Planning Commission Staff Report
Report Prepared by: Leah Brown, Senior Planner, Development Services Department
Title
SUBJECT: Recommendation to City Council to Adopt General Plan Amendment #24-06 Adopting the Merced Multijurisdictional Housing Element and Appendix G, Zoning Ordinance Amendment #26-0001, adding language to the Regional Housing Needs Allocation Rezones, Environmental Review #26-0068 and the City of Merced’s SB 244 Analysis.
ACTION: Approve/Disapprove/Modify Recommendation to City Council to adopt:
1) General Plan Amendment #24-06 - 6th Cycle Housing Element;
2) Zoning Ordinance Amendment #26-0001, Regional Housing Needs Allocation (RHNA) Rezone language;
3) Environmental Review #26-0068 (Statutorily Exempt)
4) SB 244 Analysis;
RECOMMENDATION
Planning staff recommends that the Planning Commission make a motion to adopt Resolution #4181 recommending the City Council consider and adopt:
• General Plan Amendment #24-06 - 6th Cycle Housing Element
• Zoning Ordinance Amendment #26-0001 - adding required language for RHNA rezones;
• Environmental Review #26-0068 (Statutorily Exempt); and
• SB 244 Analysis;
Body
DISCUSSION
LOCATION:
City of Merced
GENERAL PLAN DESIGNATION AND SURROUNDING USES: Multiple Land Use
ZONING AND SURROUNDING ZONES: Multiple Zoning Designations
BACKGROUND AND PRIOR ENTITLEMENTS:
California Government Code Sections 65580 through 65589.8 establish California's Housing Element as a state-mandated component of the General Plan, to be updated every eight years, and require local jurisdictions to plan for existing and projected housing needs for all income levels and implement programs that facilitate housing production and affordability consistent with Regional Housing Needs Allocation (RHNA) requirements. The last time the Housing Element was updated was July 18, 2016, also known as the 5th Housing Cycle. The Housing Element is required to maintain a specific inventory of parcels to support the housing needs identified through the RHNA numbers.
The RHNA numbers for the 5th Housing Cycle were 5,537 across the following income categories:
|
Income Category |
RHNA Allocation |
|
Extremely Low Income |
675 Units |
|
Very Low Income |
676 Units |
|
Low Income |
966 Units |
|
Moderate Income |
886 Units |
|
Above Moderate Income |
2,348 Units |
PROJECT DESCRIPTION:
The City of Merced has prepared General Plan Amendment #24-06, an update to its Housing Element also known as the 6th Housing Cycle. The Housing Element establishes policies and programs to support the development of affordable and adequate housing for all income levels, reviews the current RHNA numbers, and identifies current and potentially future parcel inventory.
The RHNA directly impacts the housing element. It is required by the State and identifies the specific number and income level of housing units which should be provided by having adequately zoned sites within a jurisdiction’s boundaries. The City’s requirement under RHNA is to demonstrate adequately zoned sites. The City is not required to produce the associated housing. The RHNA numbers for the 6th Housing Cycle were 10,517 across the following income categories:
|
Income Category |
RHNA Allocation |
|
Very Low Income |
2,543 Units |
|
Low Income |
1,742 Units |
|
Moderate Income |
1,838 Units |
|
Above Moderate Income |
4,394 Units |
To enact the General Plan Amendment #24-06, pursuant to Merced’s Municipal Code, Zoning Ordinance Amendment #26-0001 is also required and has been requested by the California Department of Housing and Community Development (HCD) to ensure compliance with statutory requirements for RHNA rezoned parcels. These actions are Statutorily Exempt under the California Environmental Quality Act (CEQA) as discussed in Environmental Review #26-0068.
Concurrent with this update, Staff is recommending the Planning Commission recommend City Council adopt the City’s SB 244 Analysis, which is a study of Disadvantaged Unincorporated Communities (DUCs) near the city limits.
ANALYSIS:
The Housing Element update began in 2022 through coordinated discussions among the seven jurisdictions within the Merced County Association of Governments (MCAG), each responsible for updating its Housing Element. With the adoption of Resolution No. 2022-72, the City of Merced formally joined the Multijurisdictional Housing Element (MJHE) and Cost-Sharing Agreement. Since that time, the City has worked closely with its consultant, Rincon, and the participating agencies to prepare the Merced County MJHE (Attachment B) and appendices. Each appendix represents a different agency in the MJHE. Appendix G (Attachment C) contains the City of Merced specific Housing Element content.
The policies and programs contained in the Housing Element have undergone extensive state and public review, with significant input and public participation throughout the process. The City prepared and submitted five drafts of the Housing Element to HCD, each of which was subject to a mandatory public review period of at least seven days. During each of these public review periods, public comments were received and incorporated into the subsequent drafts. The respective drafts were submitted in May 2024; April, September, and December of 2025; and March 2026. After each submission, HCD had up to 90 days to review and provide comments identifying additional revisions needed for compliance. The City revised the drafts accordingly after each review cycle.
On March 17, 2026, HCD issued a letter confirming that the revised draft Housing Element, with minor modifications, meets the statutory requirements identified in its December 8, 2025, review. (Attachment D).
While the State acknowledges the City rezoned 27 parcels to meet its RHNA, HCD requires additional statutory language to be incorporated into the Zoning Ordinance for the rezones to be considered complete. This language is included in Zoning Ordinance Amendment #26-0001 and reflected in Program 2 of the Housing Element, which outlines the City’s actions to ensure adequate sites consistent with Government Code Sections 65583(c)(1)(A) and 65583.2.
The rezoned sites shall include the following components pursuant to Government Code Section 65583.2(i):
• Permit owner-occupied and rental multi-family uses by-right for developments in which 20 percent or more of the units are affordable to lower-income households. By-right means approval without discretionary review.
• Permit the development of at least 16 units per site.
• Establish a minimum density of 20 units per acre and a maximum density of at least 24 units per acre for all rezone sites to accommodate lower income RHNA.
• Ensure that either: a) at least 50 percent of the shortfall of low- and very-low-income regional housing need can be accommodated on sites designated for exclusively residential uses; or b) if accommodating more than 50 percent of the low- and very-low-income regional housing need on sites designated for mixed uses, all sites designated for mixed uses must allow 100 percent residential use and require that residential uses occupy at least 50 percent of the floor area in a mixed-use project.
A key aspect to the Housing Element is the platform of programs the city must implement over the period of the 6th Cycle. In January 2025, the city held a workshop to review the programs and receive public input. The city examined 14 Programs:
Program 1: Regional Collaboration
Collaborate regionally on housing, funding, best practices, and efforts addressing housing, transit, economic development, and homelessness.
• Participate in regional meetings
• Partner with regional agencies to:
• Address homelessness
• Management and implement transit and services
• Provide a public forum
• Implement a 10-Year Plan to End Homelessness
Program 2: Adequate Sites for RHNA and Monitoring of No Net Loss
Ensure there are adequate sites at appropriate densities during the planning period to accommodate City’s share of regional housing need.
• Facilitate development*
• Rezone*
• Maintain an inventory of prospective sites*
• Meet with property owners
• Monitor no net-loss*
*Strictly required by state law
Program 3: By-Right Approval
If a site has been used in the City’s inventory in prior housing element cycles and meets certain criteria, projects on those sites are subject to by-right approval when a project includes 20 percent of the units affordable to lower-income households and no subdivision is proposed.
• Update zoning code to reflect state law
*Strictly required by state law
Program 4: Replacement Housing
Development on non-vacant sites with existing residential units is subject to replacement requirements, pursuant to AB 1397.
• Amend the zoning code to address replacement requirements
*Strictly required by state law
Program 5: Accessory Dwelling Units
Continue to encourage the production of ADUs and work to provide affordable units for lower-income households.
• Facilitate development-provide technical assistance, resources, and education
• ADU amnesty program
• Pursue funding sources to enhance ADU affordability
Program 6: Zoning Code Amendments
Remove constraints to housing development by amending the Zoning Code to facilitate a variety of housing types, especially housing for lower-income households and those with special needs.
• Allow for emergency shelters, transitional and supportive housing, and other resources for low-income families and people experiencing homelessness*
• Revise development standards
• Allow for farmworker and employee housing*
*Strictly required by state law
Program 7: Facilitating Affordable Housing Development
Expand affordable housing options for households of all income levels using development tools such as density bonus provisions, waiving development fees and streamlining the application process.
• Pursue funding
• Conduct outreach to affordable housing developers
Program 8: Preservation of At-Risk Housing
The City will work to preserve assisted units and will proactively monitor to encourage continued affordability beyond existing covenants and work proactively with owners of affordable units to assist in rehabilitation needs.
• Monitor at-risk units
• Work with property owners to ensure tenants are properly notified
*Strictly required by state law
Program 9: Housing Preservation and Rehabilitation
The City works cooperatively with citizens to ensure Municipal Code compliance and explore funding for housing rehabilitation.
• Track where rehabilitation needs are heightened
• Conduct a housing conditions survey
• Public education
Program 10: Lower-Income and Special Needs Housing
Assist in the development of housing to meet the needs of extremely low-, very low-, and low-income households.
• Connect residents to resources
• Collaborate with the Housing Authority
• Develop and inventory of affordable housing
• Work with UC Merced to complete a Student Housing Plan
• Density bonus for senior housing
Program 11: Farmworker Housing
Merced had 2,781 farmworkers in 2021, representing 22.6 percent of the total farmworker population across the county.
• Apply for funding for farmworker housing
• Work with farm owners to identify farmworker housing needs
• Facilitate development through expedited review and development standard concessions
Program 12: Water and Sewer Service
The City of Merced is the provider of water and sewer services within city limits. Adequate water and sewer services are available to fully accommodate the City’s share of the RHNA.
• Adopt a policy to prioritize water/sewer services to affordable housing projects if capacity is limited*
• Update master plans
• Conduct outreach on conservation measures
• Rehabilitation assistance for conservation
*Strictly required by state law
Program 13: Community and Economic Development
Develop and maintain infrastructure for economic growth and equal access to essential services.
• Review the City’s Capital Improvement Projects
• Work with MCAG on transportation plans
• Connect street and pedestrian/bicycle networks
Program 14: Fair Housing Outreach and Enforcement
Assist residents with fair housing issues
• Provide and disseminate information and resources
• Conduct workshops
• Support homeownership opportunities
Over the course of the multiple reviews, the State requested more robust definitions and specific measurable deliverables for each program. There were several meetings with HCD staff and technical advisors working in coordination with the city and consultants. Much of the revisions were statutory requirements and had to be incorporated to gain full compliance with Housing Element law. The detailed programs are within Section G7 Housing Plan of the attached Appendix G: City of Merced.
SB 244:
As part of the Housing Element process, the City conducted an SB 244 Analysis evaluating Disadvantaged Unincorporated Communities (DUCs) near the City limits. As noted in the October 17, 2022, Council Meeting, SB 244 does not require the physical extension of public services to residents within an identified DUC. It only requires an analysis of the specific services within the area. It also requires identification of potential funding mechanisms but does not directly provide any financial support to extend services or pay for connection costs. Areas identified in the SB 244 analysis may be candidates for grant funding and other support programs within the County prior to any future annexation of the areas into the City. Adoption of this analysis does not initiate or guarantee annexation; it is informational only. No significant changes, such as sources of water, sewer, or other services provided by the City have occurred in these communities since the study began in 2022.
DUCs are required to be identified based on the following criteria:
• Communities must consist of at least 10 dwelling units that are in close proximity to each other.
• Communities must have a median household income of 80 percent or less than the statewide average.
• “Island communities,” which are communities that are surrounded or substantially surrounded by one or more cities and located within a sphere of influence, but outside of a city boundary.
• “Fringe communities,” which are communities that are located within a sphere of influence, but outside of a city boundary.
• “Legacy communities,” which are geographically isolated communities that have existed and been inhabited for at least 50 years and are located within the unincorporated county but are outside of a city boundary and its sphere of influence.
In total, six DUCs were identified within the Merced sphere of influence, as identified in the map below.
The detailed results of this study are included at Attachment G. While each area has its own specific details, in summary, some residents in these communities have water provided by the City of Merced via an out of boundary service agreements. Although many parcels in this community are not currently connected to the City’s water system, they have the option to connect to the system in the future. City of Merced policy details that individual parcels may only be connected to the City’s water system in situations where an on-site well fails and/or when a parcel is annexed by the City. These wells extract water from the Merced Groundwater Basin. Groundwater supplies the full system’s capacity of 57,800 gallons per minute, or 83 million gallons a day. The per capita water demand has steadily decreased since 1979 as a result of the City’s conservation efforts, however, as a result of overall use, in 2010, the Merced subbasin was declared in overdraft. Several system upgrades are required to serve future areas of development within the City’s water service area, including the addition of several new wells and repairs to water mains.
Most of the parcels in the DUCs are not connected to the City’s wastewater treatment facility and must maintain their individual septic tank systems to handle household wastewater. Storm water drainage capture is limited, and infrastructure is generally lacking. Merced County Fire Department provides fire protection to all six DUCs with response times ranging from 5 to 10 minutes.
Housing Element Compliance is essential to demonstrate the City’s intent to meet state requirements and restores eligibility for state housing grants and competitive scoring advantages, which support the development of affordable housing in Merced.
ENVIORNMETNAL DETERMINATION: Pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15164, California Code of Regulation, Title 14, division 6, Chapter 3, the City prepared and adopted an Addendum to the General Plan EIR (#24-42) for the Merced Housing Element Update and Rezoning, attached as Attachment E. No subsequent EIR shall be prepared for General Plan Amendment#24-06 and its accompanying Zoning Ordinance Amendment #26-0001 since no substantial changes are proposed since the adopted addendum. Additionally, any future development on the RHNA sites will require individual environmental review under CEQA to assess potential impacts related to each specific proposal. Thus, Environmental Review #26-0068, a statutory exemption, pursuant to Guidelines Section 15162, was prepared for this action (Attachment F).
GENERAL PLAN CONSISTENCY: This plan adoption is to modify the Housing Element by adopting this update which will replace the 5th Cycle Adopted Housing Element in the General plan. Both the 6th Cycle Housing Element and the adopted SB 244 Analysis will be incorporated into the City’s Comprehensive General Plan Update.
ATTACHMENTS
A) Draft Planning Commission Resolution #4181
B) Merced Multijurisdictional Housing Element
C) Appendix G: City of Merced - Housing Element
D) HCD’s letter of March 2026
E) General Plan EIR Addendum
F) Environmental Review #26-0068
G) SB 244 Analysis