Government Code Section 65583.2(c) requires, as part of the analysis of available sites, a local government to demonstrate the projected residential development capacity of the sites identified in the housing element can realistically be achieved. Based on the information provided in subdivision (b), a city or county shall determine whether each site in the inventory can accommodate some portion of its share of the regional housing need by income level during the planning period, as determined pursuant to Section 65584. The number of units calculated shall be adjusted as necessary, based on the land use controls and site improvements requirement identified in paragraph (4) (5) of subdivision (a) of Section 65583, the realistic development capacity for the site, typical densities of existing or approved residential developments at a similar affordability level in that jurisdiction, and on the current or planned availability and accessibility of sufficient water, sewer, and dry utilities.
Requisite Analysis
The analysis must consider the imposition of any development standards that impact the residential development capacity of the sites identified in the inventory. When establishing realistic unit capacity calculations, the jurisdiction must consider existing development trends of existing or approved residential developments at a similar affordability level in that jurisdiction, as well as the cumulative impact of standards such as maximum lot coverage, height, open space, parking, and FARs. The capacity methodology must be adjusted to account for any limitation as a result of availability and accessibility of sufficient water, sewer, and dry utilities. For non-residential zoned sites (i.e. mixed-use areas or commercial sites that allow residential development), the capacity methodology must account for the likelihood of residential development on these sites.
If a local government has adopted, through regulations or ordinance, minimum density requirements that explicitly prohibit residential development below the minimum density on that site, the element may establish the housing unit capacity based on the established minimum density.
Realistic development capacity for nonresidential, nonvacant, or overlay zoned sites — The capacity calculation must be adjusted to reflect the realistic potential for residential development capacity on the sites in the inventory. Specifically, when the site has the potential to be developed with nonresidential uses, requires redevelopment, or has an overlay zone allowing the underlying zoning to be utilized for residential units, these capacity limits must be reflected in the housing element.
Helpful Hints
Options to adjust for the realistic development capacity of nonresidential, nonvacant, or overlay zoned sites may include:
- Performance standards mandating a specified portion of residential development in mixed use or nonresidential zones (e.g., residential allowed only above first floor commercial).
- Incentives for residential use, market demand, efforts to attract and assist developers, or allowance of 100 percent residential development.
- Local or regional residential development trends in the same nonresidential zoning districts
- Local or regional track records, past production trends, or net unit increases/yields for redeveloping sites or site intensification. This estimate may be based on the rate at which similar parcels were developed during the previous planning period, with adjustments as appropriate to reflect new market conditions or changes in the regulatory environment.
- Monitoring programs with next-step actions to ensure sites are achieving the anticipated development patterns.
Local governments should be diligent in preparing their annual progress reports pursuant to Government Code Section 65400. [The project-by-project descriptions and resulting build-out yields would be helpful in formulating a development track record and demonstrating realistic capacity.
Size of Sites
Parcels that are too small may not support the number of units necessary to be competitive and to access scarce funding resources. Parcels that are large may require very large projects, which may lead to an over concentration of affordable housing in one location, or may add cost to a project by requiring a developer to purchase more land than is needed, or render a project ineligible for funding. A parcel smaller than one half acre or over 10 acres is considered inadequate to accommodate housing affordable to lower income households, unless the housing element demonstrates development of housing affordable to lower income households on these sites is realistic or feasible. Please note, for purposes of this requirement, “site” means that portion of the parcel designated to accommodate lower income housing needs. The housing element must consider and address the impact of constraints associated with small or large lot development on the ability of a developer to produce housing affordable to lower income households. To demonstrate the feasibility of development on this type of site, the following analysis is required.
- An analysis demonstrating that sites of equivalent size were successfully developed during the prior planning period with an equivalent number of lower income housing units as projected for the site.
- Evidence that the site is adequate to accommodate lower income housing. Evidence could include developer interest, potential for lot consolidation for small sites or lot splits or subdivision for large sites, densities that allow sufficient capacity for a typical affordable housing project, and other information that can demonstrate to HCD the feasibility of the site for development. For parcels anticipated to be consolidated, the housing element must include analysis describing the jurisdiction’s role or track record in facilitating small lot consolidation, policies or incentives offered or proposed to encourage and facilitate lot consolidation, conditions rendering parcels suitable and ready for consolidation such as common ownership, and recent trends of lot consolidation. The housing element should include programs promoting, incentivizing, and supporting lot consolidations and/or small lot development.
- A site may be presumed to be realistic for development to accommodate lower income housing need if, at the time of the adoption of the housing element, a development affordable to lower income households has been proposed and approved for development on the site.
- The housing element must also describe existing and proposed policies or incentives the jurisdiction will offer to facilitate development of these sites.
Helpful Hints
- To demonstrate the viability of small lot development to accommodate the local housing need, the housing element could include a description of the local government’s role in facilitating small-lot development (e.g. providing regulatory and/or fiscal incentives, developing and adopting a small lot ordinance, etc.).
- To demonstrate the viability of large lot development to accommodate the local housing need, the housing element could include developer interest, proposed specific-plan development, potential for subdivision, the jurisdiction’s role or track record in facilitating lot splits, or other information that can demonstrate to HCD the feasibility of the site for development.
- Examples of program incentives for lot consolidation include deferring fees specifically for consolidation, expediting permit processing, providing flexible development standards such as setback requirements, reduced parking or increased heights, committing resources for development of affordable housing on small sites, or increasing allowable density, lot coverage or floor area ratio.
- Examples of program incentives for large lot development include expedited or automatic approval of lot splits or creation of new parcels, waivers of fees associated with subdivision, or expedited processing or financial assistance with the development of infrastructure required to develop the site.