Chapter 16.64 — DEVELOPMENT FEE AND IN-LIEU PAYMENT ADMINISTRATION

This Chapter 16.64 applies to any fee or in-lieu payment imposed under any provision of this code that states that that payment of the fee or in- lieu payment shall be made pursuant to this Chapter 16.64. For purposes of this chapter the term "fee" shall be used to refer to any such fee or in- lieu payment, regardless of how denominated elsewhere in this code.

(Ord. 5400 § 17 (part), 2016)

A fee shall be paid on or before the issuance of the first building permit for the project. For a phased project, payments may be made for each portion of a phased project prior to issuance of the first building permit for that phase. If there is no building permit for the project, the fee shall be paid upon issuance of the first city permit or other approval. If no city permit or other approval is required, and the obligation to pay the fee is triggered by a change in use, payment of the fee must be made before the change in use occurs.

(Ord. 5400 § 17 (part), 2016)

For residential development only, payment of a fee may be deferred to the date the development is approved for occupancy. If the development contains more than one dwelling, the fee shall be paid on a pro rata basis for each dwelling when it is approved for occupancy.

The fees may be deferred only if the owner of the real property for which the fees are required enters into a recordable agreement with the city prior to issuance of the building permit for the development, which from the date of recordation, shall constitute a lien on the property and shall be enforceable against successors in interest to the property owner. The agreement shall provide that final occupancy approval shall not be given until the fees are paid. The director of planning and development services may execute the agreement on behalf of the city in a form acceptable to the city attorney.

(Ord. 5691 § 2, 2026: Ord. 5645 § 2, 2025: Ord. 5641 § 2 (part), 2024: Ord. 5494 § 3, 2020: Ord. 5400 § 17 (part), 2016)

A fee shall be payable at the rate specified in the council-adopted municipal fee schedule in effect on the date the fees are paid, except: (1) an applicant for a vesting tentative map for a development project shall pay the fees in effect on the date the application for the vesting tentative map is deemed complete, and (2) an applicant that defers fees for a designated residential redevelopment project, as defined in California Government Code Section 66007, may elect to pay the fees in effect at the time of building permit issuance.

(Ord. 5691 § 2, 2026: Ord. 5645 § 3, 2025: Ord. 5641 § 2 (part), 2024: Ord. 5400 § 17 (part), 2016)

The city council can revise the rate of any fee by amending, by ordinance or resolution, the rate set forth in the municipal fee schedule. Any inflation-adjustment provided in this code with respect to a fee shall go into effect upon approval by the city council of a change to the municipal fee schedule reflecting the adjusted amount of the fee.

(Ord. 5400 § 17 (part), 2016)

(a) Each applicant is hereby notified that, in order to protest the imposition of any impact fee required by this chapter, the protest must be filed in accordance with the requirements of this chapter and, if applicable to the protest, the Mitigation Fee Act. Failure of any person to comply with the protest requirements of this chapter and, if applicable, the Mitigation Fee Act shall bar that person from any action or proceeding or any defense of invalidity or unreasonableness of the imposition, to the extent allowed by law.

(b) On or before the date on which payment of the fee is due, the applicant shall serve a written notice to the director of planning and development services with all of the following information:

(1) For challenges under the Mitigation Fee Act, a statement that the required payment is tendered, or will be tendered when due, under

protest; and

(2) a statement informing the city of the factual elements of the dispute and the legal theory forming the basis for the protest.

(Ord. 5669 § 2, 2025: Ord. 5494 § 3, 2020: Ord. 5400 § 17 (part), 2016)

(a) The director shall schedule an informal hearing regarding the protest, to be held no later than sixty days after service of the applicant’s written notice of protest, and with at least ten days' prior notice to the applicant (unless alternative dates are agreed by the director and the applicant).

(b) Either at the applicant’s request or upon the director’s initiative, the director may seek preparation, at the applicant’s expense, of additional analysis of the impacts created by the application. The time in which an informal hearing must be scheduled shall be tolled while these studies are prepared.

(c) During the informal hearing, the director shall consider the applicant's protest, relevant evidence assembled as a result of the protest, and any additional relevant evidence provided during the informal hearing by the applicant and the city. The director shall provide an opportunity for the applicant to present additional evidence at the hearing in support of the protest.

(d) The director shall issue a written determination regarding the protest directing that the fee shall remain unchanged or shall be increased or decreased based on the evidence presented at the hearing.

(e) The director may elect to appoint an independent hearing officer or other designee to hear and decide a protest under this section.

(Ord. 5669 § 3, 2025: Ord. 5400 § 17 (part), 2016)

The applicant shall pay all city costs related to any protest pursuant to this chapter, in accordance with the fee schedule adopted by the city. At the time of the applicant's protest the applicant shall pay a deposit in an amount established by the city to cover the estimated reasonable cost of processing the protest. If the deposit is not adequate to cover all city costs, the applicant shall pay the difference within twenty days after receipt of written notice from the director.

(Ord. 5669 § 5, 2025: Ord. 5400 § 17 (part), 2016)

The city manager, or her/his designee, is authorized to adopt administrative regulations or guidelines that are consistent with and that further the terms and requirements set forth in this code. All such administrative regulations or guidelines must be in writing. Such regulations or guidelines may interpret any provision of this chapter, as well as any provision of this code relating to the calculation of a fee.

(Ord. 5400 § 17 (part), 2016)

Where it is indicated in this code that a fee is subject to inflation adjustment pursuant to this section, on each July 1, the amount of the fee shall be recalculated according to the following formula:

Adjusted Rate = Prior Rate * Most Recent ENR / ENR for Prior Rate

Where the "Prior Rate" is the rate in effect prior at the time this adjustment is calculated, "Most Recent ENR" is the most recently published construction cost index when the adjustment is calculated and "ENR at Council-Approval" is the construction cost index (i) used to calculated the prior rate when it was set pursuant to this section or (ii) published for the month in which the council approved the "Prior Rate." "Construction cost index" means the construction cost index for the San Francisco Bay Area set forth in the Engineering News Record published by McGraw Hill and Associates. In the event the Engineering News Record ceases to calculate and publish this index, then the city manager may designate a comparable, alternative index to serve as the construction cost index.

The existing rate for a fee shall remain in effect until the recalculated rate is adopted and effective pursuant to Section16.64.050.

(Ord. 5400 § 17 (part), 2016)

Chapter 16.65

CITYWIDE AFFORDABLE HOUSING REQUIREMENTS

The purposes of this chapter are to:

A. Enhance the public welfare by establishing policies to provide affordable housing, meet the city's regional share of housing needs, and implement the goals and objectives of the comprehensive plan and housing element.

B. Mitigate the impacts of residential rental and nonresidential projects on the need for affordable housing by imposing a housing impact fee whereby developers of residential rental and nonresidential projects will contribute to the supply of housing for households with very low, low, and moderate incomes.

C. Increase funds available to support the preservation and production of new affordable housing in the City of Palo Alto.

D. Ensure that developers of new nonresidential square footage provide funding to mitigate the impacts of new employment on the demand for affordable housing.

E. Ensure that developers of new market-rate rental housing provide funding to mitigate the impacts of new residents on local employment and the resultant increased demand for affordable housing.

F. To create incentives for developers to build new affordable units on- or off-site instead of paying impact fees or in lieu fees.

G. To provide affordable housing that serves qualifying Palo Alto residents and those who work in the city.

(Ord. 5408 § 3 (part), 2017)

The definitions set forth in this section shall govern the application and interpretation of this chapter. Words and phrases not defined in this section shall be interpreted so as to give this chapter its most reasonable application.

(a) "Affordable housing agreement" means an agreement in conformance with Section16.65.090(b) between the city and an applicant, governing how the applicant shall comply with this chapter.

(b) "Affordable housing guidelines" means the requirements for implementation and administration of this chapter adopted by the planning and community environment director in accordance with Section 16.65.090(d).

(c) "Affordable housing plan" means a plan containing all of the information specified in and submitted in conformance with Section16.65.090(a) specifying the manner in which affordable units will be provided in conformance with this chapter and the affordable housing guidelines.

(d) "Affordable rent" means the total monthly housing expenses for a rental affordable unit not exceeding the rents specified by Section 50053 of the California Health and Safety Code and California Code of Regulations Title 25, Sections 6910-6924. As used in this chapter, "affordable rent" shall include the total of monthly payments by the tenant for all of the following: (1) use and occupancy of the affordable unit and land and all facilities associated with the affordable unit, including but not limited to parking, bicycle storage, storage lockers, and use of all common areas; (2) any additional separately charged fees or service charges assessed by the owner, other than security deposits; (3) an allowance for utilities paid by the tenant as established by the city, including garbage collection, sewer, water, electricity, gas, and other heating, cooking, and refrigeration fuel, but not telephone service or cable TV; and (4) any other interest, taxes, fees or charges for use of the land or affordable unit or associated facilities and assessed by a public or private entity other than the owner, and paid by the tenant.

(e) "Affordable sales price" means the maximum purchase price that will be affordable to the specified household at the specified income level, calculated in accordance with California Health and Safety Code Section 50052.5. The affordable sales price shall include a reasonable down payment, and monthly housing payments (including interest, principal, mortgage insurance, property taxes, homeowners insurance, homeowners association dues, property maintenance and repairs, and a reasonable allowance for utilities), all as determined by the city.

(f) "Affordable unit" means a dwelling unit affordable to very low, low, or moderate income households.

(g) "Applicant" or "developer" means a person, persons, or entity that applies for a residential or nonresidential project and also includes the owner or owners of the property if the applicant does not own the property on which development is proposed.

(h) "Area median income" or "AMI" means the annual median income for Santa Clara County, adjusted for household size, as published periodically in the California Code of Regulations, Title 25, Section 6932, or its successor provision, or as established by the City of Palo Alto in the event that such median income figures are no longer published periodically in the California Code of Regulations.

(i) "Building permit" includes full structural building permits as well as partial permits such as foundation-only permits.

(j) "Common ownership or control" refers to property owned or controlled by the same person, persons, or entity, or by separate entities in which any shareholder, partner, member, or family member of an investor of the entity owns ten percent or more of the interest in the property.

(k) "Commercial housing fund" means a fund or account designated by the city to maintain and account for all monies received from nonresidential project applicants pursuant to this chapter.

(l) "Decision-making body" means the city staff person or body authorized to approve or deny an application for a planning or building permit for a residential, mixed use or nonresidential project.

(m) "Density bonus units" means dwelling units approved in a residential project pursuant to California Government Code Section 65915 that are in excess of the maximum allowable residential density otherwise permitted by the City of Palo Alto.

(n) "First approval" means the first of the following approvals to occur with respect to a residential project: planning permit or building permit.

(o) "Housing impact fee" or "housing fee" means the fee paid by developers of residential and nonresidential projects to mitigate the impacts that such developments have on the demand for affordable housing in the city.

(p) "Low income households" are those households whose income does not exceed the low income limits applicable to Santa Clara County as defined in California Health and Safety Code Section 50079.5 and published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between fifty percent and eighty percent of area median income.

(q) "Market rate unit" means a new dwelling unit in a residential project that is not an affordable unit.

(r) "Mixed use project" means an application for a planning permit or building permit that includes the creation of one or more new dwelling units and the construction of net new gross square footage of non-residential space or the conversion of a residential use to a nonresidential use.

(s) "Moderate income households" are those households whose income does not exceed the moderate income limits applicable to Santa Clara County as defined in California Health and Safety Code Section 50093 and published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between eighty percent and one hundred twenty percent of area median income.

(t) "Nonresidential project" means an application for a planning permit or building permit that includes the new construction of net new gross square feet of nonresidential space, the conversion of a residential use to a nonresidential use, or the conversion of exempt space (as provided in Section 16.65.025) to non-exempt space.

(u) "Planning permit" means any discretionary approval of a residential project, including but not limited to a comprehensive or specific plan adoption or amendment, rezoning, tentative map, parcel map, conditional use permit, variances, or architectural review.

(v) "Residential housing fund" means a fund or account designated by the city to maintain and account for all monies received from residential project applicants pursuant to this chapter.

(w) "Residential ownership project" means any residential project that includes the creation of one or more new dwelling units that may lawfully be sold individually. A residential ownership project also includes the conversion of a residential rental project to a residential ownership project.

(x) "Residential project" means any development for which a planning permit or building permit is required that includes the creation of one or more new dwelling units, conversion of nonresidential uses to dwelling units, or the conversion of a use from a residential rental project to a residential ownership project.

(y) "Residential rental project" means any residential project on property under common ownership and control that creates one or more net new dwelling units that cannot be lawfully sold individually.

(z) "Very low income households" are those households whose income does not exceed the very low income limits applicable to Santa Clara County as defined in California Health and Safety Code Section 50105 and published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes less than fifty percent of area median income.

(Ord. 5408 § 3 (part), 2017)

The following development projects are exempt from the provisions of this chapter:

(a) Residential projects consisting of the construction of one or two units, other than accessory dwelling units and junior accessory dwelling units, unless: (1) included in a mixed use project, (2) constructed on a lot created by an Urban Lot Split under Chapter 21.10; or (3) resulting in a two- family use on a single-family zoned lot;

(b) Accessory dwelling units, unless: (1) constructed on a lot created by an Urban Lot Split underChapter 21.10; or (2) the accessory dwelling unit is constructed on a single-family zoned lot containing a two-family use;

(c) Junior accessory dwelling units and, notwithstanding subsection (b), all accessory dwelling units less than 750 square feet;

(d) Places of worship;

(e) Colleges and universities;

(f) Commercial recreation;

(g) Hospitals and convalescent facilities;

(h) Private clubs, lodges, and fraternal organizations;

(i) Private education facilities;

(j) Public facilities;

(k) Retail service, eating and drinking service, personal service, or automotive service when the total additional service related square footage is 1,500 square feet or less. This exemption shall apply only when the additional square footage of new development does not exceed 1,500 square feet. New development that is larger than 1,500 square feet shall pay a fee or otherwise comply with this chapter for all square footage, including the first 1,500 square feet;

(l) New gross square footage used for (1) an on-site cafeteria, recreational facility, or day care facility provided for employees or their children and not open to the public; or (2) a hazardous materials storage facility;

(m) Projects that have established a vested right not to be subject to this chapter; and

(n) Any nonresidential project otherwise determined to be exempt pursuant to city council resolution.

If a development project is exempt from this chapter at initial construction, but later converts to a use subject to this chapter, the converted square footage will be deemed net new square footage or dwelling units, as applicable, subject to the requirements of this chapter.

(Ord. 5587 § 24, 2023: Ord. 5542 § 23, 2022: Ord. 5408 § 3 (part), 2017)

The provisions of this section shall apply to all residential ownership projects, including the residential ownership portion of any mixed use project containing three or more units, except for any residential ownership project exempt under Section 16.65.025.

(a) Unless an alternative is approved as described in Section 16.65.080, residential ownership projects shall provide the following:

(1) For projects on sites of less than five acres, fifteen percent of the dwelling units in the project shall be made available at affordable sales

price to very low, low, and moderate income households;

(2) For projects on sites of five acres or more and all townhome projects in the NV districts, twenty percent of the dwelling units in the project

shall be made available at affordable sales price to very low, low, and moderate income households; and

(3) For projects that convert existing rental housing to condominiums, other residential ownership or nonresidential space or that remove

existing rental housing, twenty-five percent of the dwelling units in the project shall be made available at affordable sales price to very low, low, and moderate income households.

(4) Calculations of the number of affordable units required by this section shall be based on the number of dwelling units in the residential

project, excluding any density bonus units. Projects shall not receive a credit for any existing dwelling units demolished as part of the project.

(b) The affordable units shall be made available at the following affordable sales prices:

(1) For projects subject to subsections (a)(1) and (2) of this section, at least two-thirds of the required affordable units must be made available

at affordable sales price to households earning eighty percent to one hundred percent of the area median income, and one-third may be made available at affordable sales prices to households earning between one hundred percent and one hundred twenty percent of the area median income.

(2) For projects subject to subsection (a)(3) of this section, at least four-fifths of the required affordable units must be made available at

affordable sales price to households earning eighty percent to one hundred percent of the area median income, and one-fifth may be made available at affordable sales prices to households earning between one hundred percent and one hundred twenty percent of the area median income.

(c) When the affordable housing requirements described in this section result in a fractional unit, an in-lieu payment as specified in Section 16.65.060 may be made for the fractional unit instead of providing an affordable unit, except that, if the project contains thirty or more units, an additional affordable unit shall be provided for each fractional unit of 0.50 or more. The in-lieu fee for a fractional unit shall be calculated as described in the city's affordable housing guidelines.

(Ord. 5634 § 6, 2024: Ord. 5408 § 3 (part), 2017)

(a) Unless the mixed use, nonresidential or residential rental project is exempt under Section16.65.025 or an alternative is approved as described in Section 16.65.080, all mixed use, nonresidential and residential rental projects shall pay housing impact fees as specified in Section 16.65.060 to mitigate the projects' impacts on the need for affordable housing; except:

(1) The residential ownership portion of a mixed use project containing three or more units shall comply with Section16.65.030.

(2) In the NV districts, residential rental projects, including mixed use projects containing residential rental units, shall provide fifteen percent of

the dwelling units in the project at rates affordable to lower income households.

(Ord. 5634 § 7, 2024: Ord. 5408 § 3 (part), 2017)

(a) Fees. The amount of any housing impact fees and in-lieu fees shall be established from time to time by ordinance or resolution of the city council. Housing impact fees shall not exceed the cost of mitigating the impact of mixed-use, nonresidential and residential rental projects on the need for affordable housing in the city.

(b) Fee payment. Housing impact fees and in-lieu fees, if required, shall be paid prior to issuance of any building permit for a development project subject to this chapter or at a time otherwise specified by city council ordinance or resolution.

(Ord. 5408 § 3 (part), 2017)

(a) Residential projects containing ownership and rental units. When a residential project includes both ownership and rental dwelling units, the provisions of this chapter that apply to ownership residential projects shall apply to that portion of the development that consists of ownership dwelling units, while the provisions of this chapter that apply to rental residential project shall apply to that portion of the development that consists of rental dwelling units.

(b) Mixed use projects containing residential units. When a mixed use project contains three or more dwelling units, either residential rental or

residential ownership, the provisions of this chapter that apply to residential ownership and residential rental projects shall apply to those portions of the development that consist of residential ownership or residential rental units, as applicable, while the provisions of this chapter that apply to non- residential projects shall apply to that portion of the development that consists of non-residential uses. When a mixed use project contains fewer than three dwelling units, impact fees shall apply to those units.

(Ord. 5408 § 3 (part), 2017)

(a) Standards for affordable units.

(1) Affordable units shall be comparable in exterior appearance and overall quality of construction to market-rate units in the same housing development. Interior finishes and amenities must equal those provided in the base model market-rate units.

(2) The number of bedrooms and the size of the affordable units shall be comparable to the average number of bedrooms in the market-rate units, except that in a single-family detached development, the decision-making body may allow smaller affordable units or duplex affordable units, if permitted in the zoning district, when this furthers the provision of on-site affordable units. The affordable units shall be reasonably dispersed within the residential project, with unit locations comparable to those of the market-rate units, or, subject to the approval of the planning and community environment director, may be clustered within the residential project when this furthers affordable housing opportunities.

(3) The affordable units shall have the same amenities as the market rate units, including the same access to and enjoyment of common open space, parking, storage, and other facilities in the residential project.

(b) Timing of construction. The affordable units shall be constructed in proportion to construction of the market-rate units. No building permit shall be issued for any market-rate unit unless a proportional number of building permits have been issued for affordable units, and no certificates of occupancy or final inspections shall be issued for any market-rate units unless a proportional number of certificates of occupancy or final inspections have been issued for affordable units. An alternative phasing plan may be approved as part of the approval of the affordable housing plan described in Section 16.65.090.

(c) Continued affordability.

(1) All affordable units provided under Section 16.65.030 or Section 16.65.080 shall be subject to a resale restriction, deed of trust, and/or regulatory agreement recorded against the property for execution by the city manager, in a form approved by the city attorney, to ensure the continued affordability of the affordable units.

(2) Notwithstanding Section 18.15.040, to be considered as affordable units under this chapter, all affordable units shall remain affordable to the targeted income group for ninety-nine years, except in the case of affordable housing developments provided as an alternate means of compliance pursuant to Section 16.65.080, the city may authorize a fifty- five year affordability restriction if required to maintain eligibility for tax credit financing.

(3) Any household that occupies an affordable unit must occupy that unit as its principal residence, unless otherwise approved in writing for rental to a third party for a limited period of time due to household hardship, as determined by the city.

(4) No household may begin occupancy of an affordable unit until the household has been determined to be eligible to occupy that unit by the city or designee.

(Ord. 5408 § 3 (part), 2017)

The developer of a mixed use, residential or nonresidential project may request an alternate means of compliance, as described in this section, as a component of the affordable housing plan required by Section 16.65.090.

(a) Provisions applicable to all alternatives. The following provisions apply to all alternative means of compliance described in this section.

(1) The applicant shall bear the burden of presenting substantial evidence to support a finding of infeasibility under subection (b) of this section and to support the feasibility of any proposed alternative. The applicant shall set forth in detail the factual and legal basis for any request under this section.

(2) Any request under this section shall be submitted to the planning and community environment director together with an economic analysis, if required, or other supporting documentation and shall be acted upon by the city council.

(3) When the affordable housing alternative results in a fractional unit, fees shall be paid as specified in the affordable housing guidelines for any fractional units.

(4) All affordable units shall conform with the provisions of Section16.65.075.

(5) The city council may approve or conditionally approve any alternative set forth in this section if it makes all of the following findings and any additional findings required for the selected alternative:

(A) The number of affordable units provided by the alternative equals or exceeds that provided by on-site units or by the payment of impact fees, as applicable to the project;

(B) The level of affordability provided by the alternative is the same or lower as provided by on-site units or by the payment of impact fees, as applicable to the project; and

(C) The alternative is consistent with the comprehensive plan and housing element and the provisions of this chapter.

(b) Residential ownership projects.

(1) If the provision of affordable ownership units under Section 16.65.030 is infeasible, an applicant for a residential ownership project may request, in order of priority, to: (a) provide on-site affordable rental units as provided in subsection (c) below; (b) provide off-site affordable units as provided in subsection (d) below; (c) dedicate land for affordable housing as provided in subsection (d) below; (d) rehabilitate and convert existing residences to affordable housing, or preserve existing affordable housing, as provided in subsection (e) below; or (e) pay the in-lieu fee adopted as described in Section 16.65.060. The applicant must demonstrate that each of the higher priority options is infeasible before the city will consider a lower priority option.

(2) For the purposes of this section, "infeasible" means either that: (a) the affordable sales price would be less than the cost of constructing the affordable unit, including financing but excluding all other costs, including land, marketing, improvements, and profit; or (b) provision of the units would produce a confiscatory or unconstitutional result.

(3) Notwithstanding Section 16.65.080(a)(5), the city council may accept fees in lieu of the alternatives in paragraph one provided it makes a finding that special circumstances justify payment of fees over provision of ownership units, such as a finding that the fees generated would result in more affordable units than those required to be provided on site or that funds are needed to finance a pending affordable housing project.

(c) Affordable rental units in a residential ownership project or a residential rental project.

(1) An applicant for a residential ownership project or a residential rental project may elect to make available dwelling units in the residential project at affordable rent rather than provide on-site for-sale affordable units or pay housing impact fees, as applicable. The city council may by ordinance or resolution specify the percentage and affordability level of rental affordable units that are equivalent to provision of on-site for-sale affordable units or payment of housing impact fees, as applicable.

(2) To ensure compliance with the Costa-Hawkins Act (Chapter 2.7 of Title 5 of Part 4 of Division 3 of the Civil Code), the city may approve such a proposal only if the applicant agrees in a rent regulatory agreement with the city to limit rents in consideration for a direct financial contribution or a form of assistance specified in Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code.

(3) Any rent regulatory agreement for rental units in a residential ownership project shall include provisions for sale of the affordable units and relocation benefits for tenants of the affordable units if the owner of the residential ownership project later determines to offer the affordable units in the residential project for sale to moderate income households at an affordable sales price.

(d) Dedication of land and off-site construction of affordable units.

(1) The applicant may submit an affordable housing plan that proposes either to dedicate vacant land suitable for affordable housing or to construct affordable units on another site. Two or more applicants may also jointly propose the provision of vacant land suitable for affordable housing or the construction of off-site affordable units on a single site.

(2) Construction of the off-site affordable units may not commence prior to the first approval of the residential project, and construction of the off- site units must occur concurrently with construction of the market-rate units in the residential project as described in Section 16.65.075.

(3) The city council may approve or conditionally approve the dedication of land or off-site construction if it makes all of the following findings in addition to making the findings in subsection (a)(5) above:

(A) Financing or a viable financing plan, which may include public funding, is in place for the off-site affordable units; and

(B) The off-site location is suitable for the proposed affordable housing, consistent with any affordable housing guidelines and the housing element, and will not tend to cause residential segregation.

(4) No building permit shall be issued for any units in the residential project until committed funding is available for the off -site units, or units to be constructed on land to be dedicated.

(5) Off-site construction of affordable units does not qualify the residential project for a density bonus or other regulatory incentives allowed by Government Code Section 65915 unless the off-site development includes the dedication of land conforming to the provisions of Section 65915(g). No off-site alternative may be approved by the city if a density bonus or other regulatory incentive is requested for the site on which the affordable housing is to be built. Any off-site alternative must comply with the density, intensity and other development standards that are permitted under the zone for the site.

(e) Rehabilitation and conversion of existing market-rate housing.

(1) The applicant may submit an affordable housing plan that proposes the rehabilitation and conversion of existing market-rate housing to affordable housing, or the preservation of existing affordable housing that is not deed restricted as affordable.

(2) The market-rate units to be converted to affordable units shall be located in a residential project that is not subject to any existing affordability covenants except covenants restricting other units in the development.

(3) The affordable housing plan shall include a plan for long-term financial sustainability of the market-rate units to be converted to affordable units, which incorporate, among other things, provisions to accommodate increases in homeowners' association fees, special assessments and maintenance costs.

(4) Any existing tenants in the market-rate units to be converted to affordable units shall be eligible to remain in the units; or the applicant shall provide relocation assistance pursuant to California Government Code §§ 7260 et seq.

(5) The city council may approve or conditionally approve the proposal if it makes all of the following findings in addition to making the findings in subsection (a)(5) above:

(A) The proposal includes substantial rehabilitation of the existing housing equal to at least twenty-five percent of the after-rehabilitation value of the property, inclusive of land value, and the units shall be in decent, safe and sanitary condition and in compliance with all codes;

(B) Financing or a viable financing plan is in place for the units to be converted to affordable units; and

(C) The off-site location is suitable for the proposed affordable housing, consistent with any affordable housing guidelines and the housing element, and will not tend to cause residential segregation.

(6) No building permit shall be issued for any units in the residential project until regulatory agreements approved by the city have been recorded for the existing units to be converted to affordable housing.

(f) Mixed use projects. An applicant for a mixed use development may submit an affordable housing plan that proposes to mitigate the affordable housing impacts of the non-residential and residential rental portions of the development through any of the options listed above or through on-site provision of affordable units conforming with applicable provisions of Section 16.65.075. In addition to making the findings in subsection (a)(3) above, the city council may approve or conditionally approve such an alternative if it determines, based on substantial evidence, that such alternative will provide equal or greater public benefit than would payment of the housing impact fee.

(g) Nonresidential projects. An applicant for a nonresidential development may submit an affordable housing plan that proposes to mitigate the affordable housing impacts of the development through any of the options listed above or through on-site provision of affordable units conforming with applicable provisions of Section 16.65.075. In addition to making the findings in subsection (a)(5) above, the city council may approve or conditionally approve such an alternative if it determines, based on substantial evidence, that such alternative will provide equal or greater public benefit than would payment of the housing impact fee.

(Ord. 5408 § 3 (part), 2017)

(a) Affordable housing plan.

(1) All residential ownership projects and any mixed use, residential rental or nonresidential project proposing to provide affordable units under the provisions of Section 16.65.080 shall submit an affordable housing plan concurrently with the application for the first approval of the project. The city shall provide an application form specifying the contents of the affordable housing plan. If an affordable housing plan is required, no application for a first approval the project may be deemed complete until a complete affordable housing plan is submitted. The cost of reviewing any proposed alternative, including but not limited to the cost to the city of hiring a consultant to review the application, shall be borne by the applicant.

(2) No affordable housing plan is required for a mixed use, residential rental project or a nonresidential project if the applicant proposes to pay housing impact fees, or if the project is exempt under Section 16.65.025.

(3) Any affordable housing plan shall be processed concurrently with all other permits required for the development project. Before approving the affordable housing plan, the decision-making body shall find that the affordable housing plan conforms to this chapter. A condition shall be attached to require recordation of an affordable housing agreement, as described in subsection (b) of this section below, prior to the approval of any final or parcel map or building permit for the development project.

(4) The approved affordable housing plan may be amended prior to issuance of any building permit for the development project. A request for a minor modification of an approved affordable housing plan may be granted by the planning and community environment director if the modification is substantially in compliance with the original affordable housing plan and conditions of approval. Other modifications to the affordable housing plan shall be processed in the same manner as the original plan.

(b) Affordable housing agreement.

(1) Affordable housing agreements acceptable to the city manager or designee and approved as to form by the city attorney shall be recorded against the residential or nonresidential project prior to approval of any final or parcel map, or issuance of any building permit, whichever occurs first, unless the project is required only to pay impact fees.

(2) The affordable housing agreement shall specify the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential purchasers or renters of units, and resale control mechanisms, including the financing of ongoing administrative and monitoring costs, consistent with the approved affordable housing plan and any affordable housing guidelines, as determined by the city manager or designee.

(c) 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.

(d) The planning and community environment director may adopt affordable housing guidelines to implement this chapter, and may update those guidelines periodically as required.

(Ord. 5408 § 3 (part), 2017)

(a) All housing impact fees or other funds collected under this chapter shall be deposited into the city's commercial and residential housing funds.

(b) The monies in the commercial and residential housing funds and all earnings from investment of the moneys in the funds shall be expended exclusively to provide housing affordable to very low income, lower income, and moderate income households in the city, consistent with the goals and policies contained in the city's housing element and for administration and compliance monitoring of the affordable housing program.

(Ord. 5408 § 3 (part), 2017)

(a) As part of an application for the first approval of a residential or nonresidential project, a developer may request that the requirements of this chapter be waived or modified by the city council, based upon a showing that applying the requirements of this chapter would result in an unconstitutional taking of property or would result in any other unconstitutional result.

(b) The request for a waiver or modification shall set forth in detail the factual and legal basis for the claim.

(c) Any request for a waiver or modification shall be reviewed and considered at the same time as the project application or any affordable housing plan.

(d) The waiver or modification may be approved only to the extent necessary to avoid an unconstitutional result, based upon legal advice provided by or at the behest of the city attorney, after adoption of written findings, based on legal analysis and substantial evidence. If a waiver or modification is granted, any change in the project shall invalidate the waiver or modification, and a new application shall be required for a waiver or modification under this section.

(Ord. 5408 § 3 (part), 2017)

(a) Penalties. Persons employed in the following designated employee positions are authorized to exercise the authority provided in the California Penal Code Section 836.5 and are authorized to issue citation for violations of this chapter: development services director, director of planning and development services and their designees.

(b) The city attorney shall be authorized to enforce the provisions of this chapter and all affordable housing agreements, regulatory agreements, and all other covenants or restrictions placed on affordable units, by civil action and any other proceeding or method permitted by law.

(c) 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 project shall be issued, including without limitation a final inspection or certificate of occupancy, until all applicable requirements of this chapter have been satisfied.

(d) The remedies provided for in this section 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.

(Ord. 5494 § 3, 2020: Ord. 5408 § 3 (part), 2017)