Chapter 20.65

OVERLAY DISTRICTS

Parts:

• 1 TERO Transit Employment Residential Overlay

• 2 AHO Affordable Housing Overlay 3 MIHO Mixed-Income Housing Overlay 4 HERO Housing Element Residential Overlay

• 5 Neighborhood Business District Overlay

Sections:

• A. This chapter establishes overlay districts which specify development standards applying to applications for land use permits on sites that fall within an overlay designation established in the City of San José Envision 2040 the General Plan.

• B. Where a site is located within an overlay district and an application is made for development consistent with the land use provisions for the overlay designation, such a site may only use the standards and allowed uses that apply to the zoning overlay district as set forth in this chapter.

(Ords. 30786, 30988.)

• A. Whenever the following terms are used in this Chapter, they shall have the meaning established by this Section:

  1. "Affordable Housing Cost" means the housing cost for Dwelling Units as de-

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fined by California Health & Safety Code section 50052.5 for owner-occupied housing and the affordable rent for rental units as defined by California Health & Safety Code section 50053, as applicable, except that: (a) that the affordable rent for Dwelling Units that do not include private cooking and/or bathroom facilities shall be ninety percent (90%) of the otherwise applicable affordable rent for studio (0bedroom) Dwelling Units.

2. "Affordable Housing Development" means, for a rental Residential Development, a development that has a recorded affordability restriction that: (a) has a term of at least fifty-five (55) years; (b) limits the rental of all dwelling units except the manager's units, such that the rent of the restricted income units is in not excess of Affordable Housing Cost at thirty percent (30%) of sixty percent (60%) of the Area Median Income or as otherwise restricted at a substantially similar level as allowed under the Inclusionary Housing Guidelines; (c) restricts at least ten percent (10%) of the units to very low income households at incomes up to fifty percent (50%) of Area Median Income; and (d) is made for the benefit of and enforceable by the City, Santa Clara County or a State or Federal Agency. "Affordable Housing Development" means, for a for-sale Residential Development, a development that has a recorded affordability restriction with a term of at least forty-five (45) years that limits the sale of all dwelling units to households with an income not exceeding eighty percent (80%) of the Area Median Income at a price not exceeding Affordable Housing Cost and is made for the benefit of and enforceable by the City, Santa Clara County, or a regional, State, or Federal Agency.

3. "Applicant" means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities who seeks a Discretionary Approval or a Ministerial Approval from the City for a Housing Development and also includes the owner of the property if the Applicant does not own the property on which the Housing Development is proposed.

4. "Approval Authority" means the person or body within the City that is authorized to provide initial Discretionary Approval or Ministerial Approval of a Housing Development.

5. "Director" means the Director of Planning, Building and Code Enforcement.

6. "Discretionary Approval" means any approval related to a Housing Development that requires the exercise of judgment or deliberation by the Approval Authority including, but not limited to, development exceptions, variances, Development Permits, general plan and specific plan approvals and amendments, zoning ordinances and amendments, and tentative maps.

7. "Ministerial Approval" means any approval related to a Housing Development that does not require the exercise of judgment or deliberation by the Approval Authority.

8. "Non-Restricted Unit" means any dwelling unit within a Housing Development excluding the Restricted Affordable Units.

9. "Regulatory Agreement" means a recorded and legally binding agreement on a form approved by the City, executed by the Applicant and ensuring that the requirements of this Chapter are satisfied. A Regulatory Agreement, among other things, shall establish: the number of Restricted Affordable Units, their size, location, terms and conditions of affordability or age restrictions for Senior

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Citizen Housing Development units, the identity of any Incentives and the development production schedule, and provision for the payment of the City's cost of monitoring compliance with the Regulatory Agreement and this Chapter.

10. "Restricted Affordable Unit" means a dwelling unit within a Housing Development that will be available at an Affordable Housing Cost.

• (Ord. 30988.)

• A. General. Applicants seeking to construct an Affordable Housing Development pursuant to this Chapter shall enter into a Regulatory Agreement with the City, which shall be recorded against the residential development. The terms of the draft Regulatory Agreement shall be reviewed and revised as appropriate by the Director or designee and the City Attorney or designee. The final Regulatory Agreement, as approved by the City Attorney, shall be executed by the Applicant and forwarded to the Approval Authority for final approval.

• B. Timing of Agreement Approval. Recording of the Regulatory Agreement shall take place either concurrently with the Discretionary Approval or Ministerial Approval that is being processed with the overlay district application; or under an application for a compliance plan submitted between the Discretionary Approval and Ministerial Approval, and building approval or grading approval, whichever comes first.

• C. Agreement Terms and Conditions. The Regulatory Agreement shall include at a minimum all of the following:

  1. The total number of dwelling units approved for the Affordable Housing Development, including the number of Restricted Affordable Units;

  2. A description of the household income group to be accommodated by the Re-

stricted Affordable Units, and the standards for determining the corresponding Affordable Housing Cost;

3. The location, dwelling unit sizes (square feet), and number of bedrooms of the Restricted Affordable Units;

4. Term of use restrictions for Restricted Affordable Units for the minimum period(s) of time;

5. Requirements to ensure that the initial occupants of all for-sale units that qualified the Applicant for use of the overlay district are persons and families of LowerIncome, as required, and that the units are offered at an affordable housing cost, as that cost is defined in California Health & Safety Code section 50052.5. The Regulatory Agreement for for-sale Restricted Affordable Units shall include the following equity sharing provisions, unless it conflicts with the requirements of another public funding source or law:

   • a. Upon resale to another incomequalified household, 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, as defined in Subsection 5.b., and its proportionate share of appreciation, as defined in Subsection 5.c., which amount shall be used within five (5) years for any of the purposes described in California Health & Safety Code section 33334.2, subdivision (e).

   • b. For purposes of this Chapter, 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 Lower-Income household, plus the amount of any down payment assistance or mortgage assistance. If upon resale

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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 Chapter, the City 's proportionate share of appreciation shall be equal to the ratio of the City's initial subsidy to the fair market value of the home at the time of initial sale.

  6. A schedule for completion and occupancy of the Restricted Affordable Units;

  7. A description of remedies for breach of the Regulatory Agreement, including at the City's option, the identification of tenants or qualified purchasers as thirdparty beneficiaries under the Regulatory Agreement;

  8. A provision stating that the Regulatory Agreement shall be binding to all future owners and successors in interest; and

  9. Other provisions to ensure implementation and compliance with this Chapter.

• D. Recordation. Following execution of the Regulatory Agreement, the Regulatory Agreement shall be recorded on the property subject to the Regulatory Agreement.

• (Ord. 30988.)

Part 1

TERO TRANSIT EMPLOYMENT RESIDENTIAL OVERLAY*

Sections:

*Editor’s note— Ord. 30988, § 2, adopted Dec. 12, 2023, amended Part 1 in its entirety, in effect repealing and reenacting said Part 1 to read as set out herein. The former Part 1, §§ 20.65.020 - 20.65.040, pertained to similar subject matter and derived from Ord. 30786, 30775.

TERO Transit Employment Residential Overlay. The TERO overlay identifies sites within North San José that may be appropriate for residential and commercial development if they are consistent with the standards and conditions specified in Part 1 of Chapter 20.65 and comply with the other requirements of this title. Development within this category is intended to make efficient use of land to provide residential units in support of nearby industrial employment centers. Site specific land use issues and compatibility with adjacent uses shall be evaluated and addressed through the development permit application process. (Ord. 30988.)

The TERO Transit Employment Residential Overlay applies to sites in the areas identified with the Transit Employment Residential Overlay on the General Plan Land Use/Transportation Diagram in the Envision San José 2040 General Plan and the Zoning District Map. (Ord. 30988.)

The allowed uses and development standards for the TERO Transit Employment Residential Overlay Zoning District are specified below:

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(Ord. 30988.)

Part 2

AHO AFFORDABLE HOUSING OVERLAY

Sections:

20.65.090 AHO affordable housing development requirements.

AHO Affordable Housing Overlay. The Affordable Housing Overlay identifies sites within North San José that may be appropriate for development of 100% affordable housing units if they are consistent with the standards and conditions specified in Part 2 of Chapter 20.65 and comply with the other requirements of this title.

Development within this category is intended to make efficient use of land to provide 100% deedrestricted affordable residential units in support of nearby industrial employment centers. Site-specific land use issues and compatibility with adjacent uses shall be evaluated and addressed through the development permit application process. (Ord. 30988.)

The Affordable Housing Overlay applies to sites in the areas identified with the Affordable Housing Overlay on the General Plan Land Use/ Transportation Diagram in the Envision San José 2040 General Plan and the Zoning District Map. (Ord. 30988.)

A residential development in this overlay district requires the construction of 100% affordable units, either as rental or for-sale units, in accordance with the limitations set forth in this Chapter for Affordable Housing Developments. (Ord. 30988.)

The allowed uses and development standards for the Affordable Housing Overlay are specified below:

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(Ord. 30988.)

Applications for projects pursuant to this Part 2 shall comply with the Regulatory Agreement requirement in this Chapter 20.65 and may utilize Local Ministerial Approval pursuant to Part 3 of Chapter 20.195. (Ord. 30988.)

Part 3

MIHO MIXED-INCOME HOUSING OVERLAY

Sections:

• 20.65.130 Applicability and overlay location.

• 20.65.140 MIHO affordable housing development requirements.

• 20.65.150 Overlay regulations and development standards.

• 20.65.160 Compliance with inclusionary housing requirement.

• 20.65.170 Application requirements and timing.

MIHO Mixed-Income Housing Overlay. The Mixed-Income Housing Overlay identifies sites within North San José that may be appropriate for mixed-income residential development if they are consistent with the standards and conditions specified in this Part and comply with the other requirements of this title. Development within this category is intended to make efficient use of land to provide residential units in support of nearby industrial employment centers. (Ord. 30988.)

The Mixed-Income Housing Overlay applies to sites in the areas identified with the Mixed Income Housing Overlay on the General Plan Land Use/Transportation Diagram in the Envision San José 2040 General Plan and the Zoning District Map.

(Ord. 30988.)

• A. A residential development in this overlay district requires the construction of 25% affordable units, either as rental or for-sale units, in

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accordance with the limitations set forth in this Chapter for Affordable Housing Developments.

• B. No development permit or ministerial approval shall be issued under this Section unless the project includes the requisite affordable housing.

• C. Projects that incorporate the dedicated affordable housing units and non-restricted units within the same building may be permitted through a ministerial process pursuant to Chapter 20.195.

• D. Projects that provide affordable units in separate buildings from the non-restricted units may be permitted through a ministerial process pursuant to Chapter 20.195 only if the affordable units are constructed prior to or concurrently with the non-restricted residential units. Such timing requirement shall be a condition of the development permit ministerial approval.

• E. All restricted affordable units must be dispersed throughout the property and follow amenity guidelines per Section 5.08.470.

• (Ord. 30988.)

The allowed uses and development standards for the Mixed-Income Housing Overlay Zoning District are specified below:

(Ord. 30988.)

The affordable units constructed through the MIHO may count towards fulfilling the requirements of 5.08.400 of the City of San José Municipal Code.

(Ord. 30988.)

Applications for projects pursuant to this Part 3 shall comply with the Regulatory Agreement re-

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quirement in this Chapter 20.65 and may utilize Local Ministerial Approval pursuant to Part 3 of Chapter 20.195. (Ord. 30988.)

Part 4

HERO HOUSING ELEMENT RESIDENTIAL OVERLAY

Sections:

• 20.65.190 Applicability and overlay location.

• 20.65.200 HERO affordable housing development requirements.

• 20.65.210 Overlay regulations and development standards.

• 20.65.220 Compliance with inclusionary housing requirement.

• 20.65.230 Application requirements and timing.

HERO Housing Element Residential Overlay. The Housing Element Residential Overlay identifies sites within the City of San José 2014-2021 Housing Element (5th Cycle) that were not previously approved for development but are identified to accommodate a portion of the housing need for lower income housing in the current Housing Element (6th cycle). This overlay district allows residential uses by right for housing development in which at least 20 percent of the units are affordable to lower income households, as required by California Government Code Section 65583.2, subdivision (c). (Ord. 30985.)

The Housing Element Residential Overlay applies to sites in the areas identified with the Housing Element Residential Overlay on the Zoning District Map.

(Ord. 30985.)

A housing development project in this overlay district must allow a minimum density of 30 dwelling units per acre and allow residential uses by right for housing developments in which at least 20% of the units are affordable to "Lower Income Households," as defined in Section 5.08.210. Ministerial approval may be allowed pursuant to Chapter 20.195 if the project includes the requisite number of affordable units.

(Ord. 30985.)

The allowed uses and development standards for the Housing Element Residential Overlay shall follow the underlying Zoning District. (Ord. 30985.)

The affordable units constructed through the Housing Element Residential Overlay may count towards fulfilling the requirements of Chapter 5.08.400 of the City of San José Municipal Code. (Ord. 30985.)

Applications for projects pursuant to this Part 4 shall comply with the Regulatory Agreement requirement in this Chapter 20.65 and may utilize Local Ministerial Approval pursuant to Part 3 of Chapter 20.195.

(Ord. 30985.)

Part 5

NEIGHBORHOOD BUSINESS DISTRICT OVERLAY

Sections:

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• 20.65.270 Overlay regulations and development standards [- Japantown (Taylor Street only) Neighborhood Business District].

• 20.65.280 Overlay regulations and development standards [- North 13th Street Neighborhood Business District].

Neighborhood Business District ("NBD") Overlay. The purpose of the Neighborhood Business District Overlay is to recognize the variety of commercial and non-commercial uses which contribute to neighborhood identity by serving as a focus for neighborhood activity. The NBD designation functions as an "overlay" designation which is applied to predominantly commercial land use designations. The NBD Overlay allows residential uses in the Japantown (Taylor Street only), North 13th Street, and Willow Glen Neighborhood Business Districts that is consistent with the standards and conditions specified in Part 5 of Chapter 20.65 and comply with the other requirements of this title. Site specific land use issues and compatibility with adjacent uses shall be evaluated and addressed through the development permit application process.

(Ord. 31168.)

The Neighborhood Business District ("NBD") Overlay applies to sites in Japantown (Taylor Street only), North 13th Street, and Willow Glen Neighborhood Business Districts on the General Plan Land Use/Transportation Diagram in the Envision San José 2040 General Plan and the Zoning District Map. (Ord. 31168.)

The allowed uses and development standards for the Willow Glen Neighborhood Business District are specified below:

Table 20-142 Willow Glen Neighborhood Business District Overlay Development Standards

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Notes:

1. Setback regulations shall follow the underlying Zoning District.

(Ord. 31168.)

The allowed uses and development standards for the Japantown (Taylor Street only) Neighborhood Business District are specified below:

Table 20-143 Japantown (Taylor Street only) Neighborhood Business District Overlay Development Standards

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Notes:

1. Setback regulations shall follow the underlying Zoning District.

(Ord. 31168.)

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