Report Prepared by: Leah Brown, Senior Planner, Development Service Department
Title
SUBJECT: Adoption of a Resolution Approving a Statutory Exemption, Amending the Housing Element of the General Plan, and Introducing a Zoning Ordinance Amendment to Complete the Regional Housing Needs Allocation Requirements for Compliance with the State Housing Laws
REPORT IN BRIEF
Considers adopting a Resolution amending the Housing Element of the General Plan and introducing a Zoning Ordinance Amendment to comply with State Housing Laws.
RECOMMENDATION
City Council - Adopt a motion:
A. Adopting Resolution 2026-44 a resolution of the City Council of the City of Merced, California, Adopting General Plan Amendment #24-06, Amending the housing Element of the General Plan. And Environmental Review #26-0068 (Statutory Exemption); and
B. Adopting General Plan Amendment #24-06; and,
C. Introducing Ordinance 2594, an Ordinance of the City Council of the City of Merced, California, Amending Ordinance No. 2577, and adopting environmental review #26-0068 (Statutory Exemption); and,
D. Adopting Statutory Exemption Section 15162; and,
E. Directing staff to submit the adopted Housing Element to the State Department of Housing and Community Development.
Body
ALTERNATIVES
1. Approve, as recommended by Staff; or,
2. Approve, subject to conditions other than recommended by Staff (identify specific findings and/or conditions amended to be addressed in the motion); or,
3. Deny; or,
4. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Sections 200, 405, and 1105.
CITY COUNCIL PRIORITIES
Fiscal Year 2026/27 Adopted Goals and Priorities, Housing and Homelessness.
DISCUSSION
California Housing Element law requires every jurisdiction to prepare and adopt a housing element as part of its General Plan. State housing element requirements are framed in Government Code, Sections 65580 through 65589, Chapter 1143, Article 10.6. The law requires the State Department of Housing and Community Development (HCD) to administer the law by reviewing housing elements for compliance with state law and by reporting its written findings to the local jurisdiction. The Housing Element must identify existing and projected housing needs, establish goals and policies to address those needs, and demonstrate adequate capacity to accommodate the jurisdiction's Regional Housing Needs Allocation (RHNA). Additionally, a certified housing element is a key requirement to qualify for numerous state grants and funding.
State law mandates that housing elements be updated every eight years. The City of Merced last adopted a Housing Element that was certified by HCD in September 2016 for the Fifth Cycle planning period.
For the Sixth Cycle Housing Element, covering the planning period of January 31, 2024, through January 31, 2032, the City elected to participate in the Merced County Multi-Jurisdictional Housing Element (MJHE). The collaborative effort included the County of Merced and the Cities of Atwater, Dos Palos, Gustine, Livingston, Los Banos, and Merced. Participation allowed the jurisdictions to coordinate regional housing analyses, public outreach, technical studies, and consultant services while preparing individual jurisdiction-specific Housing Elements.
The City Council first considered participation in the MJHE during meetings in October and December 2022. On August 7, 2023, the City Council adopted Resolution 2023-63 authorizing participation in the MJHE.
Preparation of the Housing Element involved extensive public participation over more than three years. Public outreach included community workshops, stakeholder meetings, Planning Commission hearings, City Council study sessions, legally required public review periods, online engagement, and coordination with HCD, housing providers, advocacy organizations, neighboring jurisdictions, and the general public.
Between May 2024 and March 2026, the City submitted multiple draft Housing Elements to HCD for review. Following each review, the City revised the document to address HCD comments, update housing data and analyses, refine implementation programs, and incorporate changes resulting from public comments and ongoing planning efforts.
The Housing Element serves as the City's long-range policy document for addressing existing and future housing needs. The document evaluates demographic trends, housing conditions, housing constraints, special housing needs, available residential land, and opportunities to increase housing production and preserve existing housing stock.
The updated Housing Element includes:
• Updated demographic, housing, and economic analyses;
• A residential sites inventory demonstrating adequate capacity to accommodate the City's RHNA allocation;
• Goals, policies, and implementation programs addressing housing affordability, housing production, preservation, equal housing opportunity, special needs populations, and homelessness;
• Programs to monitor Housing Element implementation and maintain compliance with State law; and
• Revisions responding to HCD comments received throughout the review process.
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.
As part of the Housing Element update process, the City completed a comprehensive review of its residential land inventory and identified sites capable of accommodating its RHNA allocation. To ensure adequate residential capacity, the City adopted Ordinance No. 2577 in April 2025, completing a series of rezoning actions necessary to satisfy State Housing Element requirements.
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 Zoning Ordinance Amendment for 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.
On March 17, 2026, HCD issued a letter finding that the City's Housing Element substantially complies with State Housing Element Law, contingent upon completion of minor revisions and final ordinance language regarding the City's rezoning program. Those revisions have now been incorporated into the final Housing Element presented for adoption.
Adoption of the Housing Element completes the City's Sixth Cycle Housing Element update and positions the City to maintain compliance with State Housing Element Law while implementing policies and programs designed to facilitate housing opportunities for all income levels through January 31, 2032.
Staff believe the Housing Element satisfies applicable requirements of State Housing Element Law and reflects extensive coordination with HCD and public stakeholders throughout the planning process. Following City Council adoption, staff will submit the adopted Housing Element to HCD requesting formal certification.
The proposed action has been reviewed in accordance with the California Environmental Quality Act (CEQA). Pursuant to Government Code Section 65453, adoption or amendment of a General Plan for the purpose of complying with State Housing Element Law is exempt from CEQA. Accordingly, Staff recommends that the City Council adopt Statutory Exemption No. 26-0068.
Implementation of future development projects or subsequent zoning amendments contemplated by the Housing Element will be subject to environmental review, as required, prior to approval.
Notice of the public hearing was provided in accordance with applicable provisions of State law. The Housing Element was made available for public review during multiple public review periods throughout the update process, and public comments were considered during Planning Commission and City Council hearings.
On June 17, 2026, the Planning Commission adopted Resolution #4181:
• Concurring with and adopting the Analysis, Environmental Determination and General Plan Consistency sections of Planning Commission Staff Report #26-344.
• Recommending that the City Council of the City of Merced approve and adopt General Plan Amendment #24-06.
• Recommending that the City Council of the City of Merced approve and adopt Zoning Ordinance Amendment #26-0001.
• Recommending that the City Council of the City of Merced approves and adopts Environmental Review #26-0068 finding these actions Statutorily Exempt from CEQA pursuant to CEQA Guidelines Section 15162.
IMPACT ON CITY RESOURCES
No appropriation of funds is needed.
ATTACHMENTS
1. Merced Multijurisdictional Housing Element
2. Appendix G: City of Merced - Housing Element
3. HCD’s letter of March 2026
4. General Plan EIR Addendum
5. Environmental Review #26-0068
6. Zoning Ordinance Amendment 2594
7. Planning Commission Resolution #4181
8. Resolution 2026-44
9. Presentation