REPORT TO PLANNING COMMISSION
SUBJECT
Title
Forward Recommendation to City Council to Adopt a Resolution to Amend the General Plan by Adopting the 2023-2031 Housing Element and Adopt a Negative Declaration for the 2023-2031 Housing Element
Report
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.
Since August 2021, staff and the City’s consultant team, Ascent Environmental, have worked to update the City’s Housing Element for the Sixth Cycle 2023-2031 planning period. This process has included extensive community engagement, multiple revisions, and meetings with HCD staff. The community engagement process involved meetings with residents, housing advocacy groups, residential developers and an online survey, with several outreach events offering Spanish and Mandarin translation. A list of community engagement events is shown below in Table 1. In addition to the direct work on the Housing Element, the document also incorporates several of the City’s long-term planning initiatives such as the Moffett Park Specific Plan (MPSP), El Camino Real Specific Plan (ECRSP), and Lawrence Station Area Plan (LSAP), which have dramatically expanded housing capacity across the City.
Table 1: Community Engagement and Public Hearings
Based on feedback from the community, City Council, and HCD comments, the City staff has prepared four public drafts of the Housing Element. A full overview of the City’s Housing Element revision process is shown below in Table 2. The City is now in the final adoption stage of the Housing Element update process and is expecting to receive conditional certification from HCD for the Second Revised HCD Draft Housing Element, with Errata (see Attachment 2, Resolution Exhibit A). Although the Errata can be found as an Exhibit in the Resolution, this report also includes a free-standing copy of the Errata in Attachment 4.
Table 2: Sixth Cycle Housing Element Update Overview
Like most jurisdictions in Santa Clara County, the City has surpassed the January 31, 2023 deadline to have a substantially compliant, adopted housing element. The most severe consequences for exceeding this deadline include ineligibility for some State housing and transportation funding programs and the “builder’s remedy”, which limits the City’s ability to deny residential projects that meet certain affordability restrictions. For these reasons, it is critical for the City to complete this final step of housing element adoption.
Planning Commission is scheduled to consider this item on November 27, 2023. The Housing and Human Services Commission (HHSC) is scheduled to consider this item on November 29, 2023. Following recommendations by HHSC and Planning Commission, this Draft Housing Element will be submitted to Council for adoption on December 12, 2023.
EXISTING POLICY
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.
ENVIRONMENTAL REVIEW
An Initial Study/Negative Declaration (IS/ND) was prepared for the project by Ascent Environmental in accordance with the California Environmental Quality Act (CEQA). The IS/ND (Attachment 3) found that the project would not result in any unmitigated significant environmental impacts that have not been addressed in the following Environmental Impact Reports (EIR) as provided under State CEQA Guidelines Section 15063(c)(3)(D):
• Land Use and Transportation Element Update EIR (2017)
• Downtown Specific Plan EIR (2003)
• Downtown Specific Plan Amendments and Specific Development Project EIR (2020)
• Lawrence Station Area Plan Update Subsequent EIR (2021)
• El Camino Real Specific Plan EIR (2022)
• Moffett Park Specific Plan EIR (2023
The IS/ND was circulated for public review from October 20, 2023 to November 20, 2023. As of November 17, 2023, no comments were received. The Negative Declaration will be presented for Planning Commission recommendation (November 27, 2023) and Council adoption on December 12, 2023.
DISCUSSION
Housing Element Overview
The Housing Element is the City’s plan to meet the housing needs of everyone in the community. The document is wide-ranging and includes an assessment of housing needs, assessment of fair housing, sites inventory, constraints analysis, energy conservation analysis, and policies and programs. One of the most important components of any housing element is the Regional Housing Needs assessment (RHNA). The RHNA is the target number of housing units that the City must plan for during the Sixth Cycle 2023-2031 planning period. As shown in Table 3 below, the City’s total RHNA for the 2023-2031 cycle is 11,966 units and further divided into income categories based on the area median income (AMI) and classified as Very Low, Low, Moderate, and Above Moderate Income. Although the City does not need to actually build these housing units, the City’s Housing Element must provide the framework for the units to be built by putting in place the proper zoning, policies, and programs as well as addressing any constraints to the production of housing.
Table 3: 2023-2031 RHNA
Another important Housing Element component is the assessment of fair housing, which is a new requirement of the Sixth Cycle planning period. As part of the assessment of fair housing, the City must ensure that the City’s Sites Inventory distributes the RHNA fairly across all regions of Sunnyvale. This concept is known as “affirmatively furthering fair housing” (AFFH) and is intended to provide access to housing in areas that are considered higher resource according to maps developed by HCD and the State Tax Credit Allocation Committee. These opportunity maps identify areas with characteristics that support positive economic, educational, and health outcomes for low-income families. Although much of the City is considered to be moderate or high resource, most areas south of El Camino Real are categorized as highest resource. Many comments from the public and HCD have centered around how the City’s Housing Element addresses AFFH and plans for housing equitably distributed throughout the City. With each revision, the City has included additional and revised policies that address these comments and that seek to expand a variety of housing types throughout Sunnyvale.
Revised Public Review Draft and HCD Comment Letter #1
In August 2021, the City began the housing element update process with community engagement events, extensive data gathering, and a comprehensive review of the City’s housing policies. Over the course of nearly a year, this information was combined with feedback from City Council to create the Public Review Draft Housing Element, which was published on May 6, 2022. Based on additional comments received by the public and feedback from City Council, the City made minor revisions and submitted the Revised Public Review Draft to HCD on July 8, 2022.
Following a 90-day review, the City received HCD’s comment letter on the Revised Public Review Draft on October 6, 2022. Many of HCD’s comments only required minor clarifications. For example, HCD noted that programs should include earlier implementation timelines and more explicit objectives and outcomes. The City responded by revising many programs in order to provide specific commitments to housing outcomes and adjusted timelines to ensure programs are completed earlier in the planning period. HCD’s most significant comments were related to AFFH, realistic capacity assumptions of sites, suitability of nonvacant sites, constraints on residential development, and the consideration of public comments. The most significant HCD comments and the City’s responses are summarized in Table 4 below.
To address HCD’s most significant comments, the City completed major revisions to the HCD Review Draft. This revision process required data gathering and extensive analysis of housing production and the City’s existing permitting processes. In addition to new analysis, the City also held two stakeholder meetings with the local housing advocacy groups, Livable Sunnyvale and Silicon Valley at Home (also called SV@Home) in February 2023. Both of these groups were very engaged throughout the housing element update process and provided comment letters on the HCD Review Draft highlighting concerns about AFFH. The City discussed proposed solutions to their concerns about AFFH, specifically by reducing reliance on MPSP for a majority of lower-income sites and increasing lower-income sites in higher resource areas. The City then held a third Council Study Session on March 14, 2023, to obtain feedback on housing programs related to three critical topics, including lower-income housing sites in southern higher-resource areas, missing middle housing, and the Park Dedication Requirement. Council feedback on these topics was incorporated into the Revised HCD Draft and helped address AFFH concerns from housing advocates. The City sent the Revised HCD Draft to HCD on May 24, 2023, for their 60-day review.
Table 4: HCD Comment Letter #1 Summary
Revised HCD Draft and HCD Comment Letter #2
In June 2023, the City met with HCD review staff to discuss their preliminary comments on the Revised HCD Draft. As with the initial comment letter, many of HCD’s comments were minor and required only clarifying revisions, such as additional details on the City’s open space requirements and more specific program language. To address these minor comments, the City issued an Errata sheet to the Revised HCD Draft on July 10, 2023.
On July 21, 2023, HCD sent their second comment letter in response to the Revised HCD Draft and Errata sheet. Since the Errata sheet resolved many of HCD’s concerns, this comment letter was much shorter than the previous one. The City met with HCD twice in August 2023 and clarified many of their minor comments, but significant concerns were once again focused on AFFH, realistic capacity, and development constraints. A fourth City Council Study Session was held on September 26, 2023 to update Council on staff’s response to HCD comments and highlight HCD’s unresolved concerns. Council feedback was incorporated into the Second Revised HCD Draft, which the City sent to HCD on October 12, 2023, for their review. HCD’s most significant comments and the City’s responses are summarized in Table 5 below.
Table 5: HCD Comment Letter #2 Summary
Second Revised HCD Draft and HCD Conditional Certification
The City met with HCD in November 2023 to discuss their preliminary comments on the Second Revised HCD Draft. Based on informal feedback from HCD, an Errata has been prepared to address the remaining concerns.
The Errata (see Attachment 4) pertains to a few sections in Chapters 2 and 6, summarized below:
1. Revision to Program H18 (Usable Open Space Requirements) to add annual monitoring and midcycle review.
2. Revision to Program H19 (Review Park Dedication Requirements) to add annual monitoring and midcycle review.
3. Revision to Program H21 (Missing Middle Housing) to ensure max densities can be achieved.
4. Revisions to the Constraints Chapter to acknowledge that parking requirements for studio units are a constraint and revisions to Program H23 to commit to reducing the requirement to no more than 1 space per unit.
With this draft, the City has also finalized the Sites Inventory as shown below in Table 6. The final Sites Inventory includes a substantial surplus of sites, especially in the lower income category. This surplus helps the City retain a buffer to comply with the State’s “no net loss” provisions by ensuring that lower-income sites are available in the event that fewer lower-income housing units are developed than assumed in the Sites Inventory.
Table 6: 2023-2031 Housing Capacity Summary
The formal HCD letter of Conditional Certification is expected no later than December 11, 2023, prior to City Council consideration of the Housing Element on December 12, 2023.
FISCAL IMPACT
No fiscal impact is anticipated due to the recommended action; however, failure to approve a compliant housing element could negatively impact the City by causing it to be ineligible for certain State funding programs. Failure to adopt a compliant housing element has other severe consequences including:
• Four-year update penalty (Gov. Code Section 65588€(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
PUBLIC CONTACT
Public contact was made by posting the Council 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. The hearing date was included on the City’s Housing Element Update webpage and published in the Sunnyvale Sun newspaper. The agenda and report are available at the Office of the City Clerk and on the City's website.
ALTERNATIVES
1. Recommend that the City Council make the findings and adopt the Resolution in Attachment 2 to:
a. Adopt the Negative Declaration in Attachment 3, and
b. Amend the General Plan by Adopting the 2023-2031 Housing Element as included as Exhibit A.
2. Recommend that the City Council make the findings and adopt the Resolution in Attachment 2, with modifications, to:
a. Adopt the Negative Declaration in Attachment 3, and
b. Amend the General Plan by Adopting the 2023-2031 Housing Element as shown included as Exhibit A.
3. Recommend that the City Council not Adopt a Resolution.
RECOMMENDATION
Recommendation
Alternative 1: Recommend that the City Council make the findings and adopt the Resolution in Attachment 2 to the report to a. Adopt the Negative Declaration in Attachment 3 to the report, and b. Amend the General Plan by Adopting the 2023-2031 Housing Element as included a Exhibit A
The 2023-2031 Housing Element update process has lasted over two years and included robust community engagement and multiple revisions to create a stronger, more impactful plan to meet the City’s housing needs. The Sites Inventory dramatically increases housing supply and exceeds the City’s RHNA in all income categories. Policies and programs will reduce constraints to the development of housing, including missing middle housing and accessory dwelling units. The City has also incorporated community feedback to affirmatively further fair housing by increasing density in higher resource areas of the City. With conditional approval from HCD expected by December 11, 2023, the City’s Housing Element is now ready for adoption.
Staff
Prepared by: Ryan Dyson, Housing Specialist
Reviewed by: Ernie DeFrenchi, Affordable Housing Manager (Acting Housing 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 Resolution (with 5 Exhibits)
Exhibit A: 2023-2031 Sunnyvale Housing Element, including Errata
Exhibit B: HCD Finding Letter, dated October 6, 2022
Exhibit C: HCD Finding Letter, dated July 21, 2023
Exhibit D: Response to HCD Findings, dated May 2023
Exhibit E: Response to HCD Findings, dated October 5, 2023
Exhibit F: HCD letter of conditional approval (reserved for Report to Council)
3. Initial Study/Negative Declaration
4. November 17, 2023 Errata to Second Revised Draft 2023-2031 Housing Element