A. Payment of In-lieu Fee: As an alternative to constructing Inclusionary Units as required by this title, all or a portion of the inclusionary housing requirement may be fulfilled through the payment of an In-lieu Fee pursuant to an In-lieu Fee schedule adopted by the City pursuant to this title, subject to the following:
1. For-sale Residential Developments of any size may pay an In-lieu Fee by-right.
2. Rental Residential Developments with twenty two (22) or fewer units may pay an In-lieu Fee by-right.
3. Rental Residential Developments with twenty three (23) or greater units may pay an In-lieu Fee, subject to approval by the City Council, upon a demonstration that providing the affordable units in the Residential Development would create an unreasonable economic hardship due to such factors as project size, site constraints, and/or excessively large affordability gaps.
4. Prior to the effective date of this title, and from time to time thereafter, the City Council shall adopt by resolution a schedule of In-lieu Fees that shall be levied based on the square footage of the saleable area of For-sale Residential Developments or leasable area of Rental Residential Developments, but excluding the affordable units in a project that received a density bonus in accordance with Government Code section 65915.1. The amount of In-lieu Fees shall be established by resolution of the City Council. The In-lieu Fee schedule shall be updated periodically by the City Council.
5. The required In-lieu Fees shall be paid at the time that the first building permit is obtained for the Residential Development, except that, for phased projects, the developer may pay a pro rata share of the In-lieu Fee, based on the number and size of phases in the development, concurrently with the issuance of the first building permit for each phase of the Residential Development.
6. All In-lieu Fees collected under this title shall be deposited in the Inclusionary Housing fund established by the City pursuant to subsection 18.230.170(B) of this title.
B. Off-site Development of Affordable Units: Residential Developments can fulfill Inclusionary Housing requirements by renting 9% of the total number of units in the development at the Low-income standard in one of the following ways:
1. Off-site production of affordable rental units; or
2. Creation of a parcel within a For-sale Housing Development site on which affordable rental units are constructed.
C. Land Dedication: As an alternative to constructing the required inclusionary units in accordance with this title, the City Council may, in its discretion, allow an applicant to dedicate real property to the City for the purpose of developing affordable housing, provided that the real property dedicated to the City must satisfy all of the following requirements:
1. The real property must be conveyed to the City at no cost.
2. At the time the applicant submits a proposal to dedicate real property to the City pursuant to this title, the applicant must provide evidence satisfactory to the City that the property meets the following requirements:
a. The applicant has control over the property through fee ownership, an option to purchase the property, or other property interest demonstrating site control satisfactory to the City, and the real property is free of any monetary liens. In the event that there are any encumbrances or easements that adversely impact title to the property, those encumbrances or easements must be disclosed and factored into the estimated value of the real property interest to be conveyed to the City.
b. The applicant must provide evidence satisfactory to the City that the property does not contain any hazardous materials at the time of conveyance; must disclose whether any hazardous materials were previously found on the property; and if hazardous materials were previously remediated from the property, the applicant must provide evidence satisfactory to the City that such hazardous materials were remediated in accordable with all applicable laws and regulations.
c. The property cannot have been improved with any residential use for at least five years prior to the submission of the proposal for dedication of the property to the City pursuant to this title.
d. The property must be located within one mile of the property upon with the applicant proposes to develop the market rate residential development that has triggered the requirements of this title.
e. The property must have a general plan designation that authorizes residential uses and is zoned for residential development at a density to accommodate at least a number of dwelling units equal to at least ten percent (10%) of the number of dwelling units proposed in the Applicant's residential development.
f. The property must be suitable for development of inclusionary units equal to at least ten percent (10%) of the number of dwelling units proposed in the applicant's residential development, in terms of configuration, physical characteristics, location, access, adjacent uses, and other relevant planning and development criteria including, but not limited to, factors such as the cost of construction or development arising from the nature, condition, or location of the property.
g. Infrastructure to serve the property, including but not limited to streets and public utilities, must be available at the property line and have adequate capacity to serve the maximum allowable residential development pursuant to zoning regulations.
3. In order to assist the City in evaluating a proposal by an applicant to dedicate property pursuant to this title, the applicant shall submit the following documents:
a. A conceptual site plan and narrative description of a residential development that could be developed on the property.
b. An identification of the income and affordability restrictions proposed to be imposed on the property.
c. A pro forma analysis that quantifies any financial gap associated with the identified development scope and describes how this financial gap will be filled.
d. If the applicant believes a density bonus would be required pursuant to Government Code Section 65915, the terms of the requested density bonus; and the incentives, concessions, and development waivers that applicant anticipates will be requested for the development of the property.
4. Prior to scheduling a proposal for dedication of property pursuant to this title for consideration by the City Council, City staff will independently evaluate the applicant's proposal and provide the City Council with an analysis of whether the proposal meets the required standards set forth in this title.
D. The alternative means of compliance set forth herein are intended to implement the City's authority to promote the development of affordable housing, in accordance with California Government Code § 65850, subdivision (g), and shall not be considered or construed as an ad hoc exaction, a mandated fee required to develop a specific property, or a fee imposed to offset the development impacts of a specific project. (Ord. 2959, 2023)