Chapter 18.17
AFFORDABLE HOUSING INCENTIVES

Sections:

18.17.010    Purpose.

18.17.020    Definitions.

18.17.030    City incentives for below market rate units.

18.17.040    State mandated density bonuses.

18.17.050    State mandated concessions and incentives.

18.17.060    Review procedures for State mandated density bonuses, concessions, and incentives.

18.17.070    Requirements for density bonus below market rate units.

18.17.010 Purpose.

The purpose of this chapter is to provide procedures for granting incentives for the construction of affordable housing to encourage the production of affordable housing and to achieve the following additional goals:

A.    Housing Element Goals and Policies. To implement goals and policies contained in the Housing Element providing for incentives for the construction of affordable housing.

B.    Compliance with State Law. To comply with the provisions of Government Code Section 65915, which mandates the adoption of a City ordinance specifying procedures for providing the density bonuses and other incentives and concessions required by that section. (Ord. 1438 § 4 (Exh. A (part)), 2011: Ord. 1416 § 4 (Exh. A (part)), 2010. Formerly 18.204.010)

18.17.020 Definitions.

Terms defined in Section 18.16.020 shall have the same meaning in this chapter. In addition, the following terms shall have the following meanings when used in this chapter:

A.    “Bonus units” means dwelling units allowed pursuant to Section 18.17.030(A) or Section 18.17.040 that exceed the otherwise allowable maximum residential density for a residential development.

B.    “Concessions and incentives” means regulatory concessions as defined by Government Code Section 65915(k) and as listed in Section 18.17.050.

C.    “Density bonus” means a density increase over the otherwise allowable maximum residential density for a residential development, pursuant to Section 18.17.030(A) or Section 18.17.040.

D.    “Density bonus below market rate (BMR) unit” means a dwelling unit that is not a below market rate unit that is required by Section 18.17.040; is offered at an affordable rent or affordable ownership cost to moderate-, low- or very low-income households; and qualifies a residential development for a density bonus pursuant to Section 18.17.040.

E.    “Development standard” means a site or construction condition that applies to a residential development pursuant to any ordinance, General Plan element, specific plan, or other local condition, law, policy, resolution, or regulation. A “site and construction condition” is a development regulation or law that specifies the physical development of a site and buildings on the site in a residential development.

F.    “Maximum residential density” means the maximum number of dwelling units permitted in a residential development by the City’s Zoning Ordinance and by the Land Use Element of the General Plan on the date that the application for the residential development is deemed complete, excluding any density bonus. If the maximum density allowed by the Zoning Ordinance is inconsistent with the density allowed by the Land Use Element of the General Plan, the Land Use Element density shall prevail.

G.    “Senior citizen housing development” means a residential development with at least thirty-five dwelling units, meeting the definition of a senior citizen housing development set forth in California Civil Code Section 51.3. (Ord. 1438 § 4 (Exh. A (part)), 2011: Ord. 1416 § 4 (Exh. A (part)), 2010. Formerly 18.204.020)

18.17.030 City incentives for below market rate units.

The incentives provided by this section are available to residential developments that provide on-site below market rate units in compliance with Chapter 18.16. Residential developments which have been granted a density bonus pursuant to Section 18.17.040 are not eligible for the City density bonus described in subsection A of this section but may be granted another incentive included in this section as a concession or incentive granted pursuant to Section 18.17.050.

A.    City Density Bonus. Upon the discretionary issuance of a conditional use permit by the Planning Commission, residential developments with one or more on-site below market rate units that are affordable to low-income households, or to a lower income category, may be granted one additional unit for each unit affordable to low-income households or to a lower income category. This density bonus shall not apply to single-family residential developments and is an alternative to density bonuses allowed under California Government Code Section 65915 and Section 18.17.040.

B.    Modified Development Standard Calculations. Bonus unit(s) approved under the density bonus incentive described in subsection A of this section shall be exempted from floor area ratio and density requirements. In addition, the bonus unit(s) will not be counted in determining the required number of below market rate units.

C.    Flexible Parking Standards. Residential developments with one or more on-site below market rate units shall be allowed limited reductions in the parking requirements related to any dwelling units or allowed limited use of tandem and/or shared parking arrangements or allowed a combination of these modified parking standards.

D.    Flexible Setback Allowance. Residential developments with one or more on-site below market rate units may be allowed limited reductions in the minimum setback requirements if the following findings are made through the design review process:

1.    That the proposed alternative design at the proposed location will not be detrimental or injurious to improvements in the vicinity and will not be detrimental to the public health, peace, safety, comfort, general welfare or convenience; and

2.    The proposed alternative design shall not significantly reduce the privacy of the adjoining property owners or significantly reduce sunlight into adjoining properties.

E.    Permit Streamlining. In certain zoning districts, the requirement of a conditional use permit for dwelling units above the ground floor may be eliminated for residential developments with one or more on-site below market rate units.

F.    Financial Assistance. To the extent budgeted by the City Council and otherwise available, financial assistance from the City or from sources as may be available to the City may be available to the builder in the form of loans or grants for the below market rate housing component of the residential development. The builder shall be responsible for complying with all requirements associated with the particular funding source(s), including any requirements imposed by the State for payment of prevailing wages. Rental residential developments that offer the deepest affordability and which lack alternative funding sources shall be given the highest priority for financial assistance, in particular, rental residential developments affordable to very low- and low-income households.

G.    Below Market Rate Housing Plan. All requests for City incentives provided pursuant to this section shall be submitted with the below market rate housing plan required by Section 18.16.060(B). The builder shall include the following additional information in the below market rate housing plan:

1.    A site plan depicting the number and location of all market rate, below market rate and bonus units.

2.    A calculation of the maximum number of dwelling units permitted by the City’s Zoning Ordinance and General Plan for the residential development, excluding any density bonus.

3.    Description of any City incentives requested pursuant to this section. (Ord. 1438 § 4 (Exh. A (part)), 2011: Ord. 1416 § 4 (Exh. A (part)), 2010. Formerly 18.204.030)

18.17.040 State mandated density bonuses.

A.    Eligibility for Density Bonus. State law (Government Code Section 65915) provides that a residential development resulting in a net increase of at least five dwelling units is eligible for a density bonus as follows:

1.    Very Low- and Lower-Income Housing and Senior Housing. A residential development is eligible for a twenty percent density bonus if the builder seeks and agrees to construct at least one of the following:

a.    Ten percent of the total units as density bonus BMR units affordable to low-income households at an affordable rent or affordable ownership cost; or

b.    Five percent of the total units as density bonus BMR units affordable to very low-income households at an affordable rent or affordable ownership cost; or

c.    A senior citizen housing development.

2.    Moderate-Income Housing. A residential development is eligible for a five percent density bonus if the builder seeks and agrees to construct ten percent of the total units as for-sale density bonus BMR units affordable to moderate-income households, if the residential development also meets all of the following additional criteria:

a.    The residential development is a common interest development as defined by Section 1351 of the California Civil Code;

b.    All of the dwelling units in the residential development are offered to the public for purchase; and

c.    The density bonus BMR units are offered for sale at affordable ownership cost.

3.    Additional Density Bonus. The density bonus for which the residential development is eligible shall increase if the percentage of very low-, low-, and moderate-income density bonus BMR units exceeds the base percentage established in subsections (A)(1) and (A)(2) of this section, as follows:

a.    Very Low-Income Units. For each one percent increase above five percent in the percentage of density bonus BMR units affordable to very low-income households, the density bonus shall be increased by two and one-half percent up to a maximum of thirty-five percent.

b.    Low-Income Units. For each one percent increase above ten percent in the percentage of density bonus BMR units affordable to low-income households, the density bonus shall be increased by one and one-half percent up to a maximum of thirty-five percent.

c.    Moderate-Income For-Sale Units. For each one percent increase above five percent in the percentage of for-sale density bonus BMR units affordable to moderate-income households, the density bonus shall be increased by one percent up to a maximum of thirty-five percent.

4.    Below Market Rate Units Not Eligible for State Density Bonus. All density bonus BMR units qualifying a residential development for a density bonus pursuant to this section must be provided in addition to the below market rate units required by Section 18.16.030.

The following table summarizes available State density bonuses:

TABLE 18.17.040: STATE MANDATED DENSITY BONUS SUMMARY

Income Category

Minimum% Density Bonus BMR Units

Bonus Granted

Additional Bonus for Each 1% Increase in Density Bonus BMR Units

% Density Bonus BMR Units Required for Maximum 35% Bonus

Very Low-Income

5%

20%

2.5%

11%

Low-Income

10%

20%

1.5%

20%

Moderate-Income (for-sale common interest development only)

10%

5%

1%

40%

Allowable Number of Incentive(s)/Concession(s)

100%

20%

B.    State Mandated Density Bonus for Land Donation, Child Care Facility, or Condominium Conversion.

1.    A residential development may be eligible for a density bonus for land donation pursuant to the requirements set forth in Government Code Section 65915(g).

2.    A residential development that contains a child care facility as defined in Government Code Section 65915(h) may be eligible for an additional density bonus, concession, or incentive pursuant to the requirements set forth in Section 65915(h).

3.    Condominium conversions may be eligible for a density bonus, concession, or incentive pursuant to the requirements set forth in Government Code Section 65915.5.

C.    Calculation of State Mandated Density Bonus.

1.    Each residential development is entitled to only one density bonus, which may be selected based on the percentage of either density bonus BMR units affordable to very low-income households, low-income households, or moderate-income households, or the residential development’s status as a senior citizen housing development. Density bonuses from more than one category may not be combined.

2.    When calculating the number of permitted bonus units, any calculations resulting in fractional units shall be rounded to the next larger whole number.

3.    The bonus units shall not be included when determining the number of density bonus BMR units required to qualify for a density bonus. When calculating the required number of density bonus BMR units, any calculations resulting in fractional units shall be rounded to the next larger integer.

4.    The builder may request a lesser density bonus than the residential development is entitled to, but no reduction will be permitted in the minimum percentages of required density bonus BMR units pursuant to subsection A of this section. Regardless of the number of density bonus BMR units, no residential development may be entitled to a density bonus of more than thirty-five percent. (Ord. 1438 § 4 (Exh. A (part)), 2011: Ord. 1416 § 4 (Exh. A (part)), 2010. Formerly 18.204.040)

18.17.050 State mandated concessions and incentives.

A.    Eligibility for Concessions and Incentives. A builder may request concessions and incentives pursuant to this section only when the builder is eligible for and also seeks and receives a State density bonus pursuant to Section 18.17.040. State law (Government Code Section 65915) provides that a residential development is eligible for concessions and incentives as follows:

1.    One concession or incentive for residential developments that include at least ten percent of the total units as density bonus BMR units affordable to low-income households, at least five percent of the total units as density bonus BMR units affordable to very low-income households, or at least ten percent of the total units in a common interest development as density bonus BMR units affordable to moderate-income households.

2.    Two concessions or incentives for residential developments that include at least twenty percent of the total units as density bonus BMR units affordable to low-income households, at least ten percent of the total units as density bonus BMR units affordable to very low-income households, or at least twenty percent of the total units in a common interest development as density bonus BMR units affordable to moderate-income households.

3.    Three concessions or incentives for residential developments that include at least thirty percent of the total units as density bonus BMR units affordable to low-income households, at least fifteen percent of the total units as density bonus BMR units affordable to very low-income households, or at least thirty percent of the total units in a common interest development as density bonus BMR units affordable to moderate-income households.

The following table summarizes requirements for incentives and concessions:

TABLE 18.17.050: REQUIREMENTS TO QUALIFY FOR STATE MANDATED
INCENTIVES/CONCESSIONS

Income Category

Percentage of Density Bonus BMR Units to Quality for Incentives

Very Low-Income

5%

10%

15%

Low-Income

10%

20%

30%

Moderate-Income (for-sale common interest development only)

10%

20%

30%

Allowable Number of Incentive(s)/Concession(s)

1

2

3

Notes:

A.    A concession or incentive may be requested only if an application is also made for a density bonus pursuant to Section 18.17.040.

B.    Concessions or incentives may be selected from only one category (very low, low, or moderate).

C.    No concessions or incentives are available for land donation.

D.    Condominium conversions and day care centers may have one concession or a density bonus at the City’s option, but not both.

B.    Definition of Concession or Incentive. For the purposes of this section, “concession” or “incentive” means the following:

1.    A reduction in development standards or architectural design requirements which exceed the minimum building standards approved by the State Building Standards Commission in compliance with State law (Health and Safety Code Section 18901 et seq.), including, but not limited to, setback, coverage, and/or parking requirements, which result in identifiable, financially sufficient, and actual cost reductions, based upon appropriate financial analysis and documentation if required by this section.

2.    Approval of mixed-use development in conjunction with the proposed residential development if nonresidential land uses will reduce the cost of the residential development, and the nonresidential land uses are compatible with the residential development and existing or planned surrounding development.

3.    Other regulatory incentives or concessions proposed by the builder or the City that will result in identifiable, financially sufficient, and actual cost reductions, and based upon appropriate financial analysis and documentation if required by this section.

C.    Concessions Not Requiring Financial Pro Forma from Applicant. The following concessions and incentives shall be available to the builder without any requirement that the builder submit a pro forma to the City demonstrating that the requested concession or incentive results in identifiable, financially sufficient, and actual cost reductions:

1.    A reduction in the usable open space requirement;

2.    An increase in the maximum lot coverage requirement;

3.    A reduction in minimum lot dimensions;

4.    A reduction in minimum distance between buildings;

5.    A reduction in landscaping area requirements;

6.    Deferral until occupancy of development impact fees;

7.    Any of the City incentives listed in Section 18.17.030(A) through (E), inclusive.

D.    Concessions Requiring Financial Pro Forma from Applicant. All other concessions and incentives shall require the builder to demonstrate to the City Council through the provision of a pro forma that the requested concession or incentive results in identifiable, financially sufficient, and actual cost reductions to the residential development. The pro forma shall include:

1.    The actual cost reduction achieved through the concession or incentive;

2.    Evidence that the cost reduction allows the builder to provide affordable rents or affordable sales prices; and

3.    All other information as may be requested by the Administrator to ensure that the required findings can be made.

E.    Parking Reduction. Pursuant to Government Code Section 65915(p), if a residential development is eligible for a density bonus pursuant to Section 18.17.040(A), the builder may request an on-site vehicular parking ratio, inclusive of handicapped and guest parking, that does not exceed the following:

1.    Zero- to one-bedroom dwelling unit: one on-site parking space.

2.    Two- to three-bedroom dwelling unit: two on-site parking spaces.

3.    Four- or more bedroom dwelling unit: two and one-half on-site parking spaces.

On-site parking may include tandem and uncovered parking.

A builder may request this parking reduction in addition to concessions and incentives permitted by subsection A of this section.

F.    Waiver. Applicants may seek a waiver of any development standards that will physically preclude the construction of a residential development that is eligible for a density bonus pursuant to Section 18.17.040(A) with the density bonus or concessions and incentives permitted by Section 18.17.040 or this section. The builder shall demonstrate that the development standards that are requested to be waived will have the effect of physically precluding the construction of the residential development with the density bonus or concessions and incentives permitted by Section 18.17.040 or this section.

G.    City Financial Participation Not Required. Nothing in this chapter requires the provision of direct financial incentives for the residential development, including but not limited to the provision of financial subsidies, publicly owned land, fee waivers, or waiver of dedication requirements. The City at its sole discretion may choose to provide such direct financial incentives.

H.    Prevailing Wages. Financial and certain other incentives may require payment of prevailing wages by the residential development if required by State law. (Ord. 1438 § 4 (Exh. A (part)), 2011: Ord. 1416 § 4 (Exh. A (part)), 2010. Formerly 18.204.050)

18.17.060 Review procedures for State mandated density bonuses, concessions, and incentives.

A.    Below Market Rate Housing Plan. All requests for density bonuses, concessions and incentives, City incentives, parking reductions, and waivers provided pursuant to Sections 18.17.040 and 18.17.050 shall be submitted with the below market rate housing plan required by Section 18.16.060(B). The builder shall include the following additional information in the below market rate housing plan:

1.    A site plan depicting the number and location of all market rate units, below market rate units, density bonus BMR units, and bonus units.

2.    A calculation of the maximum number of dwelling units permitted by the City’s Zoning Ordinance and General Plan for the residential development, excluding any density bonus.

3.    The targeted income level of the proposed density bonus BMR units.

4.    Description of any requested concessions, incentives, waivers of development standards, or parking reductions requested pursuant to Section 18.17.050.

5.    For all concessions and incentives except those listed in Section 18.17.050(C), a pro forma demonstrating that the requested concessions and incentives result in identifiable, financially sufficient, and actual cost reductions. The pro forma shall include:

a.    The actual cost reduction achieved through the concession or incentive; and

b.    Evidence that the cost reduction allows the builder to provide affordable rents or affordable sales prices.

6.    For waivers of development standards: evidence that the development standards for which the waivers are requested will have the effect of physically precluding the construction of the residential development with the density bonus, concessions, or incentives requested.

7.    The Administrator may require that any pro forma submitted pursuant to subsection (A)(5) of this section include information regarding capital costs, equity investment, debt service, projected revenues, operating expenses, and such other information as is required to evaluate the pro forma. The cost of reviewing any required pro forma data, including but not limited to the cost to the City of hiring a consultant to review the pro forma, shall be borne by the builder.

8.    If a mixed-use building or development is proposed, the builder shall provide evidence that nonresidential land uses will reduce the cost of the residential development, and the nonresidential land uses are compatible with the residential development and existing or planned surrounding development.

9.    If a density bonus is requested for a land donation, the below market rate housing plan shall show the location of the land to be dedicated, provide proof of site control, and provide evidence that each of the findings included in Government Code Section 65915(g) can be made.

10.    If a density bonus or concession is requested for a child care facility or condominium conversion, the below market rate housing plan shall provide evidence that the findings in Government Code Section 65915(h) or 65915.5, as appropriate, can be made.

B.    City Review of Application for State Mandated Density Bonus, Concessions, and Incentives. Any request for a density bonus, concessions, incentives, waivers, or parking reductions provided pursuant to Sections 18.17.040 and 18.17.050 shall be processed, reviewed, and approved or denied by the decision-making body (Planning Commission or City Council) concurrently with the below market rate housing plan required for the residential development. In accordance with State law, neither the granting of a concession or incentive, nor the granting of a density bonus, shall be interpreted, in and of itself, to require a General Plan amendment, zoning change, or other discretionary approval.

C.    Findings for Approval of State Mandated Density Bonus, Concessions, and Incentives. Before approving an application that includes a request for a density bonus, incentive, concession, waiver, or parking reduction provided pursuant to Sections 18.17.040 and 18.17.050, the decision-making body shall make the following findings, as applicable:

1.    The residential development is eligible for a density bonus and any concessions, incentives, waivers, or parking reductions requested.

2.    Any requested incentive or concession will result in identifiable, financially sufficient, and actual cost reductions based upon appropriate financial analysis and documentation if required.

3.    If the density bonus is based all or in part on donation of land, the findings included in Government Code Section 65915(g).

4.    If the density bonus, incentive, or concession is based all or in part on the inclusion of a child care facility, the findings included in Government Code Section 65915(h).

5.    If the incentive or concession includes mixed-use development, the findings included in Government Code Section 65915(k)(2).

6.    If a waiver is requested, the development standards for which a waiver is requested would have the effect of physically precluding the construction of the residential development with the density bonus, concessions, or incentives permitted.

D.    Findings for Denial of Incentives, Concessions or Waivers.

1.    Denial of Concessions and Incentives. If the findings required by subsection C of this section can be made, the decision-making body may deny a concession or incentive only if it makes a written finding, supported by substantial evidence, of either of the following:

a.    The concession or incentive is not required to provide for affordable rents or affordable ownership costs.

b.    The concession or incentive would have a specific adverse impact upon public health or safety or the physical environment or on any real property that is listed in the California Register of Historical Resources, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to low- and moderate-income households. For the purpose of this subsection, “specific adverse impact” means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified, written public health or safety standards, policies, or conditions as they existed on the date that the application for the residential development was deemed complete.

c.    The concession or incentive would be contrary to State or Federal law.

2.    Denial of Waivers. If the findings required by subsection C of this section can be made, the decision-making body may deny a waiver only if it makes a written finding, supported by substantial evidence, of either of the following:

a.    The waiver would have a specific adverse impact upon health, safety, or the physical environment, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to low- and moderate-income households. For the purpose of this subsection, “specific adverse impact” means a significant, quantifiable, direct, and unavoidable impact, based on objective, and identified, written public health or safety standards, policies, or conditions as they existed on the date that the application was deemed complete.

b.    The waiver would have an adverse impact on any real property that is listed in the California Register of Historical Resources.

c.    The waiver would be contrary to State or Federal law.

3.    Denial of Incentive or Bonus for Child Care Center. If the findings required by subsection C of this section can be made, the decision-making body may deny a density bonus, incentive, or concession that is based on the provision of child care facilities only if it makes a written finding, based on substantial evidence, that the City already has adequate child care facilities. (Ord. 1438 § 4 (Exh. A (part)), 2011: Ord. 1416 § 4 (Exh. A (part)), 2010. Formerly 18.204.060)

18.17.070 Requirements for density bonus below market rate units.

In addition to any requirements included in Sections 18.17.040 and 18.17.050, density bonus BMR units shall conform to the following provisions applicable to below market rate units:

A.    Below market rate unit standards (Section 18.16.050), except that density bonus BMR units that are affordable to very low- and low-income households shall be affordable for thirty years or as long a period of time as permitted by current law, unless a longer period of time is required by any construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program applicable to the residential development.

B.    Compliance procedures (Section 18.16.060).

C.    Eligibility for below market rate units (Section 18.16.080).

D.    Owner-occupied below market rate units (Section 18.16.090).

E.    Rental units (Section 18.16.100). (Ord. 1438 § 4 (Exh. A (part)), 2011: Ord. 1416 § 4 (Exh. A (part)), 2010. Formerly 18.204.070)