CITY OF SAN MATEO
City Council Special Meeting
August 19, 2024
5:00 PM
City Hall Council Chamber 330 W.
20th Avenue San Mateo CA 94403
Entrance is on O’Farrell Street
COUNCIL MEMBERS
Lisa Diaz Nash, Mayor
Rob Newsom Jr., Deputy Mayor
Rich Hedges
Amourence Lee
Adam Loraine
AGENDA
THIS MEETING CAN BE ATTENDED IN PERSON OR REMOTE BY JOINING ZOOM – SEE CODES BELOW.
PUBLIC COMMENTS WILL BE ACCEPTED BOTH IN PERSON AND REMOTEL Y.
SEE END OF AGENDA FOR OPTIONS AND INSTRUCTIONS ON HOW TO PARTICIPATE IN THE MEETING.
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August 19, 2024
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CALL TO ORDER
Roll Call
AB 2449 Requests and Considerations for Meeting Participation by Teleconference due to Just Cause or Emergency Circumstances
CLOSED SESSION
The public will have an opportunity to comment before the consideration of this item. Following the meeting a report of action from Closed Session will be provided if required.
1. Conference with Labor Negotiators (Government Code Section 54957.6) City designated representatives: Yumi Maeda, Karen Huang, Abby Veeser and Stacey Cue.
Employee Organizations: Police Sergeants’ Association, San Mateo City Employees Association, SEIU Maintenance and SEIU Non-Merit Part-Time
STUDY SESSION
The public will have an opportunity to comment during the consideration of this item.
2. Housing Element Programs for Minimum Residential Densities in Mixed-Use Development and Family Housing Requirements
Receive a presentation and provide direction on potential approaches to establishing minimum residential densities in new mixed-use developments and setting minimum requirements for family-sized units in new housing development.
CEQA: This item is not a project subject to CEQA, because there is no action associated with this study session and it can be seen with certainty that it will not cause a physical change in the environment. (Public Resources Code Section 21065.)
ADJOURNMENT
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AGENDAS:
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www.cityofsanmateo.org
. Any supplemental material distributed to the Council after the posting of the agenda will be made part of the official record.
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Prior to the Meeting
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During the meeting
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Call (408) 638-0968 and enter the conference ID found at the top of the meeting agenda. When the item of interest is open for consideration, select *9 to raise your hand. When called upon, press *6 to unmute, state your name and provide your comments.
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At the meeting complete a “Request to Speak” form, submit a request at the speaker kiosk or scan the QR code.
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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 2 Section Name: STUDY SESSION Account Number: 25-3112 File ID: 24-8820 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Community Development Department
MEETING DATE: August 19, 2024
SUBJECT:
Housing Element Programs for Minimum Residential Densities in Mixed-Use Development and Family Housing Requirements
RECOMMENDATION:
Receive a presentation and provide direction on potential approaches to establishing minimum residential densities in new mixed-use developments and setting minimum requirements for family-sized units in new housing development.
BACKGROUND:
On May 20, 2024, the City Council adopted the City’s 2023-2031 Housing Element, which provides a plan for at least 10,286 new housing units and affirmatively furthers fair housing. The Housing Element establishes goals, policies, and programs to meet existing and projected housing needs for all segments of the community, including various household types, special needs populations, and affordable housing at all income levels. The adopted Housing Element was subsequently found in compliance with State Law by the Department of Housing and Community Development (HCD) on July 23, 2024.
Two policies in the Housing Element have priority status based on their timeline for implementation (2024/2025) and specific Council interest in these topics. These policies (H 1.5 and H 1.9) require further study and analysis of increasing production of family housing and setting minimum densities in mixed-use projects, as further described in their associated implementation actions:
Policy H 1.5 – Encourage Family Housing. Increase the number of new construction housing units that can accommodate families (larger units) when possible and require subsidized projects to include family-sized units.
Implementation Actions:
a) Present options to City Council for requiring a minimum percentage of three-bedroom units in City subsidized projects.
b) Present options to City Council for requiring a minimum percentage of family-sized units in private development projects as part of the Inclusionary Policy update. c) Should such policy recommendations not materialize into code amendments, explore alternative methods to promote family sized units through the community benefits program.
Policy H 1.9 – Establish Minimum Densities for Mixed-Use Projects. Create minimum residential density requirements to ensure mixed-use development will contain an appropriate amount of housing in commercial/office developments.
Implementation Actions:
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a) Amend the Zoning Code to require that properties designated for mixed-uses, in the Sites Inventory List, allow 100 percent residential use and require that residential use occupy 50 percent or more of the total floor area of a mixed-use project consistent with Government Code Section 65583[.2](h), and establish a minimum residential density for mixed-use projects elsewhere in the City that include a residential component.
b) Study and present to City Council options for requiring a residential component in all mixed-use projects in certain zones or areas.
In addition to the Housing Element, the Land Use Element in the City’s General Plan 2040 (General Plan) includes polices that address this topic. The Land Use Element and Housing Element both encourage the development of a range of housing densities with a broad variety of housing types and sizes, located near Caltrain and El Camino Real to help reduce vehicle miles traveled (VMT) and greenhouse gas (GHG) emissions. The following General Plan Land Use policies address mixed-use development and minimum densities for new development in proximity to transit:
Policy LU 1.3 – Optimize Development Opportunities. Encourage new development in major commercial and transit-oriented development areas, including the Downtown, Caltrain station areas and the El Camino Real corridor, to maximize the density and intensity specified in the Land Use Plan and to efficiently use land and infrastructure resources.
Policy LU 1.4 – Mixed-Use. Encourage mixed-use developments to include increased residential components to provide greater proximity between jobs and housing, promote pedestrian activity and reduce traffic congestion and vehicle miles traveled (VMT).
Policy LU 2.2 – Caltrain Stations and El Camino Real Minimum Densities. Require new residential development within a half mile of a Caltrain station or within one block of the El Camino Real corridor to meet the minimum density established by the applied land use designation and encourage new development to achieve maximum density.
DISCUSSION:
The goal of this meeting is to seek Council direction on setting minimum residential densities in mixed-use projects, setting minimum residential densities for mixed-use projects near transit, and creating requirements to increase the production of family housing. Establishing such standards would further the goals, policies, and programs of the Housing Element and the General Plan to produce a variety of housing types within the City and optimize opportunities to increase the use of multi-modal transportation.
To support implementation of the policies noted above, the City retained Economic and Planning Systems, Inc. (EPS) to conduct a financial feasibility analysis for requiring minimum densities for mixed-use development with a residential component (Attachment 1); and requiring family-sized units in new development (Attachment 2). The key findings of the EPS analysis are included below for each policy.
Establishing Minimum Densities in Mixed-Use Development The General Plan introduces a new land use designation, Mixed-Use, which allows for a range of commercial, retail, office and/or residential uses within the same site or building at variable intensities that would encourage people to live near where they work, play, or shop. Areas designated as Mixed-Use provide the greatest flexibility for the type of projects that may be developed. Mixed-use zones currently allow for housing, commercial and/or office, or a combination of these uses.
Not all projects in mixed-use zones are required to include residential uses, and projects are allowed to be developed as non-residential projects, depending on property owner/developer interest, market conditions, and other factors.
Over the last several years, the City has seen a growing trend of mixed-use development projects with a residential component (See Table 2 in Attachment 1). Most of these projects have included significant residential components that meet or exceed the zoned base density. However, in a small number of cases, projects have provided small residential components in order to qualify for concessions and waivers under the State Density Bonus Law (“SDBL”) (Govt. 65915 et
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seq.) to benefit the commercial component of the project.
The SDBL provides general guidance that mixed-use developers, in partnership with an affordable housing developer, may be granted a density bonus for the commercial component of their project if they meet certain affordability thresholds on the residential component. Specifically, Government Code Section 65915.7 authorizes the City to grant a developer up to a 20 percent density bonus (or other incentives) on the commercial portion of a project when at least 15 percent affordable units are provided in the residential portion. The law does not indicate a minimum standard for the residential component as a proportion of the overall project. This statute applies to projects that include a partnership between a commercial developer and an affordable housing developer. However, mixed-use development projects within the City are typically developed by a single developer that is responsible for both the commercial and residential components.
The SDBL defines a “housing development” as “a development project for five or more residential units, including mixed- use developments.”(Govt. 65915(i)). Most recent mixed-use development proposals in the City have included significant residential components that have met or exceeded the zoning district’s base density. However, for one approved mixed- use project, the residential portion represented only 16 percent of the project’s total square footage. The developer requested a concession pursuant to SDBL to increase the commercial portion’s floor area ratio (FAR) while only meeting the minimum requirement for a housing development project under state density bonus law (five units with one affordable unit). The City had to grant the concession for increased FAR, and the City had no legal mechanism to require that a greater percentage of the project be for residential uses.
If there is City Council interest, the City has the option to establish specific regulations, such as a minimum residential density or minimum residential square footage requirements for mixed-use projects with a residential component. The City Council could also consider setting higher minimum residential densities for new development within a particular geographic boundary, such as within a radius of a Caltrain Station or along the El Camino Real corridor (See Map of Transit Stations and El Camino Real in Attachment 3).
The EPS analysis (Attachment 1) shows that the City could also explore establishing a minimum residential density for mixed-use projects with a residential component in targeted mixed-use zones (such as sites close to transit). The prevalence of mixed-use projects in the development pipeline indicates market interest in including residential components in mixed-use projects and suggests that requiring a minimum amount of residential could be a viable policy option. Currently, there are eleven mixed-use projects in the San Mateo pipeline. For these projects, the residential components range from 9 to 75 units per acre, with many taking advantage of density bonus law, with the exception of the Draeger’s and 435 E 3rd Ave projects (see Table 1 below). The Table below summarizes the residential components within each mixed-use project, their residential proportion to the total square feet, and their relative proximity to transit.
Table 1 – Mixed-Use Pipeline Projects
Project Name/Location Residential Units Percentage of
Total Square Feet
Percentage of Base
Density
Within ½ mile of
Transit
Draeger’s Market - 222 E. 4th Ave 10 7% 18% Yes
435 E. 3rd Ave 5 16% 39% Yes
Bespoke - 445 S. B St 71 30% 122% Yes
Post + Beam - 668 E. 3rd Ave 69 31% 141% Yes
Block 21 - 500 E. 3rd Ave 111 33% 147% Yes
Block 20a - 500 E. 4th Ave 86 34% 148% Yes
One Hayward - 1 Hayward Ave 18 77% 142% Yes
477 9th Ave 120 80% 150% Yes
Nazareth Vista - 616 S. B St 48 86% 150% Yes
Concar Passage - 640-690 Concar Dr 961 95% 133% Yes
Fish Market - 1885 S. Norfolk St 260 99.5% 150% No
a The Block 20 Project has been revised since the preparation of the EPS report. The numbers in this table represent the prior version.
If the City wishes to pursue minimum residential standards, the following factors should be considered: (1) geographic target areas to apply this policy; (2) minimum thresholds that would not preclude new development; and (3) other metrics
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deemed appropriate from the Housing Element or City Council direction. Additional analysis and outreach with developers is also needed. EPS also presented tiered options where mixed-use projects could receive a greater number or scale of incentives benefiting the commercial portion in exchange for larger residential portions of the overall project.
Staff evaluated whether other cities have implemented minimum requirements for residential in mixed-use projects and did not find any examples. Several cities in the Bay Area, however, are exploring establishing minimum density or intensity requirements near transit, consistent with the Transit Oriented Communities Policy, developed as part of Plan Bay Area 2050, and adopted in 2022 by the Metropolitan Transportation Commission. Redwood City in particular, has eliminated maximum residential density in areas of its Downtown Precise Plan and established Maximum Allowable Development limits on office development, retail, and lodging. It has also established minimum building heights in key areas. Redwood City continues to explore establishing minimum development intensities along primary corridors, with a focus on proximity to high-quality transit and amenities.
Based on the information above and in the EPS report, staff seeks City Council direction on the following questions:
1. Should the City establish minimum residential requirements for mixed-use development with a residential component?
2. Should the City establish specific minimum residential densities within a certain radius of Caltrain stations or along the El Camino Real corridor?
3. Should commercial incentives be tiered, depending on the proportion of residential units provided? Family Housing
While the affordable housing need in San Mateo is greatest for one-bedroom units (Figure 2 in Attachment 2), overcrowding also remains an issue. The Housing Element identifies the need for larger units, including to better serve the needs of single female-headed households that are considered a special needs group with a severe housing shortage.
Specifically, Housing Element Policy H 1.5 – Encourage Family Housing seeks to increase the number of new housing units that can accommodate families (larger units with three or more bedrooms) when possible.
Recognizing this need and high demand, the City has worked with its affordable housing partners to ensure that projects on City land, such as the Kiku Crossing, include a minimum number of three-bedroom units. However, private developers of market-rate housing or mixed-use developments are overwhelmingly producing studio, one-, and two-bedroom units.
The City does not currently have any requirements for larger family-sized units within these projects and cannot mandate them without an adopted policy or ordinance.
The need for family-sized housing units is supported by data and additional analysis completed by EPS in the attached memo (Attachment 2). The memo suggests setting a requirement for at least one out of every five (20%) affordable units to be a minimum of three-bedrooms in size is a viable option that would result in roughly double the rate of three- bedroom units produced and would not have a substantial negative impact on project feasibility.
Based on the adopted Housing Element policy and EPS analysis, staff requests direction from Council on the following questions:
1. Should the City require all developments with affordable units to provide a minimum of 20% of these units as three-bedroom units?
2. Should the City evaluate the feasibility of requiring a percentage of all units in a residential development (not just affordable units) to be family-sized?
Community Benefits
The Land Use Element and Housing Element also include policies related to updating the City’s Community Benefits program and better aligning it with State Density Bonus law. However, staff recommends not proceeding with this work until after the ballot measure to amend the Measure Y height and density limits has been decided by the voters in November of 2024. The outcome of the ballot measure will significantly influence a community benefits program framework, so any further work or analysis related to updating the City’s Community Benefits Program is recommended to wait until after the November election.
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NEXT STEPS:
Based on the direction from Council, staff will conduct additional analysis and draft recommended code/policy updates, conduct appropriate outreach, and schedule for public hearings before the Planning Commission and City Council to complete the implementation of these two Housing Element policies.
BUDGET IMPACT:
The funding to support this policy work is covered by the Community Development Department’s annual budget, with funding from the Advanced Planning Fund, with no additional impact to the General Fund. Part of the analysis, particularly the consultant support and some of staff time to support this study session may also be eligible for reimbursements through HCD’s Local Early Action Planning (LEAP) Grants Program.
ENVIRONMENTAL DETERMINATION:
This item is not a project subject to CEQA, because there is no action associated with this study session and it can be seen with certainty that it will not cause a physical change in the environment. (Public Resources Code Section 21065.) NOTICE PROVIDED:
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – EPS Commercial Density Bonus Memo
Att 2 – EPS Inclusionary Family Units Memo
Att 3 – Map of Transit Stations and El Camino Real
STAFF CONTACT
Manira Sandhir, Planning Manager
[email protected]
650-522-7203
Nicholas Hamilton, Contract Planner
Good City Company
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