(2) There will be congregate living health facilities serving persons who are terminally ill, diagnosed with a life-threatening illness, or catastrophically and severely disabled, as defined in Section 1250, which are separated by a distance of less than 1,000 feet, as measured from any point upon the outside walls of the structures housing the facilities. Based on special local needs and conditions, the director may approve a separation distance of less than 300 feet or 1,000 feet, whichever is applicable, with the approval of the city or county in which the proposed facility will be located.