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SR-400-005-13 (6) PCD:SF:JT:AS:PF\f:\plan\share\council\strpt\drthresholds2.doc Council Mtg: October 24, 2000 Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Recommendation to Adopt an Emergency Interim Ordinance to Modify Article IX of the Santa Monica Municipal Code Relating to Development Review Thresholds in the RVC Residential Visitor Commercial District, BCD Broadway Commercial District, C2 Neighborhood Commercial District, C4 Highway Commercial District, C5 Special Office Commercial District, C6 Boulevard Commercial District, CM Main Street Commercial District, CP Commercial Professional District, M1 Industrial Conservation District and LMSD Light Manufacturing and Studio District. INTRODUCTION This report recommends that the City Council introduce for first reading an emergency interim ordinance to reduce the development review thresholds in the RVC Residential Visitor Commercial District, the commercial districts which abut residential districts and the industrial zoning districts throughout the City. Staff recommends adoption of an emergency interim ordinance to allow for a comprehensive planning process to revise the development review thresholds in these areas on a permanent basis. BACKGROUND A Development Review Permit is required for the construction of certain projects for which the design, siting and size could result in an adverse impact on the surrounding area. The permit allows for the review of the location, size, massing and placement of the proposed structure on the site, particularly as it relates to the existing context of the area in which it is located. The Zoning Ordinance establishes threshold criteria by zoning district for discretionary review of projects exceeding certain sizes. The development review permit is reviewed and acted upon by the Planning Commission following a noticed public hearing. Since approval of a development review permit requires a discretionary action by the Planning Commission, the proposed project is also subject to the provisions of the California Environmental Quality Act (CEQA) in accordance with Section 15061(b) of the CEQA Guidelines. Based on the size and impact of recent development, the City Council has expressed concern that the current development review thresholds in the commercial corridors of the City are too high. The City Council also requested information on the definition of a project under the California Environmental Quality Act (CEQA), specifically as it relates to development on adjacent and nearby parcels. Developers can now make multiple applications for a series of smaller projects on adjacent properties rather than a single application for the full development contemplated, resulting in project approvals that are not subject to environmental review or public hearings. On June 13, 2000 the City Council discussed the impacts of these issues on the City. In particular, Council noted that, in the commercial corridors, the 30,000 square foot development review threshold allows for administrative approval of projects adjacent to residential areas that result in adverse impacts on residential neighborhoods. This staff report provides analysis from the CEQA Guidelines regarding: ? The definition of a project under CEQA; 2 ? Projects that are subject to environmental review; and ? Segmentation or the dividing of larger projects into smaller developments. In addition, this report provides: ? An analysis of the development review thresholds City-wide; ? A summary of development trends in the City over the past 4 1/2 years, and ? Proposed changes to the development review thresholds. The proposed interim ordinance modifying the development review thresholds is contained in Attachment A. DISCUSSION CEQA Guidelines and Definition of a Project The CEQA Guidelines, the Public Resources Code, and case law establish how projects are defined, when projects are considered ministerial and discretionary, and what constitutes segmentation, or the dividing of larger projects into smaller components. In relation to development projects, CEQA defines a project as an activity which may cause either a physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Development permits are a “project” subject to CEQA in that they qualify as an activity that involves the issuance to a person of a lease, permit, A license, certificate, or other entitlement for use by one or more public agencies. @ 3 Exemptions CEQA provides statutory and categorical exemptions for various project types. Projects qualifying for the exemptions are not subject to CEQA and are not required to prepare environmental documents. A commonly used exemption is for ministerial projects (Public Resources Code Article 18, Statutory Exemptions, Section 15268). Ministerial projects are reviewed solely in relation to established standards or other objective measurements and typically include such actions as building permits or administratively approved development permits. CEQA defines “ministerial” as a governmental decision involving little or no personal judgment by the public official as to the wisdom or manner of carrying out the project. The public official merely applies the law to the facts as presented but uses no special discretion or judgment in reaching a decision. CEQA allows public agencies to establish their own thresholds for determining when ministerial or discretionary review is required: the determination of what is ministerial can most appropriately be made by the A particular public agency involved, based upon its analysis of its own laws, and each public agency should make such a determination either as part of its implementing regulations or on a case-by-case basis. @ The City of Santa Monica has established different discretionary review thresholds for multi-family residential, commercial and industrial districts (Attachment C). Projects that fall below the thresholds are ministerial and exempt from CEQA. Projects that either 4 exceed the thresholds or require a variance, conditional use permit or other discretionary permit are subject to CEQA. Legal, Environmental, and Planning Concerns In Santa Monica, where projects have been sized to fall below the square footage thresholds that require development review, there are legal concerns regarding segmentation and environmental concerns regarding incremental impacts of development that are not fully addressed. Additionally, there are planning concerns regarding projects that have been designed to avoid discretionary review by limiting the project size to just below the zoning district’s development review threshold. Segmentation Segmentation for purposes of CEQA is the division of a large project into many little ones, each with a minimal potential impact on the environment but which cumulatively can have a significant impact. In Santa Monica, segmentation could result when multiple projects in close proximity are approved that are less than 30,000 square feet is size. Over the last six years, projects have been developed on adjacent parcels where the cumulative total square footage meets the discretionary review thresholds but individually fell below the threshold. As a result, the projects were subject to administrative review and exempt from CEQA. The Zoning Ordinance does not define “project” or specify when development on adjacent parcels under common ownership constitutes a single project. Therefore, nothing in the Zoning Ordinance directly supports an assertion that development on adjacent 5 parcels constitutes a single project and consequently, no zoning regulation requires discretionary review of such contiguous projects. There are at least two ways to address the issue of contiguous projects, one would be to initiate a text amendment defining the circumstances under which development on more than one parcel would be considered a single project. For instance, projects that share resources such as parking, access, or open space could be considered to be part of a larger project. However, if adjacent projects have no shared resources, they would not be viewed as segmented components of a larger project. Another way would be to lower the development review thresholds to require discretionary review of smaller projects as is recommended here. Incremental impacts of development that are not fully addressed Since CEQA contains statutes that exempt many projects from environmental review, the incremental impacts of each new development project may not be fully analyzed and mitigated. For example, additional vehicle trips added to the roadway network by ministerial projects are not individually calculated or analyzed. The result is that these projects are not held responsible for mitigating adverse environmental impacts Development Size Currently, the City’s development review thresholds range from 30,000 square feet in the downtown area, C5 and C6 districts, to 25,000 square feet in the C4 district, and 22,500 square feet in the BCD and CP districts. The lower density, C2 neighborhood commercial district and CM Main Street districts allow an 11,000 square foot development review 6 threshold. Since these thresholds still enable a developer to construct a moderate size project, developers often opt to build projects that fall just below the district threshold specifically to avoid discretionary review. While smaller projects have the potential to produce a more dynamic and varied city environment, developments on small lots, due to the physical limits of a smaller land area and associated economics, are generally less likely to integrate a mix of land uses or provide substantial on-site amenities. With the increased flexibility afforded by a larger lot, there is greater potential to provide a mix of uses, shared parking, and useable common open spaces. Larger developments may not, however, complement adjacent and nearby development in terms of design aesthetics, proportion and context. Options The Citys Zoning Ordinance could be modified to define when adjacent projects are = considered to be components of a larger project. The criteria could be related to shared facilities, common ownership, timing of development, or type of use. One potential problem is that the first project in a series of projects may be exempt, while ensuing projects would trigger the need for environmental review. The easier and more effective alternative to prevent segmenting on an interim basis is to lower the Development Review threshold to require review and approval by the Planning Commission with concurrent CEQA review. 7 Development Review Thresholds The City’s development review thresholds vary from 5,000 square feet in the C2 district along Montana Avenue (recently reduced from 11,000 square feet by Ordinance 1978) to 30,000 square feet in the “downtown” zoning districts (BSC, C3 and C3C), the industrial zoning districts, the C5 Special Office District, portions of the RVC Residential Visitor Commercial District and the C6 district along Wilshire Boulevard (Attachment C). The thresholds are based upon the floor area of a project, consistent with the floor area definition contained in the Zoning Ordinance. However, for purposes of calculating floor area for development review thresholds, any residential square footage in the RVC and all commercial districts except the BCD and C5 is counted at 50%. This policy reflects the City’s desire to encourage the development of multi-family residential units within mixed- use projects. Recent Project Approval History Development projects which are below a district’s development review threshold undergo administrative review and approval. This review is considered a ministerial activity as discussed earlier in this report. Ministerial review ensures that projects comply with all established regulations and standards before project approval. These projects include both the construction of new buildings and additions to existing buildings. Exceptions include those buildings or additions constructed for a use that requires a discretionary approval such as a Conditional Use Permit for an automobile dealership or a Design Compatibility Permit for a condominium. 8 Analysis of Administrative Approvals issued from January, 1996 through June, 2000 for projects in commercial and industrial districts determined that the largest projects have occurred in the downtown districts. Consistent with the City’s General Plan, these districts have the highest allowable floor area ratio (FAR). Attachment D shows that 69 Administrative Approvals were issued during the study period for both new buildings and additions throughout the City. The average (mean) new building project size was 16,782 square feet with the median project size at 11,348 square feet. Additions to buildings averaged 6,823 square feet with a median size of 3,586 square feet. The average new building size approved during the study period is over twice the square footage and taller in height (up to 5 stories in the downtown) than the typical residential project, which is generally 2-stories and approximately 7,500 to 8,000 square feet. The disparity in size and height could create compatibility issues if located next to or in close proximity to residential properties. Larger scale projects have the potential for adverse noise, traffic, parking, aesthetic, privacy, light and air, and shade and shadow impacts on nearby residential uses. The following discussion provides a summary of development activity in the City by area. “Downtown” Area Commercial Districts In the Bayside Commercial District (BSC), new buildings approved during the study period 9 averaged 19,263 square feet. Additions to existing buildings averaged 8,226 square feet. New buildings that were approved include the recently completed 28,372 square foot retail building at 214 Wilshire Boulevard and the 22,853 square foot, mixed-use building at 1207 th 4 Street. These projects were administratively approved. The C3 zoning district has been an active area of the City for administratively approved development during the study period. The predominant building type consists of a mixed- use development with commercial space at the ground floor (less than 2,000 square feet) and residential units on the upper floors. Approved buildings averaged 37,812 square feet. thth Examples include the projects located at 1519 6 Street (45,907 square feet), 1535 6 th Street (55,303 square feet) and 1530 7 Street (59,908 square feet). These projects have used the floor area bonus afforded the residential component of mixed-use developments in commercial districts. The floor area bonus was instituted by the City to encourage development of multi-family housing. The physical development at these sites far exceeds the 30,000 square foot C3 threshold because the residential square footage was calculated at 50% for development review purposes. Additions to buildings during the study period averaged 10,477 square feet. The C3C district had one approved project during this time frame. This 25,701 square foot, mixed-use project contained ground floor commercial and 28 one bedroom apartment units on the upper floors. 10 Other Commercial Districts In the other commercial districts, the approved projects during the study period have typically not been as large, but have still been significant. With the exception of a private school project in the BCD Broadway Commercial District and an office project in the C5 Special Office District, the largest of the developments have also included some component of residential use. ? In the BCD district, the average approved new building contained 9,908 square feet (there were no additions to buildings during the study period). One of the larger projects was an 11,250 square foot mixed-use building. ? In the C2 Neighborhood Commercial District, approved buildings averaged 6,739 square feet with one building addition of 1,947 square feet. The largest approved projects were mixed-use commercial/residential projects at 720 Montana Avenue and 1230 Montana Avenue. Both projects were just under 11,000 square feet (the development review threshold before adoption of Ordinance 1978). ? The largest new building projects in the C4 Highway Commercial District during the study period were 2 housing projects – a 20-unit, 19,592 square foot affordable housing project at 708 Pico Boulevard and a 22-unit, 14,685 square foot apartment project at 1005 Pico Boulevard. Both projects were far larger than the 8,149 square foot average new building approved during the study period. There was a single building 11 addition approved during the study period of 2,675 square feet. The remaining commercial districts have had less development activity during the study period. In the CM, C5, C6 and CP districts, a total of 5 new buildings were administratively approved with an average size of 9,979 square feet. Two building additions were approved in the CM and CP districts which averaged 2,417 square feet. Although considered a residential district by Code, the RVC district is intended to provide commercial visitor serving uses. During the study period, a 3,237 square foot addition to “The Lobster”, was approved. Industrial District activity New buildings approved in the M1 Industrial Conservation and LMSD Light Manufacturing and Studios Districts were also analyzed. Three new buildings were approved in the M1 district averaging 7,083 square feet; however, that average was made significantly higher th by an 11,352 square foot industrial/office building approved at 1607 16 Street. There was a single building addition approved in the M1 during the study period of 2,198 square feet. The average new building approved in the LMSD district was 1,135 square feet; however, building additions averaged 8,843 square feet with the average increased dramatically due to a 21,341 square foot production facility expansion at 3301 Exposition Boulevard. Development Review Threshold Modifications The Council directed staff to assess the possibility of lowering the development review 12 thresholds to 5,000 square feet for projects located adjacent to residential districts in order to provide for public review and comment on development projects and to require environmental review under CEQA. Requiring a Development Review Permit subjects projects to the provisions of CEQA. However, CEQA also provides for “Categorical Exemptions” to environmental review for certain classes of projects which are generally smaller in size and judged to have no significant impact on the environment. Section 15303(b) exempts multi-family projects of 6 units or less in urbanized areas such as Santa Monica. Section 15303(c) exempts commercial projects that are 10,000 square feet or less in floor area if the project does not use significant amounts of hazardous materials. Therefore, although a Development Review Permit will require a project to comply with CEQA, no environmental analysis will be prepared unless a proposed commercial or industrial project exceeds 10,000 square feet in floor area. There are exceptions to these exemptions, however. CEQA Section 15300.2 does not exempt projects from environmental review that: 1. are located in an environmentally sensitive area; 2. are successive similar projects in the same place; 3. produce significant effects due to unusual circumstances; 4. significantly affect a scenic highway; 5. are located on a hazardous waste site; and 6. significantly affect an historical resource. 13 With the exception of the C2 district along Montana Avenue, a 5,000 square foot development review threshold is a significant reduction from those currently in place. As shown in Attachment C, the existing thresholds range from 11,000 square feet in the C2 districts (other than Montana Avenue) and the CM Main Street Commercial District, to 30,000 square feet in the RVC (along Ocean Avenue), BSC, C3, C3C, C5, C6, M1 and LMSD districts. Lowering development review thresholds to 5,000 square feet would have resulted in a Planning Commission public hearing for 42 of the 69 Administrative Approvals (61%) issued during the study period in the RVC, commercial and industrial districts. Commercial Districts Abutting Residential Areas and Industrial Districts A Development Review threshold of 30,000 square feet can lead to projects that are not compatible with the neighborhood context of nearby residential districts and have not been subject to public review and comment. The Development Review process evaluates a project’s location, size, massing and placement on the site to ensure that the development is compatible with and relates harmoniously to the surrounding neighborhood. Reducing the Development Review thresholds will facilitate close review of these issues and enable the public to participate in this analysis. Staff believes this will result in new development that provides a more sensitive transition between commercial and residential uses. The typical lot size in the commercial zones is 7,500 square feet. A DR threshold of 7,500 14 square feet is appropriate for the RVC, the commercial districts that abut residential districts and in the industrial districts (See Attachment C). Commercial projects 7,500 square feet or less in floor area are smaller scale developments which generally do not produce adverse impacts on nearby residential neighborhoods such as noise, traffic, parking, aesthetic, privacy, light and air, and shade and shadow impacts and are generally compatible in scale with nearby multi-family developments, where the typical 5 to 7 unit project approved during the study period ranged from approximately 5,400 square feet to 8,200 square feet. The proposed threshold would allow up to 1.0 FAR, or a one story building occupying the entire lot or a two story building occupying a portion of the lot. This level of development is consistent with the scale of existing older developments. Staff also recommends a 7,500 square foot DR threshold for the industrial districts. The LMSD and M1 zoning districts include large, sometimes under utilized parcels which are likely to be redeveloped in the near future. There has been a trend in recent years of production studio and post production facility development in these areas. A 7,500 square foot DR threshold will provide for a more comprehensive review of these projects so that the impacts associated with the new uses can be assessed. Although commercial and industrial projects that are 10,000 square feet or less are exempt from the provisions of CEQA, staff believes that public participation and Planning Commission review is warranted to ensure the siting and placement of new development is compatible with the existing neighborhood context. 15 Within the commercial districts abutting residential areas (RVC, BCD, C2, C4, C5, C6, CM, and CP) and industrial districts (M1 and LMSD), a 7,500 square foot DR threshold would have required 13 of the 39 projects (33%) approved during the study period to obtain a Development Review Permit. A 5,000 square foot development threshold would have required development review for 17 of the 39 projects (44%). Downtown Areas The objectives of the Land Use Element require that the City’s policies “reinforce the downtown area as the focus of the City, supporting the greatest concentration of activity”. Consistent with this policy objective, the Zoning Ordinance permits higher development intensity in this area, therefore, a higher development review threshold is warranted. Staff does not recommend development review threshold reductions in the downtown districts where larger developments are permitted by Code, are more in scale with existing development and are not in close proximity to residential neighborhoods. These areas include the BSC, C3, and C3C districts. Land Use Element Objective 1.3 states that the City’s land use policies should “Reinforce Downtown as the focus of the City, supporting the greatest concentration of activity”. Land Use Element Policy 1.3.5 supports this objective by stating that City’s policies should “Encourage residential uses in Downtown other than at the ground floor street frontage and encourage the provision of neighborhood commercial uses to serve the Downtown residential community”. This policy envisions 16 mixed-use developments with ground floor commercial uses and residential uses above, with residents living and working in the downtown. Such developments would have positive impacts on parking, traffic and vehicle circulation. An alternative to reducing the development review thresholds in the commercial districts abutting residential districts and industrial areas would be to eliminate the FAR bonuses for residential components and/or eliminate the discount afforded residential uses for development review purposes. The development standards in the BCD, C2, C4, C6 and CM commercial districts allow for increased density through FAR bonuses when at least 30% of a project includes residential uses. In the RVC, C2, C4, C6, CM and CP districts, residential square footage is counted at 50% for development review purposes. These provisions of the Code reflect the City’s policy to encourage housing development, particularly in mixed-use projects. The vast majority of projects that used these bonuses during the study period (13 of 17 projects) occurred in the downtown area, where reductions in the DR thresholds are not recommended. Without these incentives, developers may choose to develop commercial projects rather than mixed-use or residential projects. Staff does not recommend eliminating or modifying these Code provisions in light of the City’s need for housing. Workload Impacts It is not anticipated that lower DR thresholds will lead to fewer applications, but fewer projects could be approved administratively. The Planning Commission caseload would 17 increase and the discretionary projects would require more time to process. Development Review permit processing involves more detailed project analysis, including, in some cases, environmental review which could range from an Initial Study/Negative Declaration to an Environmental Impact Report depending upon the size, scope and location of the project. Using the proposed 7,500 square foot DR thresholds, approximately 74% (29 of 39) of the projects approved during the study period in the affected districts would not require environmental analysis pursuant to exemptions provided by the CEQA guidelines based upon size (10,000 square feet or less) and use (affordable housing). Administrative Approvals require on average approximately 3 months to review and process for approval. Development Review Permits require from 9 months to more than a year to process depending upon the level of environmental analysis required for the project. While all projects already require staff work and analysis, lowering the DR thresholds will incrementally increase staff workload and project processing timeframes. CONCLUSION The proposed emergency interim ordinance is necessary to allow for a comprehensive planning process that will address the issue of compatibility of new projects through permanent modifications to development review thresholds in the commercial corridors and industrial districts of the City. The proposed emergency interim ordinance will not reduce the size of any potential projects as allowable floor areas are unaffected. Rather, the emergency interim ordinance will change only the process by which some projects are reviewed and approved. By lowering the discretionary review thresholds, the emergency 18 interim ordinance will ensure that a larger number of new developments in the City, particularly those which have the potential to be incompatible with existing neighborhoods, will be reviewed and approved within a public process and will be subject to the provisions of CEQA. BUDGET/FINANCIAL IMPACT The recommendation presented in this report could have incremental budget impacts in that it could require additional staff and related resources in the long term. While it is not possible to predict the exact impacts at this time, staff will evaluate the issue in the context of FY 01-02 budget discussions. PUBLIC NOTIFICATION As an emergency interim ordinance, public notification is not required prior to the public hearing. However, notice of the public hearing was published in the Westside Weekly and mailed to all neighborhood groups and interested persons contained in the City’s comprehensive mailing list. RECOMMENDATION It is respectfully recommended that the City Council adopt the emergency interim ordinance included in Attachment A. Prepared by: Suzanne Frick, Director 19 Jay M. Trevino, AICP, Planning Manager Amanda Schachter, Principal Planner Paul Foley, Associate Planner Planning and Community Development Department Attachment: A. Proposed Emergency Interim Ordinance B. Notice of Public Hearing C. Development Review Thresholds by Zoning District D. Administrative Approvals Approved – January, 1996 to July, 2000 (by Zoning District) 20