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The City approved the Five Lagunas development in March 2016. The approved project consisted of 988 apartment units, and about 926,000 square feet of retail space including a luxury movie theater and new restaurants. MGP determined that the approved Five Lagunas project was not viable. MGP has been exploring new alternatives for the site, which includes less retail space, more office and housing, and a hotel; and submitted a new plan to the City on November 4th.
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The former Laguna Hills Mall is located within an area known as the Urban Village which encompasses approximately 240 acres and includes the Civic Center area, Saddleback Hospital (MemorialCare) and adjoining office buildings, Oakbrook Village, and the Villa Valencia senior assisted living facility. The boundaries of the Urban Village are generally Paseo de Valencia, Avenida de la Carlota, Los Alisos Boulevard, and the I-5 freeway. Zoning for the Urban Village is determined by the Urban Village Specific Plan (UVSP) https://www.lagunahillsca.gov/DocumentCenter/View/291/Urban-Village-Specific- Plan-UVSP which has been in place since 2002 and was last updated in 2011, after the City completed a comprehensive update to its General Plan in 2009. All properties in the Urban Village are subject to the development standards of the UVSP, which City staff and/or City Council enforce when considering proposed development projects or new businesses/uses. A key development control within the area is the UVSP “Trip Budget,” which regulates development based on traffic during morning and evening “peak” travel periods. (UVSP pp. 35-36.) The Trip Budget limits apply to all properties in the UVSP. (Also see FAQ No. 4.)
Imbedded within the UVSP, some uses are permitted “by right” such as retail stores, while others require a conditional use permit (CUP). For example, a CUP may be required to ensure potential traffic issues are addressed. The UVSP allows a variety of uses including office, retail, housing, hotel, and civic uses. New development is also subject to a Site Development Permit to ensure the city’s development standards are met. The City Council and/or City staff enforce the regulations of the UVSP by reviewing uses and development to ensure they are allowed in the UVSP. Uses that are not allowed in the UVSP cannot obtain a building permit or zoning approval. Examples of unpermitted uses in the UVSP include landfills, industrial uses, and manufacturing plants.
After the community forum, MGP heeded community concerns regarding the amount of high-density housing and overall project intensity, and submitted a development application to the City on November 4th showing significantly reduced levels of development. For comparative purposes, the table below depicts the uses and building areas of the Laguna Hills Mall, Five Lagunas, and The Village at Laguna Hills including the plan presented at MGP’s April 2019 Open House. Where indicated, building areas reflect gross floor area.
2013 LH Mall
April 2019 Plan
November 4th 2019 Plan
(Village at Laguna Hills)
225,000 s.f. – 300,000 s.f.
390,000 s.f. – 520,000 s.f.
Ranges are indicated since the final square footage actually developed could change with market conditions. The plan submitted on November 4th is on the City’s website at: https://www.lagunahills.ca/176/Planning-Projects-New-Developments.
The new plan has been named “The Village at Laguna Hills” and will replace the 2016 Five Lagunas plan, if approved.
March 2021 Update: The final Village at Laguna Hills plans have been modified to eliminate the ranges described above with the exception of the proposed hotel. The intensity of uses and building areas proposed are as follows:
The revised uses and building areas are described below along with previously proposed plans for comparison:
The multi-family units include 200 units of affordable housing – 100 units for Moderate Income Households and 100 units for Low Income Households. If possible, seniors and veterans who are currently residents of Laguna Hills will have first priority to rent these units. Any resident of Laguna Hills would have second priority.
For Orange County “Low Income Household” means a household earning no more than $71,750 for a single-person, and up to $102,450 for a family of four. A “Moderate Income Household” means a household earning no more than $86,500 for a single-person, and up to $123,600 for a family of four. The income levels described above are published annually by the state and can be found at: https://www.hcd.ca.gov/grants-funding/income-limits/state-and-federal-income-limits/docs/income-limits-2020.pdf.
Also see FAQ 20 below.
The Village at Laguna Hills is situated in an area of the City which is zoned “Village Commercial” (VC). The VC zone is implemented by the UVSP. Adopted in 2002 and amended in 2011, the UVSP permits between 30 and 50 dwelling units per acre. MGP’s new plan proposes a range of 1,200 to 1,500 units on 30 acres. This equates to 40 to 50 dwelling units per acre in the area designated for residential/mixed use and 18 to 22 units per acre spread over the entire site.
While housing is one element of the UVSP, the UVSP also contains objectives that require the development of other uses as well. Any project proposed by MGP would be evaluated against the policies of the UVSP to ensure the community’s original planning goals for the area are met.
The primary goals of the Urban Village Specific Plan are:
The goals described above are further supported by objective development standards including a land use plan, design guidelines, and an infrastructure plan. Certain goals benefit the on-going development of the UVSP specifically, such as fostering a pedestrian environment, while other goals would have community-wide benefits (increasing tax revenues).
March 2021 Update: The final Village at Laguna Hills plans have been modified to eliminate the 1,200 – 1,500 range for multi-family dwellings. The proposed number of dwelling units is 1,500 units. This represents a 512 unit increase in the number of multi-family units approved for Five Lagunas.
Source: Linscott, Law & Greenspan Traffic Impact Analysis for the Addendum to the City of Laguna Hills General Plan Program Environmental Impact Report for the Village at Laguna Hills Project, Table 6, September 1, 2020.
Overall, new development within the UVSP is regulated by a mechanism known as a “Trip Budget,” which is based on the amount of traffic new development could generate. (See FAQ No. 1.) However, it’s unclear at this time how State legislation identified in FAQ No. 21 would affect the UVSP Trip Budget for a housing or mixed-use project. The City is still evaluating the reach and impact of new State legislation on City development regulations.
Typically, the Trip Budget relies on traffic information published by the Institute of Traffic Engineers (ITE) to predict the amount of traffic a project will create. ITE trip rates are currently calculated based on ITE’s 10th edition of Trip Generation. The City specifically looks at “peak-hour” trips, which is traffic generated during the morning and evening “rush-hour” periods in evaluating traffic for purposes of the UVSP Trip Budget. These rush-hour periods are commonly referred to as “AM Peak” and “PM Peak” hour, respectively. Currently the UVSP has 335 trips in the AM peak hour and 1,680 trips in the PM peak hour available to accommodate traffic from new development. These trips are available on a first-come/first-serve basis. It should be noted that the remaining traffic figures above reflect the trips remaining after deducting trips from the Five Lagunas project approved in 2016. With each new development project, the City reduces the peak hour trips available within the UVSP based on a traffic study.
Also, the UVSP only recognizes “net new trips,” meaning property owners are given a credit for vehicle trips associated with existing buildings that are demolished and replaced with new buildings and/or uses. For example, if a 1,000 square-foot retail building was demolished, roughly seven (7) multi-family housing units could be rebuilt in its place with no net increase in vehicle trips. In this example, a 1,000 square foot retail building generates 3.81 vehicle trips, where seven (7) multi-family units generate 3.5 vehicle trips, or 0.5 trips per unit. For office uses, an 8,000 square foot office building could be built in place of a 1,000 square foot retail building since an office building only generates 0.47 trips for every 1,000 square feet. The vehicle trips described above reflect trip generation rates during the PM Peak hour since the PM Peak hour generates the highest traffic levels, although traffic for the AM and PM Peak hours will both be analyzed for the new project.
The table below depicts the relationship between uses and vehicle trips for each of the uses described above.
Per 1,000 Square Feet
*PM Peak Hour
ITE occasionally updates its trip generation rates, and the City always uses the most current edition available.
March 2021 Update: The completed traffic study for the project indicates an overall decrease in project traffic due to the elimination of retail square footage. Compared with anticipated traffic from Five Lagunas, Village at Laguna Hills will have nearly 10,000 fewer cars per weekday and over 15,000 fewer cars on the weekend since office and residential uses generate fewer vehicle trips than retail development as described above. Peak hour traffic during the evening commute period will also decline by over 900 vehicles. However, traffic during the peak morning commute period will increase by 119 vehicles compared to traffic anticipated from Five Lagunas.
See FAQ No. 1. In addition, development of the site is required to follow the City’s development codes and policies contained in the community’s General Plan and the UVSP. The vision for the UVSP area is to have a variety of uses working together to create an urban village consisting of civic, retail, recreational, housing, hotel, medical offices, and general offices. The former mall property accounts for nearly 30 percent of the land area within the UVSP under a single property ownership, and is the critical site within the UVSP in determining whether or not the goals of the city’s General Plan and UVSP will be realized. The City Council will evaluate any proposal brought forward by MGP to determine whether or not it fits within the broader objectives of the General Plan and UVSP requirements, and will always consider the good of the community.
However, it must be noted that the State legislature has become increasingly aggressive in redefining local control of zoning and other measures affecting housing, and could affect the City’s ability to regulate development of the site.
Laguna Hills General Plan: https://www.lagunahillsca.gov/DocumentCenter/View/133/ Laguna-Hills-General-Plan
As described in FAQ No. 4, new development in the UVSP is governed by the UVSP Trip Budget. When redevelopment of the Oakbrook shopping center was approved in 2012, the City accounted for the anticipated complete buildout of Oakbrook Village by deducting the number of peak hour trips the new project created from the available peak hour trips in the UVSP. The peak hour trips for Oakbrook Village were revisited in 2018 when the new retail building for Trader Joe’s was approved. The entitled buildout of Oakbrook Village includes 132,000 square feet for retail and 489 units. The City maintains a record of all peak hour trips from development projects approved within the UVSP.
According to a variety of sources, both public and private, apartment vacancy rates in Orange County are 4%-5%. According to the U.S. Census, the vacancy rate for Laguna Hills in 2017 was 7.7 percent. The City has 1,685 apartment units (excluding group quarters such as assisted living facilities – 396 units) which is 15 percent of the City’s housing stock (11,197 units). As a means of comparison, the vacancy factor for owner occupied units is estimated to be less than one percent. Owner occupied units include 3,200 condominiums and 6,312 single-family homes (9,512 units total), not including accessory dwelling units located on single-family properties. It should be noted that U.S. Census information may show different housing unit totals since it likely excludes the 289 units at Oakbrook Village built after the 2010 Census. In addition, Census “districts” that apply to the City do not follow City boundaries.
City of Laguna Hills Geographic Information System
2013-2021 City of Laguna Hills Housing Element: https://www.lagunahillsca/ DocumentCenter/View/131/Housing-Element
U.S. Census Bureau. “Laguna Hills” https://factfinder.census.gov. Accessed 24 October 2019.
O.C. Register: https://www.ocregister.com/2019/04/15/feel-bad-for-southern- californias-renters-as-vacancy-tightens-and-rates-climb/
March 2021 Update: The information above was written prior to the COVID-19 pandemic. During the pandemic City staff continued to monitor multi-family trends in Orange County. Multiple real estate trade publications identified the Orange County multi-family housing market stayed strong through the pandemic. The February 2021 edition of Western Real Estate Business cited an occupancy rate of over 96 percent for multi-family housing units in Orange County. Marcus & Millichap, a leading real estate services company, recently issued its Orange County Multifamily Market Report for Q1 2021 describing strong demand for rental housing. The report can be accessed at: https://www.marcusmillichap.com/research/market-report/orange-county/orange-county-multifamily-market-report.
See FAQ No. 3. It should be noted the City would like to have more retail on the site; however, the outlook for traditional brick and mortar retail is not very positive. While good retail locations will continue to do well, underperforming retail sites will continue to lose tenants and face redevelopment pressures as consumer support for traditional brick and mortar locations erode. Nationwide, over 7,000 retail stores closed in 2017, followed by 5,000 stores in 2018. Over 12,000 stores are projected to close by the end of 2019. The most significant trend impacting traditional retail stores is the continued rise of e-commerce retail sales. As on-line retail sales continue to increase, it is estimated that 75,000 more stores will need to be shuttered by 2026.
Orange County Business Council https://www.ocbc.org/research/ocbc-retail-study/
USA Today July 3, 2019 https://www.usatoday.com/story/money/2019/07/03/2019-store-closings-list-these-retailers-shuttering-locations/1597997001/
Coresight Research: https://coresight.com/research/weekly-us-and-uk-store-openings-and-closures-tracker-2019-week-36/
March 2021 Update: The information above was written prior to the COVID-19 pandemic. A variety of news sources have described how the pandemic has accelerated the trends described above. Coresight Research, a leading retail research firm, reports that 25 percent of America’s roughly 1,000 malls will close over the next three to five years. By 2025 experts expect a cumulative loss of over 500 malls. However, Class A malls in high income communities are the most likely to survive. The highly successful Irvine Spectrum and Newport Beach Fashion Island represent Class A competitive malls in the surrounding area to Laguna Hills. Notably, no new malls have been built in the U.S. in many years, with few exceptions.
Examples of malls being “re-imagined” are becoming more frequent. Westminster Mall is an example of how suburban malls are evolving. Although the mall still has Macy’s, JCPenney and Target as anchor stores, the City of Westminster has recognized its future is in great jeopardy. As a result, they started community outreach to develop a new Specific Plan for the 100-acre site that could allow up to 3,000 multi-family units in conjunction with hotel and office and a substantially reduced open air retail center.
Sources: CNBC August 27, 2020 https://www.cnbc.com/2020/08/27/25percent-of-us-malls-are-set-to-shut-within-5-years-what-comes-next.html
CNBC March 4, 2021 (video) Why U.S. Malls Are Disappearing: https://www.youtube.com/watch?v=C_JiP-j2FwM
Each type of project has its own unique benefits. For example, commercial office does not generate sales tax in and of itself, but it does create jobs within the community. While office workers will shop at local businesses and eat at local restaurants, the sales tax benefit derived from office worker purchases is not typically significant. Retail development generates on-going retail sales tax revenue, but is extremely susceptible to market conditions. Multi-family housing generates one-time revenues in park fees, and residents are an indirect source of sales tax revenue as everyday household purchases are made. A comprehensive net fiscal impact analysis will be prepared for the project by an independent third-party consultant and made available for public review.
But project value is not the only driver of land use decisions. Other considerations can include meeting State obligations for housing, improvement to the local economy through the addition of jobs, and improving the appearance of a major community gateway.
MGP is contemplating additional restaurants, a multi-screen luxury movie theater, and fitness tenant. Existing pad restaurants such as King’s Fish House and In-N-Out will remain, in addition to Nordstrom Rack. The City currently expects between 225,000 - 300,000 square feet of retail to be part of development at the property. The Laguna Hills Mall previously contained around 965,000 square feet of retail space (GFA), of which 536,000 square feet was contained in the former Sears, J.C. Penney, and Macy’s department store buildings.
March 2021 Update: The final Village at Laguna Hills plans have been modified to eliminate the retail range described above. New commercial space will include a 50,000 square foot theater building, two retail pads on El Toro Road and one retail pad on Avenida de la Carlota totaling +/-23,000 square feet. An additional +/- 46,000 square feet of retail shops will surround the project’s proposed 2.6-acre park. Approximately 108,000 square feet of retail space will face El Toro Road. Existing restaurants (King’s Fish House/ In-N-Out/ BJ’s Restaurant & Brewhouse) totaling +/- 23,000 square feet provide the project’s 250,000 retail building area.
The Laguna Hills Mall was very successful in the 1990’s, especially after a remodel in the mid part of that decade. The fact is, there was little competition in the region and the Mission Viejo Mall was struggling. As competition grew (the new Shops at Mission Viejo, Irvine Spectrum, Aliso Viejo Towne Center, the Arbors in Lake Forest) sales began slumping in the 2000’s. In the last fiscal year before the Great Recession (06/07), after adjusting for inflation, the Laguna Hills Mall generated $1.93M in sales tax revenue to the City. When MGP purchased the property in May of 2013, that figure had already dropped to about $1.45M. With the closure of many stores and the demolition of the south mall area, that figure dropped to $780,000 in fiscal year 2017-18.
March 2021 Update: The City has compiled additional sales tax history for the former mall as follows:
In June of 2018, the City Council approved a budget amendment for the 2018-19 fiscal year that reduced the City’s operating budget by about $1,000,000 or 4%. These cuts included some employee lay-offs and other staffing realignment and reorganization. In June of 2019, the City Council adopted the 2019-21 Biennial Budget and 8-Year Financial Plan. The current budget and 8-Year Plan do not in any way rely on additional one-time or on-going revenues from the former mall site. To make up for lost retail sales tax revenue, the City has requested that MGP consider space for a hotel use since hotels generate revenue from Transit Occupancy Tax (TOT).
March 2021 Update: The final project submittal for Village at Laguna Hills includes a hotel with 100 to 150 rooms which will generate a significant amount of Transient Occupancy Tax to the City. The City’s analysis of the project’s fiscal impacts conclude that the hotel will generate over $600,000 annually upon completion in TOT revenue for the City. The fiscal impact study is available on the City’s website. See also FAQ 14.
Property taxes are the City’s main revenue source at just over 50% of all General Fund revenues. While the basic overall property tax rate in the City is 1% of assessed value, the percentage of what the City receives of that overall rate varies throughout the City. For the former mall site, the City receives 9% of the 1%. For example, if the mall is currently assessed at $100M, the total property taxes paid by MGP would be $1M. Of that amount, the City would get 9%, or $90,000. If after redevelopment, the site was assessed at $500M, the City would get $450,000 annually. The City will also benefit from on-going revenues from the redevelopment of the project such as sales taxes and transient occupancy taxes. MGP will also pay one-time revenues to the City in the form of traffic impact fees, park development fees, development application fees, and building permit fees. The amount of on-going revenue to the City from MGP’s project is unknown at this time; however, the City will be commissioning the preparation of a fiscal impact study to evaluate costs and revenues to the city as a result of the potential development of the project. The study will evaluate the costs of providing all municipal services. The study will be made available for public review.
March 2021 Update: The Fiscal Impact Study prepared by the City for the project has identified a net positive affect on the City budget. A summary of the report’s findings are as follows:
Annual general fund revenues of $2.99 million:
a. Includes $1 million in property tax, over $1 million in direct and indirect sales tax, and $670k in hotel / transient occupancy tax.
b. Compares favorably to the declining sales tax from the original mall (see update to FAQ 12)
c. Tax revenue can be used for improved County Sheriff services.
d. After accounting for projected increased City expenses (~$1.69 million), the project will generate an annual net fiscal surplus of $1.3 million at buildout to the City.
A full copy of the fiscal impact analysis is available at: https://www.lagunahillsca.gov/176/Planning-Projects-New-Developments under “Village at Laguna Hills”.
Any impacts on city services, infrastructure, and the environment from the redevelopment of the property are required to be analyzed under the State environmental law known as the California Environmental Quality Act (CEQA). State law specifically requires an analysis of project water supply availability, which will be served by the El Toro Water District. Each public agency that provides service to the project will be asked to comment on potential impacts the project would have on the services it provides. If project impacts are determined to be “significant,” it is possible for the project to be modified, or for “mitigation measures” to be applied in order to reduce one or more significant impacts. For example, a problem of localized flooding could be solved through the construction of more storm drain systems. The cost of infrastructure needed to serve the project will be the responsibility of MGP.
Since none of the special studies needed to determine if the proposed project will have any significant impacts on city infrastructure or on the environment have been provided to the City, questions about impacts cannot be answered at this time but will be made available for public review and comment once completed. The City anticipates that these studies will be available in the second quarter of 2020. The studies will be reviewed by City staff and special consultants the City retains to provide technical expertise on specific environmental subject matters such as traffic. It should be noted that the City must also notify the Saddleback Valley Unified School District of the new project.
Additional information regarding CEQA is available from the State at: http://resources.ca.gov/ceqa/more/faq.html.
March 2021 Update: The project’s environmental analysis has been completed. The analysis and studies prepared for the project concludes that there are no new or greater impacts than those analyzed for the Five Lagunas project or the original General Plan Program EIR. Generally, CEQA provides that an update (formally known as an “Addendum”) to a previously approved Environmental Impact Report (EIR) can be used to analyze a project provided that there are no new significant effects that were not examined in a prior “Program” EIR (or PEIR), there is no substantial increase in the severity of significant effects examined in the prior PEIR, and that there are no new mitigation measures. The project addendum contains over 8,000 pages of analysis, including all technical studies to evaluate the impacts from the project compared to the Addendum EIR for Five Lagunas, and the original General Plan PEIR. The City anticipates increasing police services with the increased activity the project will bring. Saddleback Valley Unified School District (SVUSD) has also indicated that it will be impacted by the project. However, state law provides that the payment of school fees to a school district satisfies any impacts a project may have on a school district. SVUSD is expected to receive at least $8 million in one-time school fees from the project, in addition to on-going revenues to the district from increased student population.
The project CEQA analysis and studies are available for review on the City’s website at: https://www.lagunahillsca.gov/176/Planning-Projects-New-Developments under “Village at Laguna Hills”.
The standard approach to evaluating traffic impacts is based on a concept known as “Level of Service” or “LOS.” This metric evaluates congestion on streets and intersections based on the capacity of a street to carry traffic. LOS is also a standard contained in the City’s General Plan. The City’s LOS standards are described based on a lettering system - LOS A through LOS F, with LOS A being the best. At LOS A drivers enjoy free flowing traffic conditions with individual drivers virtually unaffected by other vehicles on the street. LOS D is the heaviest congestion level allowed by the General Plan. At LOS D, high-density traffic flow restricts speed and the ability to maneuver although traffic flows remain constant. There is an exception to the General Plan standard for one City intersection located at El Toro Road and Avenida de la Carlota which is part of a county-wide traffic plan known as a Congestion Management Plan (CMP). CMP intersections may maintain a LOS E. It should be noted that Orange County refers to its CMP as the “Master Plan of Arterial Highways.”
The State also requires cities to consider “vehicle miles traveled” or “VMT.” This is related to greenhouse gas emissions (GHG) and is a component of State policies that require cities to address climate change when considering new development. The State’s environmental goal is to reduce VMT thereby reducing vehicle-related air emissions that contribute to climate change. Using public transit and carpooling reduce VMT and could also reduce traffic congestion.
For the approved 2016 Five Lagunas Project, a full traffic study was conducted which analyzed 61 intersections in and around the city for traffic impacts. When compared against traffic from mall operations, the Five Lagunas project was expected to result in an increase of only 6,434 additional vehicle trips per day. The increase was offset by the demolition of commercial building areas like Sears and the south half of the mall which housed retail uses. The addition of 988 multi-family units did not create significant traffic impacts since one (1) multi-family unit only generates about six (6) vehicle trips per day versus shopping centers, which generate about 43 vehicle trips per 1,000 square feet. The demolition of 1,000 square feet of retail could be replaced by seven (7) multi-family units and not result in a net increase in traffic. Traffic from the original operation of the mall was estimated at nearly 25,000 trips per day, even though actual traffic was lower.
Expected traffic from various land uses is based on surveys from the Institute of Traffic Engineers (ITE) which is a nationally recognized data source for traffic information (see FAQ 3). The traffic study for Five Lagunas determined that the project complied with the City’s General Plan traffic standards with some modifications to planned on-site traffic improvements. VMT was not studied in 2016 since there was no requirement to do so at the time. A new traffic study will be prepared for MGP’s new proposed project.
March 2021 Update: Also see FAQ 4 for a description of how anticipated traffic from the project will decrease by nearly 10,000 vehicles per day when compared to Five Lagunas.
Linscott, Law & Greenspan Traffic Impact Analysis for the Addendum to the City of Laguna Hills General Plan Program Environmental Impact Report for the Five Lagunas Project, Table 7, November 13, 2015.
Linscott, Law & Greenspan Traffic Impact Analysis for the Addendum to the City of Laguna Hills General Plan Program Environmental Impact Report for the Village at Laguna Hills Project, Table 6, September 1, 2020.
The currently approved Five Lagunas project from 2016, which included 988 multifamily units (and any additional housing if approved in the proposed plan), will help facilitate the redevelopment of the property by replacing obsolete retail space for which there is shrinking demand. The approved housing is consistent with City planning policies and the City will evaluate if additional housing units would be consistent. Generally, by proposing a balance of uses that fill a need in the market, the community benefits by having new vibrant buildings and spaces, productive retail stores, and office spaces that provide jobs in the local economy. Newer multifamily housing provides older existing residents who are looking to downsize the opportunity to remain in Laguna Hills while providing a housing choice for younger residents who can’t yet afford to purchase a home in Laguna Hills. The proposed housing will also help the City meet its housing obligations to the State. In addition, MGP must pay $15,636 per unit in “Quimby Fees.” Quimby Fees are fees authorized by State law which the City collects to build new park and recreation facilities, or rehabilitate existing facilities, when new multi-family residential development occurs. If approved, the project would result in the payment of between $18 million and $23 million in Quimby Fees, depending on the number of units built in the project.
Housing was always anticipated to be included in the Urban Village area, which was analyzed in the City 2009 General Plan update. While the General Plan estimated that an additional 200 units would be built, it also determined that as properties transitioned from one use to another or property owners rebuilt in certain areas (such as the Urban Village), land uses and intensities would gradually shift to align with the intent of the General Plan’s Land Use Element. For the UVSP area, this means creating an urban village consisting of civic, retail, recreational, housing, hotel, medical offices, and general offices (Laguna Hills General Plan, pp. 29-30). Further, the UVSP anticipated that land uses could be interchangeable and that property could be developed to its maximum intensity provided that the UVSP Trip Budget was not exceeded and trip generation impacts created were within acceptable levels identified by the General Plan (UVSP, pp. 35 & 36).
Laguna Hills General Plan & Urban Village Specific Plan
Laguna Hills Municipal Code Chapter 8-06 – https://www.codepublishing.com/CA/ LagunaHills/#!/LagunaHills08/LagunaHills0806.html#8-06
Because of the current housing crisis, State law currently favors developers in order to boost housing construction across the State. New State laws and modifications to existing laws that became effective in 2018 make it increasingly difficult for cities to deny housing projects. MGP’s new plan proposes a range of 1,200-1,500 units. As a result, it’s likely the City will need to consider having a significant number of additional housing units on the property. A summary of the new State laws, also known as “California’s 2017 Housing Package,” are summarized by the California Department of Housing and Community Development (HCD) at http://www.hcd.ca.gov/policy-research/lhp.shtml. For 2019, the Governor and State legislature passed additional laws that will significantly impair a city’s ability to limit housing proposed for any site despite the objections of cities when they become effective in January 2020. For example, the State enacted legislation known as SB 330 to prohibit cities from changing zoning regulations that would reduce housing density.
Governor Newsom has set as a goal the need to have 3.5 million additional housing units built within the State by 2025. On August 22, 2019, the cities and counties in Southern California were informed by the State to plan for over 1.3 million new housing units for a planning period covering October 2021 through October 2029 as part of a process known as the “Regional Housing Needs Assessment,” or RHNA (Source: State of California – August 22, 2019: http://hcd.ca.gov/community-development/housing-element /docs/6thCycleRHNA-SCAGDetermination.pdf). The RHNA process is governed by a regional planning agency known as the Southern California Association of Governments (SCAG). The outcome of the RHNA process and the number of housing units each city in the SCAG region must plan for is approved by the State.
Every city and county in the State is required by law to participate in the RHNA process which results in the adoption of a housing plan known as a Housing Element, which is part of every General Plan. The City has been advised by SCAG that it should plan for an estimated 1,970 new units to meet its share of RHNA, which includes a requirement for the provision of “affordable housing.” The City is able to rely on the approved 2016 Five Lagunas plan and the 988 units contained therein to meet a portion of the anticipated RHNA. However, the approved 2016 plan does not include any units the City must include in its Housing Element to meet its “affordable housing” obligations. The City is expecting to be responsible for accommodating around 1,180 units of affordable housing in its next Housing Element (See FAQ 20 for a description of “affordable housing” as defined by State law). Providing for housing opportunities in the Urban Village enables the City to preserve its well-established land use pattern in other areas of the community.
For additional information on RHNA: http://www.scag.ca.gov/programs/Pages /Housing.aspx
For additional information on Housing Elements: http://hcd.ca.gov/community-development/housing-element/index.shtml
March 2021 Update:
The City has become aware that a state law adopted in 1982, but updated in 2017, has been used successfully against several cities to overturn decisions that denied housing projects for various reasons. Known as the “Housing Accountability Act”, the regulations require cities to approve projects that meet certain criteria, and limit the ability of a city to lower density or disapprove a project. Most recently, the City of Los Angeles was sued for violating the Housing Accountability Act over its denial of a 577-unit housing project in November 2020. The city was ordered by the Courts to approve the project.
The City has determined that Merlone-Geier’s project fits within the class of projects that are subject to the Housing Accountability Act. These projects include projects that: (1) only propose housing, (2) have at least two-thirds of their building area devoted to housing, or (3) consists of transitional housing or supportive housing geared toward homeless individuals. MGPs project meets the second criteria in that more than two-thirds of the project’s building area is devoted to housing. Only projects that violate a development standard, or violate written public health or safety standards, policies, or conditions can be required by a city to lower the number of units proposed, or otherwise be denied.
Improperly denying a project or requiring a project to lower its proposed density could result in a city being fined for violating the Housing Accountability Act. Specifically, a Court may require an agency to pay a $10,000 per unit fine. In the case of a local agency’s bad faith and failure to comply with a court order within 60 days, fines can increase to $50,000 per unit and the court can overturn a project denial and approve the project itself. Bad faith includes decisions that are frivolous or entirely without merit.
Staff notes the City has received many letters and emails requesting that the City break MGP’s project into “smaller pieces”. This approach would likely be in direct conflict with the Housing Accountability Act, subjecting the City to the fines described above. The City has no basis to require a smaller project to be submitted. It would require MGP to lower its project density without meeting the criteria state law provides to cities to require applicants to lower their project density as described in the preceding paragraphs above.
As an update to the RHNA portion of this FAQ, the City has received its final allocation for housing. Despite filing an appeal to have the housing figure lowered, the City received a final RHNA allocation of 1985 units that must be incorporated into the City’s 2021-2029 Housing Element. The proposed project will satisfy nearly 60 percent of the City’s required overall RHNA, 100 percent of the City’s obligation for higher income housing, and nearly 30 percent of the City’s RHNA obligation for Low and Moderate Income Housing. The housing provided in Merlone-Geier’s project results in less housing the City has to plan for elsewhere in the City to satisfy state planning requirements for housing.
The City’s final RHNA allocation is as follows:
Very Low: 568 Units
Low: 353 Units
Moderate: 354 Units
Above Moderate: 710 Units
Total: 1,985 units
Staff anticipates that The Village at Laguna Hills project will account for 1,164 units of the 1,985 units required in the approved RHNA.
If a city refuses to meet its statutory planning requirements for housing, the California Department of Housing and Community Development (HCD) can deny or revoke certification of the city’s housing element, potentially preventing the city from approving development of any kind in the city. Cities that do not have compliant housing elements can also be sued by the California Office of the Attorney General. Cities that continue to refuse to comply after being sued by the Attorney General could be subject to fines beginning at $10,000 per month and escalating to up to $600,000 per month as provided for in Assembly Bill 101 (https://leginfo.legislature.ca.gov/faces/billTextClient .xhtml?bill_id=201920200AB101). The Court could ultimately even appoint a receiver empowered to make land use decisions on behalf of the city. Cities that fail to comply with State housing laws in considering housing projects are also subject to lawsuits from any person eligible to apply for residency in the development, as well as from any housing organizations (Government Code 65589.5 – https://leginfo.legislature.ca.gov/faces/ codesdisplaySection.xhtml ?lawCode=GOV§ionNum=65589.5).
Office of Governor Gavin Newsom - https://www.gov.ca.gov/2019/01/25/housing-accountability/.
California Department of Housing and Community Development – Accountability and Enforcement - (http://www.hcd.ca.gov/community-development/accountability-enforcement.shtml).
The City, like every community in the State, is required by State law to establish zones and development standards that can result in the development of housing for specific income levels defined by the State. These levels include Very Low Income/Low Income/Moderate Income/and Above-Moderate Income categories. These income levels are defined by the State and are based on the Area Median Income (AMI) of the county. These income levels are reviewed annually by the State. Housing for persons of Very Low Income, Low Income, and Moderate Income is commonly referred to as “affordable housing.” The income levels associated with each type of housing is depicted below. (Source - https://www.hcd.ca.gov/grants-funding/income-limits/state-and-federal-income-limits/docs/Income-Limits-2019.pdf).
In addition, the City is required to designate one or more zones where an emergency homeless shelter can be established “by right” without a public hearing. The State also requires the City to allow facilities that serve homeless families and individuals in all multifamily zones without a public hearing. These requirements are currently contained in State law in Government Code Sections 65583 – 65589.3.
The state has published a new summary of the income limits for the various income categories it tracks. For Orange County the 2020 income limits are:
On October 9, 2019, the Governor approved Senate Bill (SB) 330, which enacts the Housing Crisis Act of 2019 (HCA). The HCA suspends the City’s ability to impose new restrictions on the development of new housing until January 1, 2025. Since housing is an allowable use within the Urban Village, beginning January 1, 2020, the HCA will prohibit the City from amending its General Plan or zoning standards or policies in a manner that would lessen the permitted density or intensity of housing in the Urban Village, or from adopting or implementing a housing moratorium or growth control measure limiting the construction of new housing in the Urban Village. The HCA does not prevent the City from amending the zoning in the Urban Village to facilitate the development of new housing. The proposed new project submitted by MGP would increase the amount of new housing as permitted in the Urban Village.
The key activities for this project include the following steps:
Each activity is described in more detail below.
Plan Submittal and Review
Once a development application is submitted to the City, the Planning Division and Public Services Division review the development application and plans to identify missing or incomplete information the City must have to evaluate the project against City requirements. Outside agencies such as the Orange County Fire Authority and public utility providers also review project plans. The development application will include the following City zoning applications, which could be revised further once the City has a better understanding of the project:
· Site Development Permit (Development Over 20,000 Square Feet/ Master Sign Program/ Public Art)
· Conditional Use Permit (Health Club/Hotel/Joint Parking Use Permit)
· Development Agreement (Establishes property development standards and conditions – generally)
· Precise Plan (Mixed Use Development)
· Vesting Tentative Tract Map (Subdivision for five or more Parcels)
During the Plan Submittal and Review phase, the City develops a written checklist of information MGP must provide to allow the City to continue processing the development application. This process is commonly referred to as a “completeness check.” The development application is “deemed complete” once all missing information and development materials are submitted to City staff. During this phase, the City may request that MGP consider additional changes to project design features and/or the site plan. Once the City deems the application complete, it allows the City to begin the project’s Environmental Review.
This phase entails the preparation of all of the environmental studies and analyses required to identify and disclose all of the project’s environmental impacts. The completion of this activity is required in order to comply with State environmental regulations known as the California Environmental Quality Act (CEQA). Studies associated with Environmental Review for The Village at Laguna Hills will include, at a minimum, the following:
Other potential impacts that may not necessarily require the preparation of a separate special study are also conducted by environmental professionals and included as part of the project’s environmental analysis. When the studies and analyses are completed, and the type and severity of all of the project’s environmental impacts are known, the City determines what type of CEQA document should be prepared based on the preparation of an “environmental checklist.”
CEQA allows different approaches to be used to complete a project’s environmental evaluation depending on the severity of a project’s impact on the environment. For large projects, an Environmental Impact Report (EIR) can be needed if no prior environmental review was ever completed for the development of a site. However, the City has completed two extensive prior environmental analyses encompassing MGP’s property – one for the City’s General Plan EIR in 2009, and another in 2016 when the Five Lagunas project was approved (Addendum No. 3 to the 2009 General Plan EIR). While the City has yet to understand the extent of environmental impacts The Village at Laguna Hills may have on the environment, the project may be able to partially rely on information from prior environmental analyses completed in 2009 and 2016, and provide updated environmental studies and analyses of impacts based on the proposed project.
The City will not be able to make a determination on which CEQA approach is appropriate to use until it has a better understanding of the proposed project’s environmental impacts.
March 2021 Update: In analyzing MGP’s submittal, the City has determined that MGPs project is a modification of the Five Laguna’s project approved by the City in 2016. The Village at Laguna Hills’ potential environmental impacts were evaluated pursuant to Public Resources Code Section 21166 and CEQA Guidelines Section 15162. An Addendum to the City’s 2009 Program Environmental Impact Report, as previously addended for the Five Lagunas Project, has been prepared and will be considered during the project’s public hearing.
State law authorizes cities and property owners to enter into an agreement governing the development of property known as a “Development Agreement” (DA). MGP has requested a DA since it anticipates that the development of The Village at Laguna Hills will take place over an extended period of time. By law a DA cannot exceed a 15-year timeframe. DAs provide certainty to the public and the property owner concerning the timing and phasing of development, type and scale of development, public benefits, and development certainty. Negotiating a DA is time consuming, and the negotiations typically are not concluded until a project is ready to be presented to the public and City Council for consideration at a project’s public hearing. The DA must be approved by the City Council at a public hearing.
State regulations concerning Development Agreements are located at: https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=1.&title=7.&part=&chapter=4.&article=2.5.
The City’s requirements for DAs are found in Chapter 9-84 of the Municipal Code: https://www.codepublishing.com/CA/LagunaHills/#!/LagunaHills09/LagunaHills0984.html#9-84.
This is the last step in the City’s development process where the City Council decides whether or not to approve MGP’s development application. The City Council also considers the project’s Environmental Review. Since the City does not maintain a Planning Commission, the City Council acts as the Planning Commission, only one public hearing is required to approve or deny zoning applications filed with the City. City staff prepares its report on the project, and presents all material previously completed related to the development application including plans, the project CEQA document, studies, development agreement, and all public correspondence received concerning the proposed development. Other materials typically included at public hearings where new development is being considered include Conditions of Approval, if being recommended for approval by staff, and the findings required to approve or deny a project. Findings are part of the City’s legal record describing the basis on which the City Council is approving or denying a project. The findings used by the City are found in the City’s Municipal Code at Section 9-92.080 at the link below.
Prior to the public hearing the City notifies by mail the surrounding property owners and any interested parties who have asked to be notified of a project’s public hearing. A notice of a project’s public hearing is also published in the Saddleback Valley Newspaper. Notices are mailed and published 10 days prior to the public hearing. To be included on the City’s public notification list for this project please submit your contact information by email to Jay Wuu at firstname.lastname@example.org.
March 2021 Update: As of April 6, 2021, the City has completed all of the work required to bring the project forward to the City Council. A public hearing is scheduled for April 27, 2021 and will be held in the Community Center located at 25555 Alicia Parkway. The City Council meeting is scheduled to begin at 7PM. Project documents are available on the City’s web site at: https://www.lagunahillsca.gov/176/Planning-Projects-New-Developments under “Village at Laguna Hills”.
At this time the City cannot say how long it will take to entitle the project, let alone say whether or not the project will ultimately be approved. Depending on the outcome of what is called an Initial Study under the California Environmental Quality Act, the entitlement process will likely range from a minimum of nine months to a maximum of eighteen months. The Initial Study may be completed sometime in March/April 2020.
March 2021 Update: See FAQ 22 above. The City notes that state law limits the City to five meetings on the project pursuant to the Housing Crisis Act legislation passed in 2019.