T&E AGENDA: 08/29/22
ITEM: (d) 1
TO: TRANSPORTATION AND FROM: Chris Burton
ENVIRONMENT COMMITTEE John Ristow
SUBJECT: UPDATE TO CITY COUNCIL DATE: August 10, 2022
POLICY 5-1 (TRANSPORTATION
ANALYSIS)
Approved Date
8/19/22
RECOMMENDATION
Accept report discussing potential updates to the Transportation Analysis Policy: Council Policy 5-1 (Policy 5-1).
Discuss potential amendments to Policy 5-1 that would support a Statement of Overriding Considerations for market rate housing projects that would have significant and unavoidable traffic impacts when analyzed under Vehicle Miles Traveled (VMT) and are proposed in areas not planned for housing growth in the Envision San José 2040 General Plan.
EXECUTIVE SUMMARY
In May 2022, the Transportation and Environment (T&E) Committee reviewed recommended changes to the City’s “Transportation Analysis Policy”, Council Policy 5-1, which defines how the City should assess transportation impacts under the California Environmental Quality Act (CEQA). The T&E Committee expressed support for the recommended changes, which generally promote greater housing development.
The T&E Committee requested further consideration of how infill sites that are not currently designated for residential development under the City’s General Plan are evaluated under Policy 5-1. This memorandum provides staff’s analysis and recommendations, in accordance with committee direction.
BACKGROUND
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
In February 2018, Council Policy 5-1, "Transportation Analysis Policy," replaced the previous Council Policy 5-3, "Transportation Impact Policy," as the policy for the CEQA review of transportation impacts from proposed development in San José. Council Policy 5-1 (Policy 5-1) 1 aligns the City's CEQA rules and transportation analysis methodology with state law changes and goals as outlined in the City's Envision San José 2040 General Plan. When City Council approved Policy 5-1, it provided staff direction to return to Council with potential updates based on lessons learned through its implementation.
In fall 2021, the Community and Economic Development (CED) Committee directed staff to propose changes to the Policy that would further streamline processes for housing, especially affordable housing, in response to the housing crisis. Staff are currently developing proposed changes to this policy based on direction from the CED Committee. The changes to the Policy proposed by staff are outlined in the memo to the Transportation and Environment (T&E) Committee dated April 13, 20222
.
At the May 2, 2022, T&E Committee meeting, the Committee expressed support for the proposed changes to Policy 5-1 and requested further evaluation of conditions under which Policy 5-1 should allow for a Statement of Overriding Considerations for projects that have significant and unavoidable environmental impacts under CEQA. Specifically, the Committee directed staff to explore amendments to Council Policy 5-1 to permit potential infill projects designated in the General Plan for non-residential development to seek a City Council Statement of Overriding Considerations, with specific process and programmatic criteria that align with the City’s General Plan and Transportation strategies. Staff’s response to this direction is the focus of this memo.
Proposed Policy 5-1 Amendments related to the Adoption of a Statement of Overriding Considerations.
In accordance with State CEQA Statute and Guidelines and Title 21 of the San José Municipal Code, projects with significant and unavoidable impacts require the City Council to certify an Environmental Impact Report and adopt a Statement of Overriding Considerations. Adoption of a Statement of Overriding Considerations with findings requires that the specified benefits of such projects outweigh the unavoidable and significant impacts identified, in accordance with Public Resources Code Section 21081. Based on these requirements, the decision-making agency must balance the economic, legal, social, technological, or other benefits of a proposed project against identified significant environmental impacts.
The existing Policy 5-1 supports a Statement of Overriding Considerations for all commercial and industrial projects that have significant and unavoidable VMT Impacts. Specifically, the Policy allows the City Council to consider overriding a significant transportation impact for these types of projects if the project mitigates its VMT impacts to the maximum extent possible 1 Transportation Analysis Policy, February 27, 2018:
https://www.sanjoseca.gov/home/showpublisheddocument/12827/636669952074470000 2 Update to City Council Policy 5-1 memo, April 13, 2022:
https://sanjose.legistar.com/View.ashx?M=F&ID=10827364&GUID=8BFE2CCF-06C7-4402-AE4D-48451488AE6E
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
as defined by the City-adopted VMT Evaluation Tool. In addition, the existing policy supports the adoption of a Statement of Overriding Considerations for residential projects that are 100% deed-restricted housing affordable to households that make no more than 80% of area median income (AMI), and market-rate housing projects that are within a Growth Area, as specified in the General Plan. In addition to mitigating VMT impacts to the maximum extent possible, projects must construct or fund multimodal transportation improvements proportionate to their VMT impact.
As discussed in the April 13, 2022, T&E Committee memorandum, staff proposes to modify Policy 5-1 to support an override for market-rate housing projects that would have immitigable VMT if the site has an existing General Plan residential land use designation and the project conforms to that land use designation. In reviewing the existing Policy and discussing proposed changes with members of the development community, clear concern existed regarding the inconsistency of having a General Plan that would support housing on a given site, but a Policy that did not. The proposed change would bring Policy 5-1 into alignment with the General Plan and address that concern.
In the April 13, 2022, memorandum, staff did not, however, propose to change Policy 5-1 to allow a statement of overriding considerations for market-rate housing projects with immitigable VMT on sites that that are not designated for housing in the General Plan. Therefore, staff requires a General Plan amendment.
Over the years, the City has been approached by developers seeking to develop in outlying parts of San José in ways that are not consistent with the General Plan. To further both the Envision San José 2040 General Plan and Climate Smart San José’s strategies and goals to reduce the City’s contributions to climate change, staff are not supportive of facilitating significant new market residential development in locations inconsistent with the General Plan that would result in immitigable VMT.
At the May 2, 2022, T&E Committee meeting, the Committee provided input that staff should explore changes to Policy 5-1 that allow Council to make findings for a Statement of Overriding Considerations for infill market-rate housing projects in immitigable areas outside of General Plan growth areas. Councilmember Peralez submitted a memo, approved by the T&E Committee, that provided staff with the following direction • Explore amendments to Council Policy 5-1 that permit potential infill projects not designated in the General Plan for residential development to seek a City Council Statement of Overriding Considerations due to Significant and Unavoidable Impacts as per the policy. Include specific process and programmatic criteria that projects seeking to use this process must perform in attaining the General Plan amendments before being considered by Council. • These considerations must align with our City’s General Plan and Transportation strategies.
Considerations should include transportation and public benefits packages commensurate with the impact of the proposed project, and full public outreach processes. Considerations should also not allow employment lands to be converted to residential. Sites to be considered must make
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
a significant contribution to solving the housing crisis and be large enough to provide a balance of uses that enhance and contribute to the vitality of their neighborhood.
ANALYSIS
In identifying potential criteria that would support a City Council Statement of Overriding Considerations for market-rate housing not currently supported by the General Plan, staff identified 2018 Measure C as a potential framework. Additional background on Measure C is helpful.
In 2017, Ponderosa Homes obtained enough valid signatures to place Measure B on the June 2018 ballot. Measure B, if passed by a majority of voters, would have amended the Envision San José 2040 General Plan to: (1) create a senior housing overlay land use designation for converting employment lands to senior housing citywide; (2) apply the senior housing overlay to the land designated industrial park adjacent to the east foothills and the former Evergreen Specific Plan area; (3) amend the Evergreen-East Hills Development Policy to address application of the senior housing overlay in Evergreen; (4) adopt the Evergreen Senior Homes Specific Plan for the industrial site; and (5) make related Municipal Code changes.
In March 2018, Council decided not to approve the amendments in Measure B and voted to place the measure on the June 2018 ballot. In addition, Council voted to place Measure C on the ballot, as a counter-measure to Measure B. In the June election, voters overwhelmingly voted against Measure B (59.00% No) and passed Measure C (60.83% Yes)3.
Measure C amended the City’s Charter to include criteria and a process for the conversion of employment lands of five or more acres in outlying portions of the City to residential uses.
Outlying areas were defined as areas generally in southeastern and southern San José within a mile of the Urban Growth Boundary. Measure C was enacted in the City Charter and included the following requirements:
1. The City, at the applicant’s cost, shall prepare a Fiscal and Jobs/Housing Balance Impact Study addressing the fiscal and economic impacts of the proposed development upon the City.
2. The City shall require the proposed development to comply with all applicable inclusionary housing requirements, except that notwithstanding any contrary provisions in those requirements, the minimum number of affordable housing units in the residential development shall be as follows, and construction of the units shall be concurrent and proportional to the construction of market rate units in the development:
a. For-sale residential development: 50% of the total dwelling units in the residential development shall be made available for purchase at an affordable housing cost to those 3 Election results for June 5, 2018: https://results.enr.clarityelections.com/CA/Santa_Clara/75369/Web02.203317/#/
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
households earning no more than 110% of the area median income. Such units may be sold to households earning no more than 120% of the area median income. b. Rental residential development: 35% of the total dwelling units in the residential development shall be made available for rent at an affordable housing cost to moderate income households, and 20% of the total dwelling units in the residential development shall be made available for rent at an affordable housing cost to very low-income households (households making 50% of area median income).
3. Must comply with the City Municipal Code and all laws relating to design and construction including but not limited to building energy efficiency standards, including all applicable Zero Net Energy requirements.
4. Required to use recycled/reclaimed water where the site is in an area served by recycled/reclaimed water for those uses.
5. To the maximum extent feasible, and subject to all applicable federal and state laws, the City shall require that any residential development includes provision of support services, at no cost to the City, as appropriate to serve the intended resident population; given that Measure B would have allowed a Senior living community, the type of services listed in Measure C were those that catered to seniors.
The rationale for using Measure C as a starting point to craft criteria to support an override for market-rate residential development under Policy 5-1 is that first, the measure applied to areas that have a similar geography to where an override would be needed under Policy 5-1. The “Threatened Employment” lands covered under Measure C are within areas that have immitigable VMT under Policy 5-1. Second, Measure C applies to residential development proposals that are fundamentally inconsistent with the General Plan, as would a new provision for a Statement of Overriding Considerations under Policy 5-1, and establishes the criteria for the approval of such development. These criteria includes project requirements that would further City goals, particularly goals related to affordable housing.
Proposed Policy 5-1 Criteria for a Statement of Overriding Considerations Based on the memo from Councilmember Peralez, approved by the T&E Committee, staff proposes the criteria below for a Statement of Overriding Considerations (the Override Criteria).
These Override Criteria would only apply to market rate housing projects that would have significant and unavoidable transportation impacts when analyzed under VMT and are proposed in areas not planned for housing growth in the Envision San José 2040 General Plan.
Applicable Land Use Designations
Consistent with Councilmember Peralez’s memo, a Statement of Overriding Considerations should not be supported for the conversion of land designated for employment uses. Consistent with the General Plan and the City Charter, it should also not be supported on lands outside of the Urban Growth Boundary (UGB) and the Urban Service Area (USA). The Override Criteria
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
could be applied to existing land designated for residential uses to allow for further densification, but staff does not recommend this. With rare exception, the residential land within immitigable VMT areas outside of growth areas is designated either Mixed-Use Neighborhood, Residential Neighborhood, Rural Residential, or Lower Hillside.
Nearly all land designated Mixed-Use Neighborhood or Residential Neighborhood has already been subdivided for existing homes and would not likely redevelop. The land designated Rural Residential and Open Hills could present opportunities for a property owner to propose redevelopment with denser housing. However, areas designated Rural Residential and Open Hillside are located at the edge of the city, within or adjacent to the lower foothills, and up against the USA/UGB. Increasing density on such outlying parcels conflicts with the Focused Growth, Fiscally Strong City, and Measurable Sustainability/Environmental Stewardship Major Strategies in the General Plan and would detract from the goals outlined in Climate Smart San José.
The Override Criteria could be applied to land designated Public Quasi/Public (PQP). However, staff recommends against this. Staff recently worked with San José’s 19 public school districts on proposed criteria for when the General Plan could support conversion of school district land designated PQP to other non-school uses, including residential. This work was put on hold, first at the request of the School Districts, and then as a result of staff vacancies. Creating criteria for when Policy 5-1 could support PQP conversions with a Statement of Overriding Considerations could, in effect, create criteria for the conversion of school district property in areas with immitigable VMT. Staff would need to re-engage the school districts, but do not have the capacity to do so within the planned timeframe for Council to consider updates to Policy 5-1. If Council desires that the Override Criteria be applied to PQP designated land, then staff recommends considering this concurrently with the process to develop a policy regarding the conversion of school district property. This work is anticipated to recommence in 2023.
By process of elimination, the land use designation, where the Override Criteria would then be supported would be on land designated Private Recreation and Open Space within the USA and UGB.
Override Criteria
Below are the Override Criteria that staff recommends a market rate housing proposal would have to meet to be considered for a Statement of Overriding Considerations, if outside of a growth area and with immitigable VMT.
Affordable Housing
Councilmember Peralez’s May 2, 2020, memo states that projects that would be considered under the Override Criteria should “make a significant contribution to solving the housing crisis.” The housing crisis in San José and the region is largely driven by a lack of housing affordable to extremely low-, very low-, low-, and moderate-income households with incomes at or below 120% AMI, and not a lack of housing for more affluent or above moderate-income
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
households. While the City needs all types of housing to address its current crisis, San José struggles most with production of enough affordable housing. As of December 31, 2021, 90% of the way through the City’s current Housing Element planning cycle, the City had reached more than 105% of its total market-rate housing goal, as established by its Regional Housing Needs Assessment (RHNA) allocation. In contrast, the City had only reached 24% of its affordable housing goal. The City Council gave staff direction to explore strategies that would facilitate the development of for-sale homes affordable to moderate-income households (81 to 120% AMI), given that no new and few resale homes are currently affordable to these households.
Given the above, staff recommends the Override Criteria below for housing affordability, which is a modified version of the criteria established under Measure C.
1. 35% of the total dwelling units in the residential development shall be affordable (rental or for sale) to those households earning no more than 120% of the area median income
2. The development shall provide additional on-site affordable housing consistent with the required affordability levels for rental housing in the City’s Inclusionary Housing Requirements (IHO), as may be amended. Under the current IHO, 15% of the development’s total rental units would need to be affordable at the following levels:
• 5% of units at a 100% AMI affordable rent cost,
• 5% of units at a 60% AMI affordable rent cost, and
• 5% of units at a 50% AMI affordable rent cost.
Alternatively, the development could provide 10% of the total rental units affordable to household making no more than at 30% of AMI.
In sum, a total of 45% to 50% of the residential units of a proposed project would need to be restricted affordable at varying levels of affordability. Developers would not be provided the option to meet their IHO obligation off-site or through payment of an in-lieu fee, as is typical of most market-rate housing developments.
Staff does not recommend establishing minimum densities for projects under this Override Criteria. The areas that would be proposed under this criteria would be in peripheral locations far from employment centers and transit. These projects would have immitigable VMT and generate significant Green House Gas emissions. These are not the areas where the Envision San José 2040 General Plan and Climate Smart José plan for density. Therefore, allowing single family homes or townhomes in these locations could be appropriate.
Commercial
Councilmember Peralez’s memo also states that projects considered under the Override Criteria should “be large enough to provide a balance of uses that enhance and contribute to the vitally of their neighborhood.” Staff recommends that projects proposed under the Override Criteria also be required to include neighborhood serving commercial uses that would help meet the daily
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
need of both the new neighborhood, as well as the residents of the surrounding neighborhood, and provide a “third space” for neighbors to gather and interact informally. To this end, staff recommends that the Override Criteria include the following commercial requirements:
1. Projects between 25-50 acres shall provide at least two acres of land dedicated to commercial uses.
2. Projects greater than 50 acres but less than 100 acres shall provide up to 4 acres of commercial.
3. Projects that are 100 acres or greater shall provide up to 6 acres of commercial.
Staff propose allowing this commercial to be integrated with residential in a mixed-use format, in addition to allowing it to be standalone. Projects less than 25 acres would not be required to provide commercial.
Transportation
Councilmember Peralez’s memo states that projects considered under the Override Criteria should “include transportation and public benefits package commensurate with the impact of the proposed project.” Staff therefore are recommending that projects proposed under the Override Criteria be required to mitigate their VMT impact to the maximum extent possible and construct or fund multimodal transportation improvements proportionate to their VMT impact. To this end, staff recommends that the Override Criteria include the following transportation requirements:
1. Mitigate the project’s VMT impacts to the maximum extent feasible per the City-adopted VMT Evaluation Tool; and
2. Construct or fund multimodal transportation improvement(s), called Transportation System Improvement(s), that will improve system efficiency and/or safety, enhance nonauto travel modes, and promote citywide reduction of VMT. The value of Transportation System Improvements that the project must construct or fund will be based on the amount of VMT impacts the project is unable to mitigate.
These requirements are consistent with those already in place since 2018, under Policy 5-1, for developments that need a Statement of Overriding Considerations. The Transportation System Improvements constructed or funded under the Override Criteria should include the City’s planned transportation infrastructure improvements located within the same Council District as the project. Examples of planned transportation infrastructure improvements include those identified in the City’s Vision Zero Action Plan, Better Bike Plan, Urban Village Plans, and Multimodal Transportation Improvement Plans, etc.
Other Requirements
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
Measure C includes requirements related to complying with the City’s ordinance related to building energy efficiency standards, using recycled water where available, and providing services for Seniors. Given that all development would now be subject to the City’s recently adopted Energy Code, including such criteria in the Override Criteria is not needed. Since the Override Criteria is not related specifically to senior living communities, including requirements for senior services would not be appropriate. Regarding requirement for the use of recycled water, staff recommends that the Override Criteria include such requirements if and when recycled water is available to a given site.
Process
Below is the process that recommended by staff for a proposed market rate housing project seeking a Statement of Overriding Considerations under Policy 5-1.
Public Outreach
Given that projects seeking a Statement of Overriding Considerations under the proposed Override Criteria would likely generate significant community interest, staff recommends that the criteria set the expectation that proposed projects conduct extensive community engagement throughout the entitlement process and not solely at the end of the process. It would, however, be difficult and not appropriate to identify the specific outreach tasks or approaches as part of this engagement process. Public Outreach is not one size fits all and the approach would need to be tailored to the context of the area and proposed project. Instead of proposing specific outreach requirements, staff recommends that proposed projects be considered as “Projects of Significant Community Interest” under Public Outreach Council Policy 6-30, and the outreach be conducted consistent with this policy. Staff also recommends that outreach be conducted in all the predominant languages spoken in the given community. It is anticipated that the Council District Office wherein the proposal is located would provide the developer and staff with more specific input on the engagement process for a specific proposal.
Fiscal Analysis
Given the City’s limited budget resources due in part to its jobs and housing imbalance, and given the General Plan’s Fiscally Strong City Major Strategy, staff recommends that the requirements from Measure C for a Fiscal and Jobs/Housing Balance Impact Study be carried over to the Override Criteria process. If the City Council were considering a project under the Override Criteria, it is important for the City Council to understand the fiscal implications of approving such development. For example, would the project be fiscally positive or neutral to ensure that the City can provide the services that both are needed and expected for the development, without adding to the City’s budget shortfall. Staff recommends that a fiscal analysis should identify the revenue relative to cost impact upon the City, whether positive or negative, that the proposed development would have upon completion and annually through the year 2040. This fiscal analysis should be paid for by the applicant but prepared by consultants working for the City.
Similar to the requirements of Measure C, staff recommends that the Override Criteria provide direction to the City Council that it determines whether approval of the proposed legislative
TRANSPORTATION AND ENVIRONMENT COMMITTEE
August 29, 2022
Subject: Update to Council Policy 5.1 (Transportation Analysis)
change could result in a net fiscal impact to the City. If the Council determines that the proposed project could result in a fiscal negative impact, then the Council should make a determination that the benefits to the City outweigh the identified fiscal impacts, prior to making a Statement of Overriding Considerations.
Entitlement Process
The proposed Override Criteria outlined in this memo would be for market rate housing projects in areas with immitigable VMT that need a General Plan Amendment. Privately Initiated General Plan amendments brought to Council for its consideration are typically just “a color change on the map.” They do not include Council consideration of an actual project. While applicants often describe what they intend to build on a given site, and Council may also provide direction to the applicant, the Council cannot “lock in” project specifics as part of its consideration of a General Plan amendment. Therefore, the Council and the public have no assurance as to the specifics of a future project.
Staff recommends that the Override Criteria include a requirement that a proposed General Plan Amendment include a proposed project (e.g., a PD Zoning and/or a site development permit) to be considered concurrently by the Planning Commission and City Council. Requiring this concurrent consideration would allow the Council to condition a project with amenities, design features, and the location and density of uses based on its desired outcome, as well input obtained through the robust public engagement discussed above.
COORDINATION
Preparation of this memo was coordinated with the Housing Department, the Office of Economic Development and the City Attorney’s Office.
/s/ /s/
John Ristow Chris Burton
Director, Department of Transportation Director, Planning, Building and Code Enforcement
For questions, please contact Michael Brilliot, Deputy Director, Planning Division at [email protected].
Attachments: Materials for the Transportation and Environment Council Committee meeting on May 2, 2022 regarding “Update to City Council Policy 5-1 (Transportation Analysis)”:
https://sanjose.legistar.com/LegislationDetail.aspx?ID=5560390&GUID=8383FF35-8FC8- 4F1D-B6C5-C3531DC4ABC5&Options=&Search=