Chapter 18.155
AFFORDABLE HOUSING

Sections:

18.155.010    Basis and purposes.

18.155.020    Definitions.

18.155.030    Basic requirement.

18.155.040    Incentives.

18.155.050    Affordable housing plan – Timing of performance.

18.155.060    Standards for on-site affordable units.

18.155.070    Continued affordability.

18.155.080    Alternatives for for-sale residential projects.

18.155.085    Alternatives for rental housing projects.

18.155.090    Establishment of affordable housing fees – Use.

18.155.100    Enforcement.

18.155.110    Waiver.

    Prior legislation: 1990 Code § 8-22177.

18.155.010 Basis and purposes.

In enacting the ordinance codified in this chapter, the city finds as follows:

(a)    The Legislature of the State of California has found that the availability of housing is of vital statewide importance, and that providing decent housing for all Californians requires the cooperative participation of government and the private sector. The Legislature has further found that local governments have a responsibility to use the powers vested in them to make adequate provisions for the housing needs of all economic segments of the community. This chapter is intended to utilize the police powers of the city to enhance the public welfare by making adequate provision for the housing needs of all economic segments of the community through the cooperative participation of government and the private sector. This chapter will also ensure that market-rate housing mitigates its impacts on the need for affordable housing, assist in meeting the city’s share of the region’s housing need and help implement the goals, policies, and actions specified in the housing element of the general plan.

(b)    The housing element of the city’s general plan, adopted on December 2, 2014, concluded that:

(1)    The shortage of affordable housing is one of the greatest challenges facing the San Francisco Bay Area. The region’s housing costs are among the highest in the nation, potentially threatening its future economic vitality, environment, and quality of life.

(2)    To provide its fair share of the region’s housing need, the city must have adequate sites zoned to accommodate 5,455 housing units for the period from 2015 to 2023, including sites for 857 extremely low income units, 857 very low income units, 926 low income units, and 978 moderate income units.

(3)    Fremont needs new housing to survive as a healthy city and to accommodate additional workers in its industrial and commercial areas, as well as housing for those serving the local economy. In recent years, most of the new homes constructed have been affordable to only a small fraction of the city’s population and workforce. Between 2007 and 2014, the private market did not produce sufficient unregulated housing units affordable to households earning extremely low, very low, low, or moderate incomes.

(4)    The city has adopted a goal of encouraging the development of affordable housing to help meet the city’s assigned share of the regional housing need and has adopted a policy of encouraging the development of a diverse housing stock that provides a range of affordability levels. To implement this goal, the city has committed to consideration of modifications to this chapter to increase the production of affordable units at all income levels; in part through production of the moderate income share on site and payment of affordable housing fees to the city to be used for development of low, very low and extremely low income households. This chapter retains alternatives that allow for creativity in achieving the overall goal of producing and retaining affordable units.

(c)    Federal and state government programs do not provide nearly enough affordable housing or subsidies to satisfy the housing needs of moderate, low, very low, and extremely low income households.

(d)    Land prices are a key factor preventing development of new affordable housing. New housing construction in the city which does not include affordable units aggravates the existing shortage of affordable housing by absorbing the supply of available residential land. This reduces the supply of land for affordable housing and increases the price of remaining residential land. Providing the affordable units and affordable housing fees required by this chapter will help to ensure that part of the city’s remaining developable land is used to provide affordable housing. At the same time, new market-rate housing contributes to the demand for goods and services in the city, increasing local service employment at wage levels which often do not permit employees to afford housing in the city. The “Residential Nexus Analysis, Fremont, California” study, dated August 2014 (the “Nexus Study”), prepared by Keyser-Marston Associates, Inc., quantifies the impacts of new market-rate units on the need for affordable housing in the city and the justified affordable housing fees to mitigate those impacts. The affordable housing fees authorized by this chapter are required to be reasonably related to the need for affordable housing associated with market-rate housing as demonstrated by the most current Nexus Study.

(e)    An economically balanced community is only possible if part of the new housing built in the city is affordable to households with limited incomes. Requiring builders of new for-sale housing to include some affordable housing is fair, not only because new development without affordable units contributes to the shortage of affordable housing but also because zoning and other ordinances concerning new housing production in the city should be consistent with the community’s goal of fostering an adequate supply of housing for households at all affordability levels and should address the need for affordable housing related to market-rate housing production.

(f)    In general, affordable units within each housing development would serve the goal of maintaining an economically balanced community. However, collection of affordable housing fees from for-sale projects, instead of on-site construction of affordable housing, may provide a greater number of housing units that are affordable to households with extremely low, very low, and low incomes. Construction of required affordable units off site and other alternatives to on-site construction may also provide affordable housing units. Consequently, the city desires to balance on-site production of moderate income units with opportunities for utilizing fees or off-site construction alternatives.

(g)    A 2009 decision of the California Court of Appeal holds that the city may not require rents to be limited in rental projects unless the city provides assistance to the rental project. To conform to this decision, this chapter does not require any rental project, except those rental projects that receive city assistance, to limit rents or to pay an in-lieu fee. Instead, consistent with the results of the Nexus Study, market-rate rental projects are required to pay an affordable housing fee to mitigate the impacts of those rental projects on the need for affordable housing.

(h)    The city is now experiencing the loss of affordable housing due to the expiration of covenants restricting rents in some affordable housing developments. Affordable housing fees may provide a source of financing to enable the city to preserve existing affordable housing that would otherwise be lost.

(i)    The limited production of rental housing and the displacement of rental housing units through conversions to residential condominiums reduce the city’s rental housing supply, which causes increased rental housing costs and decreased housing affordability. The provision of affordable units within residential condominium conversion projects provides affordable housing ownership opportunities that help offset the loss of affordable rental units. (Ord. 2493 § 1, 11-26-02; Ord. 19-2006 § 3, 10-3-06; Ord. 5-2008 § 18, 4-1-08; Ord. 13-2010 § 1, 6-15-10; Ord. 10-2015 § 1, 4-7-15. 1990 Code § 8-22170.)

18.155.020 Definitions.

(a)    “Affordable ownership cost” means a sales price resulting in projected average monthly housing payments, during the first calendar year of a household’s occupancy, including interest, principal, mortgage insurance, property taxes, homeowners’ insurance, homeowners’ association dues, if any, and a reasonable allowance for utilities, property maintenance, and repairs, not exceeding the following:

(1)    Moderate income households: 110 percent of the area median income, adjusted for assumed household size based on unit size, multiplied by 30 percent and divided by 12.

(2)    Low income households: 60 percent of the area median income, adjusted for assumed household size based on unit size, multiplied by 30 percent and divided by 12.

(3)    Very low income households: 50 percent of the area median income, adjusted for assumed household size based on unit size, multiplied by 30 percent and divided by 12.

The city may determine sales prices of affordable units by any reasonable method so long as average monthly housing payments of eligible households do not exceed those permitted by this subsection (a).

(b)    “Affordable rent” means monthly housing expenses, including all fees for housing services and a reasonable allowance for utilities, not exceeding the following:

(1)    Extremely low income households: 30 percent of the area median income, adjusted for assumed household size based on unit size, multiplied by 30 percent and divided by 12.

(2)    Very low income households: 50 percent of the area median income, adjusted for assumed household size based on unit size, multiplied by 30 percent and divided by 12.

(3)    Low income households: 60 percent of the area median income, adjusted for assumed household size based on unit size, multiplied by 30 percent and divided by 12.

(4)    Moderate income households: 110 percent of the area median income, adjusted for assumed household size based on unit size, multiplied by 30 percent and divided by 12, but in no event greater than market rent.

(c)    “Affordable units” means living units which are required under this chapter to be rented at affordable rents or available at an affordable ownership cost to eligible households.

(d)    “Area median income” means median income for Alameda County, adjusted for household size, as published pursuant to California Code of Regulations, Title 25, § 6932 (or its successor provision).

(e)    “Assumed household size” means one person in a studio apartment, two persons in a one-bedroom unit, three persons in a two-bedroom unit, and one additional person for each additional bedroom thereafter, unless a federal standard applicable to the development requires the use of a different assumed household size, in which case the federal standard shall apply.

(f)    “Construction cost index” means the Engineering News Record McGraw-Hill Construction Weekly Building Cost Index for San Francisco. If that index ceases to exist, the community development director shall substitute another construction cost index which in his or her judgment is as nearly equivalent to the original index as possible.

(g)    “Eligible household” means a household whose household income does not exceed the maximum specified for a very low, low, or moderate income household defined in subsection (j) of this section, as applicable for a given affordable unit.

(h)    “First approval” means the first of the following approvals to occur with respect to a residential project: planned district approval, subdivision approval, conditional use permit, design review permit approval, other discretionary land use approval, or building permit.

(i)    “For-sale project” means a residential project, or portion thereof, that includes the creation of one or more residential living units that may be sold individually, including a condominium, stock cooperative, community apartment, or attached or detached single-family home. A for-sale project also includes a residential condominium conversion project as defined in Section 18.190.060, and the creation of residential living units that may be sold individually, but are initially rented rather than sold.

(j)    “Household income” means the combined adjusted gross income for all adult persons living in a living unit as calculated for the purpose of the Section 8 Program under the United States Housing Act of 1937, as amended, or its successor provision.

(1)    “Extremely low income household” means a household whose income does not exceed the extremely low income limits pursuant to the published standard.

(2)    “Very low income household” means a household whose income does not exceed the very low income limits pursuant to the published standard.

(3)    “Low income household” means a household whose income does not exceed the low income limits pursuant to the published standard.

(4)    “Moderate income household” means a household whose income does not exceed the moderate income limits pursuant to the published standard.

(k)    “Housing unit, attached” shall mean all forms of attached housing units (e.g., townhomes, stacked flats, condominiums and the like). For purposes of this chapter “attached” shall mean units that share at least 75 percent of the linear length of one building wall.

(l)    “Housing unit, detached” shall mean all forms of detached, individual housing units (e.g., single-family homes, detached townhomes and similar products). For purposes of this chapter, “detached” shall mean units that share less than 75 percent of the linear length of one building wall.

(m)    “Living unit” means one or more rooms designed, occupied, or intended for occupancy as separate living quarters, with cooking, sleeping, and bathroom facilities.

(n)    “Market-rate units” means new living units in residential projects which are not affordable units under subsection (c) of this section.

(o)    “Planning area” means a geographic boundary identified within the city’s general plan.

(p)    “Published standard” means the standard for a specified income level for Alameda County, as published pursuant to California Code of Regulations, Title 25, § 6932 (or its successor provision) and adjusted for household size.

(q)    “Rental project” means a residential project, or portion thereof, that creates living units that cannot be sold individually, except that construction of any accessory dwelling unit pursuant to Section 18.190.005 shall not be considered a rental project.

(r)    “Residential project” means any project containing two or more net new living units or residential lots, or living units and residential lots which total two or more net new units and/or lots in combination, built pursuant to or contained in an application for a planned district, subdivision map, conditional use permit, design review permit approval, other discretionary city land use approval, or building permit. Contemporaneous construction of two or more living units on a lot, or on contiguous lots for which there is evidence of common ownership or control, even though not covered by the same city land use approval, shall also be considered a residential project. Construction shall be considered contemporaneous for all units which do not have completed final inspections for occupancy and which have outstanding, at any one time, any one or more of the following: planned district, subdivision map, conditional use permit, design review permit approval, or other discretionary city land use approvals, or building permits, or applications for such approval or permits. A residential condominium conversion project as defined in Section 18.190.060 is considered a residential project and is subject to this chapter. The provisions of this section shall be interpreted broadly to effect the purposes of this chapter and to prevent evasion of its terms. (Ord. 2493 § 1, 11-26-02; Ord. 20-2004 § 1, 7-27-04; Ord. 8-2005 § 2, 4-26-05; Ord. 19-2006 § 4, 10-3-06; Ord. 13-2010 § 1, 6-15-10; Ord. 16-2011 § 1, 10-4-11; Ord. 9-2014 § 21, 3-4-14; Ord. 10-2015 § 1, 4-7-15; Ord. 01-2017 § 12, 1-3-17. 1990 Code § 8-22171.)

18.155.030 Basic requirement.

(a)    For-Sale Projects. The following basic requirements apply to all for-sale projects unless an alternative is approved pursuant to Section 18.155.080:

(1)    In a residential project comprised of attached housing units, at least 3.5 percent of all living units shall be made available at an affordable cost to moderate income households as prescribed in Section 18.155.070(a). Additionally, the residential project shall pay an affordable housing fee as set forth in Section 18.155.090 to mitigate the impact of the project on the need for extremely low, very low and low income households. In lieu of constructing 3.5 percent of the units as affordable to moderate income households, the developer may elect to pay the affordable housing fee for moderate income units as set forth in Section 18.155.080(f).

(2)    In a residential project comprised of detached housing units, at least 4.5 percent of all living units shall be made available at an affordable cost to moderate income households as prescribed in Section 18.155.070(a). Additionally, the residential project shall pay an affordable housing fee to mitigate the impact of the project on the need for extremely low, very low and low income households as set forth in Section 18.155.090. In lieu of constructing 4.5 percent of the units as affordable to moderate income households, the developer may elect to pay the affordable housing fee for moderate income units as set forth in Section 18.155.080(f).

(3)    Projects that contain both attached and detached housing units shall proportionally meet the respective percentage requirements for each housing type and pay the respective fees as described above.

(4)    For the purpose of calculating the number of affordable units required by this section, any accessory dwelling units authorized under Section 18.190.005 and any additional units authorized as a density bonus pursuant to Chapter 18.165 shall not be counted as part of the for-sale project.

(5)    Affordable units provided pursuant to subsections (a)(1) and (a)(2) of this section or provided pursuant to one of the alternatives set forth in Section 18.155.080 shall be approved and completed no later than the times prescribed in Section 18.155.050.

(6)    For fractions of affordable units required in for-sale projects, the developer may either construct an additional affordable unit or pay an affordable housing fee for the fractional unit as prescribed by Section 18.155.090(b).

(b)    Rental Projects. The following basic requirement applies to all rental projects unless an alternative is approved pursuant to Section 18.155.085:

For rental projects receiving no city incentive or assistance, affordable housing fees shall be paid at the time specified in Section 18.155.050 to mitigate the rental project’s impact on the need for affordable housing in the city, except that no affordable housing fee need be paid for projects wherein all of the living units are subject to a rent regulatory agreement with a term of 55 years and which are required to be rented at affordable rents to extremely low, very low, low income or moderate income households.

(c)    For residential projects that include both a for-sale project and a rental project, the provisions of subsection (a) of this section shall apply to the for-sale project, and the provisions of subsection (b) of this section shall apply to the rental project. (Ord. 2493 § 1, 11-26-02; Ord. 13-2010 § 1, 6-15-10; Ord. 16-2011 § 2, 10-4-11; Ord. 9-2014 § 21, 3-4-14; Ord. 10-2015 § 1, 4-7-15; Ord. 01-2017 § 13, 1-3-17. 1990 Code § 8-22172.)

18.155.040 Incentives.

(a)    Residential projects that include on-site affordable units in compliance with this chapter and that do not request a density bonus or other incentives pursuant to Chapter 18.165 may receive the following incentives:

(1)    Subject to approval of the community development director or designee, affordable units may have different interior finishes and features than market-rate units in the same residential project, so long as the finishes and features are durable, of good quality and consistent with contemporary standards for new housing. Notwithstanding the above, all such units shall meet the criteria set forth in Section 18.155.060.

(2)    In a residential project which contains detached housing units, affordable units may be in the form of attached housing units rather than detached housing units, and in a residential project which contains attached multi-story living units, affordable units may contain only one story.

(b)    Residential projects that include on-site affordable units in compliance with this chapter and request a density bonus or other incentives pursuant to Chapter 18.165 may receive incentives as specified in Chapter 18.165. (Ord. 2493 § 1, 11-26-02; Ord. 8-2005 § 2, 4-26-05; Ord. 19-2006 § 5, 10-3-06; Ord. 13-2010 § 1, 6-15-10; Ord. 16-2011 § 3, 10-4-11; Ord. 10-2015 § 1, 4-7-15. 1990 Code § 8-22173.)

18.155.050 Affordable housing plan – Timing of performance.

(a)    Affordable Housing Plan.

(1)    An application for the first approval of a residential project shall include an affordable housing plan describing how the project will comply with the provisions of this chapter. The affordable housing plan shall be processed concurrently with all other applications required for the residential project. As an alternative to compliance with the basic provisions included in Section 18.155.030, an applicant for a for-sale project may propose one or a combination of the alternatives listed in Section 18.155.080 as part of the affordable housing plan and an applicant for a rental project may propose the alternative listed in Section 18.155.085 or a combination of rental units and the payment of a portion of the affordable housing fees.

(2)    The affordable housing plan shall be considered by and acted upon by the approval body with authority to approve the residential project. Before approving the affordable housing plan, the approval body shall consider whether the affordable housing plan conforms to this chapter. The approval body may approve an alternative or a combination of alternatives listed in Section 18.155.080 or 18.155.085 if it concludes that the alternative conforms to the standards in the relevant subsection of Section 18.155.080 or 18.155.085. The approval body may also modify the timing requirements for construction and occupancy of market-rate units to accommodate phasing schedules, model variations, or other factors, if the approval body determines this will provide greater public benefit.

(3)    Conditions to carry out the purposes of this chapter shall be imposed on the first approval for a residential project. Additional conditions regarding the approved affordable housing plan may be imposed on later city approvals or actions, including without limitation planned district approvals, subdivision approvals, conditional use permits, and building permits.

(4)    The approved affordable housing plan for a residential project, or for a building phase in a residential project, where phasing has been approved as part of discretionary project approvals, may be amended prior to issuance of any building permit for the residential project or building phase, if applicable. The applicant may elect to pay affordable housing fees pursuant to Section 18.155.030(b) or Section 18.155.080(f). If the applicant desires any other modification to the approved affordable housing plan, that modification shall be acted upon prior to issuance of any building permit by the approval body that previously approved the affordable housing plan.

(5)    Residential project applications deemed complete for processing prior to May 7, 2015, may continue to fulfill the requirements of their approved affordable housing plans including use of the previously established fee structure. Fees established under this fee structure will be adjusted annually as set forth in Section 18.155.090.

(b)    Affordable Housing Agreement.

(1)    In for-sale projects, or in rental projects where the applicant has agreed to provide affordable rental housing in consideration for city assistance or other incentives, affordable housing agreements acceptable to the community development director shall be recorded against the project prior to approval of any final or parcel map, or issuance of any building permit, whichever occurs first. However, if the project’s affordable housing obligation will be met entirely through the payment of affordable housing fees, no affordable housing agreement need be recorded.

(2)    The affordable housing agreement shall specify the number, type, location, size, and phasing of all affordable housing units, provisions for income certification and screening of potential purchasers or renters of units, and resale control mechanisms, including the financing of ongoing administrative and monitoring costs, consistent with the approved affordable housing plan, as determined by the community development director.

(c)    Issuance of Building Permits. In any residential project, no building permit shall be issued for any market-rate unit until the permittee has either:

(1)    Obtained permits for on-site affordable units sufficient to meet the requirements of the affordable housing agreement; or

(2)    Paid affordable housing fees consistent with city-adopted procedures for payment; or

(3)    Received certification from the community development director that the permittee has met, or made arrangements satisfactory to the city to meet, an alternative requirement of Section 18.155.080 or 18.155.085.

(d)    Final Inspections for Occupancy. In any residential project, no final inspections for occupancy of any market-rate unit shall be completed until the permittee has either:

(1)    Completed construction of on-site affordable units sufficient to meet the requirements of the affordable housing agreement; or

(2)    Paid affordable housing fees consistent with city-adopted procedures for payment; or

(3)    Completed corresponding alternative performance under Section 18.155.080 or 18.155.085. (Ord. 16-2011 § 4, 10-4-11; Ord. 10-2015 § 1, 4-7-15. 1990 Code § 8-22174.)

18.155.060 Standards for on-site affordable units.

On-site affordable units shall be comparable to the market rate units in terms of unit type, number of bedrooms per unit, quality of exterior appearance and overall quality of construction. Affordable unit size should be generally representative of the unit sizes within the market-rate portion of residential projects, as acceptable to the community development director or designee. Interior features and finishes in affordable units shall be durable, of good quality and consistent with contemporary standards for new housing. The affordable units shall be dispersed throughout the residential project in a manner acceptable to the community development director unless an alternative provided under Section 18.155.080 or 18.155.085 is approved by the approval body. (Ord. 2493 § 1, 11-26-02; Ord. 19-2006 § 7, 10-3-06; Ord. 13-2010 § 1, 6-15-10; Ord. 16-2011 § 5, 10-4-11; Ord. 10-2015 § 1, 4-7-15. 1990 Code § 8-22175.)

18.155.070 Continued affordability.

(a)    Affordable ownership units shall be sold at affordable ownership cost to moderate income households whose incomes do not exceed 110 percent of area median income, adjusted for household size; provided, that such units may be sold to any moderate income household when the community development director determines that a household income limit up to 120 percent of area median income is necessary to secure households able to qualify for mortgages to purchase the units. The community development director may, from time to time, establish affordable ownership cost in compliance with the requirements of this chapter and based on reasonably available data.

(b)    For affordable ownership units, resale restrictions, deeds of trust and/or other documents acceptable to the community development director, all consistent with the requirements of this chapter, shall be recorded against the affordable units prior to sale of the units. For affordable rental units, a rent regulatory agreement consistent with the requirements of this chapter shall be recorded against the rental project prior to final inspection.

(c)    The forms of affordable housing agreements, resale restrictions, deeds of trust, rent regulatory agreements, and/or other documents authorized by this chapter, and any change in the form of any such document which materially alters any policy in the document, shall be approved by the city attorney and the community development director prior to being executed with respect to any residential project.

(d)    The documents required by subsection (b) of this section for affordable ownership units shall be for a term of 30 years. In the case of ownership affordable units that are transferred during the required term, renewed restrictions shall be entered into on each change of ownership with a 30-year renewal term.

(e)    Affordable units which are initially owner-occupied shall not be rented by the owner, except in cases of substantial hardship including, but not limited to, active military duty and illness, and on specified terms as provided in a resale restriction agreement or other agreement acceptable to the community development director.

(f)    The maximum sales price permitted on resale of an affordable unit designated for owner-occupancy shall be the lower of: (1) fair market value; or (2) the seller’s lawful purchase price, increased by the rate of increase of area median income during the seller’s ownership. The sales price may also be modified to account for capital improvements made by the seller, deferred maintenance, and the seller’s necessary costs of sale. The resale restrictions shall provide an option to the city to purchase any affordable owner-occupancy unit at the maximum price set forth in Section 18.155.020(a) or the appraised value, whichever is lower that could be charged to a purchaser household, at any time the owner proposes sale.

(g)    No household shall be permitted to begin occupancy of a unit which is required to be affordable under this chapter unless the city has approved the household’s eligibility, or has failed to make a determination of eligibility within the time or other limits provided by an affordable housing agreement, rent regulatory agreement, or resale restrictions. If the city maintains a list of, or otherwise identifies, eligible households, initial and subsequent occupants of affordable units shall be selected first from the list of identified households, to the maximum extent possible, in accordance with rules approved by the community development director.

(h)    If the city has failed to identify an eligible buyer for initial sale of an affordable unit which is intended for owner-occupancy 90 days after the unit receives a completed final inspection for occupancy, upon 90 additional days’ notice to the city and on satisfaction of such further conditions as may be included in city-approved restrictions (such as a further opportunity to identify an eligible buyer, sale to a nonprofit affordable housing organization, or additional marketing by owner), the owner may sell the unit at a fair-market value and shall pay the city the greater of the following:

(1)    An amount equal to the difference between the sales price and the affordable ownership cost; or

(2)    An amount equal to the moderate income housing fee multiplied by the average size unit multiplied by either 22 detached (or 29 attached) moderate income units within the residential project.

The amount paid to the city shall be deposited into the city of Fremont affordable housing development fund. After such a sale, the unit shall not be subject to any requirement of this chapter. (Ord. 2493 § 1, 11-26-02; Ord. 20-2004 § 3, 7-27-04; Ord. 19-2006 § 8, 10-3-06; Ord. 13-2010 § 1, 6-15-10; Ord. 16-2011 § 5, 10-4-11; Ord. 9-2014 § 21, 3-4-14; Ord. 10-2015 § 1, 4-7-15. 1990 Code § 8-22176.)

18.155.080 Alternatives for for-sale residential projects.

As an alternative to compliance with the other provisions of this chapter, an applicant proposing a for-sale residential project may propose one or a combination of the following alternatives as part of its affordable housing plan submitted with the first approval of the project. The approval authority may approve the alternative if the alternative conforms to the standards in the relevant subsection. Any affordable units provided by an applicant pursuant to one of the following alternatives shall comply with the standards contained in Section 18.155.070, Continued affordability, and shall be roughly equivalent in value to the basic requirement contained in Section 18.155.030.

(a)    Voluntary Provision of Rental Units. Where ownership affordable units are required in a for-sale project by Section 18.155.030(a), the applicant may ask to initially provide rental units affordable to moderate, low, very low and extremely low income households at rents as prescribed in subsection (a)(1) of this section.

(1)    At least 13.4 percent of all living units in the residential project shall be exclusively offered for rent to moderate, low, very low, and extremely low income households. Of the living units in the residential project, at least 2.6 percent shall be exclusively offered to extremely low income households at rents affordable to extremely low income households, at least 4.4 percent shall be exclusively offered to very low income households at rents affordable to very low income households, and at least 3.4 percent shall be exclusively offered to low income households at rents affordable to low income households, and no more than 3.0 percent shall be exclusively offered to moderate income households at rents affordable to moderate income households. Variations focusing provision of units towards very low and low income households or that provide a higher total percentage of affordable units may be considered.

(2)    The affordable rental units shall be comparable to the market-rate units, including the number of bedrooms per unit.

(3)    A rent regulatory agreement acceptable to the community development director, consistent with the requirements of this chapter, shall be recorded against the residential project prior to any final inspection for occupancy of any living unit in the residential project. To ensure compliance with the Costa-Hawkins Act (Cal. Civ. Code Division 3, Part 4, Title 5, Chapter 2.7), the affordable housing agreement and rent regulatory agreement shall include the applicant’s agreement to the limitation on rents required by subsection (a)(1) of this section in consideration for a direct financial contribution or a form of assistance specified in Cal. Gov’t Code Title 7, Division 1, Chapter 4.3 (commencing with Section 65915).

(4)    The rent regulatory agreement shall be in place until such time as the units are sold. The rent regulatory agreement shall include provisions for sale of the affordable units and relocation benefits for tenants of the affordable units if the owner of the residential project later determines to offer any affordable units in the residential project for sale. The owner shall provide all notices to prospective tenants of the residential project required by state law and shall additionally, at the time sale of the units is proposed, provide all tenants of the rental affordable units with the same notices, rights, and relocation benefits as provided by Section 18.190.060 for residential condominium conversion projects. The owner shall provide written notice to the city at least 90 days before offering any rental affordable unit for sale. The owner shall provide as many ownership affordable units at affordable ownership cost as were originally required by the project approval. At the time of sale, resale restrictions, deeds of trust and/or other documents acceptable to the community development director or the director’s designee, all consistent with the requirements of this chapter, shall be recorded against the ownership affordable units for a term of 30 years.

(5)    The community development director may, from time to time, establish affordable rents in compliance with the requirements of this chapter and based on recently available data.

(b)    Off-Site Construction. The applicant, or an entity controlled by the applicant, or another entity that has entered into an agreement with the applicant to provide affordable housing, may propose to construct affordable units on another site. The city may allow off-site construction if the proposal meets all of the following conditions:

(1)    The off-site affordable units shall be constructed either within the same planning area as the residential project, within the city center, downtown or Warm Springs Innovation districts, or within a one-mile radius of the existing Fremont BART and Centerville stations, or the planned Irvington BART station;

(2)    Financing or a viable financing plan, which may include public funding, shall be in place for the off-site affordable units; and

(3)    Construction of the off-site affordable units may not have commenced prior to the first approval of the residential project.

Final inspections for occupancy of the market-rate units will be granted only after final inspections are completed for the off-site affordable units related to those market-rate units. However, the timing requirements set forth in this subsection may be modified by the approval body as provided in Section 18.155.050(a). The city may require that completion of off-site affordable units be further secured by the applicant’s agreement to pay an affordable housing fee in the amount due under subsection (f) of this section in the event the off-site units are not timely completed.

(c)    Property Dedication. The applicant may propose to dedicate, without cost to the city, property within or contiguous to the residential project sufficient to accommodate at least the required affordable units for the residential project. The city may approve property dedication pursuant to this subsection only if the proposal meets all of the following conditions:

(1)    The number of affordable units to be constructed on the dedicated property shall be at least 10 percent greater than the number of affordable units required under Section 18.155.030(a), or the affordable units to be constructed on the dedicated property shall provide units affordable to households in a lesser income category than required under Section 18.155.070(a) (for example, low income units rather than moderate income units); and

(2)    Financing or a viable financing plan, which may include public funding, shall be in place for construction of the affordable units on the dedicated property; and

(3)    The property to be dedicated shall be suitable for construction of affordable housing at a feasible cost, shall be served by utilities, streets and other infrastructure, and shall have no hazardous materials or other conditions that constitute material constraints on development of affordable housing on the property.

The property shall be dedicated to the city prior to issuance of any building permit for the residential project.

(d)    Purchase of Existing Market-Rate Units.

(1)    To provide the affordable units required by this chapter, the applicant may propose to purchase existing market-rate units, that may be sold individually, and convert the market-rate units to affordable ownership units. The city may approve a proposal for purchase and conversion of existing market-rate units if the proposal meets all of the following conditions:

(A)    The market-rate units to be converted to affordable units shall be located in a residential project that is not subject to any existing affordability covenants except covenants restricting other converted market-rate units in the development pursuant to this subsection (d); and

(B)    The market-rate units to be converted to affordable units shall either:

(i)    When purchased by the applicant, be in the process of foreclosure, including properties with a recorded notice of default, notice of sale, or where the foreclosure process has been completed and title transferred to the lender; or

(ii)    Be purchased through a lender-approved short sale no more than 24 months before approval of the residential project; or

(iii)    Require substantial rehabilitation equal to at least 25 percent of the after-rehabilitation value of the property, inclusive of land value; and

(C)    The market-rate units to be converted to affordable units shall be located either within the same planning area as the residential project, within the city center, downtown or Warm Springs Innovation districts, or within a one-mile radius of an existing rail transit station; and

(D)    The affordable housing plan shall include a plan for funding long-term financial sustainability of the market-rate units to be converted to affordable units, including, among other things, increases in homeowners’ association fees, special assessments and maintenance costs; and

(E)    Any existing tenants in the market-rate units to be converted to affordable units shall be eligible to remain in the units; or the applicant shall provide relocation assistance pursuant to Cal. Gov’t Code § 7260 et seq.

(2)    In reviewing a proposal for conversion of market-rate units to affordable units, the city’s desires are:

(A)    The units be sold at affordable ownership cost to low income households; and

(B)    No more than 15 percent of the units in any one common interest development be converted to affordable units; and

(C)    In addition, the city encourages applicants to provide market-rate units with three or more bedrooms for conversion.

(3)    The affordable housing agreement shall contain provisions for purchase, rehabilitation, if required, sale, and long-term financial sustainability of the converted market-rate units.

(4)    If the converted market-rate units are not available for sale to eligible households when building permits are issued for the new units in the residential project, the applicant shall deposit affordable housing fees with the city at permit issuance for the new units receiving building permits in the residential project. The city shall transfer the deposited affordable housing fees to the city of Fremont affordable housing development fund if the market-rate units to be converted to affordable units are not available for sale to eligible households by the earlier of the following:

(A)    Eighteen months after issuance of the first building permit for the residential project, except that the community development director may approve an extension for up to six months if he or she determines that the developer is proceeding in good faith and that the converted market-rate units will be available for sale within six months; or

(B)    Approval of final inspection for occupancy of more than 50 percent of the market-rate units in the residential project.

The timing requirements set forth in this subsection may be modified by the approval body as provided in Section 18.155.050(a).

(e)    Preservation of Affordable Units at Risk of Loss. The applicant may propose to preserve existing affordable units at risk of loss to provide the affordable housing required by this chapter. The city may approve preservation of affordable units at risk of loss pursuant to this subsection only if the proposal meets all of the following conditions:

(1)    The affordable units to be preserved shall be affordable to low income and very low income households; and

(2)    The term of affordability shall be extended for a minimum of 55 years for rental affordable units and for a minimum of 30 years for ownership affordable units; and

(3)    The affordable units to be preserved shall be shown as at risk of loss in the housing element of the city’s general plan, or the city council must find at a public hearing that the affordable units are eligible to, and reasonably expected to, convert to market-rate units in the next five years due to termination of subsidy contracts, mortgage prepayment, or expiration of restrictions on use; and

(4)    Prior to occupancy of the residential project, the affordable units to be preserved shall be in decent, safe and sanitary condition and in compliance with all codes.

No building permit shall be issued for any units in the residential project until regulatory agreements acceptable to the community development director have been recorded to extend the term of affordability for the affordable units at risk of loss as required by this subsection.

(f)    Affordable Housing Fee. For a for-sale project, the applicant may pay an affordable housing fee to mitigate the impacts of the project in lieu of construction of units affordable to moderate income households on site. No affordable housing fee shall be imposed on accessory units and density bonus units.

(g)    Production of On-Site Ownership Units for Lower-Income Households.

(1)    For a market-rate ownership project, in addition to the provision of moderate income units as provided in Section 18.155.030(a), the applicant may propose to provide on-site ownership units to meet the low, very low, and extremely low income housing need generated by the project, instead of paying the affordable housing fee. The city may approve such a proposal; provided, that:

(A)    In a residential project comprised of attached housing units, at least 3.4 percent of the units are affordable to extremely low income buyers, 6.7 percent to very low income buyers, and 4.4 percent to low income buyers.

(B)    In a residential project comprised of detached housing units, at least 4.4 percent of the units are affordable to extremely low income buyers, 7.3 percent to very low income buyers, and 5.4 percent to low income buyers.

(C)    A viable plan is included for ensuring that buyers of the units will have the financial wherewithal to afford repair and replacement costs over time.

(D)    A viable plan is included to ensure that buyers of the units will have access to supportive services similar to those available to renters at equivalent income levels in affordable rental projects receiving city financial support.

(2)    For a 100 percent affordable ownership project receiving a city subsidy, the affordability mix and plans for replacement costs and supportive services will be negotiated and incorporated into the affordable housing agreement and regulatory agreement. (Ord. 10-2015 § 1, 4-7-15; Ord. 27-2016 § 24, 12-6-16; Ord. 01-2017 § 14, 1-3-17.)

18.155.085 Alternatives for rental housing projects.

The developer of a rental project may negotiate a development agreement with the city pursuant to Cal. Gov’t Code § 65864 et seq. to provide rental affordable units as required in subsections (a) through (d) of this section. Alternatively, the developer of a rental project may request in writing to provide rental affordable units as required in subsections (a) through (d) of this section or a combination of rental affordable units and the payment of a portion of the affordable housing fees otherwise required in consideration for a direct financial contribution or any form of assistance specified in Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code.

(a)    At least 12.9 percent of all living units in the residential project shall be exclusively offered for rent to moderate, low, very low, and extremely low income households. Of the living units in the residential project, at least 2.4 percent shall be exclusively offered to extremely low income households at rents affordable to extremely low income households, at least 4.2 percent shall be exclusively offered to very low income households at rents affordable to very low income households, and at least 3.2 percent shall be exclusively offered to low income households at rents affordable to low income households, and no more than 3.1 percent shall be exclusively offered to moderate income households at rents affordable to moderate income households. Variations focusing provision of units towards very low and low income households or that provide a higher total percentage of affordable units may be considered.

(b)    The affordable rental units shall be comparable to the market-rate units, including the number of bedrooms per unit.

(c)    The development agreement or written request shall state that any rental affordable units proposed by the developer are not subject to Cal. Civ. Code § 1954.52(a) nor any other provision of the Costa Hawkins Rental Housing Act (Civ. Code § 1954.51 et seq.) inconsistent with controls on rents, because, pursuant to Cal. Civ. Code §§ 1954.52(b) and 1954.53(a)(2), prior to approval of the residential project, the developer will enter into a contract with the city or another public agency agreeing to the limitations on rents in consideration for a direct financial contribution or any form of assistance specified in Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code.

(d)    A regulatory agreement shall be recorded on the project and any affordable housing agreement shall include the applicant’s agreement to the limitation on rents in consideration for the city’s assistance, to ensure compliance with the Costa-Hawkins Rental Housing Act. (Ord. 10-2015 § 1, 4-7-15.)

18.155.090 Establishment of affordable housing fees – Use.

(a)    Affordable housing fees shall be set by city fee resolution or other action of the city council. Fees may be based on a fee per market-rate unit, fee per square foot, or any other reasonable basis. The city council may review the fees from time to time at its sole discretion and, based on that review, may adjust the fee amount within the range justified by the most recently adopted Nexus Study and shall not exceed the cost of mitigating the impact of market-rate housing on the need for affordable housing in the city. The affordable housing fee amounts set forth for projects deemed complete prior to May 7, 2015, shall be adjusted once each fiscal year by the community development director based on the annual percentage increase or decrease in the construction cost index; provided, that any increased adjustment does not exceed the amounts justified by the most recently adopted Nexus Study.

(b)    Affordable housing fees paid for fractional units pursuant to Section 18.155.030(a)(6) shall be equal to moderate income fee multiplied by the fraction of the affordable unit required multiplied by the average square footage of moderate income housing units multiplied by 22 detached (or 29 attached) units.

(c)    All fees collected under this chapter shall be deposited into a separate account to be designated the city of Fremont affordable housing development fund.

(d)    A residential project that would result in demolition of existing residential units shall not be entitled to a fee credit for the demolished units and new units shall be assessed based upon their full square footage. Residential units that are retained shall not be charged a fee but will be charged for any expanded square footage.

(e)    The fees collected under this chapter and all earnings from investment of the fees shall be expended exclusively to provide or assure continued provision of affordable housing in the city through acquisition, construction, development assistance, rehabilitation, financing, or other methods, and for costs of administering these programs. A maximum of five percent of the fund may be used for administrative costs directly related to the provision of affordable housing financed by the fund. The housing shall be of a type, or made affordable at a cost or rent, for which there is a need in the city and which is not adequately supplied in the city by private housing development in the absence of public assistance and to the extent feasible shall be utilized to provide for low, very low, and extremely low income housing. (Ord. 2493 § 1, 11-26-02; Ord. 13-2010 § 1, 6-15-10; Ord. 10-2015 § 1, 4-7-15; Ord. 08-2017 § 7, 6-6-17. 1990 Code § 8-22178.)

18.155.100 Enforcement.

(a)    The city attorney shall be authorized to enforce the provisions of this chapter, and all developer and regulatory agreements and resale controls placed on affordable units, by civil action and any other proceeding or method permitted by law.

(b)    Failure of any official or agency to fulfill the requirements of this chapter shall not excuse any applicant or owner from the requirements of this chapter. (Ord. 2493 § 1, 11-26-02; Ord. 13-2010 § 1, 6-15-10; Ord. 10-2015 § 1, 4-7-15. 1990 Code § 8-22179.)

18.155.110 Waiver.

As part of an application for the first approval of a residential project, an applicant may apply for a reduction, adjustment, or waiver of the requirements based upon a showing that applying the requirements of this chapter would result in an unconstitutional taking of property or would result in any other unconstitutional result. The applicant shall set forth in detail the factual and legal basis for the claim, including all supporting technical documentation, and shall bear the burden of presenting the requisite evidence to demonstrate the alleged unconstitutional result. The city may assume each of the following when applicable:

(a)    The applicant will benefit from the incentives set forth in the municipal code; and

(b)    The applicant will be obligated to provide the most economical affordable housing units feasible in terms of financing, construction, design, location and tenure.

The approval authority, based upon legal advice provided by or at the behest of the city attorney, may approve a reduction, adjustment, or waiver if the approval authority determines that applying the requirements of this chapter would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property. The reduction, adjustment, or waiver may be approved only to the extent necessary to avoid an unconstitutional result after adoption of written findings, based on legal analysis and the evidence. If a reduction, adjustment, or waiver is granted, any change in the residential project shall invalidate the reduction, adjustment, or waiver, and a new application shall be required for a reduction, adjustment, or waiver pursuant to this section. (Ord. 13-2010 § 1, 6-15-10; Ord. 10-2015 § 1, 4-7-15. 1990 Code § 8-22180.)