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Item 5 - CODE-0062-2020PLANNING COMMISSION AGENDA REPORT SUBJECT: Review of amendments to Title 17 (Zoning Regulations) of the Municipal Code associated with allowable incentives for development standards with the provision of new all-electric buildings with Exemptions from Environmental Review. PROJECT ADDRESS: Citywide BY: Teresa McClish, Special Projects Manager Phone Number: (805) 783-7840 E-mail: tmcclish@slocity.org FILE NUMBER: CODE-0062-2020 FROM: Tyler Corey, Principal Planner RECOMMENDATION: Adopt the attached Planning Commission resolution (Attachment 1) recommending that the City Council introduce and adopt an Ordinance amending Title 17 (Zoning Regulations) of the Municipal Code regarding temporary incentives for development standards with the provision of new all-electric buildings with a sunset date of December 31, 2022. SUMMARY In September of 2018 and February of 2019, Council directed staff to develop a proposal to avoid generating new greenhouse gas emissions as the result of energy use in new buildings. Given rapid improvements in electric appliances, a better understanding of how natural gas contributes to the climate crises, changes to the California Energy Code, and the City purchasing its electricity supply from carbon neutral resources via Monterey Bay Community Power, the City Council considered on September 3, 2019, establishment of a Clean Energy Choice Program 1. Three main components of the program include: 1) A “Clean Energy Choice” policy that new buildings should be all-electric and that energy use in new buildings should not cause net additional greenhouse gas emissions, (Approved Resolution 11044, [2019 Series]); 2) A “Reach Code” Ordinance establishing local amendments to the California Energy Code requiring solar panels on new nonresidential buildings, requiring new buildings with natural gas to be built to a substantially higher performance standard, and requiring new residential buildings with natural gas to include “retrofit ready” requirements (Introduced Ordinance No. 1068 [2019 Series]); 3) An Ordinance establishing a “Carbon Offset” requirement wherein new buildings with natural gas would be required to offset the proposed natural gas use by directly retrofitting existing buildings, or in-lieu of that, by paying a fee to support a retrofit program implemented by a City 1 September 3, 2019 Council Agenda Report and attachments Meeting Date: February 26, 2020 Item Number: 5 Item 5 Packet Page 249 CODE-0062-2020 Page 2 partner, such as Community Action Partnership of San Luis Obispo’s Energy Services Program (Introduced Ordinance 1069 [2019 Series]). The Clean Energy Choice Program was developed with significant input from local developers, electricians, architects, builders, designers, technical consultants, the California Energy Commission, peer cities, utility partners, and community members. In order to implement the program, the City Council directed staff to develop and return to the Council for approval of an implementation plan to include: 1. In-lieu fee schedule for various building types; 2. Community education and outreach; 3. Development of a program making professional consultation and design services available to property owners; and 4. Identification of a series of incentives, such as permit streamlining and property development standard allowances in exchange for all-electric development. During the development of the incentive program identified by Item No. 4 above, builders identified flexibility as an important initial component to facilitate construction of all-electric buildings. The proposed Ordinance amends the City’s zoning regulations to provide temporary minor allowances to site development standards for the placement of mechanical equipment on compact development sites that include new all-electric buildings. After Planning Commission recommendation, it is scheduled to be considered by City Council in April 2020, along with the other components of the program. 1.0 COMMISSION’S PURVIEW The recommended amendments are being brought before the Planning Commission to provide Commissioners with an opportunity to evaluate the proposed zoning code amendments and make a recommendation to the City Council in accordance with Government Code Sections 65854 to 65857 inclusive. 2.0 BACKGROUND City residents and businesses routinely rank climate change as an important issue that is included in the City’s budget process development and Major City Goals2. The Climate Action Major City Goal Work Program seeks to actively create economic opportunity and ensure the community remains a dynamic, high quality place to live and work, while protecting and stewarding the natural environment within and surrounding the City. The Work Program provides tasks to vet and establish the 2035 carbon neutrality target and to continue implementation work that establishes the foundations for a low carbon future with a focus on civility, sustainability, diversity and inclusivity, regionalism and partnership, and resiliency. 2 The Climate Action Major City Goal Workplan appears in its entirety in the 2019 -21 Financial Plan: https://www.slocity.org/Home/ShowDocument?id=23630 Item 5 Packet Page 250 CODE-0062-2020 Page 3 The Clean Energy Choice Program allows new all-electric buildings to comply with minimum state law standards while requiring new buildings that use natural gas (“Mixed-Fuel Buildings) to offset their natural gas use and be substantially more efficient than the 2019 baseline code currently requires. New mixed-fuel residential development would be required to include “electric ready” measures to facilitate fuel switching through a future retrofit project. In addition, nonresidential buildings would be required to include solar panels for onsite energy generation. Figures 1 and 2 illustrate the proposed pathways for obtaining a City building permit for a new building through compliance with the adopted components of the Clean Energy Choice Program. Two key definitions of terms used throughout this report and in the attached resolution, follow. 1. “ALL-ELECTRIC BUILDING” is a building that has no natural gas plumbing installed within the building and that uses electricity as the source of energy for all space heating, water heating, cooking appliances, and clothes drying appliances. An All-Electric Building may be plumbed for the use of natural gas as fuel for appliances in a commercial kitchen. 2. “MIXED-FUEL BUILDING” is a building that is plumbed for the use of natural gas as fuel for space heating, water heating, cooking or clothes drying appliances. Item 5 Packet Page 251 CODE-0062-2020 Page 4 The California Energy Code, Part 6 of the California Building Standards Code, contains energy efficiency standards for residential and nonresidential buildings, new construction, remodels and additions, and includes a process that allows local adoption of energy standards that are more stringent than statewide standards as long as it is cost effective and uses less energy than standard requirements. As part of the City’s Clean Energy Program, the City made the findings that the proposed amendments are both cost effective and use less energy than the standard requirements. To support successful implementation of the Clean Energy Choice Program, staff has developed a four part incentive package for new all-electric multifamily and affordable housing units through Monterey Bay Community Power, establishing an on-call technical support service, commitment to assist with communications and outreach, and proposing incentives in site development standards. The site development standards incentives are the subject of this Staff Report. 3.0 DISCUSSION General Plan Consistency The proposed ordinance is supported by policies in Chapter 9 of the City’s General Plan Land Use Element, specifically Policy 9.4, that states: Item 5 Packet Page 252 CODE-0062-2020 Page 5 Climate Action Plan The City shall maintain and implement its Climate Action Plan to reduce community and municipal GHG emissions consistent with State laws and objectives. and Policy 9.7: Sustainable Design. The City shall promote and, where appropriate, require sustainable building practices that consume less energy, water and other resources, facilitate natural ventilation, use daylight effectively, and are healthy, safe, comfortable, and durable. Projects shall include, unless deemed infeasible by the City, the following sustainable design features. A. Energy-Efficient Structure Utilize building standards and materials that achieve or surpass best practices for energy efficiency. B. Energy-Efficient Appliances Utilize appliances, including air conditioning and heating systems that achieve high energy efficiency. Incorporation of alternative energy systems (e.g. passive and/or active solar, heat pumps) is encouraged. C. Natural Ventilation Optimize potential for cooling through natural ventilation. D. Plumbing Utilize plumbing fixtures that conserve or reuse water such as low flow faucets or grey water systems and implement a builder incentive program that will encourage new homes to be built with onsite water/heat recycling systems to help achieve the goal of net zero water and energy use. E. Efficient Landscaping Include landscaping that reduces water use through use of drought-tolerant / native plant species, highefficiency irrigation (drip irrigation), and reduction or elimination of the use of turf. Collection and use of site runoff and rainwater harvesting in landscape irrigation is encouraged. F. Solar Orientation Optimize solar orientation of structures to the extent possible. G. Privacy and Solar Access New buildings outside of the downtown will respect the privacy and solar access of neighboring buildings and outdoor areas, particularly where multistory buildings or additions may overlook backyards of adjacent dwellings. H. Solar Ready The City shall encourage new development to be built “solar ready” so that owners may easily install solar infrastructure, as appropriate. I. Solar Canopies The City shall encourage the inclusion of solar canopies that include solar panels (such as structures over parking lots) on new construction, as appropriate. Further, Program 9.13 states: Item 5 Packet Page 253 CODE-0062-2020 Page 6 Incentive Program. The City shall consider the feasibility of providing incentives for new and renovated projects that incorporate sustainable design features such as constructing new buildings that are solar ready, or off-setting significant operational energy use through use of solar water heating, photovoltaic systems, geothermal or wind energy systems. Modifications to City Ordinance Title 17 of the Municipal Code comprises the zoning code and includes Site Development and General Development Standards in Chapter 17.70. Included in sections of this chapter are statements of purposes for standards, specifics on measurement and calculation, and processes for exceptions that are not proposed to be modified by this ordinance. The proposed ordinance includes a provision for minor allowances to specific site development standards in order to provide flexibility for new all- electric buildings that may be granted by the Director of Community Development automatically as long as specific circumstances are met. Additionally, findings currently included in Section 17.108.040 of the Zoning Code that are required for exceptions allowed by the Director are also required for the purposes of this ordinance. The draft ordinance includes the following new section to be added to Chapter 17.70: SECTION 3. Add Section 17.70.095 – Incentives related to new all-electric buildings A. Purpose. The purpose of these regulations is to support the City’s Clean Energy Choice program by providing temporary incentives in the application of site development standards, for the provision of all-electric buildings. B. Applicability. This Section shall apply to new all-electric buildings. C. Standards. Site Development Standards included in this Chapter for Accessory Structures; Edge conditions; FAR; Fences, Walls and Hedges; Height Measurement and Exceptions; Hillside Development Standards; Lot Coverage; Mixed Use Development and Setbacks, may be exceeded to the minimum extent deemed necessary to allow for equipment installations or similar accommodation of new all-electric buildings. D. The Director may grant incentives to site development standards of this Chapter that are minor in nature without application for Director Action in the following circumstances: 1. The request directly relates to construction of an all-electric structure and may include, but is not limited to, issues such as the installation of mechanical equipment: 2. The request provides the minor flexibility needed to design a project with all- electric buildings and results in better implementation of other Zoning Regulations or General Plan policies while allowing reasonable use of sites. 3. The request is minor in nature and does not have the potential to cause a significant effect on the environment. Item 5 Packet Page 254 CODE-0062-2020 Page 7 4. The Findings in Section 17.108.040 are met. D. Term. The provisions in this section shall apply to building permits with an application date prior to December 31, 2022. Importantly, as these incentives are intended to help facilitate the initial promotion of the City’s Clean Energy Program, they are temporary and will be rescinded upon adoption of the next Building Code Update that will be required prior to December 31, 2022. It is anticipated that designers and builders will not require such allowances as incorporating infrastructure and design considerations for all electric buildings become more routine over time. Staff expects that most projects can accommodate design changes related to all electric buildings without request for any incentives related to site development standards. However, some requests may be desired to accommodate space for the placement of equipment such as water heaters in developments that have already been designed with tankless heaters, compressors for heat pumps, additional transformers incorporated into previously designed neighborhoods, or additional solar installation. Accommodation for such equipment may precipitate other minor design changes or minor projections of other building features. The incentives are specifically intended for minor accommodations and as such are generally provided for as a temporary incentive measure for the initial stage of the program. Finally, the proposed definition below will be added to Section 17.158.006.A as follows: “ALL-ELECTRIC BUILDING” is a building that has no natural gas plumbing installed within the building and that uses electricity as the source of energy for all space heating, water heating, cooking appliances, and clothes drying appliances. An All-Electric Building may be plumbed for the use of natural gas as fuel for appliances in a commercial kitchen. 4.0 ENVIRONMENTAL REVIEW The proposed code amendments have been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. Specifically, the proposed amendments have been determined to be exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3) because the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment, and it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The amendment to zoning regulations; 1)does not lead to physical improvements beyond those typically exempt; and 2)is not specifically listed as categorical or statutory exemptions but exhibit characteristics similar to one or more specific exemptions; and 3)provides allowances to specific development standards that are minor in nature, for a limited time in the area immediately surrounding and attached to approved structures and existing improvements and is not anticipated to have a significant effect on the environment. The ordinance additionally is categorically exempt from environmental review under the Class 3 exemptions for (1) construction and location of limited Item 5 Packet Page 255 CODE-0062-2020 Page 8 numbers of new, small facilities or structures and (2) installation of small new equipment and facilities in small structures (§15303, CEQA Guidelines.) 5.0 ALTERNATIVES 1. The Commission may modify the proposed amendments to Zoning Regulation Sections 17.70.095 and 17.158.006.A. 2. The Commission may continue action, if additional information is needed. Specific direction should be given to staff. ATTACHMENTS: 1. Draft Planning Commission Resolution 2. Resolution 11044, [2019 Series] Item 5 Packet Page 256 ATTACHMENT 1 R _____ RESOLUTION NO. PC- _____-2020 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF SAN LUIS OBISPO RECOMMENDING THE CITY COUNCIL INTRODUCE AND ADOPT AN ORDIANCE AMENDING TITLE 17 (ZONING REGULATIONS) OF THE MUNICIPAL CODE SUPPORTING THE CLEAN ENERGY CHOICE PROGRAM (PL-CODE-0062-2020) WHEREAS, the State of California enacted Senate Bill (SB) 32 to require greenhouse gas emissions to be reduced to 40 percent below 1990 levels by 2030; and WHEREAS, former Governor Brown issued Executive Order B-55-18 establishing a statewide target of carbon neutrality by 2045; and WHEREAS, City of San Luis Obispo residents and businesses have repeatedly identified climate action as a top community priority; and WHEREAS, the City of San Luis Obispo City Council has directed staff to evaluate strategies and options to achieve community-wide carbon neutrality by 2035; and WHEREAS, the inventoried greenhouse gas emissions in the City of San Luis Obispo come from a variety of sources, primarily transportation and energy use in buildings and facilities; and WHEREAS, as of January 2020, the community has access to carbon neutral electricity procured by Monterey Bay Community Power; and WHEREAS, the remaining source of greenhouse gas emissions from energy use in buildings will come from the onsite combustion of fossil fuels, primarily natural gas; and WHEREAS, the direct global warming impact of natural gas is considerably higher than previously thought; and WHEREAS, in order to achieve carbon neutrality, new sources of greenhouse gas emissions need to be substantially reduced or eliminated; and WHEREAS, all-electric buildings are operationally carbon neutral; and WHEREAS, Resolution No. 11044 (2019 Series) establishes a “Clean Energy Choice Policy” preference for all-electric buildings and resolves that new buildings in the city shall not cause a net increase in community greenhouse gas emissions as the result of on -site energy use; and WHEREAS, although all-electric buildings are common in the U.S., local and regional developers may be designing their first electric building; and Item 5 Packet Page 257 Resolution No. (2020 Series) Page 2 R _____ WHEREAS, highly efficient electric appliances may require mechanical equipment that projects in the building pipeline may not have planned for; and WHEREAS, local and regional builders have expressed certain design standards as potential obstacles to designing and constructing all-electric buildings; and WHEREAS, minor allowances within Zoning Code Chapter 17.070 (Site Development and General Development Standards) for a specified time period would assist local and regional builders construct all-electric buildings that are in the building pipeline; and WHEREAS, the proposed ordinance is supported by policies in Chapter 9 of the City’s General Plan Land Use Element, specifically Policies 9.4 relating to implementation of the City’s Climate Action Plan and 9.7 relating to the promotion of sustainable design, and Program 9.13 to provide incentives for projects that incorporate sustainable design features; and WHEREAS, the proposed requirements specified in this Ordinance provide temporary incentives to support the initial implementation of the City’s Clean Energy Program and will end on December 31, 2022 to coincide with the next adoption of the City’s Building Code Update; and WHEREAS, the requirements specified in this Ordinance were reviewed via public comment and through a publicly noticed public hearing process; and NOW, THEREFORE, BE IT RESOLVED by the Planning Commission of the City of San Luis Obispo as follows: SECTION 1. Findings. Based upon all the evidence, the Planning Commission recommends that the City Council makes the following findings: 1. The proposed amendments to Title 17 will not significantly alter the character of the City or cause significant health, safety, or welfare concerns, since the amendment is consistent with the General Plan and directly implement City goals and policies to facilitate All-Electric buildings and the Clean Energy Choice Program. 2. The proposed amendments to Title 17 are consistent with existing zoning practices by establishing reasonable regulations to authorize the Director of Community Development to act on certain applications on an administrative basis due to the minor nature of a proposed improvement, use of land or allowed deviation from development standards. 3. The proposed amendment to the text of the Zoning Ordinance is 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 proposed allowances to development standards are minor in nature and will and otherwise maintain the existing policies, standards and regulations of the Zoning Ordinance. Item 5 Packet Page 258 Resolution No. (2020 Series) Page 3 R _____ 4. Periodic amendments, updates, and corrections of the Municipal Code are consistent with General Plan Policy to maintain regulations which are effective in implementing policies consistent with the General Plan. 5. The amendment is temporary and includes a sunset date of December 31, 2022. SECTION 2. Environmental Review. The Planning Commission finds that the adoption of this ordinance is exempt from the California Environmental Quality Act (“CEQA”), in that the Zoning Amendment contained herein do not have the potential for causing a significant effect on the environment, pursuant to Sections 15061(b)(3). The amendment to zoning regulations; 1)does not lead to physical improvements beyond those typically exempt ; and 2)is not specifically listed as categorical or statutory exemptions but exhibit characteristics similar to one or more specific exemptions; and 3)provides allowances to specific development standards that are minor in nature, for a limited time in the area immediately surrounding and attached to approved structures and existing improvements and is not anticipated to have a significant effect on the environment. The ordinance additionally is categorically exempt from environmental review under the Class 3 exemptions for (1) construction and location of limited numbers of new, small facilities or structures and (2) installation of small new equipment and facilities in small structur es (§15303, CEQA Guidelines.) SECTION 3. Recommendation. The Planning Commission does hereby recommend the City Council introduce and adopt an Ordinance amending Title 17 (Zoning Regulations) of the Municipal Code supporting the Clean Energy Choice Program by providing temporary authority to the Community Development Director to grant incentives related to the standards set forth in various sections of Municipal Code Chapter 17.70 (Site Development and General Development Standards) as set forth in Attachment A. Be it further recommended that the Ordinance shall be effective for a limited term beginning July 1, 2020 and concluding December 31, 2022. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2020. ____________________________________ Tyler Corey, Secretary Planning Commission Item 5 Packet Page 259 Resolution No. (2020 Series) Page 4 R _____ RESOLUTION NO. PC- _____-2020 ATTACHMENT A CHAPTER 17.70 SITE DEVELOPMENT AND GENERAL DEVELOPMENT STANDARDS Add Section 17.70.095 – Incentives related to new all-electric buildings A. Purpose. The purpose of these regulations is to support the City’s Clean Energy Choice program by providing temporary incentives in the application of site development standards, for the provision of all-electric buildings. B. Application. This Section shall apply to new all-electric buildings. C. Standards. Site Development Standards included in this Chapter 17.70 for Accessory Structures; Edge conditions; FAR; Fences, Walls and Hedges; Height Measurement and Exceptions, Hillside Development Standards; Lot Coverage; Mixed Use Development and Setbacks, may be exceeded to the minimum extent deemed necess ary to allow for equipment installations or similar accommodation of all-electric buildings. D. The Director may grant incentives to site development standards of this Chapter that are minor in nature without application for Director Action in the following circumstances: 1. The request directly relates to construction of an all-electric building and may include, but is not limited to, issues such as the installation of mechanical equipment. 2. The request provides the minor flexibility needed to design a project with all-electric buildings and results in better implementation of other Zoning Regulations or General Plan policies while allowing reasonable use of sites. 3. The request is minor in nature and does not have the potential to cause a significant effect on the environment. 4. The Findings in Section 17.108.040 are met. E. Term. The provisions in this section shall apply to building permits with an application date after July 1, 2020 and prior to December 31, 2022. Amend Section 17.158.006 - A by adding the following: “ALL-ELECTRIC BUILDING” is a building that has no natural gas plumbing installed within the building and that uses electricity as the source of energy for all space heating, water heating, cooking appliances, and clothes drying appliances. An All-Electric Building may be plumbed for the use of natural gas as fuel for appliances in a commercial kitchen. Item 5 Packet Page 260 RESOLUTION NO. 11044 (2019 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, ESTABLISHING A "CLEAN ENERGY CHOICE POLICY" TO GUIDE THE REDUCTION OF GREENHOUSE GAS EMISSIONS AND USE OF FOSSIL FUELS FOR BUILDINGS AND TRANSPORTATION. WHEREAS, greenhouse gas accumulation in the atmosphere as the result of human activity is the primary cause of the global climate crisis; and WHEREAS, in California alone, the initial impacts of climate change have resulted in unprecedented disasters with tremendous human, economic, and environmental costs; and WHEREAS, the Intergovernmental Panel on Climate Change estimates that global emissions need to be reduced by 45 percent from 2010 levels by 2030, and 100 percent by 2050 to prevent global catastrophe; and WHEREAS, the State of California enacted Senate Bill (SB) 32 to require greenhouse gas emissions to be reduced to 40 percent below 1990 levels by 2030; and WHEREAS, Governor Brown issued Executive Order B-55-18 establishing a statewide target of carbon neutrality by 2045; and WHEREAS, City of San Luis Obispo residents and businesses have repeatedly identified climate action as a top community priority; and WHEREAS, the City of San Luis Obispo City Council has directed staff to evaluate strategies and options to achieve community-wide carbon neutrality by 2035; and WHEREAS, the inventoried greenhouse gas emissions in the City of San Luis Obispo come from a variety of sources, primarily transportation and energy use in buildings and facilities; and WHEREAS, as of January 2020, the community will have access to carbon neutral electricity procured by Monterey Bay Community Power; and WHEREAS, the remaining source of greenhouse gas emissions from energy use m buildings will come from the onsite combustion of fossil fuels, primarily natural gas; and WHEREAS, the direct global warming impact of natural gas is considerably higher than previously thought; and WHEREAS, in order to achieve carbon neutrality, new sources of greenhouse gas emissions need to be substantially reduced or eliminated. R 11044 ATTACHMENT 2Item 5 Packet Page 261 Resolution No. 11044 (2019 Series) Page 2 NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. The recitals set forth above are hereby adopted as the findings of the City in adopting the policies herein. SECTION 2. It is the policy of the City that new buildings should be all -electric. SECTION 3. The Community Development Department should only issue a building permit for a new building if it is an all -electric building or if the applicant meets the City's current Reach Code and Carbon Offset Program requirements. Upon motion of Vice Mayor Pease, seconded by Council Member Gomez and on the following roll call vote: AYES: Council Members Christianson and Gomez, Vice Mayor Pease and Mayor Harmon NOES: Council Member Stewart ABSENT: None The foregoing resolution was adopted this 3rd day of September 2019. Mayor Heidi ATTEST: Teresa Purrington City Clerk LNU J./ehris-Fine Dietrick ty Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this It;" day o , 2019. Teresa Purrington City Clerk R 11044 Item 5 Packet Page 262