6^th Cycle Draft Housing Element (2023-2031) Update

Receive report and direct staff to submit the 6^th cycle draft Housing Element (2023-2031) to the State Department of Housing & Community Development for review.

The City of Carmel-by-the-Sea last updated the General Plan Housing Element in 2015 for the 5th cycle planning period of 2015-2023. The Housing Element is required under State law to be updated every eight (8) years in a manner consistent with the Regional Housing Needs Allocation (RHNA). The 6th cycle planning period is 2023-2031, and the City’s RHNA is 349 housing units. The Housing Element includes policies, programs, incentives, and objectives to achieve the City’s housing goals, including planning for the creation of 349 new housing units, and must be adopted by the local jurisdiction and certified by the California Department of Housing and Community Development (HCD) by December 15, 2023.

Housing Ad-Hoc Committee

In 2022, Mayor Potter appointed a Housing Ad-Hoc Committee consisting of Mayor Pro Tem Bobby Richards and Councilmember Karen Ferlito to work with staff on the Housing Element update and bring recommendations to the full Council for action throughout the process. The Housing Ad-Hoc Committee has been meeting regularly since October 2022 and has hosted four community meetings in 2023 (February 28^th, April 6^th, May 24^th, and June 15^th).

Contract with EMC Planning Group

On December 9, 2022, the City released a Request for Proposals (RFP) soliciting proposals from qualified professionals to update the General Plan Housing Element and Safety Element. On February 7, 2023, the city approved a professional services agreement with EMC Planning Group to assist staff with preparing the updates. EMC is located in Monterey, California, and has provided land use, planning, and environmental consulting services to public agencies throughout California for 44 years. The firm has prepared housing elements for jurisdictions throughout the State, including several recently completed and certified elements, as well as ongoing preparation of 6th Cycle Housing Element updates with the Town of Los Gatos and the Cities of Larkspur, Monte Sereno, Belvedere, and Sand City. EMC has a history of partnering with the City of Carmel-by-the-Sea. Past projects include but are not limited to the City’s Local Coastal Plan and Mitigated Declaration (2000 – 2003) and the Coastal Engineering and Adaptation Planning project (2022, ongoing).

Public Review Draft

On June 6, 2023, the Public Review Draft of the 6th cycle Housing Element was released for a 30-day public review period. On June 15, 2023, the Housing Ad Hoc Committee hosted a joint City  Council and Planning Commission special meeting to discuss the Public Review Draft of the updated Housing Element. Staff received comments from the Council, Planning Commission, and the public at the meeting.

The public review period ended at 5:00 PM on Thursday, July 6th. At the July 11, 2023, City Council meeting, staff sought policy direction on seven topics (Attachment 2) in response to public comments received throughout the development of the public review draft. Below is a summary of the policy direction received from Council at the July 11^th meeting:

1. Policy Question: Should we amend Program 1.3.B: R-1 Motel (Conversion) Development Transfer Rights to include existing motels not just in the R-1 but in every zoning district? Please note that the term “motel” is in reference to any transient lodging: hotel, motel, inn, b&b, etc.

Policy Direction: Modify Program 1.3.B to reflect its application to all hotels in all districts.

2. Policy Question: Should we keep Program 1.4.B: Objective Design Standards to develop objective design standards for affordable multi-family housing projects? If not, should we remove one or more sites carried over from the 5^th Housing Element cycle?

Policy Direction: Keep Program 1.4.B and develop objective design standards for projects with at least 20% affordable multi-family housing.

3. Policy Question: Should we keep a vacancy tax on the list of potential options in Program 2.1.D: Establish Affordable Housing Trust Fund?

Policy Direction: Keep vacancy tax in Program 2.1.D as a potential funding source for an Affordable Housing Trust Fund.

4. Policy Question: Should Program 3.1.A: Mixed Use Affordable Housing be modified to remove consideration of a third story when devoted to affordable housing?

Policy Direction: Modify Program 3.1.A: Mixed Use Affordable Housing to allow for a third-floor (not a story) mezzanine within the current height limits to encourage the development of affordable housing.

5. Policy Question: Should we consider using Senate Bill (SB) 10 for the Regional Housing Needs Allocation (RHNA) sites zoned R-1, or should we remove them from the site's inventory?

Policy Direction: Remove the Pine Inn Parking Lot and Carmel Presbyterian Church from the site's inventory and use SB10 on the remaining sites zoned R-1.

6. Policy Question: Should we modify Program 1.3.C: Accessory Dwelling Units to remove the creation of standardized, pre-approved Accessory Dwelling Unit plans?

Policy Direction: Retain Program 1.3.C to explore the creation of standardized, pre-approved Accessory Dwelling Unit plans.

7. Policy Question: Should we keep properties that contain parking lots on the site's inventory, or should we remove them?

Policy Direction: Retain sites with parking lots on the site's inventory on the condition that existing parking spaces are incorporated into the design of any future housing project.

Public Comment Summary:

City staff has been collecting public comments on the update to the Housing Element since the first community meeting on November 17, 2022. To date, there have been five community meetings, including a joint City Council/Planning Commission workshop and three additional meetings with the City Council to discuss and receive feedback on the project.

In addition to receiving comments at public meetings, a dedicated project website https://homecarmelbythesea.com was created to provide information throughout the update process and to receive feedback and answer questions. The website was promoted regularly in the City Administrator’s Friday Letter.

Additional outreach included a survey in which 157 responses were received. The draft Housing Element provides additional details on all outreach efforts, which can be found in Appendix E.

During the 30-day period between June 5^th and July 6^th, 31 individuals submitted public comments on the Public Review Draft through the dedicated project website and via letters. Additional comments were received verbally at the joint City Council/Planning Commission workshop on June 15^th. A copy of all comments received, followed by a written response, can be found in Attachment 3.

Revised 6^th Cycle Draft Housing Element:

Based on the public comments received throughout the process and the policy direction from the City Council on July 11, 2023, the Public Review Draft has been revised, and the document is now referred to as the draft 6^th cycle Housing Element. A redlined version that shows the changes from the Public Review Draft can be found in Attachment 1, and a clean copy can be found in Attachment 2. An updated Reader’s Guide has also been prepared to summarize the changes and highlight additions to the document (Attachment 4).

Next steps and Timeline:

The 6^th cycle draft Housing Element will be submitted to HCD for a 90-day review period. Staff will remain in close contact with HCD staff during the review process to answer any questions or provide clarification where needed. HCD staff makes every effort to have at least one check-in with City staff halfway through their review (September 16^th 45-day review).

While the draft Housing Element is being reviewed by HCD, EMC Planning Group will analyze the document for potential environmental impacts in accordance with the California Environmental Quality Act (CEQA).

On or about October 31, 2023, City staff will receive a letter from HCD that either 1) finds the draft Housing Element to be in substantial compliance with state law or 2) finds that revisions are required and outlines what those revisions include. If HCD finds the document to be in substantial compliance, the City Council can proceed with adopting the Housing Element and submitting it back to HCD for certification. If revisions are required, City staff will review the comments, discuss any substantive changes with the City Council, and resubmit the document for a 60-day review by HCD. This process continues until such time that HCD finds the document to be in substantial compliance.

Following certification from HCD, the City will submit the adopted Housing Element to the California Coastal Commission (CCC) as a Local Coastal Plan (LCP) Amendment. HCD does not require the City to obtain approval from the CCC prior to certifying the updated Housing Element.

Consultant fees for the project are $279,600. The cost will be fully paid with grant funding from SB2, LEAP, and REAP. In 2019 and 2020, the City received three grant awards totaling $290,000 to assist with the cost of updating the Housing Element: SB2 ($160,000), LEAP ($65,000), and REAP ($65,000).

On February 7, 2023, the City Council adopted Resolution 2023-024 entering into a Professional Services Agreement with EMC Planning Group for the 6th cycle Housing Element update and General Plan Safety Element update at a cost of $239,145. On July 11, 2023, the City Council adopted Resolution 2023-074 amending the Agreement to include additional work under the California Environmental Quality Act (CEQA) at an additional cost of $40,455.