Executive Summary
The City Council adopted the 6th Cycle Housing Element on April 8, 2024, which covers the 2023-2031 planning period, with a responsibility to plan for 349 new housing units by 2031. After the State Department of Housing and Community Development (HCD) certified the City's Housing Element on April 25, 2024, the City Council passed Resolution 2024-062 on July 9, 2024, to explore alternative affordable housing sites and programs due to concerns about the redevelopment of city-owned sites (Vista Lobos and Sunset Center).
Since then, five strategies have emerged, resulting in revised housing element programs and a rewritten Appendix C. The proposed amendments include changes to Chapter 2, such as removing and revising existing programs, and a new Appendix C that identifies alternative sites to accommodate at least 149 affordable housing units.
The Planning Commission reviewed these revisions on May 14, 2025, and expressed interest in exploring RHNA credit for ADUs without requiring a deed restriction and raised questions about water constraints and the financial viability of hotel-to-residential programs. However, the Commission did not provide suggested changes to the draft text of amended Chapter 2 or Appendix C.
Background
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.
Since December 2024, five strategies have emerged from extensive analysis (Housing Element, Appendix C), resulting in revised housing element programs (Housing Element, Chapter 2).
Proposed Amendments
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, many of 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 extensive analysis required to support the identification of alternative sites for affordable housing.
A summary table of the proposed sites inventory is provided in the table below and is currently labeled Table C-17 in the draft Appendix C. 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) and therefore are subject to change.
Planning Commission Review and Feedback
The proposed revisions to Chapter 2 and Appendix C were presented for review and feedback on May 14, 2025, at the Planning Commission's regular meeting.
The Commission expressed interest in exploring whether the City could obtain RHNA credit for ADUs without requiring a deed restriction. While a deed restriction is the most common method for implementing and monitoring affordable housing units, there may be other means of justifying affordability. Guidance published by HCD states that a jurisdiction can describe how the units are affordable without deed restrictions “based on various methods considering rents relative to income levels of households, such as through a survey of comparable units in the area that show the unit would be affordable to very-low-, low-, or moderate-income households.”
A member of the public shared the 2025 state income limits and offered to share the information with the Planning Commission. The Commission requested that this information be provided for the joint City Council/Planning Commission meeting on May 20th. City staff will include both income and rent limits in the PowerPoint presentation for the May 20th meeting.
Commissioner Stephanie Locke, also an employee of the Monterey Peninsula Water Management District (MPWMD), commented that water should no longer be a constraint to housing development. The allocation of 14-acre-feet of water to the City should support development within Carmel for the next 25 years. Draft Program 1.2.A regarding water distribution for affordable housing should be reviewed and updated accordingly.
Chair Michael LePage expressed support for the live/work program and the diversity it would add to the downtown area. There were also a number of questions about the financial viability of the hotel-to-residential program that the AHA Group will address at the joint City Council/Planning Commission meeting on May 20th. Lastly, Chair LePage expressed concern about removing the city-owned sites entirely from the housing element. These sites allow for a broader mix of housing, providing more opportunities on sites the City controls. Staff notes that these sites remain under the control of the City, which can entertain development proposals at any time. Removing them from the housing element reduces the pressure on the City to conform to a strict timeline for developing those sites. Such a timeline would restrict public participation in the process and hinder the implementation of other portions of the Housing Element due to a fixed amount of staff resources.
Overall, the Planning Commission expressed its support for the revised programs.
Environmental Review
The agenda item before the City Council consists of presenting information to facilitate a discussion and receiving direction on the draft Housing Element Amendment. It is not an activity that would result in either a direct or indirect physical change to the environment. Therefore, it is not a project under CEQA as defined in Public Resources Code Section 21065 and CEQA Guidelines Section 15378.