6th Cycle 2023-2031 Housing Element Adoption

Consideration of Resolution 2024-024 recommending the City Council adopt a Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program for the 2023-2031 Housing Element of the General Plan.

Consideration of Resolution 2024-025 recommending the City Council approve a General Plan Amendment repealing the 2015-2023 Housing Element and adopting the 2023-2031 Housing Element of the General Plan in compliance with State housing element law.

The City has prepared a draft update to the Housing Element of the General Plan to affirmatively further fair housing and accommodate the 349-unit Regional Housing Needs Allocation (RHNA) for the 2023-2031 Housing Element cycle. The content of the draft 2023-2031 Housing Element is structured for consistency with the requirements set forth in state law. In addition to responding to requirements of state law, the Housing Element also demonstrates the City’s strategy for meeting the City’s locally determined housing needs and that these needs are addressed through policies and programs outlined within the Housing Element. Public review and input have been a critical component of this 6th Cycle Housing Element Update.

This staff report provides a summary of the Housing Element requirements, an overview of the status of the City’s draft Housing Element, and the findings provided to the City by HCD on the first 90-day review and subsequent 60-day review of the draft. The City has responded to HCD’s comments and received a Findings Letter of Substantial Compliance on April 5, 2024, that the draft Housing Element substantially complies with Article 10.6.

Adopt a Resolution (Attachment 1) recommending the City Council adopt a Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program for the 2023-2031 Housing Element of the General Plan.

Adopt a Resolution (Attachment 2) recommending the City Council approve a General Plan Amendment repealing the 2015-2023 Housing Element and adopting the 2023-2031 Housing Element of the General Plan in compliance with State housing element law.

Background

CA Government Code Title 7, Division 1, Chapter 3, Article 10.6 [65580 – 65589.11] regulates the use and requirements of housing elements in California. The state law requires jurisdictions to update their General Plan Housing Element every eight years. State law further requires the current update for jurisdictions in the Association of Monterey Bay Area Governments (AMBAG) region to comply by December 15, 2023. A 120-day grace period follows and ends on April 15, 2024.

The City’s 2023-2031 Draft Housing Element was prepared with the benefit of input from the community and discussion at numerous public meetings held by the City Council, the Planning Commission, and the Housing Ad Hoc Committee. Guidance was also provided by HCD throughout the process.

On August 3, 2023, January 24, 2024, and April 4, 2024, the City submitted drafts of the updated Housing Element to HCD for review. The City received HCD’s 90-day findings letter on November 1, 2023, and HCD’s 60-day findings letter on March 20, 2024. Based on discussions with HCD, staff revised the draft Housing Element to include additional information and analysis. Prior to each resubmittal to HCD the draft Housing Element was posted for public review and comment. All public comments were considered during preparation of the subsequent draft. On April 5, 2024, the City received a Findings Letter of Substantial Compliance from HCD. 

The following section summarizes the required components of Housing Element Updates per State law, new requirements since the 5th Cycle Housing Element Update (2015-2023), and penalties for non-compliance with Housing Element laws. The section also includes a summary of public meetings related to the 6th Cycle Housing Element Update prior to today’s meeting.

Required Components of a Housing Element

Pursuant to Government Code Section 65583, local governments are required to include the items below as components within their Housing Elements and subsequent updates thereto. Newly required components introduced as part of the 6th Cycle are noted below and discussed in further detail within the “New Requirements for the 6th Cycle Housing Element Update” Section below.

1. Housing Needs Assessment. Examine demographic, employment, and housing trends and conditions and identify the community's existing and projected housing needs, with attention paid to special housing needs (e.g., large families, persons with disabilities). This section includes a community’s Regional Housing Needs Allocation (RHNA) as determined by the community’s regional planning body in partnership with HCD.

2. Evaluation of Past Performance. Review the prior Housing Element to measure progress in implementing policies and programs.

3. Housing Sites Inventory. Identify locations of available sites for housing development or redevelopment to demonstrate there is enough land zoned for housing to meet future needs at all income levels. New component of state law: The standards for designating adequate sites were substantially changed from the sixth cycle, particularly for non-vacant sites.

4. Community Engagement. Implement a robust community engagement program that includes reaching out to individuals and families at all economic levels of the community plus historically underrepresented groups.

5. Constraints Analysis. Analyze and recommend remedies for existing and potential governmental and nongovernmental barriers to housing development.

6. Policies and Programs. Establish policies and programs to be carried out during the 2023-2031 planning period to fulfill the identified housing needs.

7. AFFH. New component of state law: Analyze and address significant disparities in housing needs and access to opportunity by proposing housing goals, objectives, and policies that aid in replacing segregated living patterns with truly integrated and balanced living patterns, transforming racially and ethnically concentrated areas of poverty into areas of opportunity, and fostering and maintaining compliance with civil rights and fair housing laws.

New Requirements for the 6th Cycle Housing Element Update

Pursuant to recent State legislation, the following items are now required as part of the Housing Element Update process:

Affirmatively Furthering Fair Housing (AFFH). Assembly Bill 686 (AB 686), passed in 2018, created new requirements for jurisdictions to affirmatively further fair housing. According to AB 686, affirmatively furthering fair housing means to take “meaningful actions, in addition to combating discrimination, which overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to opportunity based on protected characteristics” and is Federally mandated by the 1968 Fair Housing Act. The four main goals are to:

•  Address significant disparities in housing needs and in access to opportunity, an

•  Replace segregated living patterns with truly integrated and balanced living patterns, and

•  Transform racially and ethnically concentrated areas of poverty into areas of opportunity, and

•  Foster and maintain compliance with civil rights and fair housing laws.

 Public Comment on Draft Revisions. Assembly Bill 215 (AB 215, 2021) requires local governments to make the first draft revision of their housing element update available for public comment for at least 30 days. Further, if any comments are received, a local government must take at least ten additional business days to consider and incorporate public comments into the draft revision before submitting to HCD. HCD must review the draft and report its written findings to the planning agency within 90 days of receiving the first draft submittal for each housing element revision or within 60 days of its receipt for a subsequent draft amendment or adoption.

Penalties for Non-Compliance

In the 6th Cycle, jurisdictions face a number of new consequences for not having a certified Housing Element. Under legislation enacted in recent years, if a jurisdiction does not comply with State housing law, HCD may refer the jurisdiction to the Attorney General. Significant fines may be imposed if a jurisdiction does not comply with a court order within one year.  A court finding a Housing Element inadequate may limit local land use decision-making authority until the jurisdiction brings its Housing Element into compliance, or local governments may lose the right to deny certain projects, including those submitted under the “Builder’s Remedy.”

Conversely, an HCD-certified housing element makes jurisdictions eligible for, or with higher priority for, numerous sources of funding, such as Local Housing Allocations, Affordable Housing and Sustainable Communities Grants, SB 1 Planning Grants, CalHOME Program Grants, Infill Infrastructure Grants, Pro-Housing Design funding, Local Housing Trust Funds and Regional Transportation Funds (such as MTC’s OneBayArea Grants).

Related Elements

• Safety Element. Jurisdictions must review and update their Safety Element to meet certain requirements concurrently with the Housing Element update. The Safety Element must be reviewed and updated to address wildfire, seismic, geologic and flood risks. Climate adaptation and resiliency strategies are also considered.

• SB 1035 and SB 379. Require all jurisdictions to address climate change adaptation and resilience in their general plan safety element. SB 379 is triggered by the next update of a jurisdiction’s local hazard mitigation plan (updated every five years) or before 1/1/2022, whichever is first. SB 1035 built off SB 379, requiring the safety element be updated every eight years upon the next housing element update.

• SB 1241. Applies to communities with very high fire hazard severity or unincorporated communities in state responsibility areas. Communities subject to SB 1241 need to ensure consistency between the housing and safety elements to address fire risk. AB 2911 strengthened the local very high fire hazard severity zone designation.

• AB 2140. Authorizes local governments to adopt the LHMP with the general plan safety element. Integration by reference or annexation is encouraged through a post-disaster financial incentive to cover local shares of the 25 percent non-federal portion of grant-funded post-disaster projects when approved by the legislature.

The update to the City’s Safety Element is underway.

Summary of Prior Meetings and Study Sessions

Since November 2022, the City has conducted a comprehensive community engagement and outreach strategy as required by the Government Code to inform the 6th Cycle Housing Element Update Process. This strategy has included a series of community meetings and public study sessions with the Housing Ad Hoc Committee, Planning Commission, and City Council. These meetings and study sessions are summarized in Section 1.6 of the final draft Housing Element. Feedback received throughout the ongoing community engagement and outreach process has assisted staff and the consulting team in preparing the draft Housing Element Update and related items.

Housing Element Requirements

The following section summarizes the contents of the City’s Housing Element Update for the 2023-2031 Planning Period.

Housing Needs Assessment

As part of the Housing Element Update process the City is required to analyze the existing and projected housing needs of the City, including its fair share of RHNA requirements. The City’s analysis of housing needs is required to include an assessment of detailed demographic data, including population, age, size, and ethnicity; household characteristics; overpayment trends; housing stock conditions; units in need of replacement or rehabilitation; and needs of special needs populations including the elderly, persons with disabilities, unhoused persons, extremely low-income households, and farmworkers. The 6th Cycle Housing Element Update outlines the following housing needs of the City.

Regional Housing Needs Allocation (RHNA)

In August 2021, the California Department of Housing and Community Development (HCD) issued a Regional Housing Need Determination to the AMBAG region for the 6th Cycle planning period of June 30, 2023 to December 15, 2031 and determined that the region must zone to accommodate a minimum of 33,274 housing units during this period.

California housing law (Government Code § 65580 et seq.) requires AMBAG, acting in the capacity of Council of Governments (COG), to develop a Regional Housing Needs Allocation (RHNA) Plan to allocate existing and projected housing needs to local jurisdictions within Monterey and Santa Cruz Counties.  Based on the final RHNA Plan, each city and county must update its housing element to demonstrate how the jurisdiction will meet the expected growth in housing needs over this period of time. On October 12, 2022, the AMBAG Board of Directors adopted the Final 2023-2031 6th Cycle RHNA Plan.

AMBAG’s Plan distributes the RHNA across the regions counties and cities based on demographic, and population data received from the California Department of Finance (DOF). Local jurisdictions must then utilize their ascribed RHNA to update the housing elements of their general plans for the 6th Cycle planning period, inclusive of identifying eligible land resources to accommodate this RHNA. The City of Carmel-by-the-Sea’s RHNA is 349 units.

RHNA requirements are organized into four affordability categories, established according to the Area Median Income (AMI) of a geography. These categories include very low-income residential units, which are affordable to households earning less than 50% of AMI; low-income residential units, which are affordable to households earning between 50% and 80% of AMI; moderate income residential units, which are affordable to households earning between 80% and 120%; and above moderate-income residential units which are affordable to households earning upwards of 120% of AMI. The City’s RHNA breakdown is as follows:

113 very-low income units,

74 low-income units,

44 moderate-income units, and

118 above moderate-income units.

RHNA Buffer

New “no net loss” provisions of Government Code Section 65863 require the City to ensure an adequate supply of land resources to be made available for housing development throughout the 2023-2031 planning period. This means if housing sites identified within the City’s 6th Cycle housing element update are developed with non-residential uses, lower residential densities, or residential uses at affordability levels higher than anticipated by the Housing Element, the City’s Housing Element could be determined to be out of compliance. Accordingly, the City’s RHNA requirement is further buffered with 61 units or 17% to ensure compliance with “no net loss” provisions.

Constraints Analysis

In addition to analyzing the existing and projected housing needs of the City, the Housing Element Update must also identify and analyze potential and actual governmental and nongovernmental constraints to the maintenance, improvement, or development of housing for all income in the community, regardless of protected class. A summary of constraints to the development and improvement of housing in the City can be found in Appendix B of the Housing Element.

Housing Resources & Sites Inventory

As part of the 6th Cycle housing element update, the City is also required to identify resources available to the City for the preservation, rehabilitation, and production of housing throughout the community. This includes programmatic and financial resources, such as those offered locally or through State or Federal partners. These resources also include land resources within the City that were identified as eligible for accommodation of the City’s RHNA Requirements. Pursuant to Government Code Section 65583.2(a) the following land resources are eligible for accommodation of the City RHNA: vacant sites zoned for residential use; or vacant sites zoned for nonresidential use that allow residential development; or residentially zoned sites that are capable of being developed at a higher density; or sites zoned for nonresidential use that can be redeveloped for residential use, and for which the Housing Element includes a program to rezone the site. The City’s Housing Sites Inventory is summarized in Appendix C of the Housing Element.

Policies and Programs

The Housing Element Update includes a set of goals, policies, and implementing programs intended to promote the preservation, rehabilitation, and production of housing throughout the City. Goals are long-range, broad, and comprehensive targets that describe the future outcomes the City desires. A policy is a specific instructional guideline that seeks to promote goals. Together, goals and policies are implemented through a series of programs that identify specific, quantifiable actions the City will undertake during the 6th Cycle planning period. A summary of Draft Goals, Policies, and Programs can be found in Chapter 2 of the Housing Element.

AFFH

Assembly Bill 686 (AB 686), passed in 2018, created new requirements for jurisdictions to affirmatively further fair housing as part of the Housing Element Update process. These requirements found in Government Code Section 8899.50 are intended to address racial inequalities seen today throughout the region which developed through historical policies and practices enacted at federal, state, regional and local levels and across the public and private sectors. Though many of these explicit forms of historical discrimination have been outlawed, the results of these systems have left a lasting imprint on both the region and the City. Racially explicit practices (e.g., racial covenants) that excluded persons of color from predominately white neighborhoods have been replaced with race-neutral land use policies that continue to exclude these same groups. Furthermore, rapidly increasing housing costs have deepened racial and economic disparity and segregation, displacing many low-income individuals and people of color to the peripheries of the region or out of the region altogether.

Accordingly, the City must incorporate fair housing considerations into its 6th Cycle Housing Element Update to increase housing opportunities in high-resource neighborhoods and bring additional resources to traditionally under-resourced neighborhoods. A summary of the required AFFH component can be found in section 1.4 of the Housing Element.

Targeted Community Outreach

The City must demonstrate “meaningful, frequent, and ongoing community participation, consultation, and coordination” as part of the 6th Cycle Housing Element Update process. This is intended to ensure that input has been received from groups historically and presently most impacted by fair housing issues and that local knowledge is incorporated into Housing Elements. A summary of the City’s targeted community outreach efforts can be found in section 1.6 of the Housing Element. Additional information can be found in Appendices E and H.

Assessment of Fair Housing

The City must also describe and analyze the unique housing circumstances of the City. This analysis is referred to as an Assessment of Fair Housing (AFH) and analyzes circumstances within the City pertaining to Fair Housing issues including: 

Fair Housing Outreach Capacity and Enforcement

The City’s AFH includes information regarding the City’s Fair Housing Outreach Capacity and Enforcement methods which can be found in Appendix A of the Housing Element.

Segregation and Integration Patterns

The City’s AFH also analyzes segregation and integration patterns within the jurisdiction as well as regionally. Segregation and integration patterns are analyzed by evaluating the concentration (or lack thereof) of protected groups within the community, relative to their distribution across a larger geography.

Disparities In Access to Opportunity

The City’s AFH also evaluates disparities in access to opportunity within the City, which are areas within the City that have substantial differences in access to education, transportation, economic and environmental outcomes than other areas as identified by the California Tax Credit Allocation Committee (TCAC).

Disproportionate Housing Needs (For Low-Income Households and Protected Classes)

The City’s AFH also evaluates disproportionate housing needs among low-income households and protected classes within the City. Disproportionate housing needs are evident when members of a protected group disproportionately experience a housing need compared to other groups or the total population. Disproportionate housing needs typically refer to the risk of displacement, overcrowding, or cost-burden, among others.

Sites Inventory

State Law requires the City to evaluate whether Housing Sites identified as suitable for accommodation of the City’s RHNA requirements are identified relative to the full scope of the assessment of fair housing (e.g., segregation and integration, racially and ethnically concentrated areas of poverty and affluence, access to opportunity, etc.). A summary of how Housing Sites were identified consistent with AFFH can be found in section 1.4 of the Housing Element.

Goals, Policies, and Actions

Chapter 2 of the Housing Element contains policies and programs responsive to State Law that demonstrate the City’s commitment to affirmatively further fair housing as part of the Housing Element Update process.

Evaluation of Past Progress

Pursuant to State Law, the implementation status of Goals, Policies, and Programs from the City’s 5th Cycle Housing Element Update has been included in Appendix D of the Housing Element.

Community Engagement

Consistent with State Law, the City has conducted ongoing community outreach efforts throughout the 6th Cycle Housing Element Update process. These efforts, inclusive of the Housing Ad Hoc Committee, Planning Commission, and City Council meetings held prior to today, are summarized within section 1.6 of the Housing Element.

Review Process

Below is a summary of the formal review process. Numerous informal rounds of review with HCD also occurred.

• On August 3, 2023, the City submitted the draft Housing Element to HCD for a mandatory 90-day review.
• On November 1, 2023, the City received HCD’s findings regarding the Element’s compliance with state law included as Attachment 3.
• On January 24, 2024, the City submitted a revised draft Housing Element to HCD for a mandatory 60-day review, along with a response to HCD’s 90-day Finding Letter included as Attachment 4.
• On March 20, 2024, the City received HCD’s findings regarding the Element’s compliance with state law included as Attachment 5.
• On April 4, 2024, the City submitted a final draft Housing Element to HCD, included as Attachment 1 Exhibit A, and a response to HCD’s findings, included as Attachment 6.
• On April 5, the City received a Findings Letter of Substantial Compliance, included as Attachment 7. 

Environmental Review

The City has prepared the necessary environmental review, consistent with CEQA, for the Draft 2023–2031 Housing Element Update.  The City Council will be considering the adoption of an Initial Study/Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program, consistent with CEQA, for the Draft 2023–2031 Housing Element Update.