§ 26-89-040. Affordable Housing Requirements for Residential Development

A.

Applicability and requirements. Unless otherwise exempt under Subsection 26-89-040.B., any person who constructs or develops one or more residential units, whether a single-family home, units in multi-family dwellings, or by condominium conversions or otherwise, shall provide affordable housing through one or more of the following three methods:

1.

On-site construction of the required affordable units. Provide the required affordable unit(s) on-site, in compliance with the Section 26-89-040.C.;

2.

Payment of affordable housing fee. Pay an affordable housing fee in compliance with Subsection 26-89-040.F.; or

3.

Alternative equivalent actions. Perform an alternative equivalent action in compliance with Subsection 26-89-040.G.; which may be allowed to fulfill the affordable housing requirements of this Section if approved by the Director, at his or her sole discretion.

B.

Exempt projects. The affordable housing requirements of this Section shall not apply to the following exempt projects and unit types:

1.

Project with vested rights. A project that demonstrates a vested right to proceed without complying with this Section.

2.

Affordable units. Affordable units which are subject to an Affordable Housing Agreement.

3.

Accessory dwellings. Accessory dwelling units and junior accessory dwelling units.

4.

Agricultural related housing. Farm family units of up to 1,200 square feet, agricultural employee units of up to 1,200 square feet, and seasonal, year-round, and extended seasonal farmworker housing.

5.

Alternative housing. Homeless shelters, transitional housing, supportive housing, single room occupancy facilities, community care facilities, group homes, and similar State licensed care facilities.

6.

Dwelling unit destroyed by fire or natural catastrophe. Repair, reconstruction, or replacement of a legal dwelling unit that is destroyed by fire or natural catastrophe, provided that a Building Permit for repair, reconstruction, or replacement has been issued and construction begun within 10 years of destruction.

7.

Residential remodels and minor additions that add no more than 1,000 square feet. Remodels and additions that add no more than 1,000 square feet to existing, legal dwelling units that do not result in the creation of an additional unit.

8.

Replacements. Replacement of an existing, legal dwelling unit where the total living area within the replacement unit is no more than 1,000 square feet greater than the living area within the unit being replaced.

9.

Parcels with existing affordable units. The construction or establishment of one new home on one single parcel, when the subject parcel contains an existing second dwelling unit, or a farm family unit or an employee unit of 1,000 square feet or less.

10.

General exemption. Residential projects that can demonstrate that they will not contribute to the demand for affordable housing in the County or adversely impact the County's ability to meet its affordable housing needs.

C.

Minimum Requirements for Construction of Affordable Units On-Site. To satisfy the requirements of this Article through the construction of affordable units on-site, the following minimum standards must be met:

1.

Number of Units: Ownership projects. To meet the requirements of this Article through construction of affordable units on-site within an ownership housing project, at least 20 percent of all new dwelling units shall be affordable, and shall be constructed and completed at the same time as the market rate units in the same project.

a.

Level of affordability required. At least one-half of the total number of required affordable units shall be provided as affordable to low-income households.

b.

Remaining affordable units. The remaining affordable units may be provided as affordable to households with moderate or low incomes.

c.

When number of units is an odd number. If the number of required affordable units is an odd number, the number of units affordable to moderate income households may be one greater than the number affordable to low-income households, so long as at least one low-income unit is provided.

2.

Number of Units: Condominium ortimeshare conversion projects. To meet the requirements of this Article through the provision of affordable units on-site within a project converting existing rental units or airspace parcels to condominium ownership, including common interest or timeshare projects, at least 30 percent of the converted units shall be offered for sale as affordable to low and very-low income households, as required by Housing Element Policy HE-1e or its subsequent equivalent.

3.

Number of Units: Rental projects. To meet the requirements of this Article through construction of affordable units on-site within a rental housing project at least 15 percent of all new rental units shall be affordable to low- and very low-income households; or, at least 10 percent of all new rental units shall be affordable to very low- and extremely low-income households, as follows:

a.

Allocation of Units—15 percent option. If the person constructing or developing a rental housing project proposes to satisfy the requirements of this Article by providing 15% of the units as affordable rental units, at least one-half of the total number of required affordable units shall be provided as affordable to very low-income households. The remaining affordable units may be provided as affordable to low- or very low-income households. If the number of required affordable units is an odd number, the number of units affordable to low-income households may be one greater than the number affordable to very low-income households.

b.

Allocation of Units—10 percent option. If the person constructing or developing a rental housing project proposes to satisfy the requirements of this Article by providing 10% of the units as affordable rental units, at least one-half of the total number of affordable units shall be provided as affordable to extremely low-income households. The remaining affordable units may be provided as affordable to very low-income or extremely low-income households. If the number of required affordable units is an odd number, the number of units affordable to very low-income households may be one greater than the number affordable to extremely low-income households.

c.

Timing. All affordable units provided pursuant to this subsection shall be constructed and made available for rent at the same time as the market-rate units within the remainder of the residential development.

4.

Affordable Housing Agreement. Upon approval of any project proposing to provide affordable units on-site in compliance with this Section, and before any further action by the County concerning the project, including the recording of a final map, or the issuance of a Building Permit, the property owner shall execute an affordable housing agreement in compliance with Section 26-89-100 (Affordable Housing Agreements). The affordable housing agreement shall be recorded concurrently with the final map, or before the issuance of a Building Permit, whichever occurs first.

5.

Fractional calculations. If calculating the number of units required by Subsection C. results in a fractional unit requirement, the applicant may satisfy that fractional requirement by:

a.

Construction of an additional affordable unit;

b.

On qualifying agricultural parcels, construction or conversion of a unit to a farm family or agricultural employee unit containing not more than 1,000 square feet of living area, or a farmworker bunkhouse containing at least two bunks for unaccompanied workers in compliance with Subparagraphs 26-88-010 (l) (Seasonal Farmworker Housing) or (o) Year-Round or Extended Farmworker Housing . Farm family and agricultural employee units may be constructed to satisfy a fractional requirement under this Subparagraph only, and shall not otherwise be considered an affordable unit for the purposes of meeting the affordable unit requirements of this article; or,

c.

On parcels eligible for an accessory dwelling unit, construction or conversion of an existing unit to an accessory dwelling unit pursuant to 26-88-060 (Accessory Dwelling Units). Accessory dwelling units may be constructed to defer payment of the affordable housing fee that would otherwise be due for the construction of one new single-family home on one single parcel only, provided that an Affordable Housing Fee Deferral Agreement, in a form acceptable to County Counsel, is signed by the property owner and recorded to ensure that the unit will remain available for rent to a qualified low-income household at an affordable rent. The fee will be automatically deferred in each year that the second dwelling unit continues to be made available for rent under the terms of the Affordable Housing Fee Deferral Agreement. Should the property owner cease renting the unit, or otherwise fail to comply with the terms of the Fee Deferral Agreement, then the affordable housing fee in effect at the time will be immediately due and payable to County and a Notice of Cancellation of the Affordable Housing Fee Deferral Agreement shall be recorded. In this case, credit shall be given for each year that the unit has been rented to a low income household at an affordable rent in compliance with the Agreement, with the term for being 30 years. Any remaining portion of the term may be met through payment of the remaining prorated affordable housing fee, using the fee amount in effect at the time that the owner ceases renting the unit. Provision of an accessory dwelling unit shall not otherwise be considered as meeting the affordable unit requirements of this Article. In cases involving the subdivision of property, provision of a separate accessory dwelling unit on each parcel may meet the affordable unit requirement of this article only for each parcel upon which an accessory dwelling unit is placed and a covenant recorded to ensure that the unit will remain available for rent.

D.

Affordable housing fee. When the requirements of this Article are met through the payment of an affordable housing fee, payment shall be made in accordance with the following:

1.

Determination of fee. The amount and calculation of affordable housing fees shall be established by resolution of the Board. Thereafter, the affordable housing fees shall be increased or decreased annually by the percentage change in the Construction Cost Index for the San Francisco Bay Area for the prior year, as reflected in the third quarter Engineering News Record. The affordable housing fee shall be automatically adjusted, and a new schedule published by the Director effective on January 1 ^st of each year. This adjustment will offset the effects of inflation related to construction cost increases or deflation-related cost decreases. If the Construction Cost index is discontinued, the Director shall use a comparable index for determining the changes in the median home costs for the County. The fee shall be periodically reviewed and updated at least every five years.

2.

Timing of payment. The affordable housing fees shall be calculated at the time of Building Permit application. The fee shall be paid at the time of the wallboard inspection for each non- exempt residential unit, unless proof is provided that the required affordable housing units will be constructed on site; that an alternative equivalent action was previously approved in compliance with Subsection 26-89-040.G; or that a fee deferral agreement in compliance with Section 26-89-040 (C) (5) has been granted.

3.

Affordable Housing Fee Trust Fund Guidelines. There shall be established a separate account for affordable housing fees within the County Fund for Housing (CFH) as may be necessary to avoid commingling as required by law, or as deemed appropriate to further the purposes of the affordable housing fees. The County's use of the affordable housing fees, along with any interest earnings, shall comply with all of the following requirements.

a.

Affordable housing fees deposited in the CFH, along with any interest earnings, shall be allocated for uses that increase and improve the supply of housing affordable to households of extremely low-, very low-, low-, and moderate incomes, including:

(1)

The acquisition of property and property rights; and

(2)

The cost of construction including costs associated with planning, administration, and design, building or installation, development fees, on- and off-site improvements, and any other costs associated with the planning, predevelopment, permitting, construction and financing of affordable housing.

b.

Monies may also be used to cover administrative expenses incurred by the Department or the CDC in connection with affordable housing and not otherwise reimbursed through processing and other fees, including:

(1)

Reasonable consultant and legal expenses related to the establishment and/or administration of the affordable housing fee account;

(2)

Reasonable expenses for administering the process of calculating, collecting, and accounting for affordable housing fees authorized by this Section; and

(3)

County and CDC administrative costs for project development, permitting, post Development Code compliance, and the ongoing monitoring of affordable housing projects constructed with affordable housing fee trust funds.

c.

Adequate cost accounting procedures shall be utilized and documented for all of the expenditures.

d.

No portion of the collected affordable housing fees shall be diverted to other purposes by way of loan or otherwise.

G.

Alternative equivalent actions. The Director may, at his or her sole discretion, approve an alternative equivalent action to the provision of the affordable units on-site or payment of the affordable housing fee, as follows.

1.

Scope of alternative proposals. Proposals for an alternative equivalent action may include:

a.

The dedication of vacant land (see Subparagraph G.5., below, Standards for land dedications);

b.

The construction of affordable rental or ownership units on another site within the unincorporated area of the County; or

c.

The acquisition and enforcement of rental or sales price restrictions on existing market rate dwelling units in compliance with this Article.

2.

Content of proposal. A proposal for an equivalent alternative action shall show how the requested alternative action will further affordable housing opportunities in the County to an equal or greater extent than the provision of the affordable housing units on-site in compliance with Subsection C. (Number of affordable units required), or payment of the affordable housing fee in compliance with Subsection F. (Affordable housing fee).

3.

Review and approval. Only the Director can approve an alternative equivalent action under this Section. A proposal for an alternative equivalent action may be approved by the Director only if the Director finds that the alternative action will further affordable housing opportunities in the County to an equal or greater extent than the construction of the required affordable units as part of the project or payment of the affordable housing fee, as applicable.

4.

Performance of alternative action. After approval by the Director of a proposal for an alternative action, entitlements for that alternative action shall be processed concurrent with the market-rate project. If the alternative action includes construction of affordable units on another site or the acquisition and enforcement of rental/sales price restrictions on existing market rate units, an Affordable Housing Agreement in compliance with Section 26.89.100 shall be recorded for each of those units before recordation of any final map for, or issuance of any Building Permit within, the market-rate project, and the affordable units shall be constructed or acquired concurrent with, or before, the construction of the market rate units.

5.

Standards for land dedications.

a.

Offers of dedication. An applicant who proposes to dedicate land located within the unincorporated area of the County as a means of satisfying the requirements of this Article shall offer the land dedication as a part of the initial application for project approval. The applicant's offer shall describe the site, shall offer it for dedication at no cost to the County, and shall include a site plan illustrating the feasibility of locating and constructing the number of affordable units for which the applicant is requesting credit.

b.

Site suitability and appraisal.

(1)

The applicant shall provide a site suitability analysis which demonstrates that the land proposed for dedication is suitable for the development of affordable housing in terms of size, location, General Plan land use designation, availability of services, proximity to public transit, adjacent land uses, access, physical characteristics and configuration, and other relevant planning criteria. Department staff shall evaluate the site suitability analysis, identify the site's projected unit capacity, and recommend to the review authority whether the site should be accepted or conditionally accepted. An environmental evaluation may be required as a part of the site suitability analysis.

(2)

The applicant shall provide an appraisal of the land proposed for dedication. The appraisal shall be prepared by a qualified land appraiser and shall conform to the Uniform Standards of Professional Appraisal Practice as adopted by the Appraisal Standards Board of the Appraisal Foundation.

(3)

All County staff costs associated with the determination of site suitability, and all expenses incurred to determine legal status of the site, to perform environmental assessments and to obtain an appraisal, shall be borne by the applicant.

c.

Calculation of credit for dedication of land. Following review of the appraisal and site suitability analysis, the County shall determine the extent to which the dedication shall satisfy the requirements of this Article as follows:

(1)

The County shall offer to credit the applicant for the land dedication only to the extent that the appraised value of the land to be dedicated equals the full development cost of providing the required affordable units under Subsection 26-89-040.C.1 (Ownership projects) or Subsection 26-89-040.C.2 (Rental projects), including both land costs and construction costs.

(2)

If the appraised value of the land is less than the total projected development cost for the number of affordable units required under Subsection 26-89-040.C.1 (Ownership projects) or Subsection 26-89-040.C.2 (Rental projects), the applicant will be credited with only the number of affordable units for which development costs are covered by the value of the land.

(3)

The applicant shall agree to satisfy any remaining obligations under this Article by providing additional affordable units on the project site, or paying applicable affordable housing fees.

d.

Procedure for acceptance of site. The County shall not accept an offer of dedication nor approve the proposed residential project until all of the conditions of acceptance of the land, if any, have been completed by the applicant. The County's formal acceptance of the offer of dedication shall take place concurrently with its approval of the residential project. The grant deed dedicating the site to the County, or to a developer of affordable housing approved by the County, shall be recorded before issuance of any Building Permit within the market rate project.

(Ord. No. 6223 , § IV(Exh. D), 5-8-2018; Ord. No. 6129 , § IIIA(Att. B), 8-18-2015; Ord. No. 6085, § IV(Exh. C), 10-7-2014)