The Planning Commission is reviewing a draft amendment to the 6th Cycle Housing Element, originally adopted on April 8, 2024, by the City Council and certified by the State Department of Housing and Community Development (HCD). The amendment is in response to concerns about the inclusion of city-owned sites (Vista Lobos and Sunset Center) as potential affordable housing locations. The Council directed staff to explore alternative affordable housing sites and programs.

On April 8, 2024, the City Council adopted the 6th Cycle Housing Element, which covers the 2023-2031 planning period. The City is responsible to plan for 349 new housing units by 2031.

On April 25, 2024, the State Department of Housing and Community Development (HCD) certified the City's Housing Element. Two city-owned sites, Vista Lobos and Sunset Center, were included as potential affordable housing sites to achieve certification (Housing Element Program 1.1.B: City-Owned Sites).

On July 9, 2024, in response to concerns regarding the redevelopment of the city-owned sites, the City Council passed Resolution 2024-062 (Attachment 1) directing staff to begin work immediately on exploring and developing alternative affordable housing sites and programs, and submit a formal general plan housing element amendment that provides alternative affordable housing opportunities and removes the need for housing units at Vista Lobos and Sunset Center. Additionally, City staff were directed to return to the City Council in September and October of 2024 with updates on progress.

On September 10, 2024, and October 1, 2024, the City Council received updates on the joint efforts of the Affordable Housing Alternatives (AHA) community group and City staff to explore strategies to provide affordable housing in lieu of developing city-owned sites.

A third update was provided on December 3, 2024, and focused on four strategies that City staff and the AHA Group were working on to provide affordable housing that reflected the village's character: 1) Accessory Dwelling Units, 2) Hotel-to-Residential Conversions, 3) Church Sites, and 4) Downtown Housing Opportunities.

Over the last four months, five strategies have emerged from extensive analysis (Housing Element, Appendix C), resulting in revised housing element programs (Housing Element, Chapter 2).

Chapter 2: Goals, Policies, and Programs: Several changes have been made to Chapter 2, including removing existing programs and adding or substantially revising existing ones. As a result, the numbering of many of the programs has changed. Of particular note, existing Program 1.1.B City-Owned Sites is proposed to be entirely removed. In its place is Program 1.1.B Development on Small Sites, which is currently 1.1.C. You will see similar changes throughout Chapter 2.

Other program deletions include:

• Program 1.3.E Amend the A-2 Zoning District;
• Program 1.3.I Implement Sate Law SB 10 Opportunities to Maximize Feasibility of Development in Strategic Locations

In addition to the more substantive revisions to the housing element programs related to the five strategies (discussed in more detail below), other minor modifications to Chapter 2 are proposed, including grammar, sentence structure, and formatting.

A more visually prominent formatting change involves moving the “Quantified Objectives, Timeframe, Responsible Party, and Funding Source” lines from the end of each program to the beginning, following the program title.

You will also note that “# TBD” follows the Quantified Objectives. This information will be forthcoming in future drafts of Chapter 2.

The timeframe to complete program implementation has been updated for many programs to account for the time devoted to this housing element amendment. For example, the December 2024 deadlines are proposed to be extended to June 2026.

Another minor change to Chapter 2 is the removal of scattered quotes throughout the chapter.

Appendix C: Housing Sites Inventory Analysis: Appendix C has been entirely rewritten due to the amount of analysis required to support the identification of alternative sites for affordable housing. A summary of the new site's inventory is provided in the table below. Across the five strategies, several sites have been identified that can accommodate at least 149 affordable housing units to allow for the transfer of these units from the city-owned sites at Sunset Center and Vista Lobos. These sites still require review and acceptance by the State Department of Housing and Community Development (HCD). 

The five strategies are summarized below:

Hotel-to-Residential Conversion (Hotel ‘Key’ Transfer): The hotel key transfer program is a more developed version of the Transfer of Development Rights (TDR) program in the current housing element. The TDR program was a carryover from the 5th cycle housing element (2015-2023) and did not receive any interest from the development community. City staff retained this program in the 6^th cycle element to garner more interest through education and promotion.

As part of the amendment effort, the program has been reinvented into what City staff and the AHA Group believe to be a more profitable venture for property owners and developers while providing the community with much-needed affordable housing. The program incentivizes the conversion of hotels into mixed-income affordable housing in the following ways: allowing the hotel keys to be transferred to another site within the commercial district; water credits; increased density for the converted hotels; hotel residential suites on the hotel site receiving the hotel keys; streamlined review, expedited permitted, and reduced permitting fees.

This program is estimated to provide up to 161 units.

Downtown, Live/Work: The live/work strategy is a new type of housing geared towards vacant or underutilized commercial spaces in and around Carmel’s courtyards and intrablock walkways or above commercial spaces where offices once were. This housing type would have a commercial storefront with living space at the rear. The housing would be deed-restricted affordable and eligible for the following incentives: water credits, expedited processing, and waived/reduced permit fees. The benefit to property owners participating in this program is filling vacancies at a higher rent, even with a deed restriction, than under current conditions.

This program is estimated to provide up to 85 units.

Downtown, Mixed-Income Incentive Program: The Mixed-Income Incentive Program incentivizes the creation of mixed-income housing (some affordable units and some market-rate units) either through adaptive re-use of existing buildings or demolition of existing structures and construction of new buildings. Incentives for this program would include: allowing a higher density (e.g., more residential units than what would typically be allowed); water credits; expedited processing; and waived or reduced permit fees. The benefit of this program is that it distributes housing throughout the downtown area rather than concentrating it in one location.

This program is estimated to provide up to 27 units.

Religious Facility-Owned Property: This program is aligned with Senate Bill (SB) 4, the Affordable Housing on Faith and Higher Education Lands Act of 2023. This legislation allows housing to be constructed on land owned by religious institutions regardless of local general plan or zoning regulations. The maximum permitted density is 20 dwelling units per acre, and all housing units must be affordable to lower-income households. The benefit of this program is that it opens up housing opportunities where they might not otherwise be allowed and streamlines the approval process for religious facilities.

This program is estimated to provide up to 65 units.

Accessory Dwelling Units (ADUs): This program is in the adopted 6^th cycle Housing Element. The amendment effort looked at ways to incentivize ADUs so that they could be counted towards the City’s lower-income Regional Housing Needs Allocation (RHNA). Of the 349 units the City has been allocated, 231 must be affordable to very low, low, and moderate-income households. The revised program includes specific efforts the City will take in support of ADUs, including the following: complete the update to our local ADU ordinance, incorporating any new state laws that have taken effect since April 2024; continue to monitor changes in state law and update our local ordinance accordingly; develop a process for reviewing plans submitted for pre-approval; develop a process for approving unpermitted ADUs under the State amnesty program; explore promotion of ADUs to local workers; explore a renter match program; incentivize deed-restricted ADUs in exchange for water credits; and, continued outreach and education.

This program is estimated to provide up to 77 units.

Other Program Changes:

EXISTING: Program 1.3.D Overnight Visitor Accommodation-Employee Housing Program

NEW: Program 1.1.G Hotel Employee Housing Program

This program allows a property owner to convert an existing hotel room into a deed-restricted affordable employee housing unit and replace the hotel room on-site. The program is proposed to be expanded to allow for the transfer of the hotel room off-site or the selling of the ‘hotel key’ to another hotel property in Carmel.

EXISTING: Program 3.1.G Establish Minimum Densities and Ministerial Approval Process

NEW: Program 3.1.G Establish Minimum Densities

The adopted housing element program commits to establishing a minimum density of 33 dwelling units per acre in the commercial and multi-family zoning districts. The purpose of setting a minimum density is to encourage a higher yield of residential units. The program amendment would change the minimum density to 22 dwelling units per acre with a maximum density of 40 dwelling units per acre. Up to 88 dwelling units per acre would be allowed when affordable housing is included, which the zoning code currently allows.

Next Steps:

A joint City Council/Planning Commission meeting has been scheduled for Tuesday, May 20^th. Following that meeting, all feedback received will be considered before City staff meets again with HCD to discuss the proposed amendments.