A. Duties of Program Administrator. The city may either handle in-house or contract for administration of the BMR ownership housing program and monitoring compliance with the requirements of this chapter to a program administrator pursuant to an agreement executed between the city and the administrator in accordance with the approved fee schedule. At a minimum, the administrator shall perform the following services:

A. This chapter shall apply to all residential development projects. Residential projects that have been deemed complete in the planning entitlement process or have submitted a complete building permit application the time the replacement ordinance goes into effect, are subject to the prior inclusionary housing ordinance. The following types of residential projects are exempt:

A. “Administrator” means below market rate program administrator which may either be the city itself or a third-party administrator acting as an agent for the city in connection with all aspects of the operation of the city’s below market rate program pursuant to an agreement entered into between the city and the administrator, as such agreement may be amended or replaced from time to time.

B. “Affordable” means housing which can be purchased or rented by a household with very low-, low-, or moderate-income, as described in the city’s affordable housing standards.

C. “Below market rate (BMR)” means that the affordability level of an inclusionary unit is below the cost of what a current market rate unit would be and is affordable to extremely low-, very low-, low-, or moderate-income households.

D. “Borrower” shall be defined as one who meets the eligibility requirements for purchasing an inclusionary affordable unit.

E. “Commercial linkage fee” means the fee paid by the applicant of commercial development projects to mitigate the impacts that such developments have on the demand for affordable housing in the city (see Chapter 4.60).

F. “Density bonus” means a density increase over the maximum density otherwise allowable under the zoning regulations, Chapter 17.140.

G. “Early resale” shall mean the sale, lease, or transfer of property within seven years of the initial close of escrow for equity share inclusionary units.

H. “Equity share” shall mean the shared equity of appreciation between the city and the borrower on inclusionary units when agreements specifically allow for affordable units to be sold at market rate after a seven-year period.

I. “Fee schedule” means fees that for-sale and for-rent units are subject to and are paid to either the city or the administrator for associated costs related to but not limited to eligibility screening, income verification, marketing of affordable units, and the close of escrow or completion of new lease agreements for affordable units.

J. “Inclusionary housing unit” means a dwelling unit required under the provisions of this chapter, and which meets the city’s affordable housing standards.

K. “Low-” or “lower-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families shall not exceed eighty percent of the median income within the city as published and periodically updated by the State Department of Housing and Community Development.

L. “Market rate” shall mean the highest price a willing buyer would pay and a willing seller would accept, both being fully informed and in an open market, as determined by an appraiser.

M. “Moderate-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families exceed eighty percent but are less than or equal to one hundred twenty percent of the median income within the city as published and periodically updated by the State Department of Housing and Community Development.

N. “Commercial development project” shall mean development projects which result in the construction or conversion of structures for the purpose of conducting business, including but not limited to retail sales, restaurants, offices, gas stations, manufacturing, etc.

O. “Residential development project” shall mean development projects which result in the construction or conversion of structures, including, but not limited to, single-unit attached or detached homes, apartments, condominiums, live/work units, mixed-use, mobile homes, transitional housing or supportive housing, and group housing.

P. “Very low-income” shall have the meaning set forth in Health and Safety Code Section 50079.5; provided the income of such persons and families shall not exceed fifty percent of the median income within the city as published and periodically updated by the State Department of Housing and Community Development. (Ord. 1719 § 3, 2022)

A. General Requirements. All nonexempt residential development projects shall include inclusionary units as required by this chapter. If the calculated number of units results in a fraction, the number shall be rounded as described in Section 17.138.080(A).

B. Residential Requirements.

C. Nonresidential Requirements.

D. Mixed-Use Development Requirements.

A. Standards. Inclusionary units must meet the following standards:

A. Payment of In-Lieu Fee. The developer may, at their discretion, choose to pay a fee, as established by a resolution of the city council, to the city in lieu of constructing affordable units to meet their inclusionary housing requirement.

B. In-Lieu Fee Calculation. In-lieu fees shall be calculated using the new habitable square footage, as defined by California Building Code, included within the residential development project.

C. Affordable Housing Fund. All in-lieu fees collected shall be deposited into the affordable housing fund. The fund shall be administered by the finance director and shall be used exclusively to provide funding for the provision of affordable housing and for reasonable costs associated with the development of affordable housing, at the discretion of the council.

D. Timing. In-lieu fees shall be paid prior to building permit issuance. For projects constructed in phases, in-lieu fees shall be paid in the proportion that the phase bears to the overall project. (Ord. 1719 § 3, 2022)

A. Application Requirements. An applicant proposing a project for which inclusionary housing is required shall submit a statement with their planning application or building permit (whichever applies), describing the project’s inclusionary housing plan. The statement shall include:

A. Fractional Numbers. In determining the number of dwellings that are required to be built pursuant to Section 17.138.040(B), if the number of required inclusionary dwellings results in a fractional unit, an applicant may pay the in-lieu fee for the fractional unit or provide an additional affordable unit in the project (based on the unit affordability for the type of project). The in-lieu fee for fractional units shall be calculated as described in Table 8-1 (Fractional Inclusionary Requirement Scenarios):

B. Affordable Housing Agreement. The applicant shall complete and sign an affordable housing agreement.

A. Program Requirement. Only households qualifying as extremely low, very low, low, or moderate income, pursuant to the affordable housing standards, shall be eligible to rent, purchase, or occupy inclusionary units developed or funded in compliance with this chapter. For-sale inclusionary housing units shall be owner-occupied for the term of the affordable housing agreement.

B. Eligibility Screening. The city or an administrator designated by the city shall screen prospective renters or buyers of affordable units. Buyers of affordable units shall enter into an agreement with the city. Occupants must be selected by means of an open, public process which ensures that individuals of a group of interested participants are selected in accordance with the city’s BMR ownership and rental housing guidelines. Private selection of individuals by project owners is not permitted for any affordable units. (Ord. 1719 § 3, 2022)

A. Under this program, the qualified buyer of a designated affordable dwelling unit shall enter into a shared equity agreement with the city. Said agreement shall be recorded as a lien against the purchased property, at no interest, securing and stating the city’s equity share in the property. The city’s equity share shall be calculated by the director, and shall be the decimal percentage of the property’s value resulting from:

B. Upon sale, the city’s equity share shall be repaid to the city from the proceeds of the sale, less the city’s percentage share of title insurance, escrow fees, and documentary transfer taxes, at the close of escrow. The proceeds from the sale shall be deposited into the city’s affordable housing fund and shall be used for the purposes set forth in Health and Safety Code Section 33334.2(e).

C. In the event of “early resale,” owners of properties subject to the shared equity purchase program shall either: (1) pay an equity recapture fee to the city as described in the schedule below, in addition to the city’s equity share, or (2) sell the property to another eligible household.

If the owner chooses to pay the equity recapture fee, the recapture fee shall be paid to the city upon resale at close of escrow, based on the following schedule:

The recapture amount shall be determined prior to the calculation of escrow closing costs. (Ord. 1719 § 3, 2022)

A. Duties of Program Administrator. The city may either handle in-house or contract for administration of the BMR ownership housing program and monitoring compliance with the requirements of this chapter to a program administrator pursuant to an agreement executed between the city and the administrator in accordance with the approved fee schedule. At a minimum, the administrator shall perform the following services:

A. Enforcement. No building permit shall be issued nor shall any other development entitlement be granted for a residential development project subject to this chapter that does not meet these requirements. No inclusionary unit shall be rented or sold except in accordance with these requirements and the affordable housing standards. (Ord. 1719 § 3, 2022)

A. “Affordable” shall mean residential rent costs or sales prices which conform to the standards issued by the director and updated periodically to reflect state and/or federal housing cost indices.

B. “Common interest development” means any of the following: a community apartment project, a condominium project, a planned development, or a stock cooperative as set forth in Civil Code Section 1351.

C. “Density” means residential density as defined in Section 17.70.040 (Density).

D. “Density bonus” means a density increase over the maximum density otherwise allowable under the zoning regulations and land use element of the general plan.

E. “Housing development” means a development project for five or more residential units; also includes a subdivision or common interest development.

F. “Maximum allowable residential density” means the maximum density allowed under the zoning regulations and land use element of the general plan.

G. “Senior citizen housing development” means a residential development developed, substantially rehabilitated, or substantially renovated for senior citizens (fifty-five years or older) that has at least thirty-five dwelling units. (Ord. 1650 § 3 (Exh. B), 2018)

A. The developer may submit a preliminary proposal for the development of affordable housing prior to the submittal of any formal requests for general plan amendments, zoning amendments, or subdivision map approvals.

B. Any request for a density bonus or other incentives shall be in writing, and shall include the following information, as well as any additional information required by the director:

A. This section shall apply only to housing projects consisting of five or more dwelling units, including mixed-use developments. Per state law, projects that provide affordable housing are allowed up to a fifty percent density bonus based on the tables outlined below for the respective affordability levels. In addition, the director may approve a density bonus in excess of fifty percent at the request of the developer, as well as other concessions and incentives outlined in Section 17.140.070.

B. All density calculations resulting in fractional units shall be rounded up to the next whole number.

C. For the purpose of this section, “total units” or “total dwelling units” does not include units added by a density bonus awarded pursuant to this section or any local law granting a greater density bonus.

D. Ten Percent Low-Income Dedication. When a developer agrees to construct at least ten percent of the total units of a housing development for persons or families of lower income, the director shall grant the developer, upon the developer’s request, a density bonus; the density bonus shall be calculated as follows:

E. Five Percent Very Low-Income Dedication. When a developer agrees to construct at least five percent of the total units of a housing development for very low-income households, the director shall grant the developer, upon the developer’s request, a density bonus; the density bonus shall be calculated as follows:

F. Twenty Percent Senior Citizen Housing Development Dedication. When a developer agrees to construct a senior citizen housing development, or mobile home park that limits residency based on age requirements for housing for older persons, the director shall grant the developer, upon the developer’s request, a density bonus; the density bonus shall be twenty percent of the number of senior housing units.

G. Ten Percent Common Interest Development for Moderate-Income Dedication. If a developer agrees to construct at least ten percent of the total dwelling units in a common interest development for persons or families of moderate income, provided that all units in the development are offered to the public for purchase, the director shall grant the developer, upon the developer’s request, a density bonus; the density bonus shall be calculated as follows:

H. Land Donation Dedication. If a developer for a tentative subdivision map, parcel map, or other residential development approval donates land to the city for affordable housing in accordance with this chapter and the provisions set forth in Government Code Sections 65915 through 65918, the applicant shall be entitled to a fifteen percent increase above the otherwise maximum allowable residential density for the entire development. The director shall grant the applicant, upon the applicant’s request, a density bonus; the density bonus shall be calculated as follows:

I. Housing for Transitional Foster Youth, Disabled Veterans, and Homeless Persons. If a developer agrees to construct as least ten percent of the total dwelling units in a housing development for transitional foster youth, as defined in Education Code Section 66025.9, or for disabled veterans, as defined in Government Code Section 18451, or for homeless persons, as defined in the Federal McKinney-Vento Homeless Assistance Act, the director shall grant the developer, upon the developer’s request, a density bonus of twenty percent. The units shall be subject to a recorded affordability restriction of fifty-five years and shall be provided at the same affordability level as very low-income units.

J. An applicant may elect to accept a lesser percentage of density bonus.

K. Parking Requirements.

A. For the purposes of this section, “other incentives of equivalent financial value” shall not be construed to require the city to provide cash transfer payments or other monetary compensations but may include the reduction or waiver of requirements which the city might otherwise apply as conditions of conversion approval.

B. For purposes of this section, “density bonus” means an increase in units of twenty-five percent over the number of apartments to be provided within the existing structure or structures proposed for conversion.

C. When an applicant for approval to convert apartments to condominium units agrees to provide at least thirty-three percent of the total units of the proposed condominium project to persons and families of low or moderate income, or fifteen percent of the total units of the proposed condominium project to lower-income households, and agrees to pay for the reasonable, necessary administrative costs incurred by the city pursuant to this section, the director shall grant a density bonus or provide other incentives of equivalent financial value as it finds appropriate.

D. Nothing in this section shall be construed to require the city to approve a proposal to convert apartments to condominiums.

E. An applicant shall not be eligible for a density bonus under this section if the apartments proposed for conversion constitute a housing development for which a density bonus or other incentives were provided under Section 17.140.040, 17.140.050, or 17.140.070.

F. The city shall grant the developer’s request for development incentive(s) unless the review authority makes written findings of fact that the additional incentive(s) are not required to achieve affordable housing objectives as defined in Section 50062.5 of the Health and Safety Code, or to ensure that sales prices for the targeted dwelling units will be set and maintained in conformance with city affordable housing standards. (Ord. 1705 § 84, 2021; Ord. 1650 § 3 (Exh. B), 2018)

A. When a developer agrees to construct housing for households of very low-, lower-, or moderate-income households, or for qualifying senior households, or for qualifying transitional foster youth, disabled veterans, or homeless persons, and desires an incentive other than a density bonus as provided in Section 17.140.040 (Standard Incentives for Housing Projects), or when an applicant for approval to convert apartments to a condominium project agrees to provide housing for households of very low, lower, or moderate income, or for qualifying senior households, the developer shall receive the following number of incentives or concessions:

B. Alternative incentive proposals shall include information set forth in Section 17.140.030 (Application process), as well as a description of the requested incentive. Alternative incentive proposals shall be considered by the review authority and may include but are not limited to one or more of the following:

C. Proposals for approval to convert apartments to a condominium project shall include those relevant items set forth in Section 17.140.030(B), plus the requested incentive, an estimate of the incentive’s financial value in comparison with the financial value of the density bonus as set forth in Section 17.140.060, and the basis for the comparison estimate. Nothing in this section shall be construed to require the city to provide cash transfer payments or other monetary compensation. The city may reduce or waive requirements which the city might otherwise apply as conditions of conversion approval.

D. Proposals to construct a housing development that includes affordable units and includes a childcare facility that will be located on the premises of, as part of, or adjacent to the housing development shall comply with Government Code Section 65915(h)(1).

E. The review authority shall approve the requisite number of incentives or concessions afforded by this section. The review authority shall grant the specific concession or incentive requested by the applicant unless it can make a written finding, based upon substantial evidence, that the incentive or concession does not result in cost reductions, or would have a specific adverse impact upon public health and safety or the environment or on historical properties that cannot be mitigated, or would be contrary to state or federal law (Government Code Section 65915(d)(1).

F. The review authority’s action on any alternative incentive proposal shall be by resolution. Any such resolution shall include findings relating to the information required in subsection B or C of this section. (Ord. 1705 §§ 85—87, 2021; Ord. 1657 § 23, 2019; Ord. 1650 § 3 (Exh. B), 2018)

A. No fee in addition to normal project application fees shall be charged for a request for a density bonus pursuant to the provisions of Section 17.140.040, 17.140.050, or 17.140.060, except for reasonable, necessary administrative costs incurred by the city.

B. A fee not to exceed the amount charged for “preapplication concept review” may be charged for proposals submitted pursuant to the provisions of Section 17.140.070. (Ord. 1650 § 3 (Exh. B), 2018)

A. The city shall publish and revise as needed a schedule of rental rates and sales prices for dwellings which will be affordable to households with incomes as provided in this chapter. The schedule shall substantially conform with the affordability standards as established by state or federal law.

B. The maximum rental rates and sales prices as revised, generally on an annual basis, shall remain in effect for projects receiving density bonuses or additional incentives under this chapter as provided in the affordable housing agreement, but in no case less than the minimum term required by state law. (Ord. 1650 § 3 (Exh. B), 2018)

A. The affordable dwellings developed pursuant to this chapter shall be available to qualified occupants without regard to race, religion, national origin, sex, occupation or other affiliation. Occupants may be screened on the basis of age only to qualify those occupants seeking housing designed for the elderly.

B. The city housing authority or other third party acceptable to the community development director shall screen prospective occupants so that dwellings developed pursuant to this chapter shall be occupied by households with the appropriate qualifying incomes, ages, or other qualifying status. Owners of projects shall enter into agreements with the housing authority for such screening services.

C. Preference in occupant screening shall be given to those employed within the city or the immediately surrounding area, to the extent that this provision does not conflict with state or federally funded housing assistance programs which may apply to a particular project or other applicable law. This section is to ensure that those households having the greatest difficulty obtaining housing at market value within the city shall be able to occupy affordable housing made available pursuant to this chapter. (Ord. 1650 § 3 (Exh. B), 2018)

A. Location. The downtown flexible density program shall only be available to properties zoned C-D or C-R within the downtown core as shown in Figure 8-1 (Downtown Core).

B. Residential Units. The downtown flexible density program is limited to studio or one-bedroom units that are less than six hundred square feet; all other residential units six hundred square feet or larger shall conform to the standard density limitations of the underlying zone.

C. Qualifying units under the downtown flexible density program shall be prohibited from any activities associated with Section 17.86.160 (Homestay rentals).

A. Residential Density. Residential units that are less than six hundred square feet in size and limited to a studio or one-bedroom configuration may exceed the base density for the zone in which the lot is located, in accordance with all provisions of this chapter. For the purposes of this program, qualifying units shall have a density unit value of 0.0, rather than the standard 0.5 density unit.

B. Inclusionary Housing Exemption. Residential units less than six hundred square feet that are of a studio or one-bedroom configuration shall be exempt from inclusionary housing requirements, as described in Section 17.138.040 (Inclusionary housing requirements), subject to the following:

C. Parking Requirements. Vehicle parking requirements shall be required in accordance with Chapter 17.72 (Parking and Loading), except as otherwise provided below:

A. Exclusion of Affordable Housing Units. Housing units that are deed restricted as affordable to moderate-income or below households, as defined in the city’s below market rate housing standards, will not count towards the five-hundred-unit program limit.

B. Pending Applications. Any application for new development that is deemed complete prior to the expiration of the program term as established in this section may continue to be processed in accordance with this chapter. (Ord. 1726 § 7, 2023)

A. Downtown Core. As shown in Figure 8-2: Downtown Planning Area and Downtown Core.

B. “Conversion” means a change in the primary use of at least fifty-one percent of the floor area of a legally permitted dwelling or building from residential to nonresidential use, or physical change in design of fifty-one percent of an individual dwelling’s or building’s floor area to accommodate nonresidential uses.

C. “Net housing loss” means the number of residential units removed through demolition, remodeling, or conversion to nonresidential uses exceeds the number of dwellings added through new construction, additions, remodeling, or relocation within the downtown core, or in the area outside the downtown core but within the downtown planning area. The cumulative number of dwellings added and residential units removed based on city final building inspections, within each of the above areas, shall be determined separately, and shall be based on the number of dwellings existing on March 30, 2004, as determined by the director.

D. “Replacement unit” means a dwelling which is built, moved, or remodeled to replace a residential unit lost through demolition or remodeling or conversion to nonresidential use.

E. “Subarea” means the geographic area corresponding to either the downtown core, or the area outside the downtown core but within the downtown planning area, as shown in Figure 8-2.

A. Development projects within the downtown planning area shall not result in a net housing loss. If the director determines that a development project would result in a net housing loss, the developer shall replace residential units to be removed, whether the units to be removed are occupied or not. Residential units shall be replaced on a one-for-one basis within the downtown planning area and shall be built concurrently with the development project. Replacement units may be of any size, type, or tenure, consistent with this title and as approved consistent with the ministerial or discretionary requirements of this title for the units to be built. Replacement units shall be located within the same subarea as the units removed, but need not be located on the same site as previously existed.

B. Development projects shall meet the following standards, subject to the approval of the director:

A. The council may grant exceptions to the provisions of this chapter, subject to the findings listed in subsection B of this section. In granting an exception, the council may establish conditions to ensure the intent of general plan policies is met, as described in Section 17.142.070 (Conditions of Approval). The application requirements and procedures for an exception shall be as required for a conditional use permit, as provided in Chapter 17.110 (Minor Use Permits and Conditional Use Permits).

B. To grant an exception, the city council must make each of the following findings:

B. San Luis Obispo is a charter city, empowered to make and enforce all laws concerning municipal affairs, subject only to the limitations of the city charter and the constitution and laws of the state. Regulation of the rate of residential development is a reasonable extension of municipal authority to plan overall development in furtherance of the public health, safety, and general welfare.

C. According to the general plan land use element, the city should achieve a maximum annual average population growth rate of one percent. The reserve of developable land within the city and the capacity of proposed annexations could sustain growth rates which would exceed the objectives of the general plan.

D. The growth rate policies of the general plan reflect the city’s responsibility to accommodate a reasonable share of expected state and regional growth.

E. To avoid further imbalance between the availability of jobs and of housing within the city, the general plan also manages expansion of growth-inducing activities. The burdens of growth management are not being placed solely on the residential sector since it largely responds to demands caused by other sectors.

F. Considering the likely levels of housing demand and construction throughout the housing market area, nearly coinciding with San Luis Obispo County, these regulations are not expected to affect the overall balance between housing supply and demand in the market area. These regulations will not impede and may help meet the needs of very low-, low-, and moderate-income households. (Ord. 1650 § 3 (Exh. B), 2018)

A. Each specific plan that authorizes residential development shall adopt a phasing schedule that allocates timing of potential residential construction, including phasing of required improvements, consistent with the general plan and with these regulations.

B. The limitations on residential development established by these regulations apply to new residential construction within certain areas that have been annexed to the city or that will be annexed to the city. Development in such areas is subject to development plans or specific plans which shall contain provisions consistent with these regulations.

C. Allocations shall be implemented by the timing of issuance of building permits.

D. Dwellings affordable and enforceably restricted to residents with extremely low, very low, low, or moderate incomes, as defined in the city’s general plan housing element, new dwellings in the Downtown Core, and legally established accessory dwelling units shall be exempt from these regulations. Enforceably restricted shall mean dwellings that are subject to deed restrictions, development agreements, or other legal mechanisms acceptable to the city to ensure long-term affordability, consistent with city affordable housing standards. In expansion areas, the overall number of units built must conform to the city approved phasing plan.

E. It shall not be necessary to have dwellings allocated for a particular time interval or location to process and approve applications for general plan amendment, zoning regulations amendment, or other zoning action, subdivision application, or architectural review. (Ord. 1726 § 9, 2023; Ord. 1650 § 3 (Exh. B), 2018)