§ 22.12

An application that satisfies the requirements of this Section shall be eligible to receive incentives to allow more intensive residential development than otherwise allowed by this Title. Incentives provided in accordance with this Section shall be in addition to the incentives available through the State Density Bonuses and Other Incentives Section (Section 22.12.020).

A.

Applicability of Regional Housing Incentives.

1.

Incentives. An application that satisfies the eligibility criteria of this Section may receive housing development incentives by adhering to applicable standards of this Section. Applicable standards are determined by applying the corresponding designated amount of 'Incentive Points'.

2.

General Applicability. Where other standards of this Title, including those of Article 9 (Planning Area Standards) and Article 10 (Community Planning Standards), conflict with the standards of this Section, the provisions of this Section prevail, except:

a.

Environmental Resource Protections. Where the standards of this Title are intended to protect environmental resources conflict with this Section, those standards shall prevail.

b.

Combining Designations. Where the standards of Chapter 22.14 (Combining Designation Standards) conflict with this Section, the standards of Chapter 22.14 prevail.

3.

Relationship to State Density Bonuses and Other Incentives (Section 22.12.020). Density increases

provided under this Section shall apply and be calculated as part of the base density prior to application of density bonuses.

B.

Eligibility. Applications shall satisfy all of the following criteria to be eligible for the incentives allowable by this Section.

1.

Urban Reserve Line. The project site shall be located wholly within an Urban Reserve Line.

2.

Residential Use. The project shall be for multi-family dwellings.

C.

Incentive Points. Incentive points accrued for an application shall only apply to and shall not be transferred to other applications or project sites.

1.

Accrual of Incentive Points. An application may accrue incentive points by contributing to guaranteed affordable housing in one or more of the following ways:

a.

Constructing Very Low-Income Housing. An application shall accrue two (2) incentive points per very lowincome dwelling unit constructed and provided on-site. Each very low-income dwelling unit shall be guaranteed to be affordable to very low-income households in accordance with Section 22.12.030 (Housing Affordability Standards).

(1)

Funding Limitations. To qualify for incentive points, the very low-income dwelling units must not be funded through government-funded grants, tax credits, or other equivalent funding sources intended for affordable housing, unless 100% of the dwelling units in the project are guaranteed to be affordable in the very low-, low-, and/or moderate-income categories (not counting manager dwelling units).

(2)

Occupancy Timeline. The on-site very low-income dwelling units shall be available for occupancy prior to or concurrently with final construction permit approval for occupancy of up to five on-site market-rate dwelling units.

b.

Contributing In-Lieu Fees to Regional Housing Fund. An application may accrue incentive points by contributing to the Regional Housing Fund in accordance with Title 31.

(1)

Assessment of In-Lieu Fee. A project subject to ministerial permit or discretionary approval shall be subject to the in-lieu fee in effect [A] at the time that the first construction or grading permit is applied for or [B] at the time of final map recordation, whichever occurs first.

(2)

Payment of In-Lieu Fee. In-lieu fee shall be paid in full [A] prior to issuance of the first construction or grading permit or [B] prior to recordation of the final map, whichever occurs first.

2.

Applying Incentive Points. An application may apply accrued Incentive Points to determine the applicable standards based on the following table. Each accrued Incentive Point shall only be applied once.

Regional Housing Incentives

D.

Application Requirements. The application shall include:

A description of how the project will accrue Incentive Points;

2.

A statement detailing the selected incentives that accrued Incentive Points would apply to; and

3.

Verification that the Incentive Points accrued will equal to or exceed the Incentive Points required for the selected incentives.

(2025, Ord. 3549)

Editor's note— Ord. No. 3549, § 2, adopted October 21, 2025, repealed § 22.12.010 and enacted a new § 22.12.010 as set out herein. Former § 22.12.010 pertained to the purpose of the chapter and derived from Ord. 3427 adopted 2020.

An application that satisfies the requirements of this section and State Density Bonus Law for a qualifying housing project may be eligible to receive a density bonus and other incentives, such as concessions and adjusted parking ratios. A housing project approved to receive a density bonus may establish additional housing units over the standard maximum residential density allowed by ordinance, including the standard maximum residential density set by Planning Area Standards. Qualifying housing projects may include, but are not limited to, housing projects that contain one of the following: (1) rental or ownership housing units or vacant lots restricted to very low, lower, or moderate income residents, (2) housing units for transitional foster youth, disabled veterans, or homeless persons, with rents restricted at very low income level, (3) housing units restricted to senior citizens, and 4) mixed-use development. The qualifying housing units shall be deed-restricted in accordance with the approval of the project.

A.

References to State Law. This section references California Government Code 65915 et. seq., Chapter 4.3 (Density Bonuses and Other Incentives), Division 1, Title 7 of the State of California Government Code, which shall be referenced herein as State Density Bonus Law. All references to State Density Bonus Law shall refer to the statute, as it may be amended. Where there is conflict between the State Density Bonus Law and this ordinance, the State Density Bonus Law shall prevail.

B.

Application Submittal.

1.

Application Submittal. For the purpose of this chapter, an application for a density bonus shall mean an application to request density bonus, adjusted parking ratios, incentives or concessions, waivers or reductions of development standards, or any combination thereof, as prescribed in State Density Bonus Law. The level of permitting required is as otherwise required by this Title, not including bonus units. If a discretionary permit is required, CEQA review shall consider bonus units.

2.

Application Submittal Requirements. In addition to the permit submittal requirements for the proposed development, an application requesting a density bonus shall include the following items:

a.

The development project shall have five or more dwelling units, exclusive of any density bonus units.

b.

Density Bonus Guide. Any information and supplement documentation listed in the Guide is required unless otherwise noted as optional.

c.

Include citations of the state and county density bonus codes upon which the density bonus, adjusted parking ratios, incentives or concessions, and waivers or reductions of development standards is requested; and explanations and supporting evidence demonstrating how the proposed project satisfies the applicable standards and criteria.

d.

Include all documentation the applicant would like to rely on to demonstrate support for the requested incentives and concessions, waivers and reductions of development standards. The requests shall conform with the requirements of Section E below (Decisions and Findings).

e.

The application for an incentive, concession, or a waiver or reduction of development standards must also qualify for a density bonus.

3.

Concurrent Processing. The review of the density bonus application shall occur concurrently with all other entitlement applications submitted on behalf of the development requesting the density bonus benefits.

C.

Determination of Eligibility.

1.

Notice of Determination of Eligibility. If the Planning and Building Department deems the application to be complete it shall provide the applicant with a determination of the following, based on the State Density Bonus Law:

a.

The amount of density bonus for which the project is eligible.

b.

The parking ratio for which the project is eligible.

c.

The incentives, concessions, and waivers or reductions of development standards for which the project is eligible. Before a determination pursuant to this subsection can be made, the applicant shall submit sufficient documentation to establish eligibility for a requested density bonus, for any requested incentives or concessions, and for any requested waivers or reductions of development standards.

2.

Project based on Determination of Eligibility. The project's density bonus amount, parking ratios, incentives, concessions, and waivers or reductions of development standards shall be based on the determination of eligibility made at the time the application is deemed complete. However, the Planning and Building Department or the Review Authority shall adjust the amount of density bonus, parking ratios, incentives, concessions and waivers or reductions of development standards based on any changes made to the

project prior to permit approval. The applicant may choose to accept less than what is allowed by the project determination. The County may choose to award the project an equal or greater amount than allowed by the State Density Bonus Law.

D.

Project Design.

1.

Location and Dispersal of Dwelling Units. Deed-restricted dwelling units shall be dispersed throughout the development and shall not be clustered, unless the Review Authority approves a cluster design for such units.

2.

Number of Bedrooms. The average number of bedrooms of the deed-restricted dwelling units shall equal or exceed the average number of bedrooms of the market-rate dwelling units.

3.

Exterior Appearance and Quality of Materials. The exterior appearance and quality of materials of the deedrestricted dwelling units shall be the same or similar to the market-rate dwelling units.

4.

Unit Availability and Project Phasing. Deed restricted dwelling units shall be completed and available for occupancy prior to or concurrently with market rate dwelling units. If the project is to be developed in phases, then each phase shall contain a share of the total number of deed restricted units that is proportional to the size of each phase.

Land Donation. The timing and provision of land donation(s) shall comply with California Government Code 65915(g).

E.

Decision and Findings.

1.

Findings for Density Bonus and Adjusted Parking Ratios. The Review Authority shall approve or approve with conditions a request for density bonus and adjusted parking ratios if it finds that:

a.

The proposed project is eligible for the requested density bonus and adjusted parking ratios pursuant to State Density Bonus Law; and

b.

The proposed project is consistent with the applicable standards and criteria found in State Density Bonus Law.

c.

Where a development project may qualify for other density bonuses in addition to those provided by this section (e.g. through Section 22.12.040 - Inclusionary Housing, or Section 22.22.140 - Cluster Division) only one such bonus may be used.

2.

Findings for Incentives and Concessions. The Review Authority shall approve or approve with conditions a request for incentives or concessions, unless it makes any of the following findings based upon substantial evidence:

a.

The incentive or concession does not result in identifiable and actual cost reductions, consistent with California Government Code Section 65915(k):

(1)

to provide for affordable housing costs, as defined in California Health and Safety Code Section 50052.5, or

(2)

for rents for the targeted units to be set as specified in California Government Code Section 65915(c).

b.

The incentive or concession would have a specific, adverse impact, as defined in California Government Code Section 65589.5(d)(2), upon public health and safety 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 lowincome and moderate-income households.

c.

The incentive or concession would be contrary to state or federal law.

3.

Findings for Waivers and Reductions of Development Standards. The Review Authority shall approve or approve with conditions a request for waivers or reductions of development standards, unless it makes any of the following findings:

a.

The development standard(s) are not preventing the construction of the proposed density bonus project at the densities or with the incentives permitted under this Section

b.

The waiver or reduction of development standards would have a specific, adverse impact, as defined in California Government Code Section 65589.5(d)(2), upon public health and, safety for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact.

c.

The waiver or reduction of development standards would have an adverse impact on any real property that is listed in the California Register of Historical Resources.

d.

The waiver or reduction of development standards would be contrary to state or federal law.

4.

Findings for Density Bonus greater than allowed by the State Density Bonus Law. The Review Authority shall approve an additional fifteen percent (15%) density bonus for the inclusion of very low income units beyond that allowed by State Density Bonus Law, to be calculated using the project's base density excluding any density bonus awarded by this section, provided that the Review Authority finds that the proposed project otherwise meets the applicable standards and criteria.

5.

Agreements. The applicant shall enter into an affordable housing agreement with the County and record a deed restriction on the property. The agreement and deed restriction shall require the affordability of the designated dwellings units be maintained and enforced in accordance with the approved project. The agreement and deed restriction shall be in a form prepared by the County and be recorded by the applicant with the final subdivision map or, where no subdivision map is required, prior to issuance of a building permit for any structure on the project site. The agreement and deed restriction shall incorporate the long-

term affordability provisions of the State Density Bonus Law and Section 22.12.030 - Housing Affordability Standards. When applicable, ownership units shall also be subject to an equity-sharing agreement pursuant to the State Density Bonus Law. Where allowable by law, the agreement may require payment of a fee to cover the cost of monitoring compliance with the agreement.

(2020, Ord. 3427; 2025, Ord. 3539; 2025, Ord. 3549)

A.

Applicability. Affordable housing units provided as a result of one or more of the following County actions shall be subject to the standards of this Section:

1.

Approval of residential projects that qualify for incentives and/or a density bonus under Sections 22.12.010 and/or 22.12.020 of the Land Use Ordinance, Title 22 of the County Code; or

2.

Approval of an exemption from growth management provisions under Subsection 26.01.034b of the Growth Management Ordinance, Title 26 of the County Code.

B.

Eligible Household Definitions. Households eligible to become renters or owner-occupants of affordable housing under provisions of the County Code must have incomes not exceeding one of the following income ceilings and they must agree to occupy said affordable housing as their principal residence. The County will consider actual income and imputed income from assets when determining eligibility.

1.

Extremely low-income: no more than 30 percent of median income.

2.

Very low-income: no more than 50 percent of median income.

3.

Lower-income: no more than 80 percent of median income.

4.

Moderate-income: no more than of 120 percent of median income.

5.

Workforce: no more than 160 percent of median income.

C.

Determination of initial affordable housing sales prices. The following procedure is designed to determine sales prices that will enable purchase of the affordable housing units by the eligible households without their monthly housing costs exceeding 30 or 35 percent of their gross incomes. The Planning and Building Department shall use this procedure to determine maximum sales prices for each proposed land use permit or land division using estimates of actual costs of financing, property taxes, homeowner association fees, and insurance and shall publish typical examples quarterly.

1.

Determine median income. First, find the applicable median income based on the household size. This information is published in Section 6932 of Title 25 of the California Code of Regulations. Both the household size and the size of the housing unit shall be used to determine the affordable housing sales price, as follows:

a.

Studio: use the median income for a one-person household.

b.

One-bedroom unit: use the median income for a two-person household.

c.

Two-bedroom unit: use the median income for a three-person household.

d.

Three-bedroom unit: use the median income for a four-person household.

e.

Four bedroom unit: use the median income for a five-person household.

2.

Determine maximum housing costs. Maximum housing costs by size of housing unit and eligible household group shall be calculated as the following percentages of the median income amounts determined in Subsection C.1., as follows:

a.

Extremely low-income: 30 percent of 30 percent of median income as determined under Subsection C.1.

b.

Very low-income: 30 percent of 50 percent of median income as determined under Subsection C.1.

c.

Lower-income: 30 percent of 70 percent of median income as determined under Subsection C.1.

d.

Moderate-income: 35 percent of 110 percent of median income as determined under Subsection C.1.

e.

Workforce: 35 percent of 150 percent of median income as determined under Subsection C.1.

3.

Estimate housing costs other than payments on mortgage loan principal and interest. The actual costs of property taxes, insurance and homeowner association dues shall be estimated by the Planning and Building Department for affordable housing units in each proposed land use or land division.

4.

Determine amount of income available for payments of mortgage loan principal and interest. The amount of income available for payments of mortgage principal and interest shall be determined by deducting the amounts for property taxes, insurance and homeowners associations dues estimated by Subsection C.3. from the maximum housing costs determined by Subsection C.2.

5.

Determine mortgage interest rate. The Planning and Building Department shall determine the annual percentage rate of conventional mortgage financing, amortized over 30 years, currently available in California at the time of building permit issuance.

6.

Determine the maximum affordable sales price. The Planning and Building Department shall determine the maximum affordable sales price using the income available for payment of mortgage loan principal and interest determined by Subsection C.4., the mortgage interest rate determined by Subsection C.5, and assuming the buyer can pay a down payment of 5 percent of the sales price.

D.

Non-Sales. In cases where no sale will occur, such as when an owner-builder is involved (a landowner who wishes to construct his primary residence on his own property), the sales price that would apply pursuant to Subsection C shall be used in meeting the long-term housing affordability provisions of Subsection F.

E.

Rental units. Rent levels of the affordable units, including allowances for the costs of utilities as determined by the Housing Authority of the City of San Luis Obispo, shall not exceed the following:

1.

Extremely low-income units: 30 percent of 30 percent of the median household income as determined under Subsection C.1.

2.

Very low-income units: 30 percent of 50 percent of the median household income as determined under Subsection C.1.

3.

Lower-income units: 30 percent of 60 percent of the median household income as determined under Subsection C.1.

4.

Moderate-income units: 30 percent of 110 percent of the median household income as determined under Subsection C.1.

5.

Workforce housing units: 30 percent of 150 percent of the median household income as determined under Subsection C.1.

F.

Continued availability of affordable housing. Affordable housing units which are subject to the standards of this section shall continue to be reserved as affordable housing as follows:

1.

Affordable Housing Agreements. The County and the property owner for property subject to this section shall enter into affordable housing agreements, in a form approved by County Counsel, as follows:

a.

Agreement Types.

(i)

Master Affordable Housing Agreement. For subdivisions subject to this section, the County shall enter into a Master Affordable Housing Agreement to be recorded concurrently with final map recordation. The Master Agreement shall clearly identify which lots are subject to affordable housing requirements, including specifying required household income limits for each lot number and a copy of the final map showing the physical location of the lot numbers to support subsequent recording of Parcel-Specific Affordable Housing Agreements. The subdivision entitlement shall include a condition of approval with this requirement.

(ii)

Parcel-Specific Affordable Housing Agreement. For all development projects subject to this section, the County shall enter into a Parcel-Specific Affordable Housing Agreement to be recorded prior to the

issuance of the first construction or grading permit for each parcel. The Agreement shall clearly identify which units are subject to affordable housing requirements, if not all units are subject to affordable housing requirements, including specifying required household income limits for each unit and a copy of the plan showing the physical location of the unit numbers. If the parcel is created from a subdivision, the Agreement shall not be recorded until the new parcel has been assigned an Assessor Parcel Number. If the project requires a discretionary land use permit, the land use permit shall include a condition of approval with this requirement.

b.

Agreement Provisions. Both Master and Parcel-Specific Affordable Housing Agreements shall include the following provisions:

(i)

Affordability Term. The maximum resale/rental price of the affordable housing unit(s) shall be limited for a period of 55 years from the date of (1) first property sale to a qualified income buyer for for-sale units and (2) first rental to a qualified income tenant for rental units.

(ii)

County Consent for Property Transfers. All property transfers are subject to affordable housing agreements shall require County consent. The property owner shall notify the County in writing via certified mail, return receipt requested, at least 60 days prior to initiating a property transaction to request County consent and verify the correct maximum sale price for for-sale units and rental price(s) for rental units. The County may notify eligible buyers if the property is available for purchase. A property transfer shall mean any sale, assignment or transfer, voluntary or involuntary, of any interest in the property, including, but not limited to, a fee simple interest, a joint tenancy interest, a life estate, a leasehold interest, or an interest evidenced by a land sale contract by which possession of the property is transferred and buyer retains title. Any transfer without County consent is prohibited and void. Transfers by gift, devise, or inheritance to an existing spouse who is also an obligor under the promissory note, by the buyer to a spouse where the spouse becomes the co-owner of the property, by the buyer to a spouse who is also an obligor under the note as part of a dissolution proceedings, by the buyer into an inter vivos trust in which the buyer is the beneficiary, or a transfer to a member of the buyer's immediate family shall not be considered a property transfer for the purposes of this section.

(iii)

Owner-Occupancy. The buyer of for-sale units shall occupy the property as their principal place of residence and shall continue to be a legal resident of the County of San Luis Obispo. Owner-occupied is defined as living in the unit for at least eleven (11) months out of each calendar year.

(iv)

Good Repair. The property owner shall maintain the property in good repair.

(v)

Homeowner's Insurance. Property owners of for-sale units shall maintain homeowner's insurance.

(vi)

Annual Verification. Property owners shall submit annual verification of compliance with rental limits, tenant household income, owner-occupancy, County residency, homeowner's insurance requirements, as applicable.

(vii)

Emergencies. Agreement requirements may be waived at the Department Director's discretion in times of emergency, such as waiving occupancy requirements if flooding or other natural disaster makes the property uninhabitable.

2.

County Loan for For-Sale Units. The buyer of a for-sale unit subject to this section shall execute a loan from the County in the amount equal to the difference between the market-rate sales price and restricted affordable sales price,

a.

Second Mortgage. The purchase money lender(s) shall have a higher priority than the County's loan. The County's security shall be prioritized as a second mortgage.

b.

Appraisal. Prior to the initial sale of the residence to the buyer, the buyer shall pay for an appraisal of the property that will establish the monetary difference between the initial purchase price of the property and the initial appraised fair market value of the property (as if unrestricted by any affordable housing agreement). The appraisal shall be made by an independent residential appraiser selected by the buyer, from a list of appraisers provided by the County. Each appraiser on the County's list shall have been previously approved by the Federal National Mortgage Association (Fannie Mae or FNMA) or the Federal Housing Administration (FHA) and placed on their respective lists of approved single-family housing appraisers. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three-month period.

c.

Deed of Trust and Promissory Note. The monetary difference between the initial purchase price and the initial appraised fair market value established by the appraiser shall be covered in full by a between the buyer, as trustor, and the County, as beneficiary. The loan shall be secured by a deed of trust and a promissory note. The County deed of trust shall be recorded at the time of the sale of the property, and prior to or concurrent with the close of escrow of the sale.

d.

Interest. The County loan shall accrue interest at a rate equal to 4.5 points added to the Enterprise 11th District COFI Institutional Replacement Index as currently published by the Federal Home Loan Bank

Board, amortized over the life of the loan. The monthly payments of the County loan principal and interest shall be waived by the County for as long as the buyer continues to own and reside on the property, continues to use the property as their principal residence, continues to be a legal resident of the County of San Luis Obispo, and otherwise continues to adhere to the terms of the Affordable Housing Agreement with the County. The loan shall continue to diminish in value as if continuous monthly payments were to be made on the principal and interest of the loan throughout the loan term and life of the loan. At the end of the loan term, the County shall consider the loan to be paid in full.

e.

Transfer to Successive Buyers. If the Buyer transfers or sells the Property to a new Eligible Buyer at a lower income purchase price (both of which are approved by the Planning Director), then the County shall permit the Loan to be transferred to the new Eligible Buyer, and the Buyer will be relieved of any responsibility for the Loan. The new Eligible Buyer who purchases the Property at a lower income purchase price shall be required to execute an assumption agreement with the County, in a form approved by County Counsel, whereby the new eligible Buyer shall assume full responsibility for the Loan, with no change to the terms and conditions of the Loan or of this Agreement. The County shall continue to waive payment of the principal and interest on the Loan, and the Loan shall continue to diminish in value as if continuous monthly payments were to be made on the principal and interest of the Loan throughout the loan term, starting from the date of close of escrow of the sale of the Property to initial Buyer. At the end of said loan term from the date of close of escrow and compliance with all of the terms and provisions of this Agreement, the County shall consider the Loan to be paid in full.

f.

Adjustments to maximum resale price. Adjustments to the maximum resale price as determined by the Department shall be made to ensure that the resale price is not lower than the original sales price, to increase the maximum resale price by the value of structural improvements made by the owner, and to comply with requirements of State or Federal mortgage lenders as necessary.

g.

Refinance and Home Equity Loans. The terms of the County loan shall allow the buyer to refinance and/or apply for a home equity loan for the purpose of [A] financing structural home improvements (such as roof repair or replacement or the construction of an accessory dwelling) or [B] securing a mortgage loan for the subject property with lower interest rate.

3.

Annual Compliance Verification.

a.

Rental Units. The property owner of rental housing units subject to this section shall submit to the County annually upon the County's request verification that (1) current rental amounts are compliant with the maximum rental limits specified in this section and (2) current tenants meet household income requirements specified in this section.

b.

For-Sale Units. The property owner of for-sale housing units subject to this section shall submit to the County annually, upon the County' request, verification of (1) owner-occupancy (as defined above), (2) County residency, and (3) homeowner's insurance.

4.

Buyer Acknowledgement. Buyers of property subject to an Affordable Housing Agreement shall acknowledge in writing that they are purchasing property subject to the standards of this section, including limits on maximum sales/rental price, annual tenant income or owner-occupancy verification, and County consent for property transactions.

G.

Exceptions to initial sales price limitations and resale restrictions. The Director of the Planning and Building Department may grant an exemption to the initial sales price limitation and resale restrictions for housing units that meet all of the following criteria:

1.

The housing units are provided in a development consisting exclusively of housing for very low income, lower income or moderate income households; and

2.

The housing units are constructed with at least 50 percent of the work performed by volunteers and/or households purchasing the housing; and

3.

The Director of the Planning and Building Department has determined that the home purchase financing provided will be affordable to the purchasing households for at least 30 years.

(2020, Ord. 3427; 2025, Ord. 3549; 2025, Ord. 3551)

Editor's note— Ord. No. 3471, § I, adopted June 7, 2022, repealed § 22.12.040. Former § 22.12.040 pertained to inclusionary housing and derived from Ord. No. 3427, adopted 2020.

Chapter 22.14 - COMBINING DESIGNATION STANDARDS