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City of Sausalito
Comment on the Sausalito Housing Element Opportunity Sites List
The following comment letter has been submitted to the City of Sausalito in an effort to explain the long-term planning impacts of the land use decisions included in their new 2023-2031 Housing Element Housing Opportunity Sites List.
Dear Mr.
Lindenbusch (Interim Housing Policy Planner),
Having reviewed the proposed Housing Element Opportunity Site List (the “List”), I would like to submit the following comments.
Let me begin by saying that the Housing Element (the “HE”) process and Housing Element Opportunity Site List is not what they used to be. Due to significant changes in the requirements now being demanded by the Department of Housing and Community Development (“HCD”) for certification and the plethora of new legislation, over the past two decades, the List has transformed from a fairly benign exercise in creating a wish list to a legally enforceable and potentially irrevocable commitment to land use for high-density housing. And once a parcel is put on the List, it cannot be removed unless an equally feasible site is found to replace it.
In the past, cities and counties submitted lists of properties that were by and large identified visually (by being vacant or run down) and HCD would accept them as a good faith effort. Whether they were ever developed was not heavily enforced. The fact that they were zoned for housing sufficed. All of that has changed dramatically, particularly with the passage of Senate Bill 35.
As it stands today, the acceptance of a site on a list submitted for certification is an entitlement to future housing on that site, but the size, construction type, style, and density of that housing is no longer in the control of local government for “qualified”[1] low-income project proposals. This is true of all the sites the City has placed on the List, not just the ones discussed in this comment letter.
As we will explain, property inclusions on the List must be carefully considered in light of their potential long-term planning and financial impacts on the City.
The Spinnaker “Peninsula” in Downtown Sausalito
Downtown Sausalito is iconic. It has a character that is extremely rare if not unique on the West Coast. People come from all over the world just to walk around. Whatever is developed downtown, and on the various Spinnaker parcels (the “Spinnaker peninsula”) in particular, will profoundly impact that experience and the city as a whole.
From a city planning standpoint, the List’s inclusion of only a few of the many contiguous parcels that make up the Spinnaker peninsula, which is experienced as one large open area, is obtuse. The Spinnaker peninsula is one place and should be planned, accordingly. Ownership and lessee rights to certain parcels should not, necessarily, be considered irrevocable or unchangeable, but rather as having the potential to be incorporated into a more comprehensive planning vision. (Land can be purchased or co-developed, leases can be renegotiated, bought out, and existing uses can be incorporated/joint-ventured into future redevelopment.)
However, the List’s inclusion of just a portion of the Spinnaker peninsula as a potential future housing development site is not just flawed from a city planning point of view, but the suggestion of placing housing of any kind in this location would destroy the essential character of the heart of Sausalito’s downtown and, as explained in this letter, can open the door to significant unintended development consequences.
The Spinnaker Parcel: #31
Regarding the inclusion of Spinnaker waterfront parcels (identified in Appendix E, Page E-3, and E-4, as site “31“) on the List, please consider the following:
First, please note that the map from the HE, shown above, is illogical. Almost 95% of one of the 4 parcels that make up site #31, parcel 065-041-04, is open water for boat slips. And although the remainder of parcel 065-041-04 includes a narrow strip of land that runs along the adjacent docks, it is impractical to include that land, because, for redevelopment purposes, the extension of Bay Street into the Spinnaker peninsula will have to remain in some form to provide access to the existing boat slips. Therefore, the analysis of site “31” is incorrect and the actual, developable acreage is smaller (approximately 1.5 acres).
However, even with that considered, the “realistic capacity” of development shown in HE Appendix E is grossly underestimated in light of the legislation described, herein. Please also note that the term “realistic capacity," used in the HE is misleading. Although it is a term used in the law regarding analysis of Housing Element site choices (it can be used to get a gold star from HCD to have them certify the HE), the actual, final development capacity of any parcel that the City places on the List will be determined by other state laws (SB 35, The State Density Bonus, etc.) and subject to the considerable bonuses and waivers that private developers can demand, regardless of the "realistic capacity" noted in the HE. In other words, neither of the projects shown below, in San Rafael and Novato, was indicated in those city's Lists to have a realistic capacity of over 200 units per acre, nor could their size be mitigated by the city's own analysis of "realistic capacity."
Finally, when discussing Site #31, the HE commits a significant planning error when it notes that
“Property owner confirmed interest in developing the site with mixed-use residential via phone call with City staff;”
In our opinion, as a matter of principle, city planning should not be reliant upon the current desires of an individual property owner. No property owner can predict their financial future any more than they can predict their own health. All property is essentially for sale at the right price and property rights are just that: they run with the property, not the owner. Planning should be based on what a reasonable property owner might do and what they are potentially allowed to do to maximize their return on investment.
Historically, if property rights are granted to a property (and the current state of the HE List is now a significant step toward entitlement for “qualifying” project proposals), they will eventually be used and maximized, if not by the present owner then by a subsequent owner.
Asset Management and Fiduciary Responsibility
It is generally assumed that local officials are elected to be administrators and policymakers. However, I would suggest that they are also charged with being good managers of the public assets of the city. As such, particularly as it relates to planning and future real estate development, attention should be given to asset valuations and how decisions can add or destroy value and future revenues.
Valuing the Spinnaker Peninsula Parcels
The Spinnaker peninsula parcels, in total, are arguably among one of the best and most valuable mixed commercial waterfront sites in the entire San Francisco Bay Area. Its future development potential for restaurants, retail, hospitality, maritime, and public/commercial event space, even at an appropriately modest scale, is remarkable.
A cursory estimate of the value of such a land use assemblage would be in the range of $4 million per acre range. The estimated annual revenues from business, sales, and hospitality taxes, and the potential of participating land lease revenues would be at the high end of any market in the Bay Area. (Retail space rents along Bridgeway in downtown Sausalito are among the highest in Marin.)
Simply put, to “down-zone” any part of the Spinnaker peninsula for housing would be, financially, irresponsible, particularly in light of the outcomes now possible under state housing law. And even if that housing took up only a small portion of the site (parcel #31), it would preclude its highest and best use, forever, denigrating the value of the entire Spinnaker peninsula.
This Is Not a Theoretical Exercise: Marin Case Studies
Although it has not been typical of housing projects proposed in Marin, in the past, there are currently two examples of massive housing projects being forced upon two Marin cities with streamlining and ministerial review and demands for waivers, under SB 35 and SB 330 and the State Density Bonus Law.
The first of these is a 227-unit, 6-story, prefabricated, mid-rise, multifamily housing project at 1316-1320 Grant Avenue in downtown Novato.
1316-1320 Grant Avenue, Novato
The Downtown Novato project sits on approximately 1 acre of land (a density of over 200 units per acre), replacing an existing one-story medical building. The neighboring properties behind the development are existing one-story, residential neighborhoods.
The second project is a 191-unit, 7-story, mid-rise multifamily project (seven floors of apartments on top of 2-story, underground, concrete pedestal parking), situated on .88 acres of land (over 213 units per acre) at 1515 4th Street in San Rafael.
1515 4th Street, San Rafael
Note that
- Both of these projects are located on parcels that are smaller than Spinnaker site #31.
- Both are located on parcels that are commercially zoned but were either on the Housing Element Opportunity Site List or designated as being in a “housing overlay” zone or both.
- Both of these projects greatly exceed the city’s maximum allowable density but received demanded waivers of height, FAR, lot coverage, setback, and parking requirements.
- Both of these projects rely on the provisions of SB 35, SB 330, and the State Density Bonus to argue that their size is required to make them “financially feasible,” a phrase that creates a legal nexus to state housing law enforcement.
- Both of these projects were afforded ministerial review by the Planning Department and only for compliance with Objective Design Standards that were in place at the time the applications were deemed “complete.” There have been no public workshops or public hearings before the Planning Commission or the City Council and no design review.
In our opinion, it is a certainty that developers will be submitting more projects like these in the future, seeking to maximize density and return on investment. Everything discussed in this letter applies to all the sites on the city’s Housing Element Opportunity Site List, including Parcel #31, which is larger than the parcels for either of the projects noted above.
All things considered, it is conceivable that a proposal for 5+ story, 150+ units of high-density housing could be submitted for Parcel #31 at Spinnaker that could not be denied under state law.
As such, we urge the City to remove Spinnaker parcel #31 from the Housing Element Opportunity Site List.
The HE assessments of applicable state housing laws
In general, the Housing Element’s assessment of the impacts of state housing laws (pages; HBR 132-135) seems inadequate in that it fails to warn the City of unintended consequences and the possibility of greater density than the consultant’s narrative might suggest.
Although the HE acknowledges major legislation such as Senate Bill 35 and Senate Bill 330, regarding “streamlining” and ministerial review” and “objective design standards,” it confines its comments to broad statements but fails to present the potential, specific consequences of these laws in total. In sum, the housing legislation signed into law over the past 10 years has created a situation where the potential housing density developed on any particular site can be almost double the amount that was originally anticipated when a site was placed on an HE List.
This is particularly true if the city has failed to satisfy its prior RHNA quota, which triggers an automatic ministerial review.
Concerning Senate Bill 35 and Senate Bill 330, on page HP-23, the HE states,
“To facilitate residential development and to comply with State law, the Municipal Code will be updated to ensure that eligible multi-family projects with an affordable housing component are provided streamlined review and are subject only to objective design standards consistent with relevant provisions of SB 35 and SB 330. State law defines objective design standards as those that “involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant and public official prior to submittal.” The City is in the process of preparing Objective Design and Development Standards (ODDS) and the ODDS will be developed to address multi-family development at densities envisioned by the General Plan, Zoning Code, and Program 4.
It goes on to state,
“Program Objectives and Timeframe: Within two years of Housing Element adoption, and no later than May 2025, develop procedures to address the streamlining requirements of SB 35 and objective design requirements of SB 330.”
Unfortunately, the HE fails to note that the City’s HE will be required to be certified much sooner than 2 1/2 years from now, so development proposals will likely be submitted before the City has its ODD in place, meaning the City may have little time (streamlining) or arguments to deny a proposal that conforms with a myriad of other state laws.
Similarly, per an opinion by Shute, Mihaly & Weinberger LLP, Senate Bill 330,
“…prohibits local jurisdictions from enacting new laws that would have the effect of reducing the legal limit on new housing within their borders, or delay new housing via administrative or other regulatory barriers.”
And, according to the Legislative Counsel’s Digest, Senate Bill 35,
“…would authorize a development proponent to submit an application for a multifamily housing development, which satisfies specified planning objective standards, that is subject to a streamlined, ministerial approval process.”
Although in each case the legislation text is more specific to some extent, the stated intent of each is so broad and so many aspects of it have never been tested in the courts that developers are already pushing the limits of that intent and threatening City’s with litigation based on their belief that all local regulations are barriers to development and subject to challenge.
However, the worst oversight of the Housing Element is its failure to explain the seminal change in state housing law encoded in SB 35. Under Sb 35, the liabilities, responsibilities, and burden of proof required to approve or deny a housing project proposal have now shifted from the developer to the government agency.
Whereas formerly, a developer had to prove that its project was worthy of approval and that it met all established local regulations, now, under SB 35, if the developer’s high-density, affordable housing project complies with state laws, the burden (and costs) falls on the government agency to prove why a project can be denied. And the allowable arguments for denial are now limited to conformance with objective design standards or evidence-based proof that the project would cause harm to the health and safety of the community’s residents.
If an affordable, high-density, housing proposal qualifies under state law, CEQA, parking, traffic, infrastructure impacts, etc. can no longer be argued. And if a developer or a third party sues for approval and wins in court, court costs and attorney fees are paid for by the government agency.
Housing Accountability Act as Amended in 2017
The Housing Accountability Act has been in place for decades but its newest revisions have added teeth to it that the state and housing advocacy groups are citing more often to successfully litigate to force local governments to approve high-density housing projects.
Per an opinion by Rutan & Tucker LLP,
“In sum, for a local agency to disprove any housing project or require reduced density, it must now either determine the proposed project does not comply with objective general plan, zoning or subdivision criteria or standards within one or two months of a completed application, or find that a preponderance of the evidence shows that the project would have a specific adverse impact of public health or safety and that the impact cannot be mitigated.”
The State Density Bonus Law
The HE acknowledges the State Density Bonus Law as follows,
“Density bonus law is intended to support the construction of affordable housing by offering developers the ability to construct additional housing units above an agency’s otherwise applicable density range, in exchange for offering to build or donate land for affordable or senior units. Density Bonus Law also provides for incentives intended to help make the development of affordable and senior housing economically feasible.”
But what does that mean when applied to the opportunity sites List?
It potentially means that as noted in the State Density Bonus chart, attached on page 9, below, any project that provides for all of its units to be for “very low, lower, and moderate-income” tenants (e.g., a project using Low Income Tax Credit financing) could exceed the density shown in a city’s HE and its zoning ordinance and General Plan by as much as 100 percent (and even greater density can be requested in a waiver by the developer, for financial feasibility).
In concert with all of the other housing laws noted, there would likely be no way for a city to deny such an application. Examples of these types of developments in Marin are noted, above.
The California Attorney General’s “Housing Strike Force”
Against the backdrop of ever more aggressive and punitive housing laws, the enforcement capabilities of the Office of the State Attorney General has taken a giant leap forward. The Office of the Attorney General recently announced the formation of its new “Housing Strike Force.” It appears that its powers are unrestricted in its effort to enforce the entire ensemble of state housing laws. We believe this is a seminal event that will change the litigation landscape in significant ways.
According to the official announcement made by Attorney General Bonta, the Strike Force will,
“…advance housing access, affordability, and equity in California. DOJ’s Housing Strike Force will draw on the expertise of attorneys from the Land Use and Conservation Section, the Consumer Protection Section, the Civil Rights Enforcement Section, and the Environment Section’s Bureau of Environmental Justice to address the housing crisis and to alleviate its effects. The DOJ’s Housing Strike Force will take an innovative and intersectional approach to addressing the housing crisis, focusing on tenant protections, housing availability and environmental sustainability, housing affordability, and equitable and fair housing opportunity for tenants and owners. Specifically, the Strike Force will work to address the shortage and affordability crisis by:
- Enforcing state housing and development laws in the Attorney General’s independent capacity and on behalf of DOJ’s client agencies. Earlier this year, the Governor signed AB 215 enhancing the Attorney General’s concurrent role in enforcing state housing laws;
- Enforcing tenant rights, mortgage servicing, and other consumer protection laws;
- Issuing consumer alerts advising tenants and homeowners on their protections under state and federal law;
- Issuing guidance letters to local governments on state housing laws;
- Defending state housing and tenant protection laws from legal challenges; and
- Advocating with the state legislature, federal agencies, and other state agencies to advance a right to housing.”
It appears the Strike Force will use whatever legal means available, including but not limited to filing legal actions against individual cities to ensure compliance with state housing laws, as they see fit. These legal actions have already begun against Redondo Beach, Burbank, and other cities.
Thank you for the opportunity to submit our comments.
Respectfully,
Bob Silvestri, President, Community Venture Partners, Inc.
Click on the image to enlarge the chart
[1] As defined by a myriad of state housing laws.
Bob Silvestri is a Marin County resident, the Editor of the Marin Post, and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded by individuals and nonprofit donors. Please consider DONATING TO THE MARIN POST AND CVP to enable us to continue to work on behalf of California residents.