamily Zoning Districts (the “Multi-Family ODS”), in compliance with state housing laws ITEM 7A ATTACHMENT 1

requiring use of objective review standards and with Program B-4 of the Housing Element, and in furtherance of its goals to facilitate production of housing and meet RHNA obligations; and WHEREAS, the Town provided extensive public outreach, notice and participation opportunities for the preparation and proposed adoption of the Multi-Family Rezoning Ordinance, LUE Amendment, and the Multi-Family ODS. The Los Altos Hills Planning Commission also conducted duly noticed public study sessions to review these legislative amendments and ODS at its May 1, June 5, July 10, July 24, and August 7, 2025 public meetings to provide additional public comment and participation opportunities; and
WHEREAS, under the California Environmental Quality Act (“CEQA”), a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code is statutorily exempt from the requirements of CEQA pursuant to Public Resources Code section 21080.085, unless such rezoning would allow for would allow for the construction of a distribution center or for oil and gas infrastructure or would allow construction to occur within the boundaries of any “natural and protected lands” as defined pursuant to Public Resources Code section 21067.5; and WHEREAS, CEQA Guidelines section 15061(b)(3) provides that CEQA does not apply to activities that would not have the potential for causing a significant effect on the environment.

Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA; and WHEREAS, on September 4, 2025, the Los Altos Hills Planning Commission held a duly noticed public hearing to consider a recommendation to the Los Altos Hills City Council regarding the proposed Multi-Family Rezoning Ordinance, the LUE Amendment, and the Multi-Family ODS. At the public hearing, the Planning Commission reviewed and carefully considered the proposed legislative amendments and the ODS, and all related testimony and evidence presented in the record and during the hearing. All interested parties were provided with an opportunity to participate and be heard; and
WHEREAS, at its September 4, 2025 meeting, the Planning Commission by Resolution No. XXX recommended the City Council adopt the LUE Amendment; and WHEREAS, on October 16, 2025, the City Council held a duly noticed public hearing to consider the LUE Amendment. At the public hearing, the City Council reviewed and carefully considered the proposed LUE Amendment and related legislative actions, and all related testimony and evidence presented in the record and during the hearing. All interested parties were provided with an opportunity to participate and be heard.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the Town of Los Altos Hills hereby makes the following findings:

1. General and CEQA Findings.

Based on the entirety of the record before it, which includes, without limitation, the California Environmental Quality Act, Public Resources Code §21000, et seq. and the CEQA Guidelines, 14 California Code of Regulations §15000, et seq. (collectively, “CEQA”); the Los Altos Hills ITEM 7A ATTACHMENT 1

General Plan and Housing Element; the Los Altos Hills Municipal Code; the SB 131 Statutory Exemption Report dated October 2025 prepared by Michael Baker International; all reports, minutes, and public testimony submitted as part of the Planning Commission’s duly noticed September 4, 2025 public hearing and the City Council’s duly noticed October 16, 2025 public hearing; and any and all other evidence (within the meaning of Public Resources Code §21080(e) and §21082.2), the City Council of the Town of Los Altos Hills hereby finds as follows:

A. The foregoing recitals are true and correct and made a part of this Resolution.

B. The documents and other material constituting the record for these proceedings are located at the Community Development Department for the Town of Los Altos Hills, 26379 Fremont Road, Los Altos Hills, and in the custody of the Community Development Director.

C. The proposed LUE Amendment (Exhibit A) attached to this Resolution is incorporated herein by reference as if set forth fully herein.

D. The proposed LUE Amendment is exempt from CEQA under the statutory exemption pursuant to Public Resources Code Section 21080.085 as the proposed amendment is a part of the rezoning action necessary to implement the schedule of action under the Housing Element to rezone housing sites and is also necessary to achieve internal consistency amongst the Town’s governing land use documents. Under Section 21080.085 of the Public Resources Code, CEQA does not apply to a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code and that does not allow for the construction of a distribution center for oil and gas infrastructure and does not allow construction to occur within the boundaries of any natural and protected lands as defined under Public Resources Code Section 21067.5. As set forth in separate Ordinance and in the SB 131 Statutory Exemption Report dated October 2025, the proposed multi-family rezoning meets the requirements of Section 21080.085.

Consequently, the LUE Amendment is exempt from CEQA on the same basis as it is a part of the rezoning action necessary to implement the Housing Element.

E. Further, the proposed LUE Amendment is also exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3) on the basis that it can be seen with certainty that there is no possibility that the proposed amendment may have a significant effect on the environment. The proposed LUE Amendment only involve revisions for conformance with the Town’s certified 2023-2031 Housing Element and multi-family rezoning, as required by state law. The amendment does not approve any development projects, or issue any entitlements, but are regulatory actions taken by the Town for internal horizontal general plan consistency.

F. The proposed LUE Amendment is consistent with the goals, programs, and policies in the Housing Element, including Programs A-1, A-4 and A-5, and allows the Town to comply with state Housing Element and Housing Laws, as well as contribute to the Town’s strategies in meeting its RHNA obligation.

ITEM 7A ATTACHMENT 1

2. Decision.

Based upon the testimony received by the City Council and the background and findings set forth above and all other evidence in the administrative record, the Los Altos Hills City Council hereby adopts an amendment to the Land Use Element of the General Plan, as set forth more specifically and fully in Exhibit A.

BE IT FURTHER RESOLVED this resolution shall take effect immediately upon adoption.

PASSED AND ADOPTED at a regular meeting of the City Council of the Town of Los Altos Hills this __ day of ______, 2025, by the following vote:

INTRODUCED:

PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

BY: _________________________
Mayor
ATTEST:
_________________________
City Clerk
APPROVED AS TO FORM:
_________________________
City Attorney
ITEM 7A ATTACHMENT 1

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LAND USE ELEMENT

INTRODUCTION
Purpose
101. Los Altos Hills is a residential community
nestled in the scenic foothills of the Santa Cruz
Mountains. Once a rural agricultural area, the
community has become one of the premier
residential areas in Silicon Valley. Over the
years, the population has grown and land use
patterns have changed. The farmhouses, cattle
ranches and orchards of the past have become
today’s private homes, riding stables and
vineyards. The community has gradually
urbanized over time but still retains a semi-rural
atmosphere, with large lots and expanses of
open space as envisioned by the Town’s founders.
102. Like their forefathers, today’s residents value the semi-rural character of the community.

Although it is nearly fully developed, the community is still evolving. The guiding principle of the Land Use Element, as with other parts of the General Plan, is to address long-term needs while preserving the semi-rural character of the community and the overall quality of life for residents of Los Altos Hills.

Scope
103. This element addresses the factors that contribute to preserving community character including the protection of its natural setting, the maintenance and improvement of its residential neighborhoods, and the provision of quality public services and facilities. This element also helps define the desired balance among the social, environmental and economic costs and benefits associated with development.

Relationship to Other Elements
104. The Land Use Element is the keystone of the General Plan. It unifies the other elements by providing an overall policy context. Many subjects reviewed here are discussed in greater detail in other elements such as the Circulation & Scenic Roadways Element, the Pathways Element, Housing Element, Conservation Element, and Open Space & Recreation Element.

State Requirements
105. This element meets the State-mandated requirements for a Land Use Element. It defines the Town’s land use categories and includes a Land Use Diagram that designates the land use category of each parcel in the planning area. It also includes standards of population density and building intensity for various land use categories. The Land Use Diagram and the goals, policies and programs in this element will determine the location, intensity and design of new development and ensure that the community’s semi-rural character is maintained.

We want the sun and air
and quiet of a community
which has given itself
enough space to breathe
in; the relaxed pace of
country life and rural
pursuits.

From the Green Sheets published in 1956 prior
to the Town’s incorporation.

Exhibit A: LUE Amendment and Draft Land Use Element Map

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LAND USE PATTERNS
History of Development
106. After World War II, the pressures of a growing population and increasing urbanization were felt throughout the San Francisco Peninsula. Many members of the unincorporated Los Altos Hills community viewed local commercialism as undesirable and felt threatened by possible annexation by neighboring cities. When adjacent Los Altos incorporated in 1952 with a one-quarter-acre minimum lot size, residents of the Hills knew they had to take action to defend and preserve the amenities of their rural life, such as one-acre lots and the right to keep horses on private property.
107. The compelling reasons for the
incorporation of Los Altos Hills were
printed on green paper and distributed
to residents in the fall of 1955. As
stated in this document (referred to as
the “Green Sheets”) one of the primary
reasons the founders of the Town
originally decided to incorporate in
1956 was to maintain the rural
character of the community. This
desire continues today.
108. Existing Land Use
The Town is unique in that it consists
mainly of low-density single-family
residential development, with a
minimum lot size of at least one acre.

There are several limited areas recommended for multifamily use. There are no commercial or industrial uses within the city limits. As the Town has developed over the past 50 years, residents have continued to support the preservation of low-density residential development and the semi-rural character of the community through one-acre zoning and the protection of open space, creek corridors, wildlife habitat and heritage oak trees. 109. The only non-residential uses within the Town are open space, parks and recreation facilities, a unique pathways system including miles of well-maintained roadside and offroad paths, and public and private institutions such as schools, religious facilities and governmental buildings.

Current Trends
110. With the exception of several small areas identified for future multifamily use, there is limited land available for additional housing and only slight possibility of change on nonresidential parcels, Los Altos Hills is almost fully developed. However, in addition to infill development on vacant lots, redevelopment is occurring as existing residences are torn down and replaced with new homes and accessory dwelling units. The current trend is to develop residences that maximize the square footage allowed under floor area and development area regulations established by the Town’s Zoning Ordinance. Between 2017 and 2021, an average of 6 net new single-family homes were developed per year. Following changes in State Housing Law, Los Altos Hills has seen dramatic growth in interest in and production of accessory dwelling units (ADUs), averaging 20 per year between 2018 and 2022, increasing to an average of 30 ADUs per year between 2020 and 2024.

From the Green Sheets – 1956
What Kind of Community
Do We Want?
. . . a wide and not over-populated
community of homes in the country. . .
. . . the space and right to keep
animals—rabbits, chickens, dogs,
sheep, cattle and horses. . .
. . . roads that are content to remain
country lanes as long as they are
suitable for the residential traffic of
our area. . .
. . . at least one acre of land. . .

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Population Projections
111. In Projections 2007, the Association of Bay Area Governments (ABAG) forecasts forecasted that the Town’s population within its corporate limits will would increase from 8,500 in 2005 to 9,400 in 2035. The number of households is was predicted to increase from 2,960 in 2005 to 3,300 in 2035 based on an average household size of 2.87 persons.

As of the 2020 Census Los Altos Hills had 3,016 households, the same population of nearly 8,500 persons, and a declining average of 2.81 persons per household. ABAG projected a population of 8,600 for 2040. According to World Population Review, Los Altos Hills has an estimated 2025 population of 7,989, a declining at a rate of -1.24% annually and an estimated decline -5.89% since the 2020 census. The addition of multifamily zones is expected to increase the number of households by approximately 8 percent and counterbalance the declining population.

Development Potential
112. A study of vacant and underutilized parcels conducted for the 2002 Housing Element identified a total of 138 vacant parcels with the potential to be subdivided. Based on the size of the lots and known development constraints such as steep slopes and open space designations, it was
estimated that approximately 58 to 176 additional units could be developed through subdivision of these parcels.

At an average of 2.8 persons per household, development of 176 additional units would result in a maximum
population increase of 493, putting the total population at build-out at 9,100 compared to ABAG’s projection of
9,400 in 2035, but greater than ABAG’s revised projection of 8,600 for 2040. Although additional households could be accommodated through the development of secondary
units, it is not realistic to expect the Town’s population to increase significantly beyond 9,000.

The multifamily designation allows approximately 375
multifamily homes. Multifamily units are much smaller
floor areas and fewer bedrooms than single-family homes and have significantly smaller household sizes as a result.

Assuming a household size of 2.0 persons per unit the
multifamily zones could result in approximately 750
persons. At an unlikely average of 2.8 persons per multifamily household, the resulting population could be as high as 1,050 persons. According to the 2020 Census, the total population of Los Altos Hills was 8,489 persons. Therefore buildout of the new multifamily zones could increase the population between 8 and 12 percent.

The Town’s
population is not
expected to increase
significantly due to
limited land available
for residential
development for
single-family
housing, and an
estimated 8% with
the addition of
multifamily zones.

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Implementing the General Plan
The Town’s Zoning Ordinance, Site Development
Ordinance and Subdivision Ordinance are the main
tools used to implement the General Plan. Supported
by administrative policies and procedures, the
ordinances establish processes for review and
approval of proposed land uses and regulation of site
development. The General Plan is also implemented
through specific programs that accompany the goals
and policies.

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GOAL 1
Maintain the semi-rural character of the community while providing for residential uses, open space, and the minimum public and private facilities and services needed to serve residents on a continuing basis.

Policy 1.1 Uses of land shall be consistent with the semi-rural atmosphere of the community, minimize disturbance to natural terrain, minimize removal of the natural vegetation, and create the maximum compatibility of development with the natural environment through site design and landscaping.

Policy 1.2 In addition to single-family residences, which may include a single secondary or accessory dwelling units, uses within the planning area shall include:
a. Those uses normally accessory to dwellings in a semi-rural area:
vineyards and orchards, the keeping of horses and other domestic animals, and other agricultural pursuits that are compatible with residential uses;
b. Those open space preserves, parks and recreational uses necessary to conveniently serve the residents;
c. Those public and private services and facilities including schools, religious facilities, fire stations, and community centers needed locally to serve Town residents;
d. Other uses required by State law including emergency shelters, transitional housing, and single room occupancy units.

Policy 1.3 Large non-residential structures shall be compatible with the residential character of the community.

Policy 1.4 Multifamily uses will be limited to areas with suitable access to major collector and arterial roads, freeway and expressway access, and on lands with contiguous buildable areas excluding steep slopes to that can accommodate larger buildings and development footprints, access to public sewer services and on or near non-residential or institutional uses where possible.

Program 1.1 Establish and maintain zoning that allows and supports the development of singlefamily and multifamily residences and accessory structures, as well as appropriate non-residential uses.

Program 1.2 Continue to implement the Town’s Zoning Ordinance, Site Development Ordinance, Subdivision Ordinance, and related policies and procedures. Review and update these regulations as needed to ensure that development occurs in a manner compatible with the Town’s semi-rural character and its natural environment.

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LAND USE DESIGNATIONS
Land Use Diagram
113. The Town’s Land Use Diagram on the following page illustrates the community’s vision for the development, redevelopment, and preservation of public and private properties in the Los Altos Hills. The map designates the distribution and location of land to be used for housing, open space, recreation, public facilities, and other uses. Each of the land use categories designated on the Land Use Diagram is described below. The various land use categories have been applied to geographic land areas within the community to indicate which land uses the Town believes will be the most appropriate at that location.

Residential (R)
114. The predominant land use shown on the Land Use Diagram is residential. One singlefamily dwelling is allowed per parcel. Accessory uses including one secondary dwelling unit may be permitted. Agricultural activities and conditional uses such as religious facilities and schools also may be allowed.

Multifamily Residential (MF)
115. The Multifamily Residential designation allows residential densities between 20 and 24 dwelling units per acre of contiguous buildable area exclusive of steep slopes over 25 percent. The maximum floor area of multifamily developments is limited to an average of 750 square feet of total floor area per dwelling unit and a mix of dwelling unit sizes based on number of bedrooms. No single-family uses are permitted. Senior housing, assisted living facilities, single-room occupancies, transitional and supportive housing, and accessory dwelling units are also permitted.

Open Space Preserve (OSP)
115. This designation is applied to undeveloped, natural areas that provide wildlife habitat, scenic views, and opportunities for nature study and low-impact outdoor recreation such as hiking and horseback riding. The primary purpose of this designation is the preservation and enhancement of the natural state of the land and its plants and animals. Allowable development includes paths and trails, informational signs, restrooms, open fencing, parking for the use of open space and Public Recreation Areas, and other incidental uses that are consistent with the protection of open space and the enjoyment of low-impact outdoor recreation.

Open Space Conservation Area (OSCA)
116. This is an overlay designation that is superimposed upon the residential land use areas on the Land Use Diagram. The overlay is generally applied to areas of steep slopes, canyons and ravines associated with major creeks or their tributaries, as well as creek corridors and other areas of heavy vegetation that should be protected. Within these areas, special measures should be taken to conserve the natural quality of the area and to avoid environmental degradation. Residences should be placed on the most buildable portions of lands designated OSCA and carefully sited so as to preserve existing trees, vegetation and wildlife habitat.

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Public Recreation Area (RA-PB)
117. This designation identifies publicly owned open space lands used primarily for recreation.

Development related to recreation is allowed. Examples include Westwind Community Barn, the Purissima Playing Fields (Little League Fields), and the Riding Arena.

Private Recreation Area (RA-PR)
118. This designation identifies privately owned lands used primarily for recreation.

Development related to recreation is allowed. An example is Fremont Hills Country Club.

Institutional (I)
119. This designation identifies academic, governmental and community service uses and lands that are either publicly owned or operated by non-profit organizations. Examples are schools, religious facilities, fire stations and Town government.

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DEVELOPMENT STANDARDS
State Requirements
120. State planning and zoning law requires the Land Use Element to include a statement of the standards of population density and building intensity recommended for the planning area.

As used in this element, the term density refers to population and development capacity of residential land. Density is described in terms of dwelling units per net acre of land and is related to the average slope of the parcel or lot. The term intensity refers to the extent of development on a parcel of land or lot (i.e., maximum development area). The Town’s development standards for hillside protection, slope density, and other related concepts are described below.

Hillside Protection
121. The rolling hills of Los Altos Hills are a highly valued natural feature of the community that should be protected. The hillsides provide important wildlife habitat, recreational opportunities, and scenic resources. Hillside areas are also subject to potential seismic hazards, landslides, fires, and other environmental hazards that can create risks to public safety, expose homeowners to potentially significant damage, and require extraordinary expenditures for public services. It is important to provide safe residential development while preserving the natural features, environmental integrity, and scenic character of the hills.
122. Low-density residential development can be compatible with hillside protection, especially where slopes are not excessively steep. Higher density and intensity multifamily housing has larger buildings and larger development footprints than single-family homes.

Multifamily development needs larger contiguous areas for development without significant environmental constraints, particularly areas without steep slopes. As discussed in the USGS report in Appendix A, environmental concerns increase progressively as the slope of the terrain increases. To the maximum extent feasible, steep slopes, canyons and ravines, as well as natural swales and drainage channels, and geological hazard areas within areas designated for residential development should be left undisturbed and preserved in their natural condition.

Slope Density Standards for Subdivisions and Multifamily Development 123. Within those areas designated for low density residential use, net lot area should be not less than one acre (43,560 square feet) per primary dwelling unit. In addition, the minimum net lot area for subdivisions should increase with an increase in average slope, based on the following slope-density standards for parcels designated for low density use:

Average slope of land
to be subdivided Minimum net lot size
0 – 10% slope One acre
10 – 50% slope An increase from one to seven
acres, based on the average
slope of the land.

Over 50% slope These areas generally should
not be developed for residential
purposes.

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Multifamily residential development shall be limited to areas with slopes of less than 25 percent. Limited disturbances to areas with slopes over 25 percent (e.g., not more than 10 percent of the contiguous building area exclusive of slopes greater than 25 percent) may be permitted where necessary to provide access and overall design efficiency.

Lot Unit Factor
124. The lot unit factor (LUF) for any given parcel designated for low density use is based on lot size and average slope as determined by a formula established in the Town’s Zoning Ordinance. Newly created lots must have a LUF of one or more. Some lots with a LUF of less than one were created early in the Town’s history, prior to incorporation. These lots are considered nonconforming and their development is restricted today. Lots with a LUF of less than one may not be created today. Lots with a LUF of less than .50 require a conditional development permit. Multifamily development shall be subject to a minimum contiguous buildable area requirement (exclusive of steep slopes) instead of a LUF calculation.

Maximum Floor Area and Maximum Development Area
125. Floor area is the total square footage of a structure as specified in the Town’s Zoning Ordinance. Development area is the total floor area of a residence, plus the total area of a parcel covered by other structures and hardscape not included in floor area. The maximum floor area (MFA) and maximum development area (MDA) for a parcel designated for low density use is based on the average slope and
the Lot Unit Factor (LUF) as determined by
formulas established in the Zoning Ordinance.

The maximum floor area for parcels
designated for multifamily development is
calculated by multiplying the maximum
permitted average square feet of total floor area
by the number of permitted dwelling units.
126. Building Setbacks
Setbacks regulate the placement of buildings with respect to their property lines in order to provide a minimum amount of open space between buildings on adjacent parcels and between buildings and street rights-of-way. Setbacks for single-family residences are generally 40 feet from the front property line and 30 feet from the sides and rear property lines. Increased setbacks are required for estate homes over 10,000 square feet in size.

Setbacks for multifamily residences are generally 60 feet from the front, side, and rear abutting single-family residential uses, and 25 feet from side and rear yards abutting nonresidential or institutional uses.

Height Limits
127. The vertical height of buildings is limited to 27 feet for single-family residences in order to maintain a consistent, low profile that is compatible with the Town’s semi-rural character. Building height may be increased to a maximum of 32 feet if setbacks are increased as specified in the Town’s Zoning Ordinance.

The vertical height of multi-family residences is limited to 32 feet, excluding basement and underground parking where the exposed portions do not exceed 25% of the façade of the story above it, and excluding necessary rooftop mechanicals where less than 10% of the roof area, and other architectural features.

The City Council and Planning
Commission have the discretion to
apply stricter standards for height,
setbacks, floor area and development
area where site-specific constraints
dictate further limitations.

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Green Building
128. In response to growing concerns about rising energy costs and dwindling natural resources, an increasing number of communities are embracing the concept of “green building.” This whole-systems approach to homebuilding seeks to minimize the use of energy, water and other natural resources and maximize the use of recycled and renewable construction materials. The Town should develop programs and development standards regarding green building practices such as the use of recycled and renewable construction materials, energy-efficient heating and cooling systems, water conservation and reuse, and energyefficient appliances.

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GOAL 2
Ensure that all development occurs in a manner that
minimizes disturbance of natural terrain, vegetation and wildlife, and maximizes the preservation of natural resources and open space.

Policy 2.1 Within incorporated Los Altos Hills and its sphere of influence dwelling types shall be limited to single-family detached residences, which may include a single secondary unit.

Policy 2.2 2.1 Residential densities shall be guided by considerations of topography, vegetative cover and significant physical limitations inherent in the natural environment.

Policy 2.3 2.2 The minimum parcel size for single-family dwellings shall be at least one acre and shall increase as the steepness of the land increases; and approximately

3.5 acres for multifamily development over 20 dwelling units per acre.

Policy 2.4 2.3 In subdividing land, the number of dwelling units permitted shall decrease as the steepness of the land increases.

Policy 2.5 2.4 Steep slopes, canyons and ravines generally in excess of 30% slope, as well as natural swales and drainage channels, and geologic hazard areas within areas designated for residential development shall be left undisturbed and preserved in their natural condition to the maximum extent feasible.

Policy 2.6 2.5 Limits on the development of individual residential lots shall be determined based on evaluation of such factors as natural vegetation, topographic characteristics, soils and geology.

Policy 2.72.6 The natural character of ridgelines shall be preserved to the maximum extent feasible.

Policy 2.82.7 Promote the use of green building methods and practices in the planning, design, construction, renovation, operations, and demolition of buildings.

Policy 2.9 2.8 The Town shall encourage the installation of drought-tolerant landscaping and other methods of reducing water use for landscaping.

Program 2.1 Continue to require the dedication of open space easements where appropriate as a condition of approval for new development. Each parcel shall be evaluated on a case-by-case basis during the site development review process to determine whether an open space easement should be required, based on the extent of steep slopes generally in excess of 30% slope and the presence of heritage oak trees and/or creek corridors. Other considerations shall include the size of the proposed open space easement, its contiguity with existing open space easements, and whether the property is located within an Open Space Conservation Area.

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Program 2.2 Limit grading on hillsides to the minimum extent necessary to accommodate structures. Structures should be located so that they are consistent with slope contours and compatible with the terrain.

Program 2.3 Encourage the preservation of existing trees, rock outcroppings, ridgelines and other significant natural features.

Program 2.4 Encourage the preservation of native hillside vegetation and, if vegetation must be removed, require appropriate revegetation and planting in hillside areas.

Program 2.5 Protect the public safety and minimize the risk of damage from natural hazards by requiring site-specific geologic investigations of proposed building sites.

Program 2.6 Continue to require soil erosion control measures on construction sites and require revegetation thereof.

Program 2.7 Make green building publications and other sources of information available to applicants, architects, builders and other individuals involved in the construction of new homes and major remodel projects.

Program 2.8 Consider developing a green building ordinance for site development and building applications.

Program 2.9 Develop and implement a program for the reduction and recycling of construction and demolition waste.

Open Space Easements
Open space easements (OSE’s) may be required as a
condition of approval for site development. When an OSE is required, the property owner signs an agreement with the Town to keep the easement area undeveloped and in
its natural condition. Once an OSE has been granted, the property remains under private ownership; the OSE does
not give public access to the property.

See the Open Space & Recreation Element for additional
information on open space easements.

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COMMUNITY SERVICES AND FACILITIES
Public Schools
129. The Town is served by four public school districts:
• Los Altos School District (K-8)
• Palo Alto Unified School District (K-12)
• Mountain View−Los Altos Union High School District (9-12) • Foothill Community College District
Historically, the majority of Town residents attending public elementary school were enrolled at one of three public schools located within the planning area, all of which were located west of Foothill Expressway. After elementary school, Town residents then matriculated to middle schools that were located in either Palo Alto or Los Altos. Students then attended Gunn High School in Palo Alto or Los Altos High School or Mountain View High School in Los Altos, based on attendance areas.
130. Over the past 25 years, in spite of significant opposition from Town government and residents, the school districts have closed all three elementary schools so that children in the Town presently must commute to elementary
schools in either Palo Alto or Los Altos. All commutes, by necessity, require the crossing of Foothill Expressway, which is a heavily traveled, four-lane roadway. Due to
safety concerns and the long distances involved, few
elementary school children can walk to school. Many
parents, unhappy with this situation, would like to have neighborhood schools reopened so their children can
walk to school. Bullis-Purissima School, closed in 2003, is expected to be reopened in 2008. Recent cooperation
between the districts (such as Inter-District Transfer
Agreements) should be encouraged to allow children from both elementary districts to attend the same neighborhood public elementary schools in Town. 131. There are three existing public school sites within the Town’s planning area. These sites are owned by either Palo Alto Unified School District (PAUSD) or Los Altos School District (LASD):
• 26800 Fremont Road, formerly Fremont Hills Elementary School (PAUSD property). The district closed the public school on this site in 1975 and signed a long-term lease with Pinewood School, a private, non-denominational school. The Town has some limited use of the athletic fields in the summer. • 25890 Fremont Road, Bullis Purissima Elementary School (LASD property). The district closed the public elementary school on this site in 2003 despite substantial opposition from the Town government and residents. The district presently is planning to reopen the renovated elementary school in 2008.

Neighborhood
schools are the basis
for a successful,
vibrant community
where neighbors
interact, establish
common bonds, and
provide a sense of
community for all.

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• 11311 Mora Drive, Los Altos (LASD property). This site is located in unincorporated area within the Town’s sphere of influence. The district has closed the public elementary school and leased it to the Waldorf School, a private school. The Town has no rights to use any of this property.

Town surveys indicate that residents view recreational fields and playgrounds at public and private schools as an important community resource. The Town should work with school districts to permit public use of these facilities.
132. The Town believes that it is extremely important for its residents to be able to send their children to local elementary schools, with the majority of children having the ability to walk or bicycle to school. This can be achieved by reopening public elementary schools on the two sites noted above that are currently being leased to private institutions. Providing public schools for kindergarten through grade 6 within the Town boundaries that primarily serve Town residents is an integral part of imbuing the community spirit of our Town into our children. Not only do neighborhood schools at this level promote the establishment of lifelong friendships among the children, but they also encourage positive intercourse and friendships among the parents. This is the absolute basis for all successful and vibrant communities where neighbors interact, establish common bonds and provide a sense of community for all.
133. The Town believes its residents are well served by the middle schools and high schools operated by Los Altos School District, Mountain View−Los Altos Union High School District, and Palo Alto Unified School District. These schools provide excellent educational opportunities and extracurricular activities.

Foothill Community College
134. The Town is served by an excellent
community college in its midst,
Foothill Community College. Like
other public school districts, Foothill
College generally is not subject to the
Town’s zoning and site development
ordinances. However, the district is
required to obtain conditional use
permits for certain uses such as
wireless communication antennas. The
Town continues to work with the
Foothill College administration to
maximize the school’s benefits to
Town residents and minimize any
traffic impacts and disruptions
experienced by residents living near
the campus. The college is an
appropriate location for incorporation
of multifamily housing on
underutilized portions of the property
along with the continued use of the
property for educational institutional
uses. This can help meet the Town’s
housing needs and provide financial
Foothill Community College has
approximately 18,000 students.

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Los Altos Hills General Plan
Page LU-17
support for the continued use and
health of the college.

Private Schools
135. Private schools in the Los Altos Hills planning area include St. Nicholas School (K-8), Pinewood High School and the Waldorf School. The latter two are located on public school sites as discussed above. Like Foothill Community College, the St. Nicholas School has been identified as an appropriate location for the addition of multifamily housing on underutilized portions of the property.

Religious Facilities
136. Several religious facilities are located in the Los Altos Hills planning area, including four that are located
within city limits:
• Poor Clare Monastery (Roman Catholic)
• Congregation Beth Am (Reform Jewish
Synagogue)
• Chapel in the Hills (Episcopal)
• Daughters of Charity (home for retired
Roman Catholic clergy)
All of these religious facilities hold conditional use
permits issued by the Town.

Town Government
137. The first Town Hall was built in the 1950’s on land donated by the Town’s first Mayor, Arthur E. Fowle, at
the northeast corner of his 30-acre ranch at Fremont and Concepcion Roads. The original facility served until
2004, when it was torn down because it no longer met
building codes, seismic requirements and accessibility
standards. It was replaced by a new energy efficient
facility that more than doubled the size of the original building. Dedicated on June 16, 2005, the new facility
was designed to blend with the residential character of the community. The new facility not only embodies the
rural aesthetic of the community, but also demonstrates the Town’s commitment to energy and water
conservation.
138. Two other buildings in the Town Hall complex provide a base for Town staff and services:
• Heritage House, which is a historic
house preserved by members of the
community. The building is used as the
Emergency Operations Center and
local office of the County Sheriff’s
Department.

Chapel in the Hills is in
the old Purissima School,
a historic building.

Energy-efficient Council Chambers
incorporate natural lighting.

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Los Altos Hills General Plan
Page LU-18
• The Parks and Recreation Center, located in the building formerly used by Purissima Hills Water District.

Both buildings have recently been remodeled in
order to better meet the needs of the community. The Town’s corporation yard is located on Purissima Road adjacent to the Purissima Playing Fields (Little League Fields). It serves as the center for the Town’s maintenance crew and mechanical equipment.

Public Recreation Facilities
138. Town-owned parks and recreation facilities include Byrne Preserve and six other open space preserves; Westwind
Community Barn; Purissima Playing Fields (Little
League Fields); the Riding Arena; and Edith Park. In
addition, the community’s extensive system of roadside
and off-road paths provides recreational opportunities.

Recreation programs sponsored by the Town include
youth camps, fitness programs and the annual Pathways
Run.

Private Recreation Facilities
139. Privately owned recreation facilities in the planning area include Fremont Hills Country Club and several other
country clubs in neighboring cities, as well as Hidden
Villa, the Stanford University lands, and private boarding stables.

Fire Protection
140. The Los Altos Hills County Fire Protection District is a separate public agency, distinct from the Town, that
contracts with the Santa Clara County Fire Department
for the provision of fire protection, suppression and safety services. The district owns and operates the El Monte Fire Station near Foothill Community College.

Police Protection
141. The Town contracts with the Santa Clara County Sheriff’s Department for police protection services. The Sheriff’s Department typically provides one or two patrol cars at all times, which is adequate because Los Altos Hills is a lowcrime community. In the event of emergencies, however, the Town has access to the full resources of the County Sheriff. The Town also has a public safety officer on staff and provides a substation at the Heritage House next to Town Hall for the use of the County Sheriff.

Parks and Recreation Center
is next to Town Hall.

Public and private
recreation facilities are
described in the Open
Space & Recreation
Element, which also
includes related goals,
policies and programs.

Fire and police
protection services are
described in the Safety
Element, which also
includes related goals,
policies and programs.

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Los Altos Hills General Plan
Page LU-19
Emergency Services
142. Ambulance and paramedic services are provided by Santa Clara County on contract with the Los Altos Hills County Fire District. In the event of a major disaster such as earthquake or fire, emergency response services are
coordinated by the Town as established in the Emergency Operations Plan. The Town’s Emergency Operations
Center (EOC) is located in the Heritage House adjacent to Town Hall.

Emergency response
services are described
in the Safety Element,
which also includes
related goals, policies
and programs.

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Los Altos Hills General Plan
Page LU-20
GOAL 3
Encourage the development of community services and facilities that are easily accessible, properly related to adjacent land uses, and in harmony with the semirural, residential character of the community.

Policy 3.1 School districts shall be encouraged to restore neighborhood public elementary schools in Los Altos Hills, particularly at the public school sites listed in Paragraph 131.

Policy 3.2 The Town will encourage institutional uses that are necessary to serve local residents, such as public schools, religious facilities, governmental buildings, public recreational facilities and fire stations.

Policy 3.3 Major community facilities should be located where they can be served directly by collector, or where possible, arterial roads so that they are reasonably convenient to residents. The primary consideration should be compatibility with adjacent land uses and with preserving the semi-rural, residential character of the Town. However, given the lack of commercial buildings and minimal number of institutions in the Town, some institutional structures by necessity will be adjacent to residential properties.

Policy 3.4 Every effort should be made to ensure that recreational areas and playing fields at both public and private schools are available for use by Town residents during non-school hours.

Policy 3.5 School service areas should be defined so as to maximize the number of children who can walk to schools within the Town borders, with particular emphasis on the use of the Town pathway system, using both on-road and offroad paths.

Policy 3.6 Public buildings should be of a size and scale conducive to maintaining the semi-rural atmosphere of Los Altos Hills. The architectural design of nonresidential buildings should incorporate those principles that guide our residential homes such as modest height and bulk appearance.

Program 3.1 Work with Palo Alto Unified School District and Los Altos School District to reopen public elementary schools in Los Altos Hills.

Program 3.2 Cooperate with school districts in providing demographic data and other information supporting the need for new schools.

Program 3.3 Continue to assist school districts by requiring the payment of school impact fees as per Government Code Section 65995 prior to issuance of building permits.

Program 3.4 Explore innovative ways for the community to use school facilities and grounds jointly with the school districts.

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Los Altos Hills General Plan
Page LU-21
Program 3.5 Work with school districts in the design and development of school facilities to provide for community needs in the areas of parks and recreation, community meetings, and similar activities.

Program 3.6 Work with school districts to minimize potential impacts on neighboring residential areas.

Program 3.7 Continue to require conditional use permits for the location and operation of private schools, religious facilities, and other institutional uses. Monitor and mitigate potential impacts on neighboring residential areas by limiting the hours of operation, the location of parking, and other factors as appropriate.

The Purissima Playing Fields, Town Riding Arena and Fremont Country Club are in the foreground of this aerial photo looking northeast from Interstate 280 towards San Francisco Bay.

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Los Altos Hills General Plan
Page LU-22

UTILITIES
Anticipated Needs
143. The Town is expected to experience very modest growth mostly through infill development and redevelopment of underdeveloped parcels. As a result, the need for a full range of public facilities and urban services is expected to grow very modestly in the future. To preserve the natural environment and semi-rural atmosphere desired by the residents of Los Altos Hills, it is important that the installation and/or extension of utilities be conditioned by concerns for preventing damage to the natural beauty and environmental integrity of the area. Standards for the extension of utilities, sewers in particular, must be based on health and safety considerations as well as environmental protection.

Water Supply
144. The Town’s drinking water is provided by two water suppliers: Purissima Hills Water District and the California Water Service Company (Cal Water). As discussed in the Conservation Element, the amount of water available is constrained. Purissima Hills presently obtains all of its water from San Francisco’s Hetch Hetchy system and currently is exceeding its supply assurance by 25-35 percent. Capacity limitations in the Hetch Hetchy system may be reached in six to eight years, or sooner in times of drought. Cal Water obtains the water supplied to Los Altos Hills from the Santa Clara Valley Water District via pipelines from the Santa Clara Valley Water District’s Rincoñada treatment plant and from company-owned wells. During the dry season, the plant and pipelines are at capacity. According to Purissima Hills Water District, over two-thirds of the water used each year is for the irrigation of landscaping.

Sanitary Sewer
145. There are more than 3,100 parcels within the Town, of which less than half are currently connected to the municipal sanitary sewer system. The existing municipal system includes approximately 52 miles of 6- to 12-inch diameter gravity pipelines, several reaches of force mains, 1,305 manholes, and 2 lift stations. The Town straddles two drainage basins, including the Palo Alto Basin to the north and the Los Altos Basin to the south. Sewage collected by the Town’s existing system is conveyed to sewer trunk lines owned by the cities of Los Altos and Palo Alto, with the portion of the Town in the Palo Alto Basin draining into the City of Palo Alto municipal sewer system, and the Los Altos Basin draining into the City of Los Altos municipal sewer system. The use of conveyance and treatment systems owned by these cities is governed by separate service agreements with the Town. The wastewater from all three communities eventually drains into the Palo Alto wastewater treatment plant for treatment and disposal.
146. While there has always been sufficient capacity in the Palo Alto system to accommodate all residences on the north side, the Town has been constrained by capacity limitations in the Los Altos system. However, in 2007, the Town and the City of Los Altos signed a new contract that provides additional capacity that will now allow all residences within corporate limits of the Town and its sphere of influence to access sewers. 147. The Town prefers that as many residences as practicable connect to the sewer system.

While a properly constructed and maintained septic system typically does not present an environmental hazard, the failure of a septic system can induce contaminants into the underground water table. Also, smaller lots may not be able to replace a failed system due Water resources are
also discussed in the
Conservation Element,
which also includes
related goals, policies
and programs.

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Los Altos Hills General Plan
Page LU-23
to issues regarding the construction of a new leach field. The Santa Clara County Health Department requires all new residences to connect to the sewer system if there is an existing sewer main within 200 feet of the new residence.
148. All new residences resulting from new subdivisions and multifamily development should be served by sanitary sewer trunk lines. All new residences resulting from the teardown of an existing residence or a newly constructed home on an existing lot should be required to connect to sanitary sewer trunk lines, provided there is an existing trunk line within 200 feet of the new residence. Wherever the possibility of biological harm from septic tank use exists, requirements for conversion to sanitary sewers should be established. Standards should reflect Bay Area Water Quality Control Board and Santa Clara County Health Department requirements.
149. The Town has appointed a committee to review the existing issues in regard to bringing sewer mains to as many neighborhoods as possible. This committee has conducted a survey among residents on septic tanks to determine the major issues that prevent these residents from connecting to the system. Through various methods such as sewer reimbursement districts, sewer assessment districts and the extension of sewer mains up main arteries to make sewer connection more accessible, the Town hopes to significantly increase the number of residences connected to the sewer system.

Storm Drainage System
150. The Town’s storm drainage system consists of a combination of roadside drainage ways, cross culverts, and underground pipes. Stormwater in Los Altos Hills initially flows over land, following the natural contours of the terrain and then moving to roadside flow routes.

Some of these are paved with asphalt concrete, but most roadside flow routes are dirt ditches, which help preserve the natural, semi-rural feel of the community. Stormwater in the roadside flow routes travels downhill to culverts, pipes or creeks that eventually carry the storm runoff to the San Francisco Bay.
151. Silt and debris in the storm drain system sometimes cause water to back up and flood the surrounding areas. The Town provides maintenance of the stormwater facilities in the public right-of-way, including culverts crossing under public roads and public roadside flow routes. This also includes areas where the Town has permanent storm drain easements for public drainage structures on private property. Although regular maintenance helps prevent flooding problems, in some cases the repair of deteriorated facilities and construction of new facilities are needed to improve the storm drainage system.
152. The Storm Drainage Master Plan prepared in November 2004 identifies the location of drainage problem areas in the Town and proposes solutions ranging from the installation of new pipes and catch basins to the regrading of ditches and provision of riprap protection.

The Master Plan ranks the proposed projects in order of priority and estimates the costs involved. Each year the Town adopts a Capital Improvement Program that includes some of these projects and budgets for their completion.

Areas subject to
flooding are identified
on the map included in
Appendix B and
addressed in the
Safety Element.

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Los Altos Hills General Plan
Page LU-24
153. The National Pollutant Discharge Elimination System (NPDES) permit program controls water quality by regulating point sources of pollution, including municipal storm drain systems, that discharge pollutants into surface waters. The Town is a co-permittee with other members of a regional association known as the Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP), which shares a joint permit issued by the Regional Quality Control Board to discharge stormwater into the San Francisco Bay. The conditions of the permit require the Town to reduce pollution in urban runoff to the maximum extent possible. Recent changes strengthen the regulations for projects that replace or create new impervious surface. The permit must be reissued every five years. Policies and programs related to stormwater quality are contained in the Conservation Element.

Purissima Hills Water District
is a county special district
that provides water to many
residents of Los Altos Hills.

The district office is located
near Town Hall on Fremont
Road. Constructed in 2007,
the building was designed to
blend with the residential
character of the community.

PRIVATE UTILITIES
The following companies provide utilities
to residents of Los Altos Hills:

Cal Water Service Company Water
Pacific Gas & Electric (PG&E) Electrical power and gas
Comcast Cable TV and broadband
SBC Communications Local landline telephone and
DSL internet connections
Multiple providers Wireless telecommunication
Stormwater pollution is
also discussed in the
Conservation Element,
which includes related
goals, policies &
programs.

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Los Altos Hills General Plan
Page LU-25
Wireless Communication Facilities
154. The residents of Los Altos Hills depend on cell phones and other forms of wireless communication services for convenience, business activities and security. As one of the premier residential areas of the Silicon Valley, the Town should have a high level of wireless service available to its residents in order to meet increasing demands for new and better services. However, the Town’s topography, with its steep slopes and canyons, have made cell phone reception problematic. To meet the demands for new and better services, providers need an adequate number of wireless communication facilities in the planning area.
155. The Town currently has 11 cell sites, each shared by multiple service providers who have co-located antennas and equipment. Because the Town is entirely residential, with no commercial or industrial areas, wireless
communication facilities are most appropriately
located on Town property or other public or
institutional sites such as schools and religious
facilities. The location of new facilities on or near
existing buildings, the co-location of antennas
owned by two or more companies, and landscape
screening should be utilized to minimize any
adverse visual impacts. To ensure that new facilities
are appropriately located, the Town has developed
policies and siting criteria for wireless
communication antennas and equipment shelters.

These policies and siting criteria should be
reviewed and updated as needed.

GOAL 4
Provide adequate, reliable utilities and urban services that will protect the health and safety of all residents, while minimizing environmental and aesthetic impacts on the community.

Policy 4.1 All utility installations shall be sited, designed, developed and landscaped so as to blend with the natural character of the vicinity.

Policy 4.2 New and existing developments shall be adequately served by utilities and infrastructure in accordance with Town standards. New projects that require construction or expansion of public improvements shall pay their fair share of the costs necessary to improve or expand infrastructure to serve them, including street improvements, parks, pathways, sewer and water services, storm drainage, and other urban services.

Policy 4.3 Power transmission lines, power distribution lines, and telephone lines serving new development shall be placed underground.

The wireless communication facility
at Westwind Barn is designed to
blend in with the scenery.

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Page LU-26
Policy 4.4 A systematic program for the undergrounding of all existing overhead lines shall be developed and implemented.

Policy 4.5 All new residences and major additions shall be served by sanitary sewer trunk lines or other disposal systems meeting adequate health standards.

Connection to sanitary sewer systems shall be required if available facilities are within 200 feet.

Policy 4.6 The Town shall coordinate with the City of Los Altos and the City of Palo Alto in the provision of sewer services to residents of Los Altos Hills.

Policy 4.7 New wireless communication facilities shall preferably be located on Town property or other public or institutional sites such as schools and religious facilities.

Policy 4.8 The co-location of wireless communication facilities with other facilities shall be encouraged to the maximum extent feasible.

Policy 4.9 Wireless communication facilities shall be adequately screened by landscaping in order to minimize any visual impacts.

Program 4.1 Prepare, adopt and implement an annual Capital Improvements Program supporting policies in the General Plan to maintain, improve or expand public utilities and infrastructure.

Program 4.2 Continue to require the payment of fees such as road impact fees, sewer hook-up fees, and storm drainage fees for the costs of providing and maintaining public utilities and infrastructure that serves new development.

Program 4.3 In coordination with the Santa Clara Valley Urban Runoff Pollution Prevention Program, continue to implement measures consistent with the Santa Clara Countywide NPDES Stormwater Permit.

Program 4.4 Continue to implement the Town’s policies and siting criteria for wireless communications facilities, and review and update them as needed.

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Los Altos Hills General Plan
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GROWTH BOUNDARIES
Sphere of Influence (SOI) Boundary
156. As required by state law, the Local Agency Formation Commission (LAFCO) has adopted a sphere of influence (SOI) for each city and special district in Santa Clara County. The SOIs are intended to ensure that urban development takes place in an orderly manner, to preserve agricultural and open space lands, and to ensure that the land use and development policies of a city are recognized in areas that will eventually be part of a city. 157. The SOI indicates areas that may be annexed to the Town and for which urban services, if available, could be provided. The Town’s existing SOI, which was adopted in February 1985, is coterminous with the town limits to the north, west, and most of the east. The boundaries of some of the Town’s unincorporated islands, unincorporated hillside lands, lands within the Midpeninsula Regional Open Space District’s Rancho San Antonio Open Space Preserve, and lands within the County of Santa Clara’s Rancho San Antonio Park help form sections of the southern and southeastern portion of the Town’s SOI boundary.

Permanently preserved open space areas such as MROSD’s Rancho San Antonio Preserve do not require urban services, but are appropriately included in the SOI due to their location.

Unincorporated Pockets in Urban Serviced Area (USA)
158. The urbanized unincorporated areas within the Urban Service Areas (USA) of Los Altos Hills are referred to as urban pockets or islands. The pockets are a result of development that occurred in the County in the 1950s and 1960s. Santa Clara County and LAFCO have adopted policies that state that urban islands and pockets should be annexed. There are seven unincorporated urban pockets within the Los Altos Hills urban service area (USA).

Figure 1-2 shows current Town boundaries and urban pockets subject to future annexation within the Town’s planning area.

Prezoning
159. The purpose of prezoning an area is to establish the zoning district that will apply in the event of subsequent annexation to the Town. The proposed zones must be consistent with the General Plan, and the prezoning has to be approved by the City Council at a public hearing. There are two advantages to prezoning. First, the Town will have zoning in effect immediately upon annexation. Local residents will thereby have prior knowledge of the land use regulations that would affect them should annexation occur. Secondly, prezoning acts to serve notice to LAFCO of the city's intentions regarding its adjacent areas.

Prezoning is the procedural first step necessary to ultimately annex a particular territory.

However, the act of prezoning does not compel the Town to initiate annexation proceedings.

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Definitions of Key Terms
Incorporated Town
Limits
Delineates lands currently within or annexed to the Town Sphere of Influence
(SOI)
The probable physical boundaries and service area of the Town.

Inclusion of an area in the Town’s SOI is not necessarily an indication that the area would be annexed to the Town or receive urban services.

Urban Service Area
(USA)
Delineates incorporated and unincorporated areas authorized to receive urban services or proposed to receive urban services when they are available.

Planning Area Encompasses incorporated and unincorporated territory that bears a relation to the Town’s planning.

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Page LU-29
160. In August 2002, the Town prezoned approximately 245 parcels in unincorporated county lands known as San Antonio Hills. The prezoned area is generally between Ravensbury Avenue and Interstate 280, including portions of West Loyola Drive, Mora Drive, and Berkshire Drive. In March 2006, the Town prezoned an additional 82 parcels between Magdalena and Eastbrook Avenues including properties on Spalding Avenue, Par Avenue, Winding Way, Putter Avenue and Putter Way.

Annexation
161. Subsequent to the prezoning of San Antonio Hills in 2002, the Town annexed 118 parcels totaling 142 acres within the unincorporated urban pocket. (Ravensbury Annexation, March 2002; West Loyola Annexation, September 2007) The properties in the annexed areas are mostly developed with single-family homes on parcels of one acre or more. There remain approximately 280 acres of unincorporated land within the Town’s Urban Service Area that may be subject to annexation in the future. The Town should conduct a comprehensive evaluation of all future annexations to ensure that they are compatible with the land use patterns and zoning designations of the Town and that such annexations do not negatively impact the Town’s finances, facilities and services.

Areas of Direct Concern
162. Areas of Direct Concern are within the planning area but beyond the Town’s corporate limits and the sphere of influence. These areas include several pockets of existing residential and commercial/industrial development as described below:

Residential Areas
Portions of several residential areas in Los Altos and Santa Clara County are included within the planning area. These areas, although in other jurisdictions, are of direct and immediate concern to the planning area because of common problems relating to drainage, circulation, public facilities, and visual amenities.

Existing development within the portion of Los Altos that is within the planning area is low-to-medium density residential. Development of existing vacant land immediately adjacent to Los Altos Hills should be no more intense than one-half acre per dwelling unit in order to provide a gradual transition between residential densities as previously agreed to by the City and the Town.

Commercial/Industrial Areas
The planning area includes commercial areas within the City of Los Altos and light industrial development in the Stanford Industrial Park. These areas, however, do not occur within the Town limits or its SOI.

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Los Altos Hills General Plan
Page LU-30
GOAL 5
Ensure that the Town’s growth will proceed in an orderly, planned manner in order to provide efficient and economical urban services.

Policy 5.1 Issues within the sphere of influence shall be monitored for their effects on the Town.

Policy 5.2 Any proposed annexations shall be consistent with the Town’s General Plan land use designations and adopted annexation procedures.

Policy 5.3 Maintain a cooperative working relationship with Santa Clara County regarding land use issues.

Program 5.1 Request that Santa Clara County and other applicable agencies refer all proposed projects and programs within the sphere of influence to the Town of Los Altos Hills for review and comment, and act favorably on the Town’s recommendations.

Program 5.2 Review annexation proposals to assure that they are consistent with sphere of influence boundaries, General Plan land use designations and established annexation procedures and criteria.

Program 5.3 In evaluating proposed annexations, require the preparation of a fiscal impact analysis to determine the costs and benefits to be received by the Town as a result of the proposed annexation.

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Los Altos Hills General Plan
Page LU-31

APPENDIX A
Excerpt of 2002 USGS Report by Suzanna K. Brooks,
Arthur H. Lachenbruch, and Carl M. Wentworth (2002)
Planning with Slope
Problems of regulating the creation of flat space and impermeable surface and their community impacts are generally greater for steeper slopes (Nilsen and others, 1979, p.80). Whether such problems might require regulation in any particular community depends upon the community’s physical setting and planning goals.

For the example of Los Altos Hills, Figure 3 shows that about one third of the community has slopes less than 10%, a category in which experience has shown that grading, erosion, and other development alterations to the natural terrain can generally be handled without difficulty (Mader and others, 1988).

According to Figure 3, almost half of the community has slopes from 10% to 30%, a slope category usually targeted for residential development but with progressively increasing concerns and regulatory restrictions toward the upper limit. In the one fifth of the town with slopes greater than 30% (Figure 3), residential development without extensive modification of the surroundings becomes increasingly difficult, and much of the land may be classified for limited uses with conservation easements, or with an open space designation.

Because slope is a fundamental physical parameter affecting land use in hillside communities, the community general plan and many controlling ordinances (e.g. for grading, lot size, house size, development intensity, foundation design, impermeable surface area, erosion control, and conservation easements) are often formulated in terms of the slope of the land. The slope map (Figure 2) provides a useful means of viewing the distribution of these potential problem areas, and of visualizing the community-wide implications of various regulations proposed to deal with them.

Flat Space and Grading
Typically, to create a square one-acre flat pad with balanced amounts of cut and fill on a hillside where the neutral slope is 20%, a total of two acres of natural terrain must be altered by grading (Figure 4) – the second acre is occupied by the steep compensating cut and fill banks (typically 67% and 50% respectively). Similarly, where the natural slope is 30%, about three acres must be graded to produce one flat acre (see dots, Figure 4A) – the remaining 2 acres are occupied by cut-and-fill banks that are roughly twice as steep as the original surface. . . The graded cut-and-fill slopes are not only steeper than the natural surface, they are stripped of existing trees and other vegetation; both factors can contribute to the instability and visibility of the graded slope.

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Stanford
University
rancos
Space
serve
280
N San Antonio Rd
S
El Monte
Ave
Arastradero Rd
W Middlefield
Cuesta Dr
El Camino Real
W El Camino Real
Page
Mill Rd
Central Expy
Foothill Expy
Stanford
University
Los Altos Hills
Los Altos
280
Foothill Expy
Los Altos Golf &
Country Club
Ranc
Antonio
P
Foothill College
Loyola
Town of Los Altos Hills Draft Land Use Map
July 30, 2025
°
0 3,000 6,000
Feet
Legend
Residential Agriculture
Multifamily Residential
Multifamily Overlay
Institutional
Open Space Preserve
Recreation Area - Public
Recreation Area - Private
Open Space Conservation AreaSummerhill Av
Voorhees Dr
El Monte
Rd
Saint Nicholas
School
577 Feet
535 Feet
90 90
400 Feet
189
258 Feet
Arastradero Rd

Ordinance No.____ Page 1
ORDINANCE NO. XXX
AN ORDINANCE OF THE TOWN OF LOS ALTOS HILLS AMENDING TITLE 10 (ZONING AND SITE DEVELOPMENT) OF THE LOS ALTOS HILLS MUNICIPAL

CODE TO CREATE MULTI-FAMILY ZONING DISTRICTS AND ESTABLISHING

RELATED ZONING AND DEVELOPMENT REGULATIONS IN ACCORDANCE WITH PROGRAMS A-1, A-4, AND A-5 OF THE LOS ALTOS HILLS 2023-2031 HOUSING

ELEMENT AND STATE HOUSING ELEMENT LAW INCLUDING GOVERNMENT CODE SECTIONS 65583 AND 65583.2
WHEREAS, a severe housing crisis exists in the State of California with the demand for housing outstripping supply; and
WHEREAS, California Housing Element Law (Government Code section 65580 et seq.) requires each jurisdiction to have sufficient land zoned to accommodate its fair share of the regional housing need by unit number and also by income category, including extremely low-, very lowand low-income units, during an eight-year planning period. This obligation, known as the Regional Housing Need Allocation (“RHNA”) is determined by the State Department of Housing and Community Development and allocated by the Association of Bay Area Governments in the Bay Area; and
WHEREAS, Government Code sections 65583 and 65583.2 require cities to include in their housing elements a program setting forth a schedule of actions during the planning period to, among other things, identify and rezone as necessary to make sites available during the planning period with appropriate zoning and development standards, and to maintain an inventory of sites that can realistically accommodate a portion of RHNA units, including lower-income housing; and WHEREAS, Government Code section 65863 (commonly referred to as “No Net Loss Law”) also requires cities to ensure that their housing element site inventory and program to make sites available and able to accommodate, at all times throughout the planning period, the remaining unmet RHNA share from the current and prior planning period; and WHEREAS, the adopted and state-certified 2023-2031 Housing Element (“Housing Element”) of the Town of Los Altos Hills (“Town”) contains numerous goals, policies and programs to meet its RHNA obligations, including an inventory of sites in the Town suitable to accommodate housing units at various income levels under RHNA, programs to rezone such sites to multi-family zoning districts to accommodate RHNA units and to ensure that parcels would be developed at appropriate minimum densities, and to streamline residential development projects and promote housing opportunities and mobility; and
WHEREAS, the Town’s RHNA obligation for the 2023-2031 planning period is 489 units including 197 extremely low-, very low- and low-income units. Consistent with Housing Element Law and No Net Loss Law, if a site is developed below the density projected in the Housing Element, or at a different income than projected, the Town must have adequate sites available to accommodate the remaining balance of the RHNA, or it must identify and rezone new sites that can accommodate the remaining need. For these reasons, the Housing Element includes a buffer of 15 percent above the RHNA in each income category, for a total planned capacity of 563 units with 227 lower (low and very low) income units in its site inventory; and ITEM 7A ATTACHMENT 2

Ordinance No.____ Page 2
WHEREAS, as required by Government Code section 65583 and as a part of the Town’s housing strategies to meet RHNA, the Housing Element analyzed and identified three sites in the Town, identified as portions of Foothill College (“Foothill Site”), portions of St. Nicholas School (“St. Nicholas Site”), and several parcels located in northwest Los Altos Hills along Arastradero Road that collectively are known as the “Twin Oaks” property (“Twin Oaks Site”), to be rezoned from their current Residential-Agricultural (R-A) zoning district to respective Multi-Family and Multi-Family Overlay zones to facilitate multi-family development to accommodate a portion of the RHNA obligations including the No-Net-Loss buffer. The Housing Element provided extensive site-specific evaluation of parcel characteristics, development capacity and potential, constraints, and abilities to accommodate the RHNA by unit count and income levels; and WHEREAS, the Housing Element also analyzed rezoning approaches for all three sites, including identifying portions of the properties with highest development potentials, taking steep slopes, easements, and other site constraints into account, establishing development standards to facilitate housing construction, and considering realistic development capacities when calculating maximum unit yield projections. The Housing Element projected an anticipated yield of 210 units for the Foothill Site, 75 units for the St. Nichlas Site, and 92 units for the Twin Oaks Site (collectively, the “Projected Yields”); and
WHEREAS, Program A-1 of the Housing Element sets forth a schedule of actions to create multi-family infill overlay zones on portions of the institutional Foothill College and St. Nicholas School Sites, and to rezone the Twin Oaks Site to a new multi-family zoning district, all at a minimum density of 20 dwelling units per acre and at a maximum density appropriate to facilitate development to achieve the Projected Yields and meet portions of the Town’s RHNA obligations, as required by Housing Element Law including Government Code section 65583.2; and WHEREAS, Programs A-4 and A-5 also require the Town to (1) comply with Government Code section 65583.2(h) and (i) to permit by-right housing developments with 20 percent units affordable to lower-income on sites “reused” from a prior planning cycle housing element site inventory; and (2) establish minimum densities for lower-income developments consistent with Government Code section 65583.(2)(h), respectively; and WHEREAS, the rezoning required by Program A-1 must be completed by January 31, 2026, and the related actions required by Programs A-4 and A-5 are required to be completed by Q1 2026; and
WHEREAS, the Town has prepared an Ordinance amending Title 10 of the Los Altos Hills Municipal Code pertaining to zoning and site development regulations, to create Multi-Family Overlay and Multi-Family Zoning districts and establish related zoning and development standards to implement Programs A-1, A-4, and A-5, attached hereto as Exhibit A (the “Multi-Family Rezoning Ordinance”); and
WHEREAS, the Multi-Family Rezoning Ordinance is consistent with the 2023-2031 Housing Element and its goals, policies, and programs to accommodate projected unit yields as a part of the Town’s strategy to meet its RHNA obligation; and WHEREAS, the Town has also prepared certain amendments to the Land Use Element of its General Plan, consistent with the introduction of multi-family zoning to Los Altos Hills (“LUE ITEM 7A ATTACHMENT 2

Ordinance No.____ Page 3
Amendment”); the City Council has, by separate resolution, adopted said LUE Amendment on October 16, 2025, to provide internal and horizontal consistency between the governing land use documents of the Town; and
WHEREAS, the Town provided extensive public outreach for the preparation and proposed adoption of the Multi-Family Rezoning Ordinance. The Los Altos Hills Planning Commission also conducted duly noticed public study sessions regarding the proposed multi-family rezoning at its May 1, June 5, July 10, July 24, and August 7, 2025 public meetings to provide public comment and participation opportunities; and
WHEREAS, under the California Environmental Quality Act (“CEQA”), a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code is statutorily exempt from the requirements of CEQA pursuant to Public Resources Code section 21080.085, unless such rezoning would allow for would allow for the construction of a distribution center or for oil and gas infrastructure or would allow construction to occur within the boundaries of any “natural and protected lands” as defined pursuant to Public Resources Code section 21067.5; and WHEREAS, on September 4, 2025, the Los Altos Hills Planning Commission held a duly noticed public hearing to consider a recommendation to the Los Altos Hills City Council regarding the proposed Land Use Element Amendment, Municipal Code Amendment, and Objective Design Standards. At the public hearing, the Planning Commission reviewed and carefully considered the proposed Multi-Family Rezoning Ordinance and related legislative actions, and all related testimony and evidence presented in the record and during the hearing; and WHEREAS, at its September 4, 2025 meeting, the Planning Commission by Resolution No. XXX recommended the City Council adopt the Multi-Family Rezoning Ordinance; and WHEREAS, on October 16, 2025, the Los Altos Hills City Council held a duly noticed public hearing to consider proposed Multi-Family Rezoning Ordinance and related legislative actions. At the public hearing, the City Council reviewed and carefully considered the proposed Ordinance, and all related testimony and evidence presented in the record and during the hearing.

All interested parties were provided with an opportunity to participate and be heard; and WHEREAS, based on the entirety of the record before it, the City Council desires to adopt the proposed Multi-Family Rezoning Ordinance in compliance with the 2023-2031 Housing Element and State Housing Element Law.

NOW, THEREFORE, the City Council of the Town of Los Altos Hills does hereby ordain as follows:

SECTION I. FINDINGS.

Based on the entirety of the record before it, which includes, without limitation, the California Environmental Quality Act, Public Resources Code §21000, et seq. and the CEQA Guidelines, 14 California Code of Regulations §15000, et seq. (collectively, “CEQA”); the Los Altos Hills General Plan and Housing Element; the Los Altos Hills Municipal Code; the SB 131 Statutory Exemption Report dated October 2025 prepared by Michael Baker International; all reports, minutes, and ITEM 7A ATTACHMENT 2

Ordinance No.____ Page 4
public testimony submitted as part of the Planning Commission’s duly noticed September 4, 2025 public hearing and the City Council’s duly noticed October 16, 2025 public hearing, and any and all other evidence (within the meaning of Public Resources Code §21080(e) and §21082.2), the City Council of the Town of Los Altos Hills hereby finds as follows:

1. All of the facts and recitals above are true, correct, incorporated herein and made a part hereof.

2. The documents and other material constituting the record for these proceedings are located at the Community Development Department for the Town of Los Altos Hills, 26379 Fremont Road, Los Altos Hills, and in the custody of the Community Development Director.

3. Exhibits A and B attached to this Ordinance are incorporated herein by reference as if they are set forth fully herein.

4. This Ordinance is statutorily exempt from CEQA pursuant to Section 21080.085 of the Public Resources Code as CEQA does not apply to a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code. This Ordinance is a rezoning that implements Program A1 of the Town’s adopted and state-certified 2023-2031 Housing Element pursuant to Government Code section 65583(c). As set forth in the SB 131 Statutory Exemption Report dated October 2025, this Ordinance does not allow for the construction of a distribution center for oil and gas infrastructure and does not rezone or allow construction to occur within the boundaries of any natural and protected lands as defined under Public Resources Code Section 21067.5. Therefore, this Ordinance is statutorily exempt pursuant to Section 21080.085.

5. This Ordinance was prepared and adopted in accordance with the requirements of Planning and Zoning Law (Government Code, sections 65853-65860) and meets all of the requirements thereunder.

6. This Ordinance is consistent with and supports the Los Altos Hills General Plan by implementing housing goals, programs and strategies in the 2023-2031 Housing Element, including Programs A-1, A-4 and A-5. The rezoning and related standards contained in this Ordinance is consistent with the rezoning approach, strategy, and constraints analysis contained in the Housing Element and is sufficient to accommodate the unit yields projected by the Housing Element for each site in the inventory of land. This Ordinance allows the Town to comply with state Housing Element and Housing Laws, as well as contribute to the Town’s strategies in meeting its RHNA obligation.

SECTION II. AMENDMENT.

1. Amendments to Section 10-1.301 “Established” of Articles 3 “Establishment of Districts and General Provisions”, under Chapter 1 “Zoning”, Title 10 “Zoning and Site Development” of the Municipal Code.

Section 10-1.301 is amended as follows with additions in red double underline. Other sections, subsections, paragraphs and texts not amended are not included and shall continue in full force and effect.

Section 10-1.301. Established.

ITEM 7A ATTACHMENT 2

Ordinance No.____ Page 5
The following use districts are hereby established:
(a) Residential-Agricultural (R-A);
(b) Open Space Reserve (OSR);
(c) Multi-Family (MF);
(d) Multi-Family Overlay (MFO); and
(e) Floating Multi-Family Overlay (FMFO).”

2. Amendments to Articles 5 “Area, Coverage, Height and Setback Limitations”, under Chapter 1 “Zoning”, Title 10 “Zoning and Site Development” of the Municipal Code.

The title of Article 5 is amended as follows with additions in red double underline. The purpose of the amendment is to clarify that the regulations under Article 5 applies only in the R-A zoning district. Other sections, subsections, paragraphs and texts not amended are not included and shall continue in full force and effect.

Articles 5
Residential-Agricultural (R-A) Zone - Area, Coverage, Height and Setback Limitations

3. Adding Article 16 “Multi-Family Development Standards”, under Chapter 1 “Zoning”, Title 10 “Zoning and Site Development” of the Municipal Code.

A new Article 16 “Multi-Family Development Standards” is hereby added to Title 10, Chapter 1 of the Municipal Code as shown in Exhibit A. Other sections, subsections, paragraphs and texts not amended are not included in Exhibit A and shall continue in full force and effect.

4. Amending the Town’s Zoning Map under Section 10-1.302 of the Municipal Code.

The Zoning Map for the Town of Los Altos Hills, California as set forth in Section 10-1.302 of the Municipal Code shall be amended as shown in Exhibit B. The Community Development Director is hereby directed to make the changes to the Zoning Map to reflect the foregoing rezonings. All other underlying base district(s) not specifically amended by this Ordinance shall remain unchanged and continue in full force and effect.

SECTION III. SEVERABILITY.

If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid or unconstitutional the remainder of this Ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this Ordinance are severable. The City Council of the Town of Los Altos Hills hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases be held unconstitutional, invalid, or unenforceable.

ITEM 7A ATTACHMENT 2

Ordinance No.____ Page 6
SECTION IV. EFFECTIVE DATE AND PUBLICATION.

Pursuant to the provisions of Government Code Section 36933, a summary of this Ordinance shall be prepared by the City Attorney. At least five (5) days prior to the Council meeting at which this Ordinance is scheduled to be adopted, the City Clerk shall (1) publish the Summary, and (2) post in the City Clerk’s Office a certified copy of this Ordinance. Within fifteen (15) days after the adoption of this Ordinance, the City Clerk shall (1) publish the summary, and (2) post in the City Clerk’s Office a certified copy of the full text of this Ordinance along with the names of those City Council members voting for and against this Ordinance or otherwise voting. This Ordinance shall become effective thirty (30) days from and after its adoption.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

BY: _________________________
Mayor
ATTEST:
_________________________
City Clerk
APPROVED AS TO FORM:
_________________________
City Attorney
ITEM 7A ATTACHMENT 2

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
1 Table of Contents
Article 16 Multi-Family Development Standards .................................................... 5 Purpose ................................................................................................ 5 Intent .................................................................................................... 5 Applicability .......................................................................................... 6 Ministerial Review Required ................................................................. 6 Primary Uses Permitted ........................................................................ 6 Accessory Uses and Structures Permitted ........................................... 7 Conditional Uses (MFO) ....................................................................... 8 Prohibited Uses .................................................................................... 8 Definitions ............................................................................................. 8 Area, Coverage, Height, and Setback Limitations .............................. 10 Development Standards ..................................................................... 10 Lots in More Than One Zoning District ............................................... 13 Parking ............................................................................................... 14 Preservation of Steep Hillsides, Ridgelines, Hilltops, and Creeks ...... 14 §10-1.1601
§10-1.1602
§10-1.1603
§10-1.1604
§10-1.1605
§10-1.1606
§10-1.1607
§10-1.1608
§10-1.1609
§10-1.1610
§10-1.1611
§10-1.1612
§10-1.1613
§10-1.1614
§10-1.1615 Connectivity - Paths and Walkways.................................................... 15 Exhibit A: New Article 16

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
2 Table of Tables
Table 1: Multi-Family Development Standards .............................................................. 12 Table 2: Parking Standards ........................................................................................... 14

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
3 Table of Figures
Figure 1: Steep Hillside Definition ................................................................................. 10 Figure 2: Contiguous Building Area ............................................................................... 11 Figure 3: Basement/Underground Garage Height Measurement .................................. 14 Figure 4: Multi-family Building Height Measurement ..................................................... 14

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
4 1. Amend Article 3, Establishment of Districts and General Provisions, Section 10-

1.301. Established, to add the new Multi-Family (MF) and Multi-Family Overlay (MFO) zones, as follows:
“Section 10-1.301. Established.

The following use districts are hereby established:
(a) Residential-Agricultural (R-A);
(b) Open Space Reserve (OSR);
(c) Multi-Family (MF);
(d) Multi-Family Overlay (MFO); and
(e) Floating Multi-Family Overlay (FMFO).”

2. Amend Article 5, Area, Coverage, Height and Setback Limitations to clarify that it applies to the R-A zone only, not to the MF zone standards of 10-1.16, as follows:
“Article 5
Residential-Agricultural (R-A) Zone - Area, Coverage, Height and Setback Limitations
§ 10-1.501. Minimum parcel size.”

3. Amend Title 10-Chapter 2, Zoning, to add a new Article 16 Multi-family Development Standards, as follows:

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
5 Article 16 Multi-Family Development Standards
§10-1.1601 Purpose
The purpose of this section is to establish the Multi-Family Residential (MF), Multi-Family Overlay (MFO), and Floating Multi-family Overlay (FMFO) zones to implement the Town of Los Altos Hills Housing Element while ensuring that land located in the zones will be designed and developed for multi-family housing between 20 and 24 dwelling units per acre of contiguous buildable area in a manner that is compatible and harmonious with the environmental resources and constraints of the land and the existing or potential development of adjacent areas.
§10-1.1602 Intent
The intent of this section is to allow multi-family housing between 20 and 24 dwelling units per acre of contiguous buildable area, single-room occupancies, and transitional and supportive housing as required by State law, reduce constraints to housing development, and increase the number, type, variety of, and access to housing options to meet the current and future housing needs of the Town of Los Altos Hills, including housing that is affordable to lower- and moderate-income households. The MFO zones are intended to allow the same uses noted above to be added to the existing public and private school sites designated on the General Plan Land Use Diagram.
§10-1.1603 Applicability
These multi-family zone standards and requirements shall be implemented on all parcels designated as MF, MFO, and FMFO on the zoning map. Multi-family developments shall be subject to all applicable provisions of Title 10 Zoning of the Los Altos Hills Municipal Code except where exempted, superseded by, or in conflict with the provisions of this Article 16.

For areas where the MF zone is applied as an Overlay (MFO) or Floating MFO, the MFO zone standards and permitted uses supersede the single-family residential uses and development standards of the underlying Residential-Agricultural (R-A) zone when in conflict. All public and private school uses shall be subject to the otherwise applicable standards of the underlying R-A zone.

The FMFO zone is hereby established as a floating zone on all properties designated on the General Plan Land Use Diagram as FMFO. The precise location of one or more FMFO zoning districts shall be mapped at a later date. The FMFO zoning district(s) shall include a total of not less than 8.8 acres of contiguous buildable area as defined herein and shall meet all other applicable requirements of this Article 16. The FMFO district boundaries may be mapped and recorded after review and recommendation by the Planning Commission and adoption by resolution of the City Council:
a. At the discretion of the Town at any time;
b. After selection by the property owner and confirmation by the Town Planning Director of compliance with MF zone requirements; or

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
6 c. In conjunction with a proposed development application for multi-family development on the FMFO designated property.

Upon selection and demonstration of compliance, the Town shall adopt by resolution and subsequently publish the updated Zoning Map showing the boundaries of the MFO zoning district established by adoption of this Article 16.

All multi-family development uses and structures shall require site development permit approval including review for compliance with the Multi-family Objective Design Standards by the Planning Commission pursuant to 10-2.301(c) of this Title.. §10-1.1604 Ministerial Review Required
Notwithstanding any other provision of this Title 10, the following shall not require a site development permit, conditional use permit, or other discretionary review or approval that would constitute a "project" for the purposes of Division 13 (commencing with Section 21000) of the California Public Resources Code:
(a) Multi-family housing developments in which at least 20% of the total number of units, exclusive of density bonus units, are affordable to lower-income households where identified as a lower-income site to meet the Regional Housing Needs Allocation in the current housing element in compliance with Government Code Section 65583.2(c) that were either:
(1) Rezoned to meet the lower-income household Regional Housing Needs Allocation;
(2) Non-vacant sites identified in one housing element prior to the current housing element planning period (e.g., identified in the 5th cycle before the 6 th cycle); or
(3) Vacant sites identified in two or more consecutive housing elements prior to the current housing element planning period (e.g., the 4th and 5th cycles before the 6th cycle).
(b) Supportive housing developments in conformance with Section 65651 of the California Government Code and all objective standards applicable to multi-family residential uses.
(c) Any other use or project for which State law requires the Town to utilize a ministerial review process.
§10-1.1605 Primary Uses Permitted
The following primary residential uses shall be permitted in the Multi-Family Residential (MF) zones:
(a) Multi-family Residential
(b) Senior Housing
(c) Assisted Living Facility
(d) Supportive Housing

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
7 (e) Residential Care Facilities/Group Homes
(f) Transitional Housing
§10-1.1606 Accessory Uses and Structures Permitted
Except as otherwise provided in this chapter, the words and phrases used in this chapter shall be as listed in Article 7, "Residential-Agricultural District (R-A)" of Chapter 1 entitled "Zoning" of Title 10 of LAHMC. The following accessory uses shall be permitted in the Multi-Family Residential (MF) Zone:
(a) Home Occupations.
(b) Walls, Fences, Trees, and Shrubs.
(c) House Number Signs.
(d) Accessory Buildings.
(e) Private Stables.
(f) Swimming Pools, Tennis Courts, Greenhouses, and Workshops. (g) Small Family Day Care Homes.
(h) Large Family Day Care Homes. Large family day care homes which provide care, protection, and supervision for 7 to 14 children (including children under the age of 10 years who reside at the home) in the provider’s own home, for periods of less than 24 hours per day, while the parents or guardians are away, pursuant to State regulations, shall be permitted. No business license fee or tax shall be imposed on a large family day care home.
(i) Residential Care Facility. The use of a dwelling unit or portion thereof licensed by the State of California for 24 hour nonmedical care of up to six persons per parcel or lot (not including the provider, provider family or staff) in need of personal service, supervision, protection, or assistance essential for sustaining the activities of daily living shall be permitted. No exemptions from other Town ordinances and policies apply to this permitted accessory use.
(j) Household Pets and Domestic Animals.
(k) Ornamental Garden Structures.
(l) Antennas and Dish Antennas.
(m) Accessory Dwelling Units. Accessory dwelling units shall be permitted on any lot with a primary multiple-family dwelling unit as set forth in Article 14 and be subject exclusively to the requirements of Article 14, notwithstanding any other provisions of this chapter.
(n) Temporary Trailer Coaches.
(o) Photovoltaic power generation facilities.

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
8 (p) Solar thermal energy facilities.
(q) Single Room Occupancy.
(r) On-site Manager Unit. An accessory residence to an existing allowed use for persons employed on-site for purposes of care and protection of the property shall be permitted.
§10-1.1607 Conditional Uses (MFO)
The following uses may be established in the Multi-Family Overlay (MFO) and Floating Multi-Family Overlay (FMFO) zones subject to the approval of the Planning Commission, and the issuance of a conditional development permit therefor pursuant to the provisions of this Title per Section 10-1.1004:
(a) Public schools where designated on the General Plan Land Use Diagram. (b) Private schools where designated on the General Plan Land Use Diagram. §10-1.1608 Prohibited Uses
The following uses are prohibited in the Multi-Family Residential (MF), Multi-Family Overlay (MFO) and Floating Multi-Family Overlay (FMFO) Zones:
(a) Single-family residential uses or any residential uses at a density less than 20 dwelling units per acre of contiguous buildable area.
(b) Medical and nonmedical cannabis cultivation, except for indoor and outdoor cultivation of amounts legally authorized for personal use per Section 11362.1 of the California Health and Safety Code. Outdoor cultivation for personal use must be done in a secure location, shall not be visible from the public right-of-way, and shall not be located within building setbacks or within an easement granted to the Town of Los Altos Hills.
(c) All commercial medical and nonmedical cannabis activities, except delivery by legally licensed commercial cannabis businesses established outside of Town limits in accordance with State law.
(d) Medical and nonmedical cannabis dispensaries.
(e) Processing of medical and nonmedical cannabis, except for the amounts legally authorized for personal use as defined by Section 11362.1 of the California Health and Safety Code.
(f) All commercial activity involving the sale of goods or services for profit except as otherwise allowed as a home occupation.
§10-1.1609 Definitions
Assisted Living Facility. A housing arrangement for persons 60 years of age and over, where 24-hour non-medical care and supervision is provided.

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
9 Bedroom. Attached room which is intended, arranged, or designed to be occupied by one or more persons primarily for sleeping purposes and shall have an area of not less than 70 square feet or be less than 7 feet in any dimension with a closet opening on it or within it.

Contiguous Buildable Area. The contiguous area of a parcel, lot or development site with a minimum dimension not less than 50 feet wide and excluding areas of steep slopes greater than 25% measured over a minimum horizontal distance of 25 feet. The contiguous area may include small individual areas of slopes greater than 25% where such small individual areas are less than 1,000 square feet in area and are surrounded by slopes less than 25% on all sides of said area.

Dwelling Unit. Any structure that provides a single unit providing complete, independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation, and having only one kitchen.

Floating Zone. A floating zone is a zoning district whose location is to be determined in the future subject to conditions which must be met before that zoning district can be approved for an existing piece of land.

Hilltop. The top elevation or summit of a landform that extends at least 100 feet above the elevation of the two lowest elevations within a 1,700 foot radius of the highpoint and not less than 90 horizontal degrees apart as measured from the highpoint .

Creeks, Streams & Riparian Resources. Water resources under the jurisdiction of California Department of Fish and Wildlife (CDFW) and regulated under California Fish and Game Code Sections 1600 to 1616. CDFW defines a stream (including creeks and rivers) as a body of water that flows at least periodically or intermittently through a bed or channel having banks and supports fish or other aquatic life. A stream includes watercourses with surface or subsurface flow that supports or has supported riparian vegetation. CDFW jurisdictional waters include riparian habitats associated with watercourses (vegetation associated with a stream channel). The limits of jurisdiction include ephemeral, intermittent, and perennial watercourses and include the outermost edge of riparian vegetation or the top of bank of streams or lakes, whichever is wider.

Multi-family Dwelling Unit. A structure or structures containing a total of three or more dwelling units in any vertical or horizontal arrangement on a single lot or building site.

Ridgeline. An elongated crest or series of crests at the apex of steep hillsides or the uppermost point of intersection between two opposite slopes containing steep hillsides where the elevation of such crest or crests is not lower than 400 feet above mean sea level and not less than 200 feet higher than the lowest elevation within 1,700 feet on each side of such crest or crests.

Senior Housing. A planned community of dwelling units which is designed and intended for and whose occupancy is limited to seniors as defined herein. Other uses which are ancillary to senior housing, such as common dining facilities, meeting rooms, recreational facilities and limited first-aid treatment rooms (infirmaries), may also be included. Senior

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
10 Housing may include Residential Care Facilities for the seniors. Senior housing shall not include nursing home facilities.

Senior. Persons who are 62 years of age or older.

Steep Slope. Any geographical area whether on a single lot or not, having a topographical gradient of 25% or greater (ratio of vertical distance to horizontal distance), with a minimum horizontal dimension of 25 feet, measured perpendicular to topographic contours of 5-foot intervals or less, whether manufactured or natural, whether created by a retaining structure or not, and greater than 500 square feet in area. All individual areas of steep slopes within 25 feet of each other shall be considered as a single steep slope area.

Steep Hillside. Lands that have a slope with a natural (ungraded) gradient of 25% (1 foot of vertical distance for every 4 feet of horizontal distance) or greater and a minimum vertical elevation differential of 50 feet, or a naturally existing (ungraded) gradient of 200% (2 feet of vertical distance for every 1 foot of horizontal distance) or greater and a minimum vertical elevation differential of 10 feet.

Figure 1: Steep Hillside Definition
Studio Unit. An independent dwelling unit occupied by no more than two persons that does not have a bedroom separated from the living space. §10-1.1610 Area, Coverage, Height, and Setback Limitations Unless otherwise specifically waived or modified by the Planning Commission, the following development standards are established as the minimum deemed necessary to ensure the public health, safety, and welfare within the MF Zone and to accomplish the intent and purpose of this article.
§10-1.1611 Development Standards
Each development site shall contain a contiguous buildable area, exclusive of steep slopes greater than 25% with a minimum horizontal measurement of 25 feet, with a minimum dimension not less than 50 feet wide.

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
11 Figure 2: Contiguous Building Area

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
12 Table 1: Multi-Family Development Standards
Standard

MF / MFO/ FMFO
Minimum Maximum
Density (dwelling units
per acre of contiguous
buildable area)
20 24
Maximum Floor Area Average 750 square feet per dwelling unit (1) (total gross floor area of all buildings divided by the total number of dwelling units)
Lot Size
(gross acres)

MF / MFO/ FMFO MF / MFO/ FMFO

3.5 / 3.5 / 3.5 10.0 / 10.0 / 10.0
Unit Size (square feet) 350(2) 2,000
Unit Mix (bedrooms) 2 different unit types 50% of any one unit type Front Setback 60 feet -
Side Setback 60 feet (3) -
Rear Setback 60 feet (3) -
Structure Height - 32 feet (4)(5)
Private Recreation
Space
40 sf/du for not less than
20% of total units -
Common Recreation
Space 100 square feet per dwelling unit
Notes
(1) 1,000 square foot per unit average for Senior Housing, Assisted Living developments; the maximum unit size is
2,000 square feet.
(2) Excluding Single Room Occupancy Units
(3) 25 feet minimum in an overlay zone and not less than 50 feet between multi-family buildings and primary educational facility buildings where such uses or structures are on the same property.
(4)
The provisions of 10-1.504 Height shall not apply to multifamily buildings in the MF,MF Overlay, and Floating MF Overlay zones.
(5) Excluding:
a. Non-habitable basement or underground parking
where the garage or basement entrance is not more
than 25 feet wide and the exposed portion of the
garage or basement is not more than 25% of the area
of the façade of the habitable floor above it;
b. One-half of the height between the eave and the
peak of a pitched roof;
c. Up to 4 feet of exposed foundation below the finished first floor elevation to the finished grade of any

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
13 common area or walkway within 15 horizontal feet of
the building wall; and
d. Uninhabited roof structures up to 10 feet in height
that conceal mechanical equipment, elevators, stair
overruns that cover less than 10% of the roof area
and are setback at least 10 feet from the nearest
exterior building wall.

Figure 3: Basement/Underground Garage Height Measurement Figure 4: Multi-family Building Height Measurement
§10-1.1612 Lots in More Than One Zoning District
Where a lot lies in two or more zoning districts, any building or land use established thereon shall comply with the regulations of the district in which said building or use is located. Uses permitted in one district may not extend into another district where they

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
14 would not otherwise be permitted. Dimensional requirements shall be measured from lot lines and not zoning district lines.
§10-1.1613 Parking
The following off-street parking spaces must be included dependent on unit size and number of units in the associated structure. These spaces are subject to the following requirements:
(a) Each parking space shall be at least 10 feet wide and at least 20 feet long. (b) Unobstructed vehicular access shall be available at all times for all required parking spaces, except where tandem parking is permitted by the Planning Commission as part of Site Development Permit approval pursuant to Title 10- Chapter 2.
(c) All parking spaces shall comply with setback standards under Article 5 of this chapter.
(d) Notwithstanding the foregoing, parking requirements for accessory dwelling units shall be subject to the requirements of Article 14 of this chapter.

Table 2: Parking Standards
Unit Size Minimum Required Parking Spaces
Residential
Studio 1.0 per unit
One-Bedroom 1.25 per unit
Two-Bedroom 1.75 per unit
Three-Bedroom+ 2.0 per unit
Guest Parking 0.2 per unit
Senior Housing
Senior Housing 1.0 per unit
Assisted Living 0.5 per unit plus 1.0 per employee per maximum shift §10-1.1614 Preservation of Steep Hillsides, Ridgelines, Hilltops, and Creeks
Intent: The objective of these standards is to retain significant existing natural features characteristic of the community and minimize grading and alteration of natural landforms.

Existing topography and landforms, significant trees, drainage courses, rock outcroppings, vegetation, and views should be incorporated, to the maximum extent feasible, into the future development of the land.

Steep Hillsides, ridgelines, hilltops, and creeks shall be preserved by the siting of structures to take advantage of natural topographic or landscape features to blend structures with their natural surroundings by complying with the following:

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
15 (a) Structures are prohibited within 100 feet vertically of the top elevation of a ridgeline as defined herein.
(b) Structures are prohibited on slopes greater than 25%. (c) The maximum height of a building or structure on a hilltop shall not exceed 19 feet. (d) Encroachment into steep hillsides shall not be permitted for:
(1) Primary uses or structures as defined in Article 2; (2) Accessory uses or accessory structures as defined in Article 2. (e) Encroachment into steep hillsides shall be limited to grading for vehicular access to the contiguous buildable area. Such encroachment into steep hillsides shall not exceed an area equal to 10% of the minimum contiguous buildable area. (f) Any portions of a site containing steep hillsides that are not part of the contiguous buildable area shall be left undeveloped and in their natural state and dedicated as an open space easement as set forth in the General Plan. (g) Except as otherwise permitted by the California Department of Fish and Wildlife, no structures or grading shall be allowed within 50 feet of any creeks, streams & riparian resources as defined herein. An applicant, property owner, or project sponsor shall submit to the Town as a part of a development proposal, a biological technical study demonstrating the presence or absence of creeks, streams, and riparian resources on the project site. If such water resources are present based on the report, then the applicant or project sponsor shall submit a jurisdictional delineation report approved by CDFW identifying all jurisdictional waters of the state located on the project site.
§10-1.1615 Connectivity - Paths and Walkways
Intent: Develop a compatible relationship to the landforms, building placement, public equestrian friendly pathways and recreation spaces that characterize the Los Altos Hills community. Provide a clearly organized circulation plan for automobiles, pedestrians and service vehicles.
§10-1.1615.1 Require Connections to Pathway System
Intent: Connect the sidewalks and walkways of new development to the existing Master Path Plan pathway system.
§10-1.1615.1.1 Connect to the Master Path Plan Pathway System (a) All new projects shall provide connections between the sidewalks and walkways of new development to the existing Master Path Plan pathway system. (b) Connections to the existing Master Path Plan pathway system shall be required at the time of new construction.
(c) When the Town Master Path Plan identifies a pathway on the subject property, the new Master Path Plan pathway shall be constructed and completed to Town

Town of Los Altos Hills Draft 8: September 26, 2025
Multi-Family Development Standards
16 Pathway specifications maintained by the Town Public Works Department concurrent with any multifamily development improvements. §10-1.1615.1.2 Linkages to Adjacent Development
All new projects shall provide pedestrian and vehicular linkages to adjacent nonresidential and multi-family development through connecting pathways, walkways, linked and aligned streets, driveways, and common service/delivery areas.

Stanford
University
rancos
Space
serve
280
N San Antonio
Rd
S El Monte Ave
Arastradero Rd
W Middlefield
Cuesta Dr
El Camino Real
W El Camino Real
Page Mill
Rd
Central Expy
Foothill Expy
Stanford
University
Los Altos Hills
Los Altos
280
Foothill Expy
Los Altos Golf &
Country Club
Ranc
Antonio
P
Foothill College
Loyola
Town of Los Altos Hills Draft Zoning Map
August 29, 2025
°
0 3,000 6,000
Feet
Legend
R-A Residential Agricultural
OSR Open Space Reserve
MF Multifamily
MFO Multifamily Overlay
FMFO Floating Multifamily OverlaySummerhill Av
Voorhees Dr
El Monte Rd
Saint Nicholas
School
577 Feet
535 Feet
90 90
400 Feet
189
258 Feet
Arastradero Rd
Exhibit B: Zoning Map

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF LOS ALTOS HILLS

ADOPTING OBJECTIVE DESIGN STANDARDS FOR MULTI-FAMILY ZONING

DISTRICTS
WHEREAS, a severe housing crisis exists in the State of California with the demand for housing outstripping supply; and
WHEREAS, California Housing Element Law (Government Code section 65580 et seq.) requires each jurisdiction to have sufficient land zoned to accommodate their fair share of the regional housing need by unit number and also by income category, including extremely low-, very low- and low-income units, during an eight-year planning period. This obligation, known as the Regional Housing Need Allocation (“RHNA”) is determined by the State Department of Housing and Community Development and allocated by the Association of Bay Area Governments in the Bay Area; and
WHEREAS, Government Code sections 65583 and 65583.2 require cities to include in their housing elements a program setting forth a schedule of actions during the planning period to, among other things, identify and rezone as necessary to make sites available during the planning period with appropriate zoning and development standards, and to maintain an inventory of sites that can realistically accommodate a portion of RHNA units, including lower-income housing; and WHEREAS, Government Code section 65863 (commonly referred to as “No Net Loss Law”) also requires cities to ensure that their housing element site inventory and program to make sites available and able to accommodate, at all times throughout the planning period, the remaining unmet RHNA share from the current and prior planning period; and WHEREAS, the adopted and state-certified 2023-2031 Housing Element (“Housing Element”) of the Town of Los Altos Hills (“Town”) contains numerous goals, policies and programs to meet its RHNA obligations, including an inventory of sites in the Town suitable to accommodate housing units at various income levels under RHNA, programs to rezone such sites to multi-family zoning districts to accommodate RHNA units and to ensure that parcels would be developed at appropriate minimum densities, and to streamline residential development projects and promote housing opportunities and mobility; and
WHEREAS, the Town’s RHNA obligation for the 2023-2031 planning period is 489 units including 197 extremely low-, very low- and low-income units. Consistent with Housing Element Law and No Net Loss Law, if a site is developed below the density projected in the Housing Element, or at a different income than projected, the Town must have adequate sites available to accommodate the remaining balance of the RHNA, or it must identify and rezone new sites that can accommodate the remaining need. For these reasons, the Housing Element includes a buffer of 15 percent above the RHNA in each income category, for a total planned capacity of 563 units with 227 lower (low and very low) income units in its site inventory; and WHEREAS, as required by Government Code section 65583 and as a part of the Town’s housing strategies to meet RHNA, the Housing Element analyzed and identified three sites in the Town, identified as portions of Foothill College (“Foothill Site”), portions of St. Nicholas School ITEM 7A ATTACHMENT 3

(“St. Nicholas Site”), and several parcels located in northwest Los Altos Hills along Arastradero Road that collectively are known as the “Twin Oaks” property (“Twin Oaks Site”), to be rezoned from their current Residential-Agricultural (R-A) zoning district to respective Multi-Family and Multi-Family Overlay zones to facilitate multi-family development to accommodate a portion of the RHNA obligations including the No-Net-Loss buffer. The Housing Element provided extensive site-specific evaluation of parcel characteristics, development capacity and potential, constraints, and abilities to accommodate the RHNA by unit count and income levels; and WHEREAS, the Housing Element also analyzed rezoning approaches for all three sites, including identifying portions of the properties with highest development potentials, taking steep slopes, easements, and other site constraints into account, establishing development standards to facilitate housing construction, and considering realistic development capacities when calculating maximum unit yield projections. The Housing Element projected an anticipated yield of 210 units for the Foothill Site, 75 units for the St. Nichlas Site, and 92 units for the Twin Oaks Site (collectively, the “Projected Yields”); and
WHEREAS, Program A-1 of the Housing Element sets forth a schedule of actions to create multi-family infill overlay zones on portions of the institutional Foothill College and St. Nicholas School Sites, and to rezone the Twin Oaks Site to a new multi-family zoning district, all at a minimum density of 20 dwelling units per acre and at a maximum density appropriate to facilitate development to achieve the Projected Yields and meet portions of the Town’s RHNA obligations, as required by Housing Element Law including Government Code section 65583.2; and WHEREAS, Programs A-4 and A-5 also require the Town to (1) comply with Government Code section 65583.2(h) and (i) to permit by-right housing developments with 20 percent units affordable to lower-income on sites “reused” from a prior planning cycle housing element site inventory; and (2) establish minimum densities for lower-income developments consistent with Government Code section 65583.(2)(h), respectively; and WHEREAS, the rezoning required by Program A-1 must be completed by January 31, 2026, and the related actions required by Programs A-4 and A-5 are required to be completed by Q1 2026; and
WHEREAS, the Town has prepared an Ordinance amending Title 10 of the Los Altos Hills Municipal Code pertaining to zoning and site development regulations, to create Multi-Family Overlay and Multi-Family Zoning districts and establish related zoning and development standards to implement Programs A-1, A-4, and A-5 (the “Multi-Family Rezoning Ordinance”) and has also prepared amendments to the Land Use Element of the General Plan to incorporate multi-family land uses and maintain internal consistency between governing planning documents (“LUE Amendment”); and
WHEREAS, as a part of the legislative efforts to address the state’s housing crisis, California housing laws also generally require local jurisdictions to apply objective development and design standards when reviewing housing development projects to streamline the approval process and facilitate production of units. For example, the Housing Crisis Act of 2019 (Government Code section 66300 et seq.) prohibits local governments from imposing or enforcing design standards established on or after January 1, 2020, that are not objective standards. The Housing Accountability Act (Government Code section 65589.5) also limit local authority to ITEM 7A ATTACHMENT 3

disapprove a housing development or impose conditions that render the project infeasible if the housing development project complies with applicable objective standards and regulations; and WHEREAS, objective standards are those that involve no personal or subjective judgment by a public official and being uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both a development applicant or proponent and the public official; and
WHEREAS, in compliance with the foregoing state laws and in furtherance of its goals to facilitate production of housing and meet RHNA obligations, the Town’s 2023-2031 Housing Element included Program B-4 to adopt objective design and development standards to promote certainty in the planning approval process and streamline housing production; and WHEREAS, pursuant to state law and the Housing Element, the Town has prepared a set of Objective Design Standards for Multi-Family Zoning Districts, attached hereto as Exhibit A (“Multi-Family ODS”), to implement objective design and development standards for multifamily housing developments; and WHEREAS, the Town provided extensive public outreach, notice and participation opportunities for the preparation and proposed adoption of the Multi-Family Rezoning Ordinance, LUE Amendment, and the Multi-Family ODS. The Los Altos Hills Planning Commission also conducted duly noticed public study sessions to review these legislative amendments and ODS at its May 1, June 5, July 10, July 24, and August 7, 2025 public meetings to provide additional public comment and participation opportunities; and
WHEREAS, under the California Environmental Quality Act (“CEQA”), a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code is statutorily exempt from the requirements of CEQA pursuant to Public Resources Code section 21080.085, unless such rezoning would allow for would allow for the construction of a distribution center or for oil and gas infrastructure or would allow construction to occur within the boundaries of any “natural and protected lands” as defined pursuant to Public Resources Code section 21067.5; and WHEREAS, CEQA Guidelines section 15061(b)(3) provides that CEQA does not apply to activities that would not have the potential for causing a significant effect on the environment.

Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA; and WHEREAS, on September 4, 2025, the Los Altos Hills Planning Commission held a duly noticed public hearing to consider a recommendation to the Los Altos Hills City Council regarding the proposed Multi-Family Rezoning Ordinance, the LUE Amendment, and the Multi-Family ODS. At the public hearing, the Planning Commission reviewed and carefully considered the proposed legislative amendments and the ODS, and all related testimony and evidence presented in the record and during the hearing. All interested parties were provided with an opportunity to participate and be heard; and
WHEREAS, at its September 4, 2025 meeting, the Planning Commission by Resolution No. XXX recommended the City Council adopt the Multi-Family ODS; and ITEM 7A ATTACHMENT 3

WHEREAS, on October 16, 2025, the City Council held a duly noticed public hearing to consider the Multi-Family ODS. At the public hearing, the City Council reviewed and carefully considered the proposed Multi-Family ODS and related legislative actions, and all related testimony and evidence presented in the record and during the hearing. All interested parties were provided with an opportunity to participate and be heard.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the Town of Los Altos Hills hereby makes the following findings and recommendations:

1. General and CEQA Findings.

Based on the entirety of the record before it, which includes, without limitation, the California Environmental Quality Act, Public Resources Code §21000, et seq. and the CEQA Guidelines, 14 California Code of Regulations §15000, et seq. (collectively, “CEQA”); the Los Altos Hills General Plan and Housing Element; the Los Altos Hills Municipal Code; the SB 131 Statutory Exemption Report dated October 2025 prepared by Michael Baker International; all reports, minutes, and public testimony submitted as part of the Planning Commission’s duly noticed September 4, 2025 public hearing and the City Council’s duly noticed October 16, 2025 public hearing; and any and all other evidence (within the meaning of Public Resources Code §21080(e) and §21082.2), the City Council of the Town of Los Altos Hills hereby finds as follows:

A. The foregoing recitals are true and correct and made a part of this Resolution.

B. The documents and other material constituting the record for these proceedings are located at the Community Development Department for the Town of Los Altos Hills, 26379 Fremont Road, Los Altos Hills, and in the custody of the Community Development Director.

C. The proposed Multi-Family ODS (Exhibit A) attached to this Resolution is incorporated herein by reference as if set forth fully herein.

D. The proposed LUE Amendment is exempt from CEQA under the statutory exemption pursuant to Public Resources Code Section 21080.085 as the proposed objective design standards are a part of the rezoning action necessary to implement the schedule of action under the Housing Element to rezone housing sites and is also necessary to comply with state housing law requirements for adopting and utilizing objective standards. Under Section 21080.085 of the Public Resources Code, CEQA does not apply to a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code and that does not allow for the construction of a distribution center for oil and gas infrastructure and does not allow construction to occur within the boundaries of any natural and protected lands as defined under Public Resources Code Section 21067.5.

As set forth in separate Ordinance and in the SB 131 Statutory Exemption Report dated October 2025, the proposed multi-family rezoning meets the requirements of Section 21080.085. Consequently, the Multi-Family ODS supports such rezoning and complies with state law and is exempt from CEQA on the same basis as it is a part of the rezoning action necessary to implement the Housing Element.

ITEM 7A ATTACHMENT 3

E. Further, the proposed Multi-Family ODS is also not subject to CEQA pursuant to CEQA Guidelines section 15061(b)(3), because it can be seen with certainty that there is no possibility that the proposed Objective Design Standards may have a significant impact on the environment. The proposed Objective Design Standards would only introduce objective standards and be in compliance with state housing laws including the Housing Crisis Act of 2019 and the Housing Accountability Act requiring the use of objective standards for housing development reviews. The proposed Multi-Family ODS would not alter any land use classifications or approve any particular project.

They also would not impact the physical allowances for development projects. As such, it can be seen with certainty that the proposed Multi-Family ODS do not have a significant impact on the environment.

F. The proposed Multi-Family ODS is consistent with the Housing Element, including Programs A-1, A-4, A-5 and B-4, and the proposed Multi-Family Rezoning Ordinance and LUE Amendment, and the goals, policies, programs, and housing strategies therein. The proposed ODS will provide clear and predictable design guidance, ensure compliance with state housing laws, and establish streamlined review processes to facilitate housing towards meeting the Town’s RHNA obligation.

2. Decision.

Based upon the testimony received by the City Council and the background and findings set forth above and all other evidence in the administrative record, the Los Altos Hills City Council hereby adopts the Objective Design Standards for Multifamily Zoning Districts, as set forth more specifically and fully in Exhibit A.

BE IT FURTHER RESOLVED this resolution shall take effect immediately upon adoption.

PASSED AND ADOPTED at a regular meeting of the City Council of the Town of Los Altos Hills this __ day of ______, 2025, by the following vote:

INTRODUCED:

PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

BY: _________________________
Mayor
ATTEST:
_________________________
City Clerk
APPROVED AS TO FORM:

ITEM 7A ATTACHMENT 3

_________________________
City Attorney
ITEM 7A ATTACHMENT 3

Fast Track Guide for New Residences Multi-family Objective Design Standards Exhibit A: MF ODS

i
page Multi-family Objective Design Standards

ACKNOWLEDGMENTS
Prepared by:

Prepared for:

Enter contact name/information
on this side if it is being included
Enter contact name/information
on this side if it is being included
<-- Replace logo for team members, as
appropriate. Enter contact information.

Adopted by (enter original details here)
Amended: Month 2025
Adopted by City Council: Month dd, 2025

ii
page Multi-family Objective Design Standards
Table of Contents

01. Introduction and Purpose ..........................1

02. Relationship to Other Town Documents.....2

03. Applicability................................................3

04. Limited Exceptions, Streamlined Approvals,
and Density Bonuses ..................................4

05. Definitions ..................................................5

06. Site Planning ..............................................6

06.01 Recreation Areas.........................................................6

06.01.01 Private Recreation Space ................................ 6

06.01.02 Common Recreation Space ............................. 6

06.02 Parking, Access, and Circulation.................................7

06.02.01 Access Roads ................................................ 7

06.02.02 Underground Parking ..................................... 7

06.02.03 Surface Parking ............................................. 7

06.03 Grading Design Standards ..........................................8

06.04 Retaining Walls...........................................................9

06.04.01 Wall Height ................................................... 9

06.04.02 Wall Design ................................................... 9

07. Building Design........................................ 10

07.01 Building Orientation..................................................10

07.01.01 Parking Garage/Structure Orientation .............10

07.01.02 Building Grouping .........................................10

07.02 Building Form and Massing.......................................10

07.02.01 Massing Breaks ............................................11

07.02.02 Minimize Foundation Visibility .........................12

07.02.03 Balconies and Unit Entrances..........................12

07.03 Materials and Colors .................................................12

07.03.01 Building Materials ..........................................12

07.03.02 Building Colors. ............................................13

07.04 Roof Design...............................................................13

07.04.01 Roof Form ....................................................13

07.04.02 Roof Type ....................................................13

07.05 Windows and Doors ..................................................14

08. Landscaping and Screening..................... 15

08.01 Landscaping and Screening ......................................15

08.01.01 Setback Landscaping ....................................15

08.01.02 Heritage Oak Tree Replacement .....................15

08.02 Fencing and Walls .....................................................16

08.02.01 Fence Height ................................................16

08.02.02 Fence Setback ..............................................16

08.02.03 Fence/Wall Location ......................................16

08.02.04 Fence Types ..................................................16

08.03 Lighting.....................................................................17

08.03.01 Outdoor Lighting. .........................................17

08.03.02 Building Lighting ...........................................18

08.03.03 Signage Lighting ...........................................18

08.03.04 Prohibited Lighting Types ...............................18

08.04 Signage .....................................................................19

08.04.01 Signage Location ..........................................19

08.04.02 Signage Type ................................................19

08.04.03 Signage Design ............................................19

iii
page Multi-family Objective Design Standards

09. Utilities and Service Areas....................... 20

09.01 Mechanical Equipment Location and Screening .......20

09.01.01 Equipment Location .......................................20

09.01.02 Equipment Screening.....................................20 List of Tables
Table 1. Light Emission and Color Temperature....................... 17 List of Appendices
Appendix: Checklist for Multi-family Objective Design Standards List of Figures
Figure 1. Rounded Cuts and Fills ............................................ 8 Figure 2. Retaining Wall System ............................................. 9 Figure 3. Building Form and Massing .................................... 10 Figure 4. Material Texture, Pattern, and Color........................ 11 Figure 5. Horizontal Offset or Projection................................ 11 Figure 6. Roof Height or Form.............................................. 11 Figure 7. Fenestration Pattern .............................................. 12 Figure 8. Wall Notch Combination......................................... 12 Figure 9. Roof Types............................................................ 13 Figure 10. Recessed Windows and Doors .............................. 14

1 page
Introduction and Purpose
Multi-family Objective Design Standards

01. Introduction and Purpose
The Town of Los Altos Multi-family Objective Design Standards have been created with the intent of integrating multi-family housing development into the Town’s unique semi-rural
community character, enhancing the quality of design and development throughout the Town, and considering the interests of neighboring property owners. These standards shall be referred to hereinafter as “Multi-family Objective Design Standards.” The Multi-family Objective Design Standards establish regulations for multi-family residential development consistent with State law related to objective design standards as defined by Government Code Section 66300(a)(7).

The Multi-family Objective Design Standards are intended to ensure the requirements that apply to multi-family residential projects are predictable and easy to interpret for all stakeholders, including decision makers, staff, applicants, and members of the public.

2 page
Relationship to Other Town Documents
Multi-family Objective Design Standards

02. Relationship to Other Town Documents
While the Multi-Family Zone (MFZ) establishes development standards for discretionary projects, the Multi-family Objective Design Standards provide contextual and complementary design criteria for multi-family development in the Town.

These multi-family objective design standards, together with the Los Altos Hills Municipal Code (LAHMC), Title 10 Zoning and Site Development, and other regulations, are intended to safeguard and implement the Town’s vision as stated in Policy 1.1 of the Los Altos Hills Land Use Element of maintaining Los Altos Hills’ “…semi-rural atmosphere of the community, minimize
disturbance to natural terrain, minimize removal of the natural vegetation, and create the maximum compatibility of development with the natural environment through site design and landscaping”
The Multi-family Objective Design Standards are intended to align and implement the goals, objectives, and policies of the Town of Los Altos Hill’s General Plan Land Use and Housing Elements and Zoning Ordinance.

3 page
Applicability
Multi-family Objective Design Standards

03. Applicability
The Multi-family Objective Design Standards apply to multi-family residential development projects in a multi-family zone. In addition to the standards herein, all development shall comply with the standards of LAHMC Title 10 Zoning and Site Development, and any other applicable regulations.

4 page
Limited Exceptions, Streamlined Approvals, and Density Bonuses Multi-family Objective Design Standards

04. Limited Exceptions, Streamlined Approvals, and Density Bonuses All projects must comply with all relevant Multi-family Objective Design Standards of this document. The Planning Commission may approve requests for exceptions for up to five Multi-family Objective Design Standards as part of site development permit approval.
(a) Request for Exceptions: A request for an exception(s) from one or more Multi-family Objective Design Standards must be made in writing as part of the application for the proposed project. The written justification for an exception(s) must identify each standard for which an exception is
requested, and how the request meets the findings listed below.
(b) Required Findings for Exceptions: The Planning
Commission will consider a written request for an
exception(s) and make findings to approve or deny the
request. An exception shall be granted only if all the following findings are made for each of the exceptions:
(1) The requested exception is for a Multi-family Objective Design Standard and not for a Multi-Family Zone
development standard contained in LAHMC Title 10
(Zoning and Site Development), Article 16.
(2) Exceptions from numerical standards do not deviate
more than ten percent (10%) from the standard.
(3) The proposed project meets the intent of the design standard under consideration, or a similar design
standard is implemented in substitution.
(c) Density Bonus: An exception, approved through the process outlined in this section, shall be separate from and in addition to any concession/incentive or waiver granted pursuant
to Density Bonus Law (Government Code Section 65915 -
65918) and/or other applicable State laws.
(d) If any concession/incentive or waiver is granted through Density Bonus Law to waive or exempt an applicable standard included in the Multi-family Objective Design Standards, each waiver will be counted as one of the five exceptions granted through this section. The limits of this section do not limit the number of concessions, incentives, or waivers otherwise allowed by State Density Bonus Law.