HomeMy WebLinkAboutCALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT (HCD) N-2024-175
MAY 2 3 2024 Return FULLY EXECUTED
•
og Copy to City Clerk, M-30
((.Mog0:1 0'"a
MEMORANDUM OF UNDERSTANDING BETWEEN THE CALIFORNIA
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT AND
THE CITY OF SANTA ANA
This Memorandum of Understanding(''MOU") is entered into as of May 23, 2024 between the
City of Santa Ana,a charter city and municipal corporation organized and existing under the
Constitution and laws of the State of California ("City")and the California Department of
Housing and Community Development("HCD").The Parties enter into this MOU to establish
deadlines for the City to demonstrate its compliance with AB 2011. (City and HCD are
collectively referred to as"Parties"or singularly as a "Party.")
PURPOSE
Assembly Bill 2011,the Affordable Housing and High Roads Jobs Act of 2022,codified at
Government Code Title 7, Division 1. Chapter 4.1 (commencing with Section 65912.100),
became effective July 1, 2023 and grants by-right streamlined development of multi-family
affordable and mixed-income residential projects in commercially-zoned sites. Said bill was
subsequently amended by Assembly Bill 129(AB 129),a 2023-24 state budget rider bill that was
signed by the Governor on July 10, 2023.
On June 20,2023,the City adopted Urgency Ordinance No. NS-3045 and Ordinance NS-3047
(the"Ordinances").which exempts certain parcels in Santa Ana from AB 2011. HCD advised
the City that the requisite findings to exempt parcels from AB 2011 permit streamlining may be
inconsistent with state law and requested additional level of detail and specificity to allow HCD
to make an accurate determination about compliance with AB 2011. (Gov.Code, §j 65912.1 14,
subd. (i)(3)(A)-(B); 65912.124. subd. (i)(3)(A)-(B).) I lowever,the City had previously engaged
in significant upzoning through its April 2022 General Plan Update("2022 General Plan
Update"),and properties upzoned as part of the MainPlace Specific Plan (SP-4)and Metro East
Mixed Use Overlay expansion (MEMU) (the 2022 General Plan Update, SP4 and the MEMU are
collectively referred to as the"Upzoned Sites").
The City and HCD wish to take all steps necessary to assist the City with demonstrating AB
2011 compliance.To that end,the City and HCD propose and herein adopt milestones and
deadlines to assist the City with demonstrating that its Upzoned Sites offset the loss resultant
from the Ordinances' exemptions and meet all other AB 2011 criteria by September I, 2024,and
in accordance with the commitments, milestones, and deadlines set forth below.
RECITALS
I. The California Legislature passed Assembly Bill 201 I (AB 2011). the Affordable Housing
and High Road Jobs Act of 2022,and was signed into law by the Governor on September 28,
2022, with a scheduled July I, 2023, effective date.
2. The Santa Ana City Council agendized adoption of a resolution to implement AB 2011 at the
local level to exempt certain parcels from streamlining provisions of the bill at its regularly
scheduled May 16,2023, meeting.
3. On May 16,2023,the Office of the Attorney General sent a letter stating it was made aware
of the proposed resolution on the City Council's agenda proposing to exempt certain
properties within Santa Ma from AB 2011 permit streamlining provisions,that HCD was
also aware of the proposed resolution and was reviewing the issue,and, lastly, urging the
City Council to continue the adoption of resolution to a later date so that affected and
interested parties could have adequate opportunity to review and comment on the proposal.
4. HCD sent a letter to the City on June 19, 2023, advising the City that the City's proposed
ordinances on its June 20,2023 City Council agenda may be inconsistent with AB 2011 and
requested additional level of detail and specificity to allow HCD to make an accurate
determination about the City's compliance.
5. On June 20,2023,the City Council adopted Resolution No.2023-037,Urgency Ordinance
No.NS-3045,that the City contends became effective immediately upon its adoption,and
conducted a first reading of Ordinance No.NS-3047. The City of Santa Ana adopted
Urgency Ordinance No.NS-3045 pursuant to sections 415 and 417 of Division 2 of Article
IV of The Charter of the City of Santa Ana.
6. AB 2011 became effective on July 1,2023.
7. On July 10, 2023,the Governor of the State of California signed the 2023-24 budget and
related budget-implementing legislation, including AB 129 that amended sections of AB
2011 that pertain to exempting parcels from streamlining,criteria for alternative sites, and
calculating no net loss.
8. HCD sent a letter to the City on July 11,2023,advising the City that Resolution No.2023-
037 and Urgency Ordinance No.NS-3045 adopted on June 20,2023,and Ordinance No.NS-
3047 scheduled for second reading at the July 18, 2023 City Council meeting were
inconsistent with requirements in AB 2011.
9. On July 17,2023,the Attorney General sent a letter to the City advising the City that the City
had not made the statutorily-required findings to support adoption of an urgency ordinance
amending zoning regulations required by the Government Code and that the ordinance
scheduled for second reading at the July 18th City Council meeting conflicts with AB 2011.
10. On July 18,2023,the City Council conducted a second reading of Ordinance No.NS-3047,
which exempted certain parcels in Santa Ana from development under AB 2011.
2
11. The City had previously engaged in significant.upzoning through its Upzoned Sites.
12.HCD recognizes the City's efforts to build significant residential capacity, and acknowledges
that the City could potentially demonstrate its compliance with AB 2011 and the Housing
Crisis Act of 2019 without engaging in a potentially needless and costly local legislative
process. Assuming the City's site analysis of its recently Upzoned Sites is correct, the City
could comply with AB 2011 by downzoning sites to an intensity of use no less than what was
allowed under the land use designation or zoning ordinance in effect on January 1, 2018;
revert back to its previous general plan; and re-initiate its 2022 efforts to upzone the same or
similar sites as suitable AB 201.1 replacement sites. Rather than compel the City to go
through that process,the City and HCD agree to conduct a substantive site analysis review to
determine if the Upzoned Sites do indeed offset the losses resultant from the Ordinance's
exemptions, meet environmental criteria, are suitable for residential development,and
collectively affirmatively further fair housing, (See Gov. Code, §§ 65912.111,subds. (b)-(f);
65912.121, subds. (b), (e)-(h); 65912.114, subd. (i)(1)-(3); 65912.124,.subd. (i)(1)-(3);
65583.2; 66300, subd. (b)(I).)The City and HCD further agree on a process to cure any AB
2011 compliance issues should any remain after the site analysis review described herein.
TERMS AND CONDITIONS
Now,therefore, acknowledging and representing the truth and accuracy of the Recitals above,
each and all of which are hereby incorporated into this MOU,the Parties hereby mutually agree
to the following steps to assist the City in demonstrating AB 2011 compliance.
1. City Action to Substantiate Compliance with State Law.The City shall,through the
schedule outlined in Section 3 below, substantiate a no net loss in residential density in the
jurisdiction by way of(1)providing the total amount of lost potential density—and the
resulting unit capacity—that resulted from the exemption of parcels from AB 2011 in Santa
Ana Resolution No. 2023-037,Urgency Ordinance No,NS-3045, and Ordinance No.NS-
3047(Urgency Ordinance No.NS-3045 and Ordinance No.NS-3047 are collectively
referred to as the"Ordinances")and the total amount of potential residential capacity created
through alternative sites from its Upzoned Sites.
The City shall thereafter substantiate findings in the Ordinances that the Upzoned Sites offset
the loss resultant from the Ordinances' exemptions. The City will then substantiate the
finding in the Ordinances that no net loss of total potential residential density in the
jurisdiction has occurred. (See Gov. Code, §§ 65912.114, subd. (i)(3)(A)-(B); 65912.124,
subd.(i)(3)(A)-(B).) In addition,the City must substantiate:
1.1. That the alternative sites from its Upzoned Sites meet the criteria
outlined in Government Code sections 65912.111, subdivisions(b)
through(f) for affordable housing developments in commercial zones,
and 65912.121,subdivisions(b) and(e)through(h) for mixed-income
•
housing developments along commercial corridors,as codified in text
and in effect on July 1,2023.
1.2. That the alternative sites from its Upzoned Sites are subject to AB
2011. If the alternative sites from its Upzoned Sites are not already
subject to AB 2011,the City must demonstrate that the sites are
suitable for residential development as defined in Government Code
section 65583.2.(See Gov. Code, §§ 65912.114,subd. (i)(2)(A),and
65912.124, subd. (i)(2)(A).) If the alternative sites from its and
Upzoned Sites are already subject to AB 2011,the City must
demonstrate that they are zoned at a density and height above that
required by Government Code sections 65912.113, subdivision (b) for
and 65912.123,subdivisions(b)and(c). (See Gov. Code, §§
65912.114, subd. (i)(2)(B),and 65912.124, subd. (i)(2)(B).)
1.3. That the use of the alternative sites from its Upzoned Sites in lieu of
the exempted sites set forth in the Ordinances meets the City's
obligation to affirmatively further fair housing("AFFH"). (See Gov.
Code, §§65912.114,subd.(i)(3)(C), and 65912.124, subd. (i)(3)(C).)
2. Application of AB 2011.All parties to this MOU acknowledge the following:
2.1. There is a fundamental disagreement as to whether AB 2011 as
amended by AB 129 is applicable to the City. In order to avoid any
further delay,the Parties shall in good faith continue to work together
to assist the City in substantiating its compliance with AB 2011. For
purposes of calculating no net loss, site suitability, and affirmatively
furthering fair housing analyses, all citations to AB 2011 (Gov. Code,
§§ 65912.110-65912,114 and 65912.120-65912-124) refer to that law
as amended by AB 129, which became effective on July 10,2023.
2,2. Pursuant to the Housing Crisis Act of 2019, sites may not be used as
alternative sites to offset sites that the City is exempting from AB
2011 if downzoning those sites would reduce their intensity of use
below what was allowed under the land use designation or zoning
ordinance in effect on January 1,2018. (Gov. Code, § 66300, subd.
(b)(1)(A).)
2.3. Alternative sites identified under Government Code sections
65912.124, subdivision(i)(2)(B),and 65912.114, subdivision
(i)(2)(B),must be zoned to allow more density than is required in
Government Code section 65912.123, subdivision(c), and 65912.I 13,
subdivision (b), respectively.
4
3. The City and HCD's Schedule of Actions.All parties to this MOU agree that the City and
I-ICD shall follow the following schedule of required actions for the City to substantiate that
the Ordinances are in compliance with AB 2011:
3.1. Step 1: The City shall compile and provide to HCD for review: (a)
environmental data in the form of spreadsheets and map layers of the
Upzoned Sites demonstrating sites comply with all site and
environmental criteria(Gov.Code §§ 65912.111,suds.(b)-(f);
65912.121, suds.(b),(e)-(h)); (b)data illustrating the capacity of the
alternative sites from its Upzoned Sites; (c) a list of all exempted
parcels in the City's Ordinances and the lost potential residential
capacity in units; and(d) a list of sites that are not otherwise eligible
to be developed pursuant AB 2011 that the City will permit to be
developed pursuant AB 2011 streamlining,and sites that are already
AB 2011 eligible.
3.2. Step 2:HCD shall review and provide comments on the City's: (a)
environmental data of its Upzoned Sites demonstrating sites comply
with all site and environmental criteria; (b)data illustrating the
capacity of the alternative sites from its Upzoned Sites; (e) list of all
exempted parcels in the City's Ordinances and the lost potential
residential capacity in units;and(d) list of sites that are not otherwise
eligible to be developed pursuant AB 2011 that the City will permit to
be developed pursuant AB 2011 streamlining,and sites that are
already AB 2011 eligible.
3.3. Step 3: The City shall review and revise, if necessary, items (a), (b),
(c),and(d) listed above based on comments provided by HCD and
resubmit said items for HCD review. The City shall also deliver to
HCD a list of sites that require suitability analysis as defined under
Government Code 65583.2, and sites that do not need a suitability
analysis. (Gov.Code, §§ 65912.114, subd.(i)(2)(A), and 65912.124,
subd.(i)(2)(A).)
3.4. Step 4:HCD shall complete review of items(a), (b),(c), and(d)
listed above, and provide to the City an approved list of sites to use in
its site suitability and AFFH analyses. The City shall use the approved
list in its site suitability and AFFH analyses.
3.5. Step 5: The City shall complete its site suitability and AFFH analyses
and deliver these to HCD for review.
5
3.6. Step 6: HCD shall review and provide comments on the City's site
suitability and AFFH analyses, articulating specific deficiencies with
supporting data and identifying potential solutions.
3.7. Step 7: The City shall update its site suitability and AFFH analyses to
incorporate HCD feedback and submit these analyses to HCD for
review.As part of its resubmittal,the City shall either affirm the
approach utilized in its adopted Ordinances and continue to Step 8, or
discuss alternative paths with HCD to demonstrate compliance with
AB 2011.
3.8. Step 8: HCD shall review and provide comments and feedback on the
City's site suitability and AFFH analyses and deliver said comments
and feedback to the City.
3.9. Step 9: If corrections are needed,the City shall revise its site
suitability and AFFH analyses and exemption list and submit to HCD
for review.
3.10. Step 10: HCD shall review and, if appropriate, issue approval of the
City's revised site suitability analysis, the City's AFFH analysis,the
City's exemption list,the City's alternative sites,and the City's no net
loss calculation.Upon approval of these items,HCD shall make a
formal determination of compliance with AB 2011,at which point
HCD will transmit a letter of compliance to the City and conclude the
matter.
4. Enforcement: If the City is unable to substantiate its compliance with AB 2011 through
utilization of the alternative sites in its Upzoned Sites,HCD shall issue written findings to the
City.
Thereafter,the City shall,on a timeline mutually agreed upon by HCD and the City,and no
later than 60 days after HCD has delivered its findings to the City and determination of
noncompliance,commence either or both of the following actions: (1)introduce an
ordinance, during a noticed City Council meeting,that would remove the necessary number
of site exemptions from the Ordinances to meet the lost site capacity; or(2) introduce an
ordinance, during a noticed City Council meeting,that would upzone a sufficient number of
additional adequate sites, in collaboration with HCD,to meet lost site capacity. City staff
shall recommend to the City Council that the City adopt one or a combination of these two
actions.
If the City fails to either remove the necessary number of site exemptions from its
Ordinances and/or upzone an adequate number of additional sites to meet lost site capacity,
HCD may, in its discretion, issue a Notice of Violation and reserves its rights to pursue the
6
City's violations of state law as set forth in Government Code section 65585,subdivision (k).
I-lCD shall offer the City two meetings in person or via telephone to discuss the violation,
and shall provide the jurisdiction written findings regarding the violation prior to initiating
any legal proceeding against the City.
5. Suspension of Enforcement.HCD agrees not to initiate enforcement, including the issuance
of a Notice of Violation or the initiation of litigation,until and unless HCD makes a formal
determination of noncompliance and the City does not within mutually agreed upon timeline
not to exceed 60 days of receiving HCD's written findings commence either or both of the
corrective actions set forth in Section 4.Notwithstanding the above, HCD may initiate
enforcement if the City does not timely complete its obligations under Section 3. HCD will
not initiate any enforcement proceeding if the City's delay is due solely to a delay in HCD
review of a City submittal.
6. Timeline to Cure: The City and HCD shall complete the steps set forth in Section 3 in an
amount of time that is reasonable,but no later than September 1,2024. HCD reserves the
right to extend its timeline for determination of compliance as necessary.
7. Opportunity to Cure. In the event the City fails to comply with the terms of theMOU,HCD
shall provide written notice identifying the term with which the City has failed to comply.
The notice shall articulate the specific deficiencies in the City's analysis with supporting
data,
8. Claims Extinguished and Tolling.HCD's claims against the City for AB 2011
noncompliance will be extinguished upon HCD's letter of compliance.Conversely, those
same claims are tolled until such time HCD determines continued noncompliance,pursuant
to the timeframes and schedule of potential actions set forth in Sections 3,4,and 6.
TERM OF MOU
This MOU shall take effect upon full execution by the authorized representatives of each
Party and shall remain in effect until the Parties implement and comply with each milestone
pursuant to the agreed-upon deadlines.
AMENDMENT
The Parties may amend this MOU only in and by a writing executed by each of the Parties
hereto,which amendment shall be incorporated into this MOU and become effective on the
date said amendment is fully executed by both Parties.
NO ADMISSION OF NONCOMPLIANCE
The City reserves all rights to defend its actions previously taken,when its City Council
adopted Resolution No.2023-037 and the Ordinances,exempting specified parcels
7
throughout the City, in accordance with the provisions of AB 201 1 in effect at the time of
adoption of the Urgency Ordinance, and Santa Ana City Charter Sections 415 and 417.
Notwithstanding the execution of this MOU, it is the City's position that its findings were
legally sufficient to justify the adoption of Resolution \o. 2023-037 and the Ordinances
exempting the subject parcels.
SIGNING AUTHORITY
By signing this MOU, the persons executing this MOU represent that they have the capacity
and authority to execute this MOU as the representative of their respective agency. and to
bind their respective agency to the terms of this MOU.
ENTIRE AGREEMENT
This MOU contains the entire agreement of the Parties with respect to the subject matter of
this MOU, and supersedes all prior negotiations. discussions. agreements.commitments. and
understandings with respect thereto.
COUNTERPARTS AND FACSIMILE SIGNATURES
This MOU and any and all other documents or instruments referred to herein may be
executed with counterpart signatures, all of which taken together shall constitute an original
without the necessity of all Parties signing the documents. This MOU may also be executed
by signatures to facsimile or electronic transmittal documents in lieu of an original or
machine generated or copied document.
Dated: May 23. 2024 California Department of Housing and
Community Development
By:
David Zisser
Assistant Deputy Director jiff Local
Government Relations and
Accountability
Dated: May Z Z , 2024 City of Santa Ana
By: Cttip
Alvaro Nunez
Acting City Manager
8
ATTEST: City of Santa Ana ,!
Dated: MaY 2024 1 ',
1ri Lk! a l
/ City C.;
APPROVED AS TO FORM:
Dated: May 23, 2024 Rob Bonta
Attorney General of California
By:
Sahar Durali
Deputy Attorney General
Attornef:s./br California
Department of Housing and
C ommuniti.Development
Dated: May2.2024 California Department of Housing and
Community Development
By: ���
Martin Carr
Staff Counsel
Dated: May 21, 2024 Sonia R. Car\alho
City Attorney
By:
se Montoya
Assistant City Atrornev
for the City of Santa Ana
9