Carmel-by-the-Sea planning commissioners review housing element amendment, outline ADU, hotel, downtown and church strategies

The Carmel-by-the-Sea Planning Commission held a special workshop on the city's housing element amendment where staff and volunteer group members reviewed four proposed programs to deliver affordable rental housing and discussed next steps for drafting amendment language to submit to the state.

Planning Director Anna Jeannette said the meeting's goal was to "have an informative discussion at a more intimate level so that we can work through potential amendments" and to collect community input before drafting formal language for the commission and council.

The draft amendment responds to a 2004 housing element that identified two city-owned sites and 149 affordable units; staff and volunteers are proposing a multi-pronged approach that relies on accessory dwelling units (ADUs), conversion and transfer of underperforming hotels, downtown mixed-income and live-work conversions, and partnerships with faith-based property owners. Jeannette told the audience the city will prepare draft ordinance language and proceed with the standard public hearing process before the Planning Commission and City Council.

Why it matters: Carmel must produce a housing element that the state will certify. The city's adopted RHNA allocation and related obligations — and the practical constraints of Carmel's small lots, water limits, coastal regulation and village-scale character — mean staff and volunteers told the meeting they are pursuing a "Carmel-custom" solution built from several smaller strategies rather than a single large-site approach.

Summary of the four program tracks presented

- ADUs: Nancy (volunteer working-group member) said the earlier housing element undercounted ADU production. Based on permit counts from 2019'023, staff updated the five-year baseline from 4.5 ADUs per year to 8.4 units per year and raised the inventory contribution from 34 to 60 units; staff proposed additional outreach, an amnesty/legalization program, presale inspections to identify unpermitted cottages, and incentives (priority water credits, fee reductions and deed restrictions) intended to add roughly 15 more ADUs for an estimated total of about 75 units from this track if incentives are adopted.

- Hotel conversions and transfers: Tim (volunteer working-group member) reviewed a proposal to encourage conversion of small, underperforming hotels into deed-restricted affordable rentals while allowing developers to sell the hotels' "hotel keys" (rights to operate hotel rooms) to fund conversions. Staff said they persuaded the California Department of Housing and Community Development (HCD) to consider hotels smaller than the 5+ acre sites originally in the element; the eligible pool grew from about five hotels to dozens. A sample pro forma for a 15-room hotel showed a conversion that relied on both the value of the converted building and the sale of hotel keys; meeting presenters estimated a target range of roughly 120'160 affordable units from participating hotels, emphasizing these are projections.

- Downtown live-work and mixed-income: Project team members described a ground-up inventory of every commercial parcel and leasable space (more than 1,000 leasable spaces mapped by volunteers) and proposed two downtown programs: a deed-restricted live-work use to reactivate underutilized, off-high-street commercial spaces; and incentives for small-scale mixed-income redevelopment (targeting roughly 75% market-rate/25% affordable mixes) by raising dwelling-unit-per-acre limits for mixed-income projects and prioritizing water for projects that include deed-restricted units. Staff said they are discussing with HCD a reduced minimum site size (8,000 square feet) to allow more small parcels to qualify; they identified 36 double-lot (about 8,000-sq.-ft.) opportunities and pointed to Trevet Court (14 units on an 8,000-sq.-ft. lot) as a precedent.

- Faith-based sites: Christie and staff summarized outreach to five churches that collectively own more than 15 acres in the city (about 2.5% of city land). The city provided short feasibility/legal analyses to each congregation and hosted a "Faith & Homes" summit with pro bono experts. Staff estimated churches could plausibly contribute roughly 60 units, depending on individual site feasibility studies and financing. The city is exploring a publicly administered housing trust and a parallel charitable trust to attract private donations.

Questions, constraints and next steps raised in the public discussion

- Water: Participants asked whether available water and Cal Am's meter moratorium would limit projects. Stephanie Locke (Planning Commissioner) and a representative of the water management district said Carmel currently has approximately 14 acre-feet of water allocation that can be used for these projects; Pure Water Monterey expansion and water agency work to address a cease-and-desist order were cited as timing factors. Presenters said some hotel conversion projects that will complete after the Pure Water Monterey expansion could proceed now, but that meter rules and change-of-use reviews may apply.

- State review and HCD: Multiple presenters described frequent discussions with HCD and said the agency has been receptive to tailored approaches for small/coastal communities. HCD (as described in the meeting) expects demonstrable progress and evidence that the city's programs will lead to housing production; presenters said they are preparing draft ordinance language and consultant support (Veronica Tam) to make the legal and technical case to HCD.

- Coastal and hotel-rights issues: Staff acknowledged Coastal Commission jurisdiction on coastal access and visitor-serving capacity and said the hotel-transfer proposal includes a requirement that displaced commercial/visitor capacity be replaced elsewhere; staff noted Coastal Commission staff have emphasized preserving public access and visitor accommodations, though they indicated rate-control is not their direct jurisdiction.

- Parking and public safety: Many attendees urged a comprehensive parking study and long-term traffic/evacuation planning. Commissioners and residents raised CAL FIRE maps and wildfire-evacuation concerns; presenters said the state's RHNA process requires housing production even where wildfire risks exist and that local safety planning remains the city's responsibility.

- Implementation status: Staff reported the city completed its 2024 annual progress report and will present it to council; the request for proposals for objective design and development standards closed with three submittals; roughly 20'4 ADU permits were issued in the prior year, which staff said helps demonstrate material progress to HCD.

No formal votes or ordinance adoptions were taken at the workshop; presenters said the next steps are draft amendment language, continued coordination with HCD, and the standard public hearings before the Planning Commission and City Council.

"We think we're going to get a Carmel-custom solution," said Nancy, a volunteer working-group member. Planning Director Anna Jeannette said staff will use a consultant to draft the initial ordinance language and bring that language back for the commission and public hearings.

Ending: Staff asked attendees to complete worksheets left at the meeting and said the city would accept written comments at City Hall. The group expects to circulate draft amendment language to the Planning Commission and to HCD before initiating the formal amendment hearings.