Chapter 17.40 — INCLUSIONARY HOUSING

The purpose of this chapter is to establish an inclusionary housing program that facilitates the production and availability of housing affordable to a broad range of households with varying income levels within the City to meet current and future affordable housing needs. (Ord. 6593 § 1 (part); October 29,2024.)

This chapter shall apply to any proposed residential or mixed-use project with thirty-five (35) or more dwelling units, in which an application for the project was formally submitted to the city on or after October 8, 2024, or in the case of a by right project building permit applications were submitted to the city on or after October 8, 2024, unless otherwise exempted; provided, however, that this chapter shall not be applied in a manner that conflicts with applicable State law. (Ord. 6593 § 1 (part); October 29, 2024.)

The requirements of this chapter shall not apply to the following:

.010 Residential projects with less than thirty-five (35) dwelling units;

.020 Any residential ownership projects of any size;

.030 Conversions of existing multi-family residential developments such as apartments to residential common interest developments (condominiums) for ownership housing;

.040 Reconstruction of any residential structures that have been destroyed by fire, flood, earthquake, or other act of nature;

.050 Residential building additions, repairs or remodels;

.060 Any residential project for which the city entered into a development agreement pursuant to California Government Code section 65964 prior to the effective date of the inclusionary housing ordinance.

.070 Any residential project for which the city enters into a development agreement pursuant to California

Government Code section 65964 on or after the effective date of the inclusionary housing ordinance that provides affordable housing obligations comparable to this chapter. (Ord. 6593 § 1 (part); October 29, 2024.)

As used in this chapter the following terms shall have the meanings set forth below; terms not specifically defined herein shall have the meanings ascribed to them elsewhere in this code:

Affordable Rent . The maximum affordable housing cost minus any housing costs that are imposed on the tenant on a mandatory basis. The affordable housing cost is based on the percentages of AMI identified in the following table, as adjusted for household size appropriate for the unit (as defined in California Health and Safety Code section 50052.5), times 30%:

Very Low-Income 50%

Affordable Unit. A dwelling unit that is required to be rented at the affordable rent to very low-income and lowincome households.

Anaheim Local Housing Trust Fund . The fund into which all collected in-lieu fees, and any other fees related to this chapter, are deposited for the purposes of furthering affordable housing production goals within the City.

Applicant. A person or entity that applies for approval or approvals for a residential project and/or owns the property or properties on which a residential project is proposed.

Area Median Income (AMI). The median household income of households in Orange County, adjusted for household size, as determined by the California Housing and Community Development department (HCD).

Director. The Director of Housing and Community Development, or designee.

Density Bonus. An increase in the number of units permitted in a proposed Residential Project provided pursuant to State Density Bonus Law as set forth in California Government Code sections 65915, et seq.

Gross Annual Household Income. As defined in 25 Cal. Code Regs. Section 6914, including any successor section thereto.

Inclusionary Housing Agreement. A legally binding recorded agreement and/or deed restriction in a form satisfactory to the Director and the City Attorney setting forth those provisions necessary to ensure that the requirements of the chapter are met.

Inclusionary Housing Plan . A plan containing all the information specified and submitted in conformance with this chapter specifying the manner in which affordable units will be provided.

In-Lieu Fee. The fee payable as an alternative to the construction of on-site affordable units.

Low-Income Household. A household with a gross annual household income between 51% and 80% of AMI for Orange County as defined in California Health and Safety Code section 50079.5.

Market-Rate Unit. A dwelling unit offered on the open market at the prevailing market- rate for rental.

Moderate-Income Household. A household with a gross annual household income between 81% and 110% of AMI for Orange County as defined in California Health and Safety Code section 50093.

Ownership Project. A residential project that is intended to be sold for homeownership.

Rental Project . A residential project that is intended to be rented to tenants.

Residential Project . A project undertaken for the purpose of development of land for residential purposes that

requires the issuance of a discretionary approval or the issuance of a permit, including a building permit for construction, and that will include thirty-five (35) or more dwelling units.

Very Low-Income Household . A household with a gross annual household income that does not exceed 50% of AMI for Orange County, as defined in California Health and Safety Code section 50105. (Ord. 6593 § 1 (part); October 29, 2024.)

The following requirements and standards shall apply to any for residential project subject to this chapter: .010 Project Threshold. The inclusionary housing requirement is applicable to any proposed residential project with thirty-five (35) dwelling units or more.

.020 Number of Affordable Units. The minimum number of dwelling units required to be set aside as affordable units and the required affordability level(s) of the units are specified as follows:

.0201 Rental Projects . An applicant of a rental project shall fulfill their obligation with onsite production of at least

10% affordable rental units, including at least 7% at or below the low-income level and at least 3% at or below the

very-low income level.

.0202 Fractional Calculation . For any partial affordable unit calculated, the applicant shall round up the calculation to the highest whole number or pay a fractional in-lieu fee payment in accordance with the adopted in-lieu fee schedule.

.0203 Parcel or Lot Merger. An applicant shall not avoid the requirements of this chapter by submitting piecemeal planning permit applications. At the time of the application for first approval for the residential project, the applicant shall identify all contiguous property under common ownership and control. The applicant shall not be required to construct dwelling units upon the contiguous property at the time of the application for first approval; however, the applicant shall be required to include the contiguous property under common ownership or control in its inclusionary housing plan. The inclusionary housing agreement shall be recorded against the residential project and all contiguous property under common ownership or control and shall require compliance with this chapter upon development of each contiguous property at such time as there are planning permit applications that would authorize residential units for the residential development and the contiguous property under common ownership or control.

.030 Covenant Period. For rental projects, the affordable units shall remain affordable for not less than fifty-five (55) years or as stated in the inclusionary housing agreement or other agreement(s). After fifty-five (55) years the affordability covenant may be removed only if the property is redeveloped as a non-residential use.

.040 Timing of Construction. The affordable units shall be constructed concurrently with or prior to the construction of market rate units. In phased developments, the affordable units shall be constructed in proportion to the number of dwelling units in each phase of the market rate project. The applicant shall provide a Construction Phasing Plan as part of their project plans for review by the director or their designee prior to the submittal of plans for a building permit.

.050 Unit Size. The size of the affordable units shall be the same size as the market rate units, but the final review authority may consider and approve affordable units no more than 15% smaller in square footage than the average square footage of the market rate units.

.060 Bedroom Mix. The bedroom mix of the affordable units shall be proportional to the market rate units or as otherwise agreed in the inclusionary housing agreements or other approved agreements with the City.

.070 Design. All exterior and interior improvements including floor plan design, finishes/materials, etc. for the affordable units shall be comparable, if not same, to the market rate units. The affordable units shall have same access to and enjoyment of all community amenities/facilities in the residential project. The final review authority may consider and approve alternative exterior and/or interior design improvements for the affordable units as long as it is comparably the same to the market rate units.

.080 Location. Affordable units shall be dispersed and evenly distributed throughout a residential project and not clustered in a particular area of the development or as otherwise agreed at the City's discretion in an inclusionary housing agreement. Affordable units within a residential project that share a common entrance or access shall not have separate entrances or access for market rate and affordable units.

.090 Certificate of Occupancy. No certificate of occupancy will be issued for any corresponding market rate unit in a new residential project prior to completion of the required affordable units (including offset) and/or payment of inlieu fees.

.100 Anaheim Preference. Subject to applicable fair housing laws, give reasonable preference and consideration to the housing needs of the target population residing in, employed in, or offered employment in the City of Anaheim, including but not limited to, priority placement on a written waiting list of available units. (Ord. 6593 § 1 (part); October 29, 2024.)

The following are the alternative options to fulfill the requirements of this chapter: .010 In-Lieu Fees . The payment of in-lieu fees may be used to fulfill the affordable housing requirement for residential projects and any fractional number of affordable units required.

.0101 In-lieu fees shall be paid prior to the issuance of the first building permit for the residential project, unless specified and/or agreed elsewhere in recorded agreement(s) with the City. For phased developments, the applicant may pay a pro rata share of the in-lieu fee concurrently with the issuance of a building permit for each phase.

.0102 In-lieu fees shall be paid according to a fee schedule adopted by the City Council. The in-lieu fee schedule shall be adjusted periodically on an annual basis or as determined by the City Council or their designee and shall be adopted by resolution.

.0103 All in-lieu fees collected shall be deposited into the Anaheim Local Housing Trust Fund.

.020 Offsite Construction. Affordable units may be constructed offsite only upon a determination by the director or their designee that onsite production of affordable units is economically infeasible. If this alternative compliance option is chosen, then the offsite affordable units must be constructed prior to or concurrently with construction of the market rate residential project.

.0201 The offsite affordable units shall comply with all applicable requirements pursuant to this chapter for onsite production of affordable units.

.0202 The offsite location shall be located within the City of Anaheim boundaries and shall be located within a reasonable distance from the market rate residential project that is subject to the affordable housing requirement. .0203 For residential projects for which a master plan is required, the affordable units may either be provided onsite or offsite on a separate parcel within the residential project's approved master plan boundaries.

.030 Land Dedication . An applicant may dedicate, without cost to the City, land (single or multiple parcels) within the City of Anaheim boundaries that is sufficient to accommodate the number of affordable units required by the market rate project. The following requirements are applicable to any land proposed to be dedicated to the City to fulfill the affordable housing requirement:

.0301 The land to be dedicated to the City shall be located in the City of Anaheim.

.0302 The General Plan and zoning standards shall allow for residential use at a density sufficient to allow for the market rate project's required number of affordable units to be constructed.

.0303 The land shall be suitable in terms of size, configuration, and physical characteristics, including existing utilities, streets, and other infrastructure improvements necessary to allow for the market rate project's required number of affordable units to be constructed.

.0304 The value of the land shall be equivalent or comparable to the in-lieu fee payment that would be applicable to the proposed residential project.

.0305 The applicant shall provide property related report(s) to demonstrate the suitability and value of the land to be dedicated, including but not limited to, title report, appraisal report, and environmental site assessment(s). (Ord. 6593 § 1 (part); October 29, 2024.)

The applicant shall prepare and submit a draft inclusionary housing agreement and inclusionary housing plan as part of the proposed residential project's planning application(s). The director shall review and determine if the plan and agreement are complete and in substantial conformance with the requirements of this chapter. This section shall not apply to residential projects where the developer fulfills their obligation with payment of in-lieu fees or land dedication.

.010 Inclusionary Housing Plan Requirements. The applicant shall submit a plan detailing how the requirements of this chapter will be implemented. The plan shall include, but not be limited to, the following information:

.0101 The location, structure, proposed tenure and size of the proposed market rate and affordable units.

.0102 The total number of affordable units to be provided and the calculations used to determine the number of required affordable units.

.0103 A floor plan and site plan depicting the location of the affordable units.

.0104 The income level targets for each affordable unit.

.0105 The mechanisms that will be used to assure that the affordable units remain affordable for the required term as specified in this chapter.

.0106 A marketing plan for the process by which qualified households will be reviewed and selected to rent affordable units.

.0107 Construction phasing plan schedule with the anticipated completion and opening date and as applicable for phased residential projects.

.020 Inclusionary Housing Agreement Requirements . Upon final project approval, the developer shall execute and record an inclusionary housing agreement in a form approved by the City Attorney, prior to approval of any final or parcel map or issuance of any building permit, whichever occurs first, and that at a minimum specifies the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential renters of the affordable units, consistent with the approved inclusionary housing plan and any administrative procedures adopted pursuant to this chapter.

.0201 An inclusionary housing agreement will not be required for projects that will be satisfying their affordable housing requirement through payment to the City of an in-lieu fee.

.0202 The City Council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required. (Ord. 6593 § 1 (part); October 29, 2024.)

All in-lieu fees and other funds collected under this chapter shall be deposited into the Anaheim Local Housing Trust Fund and expended exclusively to provide or assure continued production of affordable housing in the City through, including but not limited to, acquisition, construction, or development assistance, and for the associated costs of administering and monitoring these programs. (Ord. 6593 § 1 (part); October 29, 2024.)

Pursuant to State Density Bonus Law (California Government Code sections 65915, et seq.), if the applicant is proposing to provide affordable units in exchange for an increase in density, concessions, incentives, or waivers/modifications of development standards, the affordable units required to fulfill the density bonus may also count as affordable units required by this chapter, provided they also meet, or exceed, the requirements outlined in this chapter. (Ord. 6593 § 1 (part); October 29, 2024.)

To ensure that affordable units constructed pursuant to this chapter are properly maintained and continue to comply with the applicable provisions of this chapter, the applicant or responsible party at the time shall submit annual compliance reports to the City for review. In addition, the City shall conduct periodic onsite audits to ensure compliance with all applicable laws, policies, and agreements. The City Council may adopt fees for the costs of monitoring and compliance review. (Ord. 6593 § 1 (part); October 29, 2024.)

The City Manager is authorized to adopt administrative rules, regulations, policies, guidelines, standards, and/or procedures necessary to implement the provisions of this chapter, including but not limited to, eligibility requirements and/or preference standards that may be applied in the selection of tenants. (Ord. 6593 § 1 (part); October 29, 2024.)

.010 Violations of this chapter may be enforced by all available remedies at law or in equity. .020 Failure of any city official, employee, or agent to fulfill and/or enforce the requirements of this chapter shall not excuse any person or property from the requirements of this chapter. (Ord. 6593 § 1 (part); October 29, 2024.)