Daly City delays housing-element vote after heated questions about Seton Medical Center rezonings

Daly City Council on Oct. 14 paused action on a revised housing element and related rezonings after a multi-hour presentation by city staff and consultants and repeated council questions about the effects of by‑right rezoning on parcels adjacent to Seton Medical Center.

Cynthia Walsh of PlaceWorks, the consultant that prepared the element, told the council the housing element documents state requirements and the city’s site inventory. "The housing element is one of the eight mandated elements of the general plan," Walsh said, explaining the Regional Housing Needs Allocation process and why Daly City must identify sites to meet its RHNA allocation. Walsh said Daly City received an allocation of 4,838 units and currently shows total capacity of about 3,622 units, leaving a shortfall concentrated among lower‑income categories.

City staff and the consultant outlined a rezone package that would redesignate several commercial and hospital‑adjacent parcels for high‑density residential development so the element can be certified by the state Department of Housing and Community Development (HCD). Staff said some rezoned sites would permit taller buildings (staff discussed up to 120 feet at certain Sullivan Corridor parcels) and would be allowed by right, subject only to objective design standards rather than the city’s usual discretionary design review.

Councilmembers pressed staff on several topics: how rezoning would affect Seton Medical Center’s current parking fields, whether replacement parking could be guaranteed, who would decide affordability levels in projects that later apply for building permits, and how state parking rules would apply. City staff said a new state law (described in the presentation as "AB 2097") can prohibit local parking requirements for projects within a half‑mile of high‑quality transit, and that the city’s affordable‑housing ordinance would apply at the building‑permit stage.

The proposed inclusion of four parcels now designated "HOSP" near Seton drew particular scrutiny because the parcels include parking lots and are physically adjacent to hospital operations. Council members said they were concerned about losing local review: under the by‑right process, projects meeting the zone’s objective standards would not return to the Planning Commission or City Council for design review. One councilmember noted the parcels were being proposed for redevelopment as part of a concept informally described to staff as a "wellness village," and asked whether any contractual commitments would protect hospital operations and parking; staff said such arrangements would need to be negotiated between the hospital and any developer and could not be made mandatory in the housing element itself.

Developer David Nia (AGI Avant), who has been discussing a multi‑phase proposal with AHMC, described an "intergenerational wellness village" including senior living, workforce/attainable rental housing and amenities, and said the project could include structured parking and workforce targeting. "We are planning to have senior living on‑site," Nia said, and added the team has discussed reserving a portion of housing to serve hospital staff.

Several councilmembers raised another practical concern: the California Attorney General has filed a complaint alleging AHMC failed to comply with prior conditions, and one member said that pending litigation makes it imprudent to approve rezonings tied to AHMC parcels now. Staff acknowledged the litigation but said the housing element process is subject to state deadlines and certification requirements and pointed to potential funding losses if the city does not secure certification.

City staff and a councilmember estimated that losing certification could put certain regional funding streams at risk (staff cited OBAG and PLHA allocations as examples), and a staff representative estimated the city could lose roughly a few million dollars in transportation and housing funding if the element is not certified by the state deadline.

After extended questioning and requests for more time to review the housing element packet and slides in more detail, Mayor Justin C. Manalo moved to continue the hearing to Oct. 28. The council seconded the motion and adopted the continuance by roll call, with ayes recorded.

Next steps: staff will post presentation materials and tables referenced in the hearing, return on Oct. 28 with the public hearing resumed and present the proposed resolutions and ordinance language needed for the second reading of rezonings. The council’s decision to continue allows councilmembers more time to review site‑specific affordability assumptions, parking and hospital‑adjacent mitigation strategies before deciding whether to adopt the element and associated rezones.