The Carmel-by-the-Sea Planning Commission on Oct. 21 reviewed a draft amendment to the city's sixth-cycle housing element that would remove two city-owned sites from the inventory and replace them with five strategies intended to disperse housing opportunities across the village.

The amendment, presented by city staff, aims to meet Carmel's Regional Housing Needs Allocation of 349 units (231 of which the state classified as lower-income need) by relying on programs such as a hotel-to-residential conversion, a downtown mixed-income incentive, a new downtown live-work land use, expanded accessory dwelling unit (ADU) projections and partnerships with religious facilities. "We've turned constraints into opportunities," Brandon said, summarizing feedback from the State Department of Housing and Community Development (HCD).

The proposal matters because the city must demonstrate to HCD that it has identified sites and programs sufficient to meet state-required housing targets for the 2023'2031 planning period. Removing the two city-owned properties from the housing element — sites discussed since the 1990s — would free the city from some state-prescribed timelines and allow the city and community more control over future uses for those properties, staff said.

Staff described five core strategies in the amendment. The hotel-to-residential program targets underperforming hotels and proposes converting them to multifamily housing with a proposed conversion rate and a requirement that 75% of converted units be affordable for RHNA credit; converted hotels would be allowed to transfer "hotel development rights" (referred to as hotel keys) to other downtown sites. The downtown mixed-income incentive program would create by-right density ranges (proposed 22'2 to 40 dwelling units per acre with bonuses for affordable units) and remove certain conditional-use requirements to encourage mixed-income projects. The downtown live-work strategy would create a new land-use category allowing hybrid commercial-residential tenant spaces to activate upper-story and off-street commercial space. The ADU projection relies on updated permitting trends and includes an outreach and presales-inspection plan; staff proposed counting 70 ADUs toward the RHNA for the cycle. Finally, the amendment would use California's Senate Bill 4 provisions to partner with three interested church sites to secure credit toward lower-income housing.

Marnie, the staff presenter, said the revised package conservatively projects a total capacity of about 439 units across these strategies, providing a buffer (about 26%) above the RHNA target. She emphasized that the programs in the housing element are policy commitments; each would require subsequent municipal-code amendments, public hearings and environmental review to be implemented.

Commissioners and members of the public raised recurring concerns about two implementation constraints: water allocation and parking. Multiple speakers noted Carmel's limited municipal water supply and asked how the city would allocate water to converted or new residential units, especially when hotel development rights are transferred off-site. "When those hotel keys are transferred off-site to another site, they need water to go with," Marnie said, clarifying that hotel-water entitlements remain with existing hotel rooms unless reallocated by policy.

Parking was repeatedly described by residents as "the elephant in the room." A public speaker identified as Stephanie said Carmel must address parking enforcement and employee parking programs before housing growth compounds existing shortages. Commissioner Alborn and others urged the city to pursue a parallel strategic parking-management plan tied to implementation of the housing strategies.

Several speakers also urged the city to seek private-sector proposals for the city-owned sites. Developer and long-time resident Fred Kern recommended issuing a request for proposals (RFP) to solicit ideas, including underground parking and hotel redevelopment, arguing the private sector could offer practical solutions. Land-use attorney Peter Prowse cautioned that the amendment still faces HCD review, potential CEQA requirements once projects are defined and that the city's currently adopted housing element remains effective until any amendment is adopted. "The bottom line is this proposal could be a year or more away from adoption in the best case," Prowse said, and he urged the city to proceed with mandated RFPs this December for city-owned sites to avoid credibility risks.

Staff responded that HCD has already been engaged in repeated reviews and that the city plans a standard submission and 60-day HCD review period; staff said HCD representatives told them that missing an internal RFP deadline would not automatically decertify the existing housing element. Staff also noted that CEQA analysis will be completed as part of future project approvals (code amendments or site-specific development proposals), because CEQA requires a static project description before a full environmental review can be completed.

Commissioners praised the work of the resident group and staff while asking staff to return to council with the commission's feedback, including stronger clarity on water-allocation decisions, a revised ADU ordinance (implementation detail), and a recommended process or timetable addressing the city-owned sites. There were no formal motions or votes during the meeting; staff will incorporate the commission's comments into the report to the City Council, which has authority to decide whether to submit the amendment to HCD.

"It gives us more flexibility," Brandon said of removing the city-owned sites, describing the option for the council to pursue future public-private partnerships, arts or park uses, or other community-driven outcomes if the sites are not bound to the housing element.

Next steps outlined by staff: a public comment period concurrent with the staff report release; another planning commission meeting on Nov. 3; staff revisions incorporating commission and public comments; formal submittal to HCD followed by up to a 60-day statutory review; and subsequent municipal-code work and CEQA analysis if the amendment is accepted and the city proceeds with implementation measures.

The meeting closed with commissioners urging that the housing amendment move forward while concurrently accelerating work on parking management, water-allocation policy and implementation staffing so the city can reliably administer the new programs should the amendment be adopted by the City Council and certified by HCD.