Fountain Valley City Zoning Code
CHAPTER 21
17 INCLUSIONARY HOUSING PROGRAM
§ 21.17.010 Purpose.
The purpose of this Inclusionary Housing Program is to establish standards and procedures that:
(a)
Enhance the public welfare by encouraging the development of housing affordable to a range of extremely low-, very low-, and low-income households.
(b)
Encourage development and availability of affordable housing by requiring the inclusion of affordable housing units within new developments.
(c)
Ensure that future residential development is consistent with the state of California and the city of Fountain Valley's housing policies.
(d)
Ensure that each residential development project complies with the requirements of this chapter and is consistent with the city's housing goals of developing affordable housing opportunities, creating diverse housing opportunities for existing and future residents, and maintaining economic diversity and geographically dispersed affordable housing.
(Ord. 1604, 12/19/2023)
§ 21.17.020 Definitions.
shall mean an attached or detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary single-family dwelling. An ADU shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling. The term ADU also includes an efficiency unit and a manufactured home, provided it is built on a permanent foundation and located on the same parcel as the single-family dwelling. An ADU may be located within an existing attached or detached garage, shed, barn or other accessory structure of the single-family dwelling.
shall mean, for the purposes of this chapter, a dwelling unit affordable to extremely low-, very low-, and low-income households as those terms are defined in the California Health and Safety Code ("HSC") as implemented by the California Code of Regulations ("CCR"). Area median income shall be "adjusted for family size appropriate for the units" pursuant to HSC Section 50052.5 that assumes one person in a studio unit, two persons in a one-bedroom unit, three persons in a two-bedroom unit, four persons in a three-bedroom unit, five persons in a four-bedroom unit, and six persons in a five-bedroom unit. An affordable unit may also be an inclusionary unit.
shall mean a written agreement between the city of Fountain Valley (and/or the Fountain Valley housing authority) and the owner (developer) of the subject property evidencing covenants of the location, number of units at subject property (both existing, if any, and/or to be constructed onsite), type of units (ownership or rental), number of affordable units based on income category and affordable housing cost or affordable rent, as applicable, length of affordability period, approximate size of unit(s) including number of bedrooms, location of affordable units within, and as to multiple units distributed reasonably within, the subject property, and construction schedule of all dwelling units and an agreement to file a deed restriction and lien in favor of the city to secure the affordability restrictions. The affordable housing agreement (and/or the Regulatory agreement attached thereto) shall be subject to review and approval by the community development director and city attorney, with the option of consideration and action by the city council. The affordable housing agreement (and/or the regulatory agreement attached thereto) shall be recorded in the official records, county of Orange, state of California ("official records") as a condition precedent to the issuance of the first building permit for the subject construction at the subject property.
shall mean as defined in HSC Sections 50052.5 and 50053 for ownership and rental units.
For ownership units and for purposes of determining affordable housing cost pursuant to 25 CCR Section 6920 means that "monthly housing payments" shall include an estimate of the following costs for the upcoming 12 months:
Principal and interest payments on the mortgage loan, including rehabilitation loans.
Mortgage loan insurance fees.
Property taxes and assessments.
Fire and casualty insurance.
Property maintenance and repairs.
A reasonable allowance for utilities (including garbage collection, sewer, water, electricity, gas and other fuels, but not telephone service). Such an allowance shall take into consideration the cost of an adequate level of service (based on the Orange County housing authority utility allowance).
Homeowner association fees.
Space rent, if the housing unit is on rented land.
For rental units and for purposes of determining affordable rent pursuant to 25 CCR Section 6918 means that rent is an average of estimated housing costs for the next 12 months. "Rent" includes the total of monthly payments for all of the following:
Use and occupancy of a housing unit and land and facilities associated therewith.
Any separately charged fees or service charges assessed by the lessor which are required of all tenants, other than security deposits.
A reasonable allowance for utilities not included in the above costs, including garbage collection, sewer, water, electricity, gas, and other heating, cooking, and refrigeration fuels. Utilities does not include telephone service. Such an allowance shall take into consideration the cost of an adequate level of service (based on the Orange County housing authority utility allowance.)
Possessory interest taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than the lessor.
shall mean a non-profit housing development corporation whose primary function is the provision and/or management of affordable housing units.
shall mean the maximum price that can be charged for an inclusionary unit based on the qualifying household's income.
shall mean one or more person(s) or entity(ies) that applies for a residential development in the city, regardless of whether the person(s) or entity(ies) have an ownership or leasehold interest in the property on which the development is proposed.
shall mean a single-family dwelling unit having one or more walls attached to and in common with one or more single-family dwellings.
shall mean the maximum number of dwelling units allowed per acre of land within each land use category designated in the General Plan.
shall mean a dwelling unit intended for use by a single household and not attached to any other building.
shall mean an agreement entered into between the city and an owner, as developer, affecting the subject property pursuant to California Government Code Section 65864 et seq.
shall mean each, all and any objective site condition or construction condition, including, but not limited to, height limits, required setbacks, maximum floor area ratio, onsite open-space requirement, or required parking that applies to a residential development pursuant to any ordinance, General Plan, specific plan, zoning, condition of approval, or other local law, policy, resolution, or regulation.
Is defined in HSC Section 50106.
shall mean a residential development project that includes the creation of one or more new dwelling units that may be sold individually. A for-sale residential development project also includes the conversion of a residential rental development to a residential ownership development.
shall mean the specific building construction design as distinguished by the number of households per structure and the degree to which walls or ceilings/floors are shared. For the purposes of this chapter, the three housing types are attached single-family dwelling unit, detached single-family dwelling unit, and multifamily unit.
shall mean the fund created and maintained by the city in which all fees, both in-lieu and other fees, collected in compliance with this chapter 21.17, shall be deposited.
shall mean a set of narratives and site plans detailing how the provisions of this chapter will be implemented for the proposed development project, subject to the approval of the community development director and city attorney, with the option to present to the planning commission for review and recommendation to the city Council for their approval. An inclusionary housing plan shall be submitted by the developer in a form specified by the community development director detailing how the provisions of this chapter will be implemented for the proposed residential development project.
shall mean either be the city itself or a third-party administrator, retained to provide professional services and acting as a representative of the city in connection with certain to all aspects of the operation of the Inclusionary Housing Program pursuant to a contract entered into between the city and the third-party administrator, as such agreement may be amended or replaced from time to time.
shall mean a dwelling unit intended for sale or rent that is required by Section 21.17.040 to be affordable to extremely low-, very low-, or low-income households.
is defined in HSC Section 50079.5.
is a general term, which refers to households whose gross income falls under the categories of extremely low-, very low-, or low-income as those terms are defined in the HSC and this chapter.
shall mean a new dwelling unit in a residential development project that is not an inclusionary unit and is available for sale or rental at market rate.
shall mean a residential unit intended for the use of a single household that is part of a larger building or complex having one or more walls and one or more floors/ceilings attached to and in common with other residential units.
shall mean an agreement entered into between the city of Fountain Valley (and/or the Fountain Valley housing authority) and the owner (developer) of the subject property by which the developer covenants to keep certain housing units at an affordable housing cost for a specified period of time and which regulatory agreement is recorded against the subject property in the official records as a senior nonsubordinate encumbrance to any and all monetary liens, except tax liens or other monetary liens with express statutory priority.
shall mean a residential development project that creates one or more dwelling units that cannot be lawfully sold individually in conformance with the Subdivision Map Act.
shall mean a development that includes the creation of one or more new dwelling units, conversion of nonresidential uses to dwelling units, or the conversion of an existing rental residential development to a residential ownership development.
shall mean the financial arrangement and ownership structure under which an occupant lives in a housing unit. The two primary types of tenure are rental, in which rent is paid by the occupant to a landlord, and ownership, where the occupant(s) has/have acquired title to the unit (with or without a mortgage).
is defined in HSC Section 50105.
(Ord. 1604, 12/19/2023)
§ 21.17.030 Applicability.
(a)
Applicability. This chapter shall apply to all residential developments where the lots or units will be offered for sale or for rent.
(b)
Exemptions. The provisions of this chapter shall not apply to the following projects:
(1)
Projects that do not include a residential component.
(2)
Any project that provides affordable housing in a manner that is equivalent to or better than the requirements of this chapter, such as for example a project that has greater, deeper, and longer affordability covenants than required by this chapter.
(3)
Accessory dwelling units.
(4)
Residential development projects that consist only of less than 10 units including ADUs (each ADU counted as one-half unit).
(6)
Construction of a dwelling unit to replace a previously existing dwelling unit on the same lot that was demolished or destroyed within the last five years.
(A)
A project shall provide at least as many residential dwelling units as the greatest number of residential dwelling units that existed on the property within past five years.
(B)
Protected units must be replaced with new units consisting of the same number of bedrooms at the same income level as the protected unit with specified exceptions for single-family dwellings being built and single-family dwellings being replaced. (Government Code Section 66300(d)(2).)
(7)
Residential development projects exempted by state law.
(8)
Mobile homes.
(9)
Remodels and additions to single-family homes.
(Ord. 1604, 12/19/2023)
§ 21.17.040 Inclusionary housing requirements.
All new residential development projects shall include inclusionary units. Calculations of the number of inclusionary units shall be based on the number of dwelling units in the residential development project, excluding any density bonus units allowed pursuant to DBL. All required inclusionary units shall be built on the same site as the residential development project.
(a)
Inclusionary Requirement. All new residential development projects shall rent or sell 15% of the units at an affordable housing cost. The 15% total may be achieved using any combination of percentage of units affordable to extremely low-, very low, and low-income households. The 15% may also be achieved using a combination of built units and the payment of in-lieu fees.
(b)
Fractional Units. When the application of the percentages specified in Section 21.17.040(a) results in a number that includes a fraction equal to one-half or more, the fraction shall be rounded to the next higher whole number. If the result includes a fraction less than one-half, the applicant shall have the option of rounding up to the next whole number and providing the inclusionary unit or paying a fee in lieu of providing the fractional inclusionary unit.
(c)
State Density Provisions. Any inclusionary units provided on site in compliance with this chapter may be used to qualify for a density bonus as defined in DBL.
(d)
Affordable Housing Agreement. The applicant shall execute a written agreement with the city to determine project compliance with the requirements of this chapter.
(e)
Construction Timing. All inclusionary units shall be constructed and occupied in proportion to the number of market rate units constructed and occupied as measured on an annual basis. A larger number of Inclusionary units can be constructed and occupied earlier than the same proportion of market rate units.
(Ord. 1604, 12/19/2023)
§ 21.17.050 In-lieu fee option.
As an alternative means of compliance, a developer of a residential development project may pay a fee in lieu of providing on-site inclusionary units.
(a)
Purpose. This in-lieu fee is an option that may serve as an alternative to the provision of on-site inclusionary units as otherwise required by Section 21.17.040. Nothing in this chapter shall deem or be used to deem the in-lieu fee authorized in this section as an ad hoc exaction, as a mandated fee required as a condition to developing property, or as a fee subject to the analysis in Building Industry Association of Central California v. City of Patterson, 171 Cal.App.4th 886 (2009) and subsequent applicable precedent.
(b)
Amount. In-lieu fees shall be set by resolution of the city Council and shall be an amount sufficient to pay the proportionate cost of providing inclusionary units elsewhere in the city. The fee shall be periodically reviewed and updated by the city Council. The amount of in lieu fees shall be included in the city's master fee schedule and may be adjusted annually for inflation using an appropriate index, as determined by the city Council.
(c)
Timing of Payment. Payment of in-lieu fees shall be due at, and as a condition precedent to, the issuance of building permits for all residential development projects. In the event of a phased residential development project, i.e., units constructed in phases, in-lieu fees shall be paid prior to issuance of each building permit in the proportion that the phase bears to the overall residential development project. The fees shall be calculated based on the fee schedule in effect at the time the permit is used.
(d)
Use. The city shall use in-lieu fees paid under this chapter to support the development of new housing (or newly converted units) affordable to extremely low-, very low-, and low-income households on sites in the city, and/or to improve and preserve the existing supply of affordable housing in the city. In-lieu fees paid under this chapter may also be used to support appropriate Inclusionary Housing Program implementation and enforcement, provided the fees allocated toward these activities are established by city council resolution per Section 21.17.070(b).
(e)
Density Bonus. Any inclusionary units satisfied through the payment of an in-lieu fee shall not be used as the basis for a density bonus as provided by state law.
(Ord. 1604, 12/19/2023)
§ 21.17.060 Inclusionary unit standards.
The following standards shall apply to all inclusionary units built to satisfy the requirements of this chapter.
(b)
Physical Characteristics and Quality. The inclusionary units within a residential development project shall:
(1)
Have an average square footage of at least 05% of market rate units within the same housing type (detached single-family, attached single-family, or multifamily) with the same bedroom count.
(2)
Be developed with the same bedroom count ratio as the market rate units within the same housing type.
(3)
Have the same interior finishes and features as the market rate units.
(4)
Have the same exterior design and overall quality of construction as the market rate units.
(5)
Have garages in the same proportionality as market rate units.
(c)
Housing Type and Tenure. The inclusionary units within a residential development project can:
(1)
Be different in housing type and tenure than those of market rate units, provided the housing type is permitted by the underlying zoning.
(2)
For for-sale single-family residential development projects zoned exclusively for single-family detached housing, an inclusionary housing project may include attached single-family dwelling units if necessary to accommodate a density bonus.
(d)
Location. All inclusionary units shall have the same vehicular and pedestrian access to common open space and shared facilities in the residential development project as do the market rate units.
(e)
Eligibility Screening. The operator shall screen prospective homebuyers or renters of affordable units, with oversight from the administrator. Buyers of affordable units shall enter into an agreement with the city. Occupants must be selected by means of an open, public process that ensures that individuals of a group of interested participants are selected in accordance with City policy and state law. Private selection of individuals by project owners or developers (or their representatives) is not permitted for any affordable units.
(f)
Certification of Homebuyers. The developer as to the initial sale of a for-sale unit, and all subsequent owners of an inclusionary unit offered for sale shall certify under penalty of perjury, on a form provided by the city (or housing authority), the income of the homebuyer household (purchaser) and that such owners will live in the inclusionary unit as their primary personal residence.
(g)
Ongoing Affordability of For-Sale Units. In order to maintain the availability of for-sale inclusionary units constructed pursuant to this chapter, the following requirements shall apply to inclusionary units, as documented through an affordable housing agreement:
(1)
The affordable sales price of for-sale inclusionary units shall be restricted to a period of 55 years ("for-sale affordability period"), as documented through an affordable housing agreement and as the same is recorded in the official records.
(2)
The affordable sales price shall reset upon resale of the unit(s) to the qualified successor household, as homebuyer at resale, based on the then-current state income and affordable housing cost thresholds.
(A)
In order to maintain the availability of the ownership inclusionary units, the resale price shall be limited to the lesser of the fair market value of the units as established by an independent licensed real estate agent based upon three comparable properties or the restricted resale price. For these purposes, the restricted resale price shall not exceed the affordable housing cost applicable to the unit at such time of resale. As to determining fair market value, the real estate agent or first mortgage lender for the buyer may use the Fannie Mae Desktop Underwriter (DU) as an acceptable method of valuation of the subject unit
(3)
The owner shall occupy the inclusionary unit as the owner's principal place of residence within 60 days of the owner's receipt of a certificate of occupancy for the unit.
(4)
The owner shall reside in the inclusionary unit for at least 10 months out of each calendar year to be considered as occupying the inclusionary unit.
(5)
The owner shall not lease or rent the inclusionary unit or any portion of the inclusionary unit to another party. Any lease of the inclusionary unit or a portion of the inclusionary unit will constitute a default under the requirements of this chapter.
(6)
Upon the death of an owner of an owner-occupied inclusionary unit, title to the property may transfer to the surviving joint tenant, or to an heir in the case of the death of a sole owner or all owners of the household. In connection with the resale of the unit by the surviving joint tenant or heir, all requirements of this chapter apply.
(7)
If an ownership inclusionary unit is sold for an amount in excess of the resale price controls required by this chapter, the buyer and the seller shall be jointly and severally liable to the city for the amount in excess of the affordable housing cost at the time of such resale. Recovered funds shall be deposited into the Inclusionary Housing fund. Notwithstanding the foregoing, the city may allow the buyer and seller to cure any violation of the resale price controls within 90 days.
(h)
Ongoing Affordability of Rental Units. In order to maintain the availability of inclusionary units constructed pursuant to this chapter, all rental inclusionary units shall remain affordable for 55 years ("rental affordability period"), as documented through an affordable housing agreement (and regulatory agreement) as the same is recorded in the official records.
(1)
The owner of any rental residential development project shall certify on a form provided by the city of the household income (all adult members of tenant household) at the time of initial rental and annually thereafter.
(2)
Any owner, as lessor or landlord, that leases or rents an inclusionary unit in violation of this chapter shall be required to forfeit to the city all money so obtained. Further, then existing tenants who were overcharged above affordable rent shall receive a cash rebate or credit as to future rent of the unit, and prior tenants shall be traced by the owner/landlord using reasonable methods to identify then current location of such prior tenants and each such shall receive a cash rebate equal to the amount overcharged that exceeded affordable rent for such unit(s). The funds for prior tenants who cannot be traced shall be remitted to the city and deposited into the Inclusionary Housing fund.
(i)
Affordability Covenants in Affordable Housing Agreement (and Regulatory Agreement); Documentation. The owner, as developer, shall be required to execute standard documents, in a form approved by the city Attorney, to ensure the continued affordability of the inclusionary units approved for each residential development project. The documents may include, but are not limited to, affordable housing agreements, regulatory agreements, inclusionary housing agreements, promissory notes, deeds of trust, resale restrictions, rights of first refusal, options to purchase, covenants related to property management, property maintenance (interior and exterior), and/or other covenants and documents. The affordability and related covenant documents shall be recorded in the official records against the residential development project, all inclusionary units, and any site subject to the provisions of this chapter.
(Ord. 1604, 12/19/2023)
§ 21.17.070 Implementation and enforcement.
(a)
Administration. The city Council, by resolution, may from time to time adopt procedures, policies, rules, and requirements, including the adoption of processing and administrative fees, to implement, administer, and/or enforce the provisions of this chapter.
(b)
Establishment of Administration Fees by Resolution. The city Council, by resolution, may establish fees for the ongoing administration and implementation of this chapter and the monitoring of the affordable units. These fees may be updated periodically, as required.
(c)
Enforcement. The city Attorney is authorized to enforce the provisions of this chapter and all affordable housing agreements, regulatory agreements, covenants, resale restrictions, promissory notes, deeds of trust and other implementing instruments and requirements placed on inclusionary units by civil action and any other method permitted by law. The city may take such enforcement action as is authorized under this code and/or any other action authorized by law or by any regulatory document, restriction, or agreement executed under this chapter. Any individual who sells or rents an inclusionary unit in violation of the provisions of this chapter, the inclusionary housing plan, or the affordable housing agreement shall be required to forfeit to the city all monetary amounts obtained in violation of those provisions. Recovered funds shall be deposited into the Inclusionary Housing trust fund.
(d)
Forfeiture for Violation. Certain forfeiture provisions are set forth above for ownership and rental inclusionary units.
(e)
Applicability of Provisions. The provisions of this chapter shall apply to all owners, developers, their agents, successors, and assigns that propose a residential development, occupy an inclusionary unit, or both. All inclusionary units shall be sold or rented in accordance with this chapter and any regulations and administrative guidelines adopted pursuant to this chapter.
(f)
Project Approval, Permitting, and In-Lieu Fees. No permit, license, map, or other approval or entitlement for a residential development project shall be issued until all applicable requirements of this chapter have been satisfied.
(1)
Project Approval. No ministerial or discretionary approval shall be issued for a residential development project subject to this chapter until the applicant has submitted and the community development director has approved an inclusionary housing plan.
(2)
Issuance of Building Permit. No building permit shall be issued for a residential development project subject to this chapter unless the affordable housing agreement has been recorded encumbering the subject project site.
(3)
Issuance of Certificate of Occupancy. Certificates of occupancy shall only be issued:
(A)
For market rate units, up to the proportion of certificates of occupancy issued for inclusionary units. For example, if five percent of the 15% of inclusionary units are to receive a certificate of occupancy, then up to one-third of the market rate units can receive a certificate of occupancy.
(B)
For market rate units if the approved inclusionary housing plan has been fully or at least proportionally implemented (proportional if the residential development project is to be built in phases).
(C)
For market rate units, in the case of compliance through in-lieu fees, once all in-lieu fees have been paid for the entire residential development project.
(D)
For inclusionary units as soon as they are eligible.
(g)
Annual Monitoring. Homeowners will receive an annual monitoring notice from the city to confirm the owner-occupancy requirement and prohibitions against rental of the dwelling unit. The review will provide owners with an opportunity to become familiar with the guidelines of the Inclusionary Housing Program and any changes in adopted policies and procedures. For rental units, an annual monitoring notice from the city will be sent to all owners or the designated management agencies to confirm residents are eligible to occupy, and continue to qualify for occupancy, of the affordable units.
(h)
Affordable Housing Funds. Housing in-lieu fees collected by the city pursuant to this chapter shall be deposited into an inclusionary housing fund that is maintained, separately accounted for, and used by the city in the site acquisition, development, on- or off-site infrastructure, rehabilitation, program administration, or preservation of affordable housing, either directly by the city or in partnership with a third-party affordable housing developer.
(Ord. 1604, 12/19/2023)