3.040 Inclusionary Housing.
This section shall govern inclusionary housing as part of residential development pursuant to Housing Element Policy 4.2 and associated Program 4.3.
A. Applicability. The provisions of this section shall apply to all residential projects of five or more units, including residential components of mixed-use projects.
B. Requirements. All residential projects of five or more units shall comply with the following requirements:
1. Location. Unless otherwise permitted in accordance with this section, inclusionary housing units shall be provided on the site of the residential development.
2. Quantity. The number of onsite inclusionary housing units shall be equal to or greater than 15 percent of the total number of residential units or lots in the residential project.
3. Income Levels. The following income restrictions shall apply based on the ownership structure of the residential project.
a. Inclusionary housing units in a rental project shall be made affordable to very low and low income households as follows: 7.5% of the total number of residential units or lots in the residential project shall be affordable to very low income households and 7.5% of the total number of residential units or lots in the residential project shall be affordable to low income households.
b. Inclusionary housing units in an ownership project shall be made affordable to low and moderate income households as follows: 7.5% of the total number of residential units or lots in the residential project shall be affordable to low income households and 7.5% of the total number of residential units or lots in the residential project shall be affordable to moderate income households.
4. Duration. Affordable units required pursuant to this section shall be made subject to affordability covenants that are binding on owners of the units and their successors for a duration of at least 55 years in the case of rental projects and for a duration of at least 45 years in the case of ownership projects.
5. Fractional Units. In determining the number of inclusionary units required to be provided pursuant to this section, fractional units shall be rounded up to the nearest whole integer. For fractions less than 0.5 the number shall be rounded down and the fractional unit shall be paid by applicable in-lieu fee. For fractions 0.5 or greater, the number shall be rounded up to the nearest whole integer to provide onsite units. For example, in the case of a 20 unit residential rental project, provision (B)(3)(a) would require making 7.5% or 1.5 of the units affordable to very low income households, and 7.5% or 1.5 of the units affordable to low income households. In this example, the inclusionary unit obligation for the project would be rounded up to 2 units affordable to very low income households and 2 units affordable to low income households.
C. Inclusionary unit development standards. In addition to other development standards and requirements set forth in this ordinance and other applicable laws and regulations, all inclusionary housing units shall be consistent with the following standards:
1. Inclusionary units shall be constructed and occupied concurrently with or prior to the construction and occupancy of the market rate residential units in the project, unless an alternative schedule based on extenuating circumstances is adopted as part of the project approval. In phased projects inclusionary units shall be constructed and occupied in proportion to the number of units in each phase of the project.
2. Inclusionary units shall be distributed throughout the residential project site, to the fullest extent practicable.
3. The design, appearance and general quality of the affordable units shall be comparable and compatible with the design of the market rate units as determined through the Site Plan and Architectural Review process, provided that all other zoning and building codes are met.
D. Alternative Compliance. At the sole discretion of the City Council, a project’s inclusionary housing requirement may be met through alternative compliance in one of the following ways or a combination thereof:
1. Donation of a portion of the project site or an off-site property to the City or a non-profit organization deemed acceptable by the City for development of affordable housing; or
2. Payment of a housing in-lieu fee established by the City’s adopted fee schedule; or
3. Alternative mixture of units by income levels; or
4. Use of an alternative method, such as provision of a smaller percentage of onsite inclusionary units coupled with payment of in-lieu fee for the inclusionary units not provided.
E. Submittal Requirements. All applications submitted to the City for development of a residential project of five or more units or a mixed-use project including a residential component of five or more units shall include the proposed method of satisfying the requirements of this section. Compliance with the inclusionary housing requirements shall be reviewed as part of the development review process and presented to the decision making body as part of the overall project analysis for consistency with both the City’s General Plan and this section. Submittal requirements to demonstrate compliance with this section shall include the following:
1. Total number of residential units in the project
2. Number of onsite inclusionary units
3. Proposed sale price of both market rate and inclusionary units and/or proposed rental price for both market rate and inclusionary units
4. Location of onsite inclusionary units within the project
5. Size and bedroom count for the proposed inclusionary units
6. Should the applicant wish to request alternative compliance from the City Council, the application shall include the request and describe the method and details of proposed alternative for compliance. In considering requests from a developer for alternative compliance to creating inclusionary affordable units, the City Council’s consideration will include whether creating inclusionary affordable units would render the overall project financially infeasible under then current economic conditions. To that end, the developer may, at its option and at its own expense, provide its project financial information to an independent third-party housing/real estate analyst retained by the City to conduct a financial feasibility analysis. The independent analysis will be conducted utilizing the applicant’s data, and any additional information that may be required of the developer to complete a thorough assessment. The independent analyst shall employ recognized best practices for the industry and render a detailed recommendation to the City Council to support its conclusions. Any of the developer’s sensitive proprietary information shall be redacted before making the report public to the extent permitted by law.