Chapter 17.28 — RESIDENTIAL DENSITY BONUS

The purpose of the residential density bonus is to encourage affordable housing by providing the incentive for the provision of affordable housing as a portion of certain new development within the community, to implement the affordable housing goals, policies, and objectives of the City, to ensure the opportunity of affordable housing for all income levels to maintain a balanced community, and to comply with California Government Code Sections 65915 through 65918.

(Ord. 823-2016 § 11 (part), 2016)

For the purpose of this Chapter, the following words and phrases shall have the following meanings: A. "Affordable Housing" means housing with a sales price or rental amount within the means of a household that may occupy moderate- and low-income housing. In the case of dwelling units for sale, affordable means housing in which mortgage, amortization, taxes, insurance, and condominium or association fees, if any, constitute no more than 30% of such gross annual household income for a household of the size that may occupy the unit in question. In the case of dwelling units for rent, affordable means housing for which the rent and utilities constitute no more than 30% of such gross annual household income for a household of the size that may occupy the unit in question.

B. "Affordable Housing Development Agreement" means a written agreement between an applicant for a development and the City containing specific requirements to ensure the continuing affordability of housing included in the development.

C. "Affordable Housing Dwelling Unit" means any affordable housing subject to covenants or restrictions requiring such dwelling units to be sold or rented at prices preserving them as affordable housing for a period of at least 30 years.

D. "Affordable Housing Development" means any housing subsidized by the federal or state government, or any housing development in which at least 20% of the housing units are affordable dwelling units.

E. "Affordable Housing Development Plan" means that plan prepared by an applicant for an Affordable Housing Development under this ordinance that outlines and specifies the development's compliance with the applicable requirements of this Chapter.

F. "Affordable Housing Trust Fund" means the fund created by the City to hold in-lieu fees paid by a developer instead of constructing affordable units.

G. "Affordable Housing Unit" means either a housing unit subsidized by the federal or state government or an affordable dwelling unit.

H. "Child care facility" is defined as a child day care facility other than a family day care home, including, but not limited to, infant centers, preschools, extended day care facilities, and school-age child care centers.

I. "Conversion" means a change in a residential rental development or a mixed-use development that includes rental dwelling units to a development that contains only owner-occupied individual dwelling units or a change in a development that contains owner-occupied individual units to a residential rental development or mixed-use development.

J. "Density bonus" means an increase in density over the otherwise maximum allowable residential density under the applicable general plan designation as of the date of filing of an application for density bonus with City. A density

bonus request shall be considered as a component of a qualified housing development.

K. "Development" means the entire proposal to construct or place one or more dwelling units on a particular lot or contiguous lots including, without limitation, a planned unit development, site plan, or subdivision.

L. "Development standard" is defined as the site, development, or construction standards and/or conditions of approval that apply to a residential development.

M. "Housing development" is defined as one or more groups of projects for residential units constructed within a large lot parcel. For the purposes of this Chapter, "housing development" also includes a subdivision or common interest development as defined in Section 1351 of the Civil Code and consists of residential units or unimproved residential lots. A density bonus may be permitted in geographic areas of the housing development other than the areas where the affordable units are located, so long as the density bonus units are located on the same large lot parcel.

N. "Incentive" is defined as a reduction in site development standards or a modification of zoning code requirements or architectural design requirements that exceed the minimum building standards approved by the California Building Standards Commission. An incentive can be requested by the applicant for purposes of reducing the cost of development to make the project financially feasible. The term "incentive" includes the term "concession" as that term is used in California Government Code Sections 65915 through 65918.

O. "Lot" means either: (a) the basic development unit for determination of area, width, depth, and other dimensional variations; or (b) a parcel of land where the boundary has been established by some legal instrument, such as a recorded deed or recorded map, and is recognized as a separate legal entity for purposes of transfer of title.

P. "Lower income" is defined as less than 80% of the area median income, as defined by Section 50079.5 of the California Health and Safety Code.

Q. "Lower income unit" is defined as a unit with an affordable rent or payment that does not exceed 30% of 60% of area median income adjusted for family size appropriate for the unit.

R. "Low-income housing" means housing that is affordable, according to the U.S. Department of Housing and Urban Development, for either home ownership or rental, and that is occupied, reserved, or marketed for occupancy by households with a gross household income that does not exceed 50% of the median gross household income for households of the same size within the in which the housing is located.

S. "Median gross household income" means the median income level for the as established and defined in the annual schedule published by the Secretary of the U.S. Department of Housing and Urban Development, adjusted for household size.

T. "Moderate income" is defined as less than 120% of the area median income, as defined in Section 50093 of the California Health and Safety Code.

U. "Moderate-income housing" means housing that is affordable, according to the federal Department of Housing and Urban Development, for either home ownership or rental, and that is occupied, reserved, or marketed for occupancy by households with a gross household income that is greater than 50% but does not exceed 80% of the median gross household income for households of the same size.

V. "Moderate income unit" is defined as a unit with an affordable rent or payment that does not exceed 35% of 110% of area median income adjusted for family size appropriate for the unit.

W. "Renovation" means physical improvement that adds to the value of real property, but that excludes painting, ordinary repairs, and normal maintenance.

X. "Senior citizen housing development" is defined as a housing project where residency is restricted to persons 62 years of age or older, or 55 years of age or older in a senior citizen housing development per Sections 51.3 and 51.12 of the California Civil Code.

Y. "Very low income" is defined as less than 50% of the area median income, as defined in Section 50105 of the California Health and Safety Code.

Z. "Very low income unit" is defined as a unit with an affordable rent or payment that does not exceed 30% of 50% of the area median income, adjusted for family size appropriate for the unit.

(Ord. 823-2016 § 11 (part), 2016)

A density bonus may be approved pursuant to a request for approval of a density bonus, provided the request complies with the provisions of this Chapter. Each application for a density bonus request shall be accompanied by the following:

A. A site plan that identifies all units in the project including the location of the affordable units and the bonus units;

• B. A narrative briefly describing the housing development and shall include information on:

1. The number of units permitted under the general plan.

2. The total number of units proposed in the project.

3. The number of affordable and/or senior units.

4. The number of bonus units requested based on the tables provided in Section 17.28.050 of this Chapter.

5. A breakdown of units proposed for very low, lower, and moderate income, senior citizen, and/or market rate

units.

6. Any requested incentive(s), including an explanation as to why the incentive(s) is required for the housing development.

C. Information indicating that appropriate and sufficient infrastructure capacity (water, sewer, roadway) and water supply is available to serve the bonus units;

D. A pro-forma illustrating the financial need for the density bonus and/or any requested Incentives. The information that shall be included is as follows:

1. The project pro-forma shall include, but is not limited to: capital costs, operating expenses, return on investment, revenues, loan-to-value ratio and debt-coverage ratio, any contribution provided by subsidy programs, and the economic effect created by the use and income restrictions of the affordable units.

2. An appraisal report indicating the value of the density bonus and any incentive(s) requested.

3. A source and use of funds statement identifying any projected financing gap of the project. The developer shall establish how much of the gap is covered by the density bonus units, and how much will be covered by the requested incentive(s).

E. Any such additional information in support of a request for a density bonus as may be requested by the planning and redevelopment department.

(Ord. 823-2016 § 11 (part), 2016)

A developer of a housing development containing five (5) or more units may qualify for a density bonus and at least one other incentive as provided by this Chapter if the developer does one of the following:

• A. Agrees to construct and maintain at least 5% of the units dedicated to very low income households.

• B. Agrees to construct and maintain at least 10% of the units dedicated to lower income households.

• C. Agrees to construct and maintain at least 10% of the units in a common interest development (as defined in Section 1351 of the California Civil Code) dedicated to moderate income households, provided that all units in the development are offered to the public for purchase.

D. Agrees to construct and maintain a senior citizen housing development as defined in Section 17.28.020 of this Chapter.

• E. Donates land to the City dedicated for the construction of very low income units pursuant to Section 17.28.080 of this Chapter.

• F. Includes a qualifying child care facility as described in Section 17.28.070 of this Chapter in addition to providing housing as described in subsections (A) through (C) of this section.

• (Ord. 823-2016 § 11 (part), 2016)

A. State law preemption. Pursuant to state law, the granting of a density bonus or the granting of a density bonus together with an incentive(s) shall not be interpreted, in and of itself, to require a general plan amendment, specific plan amendment, rezone, or other discretionary approvals.

• B. Density bonus calculation. An applicant must choose a density bonus from only one applicable affordability category in below subsection C. and may not combine categories with the exception of child care facilities or land donation, which may be combined with an affordable housing development, for an additional density bonus up to a combined maximum of 35%.

• C. Density bonus allowance. In calculating the number of units required for very low, lower and moderate income households, the density bonus units shall not be included; in no event shall a density bonus exceed 35%. A housing development that satisfies all applicable provisions of this Chapter shall be allowed the following applicable density bonuses:

1. Very low income. The potential density bonus for a project is calculated in the following table. For example, if there is a provision for five (5) very low income units, the development could potentially gain a twenty (20) percent increase in overall number of units in the development.

2. Lower income. The potential density bonus for a project is calculated in the following table. For example, if there is a provision for ten (10) lower income units, the development could potentially gain a twenty (20) percent increase in overall number of units in the development.

3. Moderate income. The potential density bonus for a project is calculated in the following table. For example, if there is a provision for ten (10) moderate income units, the development could potentially gain a five (5) percent increase in overall units in the development.

4. Senior citizen housing development. The density bonus for a senior citizen housing development that provides housing for seniors consistent with Section 17.28.040 of this Chapter shall be 20%.

5. Child care facility. A project (whether a housing, commercial, or industrial project) is eligible for a density bonus for a child care facility when in compliance with Section 17.28.070 of this Chapter and California Government Code Section 65917.5.

6. Donation of land. A project is eligible for the following density bonus for the donation of land when in compliance with Section 17.28.080 of this Chapter:

7. Conversion of apartments to condominiums. A project is eligible percent density bonus for the conversion of apartments to condominiums when in compliance with California Government Code Section 65915.5. (Ord. 823-2016 § 11 (part), 2016)

A. Available incentives. A housing development qualifying for a density bonus may be entitled to at least one incentive. Incentives may include, but are not limited to:

1. A reduction in site development standards such as:

• a. Reduced minimum lot sizes and/or dimensions.

• b. Reduced minimum lot setbacks.

• c. Reduced minimum outdoor and/or private outdoor living area.

• d. Increased maximum lot coverage.

• e. Increased maximum building height and/or stories.

• f. Reduced on-site parking requirements.

• g. Reduced street standards.

2. A reduction in architectural design requirements.

3. A density bonus greater than the amount required by this Chapter.

4. Other regulatory incentives proposed by the developer or the City, which result in identifiable, financially sufficient, and actual cost reductions.

5. If an applicant qualifies for a density bonus pursuant to this Chapter, the applicant may request, in addition to any requested incentive(s), that the following parking requirement be applied to the project in place of the City's current parking requirements. The parking requirement is inclusive of handicapped and guest parking for the entire housing development, but shall not include on-street parking spaces in the count towards the parking requirement:

• a. Zero to one (0-1) bedroom: 1 on-site parking space.

• b. Two to three (2-3) bedrooms: 2 on-site parking spaces.

• c. Four or more (4+) bedrooms: 2.5 on-site parking spaces.

• B. Eligibility for incentives. Incentives are available to a housing developer as follows:

1. One incentive for housing developments that (a) restrict at least 10% of the total units to lower income households, at least 5% for very low income households, or at least 10% for persons and families of moderate income in a common interest development, or (b) are for senior housing.

2. Two incentives for housing developments that restrict at least 20% of the total units to lower income households, at least 10% for very low income households, or at least 20% for persons and families of moderate income in a common interest development.

3. Three incentives for housing developments that restrict at least 30% of the total units for lower income households, at least 15% for very low income households, or at least 30% for persons and families of moderate income in a common interest development.

(Ord. 823-2016 § 11 (part), 2016)

A. Child care facility density bonus. When an applicant proposes to construct a housing development that is eligible for a density bonus under Section 17.28.040 of this Chapter and California Government Code Section

65917.5, and includes a child care facility that will be located on the premises or adjacent to the housing development, the City shall grant either:

1. An additional density bonus that is an amount of square feet of residential space that is equal to or greater than the square footage of the child care facility up to a combined maximum of 35% of the project square footage without the density bonus; or

2. An additional incentive that contributes significantly to the economic feasibility of the construction of the child care facility.

B. Child care facility requirements. The City shall require, as a condition of approval to the housing development, the following:

1. The child care facility shall remain in operation for a period of time that is as long as or longer than the period of time during which the affordable units are required to remain affordable per this Chapter; and,

2. Of the children who attend the child care facility, the children of very low income households, lower income households or families of moderate income households shall equal a percentage that is equal to or greater than the percentage of affordable units in the housing development that are required for very low, low or families of moderate income households.

C. Child care facility criteria. The City shall not be required to provide a density bonus or incentive for a child care facility if it finds, based upon substantial evidence, that the community has adequate child care facilities. (Ord. 823-2016 § 11 (part), 2016)

A. Donation of land density bonus. When a developer of a tentative subdivision map, parcel map, or other residential development donates land to the City, the developer shall be entitled to a density bonus above the otherwise maximum allowable residential density, up to a maximum of 35% depending on the amount of land donated (see Section 17.28.050 of this Chapter). This increase shall be in addition to any increase in density permitted by Section 17.28.040 of this Chapter up to a maximum combined density increase of 35% if an applicant seeks both the increase required by Section 17.28.040 and this section of this Chapter.

B. The developer shall be eligible for the density bonus for the donation of land, if all of the following conditions are met:

1. The developer shall donate and transfer land no later than the date of approval of the final subdivision map, parcel map, or residential development application;

2. The developable acreage and zoning classification of the land being transferred are sufficient to permit construction of units affordable to very low income households in the amount not less than 10% of the residential units in the proposed development;

3. The transferred land is at least one acre in size or of sufficient size to permit development of at least 40 units, has the appropriate general plan designation, is appropriately zoned for development as affordable housing, and is or will be served by adequate public facilities and infrastructure. The transferred land shall have appropriate zoning and development standards to make the development of the affordable units feasible. No later than the date of approval of the final subdivision map, parcel map, or of the residential development, the transferred land shall have all of the permits and approvals, other than building permits, necessary for the development of the very low income units on the transferred land, except that the City may subject the proposed development to subsequent design review if the design is not reviewed by the local government prior to the time of transfer;

4. The transferred land and the affordable units shall be subject to a deed restriction ensuring continued affordability of the units consistent with Section 17.28.110 of this Chapter if required by financing programs or subsidy programs;

5. The land is transferred to the City or to a housing developer approved by the City. The City may require the developer to identify and transfer the land to the affordable housing developer; and,

6. The transferred land shall be within the boundary of the proposed development or, if the City determines appropriate, within one-quarter mile of the boundary of the proposed development. (Ord. 823-2016 § 11 (part), 2016)

A. Location of bonus units. As required by California Government Code Section 65915(g), the location of density bonus units within the qualifying housing development may be at the discretion of the developer, and need not be in the same area of the project where the units for the lower income households are located as long as the density bonus units are located within the same housing development.

B. Preliminary review. A developer may submit to the planning and redevelopment department a preliminary proposal for the development of housing pursuant to this Chapter prior to the submittal of any formal application for a density bonus. The City shall, within 90 days of receipt of a written proposal, notify the housing developer in writing of either (1) any specific requirements or procedures under this Chapter, which the proposal has not met, or (2) the proposal is sufficient for preparation of an application for density bonus.

C. Infrastructure and supply capacity. Criteria to be considered in analyzing the requested bonus will include the availability and capacity of infrastructure (water, sewer, road capacity, and the like) and water supply to accommodate the additional density.

(Ord. 823-2016 § 11 (part), 2016)

A. Density bonus approval. The following finding shall be made by the approving authority in order to approve a density bonus request:

1. The density bonus request meets the requirements of this Chapter.

• B. Density bonus approval with incentive(s). The following findings shall be made by the Approving Authority in order to approve a density bonus and incentive(s) request:

1. The density bonus request meets the requirements of this Chapter;

2. The incentive is required in order to provide affordable housing; and

3. Approval of the incentive(s) will have no specific adverse impacts upon health, safety, or the physical environment or on any real property that is listed in the California Register of Historical Resources and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to very low, low, and moderate income households.

C. Denial of a request for an incentive(s). The approving authority shall make the following findings prior to disallowing an incentive (in the case where an accompanying density bonus may be approved, or in the case of where an incentive(s) is requested for senior housing or child care facility):

1. That the incentive is not necessary in order to provide for affordable housing costs as defined in Section

• 17.28.020 of this Chapter, or for rents for the targeted units to be set as specified in Section 17.28.020 of this Chapter.

2. That the incentive would result in specific adverse impacts upon health, safety, or the physical environment or on any real property that is listed in the California Register of Historical Resources and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to very low, low, and moderate income households.

• (Ord. 823-2016 § 11 (part), 2016)

A. Agreement required. In approving a density bonus, the associated permit or tentative map shall require that an affordable housing agreement, or other form of agreement as approved by the City attorney, effectuating the terms of affordability of the development be executed prior to effectuation of the permit or recordation of the final map. B. Continued availability. The density bonus request shall include the procedures proposed by the developer to maintain the continued affordability of all affordable income density bonus units and shall be evidenced by an affordable housing agreement as follows:

1. An applicant shall agree to, and the City shall ensure, continued affordability of all very low and low income units that qualified the applicant for the award of the density bonus for 30 years or a longer period of time if required by the construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program. Rents for the lower income density bonus units shall be set at an affordable rent as defined in Section 17.28.020 of this Chapter. Owner-occupied units shall be available at an affordable housing cost as defined in Section 17.28.020 of this Chapter.

2. An applicant shall agree to, and the City shall ensure that, the initial occupants of the moderate income units are directly related to the receipt of the density bonus in the common interest development as defined in Section 1351 of the California Civil Code, are persons and families of moderate income, as defined in Section 17.28.020 of this Chapter and that the units are offered at an affordable housing cost, as that cost is defined in Section 17.28.020 of this Chapter. The City shall enforce an equity-sharing agreement unless it is in conflict with the requirements of another public funding source or law. The following apply to the equity-sharing agreement:

a. Upon resale, the seller of the unit shall retain the value of any improvements, the down payment, and the seller's proportionate share of appreciation. The City shall recapture any initial subsidy and its proportionate share of appreciation, which shall then be used within three years for any of the purposes described in subdivision (e) of Section 33328.2 of the California Health and Safety Code that promote home ownership.

b. For purposes of this subdivision, the City's initial subsidy shall be equal to the fair market value of the home at the time of initial sale minus the initial sale price to the moderate income household plus the amount of any down payment assistance or mortgage assistance. If upon resale the market value is lower than the initial market value, then the value at the time of the resale shall be used as the initial market value.

c. For purposes of this subdivision, the City's proportionate share of appreciation shall be equal to the ratio of the initial subsidy to the fair market value of the home at the time of initial sale. (Ord. 823-2016 § 11 (part), 2016)