CITY COUNCIL STAFF REPORT
MEETING DATE: February 15, 2017
PREPARED BY: Gina Paolini, Principal Planner/Development Services Department
APPROVED BY: City Manager
Title
APPEAL (AAE2017-0002 AND AAE2017-0003) OF PLANNING COMMISSION'S DISTRIBUTION OF RESIDENTIAL DEVELOPMENT CONTROL SYSTEM (RDCS) BUILDING ALLOTMENTS FOR RDCS2016-0014: LAUREL-DEROSE AND RDCS2016-0018: CONDIT-PRESIDIO EVERGREEN FOR FISCAL YEAR 2018/19 WITH REQUEST THAT CITY COUNCIL AWARD SECOND YEAR BUILDING ALLOTMENTS FOR FISCAL YEAR 2019/20 AND REDISTRIBUTING UNUSED RESIDENTIAL DEVELOPMENT CONTROL SYSTEM ALLOTMENTS AWARDED IN FISCAL YEARS 2016/17 AND 2017/18
END
RECOMMENDATION(S)
RECOMMENDATION
1. Adopt a Resolution denying appeals and reaffirming the distribution of the Residential Development Control System (RDCS) Building Allotments for Fiscal Year 2018/19;
2. Adopt a Resolution re-distributing unused RDCS allotments to eligible high-scoring projects from Fiscal Years 2016/17 and 2017/18; and
3. Determine that the projects are eligible ongoing projects and direct the Planning Commission to include these projects as ongoing for Measure S for Fiscal Year 2019/2020.
BODY
COUNCIL PRIORITIES, GOALS & STRATEGIES:
Ongoing Priorities
Protecting the environment
Preserving and cultivating public trust
2016 Focus Areas
Planning Our Community
Developing Our Community
POLICY CONSIDERATIONS:
1. The City Council authorized a one year RDCS competition for Fiscal Year 2018/19 on May 25, 2016. Should the Council grant the appeal, and direct staff to return with a resolution before March 1 authorizing and awarding additional allotments into a 2nd year?
2. Both appellant projects would be considered ongoing projects under current City Council policy. Measure S criteria has not been determined and the City Council policy regarding ongoing projects remains in place. Does the City Council want to direct the Planning Commission to assign up to 15 allotments each to the appellant projects in accordance with Council policy for Fiscal Year 2019/20? Or should staff return with a resolution terminating the current Council Policy?
3. Should unused and unexpired allocations for FY 2016/17 and 2017/18 that will not be used, be reallocated to the next highest scoring project that can use the allocations?
REPORT NARRATIVE:
Two of the applicants in this year's RDCS competition, TRI Pointe Homes and Presidio Evergreen LLC, are appealing the final award (distribution) of building allotments as issued by the Planning Commission on January 10, 2017, using the appeal process set forth in Chapter 1.20 of the Morgan Hill Municipal Code. Appeal procedures are established within the RDCS for the review of scoring and for general plan/zoning consistency review. The RDCS neither established nor precluded an appeal procedure for the final award of building allotments. When appeal procedures have not been specifically provided for within another section of the Code, the appeal procedures provided for within Municipal Code Chapter 1.20 may be used. The appellants submitted their appeal requests within the fifteen day appeal period set forth in that Chapter.
Planning Commission Action
The Planning Commission approved Resolution No. 17-01 (Attachment 3) at the January 10, 2017 meeting, awarding residential building allotments for Fiscal Year 2018/19 pursuant to the noted distribution amongst RDCS applicants. As part of the award process, the Planning Commission made adjustments to the number of building allotments within the set-aside categories and awarded a specific number of building allotments to each of the competing projects, as authorized by City Council Resolution No. 16-080 (Attachment 4) and Section 18.78.125 (Award and issuance of allotments) of the Morgan Hill Municipal Code. For the Fiscal Year 2018-2019 competition, 250 building allotments were distributed among 12 projects.
The Appeals
The two projects for which the City received appeals (RDCS2016-0014: Laurel DeRose and RDCS2016-0018: Condit-Presidio Evergreen) are each discussed separately in the following analysis.
1. RDCS2016-0014: Laurel-DeRose
Final Score: 176.5
Request: 45 allotments
Award: 11 allotments
The appellant, TRI Pointe Homes, has filed an appeal of the award of building allotments because the Planning Commission did not fully award the project or provide second year building allotments for Fiscal Year 2019/20 to complete the project. The appellant is requesting the City Council award an additional 34 building allotments to complete this project. The appellant's letter of justification has been provided (Attachment 5).
TRI Pointe Homes has competed in the RDCS for three consecutive years in the open/market category. Although the project has not been amongst the highest scoring projects, it has received a high enough score to obtain building allotments all three years, with a total award of 31 building allotments. The project buildout is 65 units. The project has received all discretionary approvals and has received approval of a Tentative Map for all 65 units, and has filed a Final Map with the City for five lots. The project has a "commencement of construction" deadline for the first five allotments of June 30, 2017, which they are expected to meet.
The appellant has been participating in the Planning Commission workshops for Measure S and has participated in the preliminary testing of the Measure S competition manual. Concern has been expressed with the transition from Measure C to Measure S, and obtaining a qualifying score under Measure S to complete the project as designed. The appellant is not requesting that the City Council adjust the Planning Commission distribution of Fiscal Year 2018/19 building allotments but rather provide 34 allotments from Measure S to complete the project.
Pursuant to City Council Policy CP-09-03, when RDCS competitions occur annually, a project which has completed all planning entitlements (Zoning, Tentative Map, Development Agreement, and Site Review) within one year of receiving allotments may be eligible as an on-going project for the following year. The Laurel-DeRose project has completed all planning entitlements within the required one year period and is therefore eligible to receive additional allotments as an ongoing project. On-going projects may receive up to 15 allotments for each fiscal year outside of the RDCS competition process. Therefore, TRI Pointe's Laurel - DeRose project could be considered an ongoing project by Measure C. With the transition from Measure C to S, if deemed an ongoing project, the City Council could direct that this project be considered for allocations from the first Measure S competition year. Because Measure S has a maximum allocation of 215 units per year, any ongoing allocations would then be required to be deducted from that total.
2. RDCS2016-0018: Condit-Presidio Evergreen
Final Score: 178
Request: 102 allotments
Award: 88 allotments
The appellant, Presidio Evergreen LLC, has filed an appeal of the award of building allotments because the Planning Commission did not provide second year building allotments for Fiscal Year 2019/20 to complete the project. The appellant is requesting the City Council to award an additional 14 building allotments as an ongoing project to complete this project. The appellant's letter of justification has been provided (Attachment 6).
Presidio Evergreen LLC has competed in the RDCS for two consecutive years in the large Multi-family category. In the 2015 RDCS competition, the project was awarded allotments for two Fiscal Years 2017/18 and 2018/19. In the 2016 RDCS competition, although not the highest scoring project within the category, the project did receive a high enough score to be awarded an additional building allotment for Fiscal Year 2018/19. The project has received a total award of 168 building allotments. The project buildout is 182 apartment units. The project has received all discretionary approvals.
The appellant is not requesting that the City Council adjust the Planning Commission distribution of Fiscal Year 2018/19 building allotments but rather provide 14 allotments, as an ongoing project from Measure S to complete the project.
The Presidio Evergreen project has completed all planning entitlements within one year of receiving allotments as required in Council Policy CP-09-03. The project is therefore eligible to receive allotments as an ongoing project. With the transition from Measure C to S, if deemed an ongoing project, the City Council could direct that this project be considered for allocations from the first Measure S competition year. Because Measure S has a maximum allocation of 215 units per year, any ongoing allocations would then be required to be deducted from that total.
Residential Development Control System Transition from Measure C to Measure S
The appellants have based their appeal on complications with the transition from Measure C to Measure S and the Planning Commission's inability to provide second year building allotments based on City Council Resolution 16-080, which only provided for a one year competition.
On May 18, 2016 the City Council considered the 2016 RDCS biennial review and adoption of set aside allotments as required by Section 18.78.030 (Development Allotments) of the Morgan Hill Municipal Code. At that meeting, the City Council established a 250 annual building allotment and agreed to a two year competition for the large multi-family category allowing 133 allotments over two years.
On May 25, 2016, the City Council re-considered the biennial review and adoption of set aside allotments for the 2016 RDCS competition. Several issues were raised during the re-consideration hearing:
§ Impact and unknown consequences on Measure S when awarding second year allotments;
§ Annual building allotment for Measure S had not been determined; and,
§ Concern with second year being exclusive for multi-family.
Following a lengthy discussion, the City Council methodically and deliberately authorized a one year RDCS competition for FY2018/19. As the appellants have stated in their appeals, the City Council has, in the past, authorized allotments into a second or third year to allow higher scoring projects to be completed. However, due to concerns with placing constraints on a new RDCS process (Measure S) and the potential for unforeseen consequences, the City Council did not authorize a multiple year competition to complete projects. The City Council made this determination in accordance with Section 18.78.183 (Procedures) where no later than May of each year preceding an allotment evaluation, the Planning Commission will provide a recommendation and the City Council will establish the total number of housing units to be awarded and the number of units to be allotted for each type of housing.
Subsequently, on November 8, 2016 the voters within the Morgan Hill community adopted Measure S, the replacement of the prior RDCS Ordinance. This ordinance repeals and replaces in its entirety the prior ordinances, previously codified in Division IV (Residential Development Code) of Title 18 (Zoning) of the Morgan Hill Municipal Code. The transition provisions specified in Section 18.78.030.C.1 (Previously Approved Allotments) of the Morgan Hill Municipal Code allows for allotments awarded and exercised prior to March 1, 2017 to remain valid and not affected by the new ordinance. To comply with the transition provisions, the 250 allotments set aside for FY2018/19 were to be awarded no later than March 1, 2017. All other actions and approvals relative to the RDCS must comply with the provisions of the new Measure S ordinance.
On January 25, 2017, a progress report was presented to the City Council on the Draft Competition Manual. It was noted in the January 25, 2017 staff report that the goal of this year's RDCS awards was to complete as many projects as was possible under the current RDCS (Measure C) criteria. There were four projects that were not completed, which included the two appellant projects. The City Council did recognize that these projects are ongoing and that criteria should be developed to assist with completing the projects under Measure S, without requiring redesign of fully entitled projects.
Both appellant projects would be considered eligible ongoing projects that are entitled to receive up to 15 allotments under current Council policy (Measure S criteria has not been determined as part of the Competition Manual development and Council policies have not been updated) beginning with the 2019/20 competition.
The Planning team has also tracked projects that have developed or have approved Development Agreements that will not use all building allotments awarded. Based on this evaluation, the following unused allotments have been identified:
|
Project Name |
Fiscal Year |
Extra Allotments |
Commencement Deadline |
|
Monterey-Central (MC-13-14) |
2016-2017 |
2 |
June 30, 2017 |
|
San Pedro Presidio-Mana (MC-15-11) |
2017-2018 |
1 |
June 30, 2018 |
|
Dunne-MDMH (MC-13-16) |
2016-2017 |
1 |
June 30, 2017 |
|
Monterey-Presidio (MC-13-15) |
2015-2016 |
2 |
Dec. 30, 2017 June 30, 2017 |
|
|
2016-2017 |
6 |
|
|
Watsonville-Dividend |
2016-2017 |
4 |
June 30, 2017 |
The availability of these allotments has occurred for a number of reasons, primarily the final site design and layout of projects once they complete Site and Architectural review process which happen months after RDCS competition. RDCS competition does not grant final project approvals; changes often occur to improve projects after award of allotments. For example, the Monterey-Central project reduced the number of units from 14 to 12 to accommodate a mix of single family detached and townhouse dwellings requested by the Planning Commission. The Watsonville-Dividend project was over allocated because the number of existing replacement homes had not been confirmed and could be later counted as replacement units.
These allotments are therefore eligible to be awarded to a project with a high RDCS score which competed within the same fiscal year. The projects identified to potentially receive these allotments would be:
|
Project Name/Category |
Eligible Fiscal Year |
Needed Allotments |
Score |
|
Cochrane-Borello (Open/market) |
2013-2014 2015-2016 2016-2017 2018-2019 |
173 |
185.5 174.5 170.0 180.5 |
|
Laurel-Tripointe (Open/market) |
2016-2017 2017-2018 2018-2019 |
34 |
167.0 174.0 176.5 |
|
San Pedro-Presidio Evergreen (Large multi-family rental) |
2017-2018 2018-2019 |
14 |
173.5 178.0 |
The Cochrane-Borello (Toll Brothers) project qualified to receive one additional Fiscal Year 2015/16 building allotment and all of Fiscal Year 2016/17 building allotments because they had the next highest score for that competition year requiring allotments. Toll Brothers considered the receipt of these allotments carefully and the commencement date. Toll Brothers determined that they would be unable to commence with the additional units by the June 30, 2017 deadline and declined to receive the additional building allotments.
The appellant, TRI Pointe Homes, qualifies for 13 Fiscal Year 2016/17 building allotments and one Fiscal Year 2017/18 building allotment, as the next highest scoring project for those competition years requiring building allotments. The appellant has indicated that they would like to receive the unused allotments and they can commence construction by the specified deadline. If awarded, this action would reduce the number of ongoing allotments needed for the project through Measure S to 20 building allotments.
Conclusion
The appellants are requesting that the City Council provide for second year RDCS building allotments by awarding RDCS2016-0014: Laurel DeRose 34 building allotments and RDCS2016-0018: Condit-Presidio Evergreen 14 building allotments. As discussed, facts have not been provided to adequately support this request. For the reasons set forth above, it is recommended that the City Council adopt a resolution denying the appeals. However, the City Council may direct the Planning Commission to include these projects as ongoing for Measure S for Fiscal Year 2019/2020 as they continue their work on the Draft Competition Manual and consider set aside priorities.
It is also recommended that the City Council adopt a resolution redistributing the 14 unused allotments to TRI Pointe Homes, as the next qualifying project.
COMMUNITY ENGAGEMENT: Inform
The Planning Commission awarded building allotments at its meeting on January 10, 2017. A notice of the appeal hearing was mailed to the property owners within 300 feet of the subject properties and published in the Morgan Hill Times. In addition, all developers taking part in the RDCS competition were notified of the pending appeals.
ALTERNATIVE ACTIONS:
The Council could decide to grant the appeal and award RDCS2016-0014: Laurel DeRose 34 building allotments and RDCS2016-0018: Condit-Presidio Evergreen 14 building allotments thereby reducing the maximum available building allotments for Measure S for Fiscal Year 2019/20 to 167 allotments.
PRIOR CITY COUNCIL AND COMMISSION ACTIONS:
The Planning Commission awarded building allotments on January 10, 2017. The staff report and allotment distribution for FY2018/19 has been provided.
FISCAL AND RESOURCE IMPACT:
The City Development Review functions are cost-recovery, with fees collected from applicants to cover cost of services. These fees have been collected.
CEQA (California Environmental Quality Act):
Not a Project
The issuing of RDCS residential building allotments is not a project subject to CEQA
LINKS/ATTACHMENTS:
1. Resolution-Appeal
2. Resolution-Redistribution
3. PC Resolution 17-01
4. CC Resolution 16-080
5. TRI Pointe Homes Appeal
6. Presidio Evergreen LLC Appeal
7. Planning Commission Staff Report
8. Summary of 2018/19 RDCS Building Allotment Awards