Letter to Council regarding Governmental Constraints to housing production

To Mayor Ramirez and the members of City Council:

Mountain View YIMBY respectfully proposes a set of reforms that we believe are necessary for the Housing Element to comply with state law. The RHNA target¹ requires approximately doubling our current pace of homebuilding. We believe that the city cannot meet the target without reforming its processes (“removing constraints”, in Housing Element terminology).

The draft Housing Element sidesteps this topic by calling for further study, which can neither bear fruit quickly enough to help Mountain View meet its numerical targets by 2031, nor satisfy the legal requirement to remove constraints to homebuilding². Mountain View needs more reform, now, with direct support from the City Council.

Introduction

Mountain View consistently acknowledges its responsibility to help alleviate the Bay Area’s critical shortage of homes and the need to build more homes.

Although Mountain View already leads Santa Clara County and the Peninsula in terms of homebuilding relative to current population, we need to roughly double our pace to meet the RHNA target. Remarkably, despite a supportive Planning Commission and City Council, developers uniformly perceive Mountain View as a hostile place to do business. A close look at the city’s working processes reveals many procedures that are contrary to the universally stated goal of building more homes.

To that end, the city commissioned the Development Review Assessment by Matrix Consulting (“Matrix Study”). We agree with its recommendations, believe that implementing them all would make a significant improvement, and commend staff on work they have already undertaken to this end. However, we are disappointed that the draft Housing Element barely hints at the Matrix Study recommendations³, deferring most of them to further “review.”

Our analysis is also informed by informal guidance published by the Department of Housing and Community Development (HCD)⁴. The dependence on further review corresponds to a “key area of non-compliance”: “Put[ting] off analysis to a ‘study.’” Even more broadly, we believe that the Housing Element’s constraints analysis fails to “guide solutions”, another “common overarching issue” identified by HCD.

Earlier this year, we undertook a series of interviews with local developers and arrived at our own conclusions about what reforms the city can undertake to meet our home production goals without compromising quality. Although we also advocate for zoning changes to expand housing capacity, here we present reforms that will maximize the use of existing zoning.

We believe that the core responsibility of city staff with regard to development projects is to help the applicant produce an application that complies with zoning and all other applicable codes as quickly as possible. However, our conversations with developers have revealed that working procedures at the departments of Planning, Building, and Public Works are not designed with this goal in mind. The result is unnecessary delay and even increased building cost. The already overtaxed review process must be streamlined to reduce the burden on staff, increase throughput and enable more permits to be granted each year.

We therefore respectfully offer recommendations in the following categories:

1. Make requirements clear at the beginning of the process
2. Streamline procedures
3. Increase density limits
4. Encourage innovative and cost-saving practices
5. Reform the structure of development fees
6. Improve accountability

Our complete list of recommendations follows. A few items overlap with the Matrix Study, and we have tried to identify them below. We believe that this list provides a valuable complement to the Matrix Study.

Recommendations

1. Make requirements clear at the beginning of the process

Developers embark on the project approval process without knowing what is expected. We therefore recommend that:

1. All objective, technical requirements be published on the website in the form of a checklist
2. All subjective, architectural requirements be published as well
3. Samples of all documents be published on the website, for applicants to use as a guide

Furthermore, the City’s early-stage design checklists request some details that are not properly addressed until later stages of the design process. To answer these questions up front, developers must take on an undue amount of risk.

4. These checklist items should be clarified to request only the information that is necessary.

Public comment at various hearings can also generate _de facto _requirements. We welcome public engagement, but believe that it should occur at the proper time and place. To that end, we suggest:

5. Framing the cyclic Housing Element update process as the primary forum for residents to influence planning decisions, especially on common topics such as height, density, trees, open space, and vehicle accommodations;
6. Restricting the public’s ability to make requests of specific projects outside of codified requirements and guidelines, to ensure consistency and fairness;
7. To the extent that project-specific public input exists, front-loading it so that developers can incorporate it in the first design and avoid costly and time-consuming revisions;
8. Distilling public input from each session into a report, to allow the developer to demonstrate that the revised application is in compliance.

2. Streamline procedures

We’ve identified a series of reasons why we believe Mountain View’s city staff capacity is a major constraint to housing production. In fact, these are a burden on staff time as well as the development team, which are both valuable. Compared to the previous Housing Element, processing times have doubled for many types of projects^5,6. This is a particular problem for Precise Plan areas. Despite the great effort already expended in developing the Precise Plans, developments in these areas take just as long to review as equivalent developments outside of Precise Plans⁷.

Development applications – even small ones – typically require multiple reviews. Although we acknowledge that explicitly limiting the number of reviews is not practical, we believe that review can be expedited by the following reforms:

1. Clearly define the type of revisions that each department is empowered to request. If a department wants to request a revision outside its proper scope, that request should be routed through the department that is actually responsible.
2. Once staff have returned an application to the developer, consider all aspects of the application to be approved other than those to which staff have objected. In subsequent review cycles, staff may only object if the applicant has not properly corrected issues identified in the first review. Exceptions to this rule may be allowed with a senior planner’s signature on each exception.
3. Implement internal learning processes so that issues that “slip through the cracks” per item (b) above are caught immediately in the future.
4. Limit Development Review Committee (DRC) review meetings to a maximum of two per application (Matrix recommendation #3), and eliminate aesthetic revisions outside of those two meetings.
5. Create an option for expedited review for developers who agree to pay an increased application fee.
6. Expedite review of subsidized Affordable Housing projects with no fee.

3. Increase density limits

Use of the city’s Bonus FAR program is a necessity by design in key Precise Plan areas due to purposely low base FAR⁸. This means a lengthy discretionary process with more staff involvement than a by-right process or one that doesn’t involve a discretionary “community benefit” criterion.

Furthermore, if a project requires a zone change or General Plan amendment, the City Council first considers a “gatekeeper” request which is yet another lengthy process. Due to Mountain View’s current zoning, very few by-right zoning compliant multifamily projects produce enough economic incentive for developers. As such, projects tend to opt for a “gatekeeper” process. Unfortunately the city is not considering any new “gatekeeper” projects due to lack of staff capacity until 2024.

We therefore suggest that the city:

1. Remove the need for a discretionary review of the “community benefit” criterion by producing objective and predictable requirements that could be easily verified and approved by staff in order to streamline the Bonus FAR process.
2. Analyze the impact of current staffing levels on housing production.
3. Propose a program for improving employee hiring and retention with concrete milestones and success metrics. Despite best efforts, the city currently has only 8 of 18 City Planner positions filled. This suggests there may be major impediments to hiring and retention of necessary talent.
4. Enable by-right and zoning-compliant pathways to meet our RHNA housing capacity in order to reduce the need for the “gatekeeper” process by upzoning at the General Plan level. This will have the further advantage of reducing the complexity of the Environment Impact Report studies that “gatekeeper” projects currently have to go through. (See p. 192)

Furthermore, we are disappointed that the ongoing R3 reform process was excluded from the Housing Element. In 2020, the City Council commissioned⁹ an Opticos study on “constraints for producing new stacked-flat multi-family housing in the R3 Zone.” On October 13 of that year, Opticos presented¹⁰ five key findings to the Council:

• Allowed Density too low
• Allowed Height too low
• Setbacks, Lot Coverage, and FAR Limit Development
• Parking Requirements are too high
• Open Space too high

Although the City believes that the RHNA target can be met without relying on R3 development, we nonetheless suggest that the R3 rezoning be included in the Housing Element. First of all, we believe the R3 zoning changes are common sense. Second, we have previously identified concerns with the Site Inventory, and R3 rezoning would provide extra buffer in case the Site Inventory proves to be too optimistic.

We therefore suggest that the city:

5. Commit to ameliorating the constraints on development in the R3 zone identified by Opticos

4. Encourage innovative and cost-saving practices

Developers do not propose more innovative projects that could be built faster and cost less because they have the perception that the City staff is not sufficiently familiar with new construction technologies and materials. To address this issue, we recommend the following:

1. Educate the city staff, especially in planning and building departments, about new promising materials and technologies, such as cross-laminated timber, off-site modular construction, 3D-printed homes, etc.
2. Proactively engage with developers already using such innovations and consider hiring them as consultants until the staff develops sufficient expertise (with appropriate restrictions to avoid conflict of interest).
3. Provide incentives, such as expedited reviews or reduced or waived fees, for:
   1. Technological innovations such as modular housing, “tiny houses,” and 3D-printed houses; and
   2. Other cost-saving practices, such as refurbishing unused office buildings for residential use or renovating/extending old buildings instead of building from scratch.
4. Ensure that the master list of requirements doesn’t prevent applicants from using innovative construction techniques and includes incentives for using them.

5. Reform the structure of development fees

The draft states, “Although development fees and exactions do increase the cost of producing housing, in general Mountain View’s fees do not appear to create an undue constraint on residential development in the City.”¹¹ However, no evidence is provided.

The staff memo for the Council study session¹² further states that “the City evaluates the cumulative effect of these fees on a regular basis when new fees are adopted,” but the Housing Element includes no example of such an evaluation.

In fact, the City’s own work in the East Whisman Precise Plan area encourages some entirely different conclusions. In developing the precise plan, the City commissioned a study by Seifel Consulting on “the financial feasibility of residential development” within the plan’s constraints¹³. Noting that home builders face a “complex, challenging, and expensive” infill development process in neighborhoods like East Whisman, Seifel concluded that “revenues from [new] apartments and condominiums are not likely” to cover their costs under EWPP requirements¹⁴. It also arrives at a total fee of about $95,000 per apartment unit¹⁵, considerably higher than the City’s estimate of $82,951 at the high end¹⁶, which is already nearly double what was quoted in the previous Housing Element¹⁷. Multiple developers, including Google’s real-estate division, confirmed these barriers in public comment¹⁸.

To City staff’s credit^19,20, the final EWPP’s most stringent requirements were slightly relaxed from their draft form, but as the _Mountain View Voice _has reported²¹, the City voted to raise impact fees in East Whisman just last month (May 2022). This renders new housing projects “increasingly infeasible.”²² According to the City’s analysis at the time²³, some commercial projects are exempt. Moreover, those that do pay fees pay less, per square foot and as a fraction of market value, than residential projects²⁴. The City implicitly acknowledges this infeasibility by requiring office developments to be coupled with homes (“linkage”). If there were no concern about the feasibility of homes, linkage would be unnecessary.

We therefore suggest that the city:

1. Reconsider the analysis of fees to reflect the findings of the Seifel Consulting study;
2. Adjust the structure of development fees to fall more heavily on non-residential uses;
3. Consider other funding sources (e.g., parcel taxes) for City services now funded by developer fees.

6. Improve accountability

We believe that process reforms need support and incentives up to the highest level (City Council). We therefore recommend that the city:

1. Revise the Current Project List to include the original application date and the most recent application date or other milestone for each project
2. Create the position of Permit Navigator (Matrix recommendation #35), to oversee the development review and permitting process from a customer’s perspective, and to ensure the compliance of city practices with state law.
3. Ensure that contracts with consultants, such as CSG, does not create a perverse incentive for the consultants to instigate unnecessary iterations.

Conclusion

The Housing Element process is a rare opportunity for Mountain View to take a holistic look at its planning processes. Having interviewed developers working in and around Mountain View and reviewed studies recently carried out on the City’s behalf, we believe that the City urgently needs to reform both its zoning and its procedures. Between our recommendations and those already offered in the studies cited above, the City has many options to choose from. We hope that many of these reforms can be implemented as part of the Housing Element process.

Thank you for considering our input.

Ilya Gurin

Pardis Beikzadeh

Michael Abramson

Keith Diggs, YIMBY Law

Vince Rocha, SVLG

On behalf of the members of MV YIMBY

Footnotes