The purpose and intent of this chapter is to enhance the public welfare by ensuring that residential development projects contribute to the attainment of the affordable housing goals set forth in the General Plan Housing Element, specifically goals related to the development of housing affordable to extremely low, very low, and low-income households.

(Ord. No. 24-07, § 3, 9-18-2024)

The following words and phrases shall have the meanings set forth below when used in this chapter:

(05)

Accessory dwelling unit shall have the same meaning as the term is defined in California Government Code Section 65852.2, as amended from time to time or replaced with a successor statute. "Accessory dwelling unit" shall also include junior accessory dwelling units as the term is defined in California Government Code Section 65852.2, as amended from time to time or replaced with a successor statute.

(10)

Affordable housing agreement shall mean a legally enforceable agreement between a property owner and the City to ensure that the long-term inclusionary requirements of this chapter are satisfied.

(15)

Allowable housing expense shall mean the total monthly or annual recurring expenses required of a household to obtain and maintain the housing unit.

a.

For an ownership unit, allowable housing expenses include loan principal and interest at the time of initial purchase by the homebuyer, allowances for property and mortgage insurance, property taxes, homeowners' association dues and a reasonable allowance for utilities as defined in Title 24 of the Code of Federal Regulations Section 982.517, as amended from time to time or replaced with a successor statute.

b.

For a rental unit, allowable housing expenses include rent and a utility allowance as established by the Orange County Housing Authority, as well as all monthly payments made by the tenant to the lessor in connection with use and occupancy of a housing unit and land and facilities associated therewith, including any separately charged fees, utility charges, or service charges assessed by the lessor and payable by the tenant.

(20)

Density bonus shall have the same meaning as the term is defined in California Government Code Section 65917.5, as amended from time to time or replaced with a successor statute.

(25)

Dwelling unit shall have the same meaning as the term is defined in the California Building Standards Code, as amended from time to time or replaced with a successor statute. "Dwelling unit" shall also include efficiency dwelling units as the term is defined in the California Building Standards Code, as amended from time to time or replaced with a successor statute.

(30)

Extremely low-income household shall mean households that earn 30 percent or less than the area median income for Orange County as determined, from time to time, by the U.S. Department of Housing and Urban Development.

(35)

Incentives or concessions shall mean regulatory incentives and concessions as defined in California Government Code Section 65915(k), as amended from time to time or replaced with a successor statute.

(40)

Inclusionary housing project shall mean a residential development or lawful conversion of existing residential buildings in which a percentage of the units of the development or building are reserved for and made affordable to households of certain income levels, as required by this chapter.

(45)

Inclusionary unit shall mean a dwelling unit that will be offered for rent or sale exclusively to and which shall be affordable to households of certain income levels, as required by this chapter.

(50)

Low-income household shall mean households that earn between 50 percent and 80 percent than the area median income for Orange County as determined, from time to time, by the U.S. Department of Housing and Urban Development.

(55)

Lower-income household shall include low-income, very low-income and extremely low-income households, whose gross income does not exceed 80 percent of the area median income for Orange County as determined annually by the U.S. Department of Housing and Urban Development.

(60)

Market-rate unit shall mean a dwelling unit in a residential development that is not an inclusionary unit.

(65)

Ownership unit shall mean an inclusionary housing project unit intended to be sold individually to owners.

(70)

Rental unit shall mean an inclusionary housing project unit intended not to be developed or constructed to be sold individually.

(75)

Residential development shall mean any new residential construction of ownership or rental units intended for permanent occupancy, or development revisions, including but not limited to, those with and without a master plan or specific plan, planned unit developments, site development plans, mobile home developments and conversions of apartments to condominiums, as well as dwelling units for which the cost of shelter is included in a recurring payment for expenses.

(80)

Target income level shall mean the income standards for extremely low-, very low- and low-income levels within Orange County as determined annually by the U.S. Department of Housing and Urban Development, and adjusted for family size.

(85)

Total residential units shall mean the total number of dwelling units approved by the final decision-making authority of the City. Total residential units are composed of the aggregate total of both market-rate units and inclusionary units.

(90)

Very low-income household shall mean households that earn between 30 percent and 50 percent than the Area Median Income for Orange County as determined, from time to time, by the U.S. Department of Housing and Urban Development.

(Ord. No. 24-07, § 3, 9-18-2024)

(a)

This chapter shall apply to residential developments.

(b)

The chapter shall be applied no more than once to an approved residential development and/or vested entitlement by the City, regardless of changes in the ownership of the residential development, provided the total number of residential units does not change.

(c)

This chapter shall not be applied to the replacement, reconstruction, or reconfiguration of dwelling units lawfully constructed as of the date this chapter was enacted, provided that such replacement, reconstruction, or reconfiguration does not increase the number of dwelling units (excepting any number of accessory dwelling units allowed under this Code and applicable law).

(d)

This chapter shall not apply to the following projects:

(1)

Projects that are not residential developments.

(2)

Residential developments that consist only of dwelling units offered for rent or sale exclusively to and which shall be affordable to households of extremely low, very low, and/or low-income levels, provided that such dwelling units are deed-restricted for such purposes for at least 45 years, and subject to a finding of sufficiency by the City Council. Deed restrictions shall occur prior to the rent or sale of each unit. Timing of construction shall occur in the manner set forth in Section 13.25.040(c).

(3)

Residential developments that deed-restrict the number of inclusionary units required by this chapter for such purposes for at least 55 years, subject to a finding of sufficiency by the City Council. Deed restrictions shall occur prior to the rent or sale of each unit. Timing of construction shall occur in the manner set forth in Section 13.25.040(c).

(4)

Residential units that provide more than the number of inclusionary units required by this chapter (overall and at one or more of the required income levels) and deed-restrict the same for such purposes for at least 45 years, subject to a finding of sufficiency by the City Council. Deed restrictions shall occur prior to the rent or sale of each unit. Timing of construction shall occur in the manner set forth in Section 13.25.040(c).

(5)

Residential developments that consist only of one dwelling unit with or without any number of accessory dwelling units allowed under this Code and applicable law.

(6)

Residential developments that consist only of one or more accessory dwelling units.

(Ord. No. 24-07, § 3, 9-18-2024)

(a)

Number and type of units required. Residential developments shall provide inclusionary units as follows:

(1)

Rental units. Two and five tenths percent of the new units must be for extremely low-income households and two and five tenths percent of the new units must be for very low-income households.

(2)

For-sale units. Five percent of the new units must be for very low-income households and five percent of the new units must be for low-income households.

(3)

Fractions of a new unit less than 0.5 shall be rounded down to the nearest whole number and fractions of a new unit equal to or greater than 0.5 shall be rounded up to the next whole number to establish the required number of new units.

(4)

The City Council may consider allowing inclusionary for-sale units to be offered as rental units if requested by the residential development owner.

(b)

Integration of Units. Inclusionary units shall be integrated with residential developments as a whole and shall be comparable in infrastructure, construction quality and design to the market-rate units. Residents of inclusionary units shall have the same rights and unrestricted access to all common amenities in the residentials development including, but not limited to, open space, parking, recreational space, and storage, as do residents of market-rate units.

(c)

Timing of construction. Inclusionary units shall be constructed and occupied concurrently with or prior to the construction and occupancy of market-rate units. In phased residential developments, inclusionary units shall be constructed and occupied concurrently or prior to the market-rate units in each applicable phase of the residential development.

(d)

Duration of affordability requirement. Inclusionary units required under the provisions of this chapter shall be deed restricted for such purposes for 45 years, unless otherwise approved by the City Council pursuant to Section 13.25.050(d).

(e)

Affordable housing agreement.

(1)

An affordable housing agreement shall be entered into between the City and the residential development owner. The agreement shall record the method and terms by which a residential development owner shall comply with the requirements of this chapter. The approval and recordation of the agreement shall be to the satisfaction of the City Manager and City Attorney, and subject to approval of the City Council. The execution of the agreement shall occur prior to final map approval by the City or, for residential development projects where a map is not being processed, prior to the issuance of building permits by the City.

(2)

Affordable housing agreements shall set forth the number and location of required inclusionary units, affordability tenure of the inclusionary units, deed restrictions, methodology for determining each inclusionary unit's initial and ongoing rent or sales and resale prices, resale restrictions, occupancy requirements, eligibility requirements, City incentives or concessions including, but not limited to, second mortgages and recapture mechanisms in accordance with Title 24 of the Code of Federal Regulations Section 203.41(d)(1)(ii), the administrative process for monitoring inclusionary unit management to assure ongoing affordability and other matters related to the development, maintenance, preservation, and retention of the inclusionary units.

(3)

Affordable housing agreements may be amended by the City Council.

(Ord. No. 24-07, § 3, 9-18-2024; Ord. No. 25-01, § 3(Exh. A), 3-19-2025)

The following alternatives are intended to comply with California Assembly Bill 1505 (Bloom, Chapter 376, Statutes of 2017) and may be used to satisfy the requirement to provide inclusionary units for rent at the site of a residential development, subject to approval by the City Council:

(a)

In-lieu fee. An in-lieu fee established by resolution of the City Council may be paid to the City for deposit into an affordable housing trust fund.

(1)

The intent of allowing an in-lieu fee option is to provide the City with funds to make substitute inclusionary units for rent feasible, thus meeting the purpose and intent of this chapter. The amount of the in-lieu fee shall be reasonably equal to the cost of constructing the inclusionary units for rent not being provided at the site of the residential development.

(2)

In-lieu fees shall be paid prior to the issuance of building permits by the City. For phased residential developments, the developer may pay a pro rata share of the in-lieu fee concurrently with the issuance of building permits by the City for each development phase.

(b)

Land dedication. An agreed upon area of real property land may be dedicated to the City or to a local nonprofit housing developer.

(1)

The intent of allowing a land dedication option is to provide the City or a local nonprofit housing developer the no cost land required to make substitute inclusionary units for rent feasible, thus meeting the purpose and intent of this chapter. The land dedicated shall be reasonably equal to the value of the inclusionary units for rent not being provided at the site of the residential development.

(2)

The dedicated land must be appropriately zoned for, buildable, free of toxic substances and contaminated soils, and large enough to accommodate the number of inclusionary units for rent required for the residential development.

(3)

The City's acceptance of land dedication shall include, as a precondition, the requirement that the lots be fully improved, with infrastructure, adjacent utilities, grading, and all fees paid.

(4)

The City's acceptance of land dedication shall occur prior to the issuance of building permits by the City.

(c)

Methods of compliance not expressly contemplated. The City Council may approve methods of compliance with this chapter if the applicant demonstrates to the City Council's satisfaction that such alternate method meets the purpose and intent of this chapter.

(d)

Modified requirements for hardship. The City Council may reduce, waive, or provide phasing relief of any of the provisions of this chapter provided the residential development owner submits to the City Council's satisfaction clear and convincing evidence that full compliance would present a generally accepted unreasonable financial or practical hardship, based on objective, industry standard factors such as project size, site constraints, or financial considerations.

(1)

Any reduction, waiver, or phasing relief approved by the City Council that requires allows for the provision of fewer inclusionary units than otherwise required by this chapter shall require an extension of the duration of affordability requirement set forth in Section 13.25.040(d) to at least 55 years, except to the extent that the evidence submitted by the residential development owner to the City substantiates to the City Council's satisfaction that such extension would present a generally accepted unreasonable financial or practical hardship, based on objective, industry standard factors such as project size, site constraints, or financial considerations.

(Ord. No. 24-07, § 3, 9-18-2024)