City zoning rewrite: planned development on smaller lots, housing rules, climate plan updates

In plain English

The Planning Commission is asked to recommend that the City Council adopt a package of zoning, subdivision and General Plan changes. The package would waive the city's lot-line (boundary) adjustment fee for multifamily or mixed-use projects that combine two or more lots and create at least two new homes; remove the rule that Planned Development Permits — which let a project vary from normal zoning standards in exchange for public benefits — only apply to sites of 20,000 square feet or more; rewrite zoning rules so transitional housing, supportive housing and farmworker (agricultural employee) housing are treated the same as comparable homes in the same zone, as state law requires; clean up wording in the city's inclusionary (below-market housing) rules; and update General Plan language to match the 2022 Climate Action Plan and the 2025 Local Hazard Mitigation Plan – Climate Adaptation Plan. A yes vote sends all of this to the City Council with a recommendation to approve, along with findings and a determination that no further environmental review is needed.

The changes affect small-lot property owners and builders who could combine parcels or seek flexible permits for projects of roughly two to four units, and they would open more zoning districts to transitional, supportive and farmworker housing on the same terms as other homes; the city also says keeping its Housing Element on schedule protects its eligibility for housing grants and guards against the state 'Builder's Remedy' penalty that would sharply limit the city's control over housing projects.

Key facts

Waiving the Community Development Department's boundary adjustment fee would save an applicant "just under $2,000, based on today's fees"; staff say this is likely too small to matter for multimillion-dollar projects but could help projects of about two to four units.
Roughly 110 of the City's 158 housing inventory sites are smaller than 0.5 acres.
Four Housing Element objectives are addressed: 1.1e (lot consolidation incentives), 1.6b (Planned Development Permits under 20,000 square feet), 3.4b (transitional and supportive housing), and 3.7a (agricultural housing) — several due in 2026.
Farmworker housing rules follow state law: housing for six or fewer employees is treated as a single-family home, and housing with up to 12 dwelling units or 36 beds is treated as an agricultural use.
Next steps: General Plan and fee schedule resolutions and a first reading of the ordinance at City Council on October 27, 2026, with a second reading anticipated November 17, 2026; Coastal Commission action on the Local Coastal Program parts is anticipated in 2027.

Reasons to support

Adopting these changes on time keeps the Housing Element certified by the state Department of Housing and Community Development, which staff say preserves eligibility for housing grant funding and avoids the Builder's Remedy, a penalty that would substantially reduce the city's ability to regulate housing development.
State law already requires that transitional and supportive housing be treated as residential uses subject only to the rules for similar homes in the same zone, and that farmworker housing be treated like single-family or agricultural uses; the amendments bring the city's code into line and make supportive housing allowed by right where multifamily and mixed uses are permitted.
Dropping the 20,000-square-foot minimum for Planned Development Permits gives small projects — such as live-work units — a flexible path that larger projects already get through state density bonus law, and projects of four or fewer units would still be decided by the Planning Commission.

Reasons to oppose or change it

Staff themselves acknowledge the fee waiver of just under $2,000 would not be a large enough incentive for the big corridor and downtown projects where consolidation is hardest; developers told the city that only a substantial incentive such as more allowed units would move those projects, and that analysis is deferred to a later 'phase two.'
Planned Development Permits allow departures from setback, open space and other district standards, and the amendments delete the stated intent that permits be issued 'only where the subject parcel is large enough to make innovative and creative site planning possible' — meaning neighbors could see nonstandard projects on lots of any size.
The public notice for this package listed short-term rentals on properties with accessory dwelling units, but that topic was dropped because staff say more work is needed; residents who came expecting that issue get no action on it, and attendees at the August 10, 2026 community meeting also asked for more homeownership opportunities, which this package does not directly address.

Official wording

Amendments to Municipal Code Chapter 23.12 – Maps Required, Chapter 24.08 Part 8 – Planned Development Permit, Chapter 24.10 – Land Use Districts, Chapter 24.16 Part 1 – Inclusionary Housing Requirements, and Chapter 24.22 – Definitions, to Eliminate Boundary Adjustment Fees for Certain Development Projects, Allow Planned Development Permits on Sites Less Than 20,000 Square Feet, Align with State Law Requirements Related to Zoning for Agricultural Housing and Supportive and Transitional Housing, and Clarify Existing Inclusionary Housing Regulations; and Changes to the General Plan to Align It with the Climate Action Plan and Local Hazard Mitigation Plan – Climate Adaptation Plan. CEQA: Exempt - Guidelines 15061(b)(3) and consistent with the negative declaration prepared for Climate Action Plan 2030. Applicant: City of Santa Cruz (Continued from 9/17/26 - item 4) Recommendation: Motion to: 1) Acknowledge that the required Planning Commission findings for recommending approval of Zoning Ordinance and Local Coastal Program amendments can be made, as detailed in the staff report; 2) Recommend that the City Council approve the proposed amendments to City of Santa Cruz Municipal Code Chapters 23.12, 24.08, 24.10, 24.16, and 24.22, to the Local Coastal Program Implementation Plan, and to the General Plan; and 3) Acknowledge the determination that the proposed amendments are exempt from environmental review under California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) and as consistent with the negative declaration prepared for Climate Action Plan 2030. Information Items Subcommittee/Advisory Body Oral Reports Items Referred to Future Agendas

Official agenda

Summary written by claude-opus-5 from the agenda and the Staff report (agenda packet, pages 8-37). It can contain mistakes. The official documents govern.