Title 24

Part 1 — INCLUSIONARY HOUSING REQUIREMENTS

Santa Cruz Zoning Code · 2026-06 edition · ingested 2026-07-07 · Santa Cruz

24.16.010 PURPOSE.

The purpose of the inclusionary housing requirements is to enhance the public welfare by adopting policies to utilize remaining developable land in the city in a manner consistent with state and local housing policies and needs, meet the city’s share of regional housing needs, implement the housing element’s goals and objectives, improve the feasibility of rental housing development, assure compatibility between market rate units and inclusionary units, and make housing available for households of all income levels.

(Ord. 2018-18 § 1 (part), 2018: Ord. 2018-13

§ 1 (part), 2018: Ord. 2006-16 § 2 (part), 2006).

24.16.015 DEFINITIONS.

For purposes of this part, the following definitions shall apply. Unless specifically defined below, words or phrases shall be interpreted as to give this part its most reasonable interpretation.

  1. “Affordable ownership cost” for low income households means average monthly housing costs during the first calendar year of a household’s occupancy, including mortgage payments, property taxes, homeowner’s insurance, and homeowner’s association dues, if any, the sum of which does not exceed eighty percent of area median income, adjusted for assumed household size based on unit size, multiplied by thirty percent and divided by twelve. Affordable ownership cost for moderate and very low income households is defined at Section 24.16.205(1).

  2. “Affordable rent” means the maximum monthly rent, including utilities and all fees for housing services, which does not exceed the following:

a. For moderate income households: one hundred ten percent of area median income, adjusted for assumed household size based on unit size, multiplied by thirty percent and divided by twelve.

b. For payment standard units: either affordable rent for moderate income households, or the maximum Santa Cruz housing authority payment standard rent for tenantbased subsidy holders, as provided in Section 24.16.030(9)(c)(2).

c. For low income households: eighty percent of area median income, adjusted for assumed household size based on unit size, multiplied by thirty-five percent and divided by twelve.

d. For very low income households: fifty percent of area median income, adjusted for assumed household size based on unit size, multiplied by thirty percent, and divided by twelve.

e. For extremely low income households: thirty percent of area median income, adjusted for assumed household size based on unit size, multiplied by thirty percent and divided by twelve.

  1. “Affordable units” are dwelling units which are affordable to extremely low, very low, low, median, or moderate income households as defined by this part or by any federal or state housing program and are subject to rental, sale, or resale provisions to maintain affordability.

  2. “Approval body” means the body with the authority to approve the proposed residential development.

  3. “Area median income” is area median income for Santa Cruz County as published and periodically updated by the state of California pursuant to California Code of Regulations, Title 25, Section 6932, or successor provision.

  4. “Assisted living unit” is any dwelling unit in a facility licensed under Chapter 3.2 of the California Health and Safety Code as a residential care facility for the elderly, or an assisted living unit as defined in Section

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1771(a)(6) of the California Health and Safety Code.

  1. “Assumed household size based on unit size” is a household of one person in a studio apartment, two persons in a one-bedroom unit, three persons in a two-bedroom unit, and one additional person for each additional bedroom thereafter.

  2. “Co-housing development” is an intentional community of private dwelling units clustered around shared space. Each attached or single-family home has traditional amenities, including a private kitchen. Shared spaces typically feature a common house, which may include a large kitchen and dining area, laundry, and recreational spaces. Households collaboratively plan and manage shared spaces. The legal structure is typically an HOA, condo association, or housing cooperative.

  3. “Congregate living unit” is any dwelling unit in a senior housing development or senior citizen housing development, as defined in Section 51.3 of the California Civil Code, that provides private living quarters with centralized dining services and shared living spaces and may include access to social and recreational activities.

  4. “Density bonus” is a density increase over the otherwise allowable maximum residential density on a site, granted pursuant to Part 3 of this chapter.

  5. “Employer sponsored housing” means any rental residential development where an employer owns the land to be used in the development and at least seventy-five percent of the units in the development are used to house the employer’s employees.

  6. “First approval” is the first of the following approvals to occur with respect to a residential development: development agreement, planned development permit, tentative map, minor land division, use permit, design permit, building permit, or any other permit listed in Section 24.04.030.

  7. “Household income” is the combined adjusted gross household income for all adult

persons living in a living unit as calculated for the purpose of the Housing Choice Voucher/ Section 8 program under the United States Housing Act of 1937, as amended, or its successor provision.

  1. “Household, low income” is a household whose income does not exceed the low income limits applicable to Santa Cruz County, as 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.

  2. “Household, median income” is a household whose income does not exceed area median income.

  3. “Household, moderate income” is a household whose income does not exceed the moderate income limits applicable to Santa Cruz County, as 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.

  4. “Household, very low income” is a household whose income does not exceed the very low income limits applicable to Santa Cruz County, as 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.

  5. “Household, extremely low income” is a household whose income does not exceed the extremely low income limits applicable to Santa Cruz County, as 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.

  6. “Inclusionary unit” is an ownership or rental dwelling unit, including flexible density units (FDU) and single-room occupancy (SRO) units, within a residential development which is required under this part to be rented at an

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affordable rent or sold at an affordable ownership cost to specified households.

  1. “Live/work unit” is a dwelling unit, part of which is used as a business establishment and the dwelling unit is the principal residence of the business operator or an employee of the business establishment who works in the unit.

  2. “Local public employee” means a household including an employee of a city, county, city and county, charter city, charter county, charter city and county, special district, or any combination thereof.

  3. “Local public funds” means any discretionary local resources, including but not limited to general and special revenue funds as approved by the Santa Cruz city council, awarded to any residential development project for the purposes of developing affordable housing.

  4. “Market rate unit” is a dwelling unit that is not an affordable unit or an inclusionary unit.

  5. “Member of the public” means a household that does not include either a “local public employee” or a “teacher or school district employee” with a preference for persons living or working in the city or county of Santa Cruz.

  6. “Ownership residential development” means any residential project that includes the creation of two or more new or additional dwelling units or live/work units that may be sold individually, including co-housing developments. 26. “Payment standard unit” means an inclusionary unit available to tenant-based subsidy holders, as provided in Section 24.16.030(9).

  7. “Rental residential development” means any residential development that creates one or more additional dwelling units that cannot be lawfully sold individually in conformance with the California Subdivision Map Act.

tion has been submitted to the city, and which would create two or more new or additional dwelling units or FDU or SRO units by construction or alteration of structures, or would create two or more lots through approval of a parcel map or tentative map.

  1. “FDU” means a flexible density unit as defined at Section 24.12.1510.

  2. “SRO” means a single-room occupancy residential unit that provides sleeping and living facilities in a single room but where sanitary or cooking facilities may be provided within the unit and/or shared within the housing project, or a rooming unit or efficiency unit located in a residential hotel, as that term is defined in accordance with California Health and Safety Code Section 50519, that is offered for occupancy by tenants for at least thirty consecutive days.

eping and living facilities in a single room but where sanitary or cooking facilities may be provided within the unit and/or shared within the housing project, or a rooming unit or efficiency unit located in a residential hotel, as that term is defined in accordance with California Health and Safety Code Section 50519, that is offered for occupancy by tenants for at least thirty consecutive days.

  1. “Teacher or school district employee” means a household including any person employed by a unified school district maintaining prekindergarten, transitional kindergarten, and grades one to twelve, inclusive, an elementary school district maintaining prekindergarten, transitional kindergarten and grades one to eight, inclusive, or a high school district maintaining grades nine to twelve, inclusive, including but not limited to certified and classified staff.

  2. “Tenant-based subsidy holder” (subsidy holder) is a household that holds a tenantbased voucher with the county of Santa Cruz housing authority.

(Ord. 2022-18 § 21, 2022; Ord. 2021-04 § 1, 2021; Ord. 2020-25 § 1, 2020; Ord. 2019-21 § 1, 2019: Ord. 2018-18 § 1 (part), 2018: Ord. 2018-13 § 1 (part), 2018: Ord. 2009-18 § 1 (part), 2009: Ord. 2008-20 § 1 (part), 2008: Ord. 2007-19 § 1 (part), 2007: Ord. 2006-16 § 2 (part), 2006).

  1. “Residential development” is any project requiring any discretionary permit from the city, or a building permit, for which an applica-

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24.16.020 BASIC ON-SITE INCLUSIONARY HOUSING REQUIREMENTS.

  1. Applicability.

a. The inclusionary housing requirements defined in this chapter are applicable to all residential developments that create two or more new and/or additional dwelling units or FDU or SRO units at one location by construction or alteration of structures, or would create two or more lots through approval of a parcel map or tentative map, except for exempt residential developments under subsection (2).

b. Additional rent above and beyond affordable rent or affordable ownership cost may be permitted for the commercial/work space in a live/work unit at a rent that is determined to be affordable to qualifying households and is proportionate to the amount of commercial space provided. The amount of rent for the commercial portion of the live/work unit shall be agreed upon by the developer, the economic development director, and the planning and community development director. If no agreement can be reached, the city will retain an outside financial consultant to evaluate and determine the allowable affordable rent and establish a methodology for determining future commercial rent levels. The methodology for determining future commercial rent levels shall be defined in every affordable housing development agreement for residential developments that include at least one live/ work unit.

  1. The following residential developments are exempt from the requirements of this chapter:

a. Residential developments developed pursuant to the terms of a development agreement executed prior to the effective date of the ordinance codified in this chapter; provided, that such residential developments comply with any affordable housing requirements included in the development agreement or any predecessor inclusionary housing requirements

in effect on the date the development agreement was executed.

b. Residential developments for which a complete application was filed with the city prior to the effective date of the ordinance codified in this chapter; provided, that such residential developments comply with any predecessor inclusionary housing requirements in effect on the date the application for the residential development was deemed complete.

c. Residential developments if exempted by California Government Code Section 66474.2 or 66498.1; provided, that such residential developments comply with any predecessor inclusionary housing requirements in effect on the date the application for the residential development was deemed complete.

d. Residential developments replacing dwelling units that have been destroyed by fire, flood, earthquake, or other acts of nature, so long as no additional dwelling units are created by the residential development; and provided, that such residential developments comply with any inclusionary housing requirements previously applied to the dwelling units being replaced.

e. Accessory dwelling units. f. Rental residential developments with two to four dwelling units.

  1. Ownership Residential Developments with Two to Four Dwelling Units. For ownership residential developments that would create at least two but not more than four new or additional dwelling units and/or live/work units at one location, the applicant shall either: (a) make one inclusionary unit available for sale at an affordable ownership cost; (b) make one inclusionary unit available at an affordable rent for low income households; or (c) pay an inlieu fee calculated pursuant to Section 24.16.030(6).

  2. Ownership Residential Developments with Five or More Dwelling Units. For ownership residential developments that would create five or more new or additional dwelling units and/or live/work units at one location, the

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applicant shall provide inclusionary units as follows:

a. Affordable Housing Requirement for Ownership Residential Developments. In an ownership residential or live/work development, twenty percent of the dwelling units shall be made available for sale to low and moderate income households at an affordable ownership cost.

b. Fractional Affordable Housing Requirement for Ownership Residential Developments – 0.7 Units or Less. If the number of dwelling units required under subsection (4)(a) results in a fractional requirement of 0.7 or less, then the applicant shall either: (i) make one inclusionary unit available for sale at an affordable ownership cost; (ii) make one inclusionary unit available at an affordable rent for low income households; or (iii) pay an in-lieu fee calculated pursuant to Section 24.16.030(6). This subsection (4)(b) applies to the fractional unit only, and whole units shall be provided as required by subsection (4)(a).

c. Fractional Affordable Housing Requirement for Ownership Residential Developments – More Than 0.7 Units. If the number of dwelling units required under subsection (4)(a) results in a fractional requirement of greater than 0.7, then the applicant shall either: (i) make one inclusionary unit available for sale at an affordable ownership cost; or (ii) make one inclusionary unit available at an affordable rent for low income households. This subsection (4)(c) applies to the fractional unit only, and whole units shall be provided as required by subsection (4)(a).

d. Rental Units in an Ownership Residential Development.

i. In an ownership residential development where all dwelling units are initially offered for rent, an applicant may satisfy the inclusionary requirements by providing rental units as provided in subsection (5).

ii. The rent regulatory agreement required by Section 24.16.045 shall include provisions for sale of the inclusionary units at an afford-

able ownership cost to eligible households within ninety days from the issuance of the public report by the California Department of Real Estate permitting sale of the units or at termination of the tenant’s lease whichever is later and otherwise in compliance with state law; provided, however, that the sale of the entire ownership residential development from one entity to another shall not trigger the obligation to sell individual inclusionary units. To the extent relocation payments are required by law the applicant shall be wholly responsible for the cost of preparing a relocation plan and making required payments. Any tenant of an inclusionary unit at the time units are offered for sale that qualifies to purchase an inclusionary unit at an affordable ownership cost shall be offered a right of first refusal to purchase the inclusionary unit. At sale appropriate documents shall be recorded to ensure the continued affordability of the inclusionary units at an affordable ownership cost as required by Section 24.16.045.

  1. Rental Residential Developments with Five or More Dwelling Units. For rental residential developments that would create five or more new or additional dwelling units and/or live/work units at one location, the applicant shall provide inclusionary units as follows:

a. Rental residential developments that would create five or more new or additional dwelling units or live/work units at one location shall provide twenty percent of the dwelling units as inclusionary units, which shall be made available for rent to low income households at an affordable rent.

b. SRO Developments. In a rental residential development comprised of SRO units, twenty percent of the single-room occupancy units shall be made available for rent to very low income households at an affordable rent.

c. Fractional Affordable Housing Requirement for Rental Residential Developments with More Than Five Dwelling Units. If the number of dwelling units required results in a fractional requirement of 0.7 or less, then there will be no inclusionary requirement for

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the fractional unit. If the number of dwelling units required results in a fractional requirement of greater than 0.7, then the applicant shall make one inclusionary unit available at an affordable rent. This subsection (5)(c) applies to the fractional unit only, and whole units shall be provided as required by subsections (5)(a) and (b).

  1. The requirements of subsections (3) through (5) are minimum requirements and shall not preclude a residential development from providing additional affordable units or affordable units with lower rents or sales prices than required.

a. By mutual agreement by the developer, the planning and community development director, and the economic development director, the percentage of inclusionary units may be increased in exchange for reduced parking and/ or other development requirements.

§ 2, 2021; Ord. 2019-25 § 1, 2020; Ord. 201921 § 2, 2019; Ord. 2018-18 § 1 (part), 2018: Ord. 2018-13 § 1 (part), 2018: Ord. 2009-18 § 1 (part), 2009: Ord. 2008-20 § 1 (part), 2008: Ord. 2008-14 § 5, 2008: Ord. 2007-19 § 1 (part), 2007: Ord. 2006-16 § 2 (part), 2006).

24.16.025 STANDARDS FOR INCLUSIONARY UNITS.

  1. All inclusionary units shall remain affordable in perpetuity.

  2. Inclusionary units shall be dispersed throughout the residential development to prevent the creation of a concentration of affordable units within the residential development, and no required inclusionary units shall be constructed as accessory dwelling units, except for inclusionary accessory dwelling units required for residential developments including five or

b. If the developer agrees to make at least forty percent of the residential project available for rent to low income households at a rental cost affordable to low income households, in addition to reduction of development requirements, by mutual agreement by the developer, the planning and community development director, and the economic development director, the city may also provide financial incentives to increase the number of inclusionary units in a project.

  1. For purposes of calculating the number of inclusionary units required by this section, any dwelling units authorized as a density bonus pursuant to Part 3 of this chapter shall not be counted as part of the residential development. However, if a developer receives a city rental housing bonus as authorized by Section 24.16.035(4), then all of the dwelling units in the project, including the dwelling units authorized as a density bonus, shall be counted as part of the residential development for purposes of calculating the inclusionary units required by this section.

(Ord. 2024-23 § 7, 2025; Ord. 2024-18 § 7, 2024; Ord. 2022-18 § 22, 2022; Ord. 2021-04

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more accessory dwelling units, subject to the requirements of Section 24.16.020(8).

  1. Inclusionary units shall be compatible with the design of market rate units in terms of exterior appearance, materials, and finished quality. Interior finishes, features, and amenities may differ from those provided in the market rate units, so long as the finishes, features, and amenities are durable, of good quality, compatible with the market rate units, and consistent with contemporary standards for new housing.

  2. The applicant may reduce square footage of inclusionary units as compared to the market rate units, provided all units conform to all requirements of Titles 18 and 19 and meet the minimum square footage requirement that affordable units are at least seventy-five percent of the average size of all market rate units in the development with the same bedroom count, and for residential developments including five or more accessory dwelling units, the inclusionary requirements for the accessory dwelling units shall be met by providing accessory dwelling units conforming to the above standards for size. For the purpose of this subsection, the “average size” of a unit with a certain bedroom count equals the total square footage of all market rate units or all accessory dwelling units, with that bedroom count in the development divided by the total number of market rate units, or accessory dwelling units, with the same bedroom count in the development.

s conforming to the above standards for size. For the purpose of this subsection, the “average size” of a unit with a certain bedroom count equals the total square footage of all market rate units or all accessory dwelling units, with that bedroom count in the development divided by the total number of market rate units, or accessory dwelling units, with the same bedroom count in the development.

  1. For developments with multiple market rate unit types containing differing numbers of bedrooms, inclusionary units shall be representative of the market rate unit mix and for developments including accessory dwelling units, the required inclusionary accessory dwelling units shall be calculated separately and shall be representative of the accessory dwelling unit size mix.

  2. All building permits for inclusionary units in a phase of a residential development shall be issued concurrently with, or prior to,

issuance of building permits for the market rate units, and the inclusionary units shall be constructed concurrently with, or prior to, construction of the market rate units. Occupancy permits and final inspections for inclusionary units in a phase of a residential development shall be approved concurrently with, or prior to, approval of occupancy permits and final inspections for the market rate units. When alternative methods of compliance are proposed pursuant to Section 24.16.030, the planning and community development director and the economic development director may jointly approve alternative phasing of market rate and inclusionary units if it finds that the proposal provides adequate security to ensure construction of the inclusionary units. Phases of construction shall be defined as a part of the first approval.

  1. Rental to Tenant-Based Subsidy Holders. Owners of rental residential developments or SRO developments shall accept tenantbased subsidy holders (subsidy holders) as tenants of the inclusionary units, on the same basis as all other prospective tenants. The owner shall not apply selection criteria to subsidy holders that are more burdensome than the criteria applied to all other prospective tenants, nor shall the owner apply or permit the application of management policies or lease provisions which have the effect of precluding occupancy of the inclusionary units by subsidy holders. (Ord. 2022-18 § 23, 2022; Ord. 2020-25 § 2, 2020; Ord. 2018-18 § 1 (part), 2018: Ord. 2018-13 § 1 (part), 2018: Ord. 2007-19 § 1 (part), 2007: Ord. 2006-16 § 2 (part), 2006).

24.16.030 ALTERNATIVE METHODS TO COMPLY WITH INCLUSIONARY HOUSING REQUIREMENTS.

  1. Application Submittal. Any application to use an alternative method to meet inclusionary housing requirements shall be submitted as part of the first approval for any residential development subject to the inclusionary housing requirements.

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  1. Findings. For all alternative methods of compliance with the inclusionary housing requirements, the approval body must make findings (a) and (b) in this subsection. Approval body determinations regarding alternative methods of compliance may be appealed as provided in Section 24.16.050.

a. The proposal for the alternative method of compliance is consistent with the Santa Cruz General Plan and all of its elements.

b. The proposal conforms to the standards established for inclusionary units in Section 24.16.025, unless the alternative method does not require compliance with that section.

  1. Off-Site Construction of Inclusionary Units. An applicant may propose to construct all or a portion of the required inclusionary units off site. Off-site inclusionary units may include any combination of new dwelling units, or new dwelling units created in existing structures. For the purposes of determining compliance with the city’s inclusionary housing requirements, all properties included in the proposal shall be treated as one residential development.

a. An application for off-site inclusionary units shall be accompanied by the following information:

(1) Identification of all of the entities responsible for development of the market rate units and the inclusionary units.

(2) The location of the sites where the market rate and inclusionary units will be constructed.

(3) For each site, the same level of detail for the off-site inclusionary units as for the market rate residential development including: the number, unit type, number of bedrooms and baths, approximate location, size, and design, construction and completion schedule of all inclusionary units including the phasing of inclusionary units in relation to market rate units.

(4) If the inclusionary units will not be constructed concurrently with the market rate units, the applicant shall specify the security to

be provided to the city to ensure that the inclusionary units will be constructed.

(5) Evidence of ownership or control of all sites proposed for market rate and inclusionary units. This requirement may be waived at the sole discretion of the planning and community development director with sufficient evidence that ownership or control will be secured within a reasonable amount of time after the application is submitted.

b. At the joint discretion of the planning and community development director and the economic development director, off-site units may be excluded from existing low income areas as defined by U.S. Department of Housing and Urban Development and/or where there is a concentration of low income households.

c. The approval body may approve a proposal for off-site inclusionary units if it makes all of the findings required by subsection (2) and each of the following findings:

(1) The off-site development will provide the greater of one affordable unit or thirty percent more inclusionary units than would otherwise be required if the inclusionary units were constructed on site;

(2) The off-site location is suitable for the proposed affordable housing and will not tend to cause residential segregation;

(3) The developer has provided clear and convincing evidence that financing has been secured for the off-site inclusionary units; and (4) Each entity responsible for development of the inclusionary and market rate units has adequate site control and the capacity to construct the units as proposed.

d. Prior to final or parcel map approval and prior to issuance of any building permit for the residential development, the owner and the developer of the site where the off-site inclusionary units will be located and the developer of the residential development shall all enter into the developer affordable housing agreement required by Section 24.16.040.

e. Prior to issuance of any certificate of occupancy or final inspection for any market

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rate units, the owner and the developer of the site where the off-site inclusionary units will be located shall enter into a regulatory agreement to ensure that the off-site inclusionary units will remain affordable in perpetuity.

f. Once an applicant has received approval for off-site construction of inclusionary units on a specific site, no substitution of sites may be made unless approved by the planning and community development director.

g. If the off-site construction of inclusionary units is not substantially completed within eighteen months of completion of on-site construction then the approval body may require the applicant to pay double the amount of inlieu fees as provided for in subsection (6).

  1. Conversion of Existing Market Rate Housing or Upper Floors of Commercial/ Office Buildings to Inclusionary Units. An applicant may propose to convert existing residential units or upper floors of commercial/ office buildings into inclusionary units in lieu of constructing new inclusionary units on site.

a. Any application to convert existing residential units or existing commercial/office space into inclusionary units shall be accompanied by the following information regarding the existing dwelling units proposed to be converted:

(1) Identification of all of the entities responsible for development of the market rate units and the inclusionary units.

(2) The location of the site where the existing units will be converted to inclusionary units and evidence of ownership or control of all

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sites proposed for conversion of existing units to inclusionary units.

(3) If the inclusionary units will not be constructed concurrently with the market rate units, the applicant shall describe the proposed phasing and specify the security to be provided to the city to ensure that the inclusionary units will be constructed.

(4) The same level of detail for the converted inclusionary units as for the market rate residential development for the following:

(i) Floor plans showing size and number of bedrooms of the units to be converted; number of bedrooms and square footage of market rate units in the proposed residential development.

(ii) Site plans and building elevations showing landscaping, lot lines, property dimensions, easements, location of all structures, and parking for the units to be converted.

(5) Existing rent or appraised value of each unit on the property to be converted, proposed rents or sales prices after rehabilitation and/or conversion, and any existing rent limits, resale price restrictions, or other affordability restrictions imposed by any public agency, nonprofit agency, land trust, or other body.

(6) For conversion of market rate housing units, size of household occupying each unit on the property to be converted, vacancy rates for each month during the past two years, and existing tenant incomes.

(7) For conversion of market rate housing units, a property inspection report prepared by a certified housing inspector and a termite report, both prepared no more than sixty days before the filing of the application. The property inspection report shall include an examination of all common and private areas within the existing dwelling units for compliance with the Uniform Housing Code, the structural condition of the property, identification of all code violations or unsafe elements, any potentially hazardous soil or geologic conditions, and condition of paved areas and drainage.

(8) For conversion of commercial space, a property inspection report prepared by a certi-

fied inspector and a termite report, both prepared no more than sixty days before the filing of the application. The property inspection report shall include an examination of all common and private areas, the structural condition of the property, identification of all code violations or unsafe elements, any potentially hazardous soil or geological conditions, and condition of paved areas and drainage.

(9) Plans and a written description of rehabilitation to be completed, including correction of all code violations and completion of all termite repairs described in the property inspection report and termite report; cost of rehabilitation; and the value of the property, including land, buildings, and all other improvements, after rehabilitation.

(10) Description of benefits to be offered to existing tenants, which for conversion of market rate housing units would include but not be limited to right of first refusal to remain in the unit, and any expected need for relocation of existing tenants.

b. At the joint discretion of the planning and community development director and the economic development director, off-site units may be excluded from existing low income areas as defined by U.S. Department of Housing and Urban Development and/or where there is a concentration of low income households if such exclusion will not tend to cause residential segregation.

c. No inclusionary units may be created by converting existing rental dwelling units into condominiums.

d. The conversion of existing market rate housing or conversion of existing commercial/office space to inclusionary units is not required to comply strictly with Section 24.16.025, with deviations subject to the joint approval of the planning and community development director and the economic development director. Unless otherwise determined by agreement of both the planning and community development director and the economic development director, if conversion of existing units

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is proposed and the existing residential development requires significant rehabilitation (costs estimated at about twenty-five percent of after-construction value), all units in the existing residential development shall be rehabilitated in addition to the inclusionary units.

e. The approval body may approve a proposal for conversion of existing dwelling units to inclusionary units if it makes all of the findings required by subsection (2) and all of the following findings:

(1) The off-site development will provide the greater of one affordable unit or thirty percent more inclusionary units than would otherwise be required if the inclusionary units were constructed on site;

(2) The developer has provided clear and convincing evidence that financing has been secured for the off-site inclusionary units;

(3) Each entity responsible for development of the inclusionary and market rate units or commercial space has adequate site control and the capacity to construct the units as proposed;

(4) The rehabilitation plans include all construction required to meet all current requirements of the Uniform Housing Code, as determined by the chief building official of the city;

(5) For conversion of market rate housing units the cost of rehabilitation is greater than twenty-five percent of the value of the property, including land, buildings, and all other improvements after rehabilitation unless otherwise determined by agreement of both the planning and community development director and the economic development director that conditions of the property do not require substantial rehabilitation; and

(6) The dwelling units or commercial space to be converted are not subject to any rent limits, resale price restrictions, or other affordability restrictions imposed by any public agency, nonprofit agency, land trust, or other body, unless the affordability restrictions are at risk of expiring within five years and the existing

agreement with affordability restrictions cannot be renewed, or the conversion will make the units affordable to households with lower incomes than the existing affordability restrictions.

f. For conversion of market rate housing units, if more than forty percent of the units on one site will be converted to inclusionary units, the approval body must additionally find that the rehabilitated inclusionary units will remove blight and enhance physical and social conditions in the surrounding area.

g. The conversion of existing market rate housing or conversion of existing commercial/office space may be based on the number of bedrooms in the residential development to encourage the development of smaller units when feasible. The converted units shall not be larger in terms of the number of bedrooms than the required inclusionary unit that the converted unit is replacing, unless approved by the planning and community development director, and in no event shall the maximum number of bedrooms in a unit satisfying inclusionary requirements using bedroom counts exceed the smaller of either: (1) the market rate unit in the development with the greatest number of bedrooms; or (2) three bedrooms.

h. Any existing tenants in units proposed to be converted who are relocated shall be eligible for relocation benefits pursuant to Section 24.08.1350.

i. If the conversion of existing units and substantial rehabilitation of the development is not substantially completed within eighteen months of completion of the new residential development, then the approval body may require the applicant to pay double the amount of in-lieu fees as provided for in subsection (6).

  1. Transfer of Credit. An applicant may propose to receive credit for affordable units constructed prior to or concurrently with the market rate project.

a. When a residential development is proposed that includes more inclusionary units than required by this part, the applicant may

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propose that the excess inclusionary units be made available to satisfy inclusionary requirements on other sites. The credits may be made available to other residential developments for a maximum period of five years from issuance of the last certificate of occupancy for the residential development that includes the excess inclusionary units.

b. The residential development that includes the excess inclusionary units may not receive or have received any local, state, or federal affordable housing financial assistance.

c. An application for a residential development that includes excess inclusionary units proposed to be made available for credit shall be accompanied by the following as part of the first approval for the residential development:

(1) Identification of excess inclusionary units to be made available for credit to other residential developments, including in particular the number of bedrooms, tenure, size, and location.

(2) Person or entity authorized to transfer credit to other residential developments.

d. An application for a residential development that proposes to receive credit for inclusionary units previously approved for the transfer of credit shall be accompanied by the following:

(1) A written agreement with the holder of the rights to the excess inclusionary units consenting to the transfer of credit.

(2) Evidence that the transferred units satisfy all or a portion of the residential development’s inclusionary requirements, including but not limited to inclusionary units of an appropriate size with at least the same number of bedrooms and tenure as would otherwise be required.

(3) Sufficient evidence provided that demonstrates to the satisfaction of the planning and community development director that the inclusionary units to be credited to the residential development have been constructed or will be constructed prior to or concurrently with the

market rate units in the residential development.

e. The city council may approve a proposal to use excess inclusionary units on another site to meet the development’s inclusionary requirements if it makes all of the findings required by subsection (2) and the following findings:

(1) The off-site residential development with excess inclusionary units will provide the greater of one affordable unit or thirty percent more inclusionary units than would otherwise be required if the inclusionary units were constructed on site.

(2) The excess inclusionary units are of an appropriate size with at least the same number of bedrooms and tenure as would otherwise be required, and have already been constructed or will be constructed prior to or concurrently with the market rate units in the residential development.

  1. In-Lieu Housing Fees. a. An applicant may pay in-lieu fees to the city rather than construct inclusionary units on site under the following circumstances:

(1) For all ownership residential developments or residential subdivisions that would create two but no more than four additional dwelling units or parcels at one location, the applicant may elect to pay an in-lieu fee for the fraction of an inclusionary unit equal to 0.15 times the number of units or parcels in the residential development or subdivision reduced by sixty percent.

(2) For ownership residential developments where any dwelling units are offered for sale, or where all dwelling units are offered for rent, but where a subdivision map has been recorded to create parcels containing single dwelling units, the applicant may elect to pay an in-lieu fee for any fraction of an inclusionary unit equal to 0.7 or less.

(3) For rental residential developments that would create five but no more than ten additional dwelling units at one location, the applicant may elect to pay an in-lieu fee for any

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inclusionary unit as required by Section 24.16.020(5).

(4) For residential developments that the approval body determines are assisted living units, co-housing developments, congregate living units, or live/work units the applicant may elect to pay an in-lieu fee for the entire inclusionary unit requirement.

(5) Except as provided in subsection (6)(c), for all other residential developments creating five or more units, in-lieu fees may be paid for all or a portion of the required inclusionary units at the discretion of the approval body if the approval body makes the findings required by subsection (2), accompanied by a staff report with a recommendation from the planning and community development director and the economic development director, except that conformance with Section 24.16.025 is not required. The approval body must also find that either the in-lieu fees will provide for the greater of one affordable unit or at least thirty percent more inclusionary units or affordable housing than would be provided by the on-site provision of inclusionary units by providing matching funds for state or federal grants or otherwise. It is the city council’s intent that, except as provided in subsections (6)(a)(1) through (4), in-lieu fees be infrequently approved.

b. In-lieu fees may be established from time to time by resolution of the city council or may be determined for a specific residential development by calculating the difference between (1) the affordable sales price of an inclusionary unit, and (2) the value of a market rate unit. The value of a market rate unit shall be determined by an appraisal provided by the developer from a qualified appraiser that was completed within three months prior to entering into an affordable housing agreement.

(1) The market rate value to calculate inlieu fees for live/work units may be calculated using a square footage multiplier times one hundred percent of the designated residential areas and fifty percent of the designated work

areas. The source of the square footage multiplier may be the most recent data from internet real estate data resources such as Zillow, Trulia, or other available sources that reflect actual market values or from a square footage appraisal provided by the developer from a qualified appraiser that was completed within three months prior to entering into an affordable housing agreement.

(2) The market rate value to calculate inlieu fees for co-housing developments may be calculated using a square footage multiplier times one hundred percent of the square footage of an average size unit plus a proportionate amount of shared space, as jointly determined to be reasonable by the planning and community development director and the economic development director. The source of the square footage multiplier may be the most recent data from internet real estate data resources such as Zillow, Trulia, or other available sources that reflect actual market values or from a square footage appraisal provided by the developer from a qualified appraiser that was completed within three months prior to entering into an affordable housing agreement.

elopment director. The source of the square footage multiplier may be the most recent data from internet real estate data resources such as Zillow, Trulia, or other available sources that reflect actual market values or from a square footage appraisal provided by the developer from a qualified appraiser that was completed within three months prior to entering into an affordable housing agreement.

c. In-lieu fees per parcel for subdivisions shall be calculated to be fifty percent of the average appraised value of the parcels in the subdivision where the average appraised value equals the appraised value of all parcels in the subdivision divided by the number of parcels in the subdivision. The appraisal shall be provided by the developer from a qualified licensed residential appraiser. For subdivisions that consist of two to four parcels, this amount shall be further reduced by sixty percent.

d. For residential developments, in-lieu fees shall be paid prior to or at the time of final inspection by the city planning and community development building division, or as determined in an affordable housing development agreement, with additional terms approved by the approval body. For projects constructed in phases, in-lieu fees shall be paid in the proportion that the phase bears to the overall project.

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e. Notwithstanding subsection (6)(c), inlieu fees for subdivisions shall be paid prior to or concurrently with final subdivision map approval.

f. All in-lieu fees shall be deposited into a separate account entitled the affordable housing trust fund. The monies in the affordable housing trust fund and all earnings from investment of the monies in the affordable housing trust fund shall be used within a reasonable amount of time to assist in the construction of new low income housing units with long-term affordability restrictions or preservation of existing low income housing units, including required administrative support.

  1. Land Dedication. For residential developments with an inclusionary requirement of seven or more inclusionary units, an applicant may propose to donate a minimum of fifteen percent of the net developable land area of the residential development to the city for the construction of a project with at least twenty-five percent of its total units restricted to low income households or below, or a lesser amount of land if the parcel is adjacent to a city owned land and is determined by the economic development director that the parcel is a critical component of a larger city supported affordable housing project.

a. An application for land dedication shall be accompanied by the following information. These requirements may be modified or waived at the sole discretion and joint determination of the planning and community development director and the economic development director if the dedicated land is adjacent to city owned land and/or can be incorporated into a city supported affordable housing development project.

ation for land dedication shall be accompanied by the following information. These requirements may be modified or waived at the sole discretion and joint determination of the planning and community development director and the economic development director if the dedicated land is adjacent to city owned land and/or can be incorporated into a city supported affordable housing development project.

(1) Area to be dedicated to the city. (2) Demonstration that the density approved for the site is suitable for affordable housing development, evidence of adequate infrastructure, and a site plan demonstrating that the site can accommodate the required number of inclusionary units.

(3) Identification of the entity that will construct the inclusionary units.

(4) Pro forma demonstrating that development of the inclusionary units on the site is financially feasible.

(5) If the inclusionary units will not be constructed concurrently with the market rate units, the applicant shall describe the proposed phasing and specify the security to be provided to the city to ensure that the inclusionary units will be constructed.

b. The approval body may approve a proposal for land dedication if it makes all of the findings required by subsection (2) and the following additional finding: a residential development that includes twenty-five percent low income units is feasible on the property to be dedicated.

c. The property shall be dedicated to the city at the earliest of: (1) recordation of any final or parcel map, or (2) issuance of any building permit for the residential development.

d. The city may make the site available without cost to a low income housing developer with proven experience and the ability to finance and construct an affordable housing project in the most expeditious manner. To the extent feasible, the applicant shall process the low income residential development on the dedicated site concurrently with the processing of the market rate development.

  1. Congregate Living Units or Assisted Living Units. An applicant may propose to satisfy the inclusionary housing requirements of this chapter by providing congregate living units or assisted living units. If the approval body determines that a proposed residential development includes congregate living units or assisted living units, the following alternative requirements shall apply:

a. Fifteen percent of the congregate living or assisted living units shall be made available for rent to low income households at an affordable rent. Monthly charges for congregate living or assisted living services in addition to the

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affordable rent may not exceed thirty-five percent of fifty percent of area median income for a single person, divided by twelve, or forty-five percent of fifty percent of area median income for two persons, divided by twelve.

b. The proportion of studio or one-bedroom units that are designated to be shared by non-family-members shall not exceed the proportion of the number of market rate units designated to be shared by non-family-members to the total number of market rate units. Furthermore, no more than two persons may occupy a studio or one-bedroom unit. For purposes of affordable rent calculations, for any unit shared by non-family-members the portion of the unit occupied by each individual shall be treated like a studio apartment and the rent for one person shall be equivalent to the affordable rent for a studio apartment. This section should not be interpreted to create a bias for undesired double occupancy.

  1. Rental to Tenant-Based Subsidy Holders.

a. Owners of rental residential developments or single-room occupancy unit (SRO) developments may elect to use the following procedures to offer inclusionary units comprising up to five percent of the total units in the development as payment standard units available to tenant-based subsidy holders (subsidy holders). The developer affordable housing agreement, as defined in Section 24.16.040, shall require that fifteen percent of the total units in the development will be restricted to low income households at an affordable rent, and that five percent of the total units in the project will be payment standard units restricted to moderate income households at an affordable rent as defined in Section 24.16.015(2)(b) or rented to subsidy holders, so long as the development complies with the procedures described in subsections (b) through (e) to offer the five percent payment standard units in the development to subsidy holders. Both the low income units and the payment

standard units shall remain affordable in perpetuity as per Section 24.16.025(1).

b. The owner will notify the housing authority of the county of Santa Cruz (housing authority) that a unit or units are available for rent to subsidy holders and list the units on the Section 8 Housing Choice Voucher rental listing website, advertising the units to subsidy holders within one week of the following dates (as applicable):

(1) At initial lease-up, when new inclusionary units are initially marketed, and prior to receipt of a certificate of occupancy or final inspection, the owner shall list the five percent payment standard units on the housing authority’s Section 8 Housing Choice Voucher rental listing website, advertising the units to subsidy holders (or other marketing service as requested by the housing authority).

(2) At receipt by the owner of a notice of vacancy or availability of a vacated unit in a designated payment standard unit, the owner shall list that unit on the housing authority’s Section 8 Housing Choice rental listing website (or other marketing service as requested by the housing authority).

c. Thirty days after the owner lists the available unit or units on the housing authority’s Section 8 Housing Choice rental listing website, the rent for five percent payment standard units will be established as either:

(1) The payment standard rent, as defined by the housing authority, if the owner enters into a housing assistance payments contract for a subsidy holder with the housing authority; or (2) Either payment standard rent or a deed restricted rent, as defined in Section 24.16.015(2)(b), affordable to income qualifying moderate income households, whichever is less, if no eligible subsidy holder applied to rent the unit, as demonstrated by the owner.

d. In order to qualify under this section, an owner will be required to enter into a housing assistance payment contract with the housing authority for each payment standard unit rented to a subsidy holder and a rental agreement with

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subsidy holders who become tenants of the owner. When either a subsidy holder or moderate income tenant vacates one of the five percent designated payment standard units, the owner shall again follow the process outlined in subsection (9)(c).

e. The owner will be required to retain records proving the thirty-day marketing requirement was met and, if rented to a moderate income household, demonstrating that no eligible subsidy holder submitted a rental application. These records must be available upon request from the city at any time after the thirtyday period and must be retained for five years after each time one of the units undergoes the thirty-day housing authority marketing requirement process.

f. The owner may elect to offer low income units to subsidy holders if the following criteria are met:

(1) If a subsidy holder applies for a vacant unit and any payment standard unit is available, the subsidy holder must occupy the payment standard unit before any vacant low income unit is occupied.

(2) If a subsidy holder applies for a vacant unit and all payment standard units are occupied by subsidy holders, the subsidy holder may be placed in a vacant low income unit, and the rent charged to the housing authority cannot exceed the Santa Cruz housing authority payment standard rent, and the owner must enter into a housing assistance payments contract for a subsidy holder with the housing authority.

(3) If a subsidy holder applies for a vacant unit and not all of the payment standard units in the project are occupied by subsidy holders, the subsidy holder may be placed in a vacant low income unit, but the rent paid to the owner by the Santa Cruz housing authority may not exceed the affordable rent for the low income unit until all of the payment standard units in the project are occupied by subsidy holders. The location of the designated payment standard units may be modified to include other units occupied by subsidy holders, so long as

the owner notifies the city in writing of the changed location of the payment standard units.

  1. Employer Sponsored Housing. To create more housing opportunities for employees in the city where it is difficult to attract and retain the workforce, the following employer sponsored housing requirements may be utilized as an alternate means of compliance. An applicant/employer may propose to satisfy the inclusionary housing requirements of this chapter by providing housing for its own employees based on the following requirements:

a. The following alternate means of compliance applies to all employer sponsored housing including school district employer sponsored housing if a school district elects to utilize this provision rather than the following subsection (b). For this alternate means of compliance, the proposed residential development must qualify based on the following requirements:

  1. This section applies to rental residential development only.

  2. The rental units shall be restricted to the employer’s employees except that the employer may allow other members of the public to occupy the housing if none of the employer’s eligible employees desire to rent an available unit.

  3. An employer shall retain the right to prioritize its own employees over other members of the public to occupy housing.

  4. The majority of the rental units shall serve low or moderate income households.

  5. Sections 24.16.020 and 24.16.025 shall be replaced by the affordability requirements and preferences in this section for employer sponsored housing only.

  6. The employer must demonstrate that the housing will be used to attract and retain low and/or moderate income employees and that such alternative compliance will provide more affordable units than would compliance with Section 24.16.020.

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  1. The employer must provide a greater number of affordable units than this chapter requires but the affordability levels of those restricted units can have a broader range as defined by the rents affordable to the employees (for instance, fifty-one percent at one hundred twenty percent AMI).

  2. Prior to final inspection or issuance of a certificate of occupancy, the employer must provide a management plan to the city describing the employer’s policies if an employee no longer qualifies to reside in the housing or no employee is qualified to rent an available unit at the designated affordability level. City’s intent is that at least seventy-five percent of the units be rented to eligible employees at all times to qualify as employer sponsored housing. Employer must specify how they will comply with this intent in the management plan and must propose a compliance procedure if they fall out of compliance.

  3. The employer must demonstrate that the project will not increase segregation and will meet requirements of state and federal fair housing law, including affirmatively furthering fair housing requirements.

  4. A majority of the rental units must receive public funding from local, state or federal funds, affordable housing funds or affordable housing tax credits and the funding regulations must not conflict with the requirements in this section.

b. The following alternate means of compliance only applies to school district employer sponsored housing:

  1. School district employer sponsored housing projects conforming to the requirements of the Teacher Housing Act of 2016 (Health and Safety Code Section 53570 et seq. or successor provisions) will be deemed to satisfy the inclusionary housing requirements of this chapter. For any such projects, an agreement must be executed to formalize that the project has met this alternate means of compliance, and annual compliance reports must be submitted to confirm compliance with the

affordability provisions of the Teacher Housing Act of 2016.

  1. Other Alternative Compliance Methods. An applicant may propose an alternative compliance method to provide affordable units through other means. The approval body may approve or conditionally approve such an alternative only if the approval body determines, based on substantial evidence, that 1) such alternative compliance will provide as many or more affordable units at the same or lower income levels; and 2) financing has been committed to ensure that the affordable units will be constructed.

(Ord. 2021-04 § 3, 2021; Ord. 2020-25 § 3, 2020; Ord. 2018-18 § 1 (part), 2018: Ord. 2018-13 § 1 (part), 2018: Ord. 2009-18 § 1 (part), 2009: Ord. 2008-20 § 2, 2008: Ord. 2008-14 § 6, 2008: Ord. 2007-19 § 1 (part), 2007: Ord. 2006-16 § 2 (part), 2006).

24.16.035 INCENTIVES FOR COMPLIANCE WITH INCLUSIONARY HOUSING REQUIREMENTS.

The following incentives may be available for the provision of inclusionary units:

  1. Fee deferrals may be granted pursuant to Part 4 of this chapter.

  2. A residential development may satisfy its inclusionary housing requirements through any of the alternative compliance methods available in Section 24.16.030 in lieu of providing inclusionary units on site.

  3. The interior amenities and square footage of the inclusionary units may be reduced below those required for the market rate units, as provided in Section 24.16.025(4).

  4. Residential developments in which all dwelling units are offered for rent, inclusionary units are provided within the development, no subdivision map has been recorded, and no density bonus under Part 3 of this chapter has been requested are eligible for a twenty-seven

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and one-half percent “city rental housing bonus.”

(Ord. 2026-08 § 1, 2026; Ord. 2018-18 § 1 (part), 2018: Ord. 2018-13 § 1 (part), 2018: Ord. 2006-16 § 2 (part), 2006).

24.16.040 DEVELOPER AFFORDABLE HOUSING AGREEMENT.

  1. Developers subject to the inclusionary housing requirements of this part shall agree to enter into a developer affordable housing agreement with the city. A developer affordable housing agreement shall be a condition of approval for all residential developments subject to this chapter and shall be recorded as a restriction on any residential development in which the inclusionary units will be constructed.

  2. The developer affordable housing agreement shall be recorded prior to or concurrently with final parcel map or final subdivision map approval, or, where the residential development does not include a map, prior to issuance of a building permit for any structure in the residential development. The developer affordable housing agreement shall run with the land and bind all future owners and successors in interest.

  3. The developer affordable housing agreement shall be in a form provided by the city and shall include, without limitation, the following:

a. The total number of units approved for the residential development and the number, location, and level of affordability of inclusionary units.

b. Standards for determining affordable rent or affordable ownership cost for the inclusionary units.

c. The location, unit size in square feet, and number of bedrooms of the inclusionary units. d. Provisions to ensure initial and continuing affordability, including the execution and recordation of subsequent agreements.

e. A schedule for completion and occupancy of inclusionary units in relation to construction of market rate units.

f. A description of remedies for breach of the agreement by either party. The city may identify tenants or qualified purchasers as third party beneficiaries under the agreement.

g. Procedures for qualifying tenants and prospective purchasers of inclusionary units.

h. Provisions requiring maintenance of records to demonstrate compliance with this chapter.

i. Provisions specifically describing how affordable rent and/or affordable ownership costs are calculated for the inclusionary units. Unless another basis has mutually been agreed upon by the developer, the planning and community development director, and the economic development director, the determination shall be made in accordance with Section 24.16.045(4). If there is more than a three-year delay in execution of the developer affordable housing agreement and the final building permit, the developer may request any in-lieu fees be recalculated and with the concurrence of the planning and community development and economic development directors, the city may recalculate fees accordingly.

  1. Other provisions to ensure implementation and compliance with this chapter. (Ord. 2018-13 § 1 (part), 2018: Ord. 2008-14 § 7, 2008: Ord. 2006-16 § 2 (part), 2006).

24.16.045 CONTINUED AFFORDABILITY AND INITIAL OCCUPANCY.

  1. The city council, by resolution, shall establish guidelines for determining household income, asset limits, occupancy standards, affordable ownership cost, affordable rent, provisions for continued monitoring of tenant eligibility, resale price, and other implementation criteria. The city shall use standard documents as approved by the city attorney to ensure the continued affordability of the inclusionary units in all residential developments. The documents may include, but are not limited to, inclusionary housing agreements, rent regulatory agreements, promissory notes, deeds of

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trust, options to purchase, and resale restrictions.

  1. Rent regulatory agreements consistent with the requirements of this part shall be recorded against residential developments containing rental inclusionary units. If the inclusionary units are designated for owneroccupancy, resale restrictions, deeds of trust, options to purchase, and/or other documents consistent with the requirements of this part shall be recorded against the owner-occupied inclusionary units.

  2. Any household that occupies an inclusionary unit must occupy that unit as its principal residence, except in circumstances that may require the temporary vacation of the unit. For rented inclusionary units, the documents required by subsection (1) shall provide for continued occupancy for limited periods by households occupying the units, whose incomes increase during their occupancy so that they exceed the maximum otherwise permitted for the unit.

  3. The maximum sales price shall be calculated using the methodology defined in the resolution and/or guidelines identified in and applied under the inclusionary agreement for that property. Unless otherwise required by California Government Code Section 66474.2 or 65589.5(o), or any other applicable state codes or successor provisions, the resolution in effect at the time of first approval shall be the basis for these calculations, unless another inclusionary ordinance or implementing resolution basis more recently approved by the council has been defined and mutually been agreed upon by the developer, the planning and community development director, and the economic development director or otherwise authorized by the approval body. The resale restrictions shall allow the city a right of first refusal or option to purchase any owner-occupied inclusionary unit at the maximum resale price permitted under this section at any time the owner proposes sale.

  4. No household shall be permitted to begin occupancy of an inclusionary unit designated for owner-occupancy unless the city or its designee has approved the household’s eligibility. No household shall be permitted to begin occupancy of an inclusionary rental unit unless the city or its designee has approved the household’s eligibility, except that tenants are not required to be income-eligible if the rental cost affordable to low income households is at least ninety percent of the average rent for market rate dwelling units with the same number of bedrooms in the development.

o household shall be permitted to begin occupancy of an inclusionary rental unit unless the city or its designee has approved the household’s eligibility, except that tenants are not required to be income-eligible if the rental cost affordable to low income households is at least ninety percent of the average rent for market rate dwelling units with the same number of bedrooms in the development.

  1. As consistent with state and federal law, preferences for rental inclusionary units shall be given in the following priority order: a. Residents of the city of Santa Cruz for at least one year.

b. Those employed in the city of Santa Cruz.

c. Residents of the county of Santa Cruz for at least one year. d. Those employed in the county of Santa Cruz.

  1. As consistent with state and federal law, preferences for ownership inclusionary units shall be given in the following priority order: a. Those who live or work in the city of Santa Cruz.

b. Those who live or work in the county of Santa Cruz.

  1. The city council by resolution may establish fees for the ongoing administration and monitoring of the inclusionary units, which fees may be updated periodically, as required. (Ord. 2019-25 § 2, 2020; Ord. 2018-13 § 1 (part), 2018: Ord. 2009-18 § 1 (part), 2009: Ord. 2008-20 § 3, 2008: Ord. 2006-16 § 2 (part), 2006).

24.16.050 APPEALS.

  1. An applicant or any other person whose interests are adversely affected by any determination of the planning and community development department staff or of an agency retained

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by the city with regard to this part may appeal the determination to the planning and community development director.

  1. An applicant or any other person whose interests are adversely affected by the determination of the planning and community development director with regard to this part may appeal the determination to the city council.

  2. The procedure for appeals shall be consistent with the procedures prescribed in Sections 24.04.180 through 24.04.185.

(Ord. 2018-13 § 1 (part), 2018: Ord. 2009-18 § 1 (part), 2009: Ord. 2006-16 § 2 (part), 2006).

24.16.055 WAIVERS OR REDUCTIONS OF INCLUSIONARY HOUSING REQUIREMENTS.

  1. Notwithstanding any other provision of this chapter, the inclusionary housing requirements may be waived, adjusted, or reduced if an applicant shows, based on substantial evidence, that there is no reasonable relationship between the impact of a proposed development and the requirements of this part, or that applying the requirements of this chapter would take property in violation of the United States or California Constitution.

  2. Any request for a waiver, adjustment, or reduction under this section shall be submitted as a part of the first approval. The request for a waiver, reduction, or adjustment shall set forth in detail the factual and legal basis for the claim.

  3. The request for a waiver, adjustment, or reduction shall be reviewed and considered as a part of the first approval. In making a determination on an application for waiver, adjustment, or reduction, the applicant shall bear the burden of presenting substantial evidence to support the claim. The city may assume each of the following when applicable:

a. That the applicant will provide the most economical inclusionary units to meet the requirements of this chapter.

b. That the applicant is likely to obtain housing subsidies when such funds are reasonably available.

c. The extent to which the applicant will benefit from density bonuses or other incentives.

The waiver, adjustment, or reduction may be approved by the approval body only to the extent necessary to avoid an unconstitutional result, after adoption of written findings, based on substantial evidence, supporting the determinations required by this section.

(Ord. 2019-21 § 3, 2019: Ord. 2018-13 § 1 (part), 2018: Ord. 2009-18 § 1 (part), 2009: Ord. 2006-16 § 2 (part), 2006).

24.16.060 IMPLEMENTATION AND ENFORCEMENT.

  1. The city council may adopt affordable housing program guidelines, by resolution, as mandatory regulations applicable to the implementation of this chapter.

  2. In addition to any other powers or duties prescribed by law, the economic development director shall have the following powers and duties in relation to this part:

a. To monitor compliance with the provisions of this part and to refer to the city attorney for appropriate action any person violating the provisions of this part; and

b. To administer this part.

  1. The city attorney shall be authorized to enforce the provisions of this part, all agreements entered into pursuant to this part, and all other requirements of this part, by civil action and any other proceeding or method permitted by law. The city may, at its discretion, take such enforcement action as is authorized under any provision of this code and/or any other action authorized by law or by any agreement executed pursuant to this part.

  2. Failure of any official or agency to enforce the requirements of this chapter shall not constitute a waiver or excuse any applicant or owner from the requirements of this part. No permit, license, map, or other approval or entitlement for a residential development shall be issued, including without limitation a final inspection or certificate of occupancy, until all

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applicable requirements of this part have been satisfied.

  1. The remedies provided for herein 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. 2021-04 § 4, 2021; Ord. 2018-13 § 1 (part), 2018: Ord. 2009-18 § 1 (part), 2009: Ord. 2006-16 § 2 (part), 2006).