HomeMy WebLinkAbout09/16/1991, Agenda & GENERAL PLAN UPDATE SESSION * y (o...* at Of sari LUIS 4DBIspo
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000 it O COMMUNITY ROOM • CITY/COUNTY LIBRARY PALM & OSOS STREETS
AGENDA
ADJOURNED MEETING OF THE CITY COUNCIL
MONDAY, SEPTEMBER 16, 1991 - 8:30 A.M. 4:30 P.M.
CITY/COUNTY LIBRARY - COMMUNITY ROOM
CALL TO ORDER: Mayor Ron Dunin
ROLL CALL: Vice Mayor Bill Roalman, Col $' " g' enny
Rappa, Jerry Reiss and Mayoj
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PUBLIC COMMENT PERII
(Not to exceed 15 minutes
Immediately following roll call, members of the public may address the City Council on items that DO NOT
appear on the printed agenda. Please observe the time limit of three minutes. A speaker slip (available in the
Foyer) must be filed with the City Clerk prior to the beginning of the meeting.
As a general rule, action will not be taken on issues not listed on the agenda. Staff will generally be asked to
follow-up on such items. The Council is interested in hearing from the public regarding issues or concerns of
the community and welcomes your input.
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STUDY SESSION
1. GENERAL PLAN UPDATE (JONAS/463 - 6-1/2 hrs.)
Consideration of the General plan update, specifically; 1) Nonresidential growth;
2) Affordable housing study; 3) County growth management; 4) Air. Quality/Clean
Air Plan; 5) Sustainable Community; and 6) Neighborhoods. (Continued from
7/31/90, 8/28/90, 9/25/90, 1/28/91, 5/6/91, 7/8/91, 7/29/91 and 8/5/91.)
RECOMMENDATION: Consider material and identify any additional information
needed to decide the issues. For those issues where the Council has sufficient
information, decide the overall direction staff should follow in revising the draft
Land Use Element update.
Report in progress. To be distributed under separate cover.
Page 1 of 2
Council Agenda September 16, 1991
LUE WORK SESSION SCHEDULE
8:15A - 8:30A Coffee and snacks available in the Community Room.
8:30A - 10:00A Work Session.
10:00A - 10:15A Break.
10:15A - 12:OOP Work Session.
12:OOP - 1:30P Lunch on your own. Sandwiches are available in the Council
Hearing Room, City Hall.
1:30P - 3:OOP Work Session.
3:OOP - 3:15P Break
3:15P - 4:30P Work Session.
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COMMUNICATIONS
(Not to exceed 15 minutes)
During the balance of this meeting,any Councilmember or the City Administrative Officer may informally update
the City Council of written or oral communications and ask for comment and/or discussion. State law provides
that Council take action only on such matters which have been noticed at least three days in advance of the
meeting unless special circumstances are found to exist. Formal action or approval is not preferred and such
items should be continued to the next Regular meeting.
4:30P ADJOURNMENT.
Page 2 of 2
�I�II��^�Illylf I,l�lll IIRol � r COUNCIL AGENDA REPORT MEETING DA `
IIII1� ��u,T1/r OI S�n L,.-,s OB�SpO 9 ITEM NUMBER: 1
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FROM: Arnold B. Jonas, Community Development Director
PREPARED BY: Glen Matteson, A sociate Planner
( . -' 7
SUBJECT: General plan update work session
CAO RECOMMENDATION
Consider the attached material. Identify any additional
information needed to decide the issues. For those issues where
the council has sufficient information, decide the overall
direction staff should follow in revising the draft Land Use
Element update.
DISCUSSION
This is the fourth work session at which the Council intends to
set the direction for the general plan Land Use Element update.
Once the direction is set, staff will compile a revised "hearing
draft, " and an environmental impact report and an economic impact
report will be prepared. Then the draft Land Use Element (and
circulation and housing elements) will proceed through Planning
Commission and City Council hearings, with adoption anticipated
by fall 1992 .
The subject topics are important to deciding the content of the
general plan update. Staff has prepared an issue paper or other
material (attached) for each of the topics, following the outline
endorsed by the City Council at its June 25 study session. Staff
suggests the following schedule for this meeting, to cover the
issues previously identified by the Council and make use of
experts previously requested to attend.
Morning: - Response to nonresidential growth rate direction
from August 5 (updated issue paper [Item A] , draft
text [B] , and table of existing building area [C]
attached) ;
- Affordable housing study requested August 5 (report
from Mundie & Associates attached [D] ) ;
- County growth management [E] and settlement pattern
[F] ;
Afternoon: - Air Quality/Clean Air Plan (issue paper
attached [G] ; representative from Air Pollution
Control District will attend) ;
- Sustainable Community [H] ;
- Neighborhoods [I] .
Also attached, as requested August 5, the 1990 issue paper on
converting houses to offices [J] .
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A
Updated Issue Paper: Nonresidential growth controls
Description
At the August 5 work session, Council directed staff to refine the nonresidential growth
rate policy. Council comments provided the following guidance:
- If a combined limit for both residential and nonresidential development is not
practical, the limit for nonresidential development should be as general as possible;
- There should be a reserve for downtown development;
- The limits should not be an obstacle for mixed-use projects;
The limits should accommodate one major, anchor department store whenever it
is proposed;
Staff is responding with the attached draft section for the Land Use Element. The key
features are:
A. All new nonresidential building space (private and governmental) would be
included in the limits, with specific, relatively minor exceptions. This approach
would help accommodate "mixed-use" projects.
New buildings often contain stores, restaurants, and service businesses. Dividing
such space into "retail," 'office," or "services/manufacturing' categories could be
awkward, especially when shell buildings are approved without knowing future
tenants, which may change even if known initially. Further, government and
private uses share buildings: State agencies lease much space in privately owned
buildings; the County Government Center includes private concessions; temporary
leasing of space in a potential City Hall expansion has been considered.
In August 1991, the City contained about 6.6 million square-feet of nonresidential
building space, excluding schools and hotels/motels. The following draft table
assumes that this total will be about 6.7 million square feet when the update is
adopted.
Government space is not likely to expand so quickly that it would use most of the
allowed increment, thereby preventing private projects from being built. Citywide
in 1991, governmental uses occupied about 386,000 square-feet, or less than six
percent of the total nonresidential space. Even if government building space grows
twice as fast as private space, it would use only about 11 percent of the increment.
B. The allowed increments were determined by calculating 25 years of increase at one
percent per year, compounded, based on 6.7 million square-feet at the end of
1992, the anticipated adoption date. The overall increase was then equally divided
among the five five-year intervals.
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C. The Business Improvement Area (BIA), corresponding closely to the "core area"
identified in the Planning Commission Draft, now contains about 17 percent of
citywide, nonresidential space. The suggested reserve is about 16 percent of the
allowed increase. Core area projects would count toward the overall total allowed,
but projects outside the core could use not more than 319,000 square-feet (380,000
minus 61,000) in each five-year interval.
As an alternative, the policy could allow approval of downtown projects which
provide particular benefits, even if they exceeded the amount of development
allowed within an interval.
D. Since the primary reason for nonresidential growth limits is to help balance jobs
and housing, each square-foot of residential space in mixed-use projects, in a
nonresidential zone, would allow one square-foot of nonresidential space to be
exempt from the limits. This exemption would not apply to mixed-use projects on
land already zoned for housing, since they would not be expanding the city's
residential capacity, even though such projects might help meet other objectives.
E. A nondiscount department store (a major attraction or magnet) integrated with an
existing comparison shopping area, such as downtown or Madonna Road, would
be exempt. Any other retail stores proposed in conjunction with such a
department store would not be exempt. Department store developers often want
associated specialty shops to subsidize the department store's building space cost.
However, the general plan still favors downtown as the primary location for
specialty stores; also, the existing specialty stores and department stores in the
Madonna Road centers would provide the market advantages of "agglomeration"
for any new department store in that area. A department store in the range of
80,000 to 120,000 square-feet would comprise four to six percent of the total, new
nonresidential space allowed over the planning period. The exception therefore
is not significant in overall volume, but may be significant in removing a time
constraint for development of such a store.
F. Motels and hotels are treated separately because we have not gathered floor-
area data for them, and the number of rooms appears to be a better measure of
development activity. If dwellings were incorporated in a hotel mixed-use project,
the square-footage exemption could still be used for the hotel space.
G. The limits would be applied through discretionary approvals such as annexations,
use permits, planned-developments, and subdivisions, so the applicant and the
public would know a project's standing before construction plans are prepared.
No separate ordinance would be required. Relatively small projects not needing
these types of discretionary approvals would be counted toward the allowed
increments, but would not be stopped, unless the Council wishes an implementing
ordinance to do so. The Planning Commission's desire for use-permit review of
significant projects that are not covered by some other planning, review (besides
architectural review) would bring within direct control many projects that would
not be directly controlled under current rules.
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H. A discussion. of the city's, policies on, .and ability to influence, the expansion of
nearby government agencies would be included. ..
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LAND USE ELEMENT UPDATE
City Council Workshop: 9-16-91
DRAFT
Nonresidential Growth Management Policy
San Luis Obispo wants to balance additional job opportunities with additional housing
opportunities. It also wants to accommodate moderate expansion of activities which
meet residents' shopping demands and which help fund public services, while not
stimulating excessive growth or exceeding the selected rate of change. Therefore, the
city will aim for expansion of trade and services not to exceed an average of one
percent per year during the planning period. The City will monitor the amount of
new nonresidential building space approved within five-year increments, and will not
approve development plans which would cause the desired amount of increase to be
exceeded, except as noted below, as shown in Table --.
All nonresidential building space inside the city will be monitored and included in the
determinations of whether the limits are met, whether or not the City has building-
permit authority over the space, except as noted below.
To encourage downtown development there will be a reserve for that area, so that
downtown can maintain and possibly increase its share of citywide nonresidential
building area.
Table --
Nonresidential Growth Limits
(square-feet gross floor area)
Interval Added Cumulative Total Increment reserved
in interval addition for downtown core*
1992 - - 61700,000 1,300,000 (base)
1993 - 1997 380,000 380,000 7,080,000 61,000
1998 - 2002 380,000 760,000 79460,000 61,000
2003 - 2007 3809000 1,140,000 7,840,000 61,000
2008 - 2012 380,000 1,520,000 8,220,000 61,000
2013 - 2017 380,000 1,900,000 8,600,000 61,000
* See Figure --. [Fig. 4 from the Planning Commission draft, attached]
Exceptions: (1) Public elementary and secondary schools;
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(2) One non-discount department store in the Madonna Road area or
downtown, which is integrated with other comparison shopping
(though any associated specialty stores would be subject to the
limits);
(3) The net increase in nonresidential floor area equal to the net
increase in residential floor area within a project, in a mixed-use
project, on land which was zoned for nonresidential use in 1991;
(4) Buildings existing in 1992 but annexed to the City following that
year.
(5) Motels and hotels, which had a total of 1,800 rooms in 1992, and
which may increase by a total of not more than 90 rooms in each
five-year interval.
Discretionary project approvals will be granted until the allowed increment for an
interval is reached. If the projects waiting for City approval would then cause the
limit to be exceeded, any following discretionary approval will include an earliest date
to start construction, or phasing to assure that the limits for the following interval will
not be exceeded.
Growth of government agencies near the City
Cal Poly enrollment and employment are expected to remain on a plateau
during the 1999s, then increase between the years 2000 and 2010, when the
university's ultimate size would be reached. An increase from the
approximately 17,000 students enrolled in 1991 to about 19,200 in 2005 would
correspond to about one percent annual growth over that period. The City will
oppose any enrollment increases beyond the 2,700 which the state university
system proposes to occur between 2000 and 2005. The City has no direct
control over Cal Poly enrollment or employment.
The number of California Men's Colony inmates and employees are expected
to remain about the same during the planning period, as increases in the
statewide prison population are accommodated by new facilities in other
counties. The City will oppose further expansion of the prison. The City has
no direct control over the number of inmates or employees.
Cuesta College employment and enrollment are expected to increase at about
the same rate as County population growth. Cuesta College attracts students
from throughout the County and the State. The City has no direct control
over Cuesta College enrollment or employment.
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6 N ri1vfy�t1a� DJi 1„1 September 6, 1991
Glen Matteson
Associate Planner
City of San Luis Obispo
990 Palm Street
San Luis Obispo,CA 93403
Dear Glen:
Enclosed please find our draft work in progress on affordable housing requirements for the City of San Luis
Obispo. If you agree with the format and type of presentation,we envision adding the following material by the
time we deliver a fmal report at the end of next week:
■ A summary of conclusions,to be placed at or near the beginning of the report.
■ Analyses of additional cases Note, however, that we are not so optimistic as to expect to evaluate all 15
of the cases you described.
■ The appendices noted in the text.
I will be out of the office on Monday and Tuesday, but will look forward to speaking with you on Wednesday
morning.
Best regards,
e Lampert
nior Associate
Enclosure
MUNDIE
& ASSOCIATES
p
DRAFT
Analysis of
Affordable Housing Requirements
Recommended in the
Draft Land Use Element
Prepared by:
Mundie & Associates
Consultants in Land Use and Economics
3452 Sacramento Street
San Francisco, California 94118
September 1991
DRAFT'
September 6, 1991
ANALYSIS OF AFFORDABLE HOUSING REQUIREMENTS
PURPOSE
This reports describes the results of an analysis of requirements for the production of
"affordable" housing in the City of San Luis Obispo. The requirements tested in this analy-
sis are those recommended by the Planning Commission in the Draft Land Use Element of
the General Plan.
The analysis of recommended affordable housing requirements is intended to identify the
effect of the recommended requirements on:
■ Housing production. In other words, would the recommended requirements
have such a severe impact on developers' profits that it would no longer make
economic sense to build new housing or nonresidential projects?
■ The prices of market-priced units. If the foregone profits from affordable units
were recouped through price increases on market-priced units, by how much
would the prices of the market-priced units rise?
BACKGROUND
The Draft Land Use Element recommends that all new development projects - whether
residential or nonresidential - be required to make some sort of contribution to the produc-
tion of affordable housing in San Luis Obispo.
The recommended requirements for projects in major expansion areas differ from those for
projects within the existing city limits. The rationale for this difference is that land values
will increase significantly upon annexation to the city, because annexation brings with it the
potential for more intensive development than could be achieved in the unincorporated
area. The intent of the Draft Land Use Element recommendations is to enable the City to
share the increase in value that it confers through benefit of urban zoning. The City would
capture its share of the increase through the affordable housing requirements. These
requirements would not convey any direct monetary benefit to the City; instead, they would
result in a lower value increase. The difference between the land value increase that would
result with no affordable housing requirement and the increase with such a requirement
would be the landowner's and developer's contribution to housing subsidies.
According to the summary included in the staff report prepared for the City Council
workshop on July 29, 1991, the requirements for production of affordable housing recom-
mended in the Draft Land Use Element are:
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DRAFT
September 6,1991
Residential projects: Within the existing 10 percent of new units affordable
city limits: to low income households, or 20
percent affordable to moderate
income households, or developer
contribution for offsite productiop
of affordable housing equal to 2
percent of project value.
In major residential 5 percent of land to be made avail-
expansion areas: able to the Housing Authority for
production of housing affordable
to low income renters, plus 10 per-
cent of housing to be affordable to
low income buyers, plus 40 percent
of housing affordable to moderate
income buyers.
Nonresidential projects: All areas: Any affordable housing onsite, or
developer contribution for offsite
production of housing equal to 3
percent of project value.
DEFINITIONS
This report makes frequent use of the following terms, which are defined here for conven-
ient reference:
■ Affordable housing: housing that is affordable to households with low or
moderate incomes.
■ Low income: annual household income that is 80 percent or less than the
median annual household income.
■ Major expansion area: one of the three areas that the City has considered for
potential annexation some time in the future. These areas are (1) the Dalidio
area, lying generally west of US 101 between the Madonna area and Los Osos
Valley Road; (2) the Margarita area, located north of Prado, generally between
South Higuera and Broad; and (3) the Airport area, located between Prado on
the north, a line midway between Tank Farm and Buckley on the south, South
Higuera on the west and Broad on the east.
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DRAFr
September 6, 1991
■ Median income: the middle income of all households in an area. In San Luis
Obispo County, the median income in 1991 is estimated to be $37,000.
■ Moderate income: annual household income that is between 80 and 120 percent
of the median annual household income.
AFFORDABLE RENTS AND SALE PRICES
Based on the definitions of low and moderate income outlined above, the following guide-
lines for affordable rents and sale prices were used in this analysis:
■ Households were assumed to pay 25 percent of their incomes for rent or mort-
gage payments.
■ The guideline for moderate income households was set at 110 percent of the
median income. Although the definition of moderate income includes house-
holds with as much as 120 percent of the median, setting the standard at that
level would exclude virtually all households with incomes lower than that level.
The 110 percent guideline, in contrast, would allow for a range of household
incomes in the moderate range, although it is still weighted toward the upper
end of that range. This guideline suggests an affordable monthly rent of $771
and an affordable housing value of $107,100. The housing value is based on the
assumption that a mortgage equal to 95 percent of the sale price could be ob-
tained at an interest rate of 10 percent for a term of 30 years.
■ The guideline for lower income households was set at 75 percent of the county-
wide median. As with the moderate income guideline, this standard is set lower
than the definition set forth above to allow for affordability by some households
whose incomes are not at the top of the range. This income guideline allows for
monthly rents of about $580 and sale prices of about $73,000. The sale price
calculation relies on the same assumptions about mortgage terms as does the
calculation for moderate income units.
A full set of calculations of affordable rents and sale prices is provided in Appendix A to
this report.
APPROACH TO THE ANALYSIS
The analysis summarized in this report attempts to answer the questions posed by the City
Council through a set of cash flow simulations intended to describe the financial feasibility
of alternative development projects that could be proposed in the City and the expansion
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DRAFT
September 6,1991
areas. Thirteen different development scenarios were described by Community Develop-
ment staff. Mundie & Associates interviewed several local developers and contacted other
local sources to identify the production costs, revenues (sale prices and rents) and operat-
ing costs associated with each scenario. Based on this information, the following calcula-
tions were performed: ,
1. Given costs, revenues, and required threshold profits, a land budget was calcu-
lated for each scenario. This calculation incorporated an assumption that no
contribution to affordable housing - either in the form of housing units or as a
contribution to offsite production-would be required. This calculation was used
to establish the value of the land for each type of project.
2. Alternative land budgets were calculated for identical projects that met the
affordable housing requirements recommended in the Draft Land Use Elements.
These calculations established the effect on land value of the recommended
requirements.
3. Given costs, revenues, and the land budget calculated in Step 1, the effect of the
recommended affordable housing requirements on developer profits was esti-
mated. This calculation provided some indication of whether developers would
still consider projects feasible if land prices were relatively non-negotiable.
4. Given costs, the land budget calculated in Step 1, and required threshold profits,
the effect of the recommended affordable housing requirements on prices of
market-priced units was estimated. This calculation provided information about
the potential subsidy to affordable housing that would be contributed by other
home buyers, as well as an ballpark indication of how many households would be
priced out of housing market if the entire affordable housing subsidy were
passed through to the purchasers of market-priced units.
This aspect of the analysis is not intended to suggest that market rate units (that
is, those units not reserved for low and moderate income households) with
higher prices will indeed be marketable. As the Council has discussed in the
past, every increment of increase in the price of a home puts that home beyond
the financial reach of additional households. Instead, the evaluation of impacts
on housing prices is intended to show the amounts by which asking prices would
have to rise in order to replace the revenue that a developer would have to
forego by offering the required number of affordable units. As suggested in the
previous paragraph, this perspective is consistent with the notion that the entire
subsidy for the affordable units would be borne by the purchasers of market rate
units.
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DRAFT
September 6,1991
LIMITATIONS
This approach to evaluating requirements for the production of affordable housing pro-
vides a rigorous, quantitative system for testing the effects of alternatives. Nevertheless, it
is subject to certain limitations which should not be ignored as the results are considered.
These limitations include the following:
■ All cost and revenue assumptions are open to question. It is not unreasonable to
expect every developer -including those who provided information that was used
in this analysis - to be able to explain why the cost factors and return (profit)
requirements are too low and the revenue estimates are too high. Because every
case is different, and the assumptions used in the analysis are intended to repre-
sent general scenarios, questions about the values used are likely to be reasona-
ble.
■ The number of sites - both within the existing city limits and in the major expan-
sion areas - is limited, as is the number of ownerships. Every land transaction
will be subject to a set of expectations and dynamics specific to that site. There-
fore, the land budgets calculated in Step 1 of the approach described above are
unlikely to be identical - and may not even be close - to those already mentally
assigned to sites with development potential by the development community.
RESULTS OF THE ANALYSIS
The results of the feasibility analysis are presented on the following pages for each of the
13 development scenarios analyzed. For each case, the hypothesized development project
is described and then the results of the analysis are presented. The assumptions used to
produce the results are summarized in Appendix B.
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DRAFT
September 6, 1991
CASE 2: DOWNTOWN MIXED USE
RETAIL AND OFFICE
PROJECT DESCRIPTION
Three-story, 18,390 square foot building on a 7,000 square foot site. The ground floor,
enclosing 5,990 square feet, is retail space; the second and third floors, with a total of
12,400 square feet, are office space.
This project requires 37 parking spaces. The parking requirement is met through the
payment of fees totaling $148,000.
RECOMMENDED AFFORDABLE HOUSING REQUIREMENT
The recommended affordable housing requirement may be met by either (1) the provision
of at least one unit affordable to low or moderate income households or any group housing,
or (2) payment of a three percent fee.
RESULTS OF THE ANALYSIS
Analvsis of Recommended Affordable Housing Requirement. The payment of a fee equal
to three percent of construction costs would have the following potential effects:
■ Reduce developer's/owner's profit (as measured by the internal rate of return in
year 10 of project operation) by about three percent (from 12.0 percent to 11.6
percent); or
■ Reduce estimated land value by approximately 10 percent (from $70 to $63 per
square foot); or
■ Increase the rents required to maintain the base case (without fee payment)
return by two percent or less ($0.03 per square foot per month).
These results are summarized in Table 2.1.
Alternative Affordable Housing Req uirement. As noted above, the recommended afford-
able housing requirement - that is, the payment to a fund for offsite housing production -
appears to reduce developer return by about three percent. Because this return still ap-
pears to be within the feasible range for most projects, an alternative requirement that
would increase the fee to an amount equal to five percent of the construction value was
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DRAFT
September 6,1991
tested. When compared to the recommended fee, this requirement would further reduce
the developer's return (to 113 percent, compared to 11.6 percent with the recommended
fee). Similarly, it would yield a lower land value ($58.50 per square foot, compared to $63
with the recommended fee) and require a higher monthly rent to maintain developer's
return and land value at their estimated base case (no fee) levels. These results are 4
summarized in Table 2.1
Table 2.1
Effects of Affordable Housing Contribution
Land
Value/ Rent f SA. Ft./Month
Sq. Ft. Retai Office Return'
Base Case (no affordable
housing payment) $70.00 $2.00 $1.50 12.0%
With Housing Fee 70.00 2.00 1.50 11.6%
of 3% 63.00 2.00 . 1.50 12.0%
70.00 2.03 1.53 12.1%
With Housing Fee 70.00 2.00 1.50 11.3%
of 5% 58.50 2.00 1.50 12.0%
70.00 2.05 1.55 12.1%
' Internal rate of return in year 10 of project operation.
Source: Mundie &Associates
7
1-17
DRAFT
September 6, 1991
CASE 13: INFILL CONDOMRQUMS
PROJECT DESCRIPTION
Eighteen condominiums in 10 buildings (four single-unit buildings, four duplexes and'two
triplexes). The units include:
Eleven two-bedroom units @ 1,220 sq. ft. per unit
Seven three-bedroom units @ 1,640 sq. ft. per unit
Forty-five parking spaces
Site area totals 1.79 acres (77,972 sq. ft.).
RECOMMENDED AFFORDABLE HOUSING REQUIREMENTS
The affordable housing requirement recommended in the Draft Land Use Element may be
met by either (1) payment of a two percent fee or (2) provision of 20 percent of the units at
prices affordable to moderate income households or (3) provision of 10 percent of the units
at prices affordable to low income households.
RESULTS OF THE ANALYSIS
This project was evaluated using three alternative sale prices for the market-priced condo-
miniums. The low-priced alternative assumed that two-bedroom units would sell for
$132,300 and three-bedroom units for $177,875. The mid-priced alternative assumed that
two-bedroom units would sell for $154,375 and three-bedroom units for $207,520. The
high-priced alternative assumed that two-bedroom units would sell for $172,000 and three-
bedroom units for $231,250.
General Conclusions
In all cases, the option of paying two percent of the project construction cost into a fund for
offsite provision of affordable housing is the most attractive means of meeting the require-
ments outlined in the Draft Land Use Element. This option has the smallest impact on land
value, developer profit and the price of a market-rate unit.
Similarly, in all cases, the option of reserving 20 percent of project units for moderate
income households has the greatest impact on feasibility. In the low-priced alternative,
developer profit would decrease from 12.5 percent (the assumed target level) to 7.4 per-
cent, virtually assuring that no production would occur. The price of a market-rate unit
8
DRAFT
September 6, 1991
would increase by nearly $11,000, or more than seven percent. In the high-priced alterna-
tive, developer profit would decrease from 12.5 percent to 4.2 percent, and the price of a
market-rate units would increase by nearly$22,000, or more than 11 percent.
The higher the assumed average price of market-rate units, the greater is the impact on
developer profit and price of market-rate units of requirements that include some onsite
production of affordable units. At the same time, the impact on land value and the effect
of contributions to a fund for offsite production lessens as unit price increases. This latter
result is.closely related to the assumption that average construction costs are the same for
units of all prices.
One alternative set of affordable housing requirements was tested. These requirements
revise the proportion of affordable housing units required onsite to a level that yields the
same estimated profit that would be generated if a developer chose to contribute two
percent of construction costs to a fund for offsite use. Effectively, these alternative re-
quirements hold land value constant while reducing developer profit by between five and
ten percent (e.g., from 12.5 percent to 11.5 percent; the difference between these two
represents eight percent of the higher amount) and reducing the proportion of affordable
units by the amount necessary to achieve these other parameters.
These alternative guidelines indicate that the requirement for onsite production of afford-
able housing would have to be reduced to between 15 and three percent of the total units
in order to make these options as attractive as the contribution option, without reducing
land prices or increasing housing prices. To the extent that housing price increases or land
price reductions are acceptable, then some middle ground between the recommended
requirements and the alternatives defined in this report would provide other acceptable
guidelines.
Low-Priced Alternative
Analvsis of Recommended Affordable Housing Requirements. In the low-priced alterna-
tive, a 1.79 acre ill site zoned appropriately for this hypothetical project would command
a price of over $176,000 per acre, or about $4.00 per square foot, with no affordable hous-
ing requirement. The effects of different affordable housing requirements are summarized
in Table 13.1. In the most severe case - that is, with reservation of 20 percent of the units
for moderate income households - the land value would be reduced to about $104,000, or
by nearly 40 percent. Developer profit would be reduced by a similar proportion. As noted
zbove, the price of a market-rate unit would increase by about seven percent
Alternative Affordable Housing Requirements. The alternative requirement in this case
would provide for the provision of affordable housing according to the following guideline:
9
DRAFT
September 6,1991
Contribution of two percent (of construction cost) to a fund for offsite hous-
ing production, or 4.5 percent of the units affordable to moderate income
households, or 2.5 percent of the units affordable to low income households.
These alternative requirements all maintain the project land value at the same level as
estimated for a 100 percent market rate project and yield a developer profit of 11.4 percent
with no increase in the prices of market rate units.
Table 13.1
Effects of Alternative Requirements for Affordable Housing
Low-Priced Scenario
(Average Price = $150,000)
Price of
Land Value Market- Percent
Per Per Per Developer Rate Increase
cenari Acre Unit 3q. FL Profit Unit in Price
100% Market Rate Units $176,040 $17,506 4.04 125% $150,000
100% Market Rate Units 160,913 15,913 3.67 11.4% 151,900 1.3%
with 2%Affordable
Housing In-Lieu Fee
90010 Market Rate Units, 111,442 11,082 2.56 8.0% 158,550 5.7%
10% Low Income Units
80% Market Rate Units, 104,039 10,346 239 7.4% 160,725 7.1%
20% Moderate Income
Units
'A price of 3150,000 is used as an index to gauge the impacts of alternative requirements on housing prices.
The $150,000 figure represents a weighted average price, considering the mix and sizes of two- and three-
bedroom units. More realistically, two-bedroom units would be priced at$132,300 and three-bedroom units at
5177,875,assuming similar prices per square foot.
Source: Mundie &Associates
10
/-020
DRAFT
September 6, 1991
Medium-Priced Alternative
Analysis of Recommended Affordable Housing Requirements. In the medium-priced
alternative, the value of the hypothetical site would be almost $386,000 per acre, or about
$8.90 per square foot, if no affordable housing requirement were in place. Table 13.2
summarizes the impacts of the various affordable housing requirements. If 20 percent of
the units were reserved for moderate income households (once again, the most severe
case) this land value would be reduced to about $272,000, or by about 30 percent. De-
veloper profit would be reduced by 56 percent, and the price of a market-rate unit would
increase by between 9-5 and 10 percent.
Table 13.2
Effects of Alternative Requirements for Affordable Housing
Medium-Priced Scenario
(Average Price = $175,000)°
Price of
Land Value Market- Percent
Per Per Per Developer Rate Increase
Scenario Acre Unit meq. Ft. Profit Unit in Price
1009o' Market Rate Units $385,990 $38,385 $8.86 12.5% $175,000
100% Market Rate Units 369,937 36,788 8.49 11.6510 176,925 1.1%
with 2% Affordable
Housing In-Lieu Fee
90% Market Rate Units, 300,366 29,870 6.90 7.3% 186,325 6.5%
10% Low Income Units
80% Market Rate Units, 271,972 27,046 6.24 5.5% 191,975 9.7%
20% Moderate Income
Units
'A price of $175,000 is used as an index to gauge the impacts of alternative requirements on housing prices.
The $175,000 figure represents a weighted average price, considering the mix and sizes of two- and three-
Bedroom units. More realistically,two-bedroom units would be priced at$154,375 and three-bedroom units for
$207,510, assuming similar prices per square foot.
Source: Mundie & Associates
11
DRAFT
September 6, 1991
Alternative Affordable Housing Requirements. The alternative requirement in this case
would provide for:
Contribution of two percent (of construction cost) to a fund for offsite hous-
ing production, or three percent of the units affordable to moderate income
households, or two percent of the units affordable to low income households.
These alternative requirements all maintain the project land value at the same level as
estimated for a 100 percent market rate project. With a two percent contribution to a fund
for offsite housing production, the developer profit would be 11.6 percent; with either
onsite construction option, the developer profit would be 11.5 percent. None of these
options would require an increase in housing prices to maintain land values or profits.
Hig-h-Priced Alternative
Analysis of Recommended Affordable Housing Requirements. If the average price of a
unit were in the high range identified earlier (two-bedroom units priced at $172,000 and
three-bedroom units at $231,250), then the hypothetical 1.79 acre infill site would be valued
in the range of $554,000, or just over $12.75 per square foot, if there were no affordable
housing requirement. The effects of different affordable housing requirements on this
alternative are summarized in Table 13.3.
In this case, if 20 percent of the units were made affordable to moderate income house-
holds, the value of the site would be reduced to about $406,300, or by nearly 30 percent.
Developer profit would be reduced by approximately two-thirds. As noted above, the price
of a market-rate unit would increase by over 11 percent.
Alternative Affordable Housing Requirements. Maintaining the developer profit of 11.7
percent yielded by the contribution option without affecting land value or housing price
would suggest the following alternative guideline for provision of affordable housing:
Contribution of two percent (of construction cost) to a fund for offsite hous-
ing production, or two percent of the units affordable to moderate income
households, or 1.5 percent of the units affordable to low income households.
12
/-0202-
DRAFT
September 6, 1991
Table 13.3
Effects of Alternative Requirements for Affordable Housing
High-Priced Scenario
(Average Price = $195,000)'
Price of
Land Value Market- Percent
Per Per Per Developer Rate Increase
Scenari Acre Unit Sq. Ft. Profit Unit in Pri
100% Market Rate Units $553,923 $55,085 $12.78 12.5% $195,000
100% Market Rate Units 5379870 539488 12.35 11.717o 196,925 1.0%
with 2010 Affordable
Housing In-Lieu Fee
90% Market Rate Units, 4517506 44,900 10.37 6.9% 208,550 6.9%
10% Low Income Units
80% Market Rate Units, 4069318 402406 9.33 4.2% 216,975 11.3%
20% Moderate Income
Units
•A price of 5195,000 is used as an index to gauge the impacts of alternative requirements on housing prices.
The $195,000 figure represents a weighted average price, considering the mix and sizes of two- and three-
bedroom units. More realistically,two-bedroom units would be priced at$172,000 and three-bedroom units for
$231,250,assuming similar prices per square foot.
Source: Mundie & Associates
13 /
i r�
DRAFT
September 6, 1991
CASE 14: LARGE PHASE OF MAJOR RESIDENTIAL EXPANSION AREA
PROJECT DESCRIPTION
A variety of housing types, including:
■ Single family tract-built homes: 134 units on lots ranging from 4,100 to 8,600
square feet. Units average 1,500 square feet in area. Site area occupied by these
units totals 16.9 acres. Prices for tract-built units were assumed to average
$225,000.
■ Condominiums: 88 units on a 6.6 acre site. Average unit size is 1,200 square
feet. These units are assumed to be built as fourplexes. Two alternative price
assumptions were tested: an average of$150,000 ("lower-priced condominiums")
and an average of$175,000 ("higher-priced condominiums").
■ Apartments: 20 units on a 1.8 acre site. Average unit size is 1,000 square feet.
All apartment units are assumed to be in a single building. Market rent was
assumed to be $775 per month.
■ Custom houses: 111 units on lots averaging 9,900 square feet. Total site size for
this component of the project is 25.2 acres. Units average 2,200 square feet in
area. The price of these homes was assumed to average $325,000.
Other project components include:
■ Seventy-five acre open space easement on hillside, with a contribution for trail
construction.
■ Thirteen acre linear park dedicated in fee to the City.
■ One acre minipark, dedicated and improved.
■ Water tank with 400,000 gallon capacity.
RECOMMENDED AFFORDABLE HOUSING REQUIREMENTS
The affordable housing requirement recommended in the Draft Land Use Element man-
dates that 40 percent of the housing units in a major residential expansion area be afford-
able to moderate income households and that 10 percent be affordable to low income
households.
14
DRAFT
September 6, 1991
ASSUMPTIONS
The project was evaluated using the following assumptions:
■ The various project components are built concurrently; in other words, construc-
tion of all four different housing types proceeds at the same time.
■ Construction is completed according to the schedule outlined in Table 14.1.
Table 14.1
Construction Schedule
Units Constructed in Year:
Component 1 2 3 4 5 Total
Single Family
Tract Homes 50 50 34 0 0 134
Condominiums 24 24 20 20 0 88
Apartments 20 20
Custom Homes 25 25 25 25 11 111
Total 119 99 79 45 11 353
■ The land value of the project is the total value of the land for all four residential
components discounted to net present value in the first year of construction. In
other words, the real value of project components built after the first year is
lower than the nominal value, because the money used to pay for those portions
of the site could have been invested elsewhere instead of being tied up in the
project.
■ Land cost includes the cost of the water tank, park improvements and other costs
incurred for development that are not explicitly included in the pro forma.
■ None of the custom units are marketed as affordable units; instead, all of the
' affordable units are tract-built single family homes, condominiums and apart-
ments. Therefore, the requirement that 40 percent of the units be affordable to
moderate income households and 10 percent to lower income households is met
in the manner described by Table 14.2
15
i-as'
DRAFr
September 6, 1991
RESULTS OF THE ANALYSIS
The analysis of this project assumed that the average price of custom homes is $325,000
and the average for tract-built single family homes $225,000. Condominiums were evaluat-
ed at two price levels: $150,000 and $175,000. The average monthly rent for apartments
was assumed to be $775.
Table 14.2
Distribution of Affordable Housing Units
Market Moderate Lower
Rate Income Income
Total Units Units Unit
Component Units i t- Pct. Pct,
Custom Homes 111 111 100 0 0 0 0
Single Family
Tract Homes 134 34 25 80 60 20 15
Condominiums 88 22 25 53 60 13 15
Apartments 20 10 50 8 40 2 10
Total 353 177 50 141 40 35 10
General Conclusions
This hypothetical project allows development on approximately one-third of the entire site;
the remainder is devoted to open space. Therefore, the land value per unit of acre (e.g.,
per acre or square foot) of land area appears low, because the value created by the devel-
opment potential on a relatively small portion must be used to purchase the entire site.
With this perspective, it is possible to consider the effects of the affordable housing re-
quirements. The requirements recommended in the Draft Land Use Element would reduce
the overall land value by approximately 85 percent, or - if land value is held constant -
eliminate developer profits or increase the sale price of market-rate units by approximately
35 percent. These effects could be somewhat reduced if 100 percent of the apartments and
condominiums (compared to 50 percent of apartments and 75 percent of condominiums
assumed in this analysis) were reserved for low and moderate income households, thereby
reducing the number of affordable tract-built single family homes.
One alternative set of affordable housing requirements was tested. The guiding criterion
for this alternative was that the land value of the entire site be reduced by no more than 50
16
/.1�
DRAFT
September 6, 1991
percent of the value indicated by an analysis in which 100 percent of the units were priced
at market rates. The evaluation of this alternative indicated that a project with 15 percent
moderate income units and 10 percent low income units would satisfy this criterion. This
result, like the base case analysis, relies on the assumption that the affordable share of
custom units would be redistributed to the tract-built homes and condominiums.
Recommended Affordable Housing Requirements. The recommended requirements for
affordable housing production would reduce the estimated value of the 1535-acre site by
approximately 85 percent. The proportional reduction would be slightly greater in the case
with higher-priced condominiums. The effects on land price are summarized in Table 143.
Table 14.3
Land Price Impacts of Affordable Housing Requirements
Discounted Land Value of
Entire Project That Includes:
Low- High-
Priced Priced
Condo- Condo-
miniums miniums
100% Market Rate Units Total $14,051,203 $15,629,522
Per Sq. Ft. $2.10 $2.34
Incorporating Affordable Total $2,086,975 $29481,555
Housing Requirements' Per Sq. Ft. $031 $0.37
Affordable share of custom units is distributed to tract homes and condominiums. Each of those housing
types has 25 percent market rate,60 percent moderate income and 15 percent low income units.
Source: Mundie & Associates
The land values shown in Table 14.3 appear to be quite low per square foot, because they
include all of the land to be dedicated for open space and parks. If that land were to be
excluded from the calculation, the value for a 100 percent market rate project would be
between $6.40 and $7.10 per square foot (depending on the price of the condominiums),
and the value for a project that conforms to the affordable housing requirements would be
between $0.95 and $1.10 per square foot.
The case described in Table 14.3, which shows a synthesized land value for the entire
project, is optimistic in that it assumes that a single developer could average the land costs
17
1-a7
DRAFT'
September 6, 1991
over the entire project. The estimated land values associated with each of the project
components are shown in Table 14.4. The figures describe three sets of assumptions: (1)
with 100 percent market rate units, (2) with the required moderate and low income units
provided within each component of the project and (3) with the affordable units required
by the custom home component redistributed to tract homes and condominiums.
In a 100 percent market rate project, all project components generate positive land values.
When the affordable units required for each component are provided within that compo-
nent, the land value for the custom homes becomes negative, while the values for tract
homes and condominiums are significantly reduced. When the affordable custom units are
redistributed to the tract homes and condominiums, the land values for those components
become negative. Any project component with a negative land value is extremely unlikely
to be built.
Table 14.4
Land Price Impacts of Affordable Housing Requirements,
by Type of Housing Unit
Discounted Land Value With:
Proportional Redistribution
1000,70 Distribution of Affordable
Market Rate of Affordable Share of
Component Units Unitsl custom Unit52
Custom Homes $4,073,168 $-4,561,401 $4,073,168
Single Family
Tract Homes 7,620,897 1,281,892 -1,887,608
Condominiums
@ $150,000 272047243 635,048 -149,549
Condominiums 245,030
@ $175,000 3,782,561 1,424,207
1. Each housing type has 50 percent market rate units,40 percent moderate income units and 10 percent low
income units.
2. Custom homes are 100 percent market rate; single family tract homes and condominiums are 25 percent
market rate,60 percent moderate income and 15 percent low income.
Source: Mundie & Associates
The recommended affordable housing requirements would more than erase any potential
developer profits on the for-sale components of the hypothetical project. As shown in
Table 14.5, developers were assumed to require a profit equal to 12.5 percent of the project
sale price on for-sale components and an internal rate of return in year 10 of 10.5 percent
on the apartments.
1s p
l PSG
DRAFT
September 6, 1991
When affordable units are included, the apartment return drops to 8.6 percent: The rela-
tively mild decline - which is, even at that magnitude, likely to be great enough to discour-
age production- results because the market rent of$775 per month is just at the upper end
of the range of prices affordable to moderate income households. Tlius, the real loss in
income derives from the allocation of 10 percent of units for low income households.
Table 14.5
Impacts on Developer Profits of Affordable Housing Requirements
Profit.on All Sale Units
In a Project With:
Lower- Higher
Priced Priced
Condo- Condo- Return on
minium s miniums Apartments*
100% Market Rate Units 12.5% 12.5% 10.5%
Incorporating Affordable
Housing Requirements" -8.4% -10.4010 8.6%
Internal rate of return in year 10 of operation.
Affordable share of custom units is distributed to tract homes and condominiums. Each of those housing
types has 25 percent market rate,60 percent moderate income and 15 percent low income units.
Source: Mundie & Associates
The estimated profit on for-sale units, in contrast, becomes negative in both the low- and
high-priced condominium alternatives. These results are equivalent to a requirement that
the developer pay for the privilege of developing the tract-built and condominium units.
The impact of the recommended affordable housing requirements is summarized in Table
14.6. The evaluation of price impacts relies on the assumption that increases needed to
maintain land value and developer's profit are distributed proportionally among the differ-
ent unit types, including custom homes. The result is an approximate 35 percent increase
ift home prices:
■ The average price of a custom home would increase by $115,000 to $120,000.
■ The average price of a single family tract-built home would increase by $80,000
to $85,000.
19
/-021
DRAFT
September 6, 1991
■ The average price of a lower-priced condominium would increase by between
$50,000 and $55,000, and the average price of a higher-priced condominium by
about$65,000.
■ The average rent of a 1,000 square foot apartment would increase by nearly $85 ,
per month.
Table 14.6
Sale Price and Rent Impacts of Affordable Housing Requirements
Low- High-
Priced Priced
Custom Tract Condo- Condo- Apart-
Home Home miniums miniums men
100% Market Rate Units
Sale Prices $325,000 $225,000 $150,000 $175,000
Monthly Rent $775
Incorporating Affordable
Housing Requirements`
Sale Prices 441,100 305,400 2032600
444,200 307,500 239,200
Monthly Rent 858
Affordable share of custom units is distributed to tract homes and condominiums. Each of those housing
types has 25 percent market rate,60 percent moderate income and 15 percent low income units.
Source: Mundie & Associates
Alternative Affordable Housing Requirements. The guiding philosophy behind the formu-
lation of the recommended standards is that imposing an affordability requirements on
residential projects in major expansion areas will reduce the increases in land values that
would otherwise be experienced when land is annexed to the City and awarded develop-
ment entitlements. The foregone increases would be "captured" by the City in the form of
affordable housing units.
As noted above, the recommended affordability requirements would reduce the total
estimated land value associated with a 100 percent market rate project by 85 percent. The
alternative requirement tested here was intended to reduce the total value from the value
generated by a 100 percent market rate project to about half of that value. The proportion
20
/_ rA
DRAFT
September 6, 1991
of units to be reserved for low and moderate income households was adjusted until the
targeted land value was reached,while maintaining developer's profit and the sale price of
each type of unit.
The results of this analysis indicated that:
■ The proportion of market rate units should be increased from 50 percent to
between 70 and 75 percent.
■ The proportion of moderate income units should be reduced from 40 percent to
between 15 and 20 percent.
■ The proportion of low income units may be maintained at 10 percent.
These results should be used with caution, because they apply to a specific project with a
number of unusual characteristics, such as (1) a specific mix of unit types and market
prices; (2) an assumed phasing schedule and (3) a large open space dedication require-
ment. Adjustments for projects with different characteristics may differ from those identi-
fied here.
21
-31
Issue: County Growth Management
Description
Since 1980, the County has had a "resource management system" within its Land Use
Element. The resource management system operates at a countywide level as well as
within individual communities, though the County has land-use jurisdiction only within
the unincorporated areas. The resource management system evaluates water, sewage
disposal, schools, roads, and air quality. The system uses three levels of severity. Level
3 is the point at which a certain resource can support additional use only with "adverse
community consequences," while levels 1 and 2 are intended to provide lead time before
resource capacities are exceeded (attached Figure 1). The resource management system
does not require that development offset or mitigate additional resource impacts or that
it stop when level 3 is reached, only that such steps be considered (Figure 2).
In response to resource limits, the County, the Regional Water Quality Control Board,
and the California Coastal Commission have established development limits in several
of the county's communities.
In 1990, the Board of Supervisors adopted regulations which limit issuance of permits for
dwellings in unincorporated areas, the "Growth Management Ordinance." Key provisions
of these regulations, as recently amended, are:
- Controlled dwellings can increase by not more than 23 percent per year.
- The Board of Supervisors may change the allowed growth rate for controlled
dwellings each year, based on the resource management system.
- These types of dwellings are not controlled:
Applications received before the regulations were introduced (equal to
nearly four years' growth at the maximum rate);
Farm worker housing;
Dwellings which are affordable to low-income or moderate-income residents;
Certain other applications within specific subareas of the County.
- The total controlled dwellings allowed countywide are distributed geographically
according to the resource management system.
- The total controlled dwellings allowed countywide are distributed by type, with 20
percent reserved for multifamily and phased, master-planned projects, and 80
percent for all other types of applications.
The County's resource management system and Growth Management Ordinance do not
conflict with the City's adopted or proposed Land Use Element. The County's growth
rules are not expected to cause substantially more or less overall growth in the San Luis
Obispo planning area than called for by the Planning Commission Draft update. The
resource management system may require limits on the amount of development in the
airport area and Edna Valley lower than the maximum permitted by the County Land
Use Ordinance categories, due to water supply and wastewater disposal limits. On the
1
i-a�
other hand, the resource management system may be a catalyst for expanding the
resources available to those areas, through formation of special districts, provision of
"package" treatment plants, and importation of water. The provision of community water
and sewer service would enable more intense development than allowed by on-site
methods. Existing county zoning allows more intense development than recommended
by the Planning Commission.
Planning Commission recommendation
The Commission recommended a countywide growth management program before the
County adopted the 1990 ordinance. The Commission supported several measures to
achieve more consistent regional approaches (programs 1.6 through 1.11), and in
particular the following features (program 1.9):
A. Population growth no faster than the statewide average growth rate for the
preceding year, and no faster than can be sustained by available resources and
services, whichever is less.
B. No significant deterioration in air quality, due to development activities for which
local government has approval.
C. Voter approval for any change in designation or significant increase in
development potential for land in the unincorporated area designated sensitive,
open space, agriculture, or rural.
D. Plans for large residential developments to include a range of housing types to
provide opportunities for low- and moderate-income residents.
Item A is similar to the County's adopted ordinance, but more tightly written, while items
B, C and D are not in the County regulations.
Alternatives to Commission recommendation
1. Do not take a position on countywide growth management.
2. Advocate a lower County growth rate, perhaps similar to the City's proposed rate
of one percent.
3. Advocate a higher County growth rate, similar to the County's rate over the last
ten years (3.6 percent).
4. Ask the County to consider other changes to its growth management system.
Environmental and economic questions
Council and staff have not identified questions relating to County growth management
which will require answers in addition to those provided for other issue topics, such as
jobs/housing balance, and air quality.
gmD:COGROWCCWP
2
/-33
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FIGURE 2
COUNTY LUE: RESOURCE MANAGEMENT ADVISORY PROCESS
PLANNING DEPARTMENT RESEARCH:
- RMS monitoring 7Department
ITY
- LUE update HED
y Planning
RESOURCE CAPACITY STUDY BOARD OF SUPERVISORS
Prepared by Planning - Evaluate data
Department - Determine Level of Severity
- Initiate resource capacity study
PLANNING COMMISSION BOARD OF SUPERVISORS
Public hearing Public hearing
- Review resource study Possible actions:
- Recommend action - Determine Level of Severity
- Initiate programs to avoid
or relieve a resource
problem
Consider status reports
- Initiate ordinances to
manage growth within
resource capacity
F
Issue: County Settlement Pattern Strategy/Development Credit Transfer
Description
The County Land Use Element includes a goal of directing development to land inside
urban reserve lines and village reserve lines, rather than outside them. However, allowed
parcel sizes and existing lot patterns, especially in some old, undeveloped rural
subdivisions, can accommodate development which is not consistent with this goal.
County planners have been working on a "settlement pattern strategy," assessing the
potential under existing rules for more development on lands designated for rural and
agricultural uses, and for redirecting that potential to locations with better services, and
so the County's landscape could be better preserved.
The appearance of agricultural land and open hillsides around San Luis Obispo would
change significantly with construction of houses on many existing parcels, even though the
resulting number of new houses may not be large compared with planned City growth.
As the city grows, it is likely to attract more people who want to live near the City, but
not in it, resulting in additional pressure for development outside the urban reserve line.
In addition to the countywide settlement pattern strategy, the County's Land Use Element
update for the San Luis Obispo area is considering ways to locate new houses so visually
sensitive areas will not be harmed, and to transfer development potential from more
sensitive to less sensitive areas. Transferring development credits from areas that the
City wants to keep open to areas inside the urban reserve which are planned for
development is one way to permanently protect open space. A development transfer
program requires sites to receive the development potential. Under a voluntary program,
it may be necessary to allow more than one dwelling at the receiving location to create
sufficient incentive to erase the potential for one dwelling at the sending location.
A preliminary survey by County planning staff indicates potential for about 500 dwellings,
in especially sensitive parts of the San Luis Obispo planning area, that could be
transferred to clustered rural residential areas (such as Los Ranchos) or to the City.
The key question to be answered in this discussion is: Should the City set its
development capacity, in the major expansion areas or elsewhere, to create potential
receiving sites for transferred development credits? The Land Use Element could do so
by allowing a certain maximum number of dwellings within an area if there was no
transfer, and a higher maximum with transfer. Developers of the expansion areas would
have to acquire and dedicate to the City or a conservancy organization development
rights from land outside the urban reserve line, to permanently protect the land, in order
to build more dwellings (or nonresidential space) than set by the lower maximum.
The City's draft Land Use Element update, as modified by the Council for the Dalidio
area, would accommodate the following ranges of dwellings, depending on densities, in
the major expansion areas. Providing receiver sites for 500 dwellings credit, at a two-
to-one ratio, could comprise nearly all the 1,100 dwelling difference between the low and
high ends of the total range.
1
/-3�
Dalidio 700 - 1,000
Irish Hills 700 - 1,000
Margarita 800 - 1,100
Orcutt 500 - 800
TOTAL 2,700 - 3,800
Planning Commission recommendation
The Planning Commission draft contains several policies to protect the city's rural setting
(1.4 through 1.9), including clustering incentives. Also, during it's review of the draft the
Commission discussed having major expansion areas secure open space similar to the
requirement for minor expansion areas (policies 1.14 and 1.15). No specific requirement
was recommended, but program 1.1 says the sequence of developing the major expansion
areas will be decided based on open space protection, if affordable housing performance
of the various areas is equal.
Alternatives to Commission recommendation
1. Allow a major development site or expansion area to develop only if it erases a
certain amount of development potential for an open area outside the urban
reserve line.
2. Allow a major development site or expansion area to develop a higher number
of units as it erases development potential outside the urban reserve line.
Either approach could be integrated with affordable housing requirements/incentives. An
example, with hypothetical numbers:
100 acres in a major expansion area, designated for residential use;
500 dwellings allowed with no out-of-area open-space protection, and 10% of
dwellings must be affordable to low/moderate income;
For each potential dwelling erased outside the urban reserve, allow one (or two)
additional dwellings; for each dwelling affordable to low/moderate income beyond
the 10% required, allow one additional market-rate dwelling;
... up to a maximum of 800 dwellings in the expansion area.
At the 800-unit maximum, as one example, 150 (or 75) dwellings would be
prevented outside the urban reserve, and 75 additional affordable dwellings would
be provided.
Environmental and economic questions
No questions have been previously identified.
p 0TA=RN.WP
2
• 97
�.A
Issue: Air quality & Clean Air Plan
Description
San Luis Obispo's relatively clean air, highly valued by residents and visitors, is
threatened by increasing population and activities which generate air pollution. The key
question which the city faces in this: will our air be adequately protected by proposed
measures which control pollution from each source, our should we limit the growth of
sources below what has been projected for our area? Also, how much should we count
on potential but unproven pollution control measures? There is a dilemma: if other
communities in the air basin accommodate growth that otherwise would have occurred
in San Luis Obispo, especially housing for those who work in the City, air pollution will
not be minimized, and may be made worse.
As required by State law, the Air Pollution Control District (APCD) has prepared a
Clean Air Plan ("CAP" --June 1991 draft) for the County. The Clean Air Plan aims to
reduce emissions of reactive organic gasses and oxides of nitrogen so that ozone, a
primary component of smog, can be brought within limits to protect health and welfare,
which are now exceeded. The plan tries to achieve the necessary reductions while the
county as a whole grows as projected by the State. As shown in Figure 1, the measures
contained in the draft plan are not expected to achieve the required reductions for
reactive organic gasses, which would exceed the state's mandated levels by about 25
percent in the year 2010. The reductions for oxides of nitrogen would fall within the
limits. According to Figure 1, assuming that the recommended control measures and
vehicle emission standards set by the state will be effective, future emissions for both
pollutant categories will be lower in the future, even with projected growth. However,
countywide data from 1982 through 1989 show upward trends in air pollution which will
be hard to reverse (Figure 2, attached).
The Clean Air Plan includes recommendations for land use and circulation (Appendix
E). Several features of the city's draft update anticipated and reinforce the
recommended measures:
- Maintaining a compact community inside the urban reserve line, with open space
around it;
- Allowing residential and commercial development that are relatively dense
compared to other communities in the County, and close to each other;
- Encouraging an intensely developed, mixed-use core area which is served by local
and regional transit;
- Trying to improve the job/housing balance.
Planning Commission recommendation
In addition to the broad land-use strategies noted above, the Commission's recommended
draft includes a section (policy 1.15) on air quality calling for the following.
1
- Consultation with the APCD on all significant development;
Adoption of an updated, countywide air quality plan;
Use of a model to evaluate air quality impacts of adopted plans and proposed
amendments;
Reduction of general-plan development capacities throughout the County if
measures to control air pollution at each source prove to be inadequate to offset
growth;
Various transportation measures;
A mitigation fee for new development.
Alternatives to Commission recommendation
It is difficult to identify distinct alternatives to the Commission's overall recommendation
since any approach will involve whatever Clean Air Plan is adopted by the County, which
in turn will call for action by the City. The basic choice, which the City cannot make
by itself, is how heavily we should rely on each of the two components to protecting air
quality: (a) controlling overall growth of pollution sources and (b) controlling the
production of pollution from each source through such means as location, transportation
modes, and alternative fuels, materials, and emission-control hardware.
For any given controls at the source, more people and economic activity will result in
more air pollution. On the other hand, proposed source controls may allow the area to
accommodate projected growth without significant harm to air quality.
Environmental and economic questions
Staff believes the basic questions have been answered by the draft Clean Air Plan or will
be answered in the general plan update EIR (scope reviewed by Council August 20).
Council should identify any additional specific information needed to give direction on
the Land Use Element update.
gmD:AIRQ-CCWP
2
I.qq
FIGURE 1 FORECAST EMISSIONS COUNTYWIDE
REACTIVE ORGANIC GASSES FROG)
35
so
T 25
0
n
3
20
c
r ..............
D
aIQ .................. ........................ ....................
Y
0
1987 1994 1997 2000 2010
Year
WITHOUT CAP WITH CAP REQUIRED BY CCM
OXIDES OF NITROGEN (NOX)
80
50; .................................
T
0 40
n
30
e
r
D 20
a
y
10 . ..... .............. .......
01 1 1
1987 1994 1997 2000 2010
Year
WITHOUT CAP WITH CAP REQUIRED BY CCM
M/O
FIGURE 2 INDICATORS OF AIR QUALITY: 1982 - 1989
COUNTYWIDE
DAYS EXCEEDING THE STATE OZONE STANDARD
10
8I
6
4
2
0
1962 1983 1984 1985 1986 1987 1988 1989
ozoxz (ppm)
0.20 MAXIMUM HOURLY
OZONE CONCENTRATIONS
0.13
0.10-
0.05-
NUMBER
.100.05NUMBER OF HOURS _*.o 0 . 07 PPM OZONE
o.00 1] #
HOURS
1982 10153 1964 3965 1986 1067 1066 1969
70o
600
Soo
400
300 -
200
100 -
0
1962 1903 1984 1985 1986 1967 1986 1989
Issue: Sustainable Community
Description
Most people using the term today would consider a "sustainable community" to be one
which can continue its level of resource use generation after generation. A truly
sustainable community uses resources no faster than they are renewed. Production of
pollution and consumption of nonrenewable resources would beminimised.
Encroachment into remaining natural areas would be minimised. A .sustainable
community emphasizes reuse and recycling, efficiency, and use of renewable resources.
A sustainable community is economically stable in the long term. It avoids 'boom and
bust" cycles. It has what can be called a "stead-flow" economy, seeking prosperity without
growth. However, a sustainable community need not be isolated or self sufficient (see
note #1 at end). There will be movement of people and ideas in and out of the
sustainable community. There could be extensive trade, with all parts of the world, in
goods and services that are derived from renewable resources: information, capital,
products of sustained-yield forestry and farming, products from recycled materials, and
energy from solar, geothermal, and biomass sources.
A sustainable community would be comprised of people whose individual livelihoods
would be sustainable: an economy anchored in conserving and enjoying the region's
resources, rather than seeking more. People would be moderate and selective in their
personal consumption, considering its consequences for the environment. Maintenance
services, in the broadest sense, would completely replace "expansion services."
Compared with an economy based on past patterns and geared mainly to using
nonrenewable resources, a sustainable economy would be more innovative and flexible
in the near term, as it anticipated resource limits rather than being forced to respond
to them as they occur. Total population or overall economic activity in a community that
is not sustainable will increase until some critical resource threshold is exceeded, and
then the economy will "crash" as population or levels of resource consumption respond
to intolerable pollution levels or lack of resources.
The greatest challenges to any community seeking to become sustainable are:
- Until worldwide and national populations are stabilized, accepting a fair share of
population growth (see note #2);
- A fair distribution of opportunities among the community's residents, so that those
with the least wealth do not bear a disproportionate burden for living within
resource limits;
- Making a smooth transition from ways of earning a living that depend heavily on
use of nonrenewable resources (which nearly all of us do, directly or indirectly).
Some aspects of San Luis Obispo (like most of our state and country) have not
developed on a sustainable basis. Water use has increased above reliable, long-term
yields. Air pollution has exceeded standards to protect health and enjoyment. We have
1
become dependent on nonrenewable energy sources (see note #3).
On the other hand, San Luis Obispo is moving toward sustainability in several areas.
Our sewage will be treated so that there will be more options for reusing the water, and
less pollution of the creek and groundwater. The Water Allocation Regulations have
been implemented, aiming for no net increase in water use as new development can
proceed only if it reduces water use in existing development. More of our used paper,
metal, glass, and plastic is being recycled. Our bus system can be converted to natural
gas (renewable methane) and we are pursuing people-powered transportation through
improved bikeways and trails.
To the extent that the city's finances depend on current consumption patterns, moving
further toward a sustainable community will require a shift from consumption-tax
revenues to user fees and assessments, and perhaps more modest spending by the city.
Planning Commission recommendation
Key features of the Planning Commission Draft which may make the city more
sustainable are:
- Maintaining a City population growth limit about the same as the projected growth
rate for the population of the country as a whole (policy 1.2);
- Keeping development in balance with available resources and environmental limits
(policy 1.1);
- Keeping the gap between housing demand and supply from growing wider (policies
1.LD and 1.2.);
- Maintaining a limit to the City's outward expansion (policy 1.2);
- Keeping the land outside the urban limit in open space uses, including agriculture
(policy 1.9);
- More effectively managing growth within the region (policies 1.6 through 1.11);
- Creating compact, diverse neighborhoods which are easily accessible on foot,
bicycle, and bus, and which preserve the most sensitive natural areas (policy 2.17);
- Emphasizing reuse and more efficient development within areas already committed
to nonresidential uses, rather than expansion of commercial and industrial areas
(policies 3.3, 3.10, 3.13, and 3.23).
A key feature of the draft which may not help the community become more sustainable
is this: to the extent that it works against making job opportunities and housing
opportunities more equal, trying to be the focus of the County's government,
entertainment, cultural, and specialized retail and medical services, while county
population grows at two to three percent per year, and the city's population grows at one
2
/.,92
percent per year (goal 17 and policy 1.2). Accommodating trade and services in
proportion to a County population that would be growing at twice the rate of City
population is bound to displace additional housing demand to surrounding areas. (There
is also an issue of intent conflicting with practice: the draft has been criticized for not
providing the nonresidential development capacity needed to remain a regional trade and
services center, despite the stated intent of doing so.)
Alternatives to Commission recommendation
Alternatives to the Commission recommendation which could make the community more
sustainable include:
- Reducing nonresidential development capacity, increasing residential development
capacity, or both, to make the build-out capacities more nearly equal.
- Including more specific standards for solid waste recycling, water conservation, or
energy conservation, though these topics are covered in various state standards and
other City "management plans."
Environmental and economic questions
1. What specific steps can the City take to "Provide a resilient economic base, able
to tolerate changes in its parts without overall harm to the community?" (goal
#14)
2. Can a relatively painless transition to a steady-flow economy be made within the
planning period of about 25 years?
3. If San Luis Obispo wishes to become "sustainable," what constraints must the
community address considering the City's place within regional and statewide
systems for governance and the distribution of goods and services?
Notes
1. A recognized spokesman for the "sustainable" approach has criticized some thoughts
of "saving the planet," suggesting the we should each focus on saving our own
neighborhood and community. He suggests having cities depend as much as possible on
the resources of the surrounding region, rather than imports from distant areas. He
favors this because he believes people care more about resources that are close to home,
and would therefore take better care of nearby resources such as forests, farmland, and
groundwater that sustained them than if such resources were "out of sight, out of mind."
(Wendell Berry, "Out of Your Car; Off Your Horse," The Atlantic. February 1991.)
2. Two realms of democratic choice may be in conflict: (a) accommodating all those
who would prefer to live in the community, rather than where they live now, and (b)
respecting the preference of a majority of the community's current residents not to grow
3
l-�
to the extent required to accommodate all who would prefer to live in the community.
This conflict becomes more acute as the state's urbanization continues. Small towns
and cities become more rare and more attractive as metropolitan areas spread outward
and become more intensely developed. Some people's choices are increased by having
the small towns grow; other people's choices are reduced by the same growth.
There is a further trade-off of choices in the sustainability question: Some people
deliberately restrain their production of pollution and consumption of nonrenewable
resources —and are willing to forego local shopping and entertainment opportunities-- to
maintain the quality of neighborhoods and of the natural environment within a
community. To the extent that additional growth cancels out the benefits of such self-
control, those people must move to find the quality of life they were willing to "sacrifice"
for in their preferred location.
3. A question has been posed about why a community would aim for self-sufficiency
with some resources (such as water) and not others (such as petroleum products or
metals). This probably would not be a productive discussion unless we consider the
source and re-use potential of each resource. For example, water can be recycled locally;
nearly all new water sources outside the area require reduction of water use for some
other purpose (agriculture, water quality in streams or bays). Most who would favor self-
sufficiency in water supply would also favor minimum use of non-recycled petroleum
products. Nearly all metals can be recycled, and while the extraction and processing of
ore may have undesirable impacts, the ores would not be diverted from sustaining some
other natural or economic function.
gmn:susrnnv.we
4
Issue: Neighborhoods
Description
While we have become very mobile, over a lifetime most of us still spend most of our
time in a neighborhood. A neighborhood can be defined as the area surrounding a
dwelling site, for which the occupant feels a greater sense of territory or common
characteristics than the city as a whole. Neighborhoods typically are separated from
other neighborhoods by different uses or physical features which interrupt the continuity
of streets and building patterns. Neighborhoods may have a focus such as a school, park,
or commercial area. Recently, citizens have shown renewed interest in:
1. Protecting existing residential and mixed-use neighborhoods from incompatible new
buildings, increased traffic, and the effects of poorly maintained properties and
rowdy occupants.
2. In new development areas, creating the function and feel of traditional
neighborhoods, rather than simply collections of adjacent, separate projects.
Planning Commission recommendation
Currently, the City has no comprehensive policy on neighborhoods. The Planning
Commission draft includes some 18 policies on neighborhoods generally, and 20 on
downtown specifically (pages 23 through 25 and 45 through 47). The draft describes the
desired features of new neighborhoods and of additions to existing neighborhoods.
Neighborhoods other than the named major expansion areas would be identified as
planning units. In all neighborhoods, streets, sidewalks, and yards would be deliberately
used to achieve a sense of place and connection with the rest of the community.
Alternatives to Commission recommendation
1. Determine whether there is a need for planning units smaller than the City as a
whole, and if not continue to emphasize citywide character (possible exceptions:
downtown; major expansion areas).
2. Determine that it is appropriate for individual development projects to have their
own sense of place separate from surrounding development, and that continuity
within neighborhoods is less important.
3. Revise the details of the approach to neighborhood planning. An example of such
detail revisions is the attached June 18, 1991, statement from Residents for Quality
Neighborhoods.
Environmental and economic questions
Council and staff have not identified questions relating to neighborhoods which will
require answers in addition to those provided for other issue topics, such as traffic.
gmD:NBHDSCCwr
1
all �OLeAQ,
Residents for Quality Neighborhoods
P.O. Box 126an . San l_ Qbi��r 93406M��A JA Dsnotce z;:;o�by Lead Person , DATE
?.'spond by: A
/`�auncd PI n �C r'!
CGA �yr
.PC;y �a f►'1A r1
.,r:;. .
Y%OLS
r
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-.1 T I -nuni` 7 i
11. 7.tV D't .z.L ri LUIS Ub I S 0 C.
=i1 P.a; m SL .
oan LL17S CJ01 S 0 0 Cal i+ornla
RE: DEVELOPMENT AND CONSERVATION Or NEIGHBORHOODS
r'OLICIES. . .LAND USE ELEMENT UFLiA'E.
Clear Council Members:
The enclosed material is the efforts of a committee comoosetl of several
community reoresentatives trom such organizations SUCh as e=]cents
tarl;uaii tv Ne7gnorhoods, San Luis Drive Association and the Friends of
�re+umo Cre.=i: , es well as individual Community residents.
.:iter several mon*ns of meetings to 01SCUSE tnese C+_i 7CIc9 , :e 1-JI-Ir
r_1C:1nion rna'_ th:o enclose❑ -Man-4e5 better re4'ierre tn:_ rCnCSC:' Jt ri_iai . .
in the orotection and enhancement of nelgnbornooc= .
^ Ire eF nCI'e tnat b .4 rpReme
-ie:•elocmera a.nd
Conservation of Neighborhoods and movea to 'n_
�_7rCV i aC]Cn dement for the reason stated in the Cnan(zes.
We WOVIC aooreciate vour consideration of tnese ChanCeG when ';cu again
OISCLIS. the o011C7e= +or rnis oortion of the Land Use Element Upoarp
zlincereiv .
Dotty Conner, L:na7roerson , � 'V11D
Residents for Quality Neignborhoods R
cc : Arnold Jonas, Community Development Director
JUN 2 1991
Glen Matteson , Planner .}ivC0x* Gp
San Luis drive Assoc . Friends of FretUmO Creel: sno:LuI' M'
/ Alf
Land Use Element Update Planning Commission Draft
DEVELOPMENT AND CONSERVATION OF N0J6$W VP NEIGHBORHOODS
POLICIES
Neighborhood Protection and Enhancement: (Refer to page 23)
2.1 The city should assist in identification and designation of geographic
10%^tif,# Am jfoRXggny neighborhoods. The city should assist in neighborhood
planning to preserve and YAXZ pyoppX,e jrqrzg0wrkjojf pXXrs,, ,tp facilitate
development of a sense of place within neighborhoods.
2.2 The city should encourage and support the formation and continuation of
neighborhood groups, composed of neighborhood residents.
2.3 Neighborhoods should be protected from intrusive traffic. All street and
circulation improvements should favor the pedestrian and local traffic.
Vehicle traffic on residential streets should be slow,
4A All areas should have a street and sidewalk pattern that promotes
neighborhood and community cohesiveness. There should be wide and continuous
sidewalks to provide unbroken pedestrian paths throughout the city. Note:
Delete from this section and move to policies regarding Circulation Element.
Reason: not appropriate; does not deal with neighborhood protection and
enhancement. Established neighborhoods may not want sidewalks; this
statement might be incorporated into new neighborhoods.)
2.5 The city should view streets, sidewalks, and front setbacks as a continuous
open space that links all areas of the city and all land uses. These
features should be designed as amenities for light, air, social contact, and
community identity. (Note: Question the purpose of this policy. How does
it fit into neighborhood protection and enhancement? How do streets,
sidewalks, and front setbacks act as open space?)
2.9 To foster neighborhood protection and enhancement, the city will:
(Refer to page 31)
A. Assist in identifving geographic neighborhoods, and help to preserve and
enhance their character; X446Wy ppeirgrR WR gxborXaAA
Y,2AAs
B. )encourage the formation of voluntary neighborhood groups, r resxd1Wva/
4�zR Jder-oirr XZVO Y¢d garYy XA 7k¢ preAess.
C. Involve residents early in the planning, development and review process
of projects with neighborhood impact. Provide neighborhood residents
and property owners with written notification of such development and
protects, �S,6XgRSYR IaxeitRPX 1'0 )'gjp "77y vuY jZe" K
R� 0&rg, 'Zo Yoxzek ppAFgA1%d pirginyx XRF vvi kboxxj,od �PRAXg, �A�t
9r0W axe RRrg) rkoed 77vfcegrYaR Vet OxAnR4WAX.
D. Assign a planning staff member to assist, when necessary, the programs
referred to in Section 2.9; A, B and C in order that neighborhood
residentrg oups will have a contact within the city to provide
information and assistance with neighborhood protection and enhancement.
EXCERPT FROM 7-31-90 C.C. AGENDA REPORT
LAND USE ELEMENT UPDATE
ISSUES RAISED BY CITY COUNCIL
Over the last two years, the council has referred to the Planning Commission and
staff the following specific issues to be resolved in the update of the general plan'
Land Use Element.
Issue: Replacing houses with offices in the central area
Background
The city has been concerned with these conversions for several years. Before 1977,
the medium-high density residential (R-3) zone, which applied to many blocks around
the downtown core, allowed offices with a use permit. The use permits were
routinely approved, resulting in loss of housing and change of neighborhood character.
In the 1977 general plan update and citywide rezoning, areas which had been
substantially developed with offices were zoned for that use, while most areas that
were largely residential were zoned to prevent further office development. The blocks
between the county courthouse and Highway 101 between Santa Rosa and Osos
streets, and some blocks along Pacific Street were exceptions, and remained available
for office conversions even though they were largely residential.
In 1986, the council asked for another evaluation of office conversions, looking at
both the loss of housing and the traffic and privacy impacts of large, new office
buildings in the office (0) zone on residents in neighboring residential zones. That
effort resulted in the 1987 adoption of a Zoning Regulations amendment requiring a
use permit to convert an existing building to office use or to build a new office
building in the O zone, with three new findings dealing with location and design, but
not housing availability.
Houses in the O zone around downtown continue to be converted to offices and
replaced by new office buildings. This reconsideration is a 1990 council work
program objective.
Planning Commission recommendation
The commission's position is stated on page 45 (Item 4.2) of the Land Use Element
Update - Planning Commission Draft. Basically, it is this:
The city would identify office-zoned areas which are occupied mostly by housing, and
redesignate them for residential use. It would designate for office use the areas
which are completely or almost completely developed with offices. For the areas
which are a mix of residential and office uses, the city would apply a
"residential/office" mixed-use designation. This designation would allow existing
offices to be maintained and replaced. However, enlarging an office, or replacing a
residential use with office use, would require replacement dwellings to be built on site
or somewhere within the "R/O" zone, or in the downtown office or commercial zones.
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The new "R/O" designation was supported as a concept, but the commission
postponed applying it to certain areas. The ratio of new office space to replacement
dwellings is yet to be determined. The commission also discussed establishing an in-
lieu fee as an option to actual construction of dwellings, but did not make a specific
recommendation.
Evaluation
Housing Stock
At the beginning of 1990, staff looked at some 40 blocks in the central area and
found about 220 remaining dwellings in the O zone, consisting of 90 houses and 130
apartments. These dwellings represent a little over one percent of the city's housing
stock, or about 15 months of residential construction at the one-percent annual rate
that the general plan calls for. In seven whole or half blocks zoned O, residentially
used parcels made up at least one-half of the total parcels (large working map will be
available at meeting).
Costs
An informal survey of classified advertisements and property-management agencies
found that rents for downtown houses are about the same or slightly higher than for
similar size houses outside the downtown area. There were not enough current sales
prices to give a valid comparison, though it appears that high land values due to
location and expectations of office use prevent these houses from being more
affordable than citywide averages, despite their age and smaller size in comparison
with houses in new tracts.
Office Demand and Supply
City and county population growth create demand for offices by providers of various
kinds of business and professional services. Also, San Luis Obispo is an attractive
relocation area for small firms and self-employed professionals serving metropolitan,
state, and even international markets. Government agencies also demand office space.
The county is looking for downtown sites for offices, to consolidate and expand
activities now located in leased space. Office space throughout the city has been
provided by converting houses, replacing houses with new office buildings, and by
constructing new buildings in office, commercial, and public-facility zones.
In 1986, consultants prepared an office supply and demand study for the city, which
concluded:
1. There were about 1.1 million square feet of office space in the city (the
current estimate is about 1.3 million square feet);
2. Office construction was averaging about 30,000 square feet per year
(since 1986, it has been about twice that rate);
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3. Under 1986 rules, properly zoned sites could accommodate about
374,000 square feet of additional public and private office space (the
current estimate is about 800,000 square feet);
4. Residential conversion accounted for about one-fifth of all occupied
office space (197,000 square feet), while houses in the office zone could
be converted to another 192,000 square feet (roughly 110,000 square-feet
conversion potential remains).
5. The strongest demand for office space would be for high-amenity spaces
with at least 2,500 to 5,000 square feet (staff has not reevaluated this
assessment).
6. Total office space demand in 1990 would be about 1.2 million square
feet; in 1995 it would be about 1.3 million square feet (considering
projects under construction and vacancy rates, these projections were
accurate; staff has not done further projections).
7. Continuation of 1986 office development policies would lead to a
shortfall of office space for large tenants and "office parks."
8. These options were evaluated:
A Continue existing policies.
B. Allow offices in the C-N zone. (This idea was rejected, as it had
been several times before, because in San Luis Obispo offices
serve citywide or regional, not neighborhood, demands.)
C. Allow offices in the C-S zone. (This has since been done by
adding a "PD" ordinance provision allowing offices with tenant
spaces larger than 2,500 square feet, and excluding financial, real
estate, medical, and legal services; several such projects have been
approved.)
D. Allow offices in the M zone. (This has been done, as for the
C-S zone.)
E. Increase the intensity of permitted office development in the O
zone. The use permit requirement adopted in 1987 has a
potential for the opposite result, a reduction in the intensity of
development.)
F. Promote an 'office park." (With the C-S and M zone changes,
Higuera Commerce Park and other sites have become available
for such development. However, the city has not promoted an
office park as such, because it is considered growth-inducing. The
city opposed a county application which would have established a
light industrial/office development in the Irish Hills.)
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G. Allow medical offices in the PF zone. This has not been done,
but the council has approved a rezoning to approve a recovery
care center next to County General Hospital.)
H. Accommodate office development on city owned property. (The
proposed Court Street project would have three floors of offices)
I. Increase the intensity of office development in commercial zones.
(The C-C and C-R zones continue to allow fairly intense office
development).
Traffic Considerations
A 1,200 square-foot house generates about 10 trips per day; converted to an office it
would generate about 30 trips per day. A 3,000 square-foot office building
replacement would generate about 75 trips per day (all from DKS Associates, SLO
traffic model, December 1989). All other factors being equal, converting or replacing
the remaining O-zoned houses to offices would therefore increase downtown traffic by
1,800 to 5,800 trips per day.
Jobs/housing Considerations
Each converted dwelling reduces the city's residential capacity by one or two adults,
and increases its jobs capacity by four to six workers. A 3,000 square-foot
replacement building would add 10 to 15 workers. Therefore, converting or replacing
the remaining O-zoned houses would further imbalance the jobs/housing relationship
by 180 to 1,300 employed residents, resulting in additional commuting.
Options
In addition to the commission's recommendation, the city could:
A. Make no changes. The remaining dwellings in the O zone would continue to
be converted or replaced.
B. Require additional findings for use permits. Existing use permit considerations
would be broadened to include a finding that conversion or replacement would
not reduce affordable housing opportunities or further imbalance jobs and
housing. This approach has the disadvantage of requiring a determination in
each case. Each case by itself would not be significant, but cumulatively, they
could be. Given the city's desire to at least maintain, if not improve, the jobs-
housing balance, making this finding would be difficult. (The city could also
set a standard, such as no conversions when the residential vacancy rate is less
than a certain percentage.)
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