Loading...
HomeMy WebLinkAboutDRAFT PC Staff ReportCity of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number Meeting Dates: Item Number: ______________________________________________________________________ PLANNING COMMISSION AGENDA REPORT SUBJECT: Review of proposed changes to the City’s Subdivision Regulations, Zoning Regulations, and Licenses, Permits, and Regulations (Titles 16, 17, and 5) of the Municipal Code. BY: Ethan Estrada, Assistant Planner FROM: Tyler Corey, Deputy Director David Amini, Senior Planner Phone Number: (805) 781-7169 Phone Number: (805) 781-7576 Email: tcorey@slocity.org Email: ejestrad@slocity.org RECOMMENDATION Adopt the Draft Resolution, which recommends that the City Council introduce and adopt an Ordinance amending Title 16 (Subdivision Regulations), Title 17 (Zoning Regulations), and Title 5 (Licenses, Permits, and Regulations) of the City’s 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. 1.0 COMMISSION’S PURVIEW This item is being brought before the Planning Commission to provide Commissioners with an opportunity to evaluate the proposed code amendments and make a recommendation to the City Council. Draft Title 16, 17, and 5 amendments are included in Attachments B, C, and D, respectively. Formatting of the amendments include strikethrough on text proposed to be deleted, and new text is underlined, so that changes are clear to the public and the Commissioners. 2.0 SUMMARY 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. 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. [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 2 Lastly, City staff have continued to evaluate the efficacy of existing standards and procedures instituted through the Municipal Code. Based on staff and community feedback, this update contains several miscellaneous amendments to the Municipal Code to clarify City standards and procedures. 3.0 NEW STATE LEGISLATION Provided below is a brief review of the various pieces of state legislation 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 can be viewed in Attachments B and D, 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, as of January 1, 2025, this requirement, meaning that these local ordinances may now include long-term leases in their rent stabilization protections. 4.0 ACCESSORY DWELLING UNITS New State Legislation The state legislature passed several bills pertaining to ADUs and JADUs in 2025 that are now in effect. These bills primarily require changes to processes used in the review of ADUs and JADUs, rather than any changes to design or zoning standards for ADUs. 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: [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 3 • Setbacks & Height: 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 and to be permitted a side and rear setback of no more than four feet. The code also provides that ADUs may be built to a maximum height of 25 feet (in excess of state limits) but must comply with the setback standards provided by the underlying zone. These provisions, although not inconsistent with state law, do not provide for additional height and setback allowances afforded to ADUs by state law. The following setbacks and height limits for ADUs are provided under state law: o A detached ADU on a property with a single-family residence and/or a single-story multifamily dwelling is subject to four-foot side and rear yard setbacks with a maximum height of 16 feet. o A detached ADU on a property with a multistory multifamily dwelling is subject to four-foot side and rear yard setbacks with a maximum height of 18 feet. o An ADU attached to a primary dwelling is subject to four-foot side and rear yard setbacks with a maximum height of 25 feet. Section 17.86.020 is proposed to be amended to more clearly call out the height and setback allowances permitted under state law. (Attachment C – 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. 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 of the Municipal Code. Staff considered this input and updated this provision in Section 17.86.020 to defer to the underlying zone standards for ADU height limits. Deferring to the underlying zone standards 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 height allowances described above will be required to comply with the setback standards of the underlying zone. (Attachment C – 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. [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 4 This provision can be interpreted as saying 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 procedural provision was meant to resolve. Therefore, this update proposes an amendment to Section 17.86.020 to remove this provision entirely. (Attachment C – 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 process requirement under the Hillside Development Standards and additions to nonconforming structures for ADUs that are compliant with applicable ADU standards. (Attachment C – 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 ADU versus a detached ADU. (Attachment C – 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 C – 17.70.120(B)) 5.0 MISCELLANEOUS CHANGES 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 [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 5 (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 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 (different density counts for different unit sizes) or dwelling units per acre (general number of units provided, regardless of unit size) 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. Under most circumstances, a studio/one-bedroom dwelling is worth 0.50 density units (can be 0.66 depending on the size of the unit), a two-bedroom dwelling is worth 1.00 units, a three-bedroom dwelling is worth 1.50 units, and a four or more-bedroom dwelling is worth 2.00 units. Consider the following density bonus example using fractional density units: 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. [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 6 • 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 worth of dwellings (after rounding), where two density units worth 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. However, there are two issues that have and/or can 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 affordable units (e.g., two studio units, where under fractional density, two two-bedroom units would be required). Another issue that may arise 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, the applicant is required to provide two density units worth of affordable units 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, consistent with the rest of the project. 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 C - 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 in line 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 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 B – 16.15.020(C)) [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 7 Homestay Regulations Section 17.86.160 provides requirements, such as an owner-occupancy requirement, that operating Homestays must maintain compliance with to have a valid permit, where noncompliance would render a Homestay permit invalid. 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. (Attachment C – 17.86.160(E)) 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 C – 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. (Attachment C – 17.70.210) [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 8 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. 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 C – 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 C – 17.70.010(C)) 7.0 GENERAL PLAN CONSISTENCY The proposed amendments to both Title 17 (Zoning Regulations) and Title 16 (Subdivisions) are consistent with the City’s Housing Element, specifically in promoting Goals 5 (Housing Variety) and 6 (Housing Production). The state’s intention in implementing the legislation discussed in this report, as well as the miscellaneous changes proposed by City staff, is to promote and develop a diverse housing stock that includes an increase in “missing middle” housing types (e.g., duplex, triplex, quadplex, cottages, etc.). These revisions would allow for increased residential infill development that contributes to the City’s 6th cycle RHNA production targets. These changes also seek to remove barriers to housing development by limiting the use of discretionary review for housing-related projects. [CODE-0149-2026] Planning Commission Report – 4/8/2026 Page 9 8.0 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), 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. The proposed code amendments pertaining to ADUs and JADUs are also exempt under Public Resources Code Section 21080.17 that applies to local ordinances implementing state regulations related to accessory dwelling units. 9.0 ALTERNATIVES 1. The Commission may modify certain proposed amendments to Chapter 16.15 of the Subdivision Regulations, Chapters 17.10, 17.26, 17.70, 17.86, 17.92, 17.140, and 17.156 of the Zoning Regulations, and Chapter 5.44 of the Licenses, Permits, and Regulations, so long as they are consistent with state law. 2. The Commission may continue action if additional information is needed. Specific direction should be given to staff if continued. ATTACHMENTS A – Draft Planning Commission Resolution B – Revised Title 16 Text (Subdivision Regulations – Legislative Draft) C – Revised Title 17 Text (Zoning Regulations – Legislative Draft) D – Revised Title 5 Text (Licenses, Permits, and Regulations – Legislative Draft)