September 28, 2023
Dear Mr. Paulson and Members of the Housing Element Advisory Board,
The Los Gatos Community Alliance is writing to you as a group of concerned residents regarding the draft 2023-2031 Housing Element which was recently released for the 7-day public comment period. We understand Staff is aggressively pushing to file a fourth submittal as quickly as possible to begin HCD’s next 60-day review cycle.
This has led to commencing the 7-day public comment this past Friday, 6 days before a HEAB meeting which is scheduled to review and discuss the draft Housing Element. We believe this is not in the spirit of maximizing public participation because it departs from the Town’s prior approach where the mandatory public review period commenced after the Town Council or the HEAB had publicly reviewed the drafts.
For many residents, being able to listen to the Town Council’s or HEAB’s discussion will lead to valuable comments and recommendations. The members of the public become better informed about a document they have largely not been involved with, by listening to the deliberative process of the Town Council or HEAB.
Under the current timing, after listening to the HEAB’s discussion, the public will have less than 24 hours to submit their comments before the closing of the public review period. We find this to be a barrier to public involvement and runs counter to the goal of maximizing public participation. The 7-day public comment period should commence after the HEAB meeting, just like it was done for all prior HCD submissions. We would request that a new 7-day public comment period commence after the HEAB meeting to allow concerned residents the opportunity to knowledgeable comment on the proposed draft.
Additionally, we have several comments that we would urge you to seriously consider and take all necessary actions to ensure the Housing Element conforms to State Housing Element Law. Below are our comments for your review.
Comment One – Review and consider the letter previously sent by Rutan and Tucker
On August 22, 2023 our legal advisor, Matthew Francois of the firm Rutan and Tucker, LLP sent you and Paul McDougal and Jose Armando Jauregui of the State HCD, a very thoughtful 7-page letter with numerous exhibits, which outlined serious concerns the Los Gatos Community Alliance had regarding the Housing Element Site Inventory and the Housing Element compliance with State Housing Element Law. We note that in the current draft, on page 1-115 there is a one paragraph response to this letter.
Frankly, this is not a serious response to the numerous legal issues that were identified and furthermore, fails to explain how the Town has taken the comments into consideration in preparing the current draft.
We do not intend here to cover these points again, but rather are resubmitting the letter as part of the current public comment period with the hope the Town will undertake a serious review and completely address the numerous legal issues that are discussed.
Comment Two – Make all required revisions to Table 10-3 – RHNA Credits and Site Strategies and ensure there are sufficient parcels to make up the shortfall in very low and moderate units to meet the 6th cycle RHNA by income category.
The Los Gatos Community Alliance has specific comments regarding Table 10-3. We have taken the liberty to rearrange Table 10-3 in a format more easily understood than the one presented.
The current draft of the Housing Element makes the claim that “Los Gatos reasonably expects that a net capacity total of 2,708 units will be developed”(reference page 10-33). This is shown in Part A of the schedule on the row marked “total credits and HEOZ sites”. We disagree with this, and address this in more detail below.
The Table also shows the distribution by income category of these “reasonably developed “ units as 743 units (27.4%) Very Low, 421 units (15.5%) Low, 413 units (15.3%) Moderate and 1,131 units (41.8%) Above Moderate. Furthermore, on page I-39 in response to Harmonie Park’s comment letter (the developer of site D-1 – North 40 Phase II), the Town states “the distribution of affordability levels in the Site Inventory is an estimate prepared based on a combination of factors including lot size, vacancy, property owner interest, minimum and maximum density and other development regulations”.
Unfortunately, there is no evidence in the draft Housing Element which supports the “reasonable expectation” that 1,164 units, representing 75% (1,164/1,544) of the estimated market rate units, will be below market rate housing. The SB 330 filings associated with parcels B-1 and D-1 reflect substantially less below market units (e.g. property owner interest), and the Town’s own Below Market Program (e.g. development regulations) which mandates a developer of more than 101 units to provide a minimum of below market rate units equal to 20% of the number of market rate units provide substantial evidence that the site inventory estimate of 1,164 below market rate units is wildly unreasonable and not supported by any objective evidence in the record.
Developers will not voluntarily exceed the minimum 20% requirement because there is little economic incentive to produce below market rate units above this threshold. This is confirmed by all SB 330 applications and the inclusion of Program L – Below Market Price Program whose goal is to evaluate the existing BMP Program to increase the number of BMP units constructed.
And yet the draft Housing Element ignores this economic reality and unexplainably “reasonably expects” the number of below market rate units developed will be 75% of the number of market rate units. This is not a reasonable assumption and is not supported by any evidence in the record. The site inventory must be corrected to reflect a reasonable distribution of development by income category.
In addition to the problem of realistic income distribution of the developed units, Table 10-3 also contains specific errors which must be corrected. Unfortunately, the sum of the errors results in an overstatement of the estimated development of below market rate units. Once corrected, the Town does not meet the 6th cycle RHNA by income category. We will now address each error.
1 – Single Family and Housing units entitled – June 30, 2022 to January 31, 2023
On D-64 of the Housing Element it is stated that “units that are made available during the RHNA projection period (June 30, 2022 through January 31, 2031) can be credited toward the RHNA”. Table 10-3 reflects 227 housing units that the Town claims were “final, permitted, or approved after June 30, 2022 or were under construction as of June 30, 2022”. Unfortunately, this does not conform to the instructions in the comment letter HCD issued to ABAG on January 12, 2022.
According to the comment letter, “local governments may take RHNA credit for new units approved, permitted, and/or built beginning from the start date of the RHNA projection period, June 30, 2022”. Of the 227 units 194 units were permitted prior to the start date of the projection period. This includes the 49 below market rate units on the North 40 Phase 1 parcel (APN 424-07-100). In addition, all 194 units have been included in the 5th cycle results (refer to page E-12) and reported in either the 2020, 2021 or 2022 Annual Progress Reports to HCD. Based on this, all 194 units need to be excluded from Table 10-3 and need to be deducted from the total credits.
- Projected ADU Affordability
On D-60 of the Housing Element it is disclosed that the income distribution for ADU’s is 30% very low, 30% low, 30% moderate and 10% above moderate income. This distribution was based on “ABAG’s pre-approved ADU Affordability Survey”.
We have included the referenced survey which in fact was released as a “draft” survey prepared by ABAG dated September 8, 2021. While the draft report was reviewed by HCD, HCD did not formally accept it and did not raise objections to the conclusions. HCD believed the conclusions were generally accurate and added that jurisdictions should ensure the information reflects local conditions. To that end, HCD stated jurisdictions should provide opportunity for stakeholders to comment on any assumptions, including affordability assumptions based on the draft report. ABAG did not expect to receive any additional guidance from HCD.
The survey does include a recommendation for ADU’s income distribution as discussed in the Housing Element. However, the survey also recommends a more conservative distribution for jurisdictions with fair housing concerns, which Los Gatos clearly has. This distribution is 5% very low, 30% low, 50% moderate and 15% above. This distribution more accurately reflects open market rentals, excluding units made available to family and friends. This distribution is validated by data in the survey which shows the following distribution of ADU market rate units on the Peninsula – 6% very low, 31% low, 48% moderate and 15% above.
Lastly, the Town’s actual experience for ADUs permitted between June 30, 2022 and January 30, 2023 shows the following income distribution – 0% very low, 12% low, 48% moderate and 40% above. Based on this we believe a more reasonable income distribution for ADUs would be 5% very low, 30% low, 50% moderate and 15% above, which was the recommendation for jurisdictions with fair housing concerns.
Adopting this distribution would result in 50 units deducted from the very low category and 40 units added to the moderate category and 10 units added to the above category. We made this adjustment to Table 10-3.
- Site B-1 adjustment to reflect SB 330 application
On page D-21 there is a description of site B-1, the Los Gatos Lodge. The site inventory programmed this 8.81-acre site for 262 units at a planned development density of 30 DU per acre. The income distribution of these units is 86 units very low, 86 units low, 62 units moderate and 28 units above.
The property owner has filed a preliminary SB 330 application which vests the development rights of the parcel and a final application is expected to be received by January 2, 2024. The SB 330 application calls for the development of 158 units at a development density of 17.9 DU per acre. It should be pointed out this development density is materially below the 30 DU minimum density programmed by the HEOZ zoning. The Housing Element does not discuss the difference in development densities and raises questions regarding Program AQ – Zoning Code Amendments since there is no mention as to a minimum allowable development density and appears to be inconsistent with Table C-3 – Proposed HEOZ Densities by underlying Land Use and Zoning Designation.
Based on the SB 330 application, it appears that a reasonable development assumption should be 0 units very low, 32 units low, 0 units moderate and 126 above for a total of 158 units. This would result in 86 units being deducted from very low units, 54 units being deducted from low units, 62 units being deducted from moderate, and 98 units being added to above. We made this adjustment to Table 10-3.
- Site D-1 adjustment to reflect SB 330 application
On page D-35 there is a description of site D-1, North 40 Phase II. The site inventory programmed this 15.6-acre site for 452 net units at a planned development density of approximately 30 DU per acre. The income distribution of these units is 184 units very low, 89 units low, 92 units moderate and 87 units above.
The property owner has filed a final SB 330 application which vests the development rights of the parcel. The SB 330 final application calls for the development of 451 units at a development density of 28.6 DU per acre. It should be pointed out this development density is below the 30 DU minimum density programmed by the HEOZ zoning. The Housing Element does not address the difference in development densities and raises a question regarding Program D – Additional Housing Capacity for the North 40 Specific Plan, Program AQ – Zoning Code Amendment and appears to be inconsistent with Table C-3 – Proposed HEOZ Densities by underlying Land Use and Zoning Designation.
Based on the SB 330 application, it appears that a reasonable development assumption should be 0 units very low, 91 units low, 1 unit moderate and 359 above for a total of 451 units. This would result in 184 units being deducted from very low units, 2 units being added to low, 91 units being deducted from moderate, and 272 units being added to above. We made this adjustment to Table 10-3.
- Site I-1 adjustment to reflect SB 330 application
On page D-59 there is a description of site I-1, Alberto Way. The site inventory programmed this 2.15-acre site for 60 units at a planned development density of approximately 27.9 DU per acre. The income distribution of these units is 0 units very low, 4 units low, 4 units moderate and 52 units above. The site inventory reflects the preliminary SB 330 application development plan. This is inconsistent with how the site inventory planned site B-1, which ignored the SB 330 preliminary application.
The property owner has filed a final SB 330 application which vests the development rights of the parcel. The SB 330 application calls for the development of 52 units at a development density of 24.1 DU per acre. It should be pointed out this development density is below the 30 DU minimum density programmed by the HEOZ zoning. The Housing Element does not address the difference in development densities and appears to be inconsistent with Table C-3 – Proposed HEOZ Densities by underlying Land Use and Zoning Designation.
Based on the SB 330 application, it appears that a reasonable development assumption should be 0 units very low, 8 units low, 0 unit moderate and 44 above for a total of 52 units. This would result in 4 units being added to low, 4 units being deducted from moderate, and 8 units being deducted from above. We made this adjustment to Table 10-3.
Summary and Conclusion
Summing all the adjustments noted above, materially reduces the total credits and HEOZ sites shown in Table 10-3. On an adjusted basis it is reasonably expected that there will be 2,401 units developed during the 6th cycle. In addition, reflecting the above adjustments the income distribution will be 374 very low units, 373 low units, 295 moderate units and 1,359 above units.
Given this level of development, the Town will fail to meet the 6th cycle RHNA of 537 very low units and 320 moderate units. The adjusted Table 10-3 shows the surplus and deficit for each income category compared to the 6th cycle RHNA. This result clearly does not meet the desired outcome of Program AS, which was to provide adequate sites for housing, RHNA rezoning and lower income households on nonvacant and vacant sites, while providing a 25% buffer. Only the above moderate-income group meets this program’s goals.
The Housing Elements concluding comment that “the sites identified in this report are sufficient to accommodate Los Gatos’ Regional Housing Needs Allocation for the 6th cycle planning period” is clearly incorrect. The current draft as constructed contains numerous errors, which incorrectly inflated the “reasonable development” estimate for very low-, low- and moderate-income categories. The sites inventory does not accommodate a net capacity of 1,971 units but rather a net capacity based on the developers SB 330 applications of 1,858. Furthermore, the sites inventory does not accommodate a net capacity of 634 very low income, 357 low income and 340 moderate income units but rather a capacity of 364 very low, 309 low and 183 moderate income units.
The unmistakable conclusion is the Town must identify more parcels to be included in the site inventory and rezoned as part of the HEOZ to meet the 6th cycle RHNA by income category. If this is not done, it is unlikely the HCD will certify this fourth submission.
Thank you for allowing us to provide our comments. At the end of the day, we all want the same thing – a Housing Element that fully complies with State Housing Law and is certified by HCD as quickly as possible.
We followed up after this first comment meeting with more commenrs the day after the HEAB passed the draft.
Go here to view that those opinions.
Los Gatos Community Alliance
Leave a Reply