Larkspur City Zoning Code

18.25 Affordable

Housing Fund and Inclusionary/In-Lieu Fee Requirements

18.25.010 Purpose.

The purpose of this chapter is to maintain the City’s affordable housing fund and establish an inclusionary requirement or an in-lieu fee on developers of residential development projects to mitigate the impacts caused by these development projects on the rising land prices for a limited supply of available residential land. The purpose is also to achieve a balanced community with housing available for households with a range of income levels. In-lieu fees will be used to defray the costs of providing affordable housing for very low-, low-, and moderate-income households in the City of Larkspur. The fees and inclusionary requirements required by this chapter do not replace other regulatory, development and processing fees or exactions, funding required pursuant to a development agreement or reimbursement agreement, assessments charged pursuant to special assessments or benefit assessment district proceedings, etc., unless so specified. (Ord. 1065 § 6 (Exh. A), 2023; Ord. 1030 § 2(12), 2018; Ord. 999 § 1, 2015; Ord. 941 § 1, 2005. Formerly 18.31.010)

18.25.020 Definitions.

For the purposes of this chapter, the following words, phrases, and terms shall have the meanings set forth herein. Words not defined shall be given their common and ordinary meaning.

“Affordable units” means those dwelling units which are required to be rented at affordable rents or purchased at an affordable sales price to specified households as described in Larkspur Municipal Code Section 18.25.040.

“Chief Building Official” means the Chief Building Official of the City of Larkspur, or the designee of such individual.

“Building permit” means a permit issued pursuant to Larkspur Municipal Code Chapter 15.08.

“Developer” means every person, firm, or corporation constructing, placing, or creating residential development directly or through the services of any employee, agent, independent contractor or otherwise.

“Dwelling unit” shall have the meaning set forth in Larkspur Municipal Code Chapter 18.08.

“Housing fund” means the City of Larkspur’s affordable housing fund.

“Housing in-lieu fee” means the fee established pursuant to Larkspur Municipal Code Section 18.25.040 for residential development projects.

“Low-income households” means those households with incomes of up to eighty (80) percent of median income as determined annually by the Marin Housing Authority in consultation with the City of Larkspur.

“Market rate units” means those dwelling units in a residential project which are not affordable units.

“Median income” means the annual median income, adjusted for household size, applicable to Marin County as determined annually by the Marin Housing Authority in consultation with the City of Larkspur.

“Moderate income households” means those households with incomes of up to one hundred twenty (120) percent of median income as determined annually by the Marin Housing Authority in consultation with the City of Larkspur.

“Residential development project” means a project for the new construction, creation, or placement of any dwelling unit in a permanent location, or the subdivision of land which is planned, designed, or used for the following land use categories:

1. Single-Family Residential. This category consists of single-family detached units and duplexes.

2. Multifamily Residential. This category consists of buildings containing three (3) or more dwelling units and mobile home parks.

For purposes of this chapter, this term does not include remodels where no new dwelling units are created, but does include projects where an existing structure is voluntarily demolished for rebuilding.

“Very low-income households” means those households with incomes of up to fifty (50) percent of median income as determined annually by the Marin Housing Authority in consultation with the City of Larkspur. (Ord. 1069 § 5, 2023; Ord. 1065 § 6 (Exh. A), 2023; Ord. 1030 § 2(12), 2018; Ord. 999 § 1, 2015; Ord. 959 § 1, 2007; Ord. 941 § 1, 2005. Formerly 18.31.020)

18.25.030 Affordable Housing Fund.

An affordable housing fund is established.

A. The housing fund shall be administered by the City Manager, or their designee, who shall have the authority to govern the housing fund consistent with this chapter, and with prescribed procedures for said purpose, subject to approval by the Council.

1. Monies deposited in the housing fund along with any interest earnings on such monies shall be used solely to increase and improve the supply of housing affordable to moderate-, low- and very low-income households. Monies may be used to cover reasonable administrative expenses not reimbursed through processing fees, including reasonable consultant and legal expenses related to the establishment and/or administration of the housing fund and reasonable expenses for administering the process of calculating, collecting, and accounting for inclusionary fees and any deferred City fees authorized by this section. No portion of the housing fund may be diverted to other purposes by way of loan or otherwise.

2. Expenditures by the City Manager from the housing fund shall be by contract and controlled, authorized and paid in accordance with general City budgetary policies.

3. Investment of monies from the housing fund shall be made in accordance with the City’s investment policy. (Ord. 1065 § 6 (Exh. A), 2023; Ord. 1062 § 14, 2022; Ord. 1030 § 2(12), 2018; Ord. 999 § 1, 2015; Ord. 941 § 1, 2005. Formerly 18.31.030)

18.25.040 Residential Development Project – Inclusionary/In-Lieu Fee Requirements.

Any new residential development project with dwelling units intended or designed for permanent occupancy shall be developed to provide affordable housing units to very low-, low-, moderate-, and above moderate-income households and/or pay housing in-lieu fees in accordance with the requirements, policies and procedures specified in this section.

1. Requirements for residential development projects consisting of multiple dwellings (rental dwelling units).

a. Residential development projects consisting of multifamily residential dwelling units (rental units) shall provide on-site affordable housing units as part of the proposed project in accordance with either Table A or Table B, as selected by the developer. Any fractional units resulting from calculating the number of required affordable units may either be: 1) rounded up to the next whole number, or 2) an in-lieu fee may be paid equal to the calculated fractional unit.

b. In-Lieu Fee for Multifamily Residential Development Projects. The requirement in subsection (A)(1)(a) to provide affordable units in a multifamily residential development project may be satisfied by the payment of a fee in lieu of constructing the affordable units as provided in subsection (D) of this section. The housing in-lieu fee schedule shall be established by resolution of the City Council. The housing in-lieu fees in the schedule shall be increased or decreased in accordance with the year over year increase or decrease in the California Construction Cost Index (CCCI) as measured from December to December, or by a substitute index selected by the City Manager, if the CCCI ceases to be published. The first adjustment to the housing in-lieu fee schedule shall be made on January 1, 2024, and thereafter shall be adjusted on each January 1st by the Community Development Director. For each residential development project, the housing in-lieu fee, when applicable, shall be calculated and paid on the date a building permit is issued for such project. Revenue from affordable housing in-lieu fees shall be deposited into the affordable housing fund.

Project Size	Required Affordable Unit Set Aside and In-Lieu Fee
	Very Low	Low	Moderate	In-Lieu Fee
2 – 10 units	10%			10%
11 – 29 units	10%		10%
30 or more units	15%		5% (or 5% In-Lieu Fee)

Project Size	Required Affordable Unit Set Aside and In-Lieu Fee
	Very Low	Low	Moderate	In-Lieu Fee
2 – 10 units		15%		5%
11 – 29 units		15%	5%
30 or more units	10%	5%	5%

2. Requirements for residential development projects consisting of single-family detached dwelling units and multiple houses (for-sale dwelling units).

a. Residential development projects consisting of single-family detached dwelling units (for-sale dwelling units) or multiple houses (for-sale dwelling units) shall provide affordable housing units on site as part of the proposed project in accordance with Table C. Any fractional units resulting from calculating the required affordable unit set aside may either be: 1) rounded up to the next whole number, or 2) an in-lieu fee may be paid equal to the calculated fractional unit.

b. In-Lieu Fee for Single-Family Detached Development Projects. The requirement in subsection (A)(2)(a) of this section to provide affordable units in a single-family detached residential development project may be satisfied by the payment of a fee in-lieu of constructing the affordable units as provided in subsection (D) of this section. The housing in-lieu fee schedule shall be established by resolution of the City Council. The housing in-lieu fees in the schedule shall be increased or decreased in accordance with the year over year increase or decrease in the California Construction Cost Index (CCCI) as measured from December to December, or by a substitute index selected by the City Manager, if the CCCI ceases to be published. The first adjustment to the housing in-lieu fee schedule shall be made on January 1, 2024, and thereafter shall be adjusted on each January 1st by the Community Development Director. For each residential development project, the housing in-lieu fee, when applicable, shall be calculated and paid on the date a building permit is issued for such project. Revenue from affordable housing in-lieu fees shall be deposited into the affordable housing fund.

c. In-Lieu Fee for Multiple Houses. The requirement in subsection (A)(2)(a) of this section to provide affordable units in a multiple house residential development project may be satisfied by the payment of a fee in-lieu of constructing the affordable units as provided in subsection (D) of this section. The housing in-lieu fee schedule shall be established by resolution of the City Council. The housing in-lieu fees in the schedule shall be increased or decreased in accordance with the year over year increase or decrease in the California Construction Cost Index (CCCI) as measured from December to December, or by a substitute index selected by the City Manager, if the CCCI ceases to be published. The first adjustment to the housing in-lieu fee schedule shall be made on January 1, 2024, and thereafter shall be adjusted on each January 1st by the Community Development Director. For each residential development project, the housing in-lieu fee, when applicable, shall be calculated and paid on the date a building permit is issued for such project. Revenue from affordable housing in-lieu fees shall be deposited into the affordable housing fund.

Project Size	Required Affordable Unit Set Aside
	Low	Moderate	Above Moderate
2 – 4 units			20%
5 – 29 units	5%	5%	10%
30 or more units	5%	10%	5%

1. The maximum rent charged for an affordable unit constructed pursuant to the requirements in subsection (A) of this section shall be equal to thirty (30) percent of the area median income (AMI) for the applicable unit-type as shown in Table D, adjusted for household size pursuant to California Department of Housing and Community Development (HCD) guidelines. Such maximum rent shall be inclusive of utility charges.

2. The maximum sales price for an affordable unit constructed pursuant to the requirements in subsection (A) of this section shall be equal to thirty-five (35) percent of the area median income (AMI) for the applicable unit-type as shown in Table D, adjusted for household size pursuant to Marin Housing Authority (MHA) guidelines. The maximum sales price shall be consistent with other MHA guidelines; provided, that the maximum sales price permitted by this subsection is not exceeded.

Unit Type	Very Low²	Low	Moderate	Above Moderate³
Target AMI¹	50%	65%	100%	135%

1The most recent AMIs for Marin County, published by the California Department of Housing and Community Development (HCD), shall be used for calculating maximum rent and sales prices.

2Not applicable for for-sale projects.

3Not applicable for rental projects.

1. A developer of a residential development project may propose to meet the requirements of subsection (A) of this section by an alternative equivalent action, subject to the review and approval by the City Council.

2. An alternative equivalent action may include, but is not limited to, dedication of vacant land suitable for housing to a nonprofit housing development (see subsection (C)(2)(a) of this section), transfer of inclusionary unit credits (see subsection (C)(2)(b) of this section), construction of affordable units on another site or enforcement of required rental/sales price restrictions on existing market-rate dwelling units consistent with this section, and development of second dwelling units (see subsection (C)(2)(c) of this section).

All applicants proposing the use of an alternative equivalent action shall show how the alternative will further affordable housing opportunities in the City to an equal or greater extent than compliance with the express requirements of subsection (A) of this section.

a. Land Donation. Upon approval of the City Council, an applicant may donate land to a nonprofit housing developer in place of actual construction of required affordable units. The dedicated land must be appropriately zoned, buildable (e.g., fully improved as noted below), and free of toxic substances and contaminated soils as defined by the State Department of Toxic Substances Control. The land must be large enough to accommodate the number of required affordable units as indicated by a conceptual development plan. The land that is donated shall be fully improved with access infrastructure, adjacent utilities, and grading, and fees paid.

b. Transfer of Inclusionary Unit Credits. Upon approval of the City Council as set forth herein, the requirements of this section may be satisfied by acquiring inclusionary unit credits that are transferable from one residential development project to another; provided, that no other bonuses, incentives, or concessions pursuant to Larkspur Municipal Code Chapter 18.26 have been granted to the developer acquiring the credits. The City Council may approve issuance of a credit certificate for each affordable unit provided by a particular residential development project in excess of the minimum number required for the project and it may establish a cap on the value of the certificates. Credit certificates shall be issued for specific income categories and may only be used to satisfy the requirements for affordable units within that same income category. If the holder of the credit certificates transfers any or all certificates to a developer of a residential development project, the parties shall report the transaction to the Community Development Director, who will document the transfer. When a credit certificate is applied to meet the affordable unit requirement of a particular project, it shall be recorded at the time of project approval, and subject certificates shall be returned to the Community Development Director.

c. Second Dwelling Units. Not more than fifty (50) percent of the requirements of this chapter may be satisfied through the development of second dwelling units at a ratio of two (2) second dwelling units counted as one (1) affordable housing unit. All second units counted toward meeting the affordable unit requirement shall be subject to the provisions of subsection (G) of this section, Continued Affordability.

3. The City Council shall consider an alternative equivalent action at a public meeting. An alternative equivalent action shall be considered on a case-by-case basis by the City Council and may be approved at the City Council’s sole discretion, if the City Council determines that such alternative will further affordable housing opportunities in the City to an equal or greater extent than compliance with the express requirements of subsection (A) of this section.

1. For a residential development of three (3) or fewer units, an applicant may pay the in-lieu fee.

2. For a residential development of four (4) or more units and which is not, and has not been, part of a larger residential project, an applicant may propose to meet the requirements of subsection (A) of this section by submitting at the time of application for a discretionary approval or building permit, whichever comes first, a request to pay the in-lieu fee along with a report identifying:

a. All overriding conditions impacting the project that prevent the development from meeting the requirement to construct the affordable units;

b. Sufficient independent data, including appropriate financial information, that supports the developer’s claim that it is not feasible to construct the required affordable units; and

c. A detailed analysis of why the concessions and incentives identified in Larkspur Municipal Code Chapter 18.26 will not mitigate the identified overriding conditions that are preventing the construction of the affordable units.

3. The City Council’s consideration of an in-lieu housing fee for a residential development shall follow the procedures outlined in Larkspur Municipal Code Chapter 18.26. In-lieu housing fees shall be considered on a case-by-case basis by the City Council and may be approved at the City Council’s sole discretion, if the Council determines that there are overriding conditions impacting the project that prevent the developer of a residential development project from meeting the requirement to construct affordable units and that payment of the in-lieu fee will further affordable housing opportunities.

E. Requirements for Rental Affordable Units. With respect to any particular multifamily residential development project, the City Council may, upon the recommendation of the City Manager, forgive all or a portion of the affordability requirement set forth in subsection (A) of this section upon a showing by the applicant that imposition of such requirement on the residential project will cause undue hardship and that such residential project will contribute significantly to affordable housing opportunities in the City.

F. Basic Requirements for Owner-Occupied and Rental Affordable Units. Affordable units shall be comparable in number of bedrooms, exterior appearance and overall quality of construction to market rate units in the same residential project. Subject to the approval of the Planning Commission through the design review process, square footage of affordable units and interior features in affordable units are not required to be the same as or equivalent to those in market rate units in the same residential project, so long as they are of good quality and are consistent with contemporary standards for new housing. Affordable units shall be dispersed throughout the residential project, or, subject to the approval of the Planning Commission, may be clustered within the residential project when this furthers affordable housing opportunities.

1. Prior to the issuance of certificates of occupancy or approval of the final inspection for affordable units, regulatory agreements and, if the affordable units are owner-occupied, resale restrictions, deeds of trust and/or other documents, all of which must be acceptable to the City Manager and consistent with the requirements of this chapter, shall be recorded against parcels having such affordable units and shall be effective in perpetuity, unless reduced by the City Council to a specific term to meet the requirements of a financing institution or subsidy program, with respect to each affordable unit.

2. The following shall apply during the affordability period for an affordable unit subject to this chapter:

a. The maximum sales price permitted on resale of an affordable unit intended for owner occupancy shall not exceed the seller’s purchase price, adjusted for the percentage increase in median income since the seller’s purchase, plus the cost of substantial structural or permanent fixed improvements to the property, plus the cost of reasonable seller’s broker fee as determined by the City Manager.

b. The resale restrictions shall provide that, in the event of the sale of an affordable unit intended for owner occupancy, the City shall have the right to purchase or assign its right to purchase such affordable unit at the maximum price which could be charged to an eligible household.

3. No household shall be permitted to occupy an affordable unit, or purchase an affordable unit for owner occupancy, unless the City or its designee has approved the household’s eligibility, or has failed to make a determination of eligibility within the time or other limits provided by a regulatory agreement or resale restrictions.

If the City or its designee maintains a list of eligible households, households selected to occupy affordable units shall be selected first from that list to the extent provided in the regulatory agreement or resale restrictions.

4. For any affordable unit that is no longer restricted at the time of the sale, the seller is only entitled to the maximum sales price permitted as defined in subsection (G)(2)(a) of this section. The proceeds above and beyond that shall be placed back into the housing fund and used as defined in Larkspur Municipal Code Section 18.25.030(B).

5. If the City granted concessions at the time of a development, the City shall recapture its proportionate share of appreciation. For purposes of this subsection, the City’s proportionate share of appreciation shall be equal to the discount given to make a unit affordable divided by the fair market value of the unit at the time of the initial sale; such fair market value shall be documented through an appraisal of the property by a qualified appraiser and provided to the City by the developer. This amount shall be placed into the housing fund and used as defined in Larkspur Municipal Code Section 18.25.030(B).

1. For each rental affordable unit provided hereunder, the current owner may be required to pay an annual monitoring fee for the term of required affordability. Such fee shall be specified in the regulatory agreement(s) required hereunder.

2. For each owner-occupied affordable unit provided under this section, the current owner may be required to pay a transfer fee for any change of ownership during the term of required affordability. Such fee shall be specified in the resale restrictions required by subsection (G) of this section.

I. Discretionary Permit Requirements. Every discretionary permit for a residential development project subject to this chapter shall contain a statement detailing the method of compliance with this chapter. Every final and parcel map shall bear a note indicating compliance with the requirements of this section must be met prior to issuance of a building permit for each lot created by such map.

J. Professional Assistance for City Review and Determinations. Whenever an approval or determination is required, the Community Development Director may, at the applicant’s sole cost and expense, retain a suitably qualified independent professional consultant to evaluate the adequacy of the application to achieve the purposes of this chapter.

1. No temporary or permanent certificate of occupancy shall be issued, final inspection approved or release of utilities authorized for any new dwelling unit in a residential development project until the developer has satisfactorily completed the requirements hereunder, i.e., on-site construction of affordable units, alternative equivalent action(s) or payment of the housing in-lieu fee.

2. No temporary or permanent certificate of occupancy shall be issued, final inspection approved or release of utilities authorized for a dwelling unit described as exempt from the requirements of this chapter in Larkspur Municipal Code Section 18.25.050 until the developer has made a showing acceptable to the City Manager that such an exemption is appropriate. (Ord. 1065 § 6 (Exh. A), 2023; Ord. 1062 § 14, 2022; Ord. 1030 § 2(12), 2018; Ord. 999 § 1, 2015; Ord. 941 § 1, 2005. Formerly 18.31.040)

18.25.050 Exemptions.

The following projects are exempt from the requirements of Larkspur Municipal Code Section 18.25.040:

A. Any residential development project of one (1) single-family structure.

B. Any accessory dwelling units or junior accessory dwelling units approved by the City of Larkspur pursuant to Larkspur Municipal Code Chapter 18.23.

C. Any residential development project that is damaged or destroyed by fire or other natural catastrophe; provided, that the rebuilt square footage of the residential portion of the building does not increase upon reconstruction; and provided, that any affordable units within such residential development project are rebuilt in accordance with any required affordable housing agreements or requirements related to such project.

D. Any residential development project with a valid Planning Commission approval received prior to the effective date of the ordinance codified in this section. (Ord. 1065 § 6 (Exh. A), 2023)

18.25.060 Enforcement Provisions.

A. It shall be unlawful, a public nuisance and a misdemeanor for any person to sell or rent an affordable unit at a price or rent exceeding the maximum allowed under this chapter or to a household not qualified under this chapter, and such person shall be subject to a fine of five hundred dollars ($500.00) per month plus restitution of the amount charged that exceeded the maximum allowed under this chapter from the date of original noncompliance until the affordable unit is in compliance with this section. Fine monies collected that exceed the cost of enforcement shall be deposited in the housing fund.

B. The City Attorney or the Marin County District Attorney, as appropriate, shall be authorized to abate violations of this chapter and to enforce the provisions of this chapter and all implementing regulatory agreements and resale controls placed on affordable units by civil action, injunctive relief, and any other proceeding or method permitted by law.

C. The remedies provided for herein shall be cumulative and not exclusive and shall not preclude the City from any other remedy or relief to which it otherwise would be entitled under law or equity. (Ord. 1065 § 6 (Exh. A), 2023; Ord. 1030 § 2(12), 2018; Ord. 999 § 1, 2015; Ord. 941 § 1, 2005. Formerly 18.31.050, 18.25.050)

Code reviser’s note: Ord. No. 1065 amended this section as Section 18.25.050. It has been editorially renumbered to avoid duplication of numbering.

18.25.070 Adjustment.

A. A developer of any project subject to the requirements of this chapter may appeal to the City Council for a reduction, adjustment, or waiver of the requirements based upon the absence of any reasonable relationship or nexus between the impact of the development and either the amount of the fee charged or the inclusionary requirement.

B. A developer subject to the requirements of this chapter who has received an approved tentative subdivision or parcel map, use permit or similar discretionary approval and who submits a new or revised tentative subdivision or parcel map, use permit or similar discretionary approval for the same property may appeal for a reduction, adjustment or waiver of the requirements with respect to the number of lots or square footage of construction previously approved.

C. Any such appeal shall be made in writing and filed with the City Clerk not later than ten (10) calendar days before the first public hearing on any discretionary approval or permit for the development, or if no such discretionary approval or permit is required, or if the action complained of occurs after the first public hearing on such permit or approval, the appeal shall be filed within ten (10) calendar days after payment of the fees objected to.

D. The appeal shall set forth in detail the factual and legal basis for the claim of waiver, reduction, or adjustment. The City Council shall consider the appeal at the public hearing on the permit application or at a separate hearing within sixty (60) calendar days after the filing of the appeal, whichever is later. The appellant shall bear the burden of presenting substantial evidence to support the appeal including comparable technical information to support appellant’s position.

E. No waiver shall be approved by the City Council for a new tentative subdivision or parcel map, use permit or similar discretionary approval on property with an approved tentative subdivision or parcel map, use permit or similar discretionary permit unless the Council finds that the new tentative subdivision or parcel map, use permit or similar discretionary approval is superior to the approved project both in its design and its mitigation of environmental impacts. The decision of the Council shall be final. If a reduction, adjustment, or waiver is granted, any change in the project shall invalidate the waiver, adjustment, or reduction of the fee or inclusionary requirement. (Ord. 1065 § 6 (Exh. A), 2023; Ord. 1030 § 2(12), 2018; Ord. 999 § 1, 2015; Ord. 941 § 1, 2005. Formerly 18.31.060, 18.25.060)

Code reviser’s note: Ord. No. 1065 amended this section as Section 18.25.060. It has been editorially renumbered to avoid duplication of numbering.