Chapter 9.32
Inclusionary Zoning Revised 5/25
Sections:
9.32.010 Purpose and Intent Revised 5/25
9.32.020 Applicability Revised 5/25
9.32.030 Inclusionary Unit Requirement Revised 5/25
9.32.040 Alternatives to Inclusionary Units Revised 5/25
9.32.050 Exempt Residential Project Revised 5/25
9.32.060 Standards for Inclusionary Units Revised 5/25
9.32.070 Concessions and Incentives Revised 5/25
9.32.080 Term of Affordability for Rental Inclusionary Units - Rent Costs Revised 5/25
9.32.090 Term of Affordability and Resale of For-Sale Units Revised 5/25
9.32.100 Income, Occupancy, Insurance, and Maintenance Requirement Revised 5/25
9.32.110 Administration of Inclusionary Units Revised 5/25
9.32.120 Administrative Fees Revised 5/25
9.32.130 Enforcement and Penalties Revised 5/25
9.32.010 Purpose and Intent Revised 5/25
The requirements of this Chapter are intended to:
A. Assist in achieving the City’s goals for adequate affordable housing by requiring residential projects to include a minimum percentage of housing units affordable to households of very low-, low-, or moderate-income; to provide for a program of incentives and public subsidy to assist in this effort; and to implement the mixed income policies of the Housing Element of the City’s General Plan.
B. Establish standards and procedures to require the development of housing that is affordable for a range of households with varying income levels for higher density projects. (Ord. 1575, eff. 5/16/2025)
9.32.020 Applicability Revised 5/25
The requirements of this Chapter apply to all newly constructed housing units within the City of Arcata. At least 13 percent of all newly constructed housing units in a residential project shall be developed for, offered to, and sold or rented to very low-, low-, or moderate-income households at an affordable housing cost, pursuant to Section 9.32.030. (Ord. 1575, eff. 5/16/2025)
9.32.030 Inclusionary Unit Requirement Revised 5/25
A. Number and affordability of inclusionary units. Each new residential project shall be designed and constructed to include inclusionary units to be rented, leased, or sold to very low-, low-, or moderate-income households. As used in this Section, residential projects shall include projects with any combination of allowed uses that includes a multi-family housing component.
1. Inclusionary unit - Household income. All new residential projects subject to this Chapter shall provide the following inclusionary units unless the Review Authority approves alternative to inclusionary units pursuant to Section 9.32.040.
a. Three percent of the affordable units required to be constructed in connection with the construction of market rate units intended for owner occupancy or construction of rental market rate units shall be available to very low-income household as defined in Health and Safety Code Section 50105; or
b. Six percent of the affordable units required to be constructed in connection with the construction of market rate units intended for owner occupancy or construction of rental market rate units shall be available to low-income households as defined in Health and Safety Code Section 50079.5; and
c. In addition to either subsection (A)(1)(a) or (A)(1)(b) of this Section, an additional 10 percent of the newly constructed units required to be constructed in connection with the construction of market rate units intended for owner occupancy or construction of rental market rate units shall be available to moderate-income households as defined in Health and Safety Code Section 50093. (Ord. 1575, eff. 5/16/2025)
9.32.040 Alternatives to Inclusionary Units Revised 5/25
If inclusionary unit requirements are infeasible, the requirements of this Chapter may be satisfied by an alternative. The project applicant shall submit an alternative proposal to the Review Authority demonstrating how the alternative will further affordable housing opportunities in the City to an equal or greater extent than compliance with the requirements of Section 9.32.030 by provision of one of the following:
A. Senior or disabled housing. In the event that on site inclusionary housing is infeasible, upon application of the developer and at the discretion of the Review Authority the developer may satisfy the requirements of providing inclusionary units in whole or in part by construction of the equivalent number of housing units reserved for qualifying senior citizens households as defined by Government Code Section 65915(b)(1)(C), or for qualifying disabled households as defined by Government Code Section 12926. (Ord. 1575, eff. 5/16/2025)
9.32.050 Exempt Residential Project Revised 5/25
A. The following types of residential projects are exempt from this Chapter and have no obligation to provide inclusionary housing units:
1. Housing units produced as a State density bonus.
2. Residential projects proposed to contain 60 or fewer residential housing units at one development location.
3. Rehabilitation of existing housing units.
4. Replacement of housing units destroyed by natural disaster or accidental loss. (Ord. 1575, eff. 5/16/2025)
9.32.060 Standards for Inclusionary Units Revised 5/25
A. Location of inclusionary units. Inclusionary units shall be constructed on the same site as the market rate units in the project. The Affordable Housing Plan shall provide for the dispersal of buildings containing inclusionary units to the maximum extent feasible, taking into account the funding and financing environments applicable to inclusionary housing development. The Director may allow for variation from these principles, but only to the extent necessary, if the Director determines that an alternative configuration of inclusionary units is required by funding or financing considerations associated with the development of the inclusionary units or by the applicable residential land use designations within and adjacent to the residential project.
B. Timing of construction. The Affordable Housing Plan and Affordable Housing Regulatory Agreement required by Section 9.32.110 shall include a phasing plan that provides for the timely construction of the inclusionary housing units as the project is completed. The phasing plan shall provide for development of the inclusionary units concurrently with the market rate units; provided, that the phasing plan may be adjusted by the Director away from strict concurrence where necessary to account for changes in financing and funding environments, economies of scale, and infrastructure needs applicable to development of the market rate and the inclusionary units.
C. Unit types. The housing unit size, bedroom mix, and amenities for inclusionary units shall be proportional to the market rate units in the project.
D. Exterior appearance. Inclusionary units shall be visually comparable with the market rate units. External building materials and finishes shall be the same type and quality for inclusionary units as for market rate units. Interior materials finishes may vary in compliance with Section 9.32.070(A)(2). No reduction in insulation, windows, heating systems, and other improvements relating to energy efficiency or safety of the inclusionary units is allowed.
E. Development standards. Except as provided in the Affordable Housing Regulatory Agreement in compliance with Section 9.32.070, inclusionary units shall comply with all applicable development standards of this Land Use Code.
F. Rounding. The calculation of the inclusionary units in compliance with this subsection that results in fractional units shall be rounded up to the next whole number. For the purposes of calculating a bonus, the residential units do not have to be based upon individual subdivision maps or parcels. (Ord. 1575, eff. 5/16/2025)
9.32.070 Concessions and Incentives Revised 5/25
The developer of a residential project subject to the requirements of this Chapter may request that the City provide inclusionary concessions or incentives in compliance with this Section and State law. The goal of the inclusionary concessions or incentives are to apply available concessions or incentives to qualifying projects in a manner that, to the extent feasible, offsets the cost of providing the units. The Director shall respond to a request for concessions or incentives in compliance with Section 9.32.110(A)(10) and shall determine inclusionary incentives appropriate for the inclusionary units after a review of the Affordable Housing Plan. The City shall grant concessions or incentives necessary to offset the cost of developing inclusionary units.
A. Concessions. The following concessions and incentives shall be available to the applicant without any requirement that the applicant demonstrate to the City that the requested concession or incentive results in identifiable, financially sufficient, and actual cost reductions to the project:
1. Inclusionary bonus. The City shall grant a 25 percent increase in the number of housing units normally allowed by the applicable General Plan designation and/or zoning. All standards associated with bulk and massing, including but not limited to, setbacks, floor area ratio, and maximum building height, may be exceeded by up to 1.5 times the district standard to accommodate the additional units. No additional parking is required for the additional units authorized under this Section.
2. Interior finish reductions. The City may, to the maximum extent appropriate in light of project design elements as determined by the Director, allow builders to finish out the interior of inclusionary units with less expensive finishes and appliances.
3. Development standard exceptions. The City shall grant exceptions to up to five site and development standards required in this Land Use Code unless the exception causes a health and safety violation.
B. Incentives. The City may grant financial incentives to encourage the development of inclusionary density bonus units.
1. Public financial assistance. The developer may request the City participate in local, State, and Federal public funding in compliance with Section 9.32.110(A)(11) to assist in the financing and development of the inclusionary units. The City may facilitate applying for State allocation of tax credits, mortgage revenue bond funds, or State or Federal assistance to the project ("External Subsidy").
2. Fee waivers. The City may grant a package of fee waivers for projects that exceed the minimum inclusionary requirement by at least two times the number of units required by Section 9.32.030(A)(1).
3. State waivers. Waivers of development standards as authorized by State law.
C. Effect of incentive or concession. The granting of a concession or incentive shall not be interpreted, in and of itself, to require a General Plan amendment, zoning amendment, or other discretionary permit approval. (Ord. 1575, eff. 5/16/2025)
9.32.080 Term of Affordability for Rental Inclusionary Units - Rent Costs Revised 5/25
A. Term. Each rental inclusionary unit shall remain affordable for a period of no less than 55 years from the recordation of the Affordable Housing Regulatory Agreement.
B. Rent cost requirements. Rents for the inclusionary housing units shall be limited to the rates published annually by either the United States Department of Housing and Urban Development or the California Tax Credit Allocation Committee, as approved in the Affordable Housing Plan, as applicable to Humboldt County adjusted for household size, less a reasonable allowance for utilities as may be published by the Housing Authority of the City of Eureka and County of Humboldt or the City of Arcata. Rent limits shall be documented in the Affordable Housing Regulatory Agreement. (Ord. 1575, eff. 5/16/2025)
9.32.090 Term of Affordability and Resale of For-Sale Units Revised 5/25
A. Term. Each for-sale inclusionary housing unit shall remain affordable for a period of no less than 45 years from the recordation of the Affordable Housing Regulatory Agreement.
B. Sale to an income eligible household. The purchase price charged for the inclusionary housing units in the development shall be financed so that the monthly payments on the 30-year fixed interest rate private mortgage, City second mortgage, property taxes, and property insurance do not exceed the following amounts during the initial sale of the inclusionary housing units:
1. Very low-income households. Thirty percent of 50 percent of the area median income, for units designed for very low-income households, as defined in Health and Safety Code Section 50052.5.
2. Low-income households. Thirty percent of 70 percent of the area median income, for units designed for low-income households, as defined in Health and Safety Code Section 50052.5.
3. Moderate-income households. Thirty-five percent of 110 percent of the area median income, for units designed for moderate-income households, as defined in Health and Safety Code Section 50052.5.
4. Other income limits. Other income limits that may be required by the City’s Single-Family Housing Guidelines or other local, State, or Federal agencies that are providing financial assistance to the project and are included in the Affordable Housing Regulatory Agreement. (Ord. 1575, eff. 5/16/2025)
9.32.100 Income, Occupancy, Insurance, and Maintenance Requirement Revised 5/25
A. Income requirement. Only households that meet the income eligibility requirements upon occupancy shall occupy inclusionary units.
B. Occupancy. Households must occupy inclusionary housing units as a primary residence.
C. Insurance. Owners shall maintain insurance for at least the replacement cost of inclusionary housing units throughout the entire affordability period established in the Affordable Housing Regulatory Agreement.
D. Maintenance. Owners shall maintain inclusionary housing units, common areas, and the properties they are situated sufficiently to preserve the health and safety of occupants and property value. (Ord. 1575, eff. 5/16/2025)
9.32.110 Administration of Inclusionary Units Revised 5/25
A. Affordable housing plan. The application for the first legislative entitlement for a residential project shall include a draft Affordable Housing Plan, which shall contain at least the following information:
1. Project proponent. The name and address of the property owner, developer, and authorized agent;
2. Developer. The name and address of the entity that will develop the inclusionary units, if not the developer;
3. Project description. Narrative project description; site plans, floor plans, elevation schematics, and details of phasing of the residential project as a whole including the inclusionary units;
4. Number of housing units. The total number of housing units approved for the housing development project, including the number of inclusionary units;
5. Description of targeted income group. A description of the household income group to be accommodated by the housing development project, and the standards and methodology for determining the corresponding initial and long-term affordable rent or affordable sales price and housing cost consistent with HUD Guidelines;
6. Marketing plan. The marketing plan and applicant selection procedures for the affordable housing units;
7. Description and location of affordable housing units. The location (fixed and/or floating), unit sizes (in square feet), and number of bedrooms of the affordable housing units and market rate units;
8. Term and type of use restrictions. Term of the affordability restrictions for the affordable housing units in compliance with Sections 9.32.080 and 9.32.090;
9. Completion and occupancy schedule. A schedule for completion and occupancy of the affordable housing units;
10. Description of concessions and/or incentives. A description and Land Use Code citation of the additional concessions and/or incentives being requested by the applicant; and
11. Other provisions. Other information required by the Director or local, State, or Federal funding agencies to ensure successful implementation and compliance with this Chapter.
B. Action on affordable housing plan. The Review Authority shall approve each Affordable Housing Plan that meets the requirements of Chapter 9.31 and/or this Chapter. No development entitlement shall be granted without an approved Affordable Housing Plan. The elements of the Affordable Housing Plan shall be incorporated into the terms and conditions of the applicable entitlements and Affordable Housing Regulatory Agreement, which shall be recorded on title.
C. Affordable housing regulatory agreement. The City Manager is authorized to execute an Affordable Housing Regulatory Agreement that satisfies the requirements of this Chapter, including any concessions or incentives authorized under Section 9.32.070. The Affordable Housing Regulatory Agreement shall be recorded prior to the issuance of a Certificate of Occupancy.
1. Timing. An Affordable Housing Regulatory Agreement shall be developed concurrently with the processing of an application for the first project approval;
2. Contents. The agreement shall be consistent with the Affordable Housing Plan, and shall indicate ownership or rental project, the number and size of very low-, low-, and moderate-income units, the developer of the inclusionary units, the phasing and construction scheduling of the units, commitments for inclusionary incentives, including City commitments for local public subsidy, and any other information required by the City relative to the inclusionary units;
3. Continuing right-of-first-refusal. The developer shall give the City the continuing right-of-first-refusal to lease or purchase any or all of the affordable housing units;
4. Written approval of city required prior to transfer of unit. The deeds to the affordable housing units shall contain a covenant stating that the developer or successors-in-interest shall not assign, lease, rent, sell, sublet, or otherwise transfer any interests for the affordable housing units without the prior written approval of the City;
5. Confirmation of price by city. When providing the written approval, the City shall confirm that the price (rent or sale) of the affordable housing unit is consistent with the limits of this Chapter;
6. Continuously occupied by eligible households. The City shall have the authority to enter into other agreements with the developer, or purchasers of the affordable housing units, to ensure that the required housing units are continuously occupied by eligible households;
7. Enforcement of compliance. Applicable deed restrictions, in a form satisfactory to the City Attorney, shall contain provisions for the enforcement of owner or developer compliance;
8. Failure to comply. Any default or failure to comply may result in daily penalties, liens, foreclosure, specific performance, or withdrawal of the Certificates of Occupancy; and
9. Recovery of all city-related costs. In any action taken to enforce compliance with deed restrictions, the City Attorney shall, if compliance is ordered by a court of competent jurisdiction, take all action that may be allowed by law to recover all of the City’s costs of action including legal services;
10. Remedies for breach of the agreement. A description of the remedies for breach of the density bonus agreement by the owners, developers, and/or successors-in-interest of the development project; and
11. Other provisions. Other provisions to ensure successful implementation and compliance with this Chapter.
D. For-sale housing conditions. In the case of for-sale housing developments, the agreement shall provide for the following conditions governing the initial sale and use of the affordable housing units during the applicable affordability restriction period:
1. Eligible and qualified households. The affordable housing units shall be owner-occupied by eligible very low-, low-, or moderate-income households, or by qualified residents in the case of senior or disabled housing;
2. Mandatory contents of instrument or agreement. The initial purchaser of each affordable housing unit shall execute an instrument or agreement approved by the City which:
a. Restricts the sale of the affordable housing unit in compliance with this Chapter during the applicable term of affordability restriction;
b. Contains provisions as the City may require to ensure continued compliance with this Chapter and State law; and
c. Shall be recorded against each parcel containing an affordable housing unit.
E. Rental housing conditions. In the case of rental housing developments, the agreement shall provide for the following conditions governing the use of the affordable housing units during the affordability restriction period:
1. Rules and procedures. The rules and procedures for qualifying tenants, establishing affordable rent, filling vacancies, and maintaining the affordable housing units for qualified tenants;
2. Annually verify tenant incomes. Provisions requiring owners to annually verify tenant incomes and maintain books and records to demonstrate compliance with this Chapter;
3. Submittal of annual report to the City. Provisions requiring owners to submit an annual report to the City, which includes the name, address, and income of each person occupying the affordable housing units, and which identifies the bedroom size and monthly rent or cost of each unit; and
4. Use restriction period. The applicable term of affordability restriction shall be in compliance with Section 9.32.080. (Ord. 1575, eff. 5/16/2025)
9.32.120 Administrative Fees Revised 5/25
The Council may by resolution establish reasonable fees and deposits for the administration of this Chapter. (Ord. 1575, eff. 5/16/2025)
9.32.130 Enforcement and Penalties Revised 5/25
A. No legislative entitlement and no subdivision map shall be issued or valid without an Affordable Housing Plan as required by this Chapter.
B. No project-specific approval nor Development Agreement shall be issued for any residential project unless an Affordable Housing Regulatory Agreement has been approved and executed, and no building permit or certificate of occupancy shall be issued until the Affordable Housing Regulatory Agreement has been recorded as required by this Chapter.
C. The City may bring civil and criminal enforcement actions as provided by the Arcata Municipal Code. (Ord. 1575, eff. 5/16/2025)