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HomeMy WebLinkAboutAmendments to Title 5, Title 16, and Title 17 (CODE-0149-2026) Item Click or tap here to enter text. Department: Community Development Cost Center: 4006 For Agenda of: 5/5/2026 Placement: Public Hearing Estimated Time: 60 minutes FROM: Timmi Tway, Community Development Director Prepared By: Ethan Estrada, Assistant Planner; David Amini, Senior Planner SUBJECT: INTRODUCE AN ORDINANCE AMENDING TITLE 5 (PERMITS, LICENSES, AND REGULATIONS), TITLE 16 (SUBDIVISION REGULATIONS), AND TITLE 17 (ZONING REGULATIONS) OF THE MUNCIPAL CODE. RECOMMENDATION As recommended by the Planning Commission, introduce a Draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, Amending Title 16 (Subdivision Regulations), Title 17 (Zoning Regulations), and Title 5 (Licenses, Permits, and Regulations) of the Municipal Code regarding Accessory Dwelling Units, Junior Accessory Dwelling Units, Urban Lot Splits, Mobile Homes, and other Clarifications and Changes to Regulations Associated with Housing, with an Exemption from Environmental Review (CEQA).” REPORT-IN-BRIEF In 2025, several bills implementing changes to state law regarding accessory dwelling units (ADUs), junior accessory dwelling units (JADUs), and urban lot splits went into effect, with the continued intention of streamlining and incentivizing housing production statewide. Some of these changes, in turn, require modifications to the City’s Municipal Code to maintain compliance with state law. The City of San Luis Obispo is designated as a pro-housing city by the California Department of Housing and Community Development (HCD). This designation is assigned to cities that implement local policies beyond what is provided by the state that seek to remove barriers to new housing development. This designation allows the City to receive priority processing and additional points when applying for state funding programs. Therefore, staff continue to reevaluate the City’s Municipal Code and its review processes for improvements. This process is further aided by public feedback received throughout the year, which contributed to some of the proposed amendments. Lastly, City staff have continued to evaluate the efficacy of existing standards and procedures instituted through the Municipal Code. Based on staff and community Item Click or tap here to enter text. feedback, this update contains several miscellaneous amendments to the Municipal Code to clarify City standards and procedures. The changes to the code include the following: • Clean-up of ADU code items relating to heights, setbacks, procedural requirements, lot coverage, and definitions for state law compliance. • Update to Mobile Home Park Rent Stabilization Ordinance to remove long-term lease exemption for state law compliance. • Clarifying fractional density requirements for density bonus project calculations. • Update of minor urban lot split regulations to comply with state law regarding properties in historic districts and/or containing historic structures. • Minor revisions to language in the Homestay regulations, clarifying that failure to submit required information annually constitutes grounds for revocation of permit. • Revisions to Accessory Structure regulations to clarify definitions and achieve compliance with ADU requirements. • Addition of language to the Driveway Standards for driveway approach sight triangles for consistency with the Engineering Standards. POLICY CONTEXT The California State Legislature has passed several bills requiring updates to the City’s Municipal Code to maintain consistency with state housing law. The proposed amendments are necessary to comply with state law, as well as provide for more efficient processing or clarification, and are supported by City policy as described below. On November 17, 2020, the City Council adopted the 6th Cycle Housing Element, which includes housing policies and programs for 2020-2028. Accessory Dwelling Units (ADU) are an important part of the City’s housing production, addressing state mandated Regional Housing Needs Allocation (RHNA) and helping the City meet housing policy goals. The Housing Element contains the following policies that encourage housing production. HE Policy 2.4: Encourage housing production for all financial strata of the City’s population, as allocated in the Regional Housing Needs Allocation, for the 6th cycle planning period. The number of units per income category are: extremely low and very low income, 825 units; low income, 520 units; moderate income, 604 units; and above moderate income, 1,405 units. HE Policy 8.1: Encourage housing development that meets a variety of special needs, including large families, single parents, disabled persons, the elderly, students, veterans, farmworkers, the homeless, or those seeking congregate care, group housing, single- room occupancy, or cohousing accommodations, utilizing universal design. HE Policy 6.8: To help meet the 6th cycle RHNA production targets, the City will support residential infill development and promote higher residential density where appropriate. Community Development Department (CDD) staff also periodically review the City’s Zoning Regulations to identify possible barriers to housing development. Several of the Item Click or tap here to enter text. proposed amendments aim to resolve barriers to development identified, as well as provide for additional clarifications on regulations. This is especially important as housing production is an integral part of the Housing and Neighborhood Livability Major City Goal to “promote the expansion and diversification of housing opportunities for all.” DISCUSSION New State Legislation Provided below is a brief review of the various laws that went into effect in 2025 or at the beginning of 2026 that this update integrates into the City’s Municipal Code. The provisions introduced or altered by this legislation require amendments to Chapters 16.15 and 5.44 of the Municipal Code. These specific amendments are discussed later in the report and can be viewed in Attachment A, respectively. Assembly Bill 1061 Assembly Bill 1061 introduced several changes to California Government Code Section 66852.21 that contain provisions pertaining to minor urban lot splits (a.k.a., SB-9 Lot Splits). These changes allow for housing development pursuant to Section 66852.21 and minor urban lot splits on properties within a historic district, which was previously prohibited. State law still prohibits this type of development and subdivision on properties that are listed as historic by the state and/or the City. Assembly Bill 2782 Prior to January 1, 2025, state law (Civil Code Section 798.17) required that long-term leases (those longer than twelve months) be excluded from local mobile home park rent stabilization ordinances. Assembly Bill 2782 eliminated, this requirement, as of January 1, 2025, meaning that these local ordinances may now include long-term leases in their rent stabilization protections. Summary of Proposed Changes Miscellaneous ADU-Related Changes Staff has proposed several miscellaneous amendments related to ADUs. These changes were identified as possible barriers to housing development, possible inconsistencies with state law, or items that would benefit from further clarification. These proposed amendments are as follows: • Setbacks & Height: Both state law and the Zoning Regulations currently require that new ADUs that include the creation of new square footage (i.e., new floor space) are limited to a maximum height of 16 feet to be permitted a side and rear setback of four feet. The Zoning Regulations are more permissible by allowing ADUs to be built to a maximum height of 25 feet (in excess of state limits) but must Item Click or tap here to enter text. comply with the setback standards provided by the underlying zone, beginning at a minimum of five feet for all residential zones. However, state law also permits a height maximum of 18 feet with a side and rear setback of four feet for a detached ADU on a property with a multistory multifamily dwelling, as well as a height maximum of 25 feet with a side and rear setback of four feet for attached ADUs. Therefore, the current Zoning Regulations described above are inconsistent with these additional height and setback allowances provided by state law. Section 17.86.020 is proposed to be amended to more clearly call out the height and setback allowances permitted under state law. (Attachment A – 17.86.020(B)(3)(c).) • Additional Height Allowance: As stated above, the Zoning Regulations currently allow ADUs a maximum height limit of 25 feet in any zone, given that the ADU is compliant with the underlying zone’s setback requirements. The City has received feedback from the public to consider deferring ADU height limits to the underlying zone, as is done for all other standards not accounted for in Section 17.86.020. Staff considered this input and have updated this provision of Section 17.86.020 to defer to the underlying zone standards for ADU height limits. Deferring to the underlying zone standards is more permissive than state law and could potentially increase ADU development in certain zoning districts, like the R- 2 and R-3 zones, by allowing ADU designs to be more consistent with the typical development pattern in said zones. This change would not impact ADUs in the R- 1 zone, as the current ADU maximum height limit of 25 feet matches the height limit for structures in the R-1 zone. ADUs that are built with a height in excess of state law allowances described above will be required to comply with the setback standards of the underlying zone. (Attachment A – 17.86.020(B)(3)(d).) • Procedural Requirements: In a previous update to the Zoning Regulations pertaining to ADUs (adopted on April 1, 2025), staff introduced a provision under the “Procedural Requirements” subsection of Section 17.86.020 that attempted to address issues related to attached ADUs and a “two-step” process that was occurring with the development of ADUs pursuant to California Government Code Section 66323. Since its implementation, this provision of the code has not been widely used and may potentially conflict with state law. This provision can be interpreted as providing that any attached ADU built must be compliant with all applicable zoning regulations, including setbacks, height, lot coverage, and more. State law allows for the construction of attached ADUs that are subject to the same protections and allowances afforded to detached ADUs, which conflicts with this provision of the Municipal Code. Additionally, a separate change made to Section 17.86.020 in the 2025 update regarding limits on the number of ADUs permitted on a lot has addressed the underlying issue that this Item Click or tap here to enter text. procedural provision was meant to resolve. Therefore, this update proposes an amendment to Section 17.86.020 to remove this provision entirely. (Attachment A – 17.86.020(B)(4)(c).) • Exceptions to Discretionary Review: The Zoning Regulations provides instances in which additional discretionary review is required for ADU development. These include properties that are subject to the Hillside Development Standards (Section 17.70.090(E)) and additions to nonconforming structures (Section 17.92.020(F)). However, state law prohibits the use of a discretionary process to review ADUs that are compliant with all applicable ADU state standards. This update includes changes to Sections 17.70.090 and 17.92.020 that would provide clear exceptions to the discretionary review process requirement under the Hillside Development Standards and additions to nonconforming structures for ADUs that are compliant with applicable ADU standards. (Attachment A – 17.70.090(E) & 17.92.020(G)) • Expanding the ADU Definition: The Zoning Regulations provide a general definition for ADUs. The City has received feedback from the public that additional clarification is needed for an attached versus detached ADU. This update adds additional language to the ADU definition provided under Section 17.156.004 that further describes what constitutes an attached versus a detached ADU. (Attachment A – 17.156.004) • Lot Coverage: The Zoning Regulations provide ADUs an exception to lot coverage requirements as required by state law. The first 800 square feet of lot coverage on a property for an ADU is exempt and anything in excess of that first 800 square feet is included in a property’s lot coverage calculation. This update would modify the current language under Section 17.70.120 to more clearly articulate this lot coverage exception for ADUs. (Attachment A – 17.70.120(B)) Mobile Home Update With Civil Code Section 798.17 repealed by AB 2782, the City is no longer required to exclude long-term space leases from its mobile home park rent stabilization ordinance (MHPRSO) found in Chapter 5.44 of the Municipal Code. Since the MHPRSO expressly includes the long-term lease exemption in Section 5.44.030, rather than simply referring to state law exemptions,1 removal of this exemption requires an amendment to the 1 Some jurisdictions have taken the position that AB 2782 automatically repealed the long-term lease exemption within their rent stabilization ordinances. For jurisdictions like the City of Petaluma, this makes sense because their ordinance simply included the exemptions in Civil Code Section 798.17 by reference instead of codifying a separate exemption for long-term leases. Rather than referring to state law, San Luis Obispo’s municipal code sets forth a standalone long-term lease exemption that requires removal by amendment to the MHPRSO. Item Click or tap here to enter text. ordinance (by deleting SLOMC 5.44.030(E)). The long-term lease exemption has been a significant loophole utilized by mobile home park owners across the state, and Council has directed staff to bring this amendment forward so that long-term mobile home space leases are protected by the rent stabilization ordinance. Staff also recommends deletion of Section 5.44.040 as a clean-up of the MHPRSO to reflect a 1992 amendment modifying the Ordinance’s exemptions. In 1988, the City adopted a voter-approved version of the MHPRSO, in which Section 5.44.030(F) was an exemption for “spaces in a mobile home park in which at least 66.67% of said spaces are governed by a lease with an initial term of more than one year.” (see Ord. 1117 (1988 Series).) In 1989, the City adopted Ordinance 1146, establishing Section 5.44.040, the procedures for “claiming an exemption under Section 5.44.030(F),” which, at the time, was the 2/3 long-term lease exemption established by Ordinance 1117. Section 5.44.040 has not been modified since 1989. In 1992, the City adopted Ordinance 1228, which deleted Subsections F and G and created a new subsection F (which is the same as its current iteration, related to factory-built housing.), however, Section 5.44.040 was not concurrently deleted and still sets forth procedures for a Subsection F exemption that no longer exists. Deletion of Section 5.44.040 and the reference to the 66.67% exemption in Section 5.44.060(A) will clarify the intent of the 1992 amendment. (Attachment D – 5.44.030 & 5.44.040) Fractional Density Currently, the City’s Affordable Housing Incentives in Section 17.140.040 do not specify whether to use fractional density units (fractional density units are established in the City’s municipal code and measure density based on the number of bedrooms in each unit) or dwelling units per acre (general number of units provided, regardless of the number of bedrooms in each unit) when calculating the amount of density bonus units awarded and/or the amount of affordable units to be provided by the developer. Under Section 17.70.040, the City calculates the maximum allowed density for a property based on fractional density units, not dwelling units per acre. Density for a studio/one- bedroom dwelling is 0.50 density units if less than 600 square feet in size or 0.66 density units if over 600 square feet but no more than 1,000 square feet in size, a two-bedroom dwelling is 1.00 unit, a three-bedroom dwelling is 1.50 units, and a four or more-bedroom dwelling is 2.00 units. For example, the following density bonus uses fractional density units: • The developer for a residential project that would provide five density units worth of dwellings applies for a 50 percent density bonus. This bonus would allow for a total of 8 density units (after rounding), where two density units of affordable units must be provided (after rounding). Under fractional density, the market-rate units could be provided as eight two-bedroom units, with two of them provided as affordable units. Item Click or tap here to enter text. However, there are two issues that occur under the current provisions provided in Section 17.140.040. Because this section does not clarify when and how fractional density can be used, an applicant may maximize the number of market rate units built under fractional density (e.g., six two-bedroom units) while minimizing the number of affordable units (e.g., two studio units, where under fractional density, two two-bedroom units would be required). Another issue is the way fractional density units can be applied to decrease the total number of affordable units provided. Referring to the density bonus project example above, the applicant is required to provide two density units of affordable housing to qualify for a 50 percent density bonus. They provide six market-rate two-bedroom units, but instead of two affordable two-bedroom units, they provide one four-bedroom dwelling unit. Although under Section 17.70.140 a four-bedroom unit is worth two density units, Density Bonus Law Section 65915(r) states that the intent of this law is to be interpreted as favoring the production of the maximum number of total housing units, including the affordable units. Therefore, to comply with Density Bonus Law, the applicant would be required to provide two, two-bedroom dwellings. This update would add language to Section 17.140.040 requiring fractional density units to be applied consistently for both the market rate and affordable units within a density bonus project, and that fractional density shall only be utilized in favor of producing the maximum number of affordable housing units provided. (Attachment A - 17.140.040) Minor Urban Lot Splits and Housing Development In Historic Districts Currently, the Subdivision Regulations prohibit minor urban lot splits, and in turn, housing development pursuant to the same state laws that govern urban lot splits, in historic districts and on properties listed as a historic resource by the state and/or City. This restriction was consistent with state law at the time it was instituted. With the passing of Assembly Bill 1061, this restriction was modified, specifically allowing minor urban lot splits and associated housing development on properties located within a historic district. The restriction still remains for properties that are designated as historic resources by the state and/or City. This update would adjust this provision in Section 16.15.020 to maintain compliance with state law. (Attachment A – 16.15.020(C)) Homestay Regulations Section 17.86.160 provides requirements, such as an owner-occupancy requirement, that operating Homestays must comply with to apply for a Homestay permit. This update would add language to Section 17.86.160 clarifying that these requirements must be complied with on a continuous basis and that Homestays that do not comply with applicable requirements shall expire. This change will allow staff to proactively monitor active homestays and ensure they are complying with requirements on a regular basis, leading to more effective compliance for homestays in the City. (Attachment C – 17.86.160(E)) Item Click or tap here to enter text. Accessory Structures In review of Chapter 17.70 of the Municipal Code, staff identified outdated and restrictive provisions in Section 17.70.010 pertaining to accessory structures. This update includes changes to Section 17.70.010 to address these items and are as follows (Attachment A – 17.70.010): • Modifying the term “secondary dwelling unit” used in this section to “accessory dwelling unit.” The term “secondary dwelling unit” was used to refer to accessory habitable space, which is now known as an ADU. • This section currently limits the number of accessory structures to three per lot, only one of which may include a habitable accessory structure like an ADU. This is inconsistent with both Section 17.86.020 of the City’s Municipal Code and state law. This language would be removed and replaced with a provision specifically stating that the limit on accessory structures would not apply to ADUs and JADUs. • This section contains a provision requiring a property owner to record a covenant agreement disclosing the accessory structure’s approved floor plan and status and allowing for annual inspections by the City. The City has received feedback that this requirement is particularly restrictive for what are otherwise minor projects. The purpose of this requirement was to prevent the illegal conversion of accessory structures into habitable spaces. However, since this provision was added to the Zoning Regulations, ADUs and JADUs have become highly regulated and pathways for “illegal” ADUs to become permitted units have been instituted by state law. This update would remove this provision entirely. Driveway Visibility Clarification Section 17.70.210 provides provisions for intersection visibility requirements at roadway intersections not controlled by a stop sign or traffic signal that prohibit plants, structures, or other solid objects over three feet tall to be located within “sight triangles” further described in this section. These provisions are based on Engineering Standard 7950, which was updated in 2025, expanding this same requirement to driveway approaches. This update would add a provision and figure specifically for driveway approach visibility requirements to Section 17.70.210. This update will achieve consistency with current Engineering Standard 7950. (Attachment A – 17.70.210) Use Permit Clarification for General Retail Section 17.26.030(A) provides maximum gross floor area limits for retail uses in the C-N (Neighborhood Commercial) zone. It also provides that exceptions to these limits may be granted through the approval of a Minor Use Permit. However, Table 2-1 of Chapter 17.10 (Use Regulations) indicates a Minor Use Permit is required for approval of a general retail use in the C-N zone. Item Click or tap here to enter text. General retail is allowed by right in the C-N zone, and staff have determined that the “MUP” note in Table 2-1 was mistakenly provided. Previous versions of this table included individual line items describing what was allowed by right or what required discretionary review based on the gross floor area limits. In 2018, Table 9 (now referred to as Table 2- 1) was updated, which included the reduction of these items to one line referring to “General Retail” as a whole, with a note to Section 17.26.030(A) to defer to the exceptions allowed. However, this use was marked as requiring a Minor Use Permit in the C-N zone where it should have been marked as allowed by right. This update would remove the “MUP” designation from Table 2-1 for general retail uses in the C-N zone. (Attachment A – 17.10.020) Setback Clarification for Decks Section 17.70.170 contains provisions that permit decks with a height that exceeds 30 inches above grade to encroach into side and rear yard setbacks no more than four feet or one-half the required setback, whichever is less. At the same time, it also provides that certain structures, including decks with a height of 30 inches or less, may also be located within required setbacks. However, the Municipal Code does not clearly state this, and staff have received feedback from the public requesting this point be clarified. This update would include changes to Section 17.70.170 that clearly specify that decks with a height of 30 inches or less above grade are not subject to setback requirements. (Attachment A – 17.70.010(C)) Feedback Received Regarding Additional Zoning Code Updates Staff received questions from the Council regarding additional suggested changes to the Zoning Regulations specifically allowing personal services uses in the Office zone, and/or allowing office uses in the Manufacturing zone. Allowing these classification changes would best be considered as part of a larger General Plan update that considers the potential ramifications, as personal services cover a wide range of uses such as barber shops, beauty salons, tailors, day spas, dry cleaners, tattoo shops, etc. Allowing certain office uses in the manufacturing zone would also be best to consider as part of a larger General Plan update to ensure that there is sufficient space for office uses in the City as outlined in the General Plan. Previous Council or Advisory Body Action On April 8, 2026, the Planning Commission, on a 6-0 vote (Tolle absent) adopted a Resolution (Attachment B) which recommended that City Council introduce and adopt an Ordinance amending Title 16 (Subdivision Regulations), Title 17 (Zoning Regulations), and Title 5 (Permits, Licenses, and Regulations) of the Municipal Code regarding accessory dwelling units, junior accessory dwelling units, urban lot splits, mobile homes, and other clarifications and changes to regulations associated with housing, with an exemption from environmental review (CEQA), as represented in the staff report and attachments. Item Click or tap here to enter text. Public Engagement Public notice was provided for the April 8th Planning Commission meeting and no public comment was received on the item. Public notice of this hearing has been published in a widely circulated local newspaper, and hearing agendas for this meeting were posted at City Hall, consistent with adopted notification procedures. Email notices have been provided for each public meeting to those on the interested parties list. CONCURRENCE Planning, Building, and Engineering Division staff from the Community Development Department, as well as the City Attorney’s Office, have reviewed the proposed changes to Titles 16, 17, and 5 and provided feedback that has been incorporated into the proposed amendments. ENVIRONMENTAL REVIEW The proposed code amendments to Title 16, Title 17, and Title 5 of the Municipal Code 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), the “Common Sense” exemption, 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. Individual discretionary developments will still be required to conduct environmental analyses as appropriate. The proposed code amendments pertaining to ADUs and JADUs are also exempt under Public Resourced Code Section 21080.17 that applies t o local ordinances implementing state regulations related to accessory dwelling units. FISCAL IMPACT Budgeted: Yes Budget Year: 2026-27 Funding Identified: N/A Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $0 $0 $0 $0 State Federal Fees Other: Total $0 $0 $0 $0 Item Click or tap here to enter text. The Municipal Code changes implemented by this ordinance would not have a direct fiscal impact on the City. ALTERNATIVES 1. Continue consideration of the proposed amendments. An action continuing the project should include direction for staff on pertinent issues that should be further studied or analyzed for future Council consideration. 2. Do not approve the proposed amendments. Not approving the amendments would result in the City’s Municipal Code not being consistent with state law. Denying the proposed amendments would also not address the potential barriers to housing production that have been identified within the City’s Municipal Code. ATTACHMENTS A - Draft Ordinance Adopting Amendments to Titles 16, 17, and 5 B - Signed Planning Commission Resolution (4.8.2026)