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SR 07-18-2023 10A City Council Report City Council Meeting: July 18, 2023 Agenda Item: 10.A 1 of 12 To: Mayor and City Council From: David Martin, Director, City Planning Subject: Introduction and First Reading of an Ordinance Amending the Text of the Zoning Ordinance to Provide Incentives for Certain Housing Projects That Filed an Application Prior to Implementation of the City’s 6th Cycle (2021- 2029) Housing Element Recommended Action Staff recommends that the City Council: 1. Adopt a finding that no subsequent environmental review is required pursuant to California Environmental Quality Act (CEQA) Guidelines Section15162 based on a determination that the adoption of development incentives as set forth in the proposed ordinance amending the Zoning Ordinance was analyzed as part of the 2021-2029 6th Cycle Housing Element Environmental Impact Report (EIR ) [SCH No. 2020100575] that was certified by the City Council on October 12, 2021 with an Addendum to the EIR approved by the City Council on October 11, 2022. 2. Introduce for first reading an Ordinance amending the text of the Zoning Ordinance to provide incentives for certain housing projects that filed an application prior to implementation of the City’s 6th Cycle (2021-2029) Housing Element. Executive Summary This report provides a summary of a proposed Zoning Ordinance amendment that would establish certain housing development incentives for applicants that have asserted eligibility for processing under the “builder’s remedy” provision of the Housing Accountability Act (“HAA”), California Government Code section 65589.5(d). These housing project applications were filed prior to the State of California’s Housing and Community Development Department’s (“HCD”) certification of the City’s 6th Cycle (2021-2029) Housing Element on October 14, 2022. 10.A Packet Pg. 912 2 of 12 The City Council is being asked to consider a proposed Ordinance amending Santa Monica Municipal Code (SMMC) Chapter 9.31 for the purpose of incentivizing the production of housing on certain parcels subject to applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (“HAA”), California Government Code section 65589.5(d), that were filed between September 30, 2022 and October 13, 2022, prior to certification of the 6th Cycle (2021-2029) Housing Element. As discussed in the Background section of this report, on May 9, 2023, the Santa Monica City Council approved a Settlement Agreement with WS Communities, LLC and its affiliates (“WS” or “owners”), the owners of 13 Builder’s Remedy housing projects development sites with pending applications. The Settlement Agreement addresses the disposition of these Builder’s Remedy applications and also provides an option, but does not require, the City Council to adopt a permanent ordinance to allow use of the ministerial development process already authorized in the Housing Element implementing ordinance adopted on April 11, 2023. If adopted, these incentives would further incentivize voluntary use of the ministerial development process authorized for housing projects in the April 11, 2023 Zoning Ordinance amendments as an alternative to the submitted Builder’s Remedy projects that significantly exceed codified development standards, including building height and floor area ratio (“FAR”). Background The City’s 6th Cycle (2021-2029) Housing Element was certified by the California Department of Housing and Community Development (“HCD”) on October 14, 2022. Prior to that certification, between September 30, and October 13, 2022, the City received 15 preliminary applications for housing development projects pursuant to Government Code Section 65941.1. The applicants for the 15 housing development projects assert that the projects are eligible for processing under the Builder’s Remedy provision of the Housing Accountability Act, California Government Code section 65589.5(d), (the “Builder’s Remedy applications”). 10.A Packet Pg. 913 3 of 12 The Builder’s Remedy provision prohibits a local agency from disapproving a housing development project, that provides at least 20 percent of total units for very l ow, low-, or moderate-income households, or condition approval in a manner that renders the housing development project infeasible for development for the use of very low, low -, or moderate-income households unless the local agency is able to make certain specific findings, including, but not limited to, the housing development project is inconsistent with both the jurisdiction's zoning ordinance and general plan land use designation as specified in any element of the general plan as it existed on the date the application was deemed complete, and the jurisdiction has adopted a housing element that is in substantial compliance with State Housing Element law. The Builder’s Remedy applications propose housing development projects that are inconsistent with the City’s Land Use and Circulation Element (“LUCE”) and Zoning Ordinance, in part, because the housing development projects exceed height and floor area ratio (“FAR”) maximums. On April 11, 2023, the City Council adopted Ordinance Number 2742 (CCS), implementing the certified 6th Cycle (2021-2029) Housing Element (“Ordinance 2742”), in conjunction with the Housing Element Environmental Impact Report (EIR) [SCH No. 2020100575] that was certified by Council on October 12, 2021, with an Addendum to the EIR approved on October 11, 2022. The implementation incentivizes housing production in order to meet the City’s Regional Housing Needs Assessment and Affirmatively Furthering Fair Housing obligations mandated by State law through, among other things, providing for increased heights and FARs in the City’s nonresidential districts, and streamlined ministerial approval processes for housing projects that are consistent with the City’s objective standards. On May 9, 2023, the Santa Monica City Council approved a Settlement Agreement with WS, the owners of the following properties: • 1433-1437 6th Street, • 601 Colorado Avenue, 10.A Packet Pg. 914 4 of 12 • 1518-1524 7th Street, • 1441-1443 Lincoln Boulevard, • 3000-3030 Nebraska Avenue, • 2901 Santa Monica Boulevard, • 1425 5th Street, • 1557 7th Street, • 1238 7th Street,1925 Broadway, • 1238-1242 10th Street, • 1007 Lincoln Boulevard, and • 1038 10th Street. The Settlement Agreement addresses the status of 13 of the pending Builder’s Remedy applications filed by WS. The City and owners of these properties disagree on the applicability of the Builder’s Remedy statute. Consequently, the parties elected to settle various disputes involving the Builder’s Remedy projects and unrelated litigation. Specifically, the parties agreed to settle pending litigation against each other pertaining to the City’s leasing ordinance (requiring leasing periods of no less than one year) and alleged violations of consumer and tenant protection laws by the City against certain WS affiliates. The Settlement Agreement provides financial benefits for three recently displaced tenants of 1242 10th Street and guarantees them the right to return. The Settlement Agreement would also authorize the transfer of 20 deed -restricted affordable units from 1560 Lincoln Boulevard to 1038 10th Street. The Settlement Agreement also includes a completely optional component that the City is under no obligation to pursue and that provides reciprocal benefits to the parties independent of the other provisions of the Settlement Agreement. Under these optional provisions, the City may adopt an ordinance that contemplates WS’s use of the ministerial development process already authorized in Ordinance 2742. If adopted, these incentives would further facilitate the owners’ voluntary use of the ministerial 10.A Packet Pg. 915 5 of 12 development process previously authorized in Ordinance 2742, rather than continue to propose development under the Builder’s Remedy statute. On June 19, 2023, the Planning Commission adopted Resolution No. 23 -011 (PCS) (Attachment “B”) recommending to the City Council that the Council amend the text of the Zoning Ordinance to provide incentives for certain housing projects that filed an application prior to implementation of the City’s 6th Cycle (2021 -2029) Housing Element. Discussion As presented in the Background section of this report, the Settlement Agreement approved between the City and WS addresses the disposition of 13 of the Builder’s Remedy projects submitted by WS. The Settlement Agreement specifies that processing of these 13 Builder’s Remedy applications have been temporarily suspended; confirms the applicability of the new development standards and process streamlining for housing projects approved on April 11, 2023 through Ordinance 2742 to implement the certified Housing Element; and establ ishes the option for the City to adopt a permanent ordinance to create additional incentives for applicants to propose new housing development projects on these sites that would be consistent with the City’s LUCE and Zoning Ordinance and therefore subject to ministerial/administrative review. The Proposed ordinance (Attachment “A”) provides the redline amendments to the Zoning Ordinance that are contemplated by the Settlement Agreement. If adopted by the City Council, the owner of each development site ma y, but is in no way obligated to, utilize these provisions, which would provide the following local incentives: Affordable Housing Units Affordable housing obligations for projects proposed under the Zoning Ordinance amendments (“Ordinance Projects”) may be provided off-site at any commercially or residential zoned parcel in the City outside of the Pico Neighborhood Area as identified 10.A Packet Pg. 916 6 of 12 SMMC Figure 9.40.020.A (the “Off-site Affordable Option”). The Off-site Affordable Option may not be utilized on properties improved with residential units. In exercising the Off-site Affordable Option, the Ordinance Project would be required to provide 15% of the total number of base density (i.e., pre density bonus) units as off -site affordable housing units, as opposed to the 20% off-site affordable requirement, which was recently adopted consistent with the certified Housing Element. State Density Bonus Benefits. Under the State Density Bonus Law, the required affordable units must be provided on - site as part of the development project to be eligible for a density bonus and related benefits. However, the Off-Site Affordable Option would allow the same State Density Bonus Law benefits (i.e., up to a 50% market rate density bonus, three permitted incentives, and additional waivers of development standards) as if the affordable units were to be provided on-site. Timing for Completion Under the Off-Site Affordable Option, the off-site affordable units would need to receive a certificate of occupancy prior to issuance of a certificate of occupancy for the market rate units. However, nothing would prevent the market rate units from obtaining a building permit and commencing construction concurrent with or prior to the corresponding off-site affordable units. Parking Benefit Any Ordinance Project located within the Downtown Community Plan area would also be allowed a maximum of one parking space per unit under the Ordinance, as opposed to the current maximum requirement of one-half space per unit. Termination The provisions for Affordable Housing Units, State Density Bonus Benefits, and Timing of Completion would terminate and upon issuance of Administrative Approval applications for a total of 965 “additional units”. For purposes of this requirement, 10.A Packet Pg. 917 7 of 12 “additional units” means the total amount of units provided by one or more eligible Ordinance Projects, including market rate, affordable, on -site and off-site units, that exceed the collective unit capacity allocated to the properties associated with the Ordinance Projects under the Suitable Sites Inventory for the City’s 6th Cycle (2021 - 2029) Housing Element. This provision does not impose any limit on the number of units of the Ordinance Projects (either individually or collectively) that do not utilize the off-site Affordable Housing benefits. In addition, the Parking Benefit will continue to apply to any Ordinance Projects located within the Downtown Community Plan area in the event that the criteria for Termination are met. Conclusion As demonstrated above, the primary benefit of the proposed Zoning Ordinance is the ability to locate affordable units off-site and still obtain the benefits under the State Density Bonus Law, which would otherwise require all affordable units to be located on - site. However, practical considerations, such as control of other appropriate sites, could effectively prevent or discourage project site owners from utilizing this incentive. Additionally, whether or not the Ordinance is utilized, projects proposed at Sites would be subject to the City’s Administrative Approval processing, which is already codified as Downtown Community Plan Section 9.10.050(B) and Municipal Code Chapter 9.39, and expedited processing timelines provided under the Settlement Agreement independent of the Ordinance. Zoning Text Amendment Findings 1. The amendments to the text of the Zoning Ordinance are consistent with the General Plan and any applicable Specific Plans in that the amendments incentivize the production of housing projects that are consistent wit h the General Plan and any applicable Specific Plan on parcels that are subject to 10.A Packet Pg. 918 8 of 12 pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021 -2029) Housing Element. These Builder’s Remedy applications do not comply with General Plan or applicable Specific Plan standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan and applicable Specific Plan development standards for Floor Area Ratio and building height and provide new deed - restricted affordable and market-rate housing units in Santa Monica. 2. The amendments to the text of the Zoning Ordinance are consistent with the purpose of the Zoning Ordinance to promote the growth of the City in an orderly manner and to promote and protect the public health, safety, and general welfare in that the amendments will incentivize the production of General Plan, Specific Plan, and Zoning Ordinance compliant housing on parcels that are subject to pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021 -2029) Housing Element. These Builder’s Remedy applications do not comply with General Plan or Zoning Ordinance standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan, Specific Plan, and Zoning Ordinance development standards for Floor Area Ratio and building height and therefore promote the orderly growth of the City in a manner that protects public health, safety and general welfare in comparison to projects that exceed General Plan, Specific Plan, and Zoning Ordinance development parameters. 10.A Packet Pg. 919 9 of 12 Effective Date of Action If adopted, the proposed Zoning Ordinance amendment would take effect 30 days after second reading of the ordinance which is anticipated to be scheduled on July 25, 2023. Environmental Analysis An analysis of the proposed Zoning Ordinance Amendments was prepared pursuant to State California Environmental Quality Act (CEQA) Guidelines. Based on this analysis, the 6th Cycle Housing Element Final Environmental Impact Report (SCH No. 20212269242021), certified on October 12, 2021, and the Addendum to the Final EIR, adopted on October 11, 2022, accounts for and analyzes the potential environmental effects associated with the proposed Zoning Ordinance Amendments and Ordinance Projects. Therefore, the proposed Zoning Ordinance Amendments do not trigger any of the conditions described in CEQA Guidelines Section 15162 that would require the preparation of a supplemental EIR or negative declaration pursuant to CEQA Guidelines Section 15168(c). The following provides the summary of this analysis: The Housing Element EIR analyzed a total of 11,025 housing units planned in the City during the 6th Cycle period of 2021-2029. Subsequent to certification of the Housing Element EIR, the City revised the Housing Element and prepared an addendum to the Housing Element EIR (“Housing Element Addendum”) that analyzed the total planned number of units in the City from 11,025 to 13,600 housing units. The Suitable Site Inventory (“SSI”) contained in the certified Housing Element is the City’s roadmap to achieving the commitment of 13,600 units and identifies specific sites for housing along with their potential housing capacity. Although the certified Housing Element calls for, and the SSI accommodates, 13,600 units, the Housing Element Addendum “conservatively considers maximum theoretical buildout with an additional 10-percent increase, for a total of 14,565 dwelling units.” Therefore, the Housing 10.A Packet Pg. 920 10 of 12 Element Addendum provides a 965-unit buffer (“Buffer”) to cover and analyze potential environmental effects for units proposed beyond those accounted for in the certified Housing Element SSI. The proposed Zoning Ordinance Amendments will restrict the density of the projects proposed under the proposed Ordinance (“Ordinance Projects”) (including the related offsite affordable receiver sites) to no more than the unit capacity assumed in the SSI at the site (the “SSI Credit”) plus any additional units beyond the SSI Credit so long as the additional units collectively proposed for Ordinance Projects do not exceed the buffer of 965 units. Since the proposed provisions for Affordable Housing Units, State Density Bonus Benefits, and Timing of Completion for Ordinance Projects would terminate and upon issuance of Administrative Approval applications for a total of 965 additional units, the potential environmental impacts resulting from amendments to the Zoning Ordinance have been adequately analyzed in the Housing Element EIR and Add endum and do not trigger any of the conditions described in CEQA Guidelines Section 15162 that would require the preparation of a supplemental EIR or negative declaration pursuant to CEQA Guidelines Section 15168(c). Past Council Actions Meeting Date Description October 11, 2022 Adoption of Resolution Amending the 6th Cycle (2021-2029) Housing Element to the City’s General Plan and Approval of Addendum to the Final Environmental Impact Report for the 6th Cycle (2021-2029) Housing Element February 22 and February 28, 2023 Study Session on Implementation of 6th Cycle (2021-2029) Housing Element Programs March 21, 2023 and April 11, 2023 Adoption of a finding that various amendments necessary to implement the City’s Certified 6th Cycle (2021-2029) 10.A Packet Pg. 921 11 of 12 Housing Element were analyzed as part of the 2021-2029 6th Cycle Housing Element Environmental Impact Report (EIR) and Addendum, and no further review pursuant to the California Environmental Quality Act (CEQA) is required First and Second Reading, as required: Adoption of ordinances for amendments to the LUCE, DCP, BAP, and Zoning Ordinance, LUCE designation map, and Zoning Districting Map, LUCE designation map, and Zoning Districting Map implementing Certified 6th Cycle (2021-2029) Housing Element programs May 9, 2023 City Council approved a Settlement Agreement with WS, the owners of the following properties: 1433-1437 6th Street, 601 Colorado Avenue, 1518-1524 7th Street, 1441-1443 Lincoln Boulevard, 3000-3030 Nebraska Avenue, 2901 Santa Monica Boulevard, 1425 5th Street, 1557 7th Street, 1238 7th Street,1925 Broadway, 1238-1242 10th Street, 1007 Lincoln Boulevard, and 1038 10th Street Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future. 10.A Packet Pg. 922 12 of 12 Prepared By: Roxanne Tanemori, Principal Planner Approved Forwarded to Council Attachments: A. Attachment B PC Resolution 23-011.docx B. Attachment A Ordinance Incentives for Certain Housing Projects 071823 10.A Packet Pg. 923 1 Planning Commission Meeting June 21, 2023 Santa Monica, California RESOLUTION NUMBER 23-011 (PCS) (Planning Commission Series) A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF SANTA MONICA RECOMMENDING TO THE CITY COUNCIL THAT THE COUNCIL AMEND THE TEXT OF THE CITY’S ZONING ORDINANCE TO PROVIDE INCENTIVES FOR CERTAIN HOUSING PROJECTS THAT FILED AN APPLICATION PRIOR TO IMPLEMENTATION OF THE CITY’S 6TH CYCLE (2021-2029) HOUSING ELEMENT WHEREAS, the Housing Element Law, California Government Code Sec tions 65580 et seq., requires the City to review and update the Housing Element of its General Plan every eight years; and WHEREAS, the State is experiencing a housing supply crisis, with housing demand far outstripping supply; and WHEREAS, in 2018, California ranked 49th out of the 50 states in housing units per capita; and WHEREAS, the housing crisis has particularly exacerbated the need for affordable homes at prices below market rates; and WHEREAS, the housing crisis has resulted in increased pove rty and homelessness, especially first-time homelessness, forced lower income residents into crowded and unsafe housing in urban areas, and forced families into lower cost new housing in greenfields at the urban-rural interface with longer commute times and a higher exposure to fire hazard; and WHEREAS, California needs an estimated 180,000 additional homes annually to keep up with population growth, and the Governor has called for 3.5 million new homes to be built over 7 years; and DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 924 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 2 WHEREAS, the City received a Regional Housing Needs Assessment (“RHNA”) allocation for the 6th Cycle (2021-2029) Housing Element of approximately 8,895 housing units, with approximately 70 percent allocated as affordable housing; and WHEREAS, this RHNA allocation will require the City to permit approximately 1,000 housing units annually between 2021 and 2029, 700 of which are required to be affordable housing, representing an increase of approximately five times over the City’s RHNA allocation for the 5th Cycle (2013-2021) Housing Element; and WHEREAS, in September 2020, the City commenced a public outreach process for the 6th Cycle Housing Element, which consisted of creation of a dedicated website, presenting informational webinars, seeking input through questionnaires and surveys, forming two technical working groups, and conducting a series of study sessions with the Planning Commission, Housing Commission, Rent Control Bo ard, and the City Council; and WHEREAS, on or about May 24, 2021, City staff published a Draft 6th Cycle Housing Element (“Draft Housing Element”); and WHEREAS, on June 2 and 3, 2021, the Planning Commission conducted a public hearing on the Draft Housing Element and made recommendations to the City Council; and WHEREAS, on June 15, 2021, the City Council conducted a public hearing to discuss the Draft Housing Element and directed staff to transmit the Draft Housing Element to the California Department of Housing and Community Development (“HCD”) with revisions; and DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 925 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 3 WHEREAS, on July 1, 2021, City staff transmitted the Draft Housing Element, as revised by the City Council, to HCD for a 60-day review period; and WHEREAS on August 4, 2021, in accordance with Santa Monica Municipal Code Section 9.46.030(B), the Planning Commission adopted a Resolution of Intention, Resolution Number 21-007 (PCS), declaring its intention to consider recommending to the City Council that the City Council adopt amendments to the text of the Zoning Ordinance for consistency with the Goals, Policies and Programs of the 6th Cycle Housing Element, and minor changes, corrections and clarifications to the text of the Zoning Ordinance related to parcel coverage limitations for existing structures in the City’s R1 (Single-Unit Residential) Districts and standards for accessory structures for consistency with Council direction to return with amendments to the City’s home -share rules; and WHEREAS, on August 30, 2021, in accordance with Government Code Section 65585, HCD issued a letter to report on its review of the Draft Housing Element; and WHEREAS, HCD’s review concluded that the draft Housing Element addressed many statutory requirements, but that revisions would be necessary to substantially comply with State Housing Element Law; and WHEREAS, in its review letter, HCD set forth recommended revisions to the Draft Housing Element to, among other things, provide additional information and a nalysis of the City’s: housing needs, resources, and constraints related to fair housing; population and employment trends; household characteristics; Suitable Sites Inventory (“SSI”); zoning regulations for a variety of housing types; governmental and non governmental constraints on housing; special housing needs; and “at risk” housing units; and DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 926 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 4 WHEREAS, HCD further recommended that the City make revisions to housing programs set forth in the Draft Housing Element to: demonstrate adequate capacity for the RHNA allocation; address, and where legally possible, remove, constraints to the maintenance, improvement and development of housing; promote and affirmatively further fair housing; and preserve assisted housing development for low -income households; and WHEREAS, on September 8, 2021, the Planning Commission held a discussion to consider HCD’s review and recommendations and to discuss concepts that would address those recommendations; and WHEREAS, on September 20, 2021, the Planning Commission conducted a discussion to review proposed revisions to the Draft Housing Element to address HCD’s recommendations; and WHEREAS, on September 24, 2021, Planning Commission conducted a duly noticed public hearing, and after considering oral and written test imony, adopted a Resolution of Recommendation, Resolution Number 21-011 (PCS), recommending to the City Council that the City Council adopt the 6th Cycle Housing Element; and WHEREAS, on October 12, 2021, the City Council conducted a duly noticed public hearing to consider HCD’s comments and the recommendation of the Planning Commission, and, after considering oral and written testimony, adopted Resolution Number 11371 (CCS) adopting the 6th Cycle (2021-2029) Housing Element, which the City transmitted to HCD for review and certification; and WHEREAS, on February 8, 2022, the City received a letter from HCD determining that although the Adopted 6th Cycle Housing Element addressed “many statutory DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 927 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 5 requirements,” “revisions would be necessary to comply with State Housing Element Law”; and WHEREAS, the City immediately began efforts to address HCD’s letter, including scheduling a teleconference with HCD staff on February 14, 2022 to determine the City’s required next steps in order to achieve an HCD-compliant Housing Element and conducting a Study Session with the Planning Commission on March 2, 2022; and WHEREAS, after the February 14, 2022 teleconference, the City continued to meet with HCD on a consistent basis in an effort to work toward addres sing HCD’s concerns to allow for the submission of a compliant Housing Element; and WHEREAS, the City also initiated other efforts to bring the 6th Cycle Housing Element into compliance, including an April 26, 2022 study session with Council, and Study Sessions with the Planning Commission on May 11 and June 1, 2022; and WHEREAS, in consideration of the comments received in the February 8, 2022 letter, consultations with HCD, and input received during study sessions with the City Council and Planning Commission, City staff prepared draft redline revisions to the Housing Element to primarily: 1) make technical revisions; 2) address affirmatively furthering fair housing obligations; and 3) strengthen the City’s commitment to development of affordable housing on City-owned sites; and WHEREAS on June 15, 2022, the Planning Commission considered the draft redline amendments to the 6th Cycle Housing Element in response to HCD’s comments, that, among other things, made technical revisions, and proposed amendments to the element’s affirmatively furthering fair housing requirements and program related to City- DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 928 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 6 owned sites, made recommended revisions, and recommended that the City Council direct staff to transmit the redline revisions to HCD for review; and WHEREAS, on June 21, 2022, the City Council reviewed the draft revisions to the 6th Cycle Housing Element, made recommended revisions, and directed staff to transmit to HCD for review and comment; and WHEREAS, on July 8, 2022, the City submitted the draft revised Housing Element to HCD for review and comment; and WHEREAS, on September 6, 2022, HCD issued a letter determining that the Draft Revised Housing Element will comply with State Housing Element Law once adopted, submitted to, and reviewed by, HCD; and WHEREAS, on September 22, 2022, Planning Commission conducted a duly noticed public hearing to consider recommending to the City Council that the City Council adopt the amended 6th Cycle Housing Element, and after considering oral and written testimony, adopted Resolution Number 22-018 (PCS) recommending that the City Council adopt the amended the 6th Cycle Housing Element; and WHEREAS, on September 26, 2022, in accordance with Government Code Section 65585(b), the City posted the final draft of th e amended 6th Cycle Housing Element incorporating the Planning Commission’s recommendations for updated implementation dates on the City’s website for public review, and emailed a link to all individuals and organizations that previously requested notices relating to the City’s 6th Cycle Housing Element; and WHEREAS, on October 11, 2022, the City Council conducted a duly-noticed public hearing to consider adopting the amended 6th Cycle Housing Element, and after DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 929 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 7 considering oral and written testimony, adopted Resolution Number 11469 (CCS), adopting an amended 6th Cycle Housing Element, which was certified by the State on October 14, 2022; and WHEREAS, between September 30, and October 13, 2022, the City received 15 preliminary applications for housing development projects pursuant to Government Code Section 65941.1; and WHEREAS, the applicants for the 15 housing development projects assert that the projects are eligible for processing under the “builder’s remedy” provision of the Housing Accountability Act (“HAA”), California Government Code section 65589.5(d), (the “builder’s remedy applications”); and WHEREAS, the builder’s remedy provision prohibits a local agency from disapproving a housing development project, that provides at least 20 percent of total units for very low, low-, or moderate-income households, or condition approval in a manner that renders the housing development project infeasible for development for the use of very low, low-, or moderate-income households unless the local agency is able to make certain specific findings, including, but not limited to, the housing development project is inconsistent with both the jurisdiction's zoning ordinance and general plan land use designation as specified in any element of the general plan as it existed on the date the application was deemed complete, and the jurisdiction has adopted a housing element that is in substantial compliance with State Housing Element law; and WHEREAS, 14 of the 15 builder’s remedy applications propose hou sing development projects are inconsistent with the City’s LUCE and Zoning Ordinance, in DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 930 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 8 part, because the housing development projects would far exceed height and floor area ratio (“FAR”) maximums; and WHEREAS, the Housing Element includes a variety of programs intended to achieve goals and policies related to new housing production for all income categories and the preservation of existing housing, ensuring there is equitable housing access to all neighborhoods, housing for the homeless including housing assistance and supportive services to low-income households, and eliminating housing discrimination; and WHEREAS, the Housing Element sets forth a range of goals, policies and programs, including, but not limited to, procedural changes related to streamlining the review of housing projects, updating development standards and the Affordable Housing Production Program (“AHPP”) to ensure housing projects are feasible, providing opportunities for housing in areas of the City that do not currently permit housing, incentivizing housing in areas of the City that have not historically supported housing production, amending the City’s density bonus ordinance to ensure consistency with State law and integration into the City’s land use system, and committing to the production of affordable housing on City-owned/publicly owned land; and WHEREAS, the Housing Element requires the City to implement certain programs through amendments to the Land Use and Circulation Element of the General Plan, the Bergamot Area Plan, the Downtown Community Plan, and the Zoning Ordinance in phases, subject to specified deadlines; and WHEREAS, on August 4, 2021, the Planning Commission adopted a Resolution of Intention, Resolution Number 21-007 (PCS), declaring its intention to consider recommending to the City Council that the City Council amend the text of the Zoning DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 931 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 9 Ordinance for, among other things, consistency with the goals, policies and programs of the 6th Cycle Housing Element; and WHEREAS, on February 1, 2023, the Planning Commission conducted a duly noticed public hearing, and, after considering oral and written testimony regarding the proposed amendments to the text of the Zoning Ordinance, adopted Resolution Number 23-003 (PCS), recommending that the City Council amend the text of the Zoning Ordinance; and WHEREAS, on April 11, 2023, the City Council adopted Ordinance Number 2742 (CCS), amending the text of the Zoning Ordinance for consistency with the goals, policies, and programs of the 6th Cycle Housing Element, including, but not limited to, housing development incentives such as increased height and FAR maximums in the City’s nonresidential districts and streamlined ministerial approval processes for housing projects that are consistent with the City’s objective standards; and WHEREAS, the City desires to provide an alternative means of providing housing on the sites subject to the builder’s remedy applications by allowing applicants to be eligible for the housing development incentives resulting from Housing Element implementation, including increased height and FAR maximums in the City’s nonresidential districts and streamlined ministerial approval process, subject to certain additional incentives related to offsite affordable housing requirements under the AHPP, eligibility for density bonuses for projects that provide affordable housing offsite in accordance with the AHPP, including incentives and concessions, and waiver or reduction of building standards, and parking maximums in the Downtown Co mmunity Plan area; and DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 932 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 10 WHEREAS, in addition to permitting application of the Housing Element implementation, these additional incentives will provide an alternative pathway for applicants to propose housing development projects on the sites s ubject to the builder’s remedy applications that would be consistent with the City’s LUCE and Zoning Ordinance, or any applicable Specific Plan, including increased height and FAR maximums for housing development projects in the City’s nonresidential districts as set forth the Housing Element; and WHEREAS, on May 17, 2023, the Planning Commission adopted a Resolution of Intention, Resolution Number 23-010 (PCS), declaring its intention to consider recommending to the City Council that the City Council amend the text of the Zoning Ordinance to provide the incentives for housing projects located on sites subject to a preliminary application in accordance with Government Code section 65941.1 that was filed between September 30, and October 13, 2022; and WHEREAS, on June 21, 2023, the Planning Commission conducted a duly-noticed public hearing to consider its recommendation to the City Council. NOW, THEREFORE, THE PLANNING COMMISSION OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: Proposed amendments to the text of the Zoning Ordinance. Pursuant to Santa Monica Municipal Code Section 9.46.060(B), the Planning Commission, after considering oral and written testimony, does hereby recommend that City Council that the City Council amend the text of the Zoning Ord inance to provide incentives for housing projects located on certain sites subject to a preliminary application in accordance with Government Code section 65941.1 that was filed between September 30, and October DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 933 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 11 13, 2022, as set forth in Exhibit A, attached to this Resolution. In making this recommendation, the Planning Commission hereby finds and declares that, for the reasons articulated above, in the staff report dated June 21, 2023, and below: 1. The proposed amendments to the text of the Zoning Ordinance are consistent with the General Plan and any applicable Specific Plans in that the proposed amendments incentivize the production of housing projects that are consistent with the General Plan and any applicable Specific Plan on parcels that are subject to pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021-2029) Housing Element. These Builder’s Remedy applications do not comply with General Plan or applicable Specific Plan standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan and applicable Specific Plan development standards for Floor Area Ratio and building height and provide new deed-restricted affordable and market-rate housing units in Santa Monica. 2. The proposed amendments to the text of the Zoning Ordinance are consistent with the purpose of the Zoning Ordinance to promote the growth of the City in an orderly manner and to promote and protect the public health, safety, and general welfare in that the DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 934 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 12 amendments will incentivize the production of General Plan, Specific Plan, and Zoning Ordinance compliant housing on parcels that are subject to pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021- 2029) Housing Element. These Builder’s Remedy applications d o not comply with General Plan or Zoning Ordinance standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan, Specific Plan, and Zoning Ordinance development standards for Floor Area Ratio and building height and therefore promote the orderly growth of the City in a manner that protects public health, safety and general welfare in comparison to projects that exceed General Plan, Specific Plan, and Zoning Ordinance development parameters. SECTION 2. The Director of Planning and Community Development shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: DOUGLAS SLOAN City Attorney DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 935 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 13 Adopted this 21st day of June, 2023. Chair, Planning Commission I hereby certify that the foregoing Resolution of Intention was duly and regularly introduced and approved at a meeting of the Planning Commission on the 21st day of June, 2023 by the following vote: Ayes: Commissioners Fonda-Bonardi, Landres, Tolkin, Vice Chair Raskin, Chair Ries Noes: Abstain: Absent: Commissioners Fresco, Lambert Attest: Director of Planning and Community Development DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 936 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 14 EXHIBIT A Proposed Amendments to the Text of the Zoning Ordinance Santa Monica Municipal Code Section 9.31.198 shall be added to read as follows: 9.31.198 Multiple-Unit Dwelling Projects Located on Certain Sites Subject to Applications Filed Prior to Implementation of 6th Cycle (2021-2029) Housing Element The purpose of this section is to incentivize the production of housing on parcels subject to applications for housing development projects that have asserted eligibility for processing under the “builder’s remedy” provision of the Housing Accountability Act (“HAA”), California Government Code section 65589.5(d), that were filed prior to implementation of the 6th Cycle (2021-2029) Housing Element. The provisions of this section shall be interpreted to implement the express language of the Settlement Agreement. A. Applicability. Subject to the provisions of subsection G, below, this section shall apply to new multiple-unit dwelling projects with applications filed between June 1, 2023 and two years after the effective date of this Section, on parcels that meet the following requirements (“eligible projects”): 1. A preliminary application was filed for a housing development project pursuant to Government Code Section 65941.1 between September 30, and October 13, 2022; and 2. The preliminary application asserted eligibility for processing under the “builder’s remedy” provision of the Housing Accountability Act, Government Code Section 65859.5(d). DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 937 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 15 B. Development Standards. All eligible projects shall be subject to the development standards established for the underlying zone. C. Affordable Housing Production Program Requirements. All eligible projects shall be subject to the provisions of Chapter 9.64, Affordable Housing Production Program, except that the applicant for any eligible project may elect to satisfy the off-site provisions of Chapter 9.64, as follows: 1. Applicant may offsite any or all of the affordable housing units associated with an eligible project at any commercially or residential zoned parcel in the City (outside of the Pico Neighborhood Area) consistent with the underlying General Plan and zoning regulations (with available State Density Bonus Law benefits available under AB 1763 [Chapter 666, Stats. 2019]) for 100 percent affordable projects) provided there are no existing residential units on the target offsite property (the “Offsite Affordable Option.”) For purposes herein, the Pico Neighborhood shall be defined in the Figure 9.40.020.A: “Pico Neighborhood Area”. 2. If the applicant elects the Offsite Affordable Option for an eligible project in accordance with this subsection C, the following terms and conditions apply to the eligible project: a. Affordable Housing Units. The market rate eligible project shall provide fifteen (15) percent of the total number of market rate base density (i.e., pre density bonus) units as offsite affordable housing units (i.e., five [5] percent Very Low, five (5) percent Low and five (5) percent Moderate). The affordable housing units for the Offsite Option shall not count as the basis to award a market rate density bonus for the off-site project. However, the offsite units may be used DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 938 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 16 to qualify for density bonus benefits (e.g., density bonuses, incentives/concessions, waivers of development standards and reduced parking) for a one hundred percent affordable housing project at the offsite location(s). Should the applicant elect to satisfy the affordable housing requirement onsite for any of the eligible projects, it shall be fifteen (15) percent of the base density (i.e., pre-density bonus) project units. b. State Density Bonus Benefits. If exercised, the Offsite Affordable Option would enable the applicant to receive State Density Bonus Law benefits for the eligible project (i.e., up to a fifty (50) percent market rate density bonus, three (3) permitted incentives/concessions and additional waivers of development standards) as if the affordable units were to be provided onsite. c. Timing for Completion. The Offsite Affordable project must receive a certificate of occupancy prior to issuance of a certificate of occupancy for the related market rate development. However, nothing shall prevent the market rate building from obtaining a building permit and commencing construction concurrent with or prior to the corresponding offsite affordable project. D. Parking. Notwithstanding the provisions of Section 9.28.060(A), eligible projects located in the Downtown Community Plan Area shall be subject to the following maximum parking requirements: 1. Guest = 1 space per 15 units 2. Studio, no bedrooms = 1 space per unit 3. 1 bedroom = 1 space per unit 4. 2 or more bedrooms = 1 space per unit DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 939 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 17 E. Additional Requirements. Except as expressly provided in this Section, eligible projects shall comply with the requirements set forth in Section 9.31.195, Multiple-Unit Dwelling Projects. F. Termination. This Section (with the exception of subsection D “Parking”) shall terminate and be of no further force and effect upon issuance of administrative approvals for 965 “additional units”. For purposes of this Section, “additional units” means the total amount of units provided by one or more eligible projects, including market rate, affordable, on-site and off-site units, that exceed the collective unit capacity allocated to the properties associated with the eligible projects under the Suitable Sites Inventory for the City’s 6th Cycle (2021-2029) Housing Element. This provision shall not impose any limit on the number of units of the eligible projects (either individually or collectively) that do not utilize the offsite affordable housing benefits contained in this Section 9.31.198. In addition, subsection D “Parking” shall survive termination of this Section and continue to apply to any eligible projects identified in the settlement agreement located within the Downtown Community Plan area. DocuSign Envelope ID: 0AB80294-19A8-4482-8DE4-13E0FA4DD7FA 10.A.a Packet Pg. 940 Attachment: Attachment B PC Resolution 23-011.docx (5717 : Zoning Ordinance Regarding Development Standards Incentives for Certain 1 City Council Meeting: July 18, 2023 Santa Monica, California ORDINANCE NUMBER _________ (CCS) (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA TO AMEND THE TEXT OF THE CITY’S ZONING ORDINANCE TO PROVIDE INCENTIVES FOR CERTAIN HOUSING PROJECTS THAT FILED AN APPLICATION PRIOR TO IMPLEMENTATION OF THE CITY’S 6TH CYCLE (2021-2029) HOUSING ELEMENT WHEREAS, the Housing Element Law, California Government Code Sections 65580 et seq., requires the City to review and update the Housing Element of its General Plan every eight years; and WHEREAS, the State is experiencing a housing supply crisis, with housing demand far outstripping supply; and WHEREAS, in 2018, California ranked 49th out of the 50 states in housing units per capita; and WHEREAS, the housing crisis has particularly exacerbated the need for affordable homes at prices below market rates; and WHEREAS, the housing crisis has resulted in increased poverty and homelessness, especially first-time homelessness, forced lower income residents into crowded and unsafe housing in urban areas, and forced families into lower cost new housing in greenfields at the urban-rural interface with longer commute times and a higher exposure to fire hazard; and 10.A.b Packet Pg. 941 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 2 WHEREAS, California needs an estimated 180,000 additional homes annually to keep up with population growth, and the Governor has called for 3.5 million new homes to be built over 7 years; and WHEREAS, the City received a Regional Housing Needs Assessment (“RHNA”) allocation for the 6th Cycle (2021-2029) Housing Element of approximately 8,895 housing units, with approximately 70 percent allocated as affordable housing; and WHEREAS, this RHNA allocation will require the City to permit approximately 1,000 housing units annually between 2021 and 2029, 700 of which are required to be affordable housing, representing an increase of approximately five times over the City’s RHNA allocation for the 5th Cycle (2013-2021) Housing Element; and WHEREAS, in September 2020, the City commenced a public outreach process for the 6th Cycle Housing Element, which consisted of creation of a dedicated website, presenting informational webinars, seeking input through questionnaires and surveys, forming two technical working groups, and conducting a series of study sessions with the Planning Commission, Housing Commission, Rent Control Board, and the City Council; and WHEREAS, on or about May 24, 2021, City staff published a Draft 6th Cycle Housing Element (“Draft Housing Element”); and WHEREAS, on June 2 and 3, 2021, the Planning Commission conducted a public hearing on the Draft Housing Element and made recommendations to the City Council; and WHEREAS, on June 15, 2021, the City Council conducted a public hearing to discuss the Draft Housing Element and directed staff to transmit the Draft Housing 10.A.b Packet Pg. 942 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 3 Element to the California Department of Housing and Community Development (“HCD”) with revisions; and WHEREAS, on July 1, 2021, City staff transmitted the Draft Housing Element, as revised by the City Council, to HCD for a 60-day review period; and WHEREAS on August 4, 2021, in accordance with Santa Monica Municipal Code Section 9.46.030(B), the Planning Commission adopted a Resolution of Intention, Resolution Number 21-007 (PCS), declaring its intention to consider recommending to the City Council that the City Council adopt amendments to the text of the Zoning Ordinance for consistency with the Goals, Policies and Programs of the 6th Cycle Housing Element, and minor changes, corrections and clarifications to the text of the Zoning Ordinance related to parcel coverage limitations for existing structures in the City’s R1 (Single-Unit Residential) Districts and standards for accessory structures for consistency with Council direction to return with amendments to the City’s home-share rules; and WHEREAS, on August 30, 2021, in accordance with Government Code Section 65585, HCD issued a letter to report on its review of the Draft Housing Element; and WHEREAS, HCD’s review concluded that the draft Housing Element addressed many statutory requirements, but that revisions would be necessary to substantially comply with State Housing Element Law; and WHEREAS, in its review letter, HCD set forth recommended revisions to the Draft Housing Element to, among other things, provide additional information and analysis of the City’s: housing needs, resources, and constraints related to fair housing; population and employment trends; household characteristics; Suitable Sites Inventory (“SSI”); 10.A.b Packet Pg. 943 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 4 zoning regulations for a variety of housing types; governmental and nongovernmental constraints on housing; special housing needs; and “at risk” housing units; and WHEREAS, HCD further recommended that the City make revisions to housing programs set forth in the Draft Housing Element to: demonstrate adequate capacity for the RHNA allocation; address, and where legally possible, remove, constraints to the maintenance, improvement and development of housing; promote and affirmatively further fair housing; and preserve assisted housing development for low-income households; and WHEREAS, on September 8, 2021, the Planning Commission held a discussion to consider HCD’s review and recommendations and to discuss concepts that would address those recommendations; and WHEREAS, on September 20, 2021, the Planning Commission conducted a discussion to review proposed revisions to the Draft Housing Element to address HCD’s recommendations; and WHEREAS, on September 24, 2021, Planning Commission conducted a duly noticed public hearing, and after considering oral and written testimony, adopted a Resolution of Recommendation, Resolution Number 21-011 (PCS), recommending to the City Council that the City Council adopt the 6th Cycle Housing Element; and WHEREAS, on October 12, 2021, the City Council conducted a duly noticed public hearing to consider HCD’s comments and the recommendation of the Planning Commission, and, after considering oral and written testimony, adopted Resolution Number 11371 (CCS) adopting the 6th Cycle (2021-2029) Housing Element, which the City transmitted to HCD for review and certification; and 10.A.b Packet Pg. 944 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 5 WHEREAS, on February 8, 2022, the City received a letter from HCD determining that although the Adopted 6th Cycle Housing Element addressed “many statutory requirements,” “revisions would be necessary to comply with State Housing Element Law”; and WHEREAS, the City immediately began efforts to address HCD’s letter, including scheduling a teleconference with HCD staff on February 14, 2022 to determine the City’s required next steps in order to achieve an HCD-compliant Housing Element and conducting a Study Session with the Planning Commission on March 2, 2022; and WHEREAS, after the February 14, 2022 teleconference, the City continued to meet with HCD on a consistent basis in an effort to work toward addressing HCD’s concerns to allow for the submission of a compliant Housing Element; and WHEREAS, the City also initiated other efforts to bring the 6th Cycle Housing Element into compliance, including an April 26, 2022 study session with Council, and Study Sessions with the Planning Commission on May 11 and June 1, 2022; and WHEREAS, in consideration of the comments received in the February 8, 2022 letter, consultations with HCD, and input received during study sessions with the City Council and Planning Commission, City staff prepared draft redline revisions to the Housing Element to primarily: 1) make technical revisions; 2) address affirmatively furthering fair housing obligations; and 3) strengthen the City’s commitment to development of affordable housing on City-owned sites; and WHEREAS on June 15, 2022, the Planning Commission considered the draft redline amendments to the 6th Cycle Housing Element in response to HCD’s comments, that, among other things, made technical revisions, and proposed amendments to the 10.A.b Packet Pg. 945 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 6 element’s affirmatively furthering fair housing requirements and program related to City- owned sites, made recommended revisions, and recommended that the City Council direct staff to transmit the redline revisions to HCD for review; and WHEREAS, on June 21, 2022, the City Council reviewed the draft revisions to the 6th Cycle Housing Element, made recommended revisions, and directed staff to transmit to HCD for review and comment; and WHEREAS, on July 8, 2022, the City submitted the draft revised Housing Element to HCD for review and comment; and WHEREAS, on September 6, 2022, HCD issued a letter determining that the Draft Revised Housing Element will comply with State Housing Element Law once adopted, submitted to, and reviewed by, HCD; and WHEREAS, on September 22, 2022, Planning Commission conducted a duly noticed public hearing to consider recommending to the City Council that the City Council adopt the amended 6th Cycle Housing Element, and after considering oral and written testimony, adopted Resolution Number 22-018 (PCS) recommending that the City Council adopt the amended the 6th Cycle Housing Element; and WHEREAS, on September 26, 2022, in accordance with Government Code Section 65585(b), the City posted the final draft of the amended 6th Cycle Housing Element incorporating the Planning Commission’s recommendations for updated implementation dates on the City’s website for public review, and emailed a link to all individuals and organizations that previously requested notices relating to the City’s 6th Cycle Housing Element; and 10.A.b Packet Pg. 946 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 7 WHEREAS, on October 11, 2022, the City Council conducted a duly-noticed public hearing to consider adopting the amended 6th Cycle Housing Element, and after considering oral and written testimony, adopted Resolution Number 11469 (CCS), adopting an amended 6th Cycle Housing Element, which was certified by the State on October 14, 2022; and WHEREAS, between September 30, and October 13, 2022, the City received 15 preliminary applications for housing development projects pursuant to Government Code Section 65941.1; and WHEREAS, the applicants for the 15 housing development projects assert that the projects are eligible for processing under the “builder’s remedy” provision of the Housing Accountability Act (“HAA”), California Government Code section 65589.5(d), (the “builder’s remedy applications”); and WHEREAS, the builder’s remedy provision prohibits a local agency from disapproving a housing development project, that provides at least 20 percent of total units for very low, low-, or moderate-income households, or condition approval in a manner that renders the housing development project infeasible for development for the use of very low, low-, or moderate-income households unless the local agency is able to make certain specific findings, including, but not limited to, the housing development project is inconsistent with both the jurisdiction's zoning ordinance and general plan land use designation as specified in any element of the general plan as it existed on the date the application was deemed complete, and the jurisdiction has adopted a housing element that is in substantial compliance with State Housing Element law; and 10.A.b Packet Pg. 947 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 8 WHEREAS, 14 of the 15 builder’s remedy applications propose housing development projects are inconsistent with the City’s LUCE and Zoning Ordinance, in part, because the housing development projects would far exceed height and floor area ratio (“FAR”) maximums; and WHEREAS, the Housing Element includes a variety of programs intended to achieve goals and policies related to new housing production for all income categories and the preservation of existing housing, ensuring there is equitable housing access to all neighborhoods, housing for the homeless including housing assistance and supportive services to low-income households, and eliminating housing discrimination; and WHEREAS, the Housing Element sets forth a range of goals, policies and programs, including, but not limited to, procedural changes related to streamlining the review of housing projects, updating development standards and the Affordable Housing Production Program (“AHPP”) to ensure housing projects are feasible, providing opportunities for housing in areas of the City that do not currently permit housing, incentivizing housing in areas of the City that have not historically supported housing production, amending the City’s density bonus ordinance to ensure consistency with State law and integration into the City’s land use system, and committing to the production of affordable housing on City-owned/publicly owned land; and WHEREAS, the Housing Element requires the City to implement certain programs through amendments to the Land Use and Circulation Element of the General Plan, the Bergamot Area Plan, the Downtown Community Plan, and the Zoning Ordinance in phases, subject to specified deadlines; and 10.A.b Packet Pg. 948 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 9 WHEREAS, on August 4, 2021, the Planning Commission adopted a Resolution of Intention, Resolution Number 21-007 (PCS), declaring its intention to consider recommending to the City Council that the City Council amend the text of the Zoning Ordinance for, among other things, consistency with the goals, policies and programs of the 6th Cycle Housing Element; and WHEREAS, on February 1, 2023, the Planning Commission conducted a duly noticed public hearing, and, after considering oral and written testimony regarding the proposed amendments to the text of the Zoning Ordinance, adopted Resolution Number 23-003 (PCS), recommending that the City Council amend the text of the Zoning Ordinance; and WHEREAS, on April 11, 2023, the City Council adopted Ordinance Number 2742 (CCS), amending the text of the Zoning Ordinance for consistency with the goals, policies, and programs of the 6th Cycle Housing Element, including, but not limited to, housing development incentives such as increased height and FAR maximums in the City’s nonresidential districts and streamlined ministerial approval processes for housing projects that are consistent with the City’s objective standards; and WHEREAS, the City desires to provide an alternative means of providing housing on the sites subject to the builder’s remedy applications by allowing applicants to be eligible for the housing development incentives resulting from Housing Element implementation, including increased height and FAR maximums in the City’s nonresidential districts and streamlined ministerial approval process, subject to certain additional incentives related to offsite affordable housing requirements under the AHPP, eligibility for density bonuses for projects that provide affordable housing offsite in 10.A.b Packet Pg. 949 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 10 accordance with the AHPP, including incentives and concessions, and waiver or reduction of building standards, and parking maximums in the Downtown Community Plan area; and WHEREAS, in addition to permitting application of the Housing Element implementation, these additional incentives will provide an alternative pathway for applicants to propose housing development projects on the sites subject to the builder’s remedy applications that would be consistent with the City’s LUCE and Zoning Ordinance, or any applicable Specific Plan, including increased height and FAR maximums for housing development projects in the City’s nonresidential districts as set forth the Housing Element; and WHEREAS, on May 17, 2023, the Planning Commission adopted a Resolution of Intention, Resolution Number 23-010 (PCS), declaring its intention to consider recommending to the City Council that the City Council amend the text of the Zoning Ordinance to provide the incentives for housing projects located on sites subject to a preliminary application in accordance with Government Code section 65941.1 that was filed between September 30, and October 13, 2022; and WHEREAS, on June 21, 2023, the Planning Commission conducted a duly-noticed public hearing to consider its recommendation to the City Council; and WHEREAS, on June 21, 2023, the Planning Commission conducted a duly noticed public hearing, and, after considering oral and written testimony regarding the proposed amendments to the text of the Zoning Ordinance, adopted Resolution Number 23-011 (PCS), recommending that the City Council amend the text of the Zoning Ordinance to provide incentives for housing projects located on sites subject to a preliminary 10.A.b Packet Pg. 950 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 11 application in accordance with Government Code section 65941.1 that was filed between September 30, and October 13, 2022 based on the following findings: 1. The proposed amendments to the text of the Zoning Ordinance are consistent with the General Plan and any applicable Specific Plans in that the proposed amendments incentivize the production of housing projects that are consistent with the General Plan and any applicable Specific Plan on parcels that are subject to pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021-2029) Housing Element. These Builder’s Remedy applications do not comply with General Plan or applicable Specific Plan standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan and applicable Specific Plan development standards for Floor Area Ratio and building height and provide new deed-restricted affordable and market-rate housing units in Santa Monica. 2. The proposed amendments to the text of the Zoning Ordinance are consistent with the purpose of the Zoning Ordinance to promote the growth of the City in an orderly manner and to promote and protect the public health, safety, and general welfare in that the amendments will incentivize the production of General Plan, Specific Plan, 10.A.b Packet Pg. 951 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 12 and Zoning Ordinance compliant housing on parcels that are subject to pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021- 2029) Housing Element. These Builder’s Remedy applications do not comply with General Plan or Zoning Ordinance standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan, Specific Plan, and Zoning Ordinance development standards for Floor Area Ratio and building height and therefore promote the orderly growth of the City in a manner that protects public health, safety and general welfare in comparison to projects that exceed General Plan, Specific Plan, and Zoning Ordinance development parameters; and WHEREAS, on October 12, 2021, the City Council certified the 6th Cycle Housing Element Final Environmental Impact Report (SCH No. 20212269242021), and subsequent to certification of the Housing Element EIR, the City revised the Housing Element and prepared an addendum to the Housing Element EIR (“Housing Element Addendum”); and WHEREAS, although the certified Housing Element calls for, and the certified Housing Element Suitable Sites Inventory (“SSI”) accommodates, 13,600 units, the Housing Element Addendum “conservatively considers maximum theoretical buildout with an additional 10-percent increase, for a total of 14,565 dwelling units”; and 10.A.b Packet Pg. 952 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 13 WHEREAS, therefore, the Housing Element Addendum provides a 965-unit buffer to cover and analyze potential environmental effects for units proposed beyond those accounted for in the certified Housing Element SSI; and WHEREAS, the proposed amendments to the Zoning Ordinance will restrict the density of the eligible projects (“Ordinance Projects”) (including the related offsite affordable receiver sites) to no more than the unit capacity assumed in the SSI at the site (the “SSI Credit”) plus any additional units beyond the SSI Credit so long as the additional units collectively proposed for Ordinance Projects do not exceed the buffer of 965 units; and WHEREAS, as explained more fully in the staff report dated July 18, 2023 accompanying this Ordinance, since the proposed incentives for Ordinance Projects, with the exception of the parking incentives for projects located within the Downtown, would terminate upon issuance of Administrative Approval applications for a total of 965 additional units, the potential environmental impacts resulting from amendments to the Zoning Ordinance have been adequately analyzed in the Housing Element EIR and Addendum and do not trigger any of the conditions described in CEQA Guidelines Section 15162 that would require the preparation of a supplemental EIR or negative declaration pursuant to CEQA Guidelines Section 15168(c); and WHEREAS, on July 18, 2023, the City Council conducted a duly noticed hearing to consider the findings and recommendations of the Planning Commission, and desires to adopt the proposed Zoning Ordinance amendments as set forth below. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: 10.A.b Packet Pg. 953 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 14 SECTION 1. Based upon the oral and written testimony presented to the City Council at the public hearing on July 18, 2023, regarding the proposed changes to the text of the Zoning Ordinance, the City Council hereby makes the following findings: 1. The amendments to the text of the Zoning Ordinance are consistent with the General Plan and any applicable Specific Plans in that the amendments incentivize the production of housing projects that are consistent with the General Plan and any applicable Specific Plan on parcels that are subject to pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021-2029) Housing Element. These Builder’s Remedy applications do not comply with General Plan or applicable Specific Plan standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan and applicable Specific Plan development standards for Floor Area Ratio and building height and provide new deed-restricted affordable and market-rate housing units in Santa Monica. 2. The amendments to the text of the Zoning Ordinance are consistent with the purpose of the Zoning Ordinance to promote the growth of the City in an orderly manner and to promote and protect the public health, safety, and general welfare in that the amendments will incentivize the production of General Plan, Specific Plan, and Zoning Ordinance 10.A.b Packet Pg. 954 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 15 compliant housing on parcels that are subject to pending applications for housing development projects that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (California Government Code section 65589.5(d)), that were filed prior to certification of the City’s 6th Cycle (2021-2029) Housing Element. These Builder’s Remedy applications do not comply with General Plan or Zoning Ordinance standards for Floor Area Ratio or building height. The new projects that may be submitted in accordance with the text amendments would comply with General Plan, Specific Plan, and Zoning Ordinance development standards for Floor Area Ratio and building height and therefore promote the orderly growth of the City in a manner that protects public health, safety and general welfare in comparison to projects that exceed General Plan, Specific Plan, and Zoning Ordinance development parameters. Section 2. Santa Monica Municipal Code Section 9.31.198 is hereby added to read as follows: 9.31.198 Multiple-Unit Dwelling Projects Located on Certain Sites Subject to Applications Filed Prior to Implementation of 6th Cycle (2021-2029) Housing Element The purpose of this section is to incentivize the production of housing on parcels subject to applications for housing development projects that have asserted eligibility for processing under the “builder’s remedy” provision of the Housing Accountability Act (“HAA”), California Government Code section 65589.5(d), that were filed between September 30, and October 13, 2022, prior to implementation of the 6th Cycle (2021- 2029) Housing Element. 10.A.b Packet Pg. 955 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 16 A. Applicability. Subject to the provisions of subsection G, below, this section shall apply to new multiple-unit dwelling projects with applications filed between June 1, 2023 and two years after the effective date of this Section, on parcels that meet the following requirements (“eligible projects”): 1. A preliminary application was filed for a housing development project pursuant to Government Code Section 65941.1 between September 30, and October 13, 2022; and 2. The preliminary application asserted eligibility for processing under the “builder’s remedy” provision of the Housing Accountability Act, Government Code Section 65859.5(d). B. Development Standards. All eligible projects shall be subject to the development standards established for the underlying zone. C. Affordable Housing Production Program Requirements. All eligible projects shall be subject to the provisions of Chapter 9.64, Affordable Housing Production Program, except that the applicant for any eligible project may elect to satisfy the off-site provisions of Chapter 9.64, as follows: 1. Applicant may offsite any or all of the affordable housing units associated with an eligible project at any commercially or residential zoned parcel in the City (outside of the Pico Neighborhood Area) consistent with the underlying General Plan and zoning regulations (with available State Density Bonus Law benefits available under AB 1763 [Chapter 666, Stats. 2019]) for 100 percent affordable projects) provided there are no existing residential units on the target offsite property (the “Offsite Affordable Option”). 10.A.b Packet Pg. 956 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 17 For purposes herein, the Pico Neighborhood shall be defined in the Figure 9.40.020.A: “Pico Neighborhood Area”. 2. If the applicant elects the Offsite Affordable Option for an eligible project in accordance with this subsection C, the following terms and conditions apply to the eligible project: a. Affordable Housing Units. The market rate eligible project shall provide fifteen (15) percent of the total number of market rate base density (i.e., pre density bonus) units as offsite affordable housing units (i.e., five [5] percent Very Low, five (5) percent Low and five (5) percent Moderate). The affordable housing units for the Offsite Option shall not count as the basis to award a market rate density bonus for the off-site project. However, the offsite units may be used to qualify for density bonus benefits (e.g., density bonuses, incentives/concessions, waivers of development standards and reduced parking) for a one hundred percent affordable housing project at the offsite location(s). Should the applicant elect to satisfy the affordable housing requirement onsite for any of the eligible projects, it shall be fifteen (15) percent of the base density (i.e., pre-density bonus) project units. b. State Density Bonus Benefits. If exercised, the Offsite Affordable Option would enable the applicant to receive State Density Bonus Law benefits for the eligible project (i.e., up to a fifty (50) percent market rate density bonus, three (3) permitted incentives/concessions and additional waivers of development standards) as if the affordable units were to be provided onsite. 10.A.b Packet Pg. 957 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 18 c. Timing for Completion. The Offsite Affordable project must receive a certificate of occupancy prior to issuance of a certificate of occupancy for the related market rate development. However, nothing shall prevent the market rate building from obtaining a building permit and commencing construction concurrent with or prior to the corresponding offsite affordable project. D. Parking. Notwithstanding the provisions of Section 9.28.060(A), eligible projects located in the Downtown Community Plan Area shall be subject to the following maximum parking requirements: 1. Guest = 1 space per 15 units 2. Studio, no bedrooms = 1 space per unit 3. 1 bedroom = 1 space per unit 4. 2 or more bedrooms = 1 space per unit E. Additional Requirements. Except as expressly provided in this Section, eligible projects shall comply with the requirements set forth in Section 9.31.195, Multiple-Unit Dwelling Projects. F. Termination. This Section (with the exception of subsection D “Parking”) shall terminate and be of no further force and effect upon issuance of administrative approvals for 965 “additional units”. For purposes of this Section, “additional units” means the total amount of units provided by one or more eligible projects, including market rate, affordable, on-site and off-site units, that exceed the collective unit capacity allocated to the properties associated with the eligible projects under the Suitable Sites Inventory for the City’s 6th Cycle (2021-2029) Housing Element. This provision shall not impose any limit on the number of units of the eligible projects (either individually or collectively) that 10.A.b Packet Pg. 958 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 19 do not utilize the offsite affordable housing benefits contained in this Section 9.31.198. In addition, subsection D “Parking” shall survive termination of this Section and continue to apply to any eligible projects identified in the settlement agreement located within the Downtown Community Plan area. SECTION 3. Any provision of the Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 4. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 5. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective 30 days from its adoption. APPROVED AS TO FORM: _______________________ DOUGLAS SLOAN City Attorney 10.A.b Packet Pg. 959 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding 20 10.A.b Packet Pg. 960 Attachment: Attachment A Ordinance Incentives for Certain Housing Projects 071823 [Revision 1] (5717 : Zoning Ordinance Regarding