Del Mar Municipal Code Ch. 24.21 Inclusionary Housing

Footnotes:

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Editor's note— Ord. No. 1012, § 2, adopted Oct. 7, 2024, repealed and readopted Ch. 24.21 to read as set out herein. Former Ch. 24.21, §§ 24.21.010—24.21.130, pertained to affordable housing mitigation, and derived from Ord. No. 396; Ord. No. 648; Ord. No. 743; Ord. No. 631, and Ord. No. 905.

Local governments have a responsibility to exercise their powers to facilitate the development of housing to adequately provide for the housing needs of all economic segments of the community, as stated in Government Code Section 65580. The City's Housing Element identifies that the City of Del Mar faces a shortage of affordable dwelling units and calls for the continued implementation of an inclusionary housing program as an affordable housing mitigation strategy to produce affordable housing at low-, very low-, and extremely low-income levels.

The purpose of this Chapter is to ensure that the limited remaining developable land in the City is utilized in a manner consistent with the City's housing polices and needs. The provisions of this Chapter advance a legitimate State interest by establishing standards and procedures to facilitate the development of housing that is affordable to a range of households with varying income levels. The intent of this Chapter is to materially reduce cost impacts and increase the financial feasibility of affordable housing production to ensure that the addition of affordable dwelling units is in proportion with the overall increase in new dwelling units, and that the same affordable dwelling units are counted towards both the inclusionary housing and density bonus law provisions under this Code, consistent with State law and case law authority.

(Ord. No. 1012, § 2, 10-7-2024)

For purposes of implementing the provisions of this Chapter, the following words and phrases shall have the meaning as assigned below.

Affordable housing shall mean housing for which the total housing cost paid by a qualifying household, including utilities, does not exceed a specified percentage of the local area median income (AMI), as published and periodically updated by the State of California Department of Housing and Community Development (HCD) in accordance with Section 50093 of the California Health and Safety Code. The following household income categories meet the State law criteria for lower income affordable housing:

1. Low-income household shall mean a lower income household whose gross income is in the range of 50 to 80 percent of AMI, adjusted for household size.

2. Very low-income household shall mean a lower income household whose gross income is in the range of 30 to 50 percent of AMI, adjusted for household size.

3. Extremely low-income household shall mean a lower income household whose gross income is in the range of 15 to 30 percent of AMI, adjusted for household size.

Household shall mean one person living alone or two or more persons sharing a dwelling unit.

Inclusionary unit shall mean a dwelling unit, offered for sale or rent, at affordable housing rates to low-, very low-, or extremely low-income households.

Market-rate unit shall mean a dwelling unit, offered for sale or rent, on the open market at the prevailing market rate.

Ownership unit shall mean a dwelling unit designed and intended to be sold.

Primary Residence means a dwelling unit owned and occupied as the owner's principal place of residence, where the owner lives more than six months per year. For purposes of this Chapter, an owner can only have one primary residence at any given time.

Rental unit shall mean a dwelling unit designed and intended to be rented.

(Ord. No. 1012, § 2, 10-7-2024)

A. This Chapter shall apply to residential development projects, where the dwelling units will be offered for sale or rent, resulting in:

1. The development of two or more dwelling units, including, but not limited to, mixed income projects, and mixed-use projects; or

2. The conversion of two or more dwelling units to condominiums in accordance with Chapter 24.40 of this Code.

B. This Chapter shall apply to the creation of lots through a subdivision map.

C. This Chapter shall not apply to the following:

1. Projects that are not a residential development project or that do not include a residential development component.

2. Projects for which the City enters into a development agreement in accordance with Government Code Sections 65864 et seq. before the effective date of this Chapter, provided that the project complies with the inclusionary requirements set forth in such development agreement or any preceding inclusionary housing ordinance in effect on the date the development agreement was executed.

3. Construction, alteration, improvement, expansion, or extension of existing dwelling units, provided that the number of dwelling units is not increased, except that this Chapter shall apply to the subdivision of land for the conversion of apartments to condominiums.

4. Reconstruction, restoration, or rebuilding of dwelling units to replace previously existing dwelling units on the same lot that were involuntarily damaged or destroyed within two years prior to the application for a building permit for the new dwelling units, provided that the number of dwelling units is not increased.

5. Construction of accessory dwelling units in accordance with Chapter 30.91 of this Code.

6. Construction of homeless shelters, supportive housing, transitional housing, residential care facilities, and health care facilities.

7. Conversion of mobile home parks in accordance with Chapter 24.44 of this Code.

(Ord. No. 1012, § 2, 10-7-2024)

A. Inclusionary Units.

1. All residential development projects subject to this Chapter that result in the creation of net-new dwelling units shall reserve a portion of the units on-site as inclusionary units for occupancy by low-, very low-, or extremely low-income households as follows:

a. Projects with less than 30 net-new dwelling units shall provide at least 15 percent of the dwelling units as inclusionary units for occupancy by low-, very low-, or extremely low-income households. The inclusionary housing calculation shall be taken from the total number of net-new units.

b. Projects with 30 net-new dwelling units or more shall provide at least 20 percent of the dwelling units as inclusionary units for occupancy by low-, very low-, or extremely low-income households. The inclusionary housing calculation shall be taken from the total number of net-new units.

c. Projects with 50 net-new units or more, shall comply with Section 24.21.040(A)(1)(b) for the total number of inclusionary units and at least 20 percent of the inclusionary units provided shall be reserved for occupancy by extremely low-income households.

2. Condominium conversion projects subject to this Chapter shall provide inclusionary units on-site for occupancy by low-, very low-, or extremely low-income households as follows:

a. Two-unit condominium conversion projects shall provide one low-income unit on-site, or may pay one in-lieu fee at the rate in existence at the time of payment.

b. Condominium conversion projects with more than two units shall provide at least 15 percent of the dwelling units as inclusionary units for projects with less than 30 dwelling units and shall provide at least 20 percent of the dwelling units as inclusionary units for projects with 30 or more units. The inclusionary housing calculation shall be taken from the total number of converted units.

c. Accessory dwelling unit (ADU) development in accordance DMMC Chapter 30.91 (ADU Regulations) may be utilized to satisfy the inclusionary housing requirement.

3. As a condition of approval of any Tentative Map or Tentative Parcel Map that proposes the creation of residential lots, the subdivider shall pay one in-lieu fee for each net-new lot to be created as part of the subdivision.

a. The rate of the in-lieu fee shall be as established or amended by Resolution of the City Council.

b. The condition shall specify that all in-lieu fees required by this Section are to be paid to the City prior to approval of the subdivision's Final Parcel Map at the rate of the in-lieu fee in existence at the time of payment.

c. Any in-lieu fees collected shall be deposited in the Del Mar Housing Assistance Fund, which is an existing housing trust fund that is administered in accordance with Section 24.21.080.

B. Fractional Units. When calculating the number of inclusionary units, a number that results in a fraction of a whole number shall be rounded up to the nearest whole number.

C. Compliance with Density Bonus Law.

1. An applicant that seeks to construct affordable housing to qualify for a density bonus in accordance with State law and Chapter 30.90 of this Code, may count those dwelling units that qualify for a density bonus towards satisfying the inclusionary housing requirements of this Chapter.

2. In such cases, the required affordable units for the density bonus project per DMMC Chapter 30.90 shall be calculated based on the number of units allowed pre-density bonus; and the total number of required inclusionary units shall be calculated based on the total number of net-new units proposed in the project, including the density bonus units.

3. The lower income units used to qualify the project for a density bonus shall count towards satisfaction of the total number of required inclusionary units. Therefore, the total number of required inclusionary units minus the required number of lower income units for the density bonus project identifies the remaining number of inclusionary units that must be provided to satisfy the lower income inclusionary housing requirement for the project.

D. No Alternative Means of Compliance. All qualifying residential development projects under Section 24.21.030(A) must comply with the inclusionary housing requirements of this Chapter. No alternative means of compliance may be provided to satisfy compliance with the inclusionary housing requirements of this Chapter.

(Ord. No. 1012, § 2, 10-7-2024)

A. The applicant of a residential development project subject to this Chapter shall comply with the following requirements:

1. Inclusionary Housing Plan. The applicant shall submit an inclusionary housing plan, on a form approved by the City, detailing how the provisions of this Chapter will be implemented for the proposed residential development project. The inclusionary housing plan shall be processed concurrently with all other permits required for the residential development project and shall be subject to the approval of the Planning and Community Development Director, with the option of review and approval by the City Council. The inclusionary housing plan shall include, at a minimum, the following:

a. The location, tenure (ownership units or rental units), and size of the market-rate, commercial space and/or inclusionary units;

b. The basis for calculating the number of inclusionary units;

c. A floor or site plan depicting the location of the inclusionary units;

d. The household income categories to be accommodated by the residential development;

e. A description of the mechanisms that will be used to ensure that the inclusionary units remain affordable for the required duration;

f. A schedule for production of the inclusionary units;

g. For phased development projects, a phasing plan that provides for the timely development of the number of inclusionary units proportionate to each proposed phase of the project and a schedule for completion;

h. Any proposed density bonus, concessions or incentives, waivers or modifications of development standards, reduced parking ratios, or other regulatory incentives requested in accordance with Chapter 30.09 of this Code; and

i. Any additional information or documentation that may be required by the City.

2. Inclusionary Housing Agreement. The applicant shall enter into an inclusionary housing agreement with the City, on a form approved by the City, to ensure that all requirements of this Chapter are satisfied.

a. The inclusionary housing agreement shall include, at a minimum, the following:

i. A description of the residential development;

ii. The number of units approved for the residential development, including the number of ownership units or rental units, household income categories, and tenure of affordability of the inclusionary units (55 year minimum);

iii. The location, unit size(s) (square footage), and number of bedrooms of the inclusionary units;

iv. Where applicable, tenure and conditions governing the initial sale of the inclusionary units or establishing rules and procedures for qualifying tenants, setting rental rates, filling vacancies, and operating and maintaining inclusionary units;

v. Documents identifying the rental restrictions, resale restrictions, and provisions for changes in title that will be used to secure the continued affordability of the inclusionary units for the required duration, including, but not limited to, deeds of trust, rights of first refusal, procedures for rent and sales price increases, required disclosure of deed restrictions affecting the re-sale of for-sale units and the City's first right of refusal to buy the unit(s) to provide affordable housing or other documents; and

vi. The standards and process that will be used to determine household income and certify qualifying households for the rental or ownership units within the project as applicable. This may include consideration of records such as tax returns and annual occupancy verification forms to demonstrate due diligence in verification of income;

vii. A provision for annual monitoring to ensure implementation of the ongoing maintenance obligations;

viii. Compliance with State and Federal laws;

ix. Prohibition against discrimination;

x. Indemnification of City;

xi. City's right to inspect units and documents;

xii. Remedies for applicant's breach of agreement; and

xiii. Any additional information or documentation that may be required by the City.

b. Following execution of the agreement by all parties, the completed agreement shall be recorded as a deed restriction on the property designated for the location of inclusionary units. The agreement shall run with the land and be binding on all future owners and successors in interest of the property.

B. City Approvals.

1. Development Permit Approvals. No Development Permit approval shall be issued until the applicant has submitted the inclusionary housing plan to the City. This shall include all Development Permits that are required to be issued for the project irrespective of whether the permit issuance is required through a discretionary or ministerial process.

2. Map or Building Permit. No tentative map, parcel map, final map shall be approved, or, where a map is not being processed, no building permit shall be issued unless the City has approved the inclusionary housing plan and the inclusionary housing agreement has been recorded against the property.

3. Certificate of Occupancy. No certificate of occupancy shall be issued unless the approved inclusionary housing plan has been fully implemented.

(Ord. No. 1012, § 2, 10-7-2024)

A. Design. Inclusionary units constructed in accordance with this Chapter shall be:

1. Reasonably dispersed throughout the residential development so as not to create a concentration of inclusionary units on one floor or to an area on a specific floor;

2. Proportional, in terms of the number and size of bedrooms to the market-rate units in the residential development;

3. Comparable, in terms of size, design, materials, finished quality, and appearance, to the market-rate units in the residential development, and be consistent with the City's design review objective standards. Interior finishes and amenities may differ from those provided in the market-rate units, but neither the workmanship nor the products may be of substandard or inferior quality; and

4. Permitted the same access to common entrances, common areas, parking, amenities, and recreational facilities as the occupants of the market-rate units in the residential development.

B. Timing of Construction. The inclusionary units shall be constructed concurrently with the market-rate units. If the City approves a phased project, a proportional share of the inclusionary units shall be constructed within each phase of the residential development project. Building permits and final inspections or certificates of occupancy shall be issued concurrently for the inclusionary units and the market-rate units.

C. Continued Affordability.

1. Ownership Unit. Inclusionary ownership units shall remain restricted at an affordable sales price to the designated household income category at which the inclusionary ownership unit was first purchased. The unit shall remain restricted from the date of purchase/close of escrow for a period of at least 55 years, unless a longer term is required in accordance with State law or financing requirements.

a. Transfer. Renewed restrictions will be entered into on each change of ownership, up to the 55 year affordability term, upon transfer of an inclusionary ownership unit prior to the expiration of the 55-year affordability period.

b. Resale. The resale price of an inclusionary ownership unit shall be limited to the lesser of (1) the fair market value of the unit, or (2) the seller's lawful purchase price, increased by the rate of increase of AMI during the seller's ownership. To the extent authorized in any resale restrictions or operative Inclusionary Housing Agreement, the seller may recover at time of sale the market value of capital improvements made by the seller and may authorize an increase in the maximum allowable sales price to achieve such recovery. The resale restrictions shall allow the City a right of first refusal to purchase any inclusionary ownership unit at the maximum price that could be charged to an income-eligible household at any time the owner proposes sale of the inclusionary ownership unit.

2. Rental Unit. Inclusionary rental units shall remain restricted at an affordable rental price to the designated household income category at which the inclusionary rental unit was first rented for a period of at least 55 years, or a longer period of time if required in accordance with State law or by the construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program.

3. Required Documentation. The City may require, in a form approved by the City, the provision of documents, such as rental restrictions, resale restrictions, or a regulatory agreement to secure the continued affordability of the inclusionary units, establish standards for determining household income, provide ongoing maintenance obligations, define procedures for rent and sales price increases, and other requirements.

4. Income Certification.

a. Ownership Unit. The applicant and any subsequent owner of an inclusionary ownership unit offered for sale shall certify, on a form approved by the City, the income of the purchaser.

b. Rental Unit. The owner of an inclusionary rental unit offered for rent shall certify, on a form approved by the City, the income of the tenant at the time of the initial rental of the inclusionary unit and annually thereafter.

D. Primary Residence.

1. The owner or lessee of an inclusionary unit shall reside in the unit as their primary residence, unless otherwise approved in writing by the City for rental to a third-party eligible household for a limited period of time due to household hardship.

2. No owner or lessee of an inclusionary unit shall lease or sublease, as applicable, an inclusionary unit without the prior written permission of the City.

E. General Prohibitions.

1. No person shall sell or rent an inclusionary unit at a price or rent in excess of the applicable affordable housing cost placed on the unit in accordance with this Chapter.

2. No person shall sell or rent an inclusionary unit to person(s) that do not meet the income restrictions under this Chapter.

3. No person shall provide false or materially incomplete information to the City or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which that person is not eligible.

4. No person shall sublease or rent an inclusionary unit for any use other than affordable housing. Use of an inclusionary unit as a short-term rental for dwelling, lodging, or sleeping purposes for 30 consecutive days—less is prohibited.

F. No Conflict of Interest. Officials, employees, or consultants of the City, members of City boards and commissions, and the applicant shall comply with all applicable laws, regulations, and policies relating to conflicts of interest as to their eligibility to develop, construct, sell, rent, lease, occupy, or purchase an inclusionary unit.

(Ord. No. 1012, § 2, 10-7-2024)

A. An applicant may request an exception to the requirements of this Chapter subject to approval by the City Council as necessary to avoid a taking.

B. Any request for an exception pursuant to this Section shall be submitted to the City concurrently with the inclusionary housing plan and shall set forth in detail the factual and legal basis for the claim. The request shall be reviewed and considered in the same manner and at the same time as the inclusionary housing plan.

C. The applicant shall bear the burden of presenting substantial evidence to the City supporting the request for an exception to avoid a taking. The City may assume each of the following, when applicable:

1. The applicant will provide the most economical inclusionary units feasible, while still meeting the requirements of this Chapter; and

2. The applicant will benefit from the incentives of residential development as described in this Chapter and elsewhere in this Code.

D. Notwithstanding any other provision of this Section, the City Council may grant an exception based upon a finding that applying the requirements of this Chapter would result in an unconstitutional taking of property or would result in any other unconstitutional result.

(Ord. No. 1012, § 2, 10-7-2024)

A. Del Mar Housing Assistance Fund. The City Council may, by resolution, establish fees for the ongoing administration, monitoring and enforcement of this Chapter, which fees may be updated as necessary. Any fees collected by the City in accordance with this Chapter shall be deposited into the Del Mar Housing Assistance Fund, which is an existing housing trust fund. The City will continue to make these funds available for rental subsidy and/or other affordable housing-related programs such as the acquisition of land and construction of affordable units designated for low-, very low-, or extremely low-income households in the City and/or for costs and expenses related to administration of the housing trust fund.

B. Required Compliance. Failure of any official or agency to fulfill the requirements of this Chapter shall not excuse any developer or owner from the requirements of this Chapter. No permit, license, map, or other approval or entitlement for a residential development project shall be issued, including, without limitation, a final inspection or certificate of occupancy, until all applicable requirements of this Chapter have been satisfied.

C. Enforcement. The regulations of this Chapter, including the terms of any inclusionary housing agreement or document prepared to administer the affordability and eligibility requirements of an inclusionary unit, shall be enforced according to the provisions in Chapter 1.08 of this Code.

D. Forfeiture.

1. Ownership Unit. If an inclusionary unit for sale is sold for an amount in excess of the resale price controls required by this Chapter, the buyer and seller shall be jointly and severally liable to the City for the entire purchase price of the unit. Recovered funds shall be deposited into the affordable housing trust fund. Notwithstanding the foregoing, upon written request for time to cure any violation given to the City by the buyer and/or seller, it shall be within the discretion of the City to allow the buyer and seller 180 days to cure any violation of the resale price controls.

2. Rental Unit. Any lessor who leases an inclusionary unit in violation of this Chapter shall be required to forfeit to the City all money so obtained. Recovered funds shall be deposited into the affordable housing trust fund.

E. Remedies Not Exclusive. The remedies provided for herein shall be cumulative and not exclusive and shall not preclude the City from any other remedy or relief to which it otherwise would be entitled under law or equity including but not limited to, taking action to revoke, deny or suspend any permit issued to the residential development, including a building permit, certificate of occupancy, or discretionary approval.

(Ord. No. 1012, § 2, 10-7-2024)

An appeal by an applicant or interested person seeking City Council review of a determination made pursuant to this Chapter shall be filed in accordance with Chapter 1.12 of this Code.

(Ord. No. 1012, § 2, 10-7-2024)

Should a court of competent jurisdiction determine that these regulations are void or if certain terms or provisions are voided, then those regulations shall either become void in their entirety, or, where the courts have determined that certain terms or provisions are void by operation of the law, then those terms and provisions shall have no force or effect.

(Ord. No. 1012, § 2, 10-7-2024)