Chapter 18.35 — Affordable Housing – Basic Provisions

Sections:

18.35.010 – Purpose and Intent 0 – Definitions 18.35.030 – Requirement and Implementation 18.35.040 – Standards for Affordable Units 18.35.050 – Timing of Construction of Affordable Units 0 – Initial Occupancy and Continued Affordability

Rental and owner-occupied housing in East Palo Alto has become steadily more expensive. Although East Palo Alto has historically provided much of the housing affordable to San Mateo County's workforce, in recent years housing costs have escalated sharply, increasing faster than incomes for many groups in the community. As a result, there is a severe shortage of adequate, affordable housing for extremely low, very low, lower, and moderate income households.

Because of the shortage of affordable housing in East Palo Alto, many households overpay for their housing. Providing decent housing at affordable costs allows households to utilize their resources for other necessary pursuits, such as education, food, investment, and saving for retirement.

It is the City Council's policy to enhance the public welfare by encouraging a variety of housing prices throughout the city to give households of all income levels, but particularly lower income households, the opportunity to find suitable housing. The City can achieve its goals of providing more affordable housing and achieving an economically balanced community only if part of the new housing built in the city is affordable to households with limited incomes.

The affordable requirements will substantially advance the City's legitimate interest in providing additional housing affordable to all income levels and dispersed throughout the city because affordable units required, including both rental and ownership units, must be affordable to either extremely low, very low, lower, and moderate income households.

The provisions in this chapter are being adopted pursuant to the City's police power authority to protect the public health, safety, and welfare. Requiring affordable units is consistent with the community's housing element goals of protecting the public welfare by fostering an adequate supply of housing for persons at all economic levels and maintaining both economic diversity and geographically dispersed affordable housing. Requiring builders of new developments to provide for housing affordable to extremely low, very low, lower, and moderate income households is also reasonably related to the impacts of their projects.

The purpose of this chapter is to enhance the public welfare by establishing policies related to the development of housing affordable to households of extremely low, very low, lower, and moderate incomes, meet the City's regional share of housing needs, and implement the goals and objectives of the general plan and housing element.

The adoption of a citywide affordable housing program also will assist in alleviating the use of available residential land solely for the benefit of households that are able to afford market rate housing because such market-rate development will be required to contribute to the provision of affordable housing for the

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entire East Palo Alto community, and will assist in alleviating the impacts of the service needs of households in new market-rate residential development.

Affordable Housing Fund . A fund or account designated by the City to maintain and account for all monies received in compliance with affordable housing requirements.

Affordable Ownership Cost . The affordable ownership cost is the maximum purchase price that will be affordable to the specified household at the specified income level. The purchase price shall be considered affordable only if it is based on a reasonable down payment, and monthly housing payments, including mortgage loan principal and interest, any associated loan insurance and financing fees, property taxes and assessments, an allowance for property maintenance and repairs established by the City based on the initial cost and size of the home, homeowners insurance, a reasonable allowance for utilities based on the utility allowance applicable under Section 8 of the United States Housing Act of 1937 (not including telephone service), land rent (if the home is on rented land) and homeowners association dues, if any, which are equal to or less than one-twelfth of 30 percent of the maximum annual household income designated for an affordable unit, during the first calendar year of a household's occupancy. The maximum household income for an affordable unit shall be based on presumed occupancy levels of one person in a studio dwelling unit, two persons in a one bedroom dwelling unit, three persons in a two bedroom dwelling unit, and one additional person for each additional bedroom thereafter. Affordable ownership cost shall be calculated assuming a down payment equal to 10 percent of the total purchase price, and a conventional fixed-rate 30 year fully amortizing loan in the amount of the difference between the purchase price and the down payment.

Affordable Rent . Monthly rent, including a reasonable allowance for utilities based on the utility allowance applicable under Section 8 of the United States Housing Act of 1937, and all fees for housing services, equal to or less than one-twelfth of 30 percent of the maximum annual household income designated for an affordable unit. Rents for the lower income density bonus units shall be set at an affordable rent as defined in Health and Safety Code Section 50053. Affordable rent shall be based on presumed occupancy levels of one person in a studio dwelling unit, two persons in a one bedroom dwelling unit, three persons in a two bedroom dwelling unit, and one additional person for each additional bedroom thereafter for rental target units reserved for very low income, lower income, or moderate income households, not exceeding the following calculations:

• Very low income: 50 percent of the area median income for San Mateo County, adjusted for household size, multiplied by 30 percent and divided by 12.

• Lower income: 60 percent of the area median income for San Mateo County, adjusted for household size, multiplied by 30 percent and divided by 12. In addition, for those lower income households with gross incomes which exceed 60 percent of the area median income adjusted for family size, the affordable rent may be established at a level not to exceed 30 percent of gross income of the household.

• Moderate income: 110 percent of the area median income for San Mateo County, adjusted for household size, multiplied by 30 percent and divided by 12.

Affordable Sales Price . A sales price at which lower income households, as defined in Health and Safety Code Section 50079.5, very low income households as defined in Health and Safety Code Section 50105, or moderate income households as defined in Health and Safety Code Section 50093, can qualify for the purchase of target units, as calculated by the Director.

Affordable Units . Dwelling units affordable to extremely low, very low, lower, or moderate income households.

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Eligible Household . A household whose income does not exceed the maximum incomes for extremely low income, very low income, low-income or moderate income.

Extremely Low Income Household . Household whose income does not exceed the extremely low income limits applicable to San Mateo County, as published and periodically updated by the State Department of Housing and Community Development in compliance with Health and Safety Code Section 50106.

Household Income . The combined adjusted gross income for all adult persons living in a dwelling unit as calculated for the purpose of the Section 8 program under the United States Housing Act of 1937, as amended, or its successor.

Lower Income Household . Household whose income does not exceed the lower income limits applicable to San Mateo County, as published and periodically updated by the State Department Of Housing And Community Development in compliance with Health and Safety Code Section 50079.5.

Moderate Income Household . Household whose income does not exceed the moderate income limits applicable to San Mateo County, as published and periodically updated by the State Department Of Housing And Community Development in compliance with Health and Safety Code Section 50093.

Market Rate Unit . A unit in a housing development that has no affordability restrictions.

Median Income . The area median income, adjusted for household size, applicable to San Mateo County as published annually in compliance with Title 25 of the California Code of Regulations, Section 6932 (or its successor provisions) by the California Department of Housing and Community Development.

Qualifying Resident . Persons eligible to reside in a target unit.

Target Population . Persons with low incomes having one or more disabilities, including mental illness, HIV or AIDS, substance abuse, or other chronic health conditions, or individuals eligible for services under federal or state law. May include adults, emancipated youth, families, families with children, elderly persons, young adults aging out of the foster care system, individuals exiting from institutional settings, veterans, and homeless people.

Target Unit . A dwelling unit within a housing development which will be reserved for sale or rent to, and affordable by very low, low, moderate income, senior, or qualifying resident households.

Very Low Income Household . Household whose income does not exceed the very low income limits applicable to San Mateo County, as published and periodically updated by the State Department Of Housing And Community Development in compliance with Health and Safety Code Section 50105.

• A. Exemptions from the requirements of this chapter include:

  1. Housing developments exempted by California Government Code Section 66474.2 or 66498.1.

  2. Housing developments for which a planning permit has been approved by the City prior to the operative date of this chapter.

• B. An applicant for a planning permit shall not avoid the requirements of this chapter by submitting piecemeal planning permit applications.

• C. When a residential development includes both for-sale and rental dwelling units, the provisions of this chapter that apply to for-sale residential development shall apply to that portion of the

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development that consists of for-sale dwelling units, while the provisions of this chapter that apply to rental residential development shall apply to that portion of the development that consists of rental dwelling units.

• D. The requirements of this chapter are minimum requirements and shall not preclude a residential development from providing additional affordable units or affordable units with lower rents or sales prices.

• A. Single-family detached affordable units shall be dispersed throughout the housing development. Townhouse, row-house, and multiple-family affordable units shall be located so as not to create a geographic concentration of affordable units within the housing development.

• B. The quality of exterior design and overall quality of construction of the affordable units shall be consistent with the exterior design of all market rate units in the housing development and meet all site, design, and construction standards of this Code, including but not limited to compliance with all design guidelines included in applicable specific plans or otherwise adopted, and the affordable housing guidelines. Affordable units shall have functionally equivalent parking.

• C. Affordable units may have different interior finishes and features than market rate units in the same housing development, so long as the finishes and features are functionally equivalent to the market rate units and are durable and of good quality and comply with the affordable housing guidelines.

• D. The affordable units shall have the same amenities as the market rate units, including the same access to and enjoyment of common open space and facilities in the housing development.

• E. The affordable units shall have the same proportion of unit types as the market rate units in the housing development except that single family detached housing projects may include single family attached affordable units and single-family detached affordable units may have smaller lots than single-family detached market rate units.

• F. The affordable units shall have a comparable square footage and the same or greater bedroom count and bedroom count ratio as the market rate units.

• A. All required affordable units shall be made available for occupancy concurrently with the market rate units.

• B. The city may not issue building permits for more than 90 percent of the market rate units within a construction phase in a residential development until it has issued building permits for all of the affordable units to be included in that construction phase. The city may also not approve final inspections for single-family detached homes, or certificates of occupancy for all other residences, for more than 90 percent of the market rate units within a construction phase until it has approved final inspections or certificates of occupancy, as appropriate, for all of the affordable units within that construction phase.

• A. Any household that occupies an affordable unit must occupy that unit as its principal residence.

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• B. No household may begin occupancy of an affordable unit until the household has been determined to be eligible to occupy that unit.

• C. All affordable units shall remain affordable to the designated income group in perpetuity.

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