REPORT TO PLANNING COMMISSION
SUBJECT
Title
Proposed Project: Consider actions related to implementation of the 2023-2031 Housing Element to create a By-Right Approval process for certain parcels within the City:
A. Adopt Urgency Ordinance to:
a. Add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), Miscellaneous Plan Permit (19.82); and
B. Introduce an Ordinance to:
a. Add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), and Miscellaneous Plan Permit (19.82)
File #: PLNG-2023-0881
Location: Citywide
Applicant: City of Sunnyvale
Environmental Review: Non-discretionary project (Public Resources Code Section 21080(b)(1), CEQA Guidelines Sections 15268, 15357)
Project Planner: Julia Klein, (408) 730-7463, jklein@sunnyvale.ca.gov
Report
REPORT IN BRIEF
General Plan: Various, including Moffett Park Specific Plan, Transit Mixed-Use, El Camino Real Specific Plan, Residential High Density
Existing Zoning: Various, including: MP-R, DSP-4, DSP-14, DSP-16, MXD-IV, ECR-MU42, ECR-MU54, Split (ECR-MU54 and ECR-C) and R-4/PD
Existing Site Conditions: Various Uses Including Residential, Office, Commercial and Industrial
Surrounding Land Uses: Various
Issues: Compliance with the Adopted 2023-2031 Housing Element and State Laws
Staff Recommendation: Recommend to City Council Alternative 1:
a. Find that the Action is Exempt from the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080(b)(1) and CEQA Guidelines Section 15268 and 15357; and
b. Adopt an Urgency Ordinance in Attachment 2 to add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), and Miscellaneous Plan Permit (19.82).
c. Introduce an Ordinance in Attachment 3 to add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to the Sunnyvale Municipal Code and Amend Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), and Miscellaneous Plan Permit (19.82).
BACKGROUND
The Housing Element is part of Sunnyvale’s General Plan and identifies the policies, programs, and sites to meet the housing needs of the City’s current and future residents. Housing elements are written and adopted by local governments; however, housing elements are the only portion of a city’s General Plan that must be certified by the state (Department of Housing and Community Development - HCD). HCD reviews and certifies that each jurisdiction’s Housing Element meets all the requirements of state law (Government Code Sections 65580-65589.8). Under current state laws, housing elements are updated every eight years to coincide with an eight-year planning period. The statutory deadline for the 6th Cycle Housing Element was January 31, 2023. The City’s Housing Element was adopted by the City Council on December 12, 2023.
As the Housing Element was not adopted within 120 days of the January 31, 2023, statutory deadline, state law requires the City to rezone numerous sites that are included in the 6th Cycle (2023-2031) Housing Element Sites Inventory for By-Right residential development within one-year of the statutory deadline or by January 31, 2024.
State laws require by right approval of supportive housing and low barrier navigation centers (LBNC), meeting certain criteria, in zones where multifamily and mixed uses are permitted. By-right approval of low barrier navigation centers (LBNC) has been required since 2020 (AB 101) and by-right approvals of permanent supportive housing has been required since 2019 (AB 2162). The City must comply with these provisions even if local regulations do not reflect them; the proposed ordinances add provisions to clarify how the City would process such requests.
EXISTING POLICY
Below are key policies related to By-Right zoning. A full set of relevant goals, policies and programs are in Attachment 7.
Council Policy 7.3.1 Legislative Management - Goals and Policies
Goal 7.3A: Assess community conditions and make appropriate changes to long-range, mid-range and short-range plans.
GENERAL PLAN
HOUSING ELEMENT
Implementation Programs
H2. Rezone Program. As of the start of the planning period (January 31, 2023), the City has an unmet RHNA of 1,535 lower-income and 3,280 above moderate-income units. The City shall approve a specific plan for the Moffett Park area to accommodate the City’s RHNA shortfall by January 31, 2024, and shall ensure that sites rezoned to meet the City’s unmet lower-income RHNA meet the following criteria:
• Permit owner-occupied and rental multifamily uses by right pursuant to Government Code section 65583.2(i) for developments in which 20 percent or more of the units are affordable to lower-income households.
• Accommodate at least 50 percent of the lower-income RHNA shortfall on parcels designated exclusively for residential uses.
• Allow for densities of at least 30 dwelling units per acre, with a minimum density of 20 dwelling units per acre.
• Have existing or planned water, sewer, and dry utilities.
• Objective: Rezone sufficient land to accommodate the RHNA shortfall of 1,535 lower-income units and 3,280 above moderate-income units.
• Policy(ies) Implements: H-1.1
• Timeframe: Complete rezone before January 31, 2024
• Responsible Department or Agency: Community Development Department, Housing and Planning Divisions
H23. Zoning Code Amendments. The City shall amend the zoning code to ensure compliance with State law as follows:
• Allow “low barrier navigation center” developments by right in mixed-use zones and nonresidential zones permitting multifamily uses, consistent with Government Code Section 65662.
• Allow for the approval of 100 percent affordable developments that include a percentage of supportive housing units, either 25 percent or 12 units, whichever is greater, to be allowed without a conditional use permit or other discretionary review in all zoning districts where multifamily and mixed-use development is permitted, consistent with Government Code Section 65651(a).
(Staff will return at a later date with zoning code amendments to fully implement H23.)
ENVIRONMENTAL REVIEW
The proposed action does not require environmental review under the California Environmental Quality Act (CEQA) because it implements a state-mandated program and is therefore not a discretionary project subject to CEQA. (Public Resources Code Section 21080(b)(1), CEQA Guidelines Sections 15268, 15357).
DISCUSSION
Amendments to the City’s zoning code are proposed to comply with State law and with the City’s adopted Housing Element. These proposed amendments identify specific sites and establish an appropriate review procedure for By-Right housing.
The sites that require By-Right zoning fall into two general categories:
1) Previously identified sites from the 5th Cycle (2015-2023) Housing Element, and
2) Moffett Park Specific Plan (MPSP) lower-income shortfall sites (as the zoning for the MPSP sites was not completed until July 11, 2023).
The first category includes nonvacant sites that were identified in the previous 5th Cycle (2015-2023) Housing Element Sites Inventory and are also included in the current 6th Cycle Housing Element to accommodate the City’s Regional Housing Needs Allocation (RHNA) for lower-income households. Per Government Code Section 65583.2(c), these sites must be designated for By-Right residential development in order to be included in the current Housing Element Sites Inventory.
The second category includes sites that were included in the MPSP to accommodate the City’s lower-income shortfall. To meet the City’s lower-income RHNA of 4,677 units, the Housing Element relied heavily on high-density sites in MPSP. However, as the MPSP was not adopted by the January 31, 2023 deadline, the City technically had a shortfall of 1,535 lower-income units at the beginning of the 2023-2031 Housing Element planning period. Pursuant to Government Code 65583.2(h), the City must select sites within the MPSP to accommodate the 1,535 lower-income unit shortfall and make zoning changes to allow for By-Right residential development. Sites within the MPSP have been identified that meet state criteria and are located in proximity to a few VTA light rail stations (Crossman, Borregas, and Lockheed Martin).
The City’s Housing Element acknowledged the need to rezone in Housing Element Implementation Program, H2. Rezone Program (see below), which states that the City must permit owner-occupied and rental multifamily uses By-Right review/approvals pursuant to Government Code Section 65583.2(i) for developments that provide 20% or more of the units to affordable to lower income households. The program is intended to accommodate Housing Inventory Sites from the 2015-2023 Housing Element and additional sites located in the MPSP since it was not adopted by January 31, 2023. Sites outside of the MPSP also must be changed to allow By-Right review since the Housing Element was not adopted by January 2023. Sites identified in the Sites Inventory are those that are greater than one-half acre and less than ten acres, based on state requirements [Government Code Section 65583.2 (c)(2)].
The By-Right zoning consists of approximately 60 Housing Inventory parcels clustered in approximately 19 locations shown as a list in the proposed ordinance. The total number of units that need to be accommodated are:
Table 5-22 from the 2023-2031 Housing Element notes the shortfall since it did not include the sites in the MPSP (1,535 units).
Sites proposed for By-Right residential zoning are listed in Attachment 4 and presented on Maps in Attachments 5 and 6. The proposed sites in the MPSP yield 1,703 units; a surplus of 168 units over the City’s January 2023 shortfall of 1,535 units.
If the proposed zoning code amendments are approved, it would address the City’s RHNA for lower-income units, including a buffer of 168 units.
Housing Element and other State Law Implementation
The proposed Housing Element Rezone Program is to include a new chapter in the Sunnyvale Municipal Code to allow By-Right residential development for sites set out in the Sites Inventory Analysis in the adopted 2023-2031 Housing Element. The identified sites are included in Attachments 4 (Table), 5 (North Area Map) and 6 (South Area Map). Specifically, the Municipal Code would be amended to add Chapter 19.73 (By-Right Approvals), which specifies the ministerial review process (Director of Community Development) of projects on the identified sites. By-Right Approvals would be subject to the following criteria:
• Twenty Percent (20%) of the total number of units must be affordable to lower-income households.
AND
• The project does not include a subdivision per Title 18.
The proposed ordinance also addresses by-right housing (as already required by state law) for these two types of development:
• Permanent supportive housing as defined in Government Code Section 65660(a) that meets all of the requirements of Government Code Sections 65660 et seq.
• Low barrier navigation center as defined in Government Code Section 65660(a) that meets all of the requirements of Government Code Sections 65660 et seq.
Projects that meet the criteria may use Chapter 19.73 for a ministerial review of the project and shall be subject to approval of the design per adopted objective development standards, and be exempt from CEQA. Ministerial review shall be subject to review and approval by the Director of Community Development to assure compliance with objective development standards; would not require notice or hearing and may only be appealed by the applicant or property owner to the Planning Commission.
In addition to Chapter 19.73, the following sections of the Zoning Code are proposed to be updated to provide clarity and ensure internal consistency:
• Definitions (19.12) - to include new terminology for the By-Right Approvals.
• Zoning Districts and Specific Plan Areas - to include reference to the new By-Right Approvals chapter (19.73).
o Residential (19.18)
o Commercial (19.20)
o Office and Public Facilities (19.24)
o DSP (19.28)
o MPSP (19.29)
o LSAP (19.35)
o ECRSP (19.36)
• Inclusionary Below Market Rate Ownership Housing Program (19.67) - to include State terminology for Supportive Housing in the definitions.
• Miscellaneous Plan Permit (19.82) - added in By-Right Approvals as a review type under Ministerial Reviews.
Adopting Ordinances
An Urgency Ordinance is proposed to implement the new By-Right provisions upon Council adoption on January 30, 2024. The Urgency Ordinance would be effective on January 30, 2024 if adopted by the City Council by a 4/5 vote, and would be in effect for 45 days to March 15, 2024. Also included in the recommendation is the formal “regular” ordinance for the By-Right provisions. Regular ordinances go into effect 30 days after the second reading. The proposed second reading (formal adoption) would occur on February 6, 2024, and the regular ordinance would become effective on March 7, 2024. The proposed two ordinances would make the By-Right provision effective by January 30, 2024, which would be in compliance with the Housing Element Implementing Program H2. The regular ordinance would go into effect before the Urgency Ordinance would expire. These two actions would keep the City in compliance with the Adopted Housing Element.
FISCAL IMPACT
No fiscal impact is anticipated due to the recommended action; however, failure to adopt the proposed Ordinances could result in HCD finding the City’s Housing Element out of compliance. A non-compliant Housing Element has multiple ramifications: 1) it may disqualify the City from future federal/state/regional grant funding opportunities thereby negatively impacting the City’s ability to deliver on much needed infrastructure, park/open space, and housing projects, and 2) has other severe consequences including:
• Four-year update penalty (Gov. Code Section 65588(e)(4)(A)).
• RHNA carries over to the next Housing Element cycle (essentially doubling next RHNA obligation) (Gov. Code Section 65584.09).
• General Plan could be found inadequate.
• Vulnerable to lawsuits, fines, and attorneys’ fee awards.
• “Builder’s Remedy” projects (Gov. Code 65589.5(d)).
• Cities can lose local control of land use decisions (AB 72).
• Court can suspend city’s authority to issue building permits, zoning changes, variances, and subdivision maps.
An application fee for By-Right approvals will be proposed to cover the costs of City services for application review. The new fee will be included in a separate Fee Schedule update anticipated for City Council consideration in the next month or two.
PUBLIC CONTACT
Public contact was made by posting the Planning Commission agenda on the City's official-notice bulletin board outside City Hall, Sunnyvale Public Library and Department of Public Safety. Email notifications were sent to interested parties, including housing advocacy organizations and neighborhood groups. Notices were mailed to property owners and tenants within 300 feet of the subject sites. Notice of the hearing dates was published in the Mercury News on January 12, 2024. The agenda and report are available at the Office of the City Clerk and on the City's website.
ALTERNATIVES
Recommend that the City Council:
1. Take the following actions:
a. Find that the Action is Exempt from the California Environmental Quality Act subject to (CEQA) pursuant to Public Resources Code Section 21080(b)(1) and CEQA Guidelines Section 15268 and 15357; and
b. Adopt an Urgency Ordinance in Attachment 2 to add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), and Miscellaneous Plan Permit (19.82).
c. Introduce an Ordinance in Attachment 3 to add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), and Miscellaneous Plan Permit (19.82).
2. Take the actions in Alternative 1 with modifications.
3. Do not Adopt an Ordinance.
RECOMMENDATION
Recommendation
Recommend Alternative 1 to the City Council:
1) Take the following actions:
a. Find that the Action is Exempt from the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080(b)(1) and CEQA Guidelines Section 15268 and 15357; and
b. Adopt an Urgency Ordinance to add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), and Miscellaneous Plan Permit (19.82).
c. Introduce an Ordinance in Attachment 3 to add By-Right Approvals (Chapter 19.73) to the Sunnyvale Municipal Code, Designate Parcels Subject to By-Right Approval, and Make Related Amendments to Chapters 19.12 (Definitions), Zoning Districts and Specific Plan Districts - Areas, Residential (19.18), Commercial (19.20), Office and Public Facilities (19.24), Downtown Specific Plan (19.28), Moffett Park Specific Plan (19.29), Lawrence Station Area Plan (19.35), El Camino Real Specific Plan (19.36), Inclusionary Below Market Rate Ownership Housing Program (19.67), and Miscellaneous Plan Permit (19.82).
The proposed amendments to the Zoning Code implement the 2023-2031 Housing Element Program H2 (Rezone Program) by establishing a new By-Right Approval process for various sites throughout the City. Sites identified in the 5th Cycle (2015-2023) Housing Element must be allowed a By-Right review process since the 6th Cycle (2023-2031) Housing Element was not adopted by January 31, 2023. Sites within the MPSP have been selected from a pool of identified sites based on proximity to the VTA light rail, different property ownership and in accordance with state law requirements. The new process outlined in Chapter 19.73 (By-Right Approvals) provides a ministerial review process for those sites identified in Attachment 4 which allows review at the Director of Community Development level, does not require notification or public hearing and exempts the projects from the provisions of CEQA. Additional changes proposed provide clarification consistency within the Zoning Code.
Staff
Prepared by: Julia Klein, Principal Planner
Reviewed by: George Schroeder, Principal Planner
Reviewed by: Shaunn Mendrin, Planning Officer
Reviewed by: Trudi Ryan, Director of Community Development
Reviewed by: Connie Verceles, Deputy City Manager
Approved by: Kent Steffens, City Manager
ATTACHMENTS
1. Reserved for Report to Council
2. Draft Urgency Ordinance
3. Draft Ordinance
4. Table of Selected Parcels - By-Right Zoning
5. Sites Inventory Map, North Part of Sunnyvale
6. Sites Inventory Map, South Part of Sunnyvale
7. Full List of Relevant Goals, Policies and Programs