The purpose of this chapter is to allow density bonuses and other affordable housing incentives to qualifying projects , as set forth in California Government Code sections 65915 through Section 65918, as they may be amended, to increase the production of affordable housing.

(Ord. 596 § 2 (part), 2007)

(Ord. No. 732, § 5, 8-27-2024)

The density bonuses and other affordable housing incentives required by State law, including but not limited to, Government Code section 65915 et seq., shall be available to applicants on the terms and conditions specified in State law.

(Ord. No. 732, § 5, 8-27-2024)

Editor's note— Ord. No. 732, § 5, 8-27-2024 enacted provisions designated as § 16.82.020. Inasmuch as there were already provisions so designated, said section has been codified herein as § 16.82.015, at the discretion of the editor.

The following definitions shall apply to this chapter:

"Affordable housing cost" bears the same meaning as defined in Section 50052.5 of the California Health and Safety Code.

"Affordable housing unit" means a dwelling unit within a housing development which will be rented or sold to and reserved for very low-income households, lower-income households, moderate-income households and/or senior citizens at an affordable housing cost for the respective group(s) in accordance with Section 65915 of the California Government Code and this chapter.

"Affordable rent" means that level of rent defined in Section 50053 of the California Health and Safety Code.

"Applicant" means a developer or applicant for a density bonus pursuant to Section 65915, subdivision (b), of the California Government Code and Section 16.82.030 of this chapter.

"Child care facility" means a child day care facility other than a family day care home, including, but not limited to, infant centers, preschools, extended day care facilities, and school age child care centers.

"Common interest development" bears the same meaning as defined in Section 1351 of the California Civil Code.

"Density bonus" means a density increase over the otherwise maximum allowable residential density under the applicable zoning ordinance and land use element of the general plan as of the date of application by the applicant to the city.

"Development standard" means site or construction conditions that apply to a housing development pursuant to any ordinance, general plan element, specific plan, charter amendment, or other local condition, law, policy, resolution, or regulation.

"Housing development," means one or more groups of projects for residential units in the planned development of the city. "Housing development" also includes a subdivision or common interest development, as defined in Section 1351 of the California Civil Code, approved by the city and consisting of residential units or unimproved residential lots and either a project to substantially rehabilitate and convert an existing commercial building to residential use or the substantial rehabilitation of an existing multifamily dwelling, as defined in subdivision (d) of Section 65863.4, where the result of the rehabilitation would be a net increase in available residential units.

"Lower-income households" bears the same meaning as defined in Section 50079.5 of the California Health and Safety Code.

"Maximum allowable residential density" means the density allowed under applicable zoning ordinances, or if a range of density is permitted, means the maximum allowable density for the specific zoning range applicable to the subject project.

"Moderate income" or "persons and families of moderate income" means those middle-income families as defined in Section 50093 of the California Health and Safety Code.

"Qualified mobilehome park" means a mobilehome park that limits residency based on age requirements for housing for older persons pursuant to Section 798.76 or 799.5 of the California Civil Code.

"Redevelopment agency" means the Arroyo Grande redevelopment agency, a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.).

"Senior citizen housing development" means senior citizen housing as defined in Sections 51.3 and 51.12 of the California Civil Code.

"Specific adverse impact" means any adverse impact as defined in paragraph (2), subdivision (d), of California Government Code Section 65589.5, upon public health and safety or the physical environment, or on any real property that is listed in the California Register of Historical Resources, and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the housing development unaffordable to low- and moderate-income households.

"Very low-income households" bears the same meaning as defined in Section 50105 of the Health and Safety Code.

(Ord. 596 § 2 (part), 2007)

A.

The city shall grant one density bonus as specified in Section 16.82.070, and incentives or concessions as described in Section 16.82.050, when an applicant seeks and agrees to construct a housing development, excluding any units permitted by the density bonus awarded pursuant to this chapter, that will contain at least any one of the following:

1.

Ten (10) percent of the total units of the housing development as affordable housing units affordable to lower-income households; or

2.

Five percent of the total units of the housing development as affordable housing units affordable to very low-income households; or

3.

A senior citizen housing development; or

4.

A qualified mobilehome park; or

5.

Ten (10) percent of the total units of a common interest development as affordable housing units affordable to moderate-income households, provided that all units in the development are offered to the public for purchase subject to the restrictions specified in this chapter.

B.

As used in subsection A of this section, the term "total units" does not include units permitted by a density bonus awarded pursuant to this section or any other local law granting a greater density bonus.

C.

Each applicant who requests a density bonus pursuant to this chapter, shall elect whether the bonus shall be awarded on the basis of subsection (A)(1), (2), (3), (4) or (5) of this section. Each housing development is entitled to only one density bonus, which may be selected based on the percentage of either very low-income affordable housing units, lower-income affordable housing units or moderate-income affordable housing units, or the development's status as a senior citizen housing development or qualified mobilehome park. Density bonuses from more than one category may not be combined.

(Ord. 596 § 2 (part), 2007)

A.

Subject to subsection C of this section, an applicant shall agree to, and the city shall ensure, continued affordability of all low- and very low-income units that qualified the applicant for the award of the density bonus for a period of thirty (30) years or a longer period of time if required by the construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program. Rents for affordable housing units for lower-income households shall be set at an affordable rent. Owner-occupied affordable housing units shall be available at an affordable housing cost.

B.

An applicant shall agree to, and the city shall ensure, that the initial occupant of moderate-income units that are directly related to the receipt of the density bonus in a common interest development, are persons and families of moderate income and that the units are offered at an affordable housing cost. The local government shall enforce an equity-sharing agreement, unless it is in conflict with the requirements of another public funding source or law. The following shall apply to the equity-sharing agreement:

1.

Upon resale, the seller of the unit shall retain the value of any improvements, the downpayment, and the seller's proportionate share of appreciation. The city shall recapture any initial subsidy and its proportionate share of appreciation, which shall then be used within three years for any of the purposes that promote homeownership as described in subdivision (e) of Section 33334.2 of the California Health and Safety Code that promote homeownership.

2.

For purposes of this subdivision, the city's initial subsidy shall be equal to the fair market value of the home at the time of initial sale minus the initial sale price to the moderate-income household, plus the amount of any downpayment assistance or mortgage assistance. If upon resale the market value is lower than the initial market value, then the value at the time of the resale shall be used as the initial market value.

3.

For purposes of this subdivision, the city's proportionate share of appreciation shall be equal to the ratio of the initial subsidy to the fair market value of the home at the time of initial sale.

C.

Notwithstanding the foregoing, very low-, low-, and moderate-income units in housing developments qualified for a density bonus that are located in any redevelopment project area within the city, shall remain at an affordable level for a period of not less than forty-five (45) years for owner-occupied units, and not less than fifty-five (55) years for rental units, in accordance with applicable provisions of the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.).

D.

Any contract, deed restriction, or other instrument used to implement subsections A and/or B and/or C of this section, shall be signed by the applicant and by the city as parties. If the housing development is located within any redevelopment project area within the city, such contract, deed restriction, or other instrument shall be signed by the redevelopment agency as a party or, at the redevelopment agency's election, the contract, deed restriction, or other instrument shall identify the redevelopment agency as an express third-party beneficiary with the right to enforce the terms of such contract, deed restriction, or other instrument.

E.

All affordable units shall be reasonably dispersed throughout the housing development; shall be proportional, in size, bedroom number and location to the market rate units; and shall be comparable with the market-rate units in terms of the base design, architectural appearance, building materials and finished quality. All affordable units in a housing development shall be constructed concurrently with or prior to the construction of the market-rate units. In the event the city approves a phased project, the affordable units required by this chapter shall be provided within each phase of the residential development unless otherwise approved by the director of community development.

F.

Applicants receiving density bonuses shall use best efforts to provide a substantial proportion of any affordable housing units in the housing development to citizens residing or employed within the city.

(Ord. 596 § 2 (part), 2007)

A.

An applicant for a density bonus may also submit to the city a proposal for specific incentives or concessions in exchange for the provision of affordable housing units in accordance with this chapter. The applicant may also request a meeting with the city's director of community development to discuss such proposal. The city shall grant the concession or incentive requested by the applicant unless the city makes a written finding, based upon substantial evidence, of either of the following:

1.

The concession or incentive is not required in order to provide for affordable housing costs or for rents for the targeted units to be set as specified in Section 16.82.040 (i.e., the applicant is unable to demonstrate that the waiver or modification is necessary to make the housing units economically feasible); or

2.

The concession or incentive would have a specific adverse impact.

B.

If the conditions of Section 16.82.030 and subsection A of this section are met by an applicant, the city may grant an applicant applying for incentives or concessions the following number of incentives or concessions:

1.

One incentive or concession for housing developments that include: at least ten (10) percent of the total units affordable to lower-income households; or at least five percent of the total units affordable to very low-income households; or at least ten (10) percent of the total units affordable to persons and families of moderate income in a common interest development.

2.

Two incentives or concessions for housing developments that include: at least twenty (20) percent of the total units affordable to lower-income households; or at least ten (10) percent of the total units affordable to very low-income households; or at least twenty (20) percent of the total units affordable to persons and families of moderate income in a common interest development.

3.

Three incentives or concessions for housing developments that include: at least thirty (30) percent of the total units for lower-income households; or at least fifteen (15) percent for very low-income households; or at least thirty (30) percent for persons and families of moderate income in a common interest development.

C.

For the purposes of this chapter, available concessions or incentives may include any of the following:

1.

A reduction in site development standards or a modification of zoning code requirements or architectural design requirements that exceed the minimum building standards approved by the California Building Standards Commission as provided in Part 2.5 (commencing with Section 18901) of Division 13 of the California Health and Safety Code, including, but not limited to, a reduction in setback and square footage requirements and in the ratio of vehicular parking spaces that would otherwise be required that results in identifiable, financially sufficient, and actual cost reductions.

2.

Approval of mixed use zoning in conjunction with the housing development if commercial, office, industrial, or other land uses will reduce the cost of the housing development and if the commercial, office, industrial, or other land uses are compatible with the housing project and the existing or planned development in the area where the proposed housing development will be located.

3.

Other regulatory incentives or concessions proposed by the applicant or the city that result in identifiable, financially sufficient, and actual cost reductions.

4.

For purposes of this chapter, the parking ratios set forth in Government Code Section 65915 (and Section 16.82.110 of this chapter) for qualified affordable housing projects shall be deemed a concession or incentive available to the applicant.

D.

This section does not limit or require the provision of direct financial incentives for the housing development, including the provision of publicly-owned land, by the city or the waiver of fees or dedication requirements. Nor does any provision of this section require the city to grant an incentive or concession found to have a specific adverse impact.

E.

The granting of a concession or incentive shall not be interpreted, in and of itself, to require a general plan amendment, local coastal plan amendment, zoning change, or other discretionary approval.

F.

Applicants seeking a condominium conversion may apply for either a density bonus or an incentive of equivalent financial value (as that term is defined in Government Code Section 65915.5) in accordance with Section 16.82.100 of this chapter and Government Code Section 65915.5.

G.

The application and review process for a proposal of incentives and concessions is set forth in Section 16.82.120.

(Ord. 596 § 2 (part), 2007)

A.

Applicants may, by application, seek a waiver, modification or reduction of development standards that will otherwise preclude or inhibit the utilization of the density bonus on specific sites in a housing development at the densities or with the concessions or incentives permitted by this chapter. The applicant may also request a meeting with the city to discuss such request for waiver/modification. In order to obtain a waiver/modification of development standards, the applicant shall show that (1) the waiver or modification is necessary to make the housing units economically feasible, and (2) that the development standards will have the effect of precluding the construction of a housing development meeting the criteria of Section 16.82.030(A), at the densities or with the concessions or incentives permitted by this chapter.

B.

Nothing in this section shall be interpreted to require the city to waive, modify or reduce development standards if the wavier, modification or reduction would have a specific adverse impact.

C.

The application and review process for a waiver/modification of development standards is set forth in Section 16.82.120.

(Ord. 596 § 2 (part), 2007)

A.

Only housing developments consisting of five or more dwelling units are eligible for the density bonus percentages provided by this section. The amount of density bonus to which the applicant is entitled shall vary according to the amount by which the percentage of affordable housing units exceeds the percentage established in Section 16.82.030(A).

B.

For housing developments meeting the criteria of subsection (A)(1) of Section 16.82.030, the density bonus shall be calculated as follows:

C.

For housing developments meeting the criteria of subsection (A)(2) of Section 16.82.030, the density bonus shall be calculated as follows:

D.

For housing developments meeting the criteria of subsections (A)(3) and (A)(4) of Section 16.82.030, the density bonus shall be twenty (20) percent.

E.

For housing developments meeting the criteria of subsection (A)(5) of Section 16.82.030, the density bonus shall be calculated as follows:

F.

An applicant may elect to accept a lesser percentage of density bonus than that to which the applicant is entitled under this chapter. All density bonus calculations resulting in a fractional number shall be rounded upwards to the next whole number. The granting of a density bonus shall not be interpreted, in and of itself, to require a general plan amendment, zoning change, or other discretionary approval.

G.

For the purpose of calculating a density bonus, the residential units do not have to be based upon individual subdivision maps or parcels. The density bonus shall be permitted in geographic areas of the housing development other than the areas where the units for the lower-income households are located.

H.

The application and review process for a density bonus as provided by this section is set forth in Section 16.82.120.

(Ord. 596 § 2 (part), 2007)

A.

When an applicant for a tentative map, subdivision map, parcel map, or other residential development approval donates land to the city as provided for in this section, the applicant shall be entitled to a fifteen (15) percent increase above the otherwise maximum allowable residential density under the applicable zoning ordinance and land use element of the general plan for the entire housing development, as follows:

This increase shall be in addition to any increase in density mandated by Section 16.82.030, up to a maximum combined mandated density increase of thirty-five (35) percent, if an applicant seeks both the increase required pursuant to this section and Section 16.82.030. All density calculations resulting in fractional units shall be rounded up to the next whole number. Nothing in this section shall be construed to enlarge or diminish the city's authority to require an applicant to donate land as a condition of development.

B.

An applicant shall be eligible for the increased density bonus described in this section if the city is able to make all the following conditions and findings:

1.

The applicant donates and transfers the land no later than the date of approval of the final subdivision map, parcel map, or date of approval of the residential development application.

2.

The developable acreage and zoning classification of the land being transferred are sufficient to permit construction of units affordable to very low-income households in an amount not less than ten (10) percent of the number of residential units of the proposed development.

3.

The transferred land is at least one acre in size or of sufficient size to permit development of at least forty (40) units, has the appropriate general plan designation, is appropriately zoned for development as affordable housing, and is or will be served by adequate public facilities and infrastructure. The land shall have appropriate zoning and development standards to make the development of the affordable units feasible. No later than the date of approval of the final subdivision map, parcel map, or date of approval of the development application for the housing development, the transferred land shall have all of the permits and approvals, other than building permits, necessary for the development of very low-income housing units on the transferred land, except that the city may subject the proposed development to subsequent design review to the extent authorized by subdivision (i) of Government Code Section 65583.2 if the design is not reviewed by the local government prior to the time of transfer.

4.

The transferred land and the very low-income units constructed on the land will be subject to a deed restriction ensuring continued affordability of the units consistent with this chapter, which restriction will be recorded on the property at the time of dedication.

5.

The land is transferred to the city or to a housing developer approved by the city. The city may require the applicant to identify and transfer the land to such city-approved developer, including but not limited to the redevelopment agency.

6.

The transferred land shall be within the boundary of the proposed development or, if the city agrees in writing, within one-quarter mile of the boundary of the proposed development.

C.

The application and review process for a donation of land and related density bonus is set forth in Section 16.82.120.

(Ord. 596 § 2 (part), 2007)

A.

When an applicant proposes to construct a housing development that includes affordable units as specified in Section 16.82.030 and includes a child care facility that will be located on the premises of, as part of, or adjacent to such housing development, the city shall grant either of the following if requested by the applicant.

1.

An additional density bonus that is an amount of square feet of residential space that is equal to or greater than the amount of square feet in the child care facility.

2.

An additional concession or incentive that contributes significantly to the economic feasibility of the construction of the child care facility.

B.

A housing development shall be eligible for the density bonus or concession described in this section if the city, as a condition of approving the housing development, requires all of the following to occur:

1.

The child care facility will remain in operation for a period of time that is as long as or longer than the period of time during which the affordable housing units are required to remain affordable pursuant to Section 16.82.040.

2.

Of the children who attend the child care facility, the percentage of children of very low-income households, lower-income households, or moderate-income households shall be equal to or greater than the percentage of affordable housing units that are proposed to be affordable to very low-income households, lower-income households, or moderate-income households.

3.

Notwithstanding any requirement of this section, the city shall not be required to provide a density bonus or concession for a child care facility if it finds, based upon substantial evidence, that the community already has adequate child care facilities.

C.

The application and review process for the provision of child care facilities and related density bonus or concessions or incentives is set forth in Section 16.82.120.

(Ord. 596 § 2 (part), 2007)

Any applicant seeking to convert apartments into condominiums may receive a density bonus or incentives of equivalent financial value (as that term is defined in Government Code Section 65915.5) upon an application made in conjunction with its map application pursuant to the Subdivision Map Act, this code and consistent with Government Code Section 65915.5. Any appeal of any density bonus or incentive of equivalent financial value or review by the planning commission to the city council shall automatically require an appeal of the underlying map to that body. An applicant shall be ineligible for a density bonus or other incentives under this section if the apartments proposed for conversion constitute a housing development for which a density bonus or other incentives or concessions were provided under Government Code Section 65915. Nothing in this section shall be

construed to require the city to approve a proposal to convert apartments to condominiums.

(Ord. 596 § 2 (part), 2007)

A.

Housing developments meeting any of the criteria of Section 16.82.030(A), shall be granted the following maximum parking ratios, inclusive of handicapped and guest parking, which shall apply to the entire development, not just the restricted affordable units, when requested in writing by an applicant:

1.

Zero to one bedroom dwelling unit: one on-site parking space;

2.

Two to three bedrooms dwelling unit: two on-site parking spaces;

3.

Four or more bedrooms: two and one-half parking spaces.

B.

If the total number of spaces required results in a fractional number, it shall be rounded up to the next whole number. For purposes of this subdivision, a development may provide "on-site parking" through tandem parking or uncovered parking, but not through on-street parking.

(Ord. 596 § 2 (part), 2007)

A.

A written application for a density bonus, incentive, concession, waiver, or modification pursuant to this chapter shall be submitted with the first application for approval of a housing development and processed concurrently with all other applications required for the housing development. The application shall be submitted on a form prescribed by the city and shall include at least the following information:

1.

Site plan showing total number of units, number and location of affordable housing units, and number and location of proposed density bonus units.

2.

Level of affordability of affordable housing units and proposals for ensuring affordability.

3.

Description of any requested incentives, concessions, waivers or modifications of development standards, or modified parking standards. The application shall include evidence that the requested incentives and concessions are required for the provision of affordable housing costs and/or affordable rents, as well as evidence relating to any other factual findings required under Section 16.82.050.

4.

If a density bonus or concession is requested in connection with a land donation, the application shall show the location of the land to be dedicated and provide evidence that each of the findings included in Section 16.82.080 can be made.

5.

If a density bonus or concession/incentive is requested for a child care facility, the application shall show the location and square footage of the child care facilities and provide evidence that each of the findings included Section 16.82.090 can be made.

B.

An application for a density bonus, incentive or concession pursuant to this chapter shall be considered by and acted upon by the approval body with authority to approve the housing development and subject to the same administrative appeal procedure, if any. In accordance with state law, neither the granting of a concession, incentive, waiver, or modification nor the granting of a density bonus shall be interpreted, in and of itself, to require a general plan amendment, zoning change, variance, or other discretionary approval.

C.

For housing developments requesting a waiver, modification or reduction of a development standard, an application pursuant to this subsection shall be heard by the city planning commission. A public hearing shall be held by the planning commission and the commission shall issue a determination. Pursuant to Government Code Section 65915, the planning commission shall approve the requested waiver/modification or reduction of development standards, unless one of the following conditions applies:

1.

The waiver/modification is not required to make the proposed affordable housing units feasible; or

2.

The waiver/modification will have a specific adverse impact.

The decision of the city planning commission may be appealed to the city council within fourteen (14) consecutive calendar days of the date the decision is made in the manner provided in Arroyo Grande Municipal Code.

D.

Notice of any city determination pursuant to this section shall be provided to the same extent as required for the underlying development approval.

(Ord. 596 § 2 (part), 2007)

This chapter implements the laws for density bonuses and other incentive and concessions available to qualified applicants under Government Code Sections 65915 through 65918. In the event these Government Code sections are amended, those amended provisions shall be incorporated into this chapter as if fully set forth herein. Should any inconsistencies exist between the amended state law and the provisions set forth in this chapter, the amended state law shall prevail.

(Ord. 596 § 2 (part), 2007)