The developer of a mixed use, residential or nonresidential project may request an alternate means of compliance, as described in this section, as a component of the affordable housing plan required by Section 16.65.090.
(a) Provisions applicable to all alternatives. The following provisions apply to all alternative means of compliance described in this section.
(1) The applicant shall bear the burden of presenting substantial evidence to support a finding of infeasibility under subection (b) of this section and to support the feasibility of any proposed alternative. The applicant shall set forth in detail the factual and legal basis for any request under this section.
(2) Any request under this section shall be submitted to the planning and community environment director together with an economic analysis, if required, or other supporting documentation and shall be acted upon by the city council.
(3) When the affordable housing alternative results in a fractional unit, fees shall be paid as specified in the affordable housing guidelines for any fractional units.
(4) All affordable units shall conform with the provisions of Section 16.65.075.
(5) The city council may approve or conditionally approve any alternative set forth in this section if it makes all of the following findings and any additional findings required for the selected alternative:
(A) The number of affordable units provided by the alternative equals or exceeds that provided by on-site units or by the payment of impact fees, as applicable to the project;
(B) The level of affordability provided by the alternative is the same or lower as provided by on-site units or by the payment of impact fees, as applicable to the project; and
(C) The alternative is consistent with the comprehensive plan and housing element and the provisions of this chapter.
(b) Residential ownership projects.
(1) If the provision of affordable ownership units under Section 16.65.030 is infeasible, an applicant for a residential ownership project may request, in order of priority, to: (a) provide on-site affordable rental units as provided in subsection (c) below; (b) provide off-site affordable units as provided in subsection (d) below; (c) dedicate land for affordable housing as provided in subsection (d) below; (d) rehabilitate and convert existing residences to affordable housing, or preserve existing affordable housing, as provided in subsection (e) below; or (e) pay the in-lieu fee adopted as described in Section 16.65.060. The applicant must demonstrate that each of the higher priority options is infeasible before the city will consider a lower priority option.
(2) For the purposes of this section, "infeasible" means either that: (a) the affordable sales price would be less than the cost of constructing the affordable unit, including financing but excluding all other costs, including land, marketing, improvements, and profit; or (b) provision of the units would produce a confiscatory or unconstitutional result.
(3) Notwithstanding Section 16.65.080(a)(5), the city council may accept fees in lieu of the alternatives in paragraph one provided it makes a finding that special circumstances justify payment of fees over provision of ownership units, such as a finding that the fees generated would result in more affordable units than those required to be provided on site or that funds are needed to finance a pending affordable housing project.
(c) Affordable rental units in a residential ownership project or a residential rental project.
(1) An applicant for a residential ownership project or a residential rental project may elect to make available dwelling units in the residential project at affordable rent rather than provide on-site for-sale affordable units or pay housing impact fees, as applicable. The city council may by ordinance or resolution specify the percentage and affordability level of rental affordable units that are equivalent to provision of on-site for-sale affordable units or payment of housing impact fees, as applicable.
(2) To ensure compliance with the Costa-Hawkins Act (Chapter 2.7 of Title 5 of Part 4 of Division 3 of the Civil Code), the city may approve such a proposal only if the applicant agrees in a rent regulatory agreement with the city to limit rents in consideration for a direct financial contribution or a form of assistance specified in Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code.
(3) Any rent regulatory agreement for rental units in a residential ownership project shall include provisions for sale of the affordable units and relocation benefits for tenants of the affordable units if the owner of the residential ownership project later determines to offer the affordable units in the residential project for sale to moderate income households at an affordable sales price.
(d) Dedication of land and off-site construction of affordable units.
(1) The applicant may submit an affordable housing plan that proposes either to dedicate vacant land suitable for affordable housing or to construct affordable units on another site. Two or more applicants may also jointly propose the provision of vacant land suitable for affordable housing or the construction of off-site affordable units on a single site.
(2) Construction of the off-site affordable units may not commence prior to the first approval of the residential project, and construction of the off-site units must occur concurrently with construction of the market-rate units in the residential project as described in Section 16.65.075.
(3) The city council may approve or conditionally approve the dedication of land or off-site construction if it makes all of the following findings in addition to making the findings in subsection (a)(5) above:
(A) Financing or a viable financing plan, which may include public funding, is in place for the off-site affordable units; and
(B) The off-site location is suitable for the proposed affordable housing, consistent with any affordable housing guidelines and the housing element, and will not tend to cause residential segregation.
(4) No building permit shall be issued for any units in the residential project until committed funding is available for the off -site units, or units to be constructed on land to be dedicated.
(5) Off-site construction of affordable units does not qualify the residential project for a density bonus or other regulatory incentives allowed by Government Code Section 65915 unless the off-site development includes the dedication of land conforming to the provisions of Section 65915(g). No off-site alternative may be approved by the city if a density bonus or other regulatory incentive is requested for the site on which the affordable housing is to be built. Any off-site alternative must comply with the density, intensity and other development standards that are permitted under the zone for the site.
(e) Rehabilitation and conversion of existing market-rate housing.
(1) The applicant may submit an affordable housing plan that proposes the rehabilitation and conversion of existing market-rate housing to affordable housing, or the preservation of existing affordable housing that is not deed restricted as affordable.
(2) The market-rate units to be converted to affordable units shall be located in a residential project that is not subject to any existing affordability covenants except covenants restricting other units in the development.
(3) The affordable housing plan shall include a plan for long-term financial sustainability of the market-rate units to be converted to affordable units, which incorporate, among other things, provisions to accommodate increases in homeowners' association fees, special assessments and maintenance costs.
(4) Any existing tenants in the market-rate units to be converted to affordable units shall be eligible to remain in the units; or the applicant shall provide relocation assistance pursuant to California Government Code §§ 7260 et seq.
(5) The city council may approve or conditionally approve the proposal if it makes all of the following findings in addition to making the findings in subsection (a)(5) above:
(A) The proposal includes substantial rehabilitation of the existing housing equal to at least twenty-five percent of the after-rehabilitation value of the property, inclusive of land value, and the units shall be in decent, safe and sanitary condition and in compliance with all codes;
(B) Financing or a viable financing plan is in place for the units to be converted to affordable units; and
(C) The off-site location is suitable for the proposed affordable housing, consistent with any affordable housing guidelines and the housing element, and will not tend to cause residential segregation.
(6) No building permit shall be issued for any units in the residential project until regulatory agreements approved by the city have been recorded for the existing units to be converted to affordable housing.
(f) Mixed use projects. An applicant for a mixed use development may submit an affordable housing plan that proposes to mitigate the affordable housing impacts of the non-residential and residential rental portions of the development through any of the options listed above or through on-site provision of affordable units conforming with applicable provisions of Section 16.65.075. In addition to making the findings in subsection (a)(3) above, the city council may approve or conditionally approve such an alternative if it determines, based on substantial evidence, that such alternative will provide equal or greater public benefit than would payment of the housing impact fee.
(g) Nonresidential projects. An applicant for a nonresidential development may submit an affordable housing plan that proposes to mitigate the affordable housing impacts of the development through any of the options listed above or through on-site provision of affordable units conforming with applicable provisions of Section 16.65.075. In addition to making the findings in subsection (a)(5) above, the city council may approve or conditionally approve such an alternative if it determines, based on substantial evidence, that such alternative will provide equal or greater public benefit than would payment of the housing impact fee.
(Ord. 5408 § 3 (part), 2017)