HomeMy WebLinkAboutItem 29 - Zoning Ordinance Amendment No. 2021-03 Planning and Building Agency
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Item # 29
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
November 16, 2021
TOPIC: Zoning Ordinance Amendment No. 2021-03
AGENDA TITLE:
Public Hearing - Zoning Ordinance Amendment No. 2021-03 - An Ordinance of the City
Council of the City of Santa Ana Repealing and Reenacting in its Entirety Article XVIII.I.
of Chapter 41 of the Santa Ana Municipal Code Regarding the Housing Opportunity
Ordinance
RECOMMENDED ACTION
Consider the recommendations made by the Planning Commission and take one of the
following options:
1. Approve first reading of the Ordinance as presented; or
2. Approve first reading of the Ordinance incorporating the changes recommended
by the Planning Commission; or
3. Approve first reading of the Ordinance with the incorporation of changes desired
by the City Council.
BACKGROUND AND DISCUSSION
Planning Commission Recommendations: The City Planning Commission held a
public hearing on the proposed draft Ordinance on October 25, 2021. The Commission
voted 4:3:0 (Ayes: Alderete, Pham, Ramos, Woo; Noes: Calderon, McLoughlin,
Morrissey) to forward the draft Ordinance with the following recommendations:
1. Increase the minimum inclusionary percentage for all income categories
2. Increase the minimum starting dollar amount in the proposed in-lieu fee sliding
scale
3. Permit projects that have been approved (entitled) by the City prior to the adoption
date of the proposed Ordinance to vest the existing regulations and provisions of
the Housing Opportunity Ordinance under Ordinance No. NS-2994
For ease of reference, the redline and clean versions of the Ordinance as presented to
the Planning Commission are attached as Exhibit 1. In addition, the redline and clean
Zoning Ordinance Amendment No. 2021-03
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versions of the Ordinance with the incorporation of changes recommended by the
Planning Commission are attached as Exhibit 4.
For comparison purpose, the Commission’s recommended changes are further outlined
and discussed in Table 1 below alongside the original changes discussed by the City
Council and the Housing Ad Hoc Committee.
Table 1: Summary of Key Amendments &
Planning Commission Recommended Changes
Code
Section
Subject Summary of Key Amendments Planning Commission Recommended
Changes & Staff’s Analysis
Title Update Title:
2021 AFFORDABLE
HOUSING
OPPORTUNITY &
CREATION
ORDINANCE
The updated title will provide clarity and
distinction from prior versions of the
ordinance.
No recommended changes by the
Commission.
41-1900 Purpose:
Expands the scope of
the ordinance
This section has been modified to also
require affordable housing for zoning
classification changes exceeding
permitted densities
No recommended changes by the
Commission.
41-1901 Definition:
Deletes “Entitled
Residential Project”
and “Prior Project”
definition and modifies
various definitions to
include a new
category for extremely
low-income
The provisions for “Entitled Residential
Projects” and “Prior Projects” no longer
apply after October 1, 2021. A new
category of extremely low-income has
been added to also prioritize production of
housing for this income category.
No recommended changes by the
Commission.
Zoning Ordinance Amendment No. 2021-03
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41-1902 Applicability:
Establishes new
standards for projects
that need to comply
with the ordinance
This section is amended to revert the
language to the previous HOO before it
was previously amended in October 2020.
The HOO would apply to projects of 5 or
more units that will require a zone change
or general plan amendment, including city
initiated zone changes and general plan
amendments since November 28, 2011
(The current ordinance only applies to
projects that are requesting an increase in
the density permitted by the General
Plan).
It also establishes the applicability of the
ordinance to projects that have not been
issued a building permit or have not paid
their HOO in-lieu fee as of November 17,
2021.
To incentivize the construction of
extremely low-income units and blended
income projects, the amendment also
adds a percentage of rental units that may
be built on-site for extremely low-income
households equal to 5 percent of the total
number of units, and 10 percent for a
blended income project of which, 5
percent, 3 percent, and 2, percent
respectively shall be for low, very low, and
extremely low income.
Commission recommended change: Allow
projects that have received entitlement
approvals under existing Ordinance No. NS-
2994 to vest the provisions of the existing
ordinance and to not be subjected to the
provisions of the proposed ordinance.
Discussion: This recommendation would
provide the opportunity for currently entitled
development projects to vest the regulations
and provisions of the HOO in effect at the
time when the project was proposed and
approved by the City. It will also help to
maintain the financial assumptions and
constructability of the project as approved.
------------------------
Commission recommended change: For
rental units, increase the minimum
inclusionary percentage for each income
level as follows:
Low Income: Increase to 20% from
15%
Very Low Income: Increase to
15% from 10%
Extremely Low Income: Increase
to 10% from 5%
Mixed Income: Increase to 15%
from 10%, of which, 5% each will
be allocated to each of the three
target income levels.
Discussion: Prior to considering increasing
the inclusionary percentage in the draft
Ordinance, additional analysis is
recommended to evaluate the impacts of
these changes to the constructability of a
project.
41-1903 Exempt Projects:
Clarifies which
projects are not
subject to the
ordinance
This section is amended to delete the
language regarding applications deemed
complete prior to November 28, 2011 and
further clarify the exclusions to the HOO
that may be agreed upon by City Council
in a development agreement.
Discussion: To be consistent with the
changes recommended by the Commission
under section 41-1902 above, this section
can be clarified to also include a provision
addressing projects to be vested under
Ordinance No. NS-2994 and to include a
vesting project list. These changes will
provide clarity for the future application and
implementation of the Ordinance. The
proposed vesting list is included as Exhibit 5
to this report.
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41-1904 In-Lieu Fee Option:
Revises the in-lieu fee
and changes the
timing of payment
This section is amended to increase the
in-lieu fee from $5 per habitable square
foot to establish a sliding scale with a $5 -
$15 range per habitable square foot.
Units
Fee Per Square
Foot of Habitable
Area
5 – 9 $6.00
10 – 14 $9.00
15 – 19 $12.00
20 or more $15.00
This section also removes the prior
incentive for “Entitled Residential Projects”
to obtain building permits during the
current economic climate. The provision
for “Entitled Residential Projects” no
longer applies after October 1, 2021.
The amendments also extend the timing of
payment from issuance of the building
permit to issuance of the certificate of
occupancy, allowing a developer the
option to pay after the project is developed
in order to make the larger fee more
reasonable and to help reduce carrying
costs during construction.
Commission recommended change:
Modify the sliding scale to range between
$10 - $15 in place of $6 - $15 as follows:
Units Fee Per Square Foot
of Habitable Area
5 – 9 $10.00
10 – 14 $11.66
15 – 19 $13.32
20 or more $15.00
Discussion: Prior to considering increasing
the bottom step of the sliding scale and
reducing the differential between each step
in the draft Ordinance, additional analysis is
recommended to evaluate the
constructability of a project in the 5-19 unit
categories. It is challenging for small infill
projects to construct affordable units onsite.
If the in-lieu fee amount is not aligned with
the market gap, these smaller projects may
not be feasible.
The Commission also discussed the need to
provide clarity regarding the timing of
payment of the vested in-lieu fee when the
City approves a phased development
project. To be consistent with the timing
provision that permits construction of
affordable units proportional with each phase
(Section 41-1906(b)of the draft Ordinance)
of a project, an approved phased
development project should also be allowed
to time the payment proportional with each
phase as well. This change would meet the
intent of reducing the carrying cost during
the project construction phase.
41-1904
(c)(1)(i)
& (ii)
Skilled and Trained
Workforce
Incentives and
Sliding Scale In-Lieu
Fee Schedule:
Incentive to utilize a
skilled and trained
workforce and local
hire
This section is amended to incorporate a
skilled and trained workforce incentive and
a sliding scale for the reduction of the in-
lieu fee to $5 or $10, depending on the
level of utilization of a skilled and trained
workforce and local hire.
This change also incorporates a local hire
incentive where a developer of 15 or more
housing units would include a 35-percent
minimum local hire component as part of
the skilled and trained workforce.
No recommended changes by the
Commission.
Zoning Ordinance Amendment No. 2021-03
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In summary, if the City Council desires to incorporate Planning Commission
recommendations 1 and 2, additional analysis should be completed to fully evaluate their
impacts to the constructability of a project. Planning Commission recommendation 3 can
be incorporated without the need to complete additional analysis of the impacts on the
constructability of a project.
Background and Process: On November 28, 2011, the Santa Ana City Council adopted
Ordinance No. NS-2825, known as the Housing Opportunity Ordinance and appearing as
“Article XVIII.I. – Housing Opportunity Ordinance” (“Housing Opportunity Ordinance”) of
Chapter 41 (Zoning) of the Santa Ana Municipal Code. The Housing Opportunity
Ordinance was adopted to implement the City’s Housing Element Goal of providing
affordable housing within the City.
On September 1, 2015, the City Council adopted Ordinance No. NS-2881, which
amended the Housing Opportunity Ordinance in various respects, including applicability,
options to satisfy inclusionary requirements, and calculation of the in-lieu housing fee.
These amendments were intended to make the inclusionary housing requirements more
predictable for housing developers and to incentivize the production of more affordable
housing.
In response to impacts of the COVID-19 pandemic on the development and construction
of housing in the City, including the reduction of housing starts, the City Council adopted
Ordinance No. NS-2994 on September 1, 2020. Ordinance No. NS-2994 further
amended the Housing Opportunity Ordinance to lower the in-lieu fee option amount for
all projects from $15 to $5 per square foot, adjust the trigger of the ordinance, and expand
the eligible uses of in-lieu fees collected by the City.
41-1909 Inclusionary
Housing Fund:
Clarifies the use of the
in-lieu fees collected
This section is amended to further clarify
the use of in-lieu fees paid to the City. It
provides the Community Development
Agency with a priority for the use of the
funds for large families and allows the
funds to be used for additional one-time
programs addressing housing security,
eviction prevention, and housing legal
assistance for city residents.
This section is also amended to
strengthen and emphasize the goal for
projects that receive inclusionary housing
funds to negotiate in good faith to utilize a
skilled and trained workforce with a local
hire component.
No recommended changes by the
Commission.
41-1910 In-lieu fee
calculation:
Provides for periodic
review at the option of
the City Council;
deletes “Prior
Projects”
This section is amended to provide for
periodic review of the in-lieu fee when
determined to be appropriate by the City
Council. The amendment also deletes the
paragraph on “Prior projects” since it is no
longer applicable.
No recommended changes by the
Commission.
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On March 2, 2021, at the direction of the City Council, an Ad Hoc Committee for Housing
was formed. The Ad Hoc Committee reviewed the Housing Opportunity Ordinance and
recommended certain changes. The Ad Hoc Committee’s recommendations were
presented, discussed, and commented on by the City Council at the regular meetings of
July 6th, July 26th, and September 7th of 2021. At the meetings, the City Council also
provided a forum to receive input from key stakeholders and members of the public. On
October 5, 2021, the City Council provided direction to staff to prepare amendments to
the Housing Opportunity Ordinance and to initiate the adoption public hearing process.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action. It is recommended that the
City Council finds and determines that this Ordinance is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of
the State CEQA Guidelines because it will not result in a direct or reasonably foreseeable
indirect physical change in the environment, as there is no possibility it will have a
significant effect on the environment and it is not a "project", as defined in Section 15378
of the CEQA Guidelines. Furthermore, even if the proposed Ordinance is considered a
project, it falls within the "common sense" CEQA exemption set forth in CEQA Guidelines
Section 15061(b)(3), excluding projects where "it can be seen with certainty that there is
no possibility that the activity in question may have a significant effect on the
environment." Adoption of this Ordinance will not have a significant effect on the
environment because the proposed changes will only modernize, update, and clarify
existing affordable and inclusionary housing requirements responding to the current
economic and housing trends in the City and will not cause a physical change in the
environment.
FISCAL IMPACT
There is no fiscal impact associated with this action.
EXHIBIT(S)
1. Redline and Clean versions of draft Ordinance adopting Zoning Ordinance
Amendment No. 2021-03
2. City Council Public Hearing Notice
3. Planning Commission staff report, exhibits, presentation, and written public
comments of October 25, 2021 are incorporated herein by reference and can be
viewed at the following link: Item - PrimeGov Portal
4. Redline and Clean versions of draft Ordinance adopting Zoning Ordinance
Amendment No. 2021-03 with the incorporation of Planning Commission
Recommendations
5. Proposed 2021 List of Entitled Projects Vested Under the Regulations and
Provisions of Ordinance No. NS-2994
Submitted: Minh Thai, Executive Director, Planning and Building Agency
Zoning Ordinance Amendment No. 2021-03
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Approved By: Kristine Ridge, City Manager
Ordinance No. NS-XXX
Page 1 of 18
ORDINANCE NO. NS-________
ZONING ORDINANCE AMENDMENT NO. 2021-03 AN
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA REPEALING AND REENACTING IN ITS
ENTIRETY ARTICLE XVIII.I. OF CHAPTER 41 OF THE
SANTA ANA MUNICIPAL CODE REGARDING THE
HOUSING OPPORTUNITY ORDINANCE
THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines,
and declares as follows:
A. On November 28, 2011, the Santa Ana City Council adopted Ordinance No.
NS-2825, known as the Housing Opportunity Ordinance and appearing as “Article XVIII.I.
– Housing Opportunity Ordinance” (“Housing Opportunity Ordinance”) of Chapter 41 of
the Santa Ana Municipal Code. The Housing Opportunity Ordinance was adopted to
implement the City’s Housing Element Goal of providing affordable housing within the
City.
B. On September 1, 2015, the City Council adopted Ordinance No. NS-2881,
which amended the Housing Opportunity Ordinance in various respects, including
applicability, options to satisfy inclusionary requirements, and calculation of the in-lieu
housing fee. These amendments were intended to make the inclusionary housing
requirements more predictable for housing developers and to incentivize the production
of more affordable housing.
C. In response to impacts of the COVID-19 pandemic on the development and
construction of housing in the City, including the reduction of housing starts, the City
Council adopted Ordinance No. NS-2994 on September 1, 2020. Ordinance No. NS-
2994 further amended the Housing Opportunity Ordinance to lower the in-lieu housing
fee for all projects from $15 to $5 per square foot, adjust the trigger of the ordinance, and
expand the eligible uses of in-lieu fees collected by the City.
D. On March 2, 2021, at the direction of the City Council, an Ad Hoc Committee
for Housing was formed. The Ad Hoc Committee reviewed the Housing Opportunity
Ordinance and recommended certain changes. The Ad Hoc Committee’s
recommendations were presented and discussed at the City Council Meeting on July 6,
2021.
E. On July 26, 2021, the City Council conducted a work-study session to
further evaluate the Committee’s recommendations and to receive input from key
stakeholders and members of the public. The City Council provided direction to staff to
prepare amendments to the Housing Opportunity Ordinance concerning the applicability
Ordinance No. NS-XXX
Page 2 of 18
and triggers for the ordinance, adjustments to the in-lieu fee calculation, set-aside units,
and options for satisfaction of inclusionary requirements.
F. On September 7, 2021, the City Council further considered this matter and
provided additional direction to staff regarding proposed amendments to the Housing
Opportunity Ordinance.
G. At the City Council meeting of October 5, 2021, staff received direction to
initiate the adoption hearing in order for the City Council to consider the changes
recommended by the Housing Ad Hoc Committee.
H. On October 25, 2021, the Planning Commission held a duly noticed public
hearing on the proposed amendments and considered the staff report, recommendations
by staff, and public testimony concerning the proposed Ordinance. The Planning
Commission recommended that the City Council adopt the proposed Ordinance.
I. The Request for City Council Action for this Ordinance dated __________,
2021 and duly signed by the Executive Director of the Planning and Building Agency shall,
by this reference, be incorporated herein, and together with this ordinance, any
amendments or supplements, and oral testimony, constitute the necessary findings for
this ordinance.
Section 2. The City Council finds and determines that this Ordinance is not
subject to the California Environmental Quality Act (CEQA) pursuant to Sections
15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a
direct or reasonably foreseeable indirect physical change in the environment, as there is
no possibility it will have a significant effect on the environment and it is not a "project",
as defined in Section 15378 of the CEQA Guidelines. Furthermore, the proposed
Ordinance falls within the "common sense" CEQA exemption set forth in CEQA
Guidelines Section 15061(b)(3), excluding projects where "it can be seen with certainty
that there is no possibility that the activity in question may have a significant effect on the
environment." Adoption of this Ordinance will not have a significant effect on the
environment because the proposed changes will only modernize, update, and clarify
existing affordable and inclusionary housing requirements responding to the current
economic and housing trends in the City and will not cause a physical change in the
environment.
Section 3. Article XVIII.I of Chapter 41 of the Santa Ana Municipal Code is
hereby repealed in its entirety.
Section 4. Article XVIII.I. of Chapter 41 of the Santa Ana Municipal Code is
hereby reenacted and amended to read in its entirety as follows:
ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY AND CREATION
ORDINANCE
Ordinance No. NS-XXX
Page 3 of 18
Sec. 41-1900. Purpose.
This article establishes standards and procedures to encourage the development of
housing that is affordable to a range of households with varying income levels. The
purpose of this article is to encourage the development and availability of affordable
housing by requiring the inclusion of affordable housing units within new developments
or the conversion of rental units to condominium ownership when the number of units
exceed the densities permitted under the general plan. , zoning classification, or the
conversion of rental units to condominium ownership.
Sec. 41-1901. Definitions.
As used in this article, the following terms shall have the following meanings:
Adjusted for household size appropriate for the unit means a household of one person
in the case of a studio unit, two (2) persons in the case of a one-bedroom unit, three (3)
persons in the case of a two-bedroom unit, four (4) persons in the case of a three-
bedroom unit, and five (5) persons in the case of a four-bedroom unit.
Administrative procedures means those regulations promulgated by the executive
director pursuant to section 41-1910 of this article.
Affordable housing cost means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified, as follows:
Extremely low-income households. Thirty (30) percent of the income of a
household earning thirty (30) percent of the Orange County median income adjusted for
family size appropriate for the unit.
Very low-income households. Thirty (30) percent of the income of a household
earning fifty (50) percent of the Orange County median income adjusted for family size
appropriate for the unit.
Low-income households. Thirty (30) percent of the income of a household earning
eighty (80) percent of the Orange County median income for family size appropriate for
the unit.
Moderate-income households. Thirty (30) percent of the income of a household
earning one hundred twenty (120) percent of the Orange County median income adjusted
for family size appropriate for the unit.
The qualifying limits for extremely low-income, very low-income, low-income and
moderate-income households are established and amended annually pursuant to Section
8 of the United States Housing Act of 1937. The limits are published by the Secretary of
Housing and Urban Development.
Developer means any association, corporation, firm, joint venture, partnership,
person, or any entity or combination of entities, which seeks city approval for all or part of
a residential project.
Development agreement means an agreement approved by the city council between
a property owner and the city pursuant to Government Code section 65864, et seq.
Ordinance No. NS-XXX
Page 4 of 18
Entitled residential project means a development project that includes residential units
subject to the provisions and applicability of this Article XVIII.I. that received entitlement
approvals by city council action between August 4, 2015 and August 17, 2020 to construct
the residential project and which has not been issued a building permit prior to August 18,
2020. A list of the currently entitled residential projects is attached hereto as Exhibit A
and is incorporated by reference.
Executive director means the executive director of community development for the
city.
General plan means the adopted general plan for the City of Santa Ana.
Inclusionary housing agreement means a legally binding agreement between the
developer and the city, in a form and substance satisfactory to the executive director and
the city attorney, and containing those provisions necessary to ensure that the
requirements of this article are satisfied, whether through the provision of inclusionary
units or through an approved alternative method.
Inclusionary housing fund means the fund created by the city in which all fees collected
in compliance with this article shall be deposited.
Inclusionary housing plan means the plan submitted by the developer, in a form
specified by the executive director, detailing how the provisions of this article will be
implemented for the proposed residential project.
Inclusionary unit means a dwelling unit that will be offered for sale or rent to extremely
low, very low, low, or moderate -income households, at an affordable housing cost, in
compliance with this article.
Low-income units and, very low-income units, and extremely low-income units means
inclusionary units restricted to occupancy by low or, very low, and extremely low-income
households, respectively, at an affordable housing cost.
Market rate units means dwelling units in a residential project that are not inclusionary
units.
Moderate-income units means inclusionary units restricted to occupancy by
moderate-income households at an affordable housing cost.
Prior project means any project for which an application was submitted and the
application was deemed complete prior to August 4, 2015.
Regulatory agreement means an agreement entered into between the City of Santa
Ana or the Santa Ana Community Development Agency and a developer by which the
developer covenants to keep certain housing units at an affordable housing cost for a
specified period of time.
Rehabilitated units/rehabilitation means the improvement of a unit in substandard
condition to a decent, safe and sanitary level. Units are in substandard condition when,
while they may be structurally sound, they do not provide safe and adequate shelter, and
in their present condition endanger the health, safety or well-being of the occupants.
Residential project/project means any of the following:
Ordinance No. NS-XXX
Page 5 of 18
A subdivision resulting in the creation of five (5) or more residential lots or
residential condominium units; or
The new construction of a project consisting of five (5) or more multi-family units;
or
The new construction of five (5) or more separate houses or dwelling units; or
The conversion of five (5) or more existing residential rental units to condominium
ownership.
Target area means that area designated by the city from time to time, on an as-needed
basis, as a priority area for rehabilitation due to health and safety concerns.
Total housing costs the total monthly or annual recurring expenses required of a
household to obtain shelter. For a rental unit, total housing costs shall include the monthly
rent payment and utilities paid by the tenant (excluding telephone and television). For an
ownership unit, total housing costs shall include the mortgage payment (principal and
interest), insurance, homeowners' association dues (if applicable), private mortgage
insurance (if applicable), taxes, utilities, an allowance for maintenance and any other
related assessments.
Sec. 41-1902. Applicability and inclusionary unit requirements.
(a) Applicability. The requirements of this article shall apply to any new residential
project comprised of twenty (20five (5) or more residential lots or residential units located
withinwhich has not been issued a building permit or paid the cityin-lieu fee as of
November 17, 2021, including new construction, and condominium conversions, which
exceedmeets one or all of the following applicability thresholds:
(1) A change in use to allow for residential or that exceeds the general plan or
zoning prescribed densities or percentage of residential development of the subject
property at the time of application.
(b) Applications. The requirements of this article shall apply to any new residential
project proposed in connection with an application to do a
(2) Implementation of the following:
(1) Increase the permitted residential density or percentage of residential
development allowed as a result of the subject property above the density permitted by
thecity initiated zone changes or city initiated general plan at the time of the application.
The inclusionary requirements shall only apply to the incremental increase in the number
of units beyond that which is allowed by the applicable density permitted by the general
plan. amendments after November 28, 2011.
(2)
(3) Increase of the permitted percentage of residential development allowed for a
mixed-use development above the percentage at the time of the application. The
inclusionary requirements shall only apply to the incremental increase in the number of
units beyond that which is allowed by the density permitted by the general plan. permitted
under the zoning classification at the time of application.
(3) Convert
Ordinance No. NS-XXX
Page 6 of 18
(4) Development of new residential uses or increase of the permitted residential
density or percentage of residential development within an overlay zone approved
pursuant to Division 28 of Article I of this Chapter.
(5) Conversion of rental units to condominium ownership.
(b) Applications. The inclusionary requirements shall only apply to the incremental
increase in the number of units beyond that which is allowed by the density permitted by
the general plan. as prescribed in Subsection (a) above.
(c) Units for sale. If the new residential project consists of units for sale, then a
minimum of ten (10) percent of the total number of units in the project shall be sold to
moderate -income households.
(d) Rental units. If the new residential project consists of rental units, then athe
inclusionary units shall be constructed as follows:
(1) A minimum of fifteen (15) percent of the units shall be rented to low-income
households, or
(2) A minimum of ten (10) percent shall be rented to very low-income
households., or
(3) A minimum of five (5) percent shall be rented to extremely low-income
households, or
(4) A minimum of ten (10) percent shall be available at an affordable housing
cost of which five (5) percent rented to low-income households, three (3) percent rented
to very low-income households, and two (2) percent rented to extremely low-income
households.
(e) Rounding of quantities in calculations. In calculating the required number of
inclusionary units, fractional units shall be rounded-up to the next whole unit. The
developer may choose to pay an in-lieu fee set forth in section 41-1904(c) for the fractional
units, which shall be calculated based on the number of habitable square feet applicable
in each case.
(f) Displacement of existing inclusionary units. Notwithstanding any other provision of
this article, any residential project subject to this article that results in the displacement of
extremely low, very low and/or low -income household(s) shall be required to provide on-
site inclusionary units as required by this article.
(g) Compliance with article. All inclusionary units required by this article shall be sold
or rented in compliance with this article.
Sec. 41-1903. Exempt projects.
The following are exempt from the requirements of this article:
Ordinance No. NS-XXX
Page 7 of 18
(a) Applications deemed complete. Applications that include a residential project for
which a development application has been deemed complete prior to November
28, 2011.
(b)
(a) Development agreements. A residential project that is the subject of a
development agreement under applicable provisions of the California Government Code
that expressly provides for an exclusion to this article, provides for a different amount of
inclusionary units, or provides for a different amount of inclusionary unitsspecified method
for determining the in-lieu fee provisions of this ordinance, such as the timing of payment
or the point in time for determining the applicable in-lieu fee amount, to satisfy the
inclusionary units from that specified by this article, provided the development agreement
was adopted on or before November 28, 2011..
(c)
(b) Project with regulatory agreement. A residential project for which a regulatory
agreement has been approved, provided that the regulatory agreement is effective at the
time the residential project would otherwise be required to comply with the requirements
of this article, and there is no uncured breach of the regulatory agreement before issuance
of a certificate of occupancy for the project. This may include a residential project that has
obtained a density bonus under article XVI.I of the Santa Ana Municipal Code. Such
projects cannot be used to satisfy the inclusionary requirement for another project.
(d)
(c) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41,
Article XVI.II - Adaptive Reuse.
Sec. 41-1904. Options to satisfy inclusionary requirements.
(a) On-site units. The primary means of complying with the inclusionary requirements
of this article shall be the provision of on-site inclusionary units in accordance with section
41-1901,1902 above. A developer may only satisfy the requirements of this article by
means of an alternative to on-site inclusionary units in accordance with the requirements
and procedures of this section.
(b) Off-site units.
(1) New units. The developer may satisfy the inclusionary unit requirements for
the project, in whole or in part by constructing the required new inclusionary housing at a
different location within the city borders at the ratio of one square foot of habitable
inclusionary unit space for each required habitable square foot. While the total habitable
square footage area of the required new inclusionary units must be the same as the sum-
total of the number of habitable square feet for the project as directed by this ordinance,
the number of units and bedrooms associated with the off-site units may be approved by
the review authority of the city, consistent with the type of affordable housing needed at
the time of project review.
(2) Rehabilitated units outside a designated target area. The developer may
satisfy the inclusionary unit requirements for the project, in whole or in part by
Ordinance No. NS-XXX
Page 8 of 18
substantially rehabilitating existing housing units elsewhere within the borders of the city
at a rate of one and one-half (1½) habitable square feet per each required habitable
square foot of inclusionary units.
(3) Rehabilitated units within a designated target area. Upon application, the
developer may satisfy the inclusionary unit requirements for the project, in whole or in
part by substantially rehabilitating existing housing units elsewhere within the borders of
the city at a rate of one habitable square foot per each required habitable square foot of
affordable inclusionary units.
(c) In-lieu fee.
(1) More than twenty (20) units. A residential project comprised of more than twenty
(20) residential lots or residential units, the developer may elect to satisfy the
inclusionary unit requirements for the project, in whole or in part, by payment of
a fee in lieu of constructing some or all of the required units. The amount of the
fee allowed by this section shall be five dollars per square foot ($5.00/ft.2 ) of the
sum total of the number of habitable square feet within the entire project, as
measured from the exterior walls of the residential units. This calculation does
not include exterior hallways, common areas, landscape, open space or exterior
stairways.
(2) Entitled residential projects. The applicant(s) of an entitled residential project
(see Exhibit A) may either construct the inclusionary units or pay an in lieu fee
as follows:
(i) Twenty (20) or fewer units. In the case of an entitled residential project containing
between five (5) and twenty (20)
(1) Five (5) or more units. For a residential project comprised of five (5) or more
residential lots or residential units, the developer may elect to satisfy the inclusionary unit
requirements for the project, in whole or in part, by payment of a fee in -lieu of constructing
some or all of the required units. The total amount of the fee allowed by this section shall
be five dollars per square foot ($5.00/ft.) ofcalculated using the In-Lieu Fee Schedule in
section 41-1904(c)(1)(i) multiplied by the sum total of the number of habitable square feet
within the entire project, as measured from the exterior walls of the residential units. This
calculation does not include exterior hallways, common areas, landscape, open space or
exterior stairways.
(ii) More than twenty (20) units. In the case of an entitled residential project
comprised of more than twenty (20) residential lots or residential units, the
developer may elect to satisfy the inclusionary unit requirements for the project,
in whole or in part, by payment of a fee in lieu of constructing some or all of the
required units. The amount of the fee allowed by this section shall be five dollars
per square foot ($5.00/ft.) of the sum total of the number of habitable square
feet within the entire project, as measured from the exterior walls of the
residential units. This calculation does not include exterior hallways, common
areas, landscape, open space or exterior stairways. The in lieu fee amount
allowed herein by this subsection shall revert to fifteen dollars per square foot
($15.00) on October 1, 2021 for any construction which adds net residential
Ordinance No. NS-XXX
Page 9 of 18
units, which has city-approved entitlements, that has not been issued a building
permit by October 1, 2021.
(iii) A residential project that has been entitled and approved with conditions to pay
a specific in lieu fee or has a city council approved development agreement to
pay a specific in-lieu fee shall comply with the conditions or the development
agreement as approved and shall not be modified by this ordinance.
(3)
(i) In-Lieu Fee Schedule
Units
Fee Per Square Foot of
Habitable Area
5 – 9
$6.00
10 – 14
$9.00
15 – 19
$12.00
20 or more
$15.00
(ii) Local Skilled and Trained Workforce Incentive. The in-lieu fee for
fifteen (15) or more units shall be reduced if the developer voluntarily provides the City
with an executed enforceable commitment to use a “Skilled and Trained Workforce” as
defined in Public Contract Code section 2601 to complete the construction of the project
as follows:
Use of Skilled and Trained
Workforce
Fee Per Square Foot of
Habitable Area
30% of workforce utilizing
2 or more construction
trades
$10.00
60% of workforce utilizing
3 or more construction
trades
$5.00
A minimum of 35% of the above work-hours shall be
performed in accordance with local hire policies
approved by the City Council.
Ordinance No. NS-XXX
Page 10 of 18
(2) Timing of payment. The total fee amount for the entirety of a project is
calculated, determined, and set at the time of issuance of the first building permit for the
project. The developer shall pay the All in-lieu fees allowed by this section shall be paid
no later than prior to issuance of the building permitfirst occupancy approval for any
construction which adds net residential units. The developer may provide input regarding
what project the in lieu fees should be applied towards, but such input shall not be
dispositive. The in in-lieu fees collected by the city are city funds over which the city has
complete and absolute discretion.
(4)
(3) Inclusionary housing fund. Fees collected in compliance with this section
shall be deposited in the inclusionary housing fund.
Sec. 41-1904.1. Inclusionary housing development incentives for production of
units.
(a) In order to make the production of new inclusionary units on-site or off-site or off-
site rehabilitated units, certain incentives, standards and concessions shall be allowed
and prescribed as set forth herein below. Such concessions shall not be available to those
developers that choose to pay an in lieu fee rather than build the units. The developer
may opt to take advantage of up to two (2) concessions among the following possible
concessions:
(1) Parking concession. One on-site parking space for each zero to one
bedroom unit; two (2) on-site parking spaces for each two (2) to three (3) bedroom unit;
two and one-half (2½) parking spaces for each four (4) or more bedroom unit.
(2) Concession on one of the following Zoning Code site development
standards:
(i) Setback reduction of up to twenty-five (25) percent reduction on
subject property;
(ii) Height increase of up to twenty (20) additional feet.
(b) A developer of a for sale residential project proposing to provide on-site moderate
income units and a surrounding community benefit may opt to take advantage of up to
three (3) of the above concessions. The surrounding community benefit will include but
not be limited to park improvements, urban community gardens, developer-funded down
payment assistance, or subsidy of services, activities or programs.
Sec. 41-1905. Housing plan and housing agreement.
(a) Submittal and execution. The developer shall comply with the following
requirements:
(1) Inclusionary housing plan. The developer shall submit an inclusionary
housing plan in a form specified by the executive director, detailing how the provisions of
this article will be implemented for the proposed residential project. The inclusionary
housing plan and its supportive documents, plans, and details shall be submitted at the
same time as the site plan and application materials for the original project. All
Ordinance No. NS-XXX
Page 11 of 18
inclusionary housing plans shall be subject to the approval of the executive director and
subject to appeal processes and procedures set forth in the Santa Ana Municipal Code.
2) Inclusionary housing agreement. The developer shall execute and cause to
be recorded an inclusionary housing agreement. The inclusionary housing agreement
shall be a legally binding agreement between the developer and the city, executed by the
city manager, or his or her designee, and in a form and substance satisfactory to the
executive director and the city attorney, and containing those provisions necessary to
ensure that the requirements of this article are satisfied, whether through the provision of
inclusionary units or through an approved alternative method.
(b) Discretionary approvals. No discretionary approval shall be issued for a residential
project subject to this article until the developer has submitted an inclusionary housing
plan.
(c) Issuance of building permit. No building permit shall be issued for a residential
project subject to this article unless the executive director has approved the inclusionary
housing plan, and any required inclusionary housing agreement has been recorded.
(d) Issuance of certificate of occupancy. A certificate of occupancy shall not be issued
for a residential project subject to this article unless the approved inclusionary housing
plan has been fully implemented.
Sec. 41-1906. Standards.
(a) Location within project, relationship to non-inclusionary units. All inclusionary units
shall be:
(1) Reasonably dispersed throughout the residential project;
(2) Proportional, in number of bedrooms, gross floor area of habitable space,
and location, to the market rate units;
(3) Comparable to the market rate units included in the residential project in
terms of design, materials, finished quality, and appearance; and
(4) Permitted the same access to project amenities and recreational facilities,
as are market rate units.
(b) Timing of construction. All inclusionary units in a residential project shall be
constructed concurrent with, or before the construction of the market rate units. If the city
approves a phased project, a proportional share of the required inclusionary units shall
be provided within each phase of the residential project.
(c) Location outside the proposed original project. For projects where the developer
proposes to either produce new inclusionary units or rehabilitate existing off-site units to
meet the inclusionary affordable housing requirements of this ordinance, the off-site
project(s) containing the required inclusionary units shall be subject to the following
requirements:
Ordinance No. NS-XXX
Page 12 of 18
(1) The sum-total area (in habitable square feet) of all the newly constructed
off-site inclusionary units shall be the same number of habitable square feet of
inclusionary area as required by this ordinance. For the purpose of the calculation of the
number of square feet of required inclusionary housing, the total gross habitable square
feet of the housing units of the original market rate project shall be used, as measured
from exterior walls to exterior walls of the market units provided as the base for calculation
either ten (10) percent for very low income or fifteen (15) percent for low income
inclusionary units. The common areas, exterior hallways, stairways, patios, and balconies
shall not be calculated in determining the number of required square feet of inclusionary
housing production. All new or rehabilitated units must meet all current zoning and
general plan standards.
(2) While the total number of square feet of inclusionary housing requirement
is calculated based on the requirements of this ordinance, the number of units, bedrooms
and other amenities on the proposed off-site inclusionary housing location shall be
approved by the review authority commensurate with the size and type of units most in
demand at the time of submittal of the application.
(3) Any off-site affordable inclusionary housing project shall be substantially
comparable to the market rate units included in the residential project in terms of quality
of design, materials and finishes.
(4) If tenants are displaced due to rehabilitation of housing to meet the
inclusionary unit requirement, the developer shall be responsible for relocation costs as
required by state law.
(5) No city, housing authority, or public funds, subsidies, or participation of any
kind shall be expended on the production or building of any inclusionary housing projects
associated with meeting the inclusionary unit requirement.
(d) Timing of construction. All inclusionary units in a residential project or proposed
off-site new inclusionary units or rehabilitated units shall be constructed concurrent with,
or before the construction of the market rate units. If the city approves a phased project,
a proportional share of the required inclusionary units shall be provided within each phase
of the residential project.
(e) Units for sale.
(1) Time limit for inclusionary restrictions. A unit for sale shall be restricted to
the target income level group at the applicable affordable housing cost for a minimum of
fifty-five (55) years.
(2) Certification of purchasers. The developer and all subsequent owners of an
inclusionary unit offered for sale shall certify, on a form provided by the city, the income
of the purchaser and that such owners will live in such inclusionary unit as their primary
residence.
Ordinance No. NS-XXX
Page 13 of 18
(3) Resale price control. In order to maintain the availability of inclusionary units
required by this article, the resale price of an owner occupied inclusionary unit shall be
limited to the lesser of the fair market value of the unit as established by a licensed real
estate agent based upon three (3) comparable properties or the restricted resale price.
For these purposes, the restricted resale price shall be the applicable affordable housing
cost.
(4) Inheritance of inclusionary units. Upon the death of an owner of an owner-
occupied inclusionary unit, title in the property may transfer to the surviving joint tenant
or heir (in the case of the death of a sole owner or all owners of the household).
(5) Forfeiture. If an inclusionary unit for sale is sold for an amount in excess of
the resale price controls required by this section, the buyer and the seller shall be jointly
and severally liable to the city for the amount in excess of the affordable housing cost at
the time of such sale of the inclusionary unit. Recovered funds shall be deposited into the
inclusionary housing fund. Notwithstanding the foregoing, city may allow the buyer and
seller to cure any violation of the resale price controls within one hundred eighty (180)
days.
(f) Rental units.
(1) Time limit for inclusionary restrictions. A rental inclusionary unit shall remain
restricted to the target income level group at the applicable affordable housing cost for
fifty-five (55) years.
(2) Certification of renters. The owner of any rental inclusionary unit shall
certify, on a form provided by the city, the income of all members of the household above
the age of eighteen (18) at the time of the initial rental and annually thereafter.
(3) Forfeiture. Any lessor who leases an inclusionary unit in violation of this
article shall be required to forfeit to the city all money so obtained. Recovered funds shall
be deposited into the inclusionary housing fund.
(g) Execution and recording of documents. The executive director may require the
execution and recording of whatever documents are required to ensure enforcement of
this section; including, but not limited to, promissory notes, deeds of trust, resale
restrictions, rights of first refusal, options to purchase, and/or other documents, which
shall be recorded against all inclusionary units.
(h) General prohibitions.
(1) No person shall sell or rent an inclusionary unit at a price or rent in excess
of the maximum amount allowed by any restriction placed on the unit in accordance with
this article.
Ordinance No. NS-XXX
Page 14 of 18
(2) No person shall sell or rent an inclusionary unit to a person or persons that
do not meet the income restrictions placed on the unit in accordance with this article.
(3) No person shall provide false or materially incomplete information to the city
or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which
that person is not eligible.
(i) Principal residency requirement.
(1.) The owner or lessee of an inclusionary unit shall reside in the
unit for not less than ten (10) out of every twelve (12) months.
(2.) No owner or lessee of an inclusionary unit shall lease or
sublease, as applicable, an inclusionary unit without the prior permission of the executive
director.
Sec. 41-1907. Reserved.
Sec. 41-1908. Enforcement.
(a) Violation. Any violation of this article constitutes a misdemeanor.
(b) Forfeiture of funds. Any individual who sells an inclusionary unit in violation of this
article shall be required to forfeit any money in excess of the affordable housing cost at
such time. Any individual who rents an inclusionary unit in violation of this article shall be
required to forfeit all money so obtained. Recovered funds shall be deposited into the
inclusionary housing fund.
(c) Legal actions. The city may institute any appropriate legal actions or proceedings
necessary to ensure compliance with this article, including actions:
(1) To disapprove, revoke, or suspend any permit, including a building permit,
certificate of occupancy, or discretionary approval; and
(2) For injunctive relief or damages.
(d) Recovery of costs. In any action to enforce this article, or an inclusionary housing
agreement recorded hereunder, the city shall be entitled to recover its reasonable
attorney's fees and costs.
Sec. 41-1909. Inclusionary housing fund.
(a) Inclusionary housing fund. There is hereby established a separate fund of the city,
to be known as the inclusionary housing fund. All monies collected pursuant to this article
shall be deposited in the inclusionary housing fund. Additional monies from other sources
may be deposited in the inclusionary housing fund. The monies deposited in the
inclusionary housing fund shall be subject to the following conditions:
(1) Monies deposited into the inclusionary housing fund must be used to
increase and improve the supply of housing affordable to moderate, low, very low, and
extremely low income households in the city as specified in the city's affordable housing
Ordinance No. NS-XXX
Page 15 of 18
funds policies and procedures. A priority will be on the creation of affordable housing
opportunities or units from the existing market rate housing stock rather than construction
of new affordable housing units. This includes, but is not limited to, the purchase and
rehabilitation of units for sale. Monies may also be used to pay for one-time programs for
code enforcement, quality of life and general health and safety activities. Monies may
also be used to cover reasonable administrative or related expenses associated with the
administration of this article. new affordable housing opportunities for large families
currently living in the City. Other eligible uses of the inclusionary housing fund include but
are not limited to:
(i) Creating affordable units from the existing market rate housing stock
including but not limited to, the purchase and rehabilitation of units.
(ii) Funding one-time programs for code enforcement, quality of life, and
general health and safety activities.
(iii) Implementing and promoting programs addressing housing security,
eviction prevention, and housing legal assistance for city residents.
(iv) Funding reasonable administrative or related expenses associated
with the administration of this article.
(2) The fund shall be administered by the executive director, or his or her
designee, who may develop procedures in the city's affordable housing funds policies and
procedures to implement the purposes of the inclusionary housing fund consistent with
the requirements of this article and any adopted budget of the city.
(3) Monies deposited in accordance with this section shall be used in
accordance with the affordable housing funds policies and procedures, housing element,
consolidated plan, or subsequent plan adopted by the city council to construct,
rehabilitate, or subsidize affordable housing or to recapture affordable housing at risk of
market conversion, or to assist other government entities, private organizations, or
individuals to do so. Permissible uses include, but are not limited to, assistance to housing
development corporations, equity participation loans, grants, pre-home ownership co-
investment, pre-development loan funds, participation leases, or other public-private
partnership arrangements. The inclusionary housing fund may be used for the benefit of
both rental and owner-occupied housing.
(4) A developer receiving funding from the inclusionary housing fund shall
implement a local preference in their resident selection criteria and marketing policies
meeting guidelines established by the executive director.
(5) A developer opting for the in lieu payment option or receiving funding from
the inclusionary housing fund, as well as its contractors and subcontractors at every tier
performing work for the new housing units is encouraged and should negotiate in good
faith to provide the City with an enforceable commitment that a skilled and trained
Ordinance No. NS-XXX
Page 16 of 18
workforce will be usedminimum 30% of the labor utilizing 2 or more construction trades
be performed by a “Skilled and Trained Workforce” as defined in Public Contract Code
section 2601 to complete a contract or projectthe construction of the project and shall
also include a minimum of 35% of all work-hours for the project be performed in
accordance with Public Contract Code §§ 2601—2602local hire policies approved by the
City Council.
Sec. 41-1910. Administrative.
(a) In-lieu fee calculation. The amount per square foot of the inclusionary housing in-
lieu fee shall be subject to city council review and consideration before the end of calendar
year 2018, but after June 30, 2018. Between July 1, 2018 and December 31, 2018, staff
shall report on the effectiveness of this ordinance and provide options for council
consideration on the components of this ordinance, including, but not limited to, the
monetary amount of inclusionary in-lieu fee per square footas needed.
(b) Prior projects. The applicant(s) of any project for which a site plan review application
was submitted and such application was deemed complete prior to August 4, 2015,
may either construct the inclusionary units pursuant to the prior housing opportunity
ordinance (Ordinance No. NS-2825) or pay an in lieu fee calculated by the formula
under the prior housing opportunity ordinance (Ordinance No. NS-2825) or request
to revise its inclusionary housing plan and/or inclusionary housing agreement and
pay an in-lieu fee of nine dollars and thirty-five cents ($9.35) per square foot of
habitable space for the entire project's inclusionary housing obligation.
(c)
(b) Administration fees. The council may by resolution establish reasonable fees and
deposits for the administration of this article including an annual monitoring fee and an
inclusionary housing plan submittal fee.
(d)
(c) Monitoring/audits. At the time of initial occupancy, and annually thereafter, the city
will monitor the project to ensure that the income verifications are correct and in
compliance with the inclusionary housing administrative procedures. For ownership units,
the city shall monitor to verify that owner-occupancy requirements are maintained.
Developer/property owners are required to cooperate with the city in promptly providing
all information requested by the city in monitoring compliance with program requirements.
The city will conduct periodic random quality control audits of inclusionary units to assure
ensure compliance with rules and requirements. Such audits may include verification of
continued occupancy in inclusionary units by eligible tenants, compliance with the
inclusionary housing plan and agreement, and physical inspections of the residential
project.
(e) Administrative procedures. The city manager is hereby authorized and directed
to promulgate administrative procedures for the implementation of this article.
Secs. 41-1911—41-1999. Reserved.
Section 5. If any section, subsection, sentence, clause, phrase or portion of this
ordinance is for any reason held to be invalid or unconstitutional by the decision of any
Ordinance No. NS-XXX
Page 17 of 18
court of competent jurisdiction, such decision shall not affect the validity of the remaining
portions of this ordinance. The City Council of the City of Santa Ana hereby declares that
it would have adopted this ordinance and each section, subsection, sentence, clause,
phrase or portion thereof irrespective of the fact that any one or more sections,
subsections, sentences, clauses, phrases, or portions be declared invalid or
unconstitutional.
Section 6. This Ordinance shall become effective thirty (30) days after its
adoption.
Section 7. The Clerk of the Council shall certify the adoption of this ordinance
and shall cause the same to be published as required by law.
ADOPTED this _______ day of ___________, 2021.
_________________________
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:_________________________
John M. Funk
Sr. Assistant City Attorney
AYES: Councilmembers ______________________________________
NOES: Councilmembers _______________________________________
ABSTAIN: Councilmembers _______________________________________
NOT PRESENT: Councilmembers _______________________________________
Ordinance No. NS-XXX
Page 18 of 18
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached
Ordinance No. NS-____________ to be the original ordinance adopted by the City
Council of the City of Santa Ana on _______________, and that said ordinance was
published in accordance with the Charter of the City of Santa Ana.
Date: ________________ ____________________________________
Clerk of the Council
City of Santa Ana
Ordinance No. NS-XXX
Page 1 of 16
ORDINANCE NO. NS-________
ZONING ORDINANCE AMENDMENT NO. 2021-03 AN
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA REPEALING AND REENACTING IN ITS
ENTIRETY ARTICLE XVIII.I. OF CHAPTER 41 OF THE
SANTA ANA MUNICIPAL CODE REGARDING THE
HOUSING OPPORTUNITY ORDINANCE
THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines,
and declares as follows:
A. On November 28, 2011, the Santa Ana City Council adopted Ordinance No.
NS-2825, known as the Housing Opportunity Ordinance and appearing as “Article XVIII.I.
– Housing Opportunity Ordinance” (“Housing Opportunity Ordinance”) of Chapter 41 of
the Santa Ana Municipal Code. The Housing Opportunity Ordinance was adopted to
implement the City’s Housing Element Goal of providing affordable housing within the
City.
B. On September 1, 2015, the City Council adopted Ordinance No. NS-2881,
which amended the Housing Opportunity Ordinance in various respects, including
applicability, options to satisfy inclusionary requirements, and calculation of the in-lieu
housing fee. These amendments were intended to make the inclusionary housing
requirements more predictable for housing developers and to incentivize the production
of more affordable housing.
C. In response to impacts of the COVID-19 pandemic on the development and
construction of housing in the City, including the reduction of housing starts, the City
Council adopted Ordinance No. NS-2994 on September 1, 2020. Ordinance No. NS-
2994 further amended the Housing Opportunity Ordinance to lower the in-lieu housing
fee for all projects from $15 to $5 per square foot, adjust the trigger of the ordinance, and
expand the eligible uses of in-lieu fees collected by the City.
D. On March 2, 2021, at the direction of the City Council, an Ad Hoc Committee
for Housing was formed. The Ad Hoc Committee reviewed the Housing Opportunity
Ordinance and recommended certain changes. The Ad Hoc Committee’s
recommendations were presented and discussed at the City Council Meeting on July 6,
2021.
E. On July 26, 2021, the City Council conducted a work-study session to
further evaluate the Committee’s recommendations and to receive input from key
stakeholders and members of the public. The City Council provided direction to staff to
prepare amendments to the Housing Opportunity Ordinance concerning the applicability
Ordinance No. NS-XXX
Page 2 of 16
and triggers for the ordinance, adjustments to the in-lieu fee calculation, set-aside units,
and options for satisfaction of inclusionary requirements.
F. On September 7, 2021, the City Council further considered this matter and
provided additional direction to staff regarding proposed amendments to the Housing
Opportunity Ordinance.
G. At the City Council meeting of October 5, 2021, staff received direction to
initiate the adoption hearing in order for the City Council to consider the changes
recommended by the Housing Ad Hoc Committee.
H. On October 25, 2021, the Planning Commission held a duly noticed public
hearing on the proposed amendments and considered the staff report, recommendations
by staff, and public testimony concerning the proposed Ordinance. The Planning
Commission recommended that the City Council adopt the proposed Ordinance.
I. The Request for City Council Action for this Ordinance dated __________,
2021 and duly signed by the Executive Director of the Planning and Building Agency shall,
by this reference, be incorporated herein, and together with this ordinance, any
amendments or supplements, and oral testimony, constitute the necessary findings for
this ordinance.
Section 2. The City Council finds and determines that this Ordinance is not
subject to the California Environmental Quality Act (CEQA) pursuant to Sections
15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a
direct or reasonably foreseeable indirect physical change in the environment, as there is
no possibility it will have a significant effect on the environment and it is not a "project",
as defined in Section 15378 of the CEQA Guidelines. Furthermore, the proposed
Ordinance falls within the "common sense" CEQA exemption set forth in CEQA
Guidelines Section 15061(b)(3), excluding projects where "it can be seen with certainty
that there is no possibility that the activity in question may have a significant effect on the
environment." Adoption of this Ordinance will not have a significant effect on the
environment because the proposed changes will only modernize, update, and clarify
existing affordable and inclusionary housing requirements responding to the current
economic and housing trends in the City and will not cause a physical change in the
environment.
Section 3. Article XVIII.I of Chapter 41 of the Santa Ana Municipal Code is
hereby repealed in its entirety.
Section 4. Article XVIII.I. of Chapter 41 of the Santa Ana Municipal Code is
hereby reenacted and amended to read in its entirety as follows:
ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY AND CREATION
ORDINANCE
Ordinance No. NS-XXX
Page 3 of 16
Sec. 41-1900. Purpose.
This article establishes standards and procedures to encourage the development of
housing that is affordable to a range of households with varying income levels. The
purpose of this article is to encourage the development and availability of affordable
housing by requiring the inclusion of affordable housing units within new developments
when the number of units exceed the densities permitted under the general plan, zoning
classification, or the conversion of rental units to condominium ownership.
Sec. 41-1901. Definitions.
As used in this article, the following terms shall have the following meanings:
Adjusted for household size appropriate for the unit means a household of one person
in the case of a studio unit, two (2) persons in the case of a one-bedroom unit, three (3)
persons in the case of a two-bedroom unit, four (4) persons in the case of a three-
bedroom unit, and five (5) persons in the case of a four-bedroom unit.
Administrative procedures means those regulations promulgated by the executive
director pursuant to section 41-1910 of this article.
Affordable housing cost means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified, as follows:
Extremely low-income households. Thirty (30) percent of the income of a
household earning thirty (30) percent of the Orange County median income adjusted for
family size appropriate for the unit.
Very low-income households. Thirty (30) percent of the income of a household
earning fifty (50) percent of the Orange County median income adjusted for family size
appropriate for the unit.
Low-income households. Thirty (30) percent of the income of a household earning
eighty (80) percent of the Orange County median income for family size appropriate for
the unit.
Moderate-income households. Thirty (30) percent of the income of a household
earning one hundred twenty (120) percent of the Orange County median income adjusted
for family size appropriate for the unit.
The qualifying limits for extremely low-income, very low-income, low-income and
moderate-income households are established and amended annually pursuant to Section
8 of the United States Housing Act of 1937. The limits are published by the Secretary of
Housing and Urban Development.
Developer means any association, corporation, firm, joint venture, partnership,
person, or any entity or combination of entities, which seeks city approval for all or part of
a residential project.
Development agreement means an agreement approved by the city council between
a property owner and the city pursuant to Government Code section 65864, et seq.
Executive director means the executive director of community development for the
city.
Ordinance No. NS-XXX
Page 4 of 16
General plan means the adopted general plan for the City of Santa Ana.
Inclusionary housing agreement means a legally binding agreement between the
developer and the city, in a form and substance satisfactory to the executive director and
the city attorney, and containing those provisions necessary to ensure that the
requirements of this article are satisfied, whether through the provision of inclusionary
units or through an approved alternative method.
Inclusionary housing fund means the fund created by the city in which all fees collected
in compliance with this article shall be deposited.
Inclusionary housing plan means the plan submitted by the developer, in a form
specified by the executive director, detailing how the provisions of this article will be
implemented for the proposed residential project.
Inclusionary unit means a dwelling unit that will be offered for sale or rent to extremely
low, very low, low, or moderate-income households, at an affordable housing cost, in
compliance with this article.
Low-income units, very low-income units, and extremely low-income units means
inclusionary units restricted to occupancy by low, very low, and extremely low-income
households, respectively, at an affordable housing cost.
Market rate units means dwelling units in a residential project that are not inclusionary
units.
Moderate-income units means inclusionary units restricted to occupancy by
moderate-income households at an affordable housing cost.
Regulatory agreement means an agreement entered into between the City of Santa
Ana or the Santa Ana Community Development Agency and a developer by which the
developer covenants to keep certain housing units at an affordable housing cost for a
specified period of time.
Rehabilitated units/rehabilitation means the improvement of a unit in substandard
condition to a decent, safe and sanitary level. Units are in substandard condition when,
while they may be structurally sound, they do not provide safe and adequate shelter, and
in their present condition endanger the health, safety or well-being of the occupants.
Residential project/project means any of the following:
A subdivision resulting in the creation of five (5) or more residential lots or
residential condominium units; or
The new construction of a project consisting of five (5) or more multi-family units;
or
The new construction of five (5) or more separate houses or dwelling units; or
The conversion of five (5) or more existing residential rental units to condominium
ownership.
Target area means that area designated by the city from time to time, on an as-needed
basis, as a priority area for rehabilitation due to health and safety concerns.
Ordinance No. NS-XXX
Page 5 of 16
Total housing costs the total monthly or annual recurring expenses required of a
household to obtain shelter. For a rental unit, total housing costs shall include the monthly
rent payment and utilities paid by the tenant (excluding telephone and television). For an
ownership unit, total housing costs shall include the mortgage payment (principal and
interest), insurance, homeowners' association dues (if applicable), private mortgage
insurance (if applicable), taxes, utilities, an allowance for maintenance and any other
related assessments.
Sec. 41-1902. Applicability and inclusionary unit requirements.
(a) Applicability. The requirements of this article shall apply to any new project
comprised of five (5) or more residential lots or residential units which has not been issued
a building permit or paid the in-lieu fee as of November 17, 2021, including new
construction and condominium conversions, which meets one or all of the following
applicability thresholds:
(1) A change in use to allow for residential or that exceeds the general plan or
zoning prescribed densities or percentage of residential development of the subject
property at the time of application.
(2) Implementation of the permitted residential density or percentage of residential
development allowed as a result of city initiated zone changes or city initiated general
plan amendments after November 28, 2011.
(3) Increase of the permitted percentage of residential development allowed for a
mixed-use development above the percentage permitted under the zoning classification
at the time of application.
(4) Development of new residential uses or increase of the permitted residential
density or percentage of residential development within an overlay zone approved
pursuant to Division 28 of Article I of this Chapter.
(5) Conversion of rental units to condominium ownership.
(b) Applications. The inclusionary requirements shall only apply to the incremental
units beyond that which is allowed as prescribed in Subsection (a) above.
(c) Units for sale. If the new residential project consists of units for sale, then a
minimum of ten (10) percent of the total number of units in the project shall be sold to
moderate-income households.
(d) Rental units. If the new residential project consists of rental units, the inclusionary
units shall be constructed as follows:
(1) A minimum of fifteen (15) percent of the units shall be rented to low-income
households, or
Ordinance No. NS-XXX
Page 6 of 16
(2) A minimum of ten (10) percent shall be rented to very low-income
households, or
(3) A minimum of five (5) percent shall be rented to extremely low-income
households, or
(4) A minimum of ten (10) percent shall be available at an affordable housing
cost of which five (5) percent rented to low-income households, three (3) percent rented
to very low-income households, and two (2) percent rented to extremely low-income
households.
(e) Rounding of quantities in calculations. In calculating the required number of
inclusionary units, fractional units shall be rounded-up to the next whole unit. The
developer may choose to pay an in-lieu fee set forth in section 41-1904(c) for the fractional
units, which shall be calculated based on the number of habitable square feet applicable
in each case.
(f) Displacement of existing inclusionary units. Notwithstanding any other provision of
this article, any residential project subject to this article that results in the displacement of
extremely low, very low and/or low-income household(s) shall be required to provide on-
site inclusionary units as required by this article.
(g) Compliance with article. All inclusionary units required by this article shall be sold
or rented in compliance with this article.
Sec. 41-1903. Exempt projects.
The following are exempt from the requirements of this article:
(a) Development agreements. A residential project that is the subject of a
development agreement under applicable provisions of the California Government Code
that expressly provides for an exclusion to this article, provides for a different amount of
inclusionary units, or provides for a different specified method for determining the in-lieu
fee provisions of this ordinance, such as the timing of payment or the point in time for
determining the applicable in-lieu fee amount, to satisfy the inclusionary units from that
specified by this article.
(b) Project with regulatory agreement. A residential project for which a regulatory
agreement has been approved, provided that the regulatory agreement is effective at the
time the residential project would otherwise be required to comply with the requirements
of this article, and there is no uncured breach of the regulatory agreement before issuance
of a certificate of occupancy for the project. This may include a residential project that has
obtained a density bonus under article XVI.I of the Santa Ana Municipal Code. Such
projects cannot be used to satisfy the inclusionary requirement for another project.
(c) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41,
Article XVI.II - Adaptive Reuse.
Ordinance No. NS-XXX
Page 7 of 16
Sec. 41-1904. Options to satisfy inclusionary requirements.
(a) On-site units. The primary means of complying with the inclusionary requirements
of this article shall be the provision of on-site inclusionary units in accordance with section
41-1902 above. A developer may only satisfy the requirements of this article by means of
an alternative to on-site inclusionary units in accordance with the requirements and
procedures of this section.
(b) Off-site units.
(1) New units. The developer may satisfy the inclusionary unit requirements for
the project, in whole or in part by constructing the required new inclusionary housing at a
different location within the city borders at the ratio of one square foot of habitable
inclusionary unit space for each required habitable square foot. While the total habitable
square footage area of the required new inclusionary units must be the same as the sum-
total of the number of habitable square feet for the project as directed by this ordinance,
the number of units and bedrooms associated with the off-site units may be approved by
the review authority of the city, consistent with the type of affordable housing needed at
the time of project review.
(2) Rehabilitated units outside a designated target area. The developer may
satisfy the inclusionary unit requirements for the project, in whole or in part by
substantially rehabilitating existing housing units elsewhere within the borders of the city
at a rate of one and one-half (1½) habitable square feet per each required habitable
square foot of inclusionary units.
(3) Rehabilitated units within a designated target area. Upon application, the
developer may satisfy the inclusionary unit requirements for the project, in whole or in
part by substantially rehabilitating existing housing units elsewhere within the borders of
the city at a rate of one habitable square foot per each required habitable square foot of
affordable inclusionary units.
(c) In-lieu fee.
(1) Five (5) or more units. For a residential project comprised of five (5) or more
residential lots or residential units, the developer may elect to satisfy the inclusionary unit
requirements for the project, in whole or in part, by payment of a fee in-lieu of constructing
some or all of the required units. The total amount of the fee allowed by this section shall
be calculated using the In-Lieu Fee Schedule in section 41-1904(c)(1)(i) multiplied by the
sum total of the number of habitable square feet within the entire project, as measured
from the exterior walls of the residential units. This calculation does not include exterior
hallways, common areas, landscape, open space or exterior stairways.
(i) In-Lieu Fee Schedule
Ordinance No. NS-XXX
Page 8 of 16
Units Fee Per Square Foot of
Habitable Area
5 – 9 $6.00
10 – 14 $9.00
15 – 19 $12.00
20 or more $15.00
(ii) Local Skilled and Trained Workforce Incentive. The in-lieu fee for
fifteen (15) or more units shall be reduced if the developer voluntarily provides the City
with an executed enforceable commitment to use a “Skilled and Trained Workforce” as
defined in Public Contract Code section 2601 to complete the construction of the project
as follows:
Use of Skilled and Trained
Workforce
Fee Per Square Foot of
Habitable Area
30% of workforce utilizing
2 or more construction
trades
$10.00
60% of workforce utilizing
3 or more construction
trades
$5.00
A minimum of 35% of the above work-hours shall be
performed in accordance with local hire policies
approved by the City Council.
(2) Timing of payment. The total fee amount for the entirety of a project is
calculated, determined, and set at the time of issuance of the first building permit for the
project. All in-lieu fees allowed by this section shall be paid no later than prior to issuance
of the first occupancy approval for any construction which adds net residential units. The
in-lieu fees collected by the city are city funds over which the city has complete and
absolute discretion.
(3) Inclusionary housing fund. Fees collected in compliance with this section
shall be deposited in the inclusionary housing fund.
Sec. 41-1904.1. Inclusionary housing development incentives for production of
units.
(a) In order to make the production of new inclusionary units on-site or off-site or off-
site rehabilitated units, certain incentives, standards and concessions shall be allowed
and prescribed as set forth herein below. Such concessions shall not be available to those
developers that choose to pay an in lieu fee rather than build the units. The developer
may opt to take advantage of up to two (2) concessions among the following possible
concessions:
Ordinance No. NS-XXX
Page 9 of 16
(1) Parking concession. One on-site parking space for each zero to one
bedroom unit; two (2) on-site parking spaces for each two (2) to three (3) bedroom unit;
two and one-half (2½) parking spaces for each four (4) or more bedroom unit.
(2) Concession on one of the following Zoning Code site development
standards:
(i) Setback reduction of up to twenty-five (25) percent reduction on
subject property;
(ii) Height increase of up to twenty (20) additional feet.
(b) A developer of a for sale residential project proposing to provide on-site moderate
income units and a surrounding community benefit may opt to take advantage of up to
three (3) of the above concessions. The surrounding community benefit will include but
not be limited to park improvements, urban community gardens, developer-funded down
payment assistance, or subsidy of services, activities or programs.
Sec. 41-1905. Housing plan and housing agreement.
(a) Submittal and execution. The developer shall comply with the following
requirements:
(1) Inclusionary housing plan. The developer shall submit an inclusionary
housing plan in a form specified by the executive director, detailing how the provisions of
this article will be implemented for the proposed residential project. The inclusionary
housing plan and its supportive documents, plans, and details shall be submitted at the
same time as the site plan and application materials for the original project. All
inclusionary housing plans shall be subject to the approval of the executive director and
subject to appeal processes and procedures set forth in the Santa Ana Municipal Code.
2) Inclusionary housing agreement. The developer shall execute and cause to
be recorded an inclusionary housing agreement. The inclusionary housing agreement
shall be a legally binding agreement between the developer and the city, executed by the
city manager, or his or her designee, and in a form and substance satisfactory to the
executive director and the city attorney, and containing those provisions necessary to
ensure that the requirements of this article are satisfied, whether through the provision of
inclusionary units or through an approved alternative method.
(b) Discretionary approvals. No discretionary approval shall be issued for a residential
project subject to this article until the developer has submitted an inclusionary housing
plan.
(c) Issuance of building permit. No building permit shall be issued for a residential
project subject to this article unless the executive director has approved the inclusionary
housing plan, and any required inclusionary housing agreement has been recorded.
(d) Issuance of certificate of occupancy. A certificate of occupancy shall not be issued
for a residential project subject to this article unless the approved inclusionary housing
plan has been fully implemented.
Sec. 41-1906. Standards.
Ordinance No. NS-XXX
Page 10 of 16
(a) Location within project, relationship to non-inclusionary units. All inclusionary units
shall be:
(1) Reasonably dispersed throughout the residential project;
(2) Proportional, in number of bedrooms, gross floor area of habitable space,
and location, to the market rate units;
(3) Comparable to the market rate units included in the residential project in
terms of design, materials, finished quality, and appearance; and
(4) Permitted the same access to project amenities and recreational facilities,
as are market rate units.
(b) Timing of construction. All inclusionary units in a residential project shall be
constructed concurrent with, or before the construction of the market rate units. If the city
approves a phased project, a proportional share of the required inclusionary units shall
be provided within each phase of the residential project.
(c) Location outside the proposed original project. For projects where the developer
proposes to either produce new inclusionary units or rehabilitate existing off-site units to
meet the inclusionary affordable housing requirements of this ordinance, the off-site
project(s) containing the required inclusionary units shall be subject to the following
requirements:
(1) The sum-total area (in habitable square feet) of all the newly constructed
off-site inclusionary units shall be the same number of habitable square feet of
inclusionary area as required by this ordinance. For the purpose of the calculation of the
number of square feet of required inclusionary housing, the total gross habitable square
feet of the housing units of the original market rate project shall be used, as measured
from exterior walls to exterior walls of the market units provided as the base for
calculation. The common areas, exterior hallways, stairways, patios, and balconies shall
not be calculated in determining the number of required square feet of inclusionary
housing production. All new or rehabilitated units must meet all current zoning and
general plan standards.
(2) While the total number of square feet of inclusionary housing requirement
is calculated based on the requirements of this ordinance, the number of units, bedrooms
and other amenities on the proposed off-site inclusionary housing location shall be
approved by the review authority commensurate with the size and type of units most in
demand at the time of submittal of the application.
(3) Any off-site affordable inclusionary housing project shall be substantially
comparable to the market rate units included in the residential project in terms of quality
of design, materials and finishes.
Ordinance No. NS-XXX
Page 11 of 16
(4) If tenants are displaced due to rehabilitation of housing to meet the
inclusionary unit requirement, the developer shall be responsible for relocation costs as
required by state law.
(5) No city, housing authority, or public funds, subsidies, or participation of any
kind shall be expended on the production or building of any inclusionary housing projects
associated with meeting the inclusionary unit requirement.
(d) Timing of construction. All inclusionary units in a residential project or proposed
off-site new inclusionary units or rehabilitated units shall be constructed concurrent with,
or before the construction of the market rate units. If the city approves a phased project,
a proportional share of the required inclusionary units shall be provided within each phase
of the residential project.
(e) Units for sale.
(1) Time limit for inclusionary restrictions. A unit for sale shall be restricted to
the target income level group at the applicable affordable housing cost for a minimum of
fifty-five (55) years.
(2) Certification of purchasers. The developer and all subsequent owners of an
inclusionary unit offered for sale shall certify, on a form provided by the city, the income
of the purchaser and that such owners will live in such inclusionary unit as their primary
residence.
(3) Resale price control. In order to maintain the availability of inclusionary units
required by this article, the resale price of an owner occupied inclusionary unit shall be
limited to the lesser of the fair market value of the unit as established by a licensed real
estate agent based upon three (3) comparable properties or the restricted resale price.
For these purposes, the restricted resale price shall be the applicable affordable housing
cost.
(4) Inheritance of inclusionary units. Upon the death of an owner of an owner-
occupied inclusionary unit, title in the property may transfer to the surviving joint tenant
or heir (in the case of the death of a sole owner or all owners of the household).
(5) Forfeiture. If an inclusionary unit for sale is sold for an amount in excess of
the resale price controls required by this section, the buyer and the seller shall be jointly
and severally liable to the city for the amount in excess of the affordable housing cost at
the time of such sale of the inclusionary unit. Recovered funds shall be deposited into the
inclusionary housing fund. Notwithstanding the foregoing, city may allow the buyer and
seller to cure any violation of the resale price controls within one hundred eighty (180)
days.
(f) Rental units.
Ordinance No. NS-XXX
Page 12 of 16
(1) Time limit for inclusionary restrictions. A rental inclusionary unit shall remain
restricted to the target income level group at the applicable affordable housing cost for
fifty-five (55) years.
(2) Certification of renters. The owner of any rental inclusionary unit shall
certify, on a form provided by the city, the income of all members of the household above
the age of eighteen (18) at the time of the initial rental and annually thereafter.
(3) Forfeiture. Any lessor who leases an inclusionary unit in violation of this
article shall be required to forfeit to the city all money so obtained. Recovered funds shall
be deposited into the inclusionary housing fund.
(g) Execution and recording of documents. The executive director may require the
execution and recording of whatever documents are required to ensure enforcement of
this section; including, but not limited to, promissory notes, deeds of trust, resale
restrictions, rights of first refusal, options to purchase, and/or other documents, which
shall be recorded against all inclusionary units.
(h) General prohibitions.
(1) No person shall sell or rent an inclusionary unit at a price or rent in excess
of the maximum amount allowed by any restriction placed on the unit in accordance with
this article.
(2) No person shall sell or rent an inclusionary unit to a person or persons that
do not meet the income restrictions placed on the unit in accordance with this article.
(3) No person shall provide false or materially incomplete information to the city
or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which
that person is not eligible.
(i) Principal residency requirement.
1. The owner or lessee of an inclusionary unit shall reside in the
unit for not less than ten (10) out of every twelve (12) months.
2. No owner or lessee of an inclusionary unit shall lease or
sublease, as applicable, an inclusionary unit without the prior permission of the executive
director.
Sec. 41-1907. Reserved.
Sec. 41-1908. Enforcement.
(a) Violation. Any violation of this article constitutes a misdemeanor.
(b) Forfeiture of funds. Any individual who sells an inclusionary unit in violation of this
article shall be required to forfeit any money in excess of the affordable housing cost at
Ordinance No. NS-XXX
Page 13 of 16
such time. Any individual who rents an inclusionary unit in violation of this article shall be
required to forfeit all money so obtained. Recovered funds shall be deposited into the
inclusionary housing fund.
(c) Legal actions. The city may institute any appropriate legal actions or proceedings
necessary to ensure compliance with this article, including actions:
(1) To disapprove, revoke, or suspend any permit, including a building permit,
certificate of occupancy, or discretionary approval; and
(2) For injunctive relief or damages.
(d) Recovery of costs. In any action to enforce this article, or an inclusionary housing
agreement recorded hereunder, the city shall be entitled to recover its reasonable
attorney's fees and costs.
Sec. 41-1909. Inclusionary housing fund.
(a) Inclusionary housing fund. There is hereby established a separate fund of the city,
to be known as the inclusionary housing fund. All monies collected pursuant to this article
shall be deposited in the inclusionary housing fund. Additional monies from other sources
may be deposited in the inclusionary housing fund. The monies deposited in the
inclusionary housing fund shall be subject to the following conditions:
(1) Monies deposited into the inclusionary housing fund must be used to
increase and improve the supply of housing affordable to moderate, low, very low, and
extremely low income households in the city as specified in the city's affordable housing
funds policies and procedures. A priority will be on the creation of new affordable housing
opportunities for large families currently living in the City. Other eligible uses of the
inclusionary housing fund include but are not limited to:
(i) Creating affordable units from the existing market rate housing stock
including but not limited to, the purchase and rehabilitation of units.
(ii) Funding one-time programs for code enforcement, quality of life, and
general health and safety activities.
(iii) Implementing and promoting programs addressing housing security,
eviction prevention, and housing legal assistance for city residents.
(iv) Funding reasonable administrative or related expenses associated
with the administration of this article.
(2) The fund shall be administered by the executive director, or his or her
designee, who may develop procedures in the city's affordable housing funds policies and
procedures to implement the purposes of the inclusionary housing fund consistent with
the requirements of this article and any adopted budget of the city.
(3) Monies deposited in accordance with this section shall be used in
accordance with the affordable housing funds policies and procedures, housing element,
Ordinance No. NS-XXX
Page 14 of 16
consolidated plan, or subsequent plan adopted by the city council to construct,
rehabilitate, or subsidize affordable housing or to recapture affordable housing at risk of
market conversion, or to assist other government entities, private organizations, or
individuals to do so. Permissible uses include, but are not limited to, assistance to housing
development corporations, equity participation loans, grants, pre-home ownership co-
investment, pre-development loan funds, participation leases, or other public-private
partnership arrangements. The inclusionary housing fund may be used for the benefit of
both rental and owner-occupied housing.
(4) A developer receiving funding from the inclusionary housing fund shall
implement a local preference in their resident selection criteria and marketing policies
meeting guidelines established by the executive director.
(5) A developer receiving funding from the inclusionary housing fund, as well
as its contractors and subcontractors at every tier performing work for the new housing
units is encouraged and should negotiate in good faith to provide the City with an
enforceable commitment that a minimum 30% of the labor utilizing 2 or more construction
trades be performed by a “Skilled and Trained Workforce” as defined in Public Contract
Code section 2601 to complete the construction of the project and shall also include a
minimum of 35% of all work-hours for the project be performed in accordance with local
hire policies approved by the City Council.
Sec. 41-1910. Administrative.
(a) In-lieu fee calculation. The amount per square foot of the inclusionary housing in-
lieu fee shall be subject to city council review and consideration as needed.
(b) Administration fees. The council may by resolution establish reasonable fees and
deposits for the administration of this article including an annual monitoring fee and an
inclusionary housing plan submittal fee.
(c) Monitoring/audits. At the time of initial occupancy, and annually thereafter, the city
will monitor the project to ensure that the income verifications are correct and in
compliance with the inclusionary housing administrative procedures. For ownership units,
the city shall monitor to verify that owner-occupancy requirements are maintained.
Developer/property owners are required to cooperate with the city in promptly providing
all information requested by the city in monitoring compliance with program requirements.
The city will conduct periodic random quality control audits of inclusionary units to ensure
compliance with rules and requirements. Such audits may include verification of
continued occupancy in inclusionary units by eligible tenants, compliance with the
inclusionary housing plan and agreement, and physical inspections of the residential
project.
(e) Administrative procedures. The city manager is hereby authorized and directed
to promulgate administrative procedures for the implementation of this article.
Secs. 41-1911—41-1999. Reserved.
Ordinance No. NS-XXX
Page 15 of 16
Section 5. If any section, subsection, sentence, clause, phrase or portion of this
ordinance is for any reason held to be invalid or unconstitutional by the decision of any
court of competent jurisdiction, such decision shall not affect the validity of the remaining
portions of this ordinance. The City Council of the City of Santa Ana hereby declares that
it would have adopted this ordinance and each section, subsection, sentence, clause,
phrase or portion thereof irrespective of the fact that any one or more sections,
subsections, sentences, clauses, phrases, or portions be declared invalid or
unconstitutional.
Section 6. This Ordinance shall become effective thirty (30) days after its
adoption.
Section 7. The Clerk of the Council shall certify the adoption of this ordinance
and shall cause the same to be published as required by law.
ADOPTED this _______ day of ___________, 2021.
_________________________
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:_________________________
John M. Funk
Sr. Assistant City Attorney
AYES: Councilmembers ______________________________________
NOES: Councilmembers _______________________________________
ABSTAIN: Councilmembers _______________________________________
NOT PRESENT: Councilmembers _______________________________________
Ordinance No. NS-XXX
Page 16 of 16
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached
Ordinance No. NS-____________ to be the original ordinance adopted by the City
Council of the City of Santa Ana on _______________, and that said ordinance was
published in accordance with the Charter of the City of Santa Ana.
Date: ________________ ____________________________________
Clerk of the Council
City of Santa Ana
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NOTICE OF PUBLIC HEARING
BEFORE THE CITY COUNCIL OF THE
CITY OF SANTA ANA,CA.
The City of Santa Ana encourages the
public to participate in the decision-
making process.The following notice
is being provided so that you can ask
questions,make comments and stay
informed about projects that might be
important to you.We encourage you to
contact us prior to the Public Hearing if
you have any questions.
NOTICE IS HEREBY GIVEN -The City
Council of the City of Santa Ana will hold
a public hearing to receive public
testimony and will take action on the item
described below.
Proposed Action:The City Council is
considering the adoption of Zoning
Ordinance Amendment No.2021-03 to
amend the Santa Ana Municipal Code
repealing and reenacting in its entirety
Article XVIII.I.of Chapter 41 of the Santa
Ana Municipal Code regarding the
Housing Opportunity Ordinance.The
proposed Amendment will modernize and
update the Ordinance to clarify the
purpose and applicability of the proposed
regulations,to clarify vesting provisions
for development projects,to modify the in-
lieu fee structure,and to incentivize the
use of a skilled and trained local
workforce,as well as other various
sections of the Ordinance to respond to
current development and economic
trends.The Planning Commission vote on
October 25,2021,resulted in a 4-3
(Calderon,McLoughlin and Morrissey
dissented)recommendation that the City
Council adopt the proposed Amendment
with certain modifications.
Environmental Impact:There is no
environmental impact associated with this
action in that the Ordinance is not subject
to the California Environmental Quality
Act (CEQA)pursuant to Sections
15060(c)(2)and 15060(c)(3)of the State
CEQA Guidelines because it will not result
in a direct or reasonably foreseeable
indirect physical change in the
environment,as there is no possibility it
will have a significant effect on the
environment and it is not a "project",as
defined in Section 15378 of the CEQA
Guidelines.Furthermore,the proposed
Ordinance falls within the "common
sense"CEQA exemption set forth in
CEQA Guidelines Section 15061(b)(3),
excluding projects where "it can be seen
with certainty that there is no possibility
that the activity in question may have a
significant effect on the environment."
Adoption of this Ordinance will not have a
significant effect on the environment
because the proposed changes will only
modernize,update,and clarify existing
affordable and inclusionary housing
requirements responding to the current
economic and housing trends in the City
and will not cause a physical change in
the environment.Notice of Exemption,
Environmental Review No.2021-107 will
be filed for this project.
Meeting Time and Date –This matter will
be heard on Tuesday,November 16,
2021 at 5:45 p.m.or thereafter in the City
Council Chamber,22 Civic Center Plaza,
Santa Ana,California 92702.All persons
interested in this matter are notified to
appear at this time.
How To Make Comments -If you do not
wish to appear at the public hearing,you
may also send your written comments to
the Clerk of the Council,by mail to City of
Santa Ana,20 Civic Center Plaza –M30,
Santa Ana,CA 92701 or via e-mail at
ecomments@santa-ana.org (reference
"City Council meeting")by 12:00 p.m.on
Monday,the day before the meeting;e-
mails received after said time will be on
file for public viewing the day after the
meeting.
Who To Contact For Questions -Should
you have any questions,please contact
the Planning and Building Agency at (714)
667-2706 or you can send an email to
ecomments@santa-ana.org.
Where To Get More Information -All
staff reports regarding any item on this
agenda are available for public inspection
in the Clerk of the Council Office during
regular business hours and posted on the
City's website the Friday before a Council
meeting at:www.santa-ana.org/cc/city-
meetings.
Si tiene preguntas en español,favor de
llamar al (714)647-6520.
N u c n liên l c b ng ti ng Vi t,xin
i n tho i cho Tony Lai s (714)565-
2627.
If you challenge the decision on the above
matter,you may be limited to raising only
those issues you or someone else raised
at the public hearing described in this
notice,or in written correspondence
delivered to the City Council of the City of
Santa Ana at,or prior to,the public
hearing.
Daisy Gomez,
Clerk of the Council
Publish Orange County Reporter -Legals
Section;
Date:November 5,2021
11/5/21
OR-3527760#
Ordinance No. NS-XXX
Page 1 of 17
ORDINANCE NO. NS-________
ZONING ORDINANCE AMENDMENT NO. 2021-03 AN
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA REPEALING AND REENACTING IN ITS
ENTIRETY ARTICLE XVIII.I. OF CHAPTER 41 OF THE
SANTA ANA MUNICIPAL CODE REGARDING THE
HOUSING OPPORTUNITY ORDINANCE
THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines,
and declares as follows:
A. On November 28, 2011, the Santa Ana City Council adopted Ordinance No.
NS-2825, known as the Housing Opportunity Ordinance and appearing as “Article XVIII.I.
– Housing Opportunity Ordinance” (“Housing Opportunity Ordinance”) of Chapter 41 of
the Santa Ana Municipal Code. The Housing Opportunity Ordinance was adopted to
implement the City’s Housing Element Goal of providing affordable housing within the
City.
B. On September 1, 2015, the City Council adopted Ordinance No. NS-2881,
which amended the Housing Opportunity Ordinance in various respects, including
applicability, options to satisfy inclusionary requirements, and calculation of the in-lieu
housing fee. These amendments were intended to make the inclusionary housing
requirements more predictable for housing developers and to incentivize the production
of more affordable housing.
C. In response to impacts of the COVID-19 pandemic on the development and
construction of housing in the City, including the reduction of housing starts, the City
Council adopted Ordinance No. NS-2994 on September 1, 2020. Ordinance No. NS-
2994 further amended the Housing Opportunity Ordinance to lower the in-lieu housing
fee for all projects from $15 to $5 per square foot, adjust the trigger of the ordinance, and
expand the eligible uses of in-lieu fees collected by the City.
D. On March 2, 2021, at the direction of the City Council, an Ad Hoc Committee
for Housing was formed. The Ad Hoc Committee reviewed the Housing Opportunity
Ordinance and recommended certain changes. The Ad Hoc Committee’s
recommendations were presented and discussed at the City Council Meeting on July 6,
2021.
E. On July 26, 2021, the City Council conducted a work-study session to
further evaluate the Committee’s recommendations and to receive input from key
stakeholders and members of the public. The City Council provided direction to staff to
prepare amendments to the Housing Opportunity Ordinance concerning the applicability
Ordinance No. NS-XXX
Page 2 of 17
and triggers for the ordinance, adjustments to the in-lieu fee calculation, set-aside units,
and options for satisfaction of inclusionary requirements.
F. On September 7, 2021, the City Council further considered this matter and
provided additional direction to staff regarding proposed amendments to the Housing
Opportunity Ordinance.
G. At the City Council meeting of October 5, 2021, staff received direction to
initiate the adoption hearing in order for the City Council to consider the changes
recommended by the Housing Ad Hoc Committee.
H. On October 25, 2021, the Planning Commission held a duly noticed public
hearing on the proposed amendments and considered the staff report, recommendations
by staff, and public testimony concerning the proposed Ordinance. The Planning
Commission recommended that the City Council adopt the proposed Ordinance.
I. The Request for City Council Action for this Ordinance dated __________,
2021 and duly signed by the Executive Director of the Planning and Building Agency shall,
by this reference, be incorporated herein, and together with this ordinance, any
amendments or supplements, and oral testimony, constitute the necessary findings for
this ordinance.
Section 2. The City Council finds and determines that this Ordinance is not
subject to the California Environmental Quality Act (CEQA) pursuant to Sections
15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a
direct or reasonably foreseeable indirect physical change in the environment, as there is
no possibility it will have a significant effect on the environment and it is not a "project",
as defined in Section 15378 of the CEQA Guidelines. Furthermore, the proposed
Ordinance falls within the "common sense" CEQA exemption set forth in CEQA
Guidelines Section 15061(b)(3), excluding projects where "it can be seen with certainty
that there is no possibility that the activity in question may have a significant effect on the
environment." Adoption of this Ordinance will not have a significant effect on the
environment because the proposed changes will only modernize, update, and clarify
existing affordable and inclusionary housing requirements responding to the current
economic and housing trends in the City and will not cause a physical change in the
environment.
Section 3. Article XVIII.I of Chapter 41 of the Santa Ana Municipal Code is
hereby repealed in its entirety.
Section 4. Article XVIII.I. of Chapter 41 of the Santa Ana Municipal Code is
hereby reenacted and amended to read in its entirety as follows:
ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY AND CREATION
ORDINANCE
Ordinance No. NS-XXX
Page 3 of 17
Sec. 41-1900. Purpose.
This article establishes standards and procedures to encourage the development of
housing that is affordable to a range of households with varying income levels. The
purpose of this article is to encourage the development and availability of affordable
housing by requiring the inclusion of affordable housing units within new developments
when the number of units exceed the densities permitted under the general plan, zoning
classification, or the conversion of rental units to condominium ownership.
Sec. 41-1901. Definitions.
As used in this article, the following terms shall have the following meanings:
Adjusted for household size appropriate for the unit means a household of one person
in the case of a studio unit, two (2) persons in the case of a one-bedroom unit, three (3)
persons in the case of a two-bedroom unit, four (4) persons in the case of a three-
bedroom unit, and five (5) persons in the case of a four-bedroom unit.
Administrative procedures means those regulations promulgated by the executive
director pursuant to section 41-1910 of this article.
Affordable housing cost means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified, as follows:
Extremely low-income households. Thirty (30) percent of the income of a
household earning thirty (30) percent of the Orange County median income adjusted for
family size appropriate for the unit.
Very low-income households. Thirty (30) percent of the income of a household
earning fifty (50) percent of the Orange County median income adjusted for family size
appropriate for the unit.
Low-income households. Thirty (30) percent of the income of a household earning
eighty (80) percent of the Orange County median income for family size appropriate for
the unit.
Moderate-income households. Thirty (30) percent of the income of a household
earning one hundred twenty (120) percent of the Orange County median income adjusted
for family size appropriate for the unit.
The qualifying limits for extremely low-income, very low-income, low-income and
moderate-income households are established and amended annually pursuant to Section
8 of the United States Housing Act of 1937. The limits are published by the Secretary of
Housing and Urban Development.
Developer means any association, corporation, firm, joint venture, partnership,
person, or any entity or combination of entities, which seeks city approval for all or part of
a residential project.
Development agreement means an agreement approved by the city council between
a property owner and the city pursuant to Government Code section 65864, et seq.
Executive director means the executive director of community development for the
city.
Ordinance No. NS-XXX
Page 4 of 17
General plan means the adopted general plan for the City of Santa Ana.
Inclusionary housing agreement means a legally binding agreement between the
developer and the city, in a form and substance satisfactory to the executive director and
the city attorney, and containing those provisions necessary to ensure that the
requirements of this article are satisfied, whether through the provision of inclusionary
units or through an approved alternative method.
Inclusionary housing fund means the fund created by the city in which all fees collected
in compliance with this article shall be deposited.
Inclusionary housing plan means the plan submitted by the developer, in a form
specified by the executive director, detailing how the provisions of this article will be
implemented for the proposed residential project.
Inclusionary unit means a dwelling unit that will be offered for sale or rent to extremely
low, very low, low, or moderate-income households, at an affordable housing cost, in
compliance with this article.
Low-income units, very low-income units, and extremely low-income units means
inclusionary units restricted to occupancy by low, very low, and extremely low-income
households, respectively, at an affordable housing cost.
Market rate units means dwelling units in a residential project that are not inclusionary
units.
Moderate-income units means inclusionary units restricted to occupancy by
moderate-income households at an affordable housing cost.
Regulatory agreement means an agreement entered into between the City of Santa
Ana or the Santa Ana Community Development Agency and a developer by which the
developer covenants to keep certain housing units at an affordable housing cost for a
specified period of time.
Rehabilitated units/rehabilitation means the improvement of a unit in substandard
condition to a decent, safe and sanitary level. Units are in substandard condition when,
while they may be structurally sound, they do not provide safe and adequate shelter, and
in their present condition endanger the health, safety or well-being of the occupants.
Residential project/project means any of the following:
A subdivision resulting in the creation of five (5) or more residential lots or
residential condominium units; or
The new construction of a project consisting of five (5) or more multi-family units;
or
The new construction of five (5) or more separate houses or dwelling units; or
The conversion of five (5) or more existing residential rental units to condominium
ownership.
Target area means that area designated by the city from time to time, on an as-needed
basis, as a priority area for rehabilitation due to health and safety concerns.
Ordinance No. NS-XXX
Page 5 of 17
Total housing costs the total monthly or annual recurring expenses required of a
household to obtain shelter. For a rental unit, total housing costs shall include the monthly
rent payment and utilities paid by the tenant (excluding telephone and television). For an
ownership unit, total housing costs shall include the mortgage payment (principal and
interest), insurance, homeowners' association dues (if applicable), private mortgage
insurance (if applicable), taxes, utilities, an allowance for maintenance and any other
related assessments.
Sec. 41-1902. Applicability and inclusionary unit requirements.
(a) Applicability. The requirements of this article shall apply to any new project
comprised of five (5) or more residential lots or residential units which has not been issued
a building permit or paid the in-lieu fee as of November 17, 2021, including new
construction and condominium conversions, which meets one or all of the following
applicability thresholds:
(1) A change in use to allow for residential or that exceeds the general plan or
zoning prescribed densities or percentage of residential development of the subject
property at the time of application.
(2) Implementation of the permitted residential density or percentage of residential
development allowed as a result of city initiated zone changes or city initiated general
plan amendments after November 28, 2011.
(3) Increase of the permitted percentage of residential development allowed for a
mixed-use development above the percentage permitted under the zoning classification
at the time of application.
(4) Development of new residential uses or increase of the permitted residential
density or percentage of residential development within an overlay zone approved
pursuant to Division 28 of Article I of this Chapter.
(5) Conversion of rental units to condominium ownership.
(b) Applications. The inclusionary requirements shall only apply to the incremental
units beyond that which is allowed as prescribed in Subsection (a) above.
(c) Units for sale. If the new residential project consists of units for sale, then a
minimum of ten (10) percent of the total number of units in the project shall be sold to
moderate-income households.
(d) Rental units. If the new residential project consists of rental units, the inclusionary
units shall be constructed as follows:
(1) A minimum of fifteen (15) twenty (20) percent of the units shall be rented to
low-income households, or
Ordinance No. NS-XXX
Page 6 of 17
(2) A minimum of ten (10) fifteen (15) percent shall be rented to very low-
income households, or
(3) A minimum of five (5) ten (10) percent shall be rented to extremely low-
income households, or
(4) A minimum of ten (10) fifteen (15) percent shall be available at an affordable
housing cost of which five (5) percent rented to low-income households, three (3) five (5)
percent rented to very low-income households, and two (2) five (5) percent rented to
extremely low-income households.
(e) Rounding of quantities in calculations. In calculating the required number of
inclusionary units, fractional units shall be rounded-up to the next whole unit. The
developer may choose to pay an in-lieu fee set forth in section 41-1904(c) for the fractional
units, which shall be calculated based on the number of habitable square feet applicable
in each case.
(f) Displacement of existing inclusionary units. Notwithstanding any other provision of
this article, any residential project subject to this article that results in the displacement of
extremely low, very low and/or low-income household(s) shall be required to provide on-
site inclusionary units as required by this article.
(g) Compliance with article. All inclusionary units required by this article shall be sold
or rented in compliance with this article.
Sec. 41-1903. Exempt projects.
The following are exempt from the requirements of this article:
(a) Development agreements. A residential project that is the subject of a
development agreement under applicable provisions of the California Government Code
that expressly provides for an exclusion to this article, provides for a different amount of
inclusionary units, or provides for a different specified method for determining the in-lieu
fee provisions of this ordinance, such as the timing of payment or the point in time for
determining the applicable in-lieu fee amount, to satisfy the inclusionary units from that
specified by this article.
(b) Project with regulatory agreement. A residential project for which a regulatory
agreement has been approved, provided that the regulatory agreement is effective at the
time the residential project would otherwise be required to comply with the requirements
of this article, and there is no uncured breach of the regulatory agreement before issuance
of a certificate of occupancy for the project. This may include a residential project that has
obtained a density bonus under article XVI.I of the Santa Ana Municipal Code. Such
projects cannot be used to satisfy the inclusionary requirement for another project.
(c) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41,
Article XVI.II - Adaptive Reuse.
Ordinance No. NS-XXX
Page 7 of 17
(d) Development Projects Approved Under the Provisions of Ordinance No. NS-2994
Adopted on September 1, 2020. A development project that has received entitlement
approvals by city council action prior to November 16, 2021 to construct new residential
units is hereby determined to have vested the right to carry out the completion and
construction of the project under the regulations and provisions of Ordinance No. NS-
2994. The vested regulations and provisions in accordance with this section shall
terminate if any or all of the entitlement approvals become invalid for any reasons or have
expired under the various applicable time limits established in the Santa Ana Municipal
Code. A list these projects and the vested right(s) under Ordinance No. NS-2994 are
attached hereto as Exhibit A and is incorporated herein by reference.
Sec. 41-1904. Options to satisfy inclusionary requirements.
(a) On-site units. The primary means of complying with the inclusionary requirements
of this article shall be the provision of on-site inclusionary units in accordance with section
41-1902 above. A developer may only satisfy the requirements of this article by means of
an alternative to on-site inclusionary units in accordance with the requirements and
procedures of this section.
(b) Off-site units.
(1) New units. The developer may satisfy the inclusionary unit requirements for
the project, in whole or in part by constructing the required new inclusionary housing at a
different location within the city borders at the ratio of one square foot of habitable
inclusionary unit space for each required habitable square foot. While the total habitable
square footage area of the required new inclusionary units must be the same as the sum-
total of the number of habitable square feet for the project as directed by this ordinance,
the number of units and bedrooms associated with the off-site units may be approved by
the review authority of the city, consistent with the type of affordable housing needed at
the time of project review.
(2) Rehabilitated units outside a designated target area. The developer may
satisfy the inclusionary unit requirements for the project, in whole or in part by
substantially rehabilitating existing housing units elsewhere within the borders of the city
at a rate of one and one-half (1½) habitable square feet per each required habitable
square foot of inclusionary units.
(3) Rehabilitated units within a designated target area. Upon application, the
developer may satisfy the inclusionary unit requirements for the project, in whole or in
part by substantially rehabilitating existing housing units elsewhere within the borders of
the city at a rate of one habitable square foot per each required habitable square foot of
affordable inclusionary units.
(c) In-lieu fee.
Ordinance No. NS-XXX
Page 8 of 17
(1) Five (5) or more units. For a residential project comprised of five (5) or more
residential lots or residential units, the developer may elect to satisfy the inclusionary unit
requirements for the project, in whole or in part, by payment of a fee in-lieu of constructing
some or all of the required units. The total amount of the fee allowed by this section shall
be calculated using the In-Lieu Fee Schedule in section 41-1904(c)(1)(i) multiplied by the
sum total of the number of habitable square feet within the entire project, as measured
from the exterior walls of the residential units. This calculation does not include exterior
hallways, common areas, landscape, open space or exterior stairways.
(i) In-Lieu Fee Schedule
Units Fee Per Square Foot of
Habitable Area
5 – 9 $610.00
10 – 14 $9.0011.66
15 – 19 $12.0013.32
20 or more $15.00
(ii) Local Skilled and Trained Workforce Incentive. The in-lieu fee for
fifteen (15) or more units shall be reduced if the developer voluntarily provides the City
with an executed enforceable commitment to use a “Skilled and Trained Workforce” as
defined in Public Contract Code section 2601 to complete the construction of the project
as follows:
Use of Skilled and Trained
Workforce
Fee Per Square Foot of
Habitable Area
30% of workforce utilizing
2 or more construction
trades
$10.00
60% of workforce utilizing
3 or more construction
trades
$5.00
A minimum of 35% of the above work-hours shall be
performed in accordance with local hire policies
approved by the City Council.
(2) Timing of payment. The total fee amount for the entirety of a project is
calculated, determined, and set at the time of issuance of the first building permit for the
project. All in-lieu fees allowed by this section shall be paid no later than prior to issuance
of the first occupancy approval for any construction which adds net residential units. If
the city approves a phased project, a proportional share of the required fee shall be paid
within each phase of the residential project. The in-lieu fees collected by the city are city
funds over which the city has complete and absolute discretion.
Ordinance No. NS-XXX
Page 9 of 17
(3) Inclusionary housing fund. Fees collected in compliance with this section
shall be deposited in the inclusionary housing fund.
Sec. 41-1904.1. Inclusionary housing development incentives for production of
units.
(a) In order to make the production of new inclusionary units on-site or off-site or off-
site rehabilitated units, certain incentives, standards and concessions shall be allowed
and prescribed as set forth herein below. Such concessions shall not be available to those
developers that choose to pay an in lieu fee rather than build the units. The developer
may opt to take advantage of up to two (2) concessions among the following possible
concessions:
(1) Parking concession. One on-site parking space for each zero to one
bedroom unit; two (2) on-site parking spaces for each two (2) to three (3) bedroom unit;
two and one-half (2½) parking spaces for each four (4) or more bedroom unit.
(2) Concession on one of the following Zoning Code site development
standards:
(i) Setback reduction of up to twenty-five (25) percent reduction on
subject property;
(ii) Height increase of up to twenty (20) additional feet.
(b) A developer of a for sale residential project proposing to provide on-site moderate
income units and a surrounding community benefit may opt to take advantage of up to
three (3) of the above concessions. The surrounding community benefit will include but
not be limited to park improvements, urban community gardens, developer-funded down
payment assistance, or subsidy of services, activities or programs.
Sec. 41-1905. Housing plan and housing agreement.
(a) Submittal and execution. The developer shall comply with the following
requirements:
(1) Inclusionary housing plan. The developer shall submit an inclusionary
housing plan in a form specified by the executive director, detailing how the provisions of
this article will be implemented for the proposed residential project. The inclusionary
housing plan and its supportive documents, plans, and details shall be submitted at the
same time as the site plan and application materials for the original project. All
inclusionary housing plans shall be subject to the approval of the executive director and
subject to appeal processes and procedures set forth in the Santa Ana Municipal Code.
2) Inclusionary housing agreement. The developer shall execute and cause to
be recorded an inclusionary housing agreement. The inclusionary housing agreement
shall be a legally binding agreement between the developer and the city, executed by the
city manager, or his or her designee, and in a form and substance satisfactory to the
executive director and the city attorney, and containing those provisions necessary to
Ordinance No. NS-XXX
Page 10 of 17
ensure that the requirements of this article are satisfied, whether through the provision of
inclusionary units or through an approved alternative method.
(b) Discretionary approvals. No discretionary approval shall be issued for a residential
project subject to this article until the developer has submitted an inclusionary housing
plan.
(c) Issuance of building permit. No building permit shall be issued for a residential
project subject to this article unless the executive director has approved the inclusionary
housing plan, and any required inclusionary housing agreement has been recorded.
(d) Issuance of certificate of occupancy. A certificate of occupancy shall not be issued
for a residential project subject to this article unless the approved inclusionary housing
plan has been fully implemented.
Sec. 41-1906. Standards.
(a) Location within project, relationship to non-inclusionary units. All inclusionary units
shall be:
(1) Reasonably dispersed throughout the residential project;
(2) Proportional, in number of bedrooms, gross floor area of habitable space,
and location, to the market rate units;
(3) Comparable to the market rate units included in the residential project in
terms of design, materials, finished quality, and appearance; and
(4) Permitted the same access to project amenities and recreational facilities,
as are market rate units.
(b) Timing of construction. All inclusionary units in a residential project shall be
constructed concurrent with, or before the construction of the market rate units. If the city
approves a phased project, a proportional share of the required inclusionary units shall
be provided within each phase of the residential project.
(c) Location outside the proposed original project. For projects where the developer
proposes to either produce new inclusionary units or rehabilitate existing off-site units to
meet the inclusionary affordable housing requirements of this ordinance, the off-site
project(s) containing the required inclusionary units shall be subject to the following
requirements:
(1) The sum-total area (in habitable square feet) of all the newly constructed
off-site inclusionary units shall be the same number of habitable square feet of
inclusionary area as required by this ordinance. For the purpose of the calculation of the
number of square feet of required inclusionary housing, the total gross habitable square
feet of the housing units of the original market rate project shall be used, as measured
from exterior walls to exterior walls of the market units provided as the base for
calculation. The common areas, exterior hallways, stairways, patios, and balconies shall
Ordinance No. NS-XXX
Page 11 of 17
not be calculated in determining the number of required square feet of inclusionary
housing production. All new or rehabilitated units must meet all current zoning and
general plan standards.
(2) While the total number of square feet of inclusionary housing requirement
is calculated based on the requirements of this ordinance, the number of units, bedrooms
and other amenities on the proposed off-site inclusionary housing location shall be
approved by the review authority commensurate with the size and type of units most in
demand at the time of submittal of the application.
(3) Any off-site affordable inclusionary housing project shall be substantially
comparable to the market rate units included in the residential project in terms of quality
of design, materials and finishes.
(4) If tenants are displaced due to rehabilitation of housing to meet the
inclusionary unit requirement, the developer shall be responsible for relocation costs as
required by state law.
(5) No city, housing authority, or public funds, subsidies, or participation of any
kind shall be expended on the production or building of any inclusionary housing projects
associated with meeting the inclusionary unit requirement.
(d) Timing of construction. All inclusionary units in a residential project or proposed
off-site new inclusionary units or rehabilitated units shall be constructed concurrent with,
or before the construction of the market rate units. If the city approves a phased project,
a proportional share of the required inclusionary units shall be provided within each phase
of the residential project.
(e) Units for sale.
(1) Time limit for inclusionary restrictions. A unit for sale shall be restricted to
the target income level group at the applicable affordable housing cost for a minimum of
fifty-five (55) years.
(2) Certification of purchasers. The developer and all subsequent owners of an
inclusionary unit offered for sale shall certify, on a form provided by the city, the income
of the purchaser and that such owners will live in such inclusionary unit as their primary
residence.
(3) Resale price control. In order to maintain the availability of inclusionary units
required by this article, the resale price of an owner occupied inclusionary unit shall be
limited to the lesser of the fair market value of the unit as established by a licensed real
estate agent based upon three (3) comparable properties or the restricted resale price.
For these purposes, the restricted resale price shall be the applicable affordable housing
cost.
Ordinance No. NS-XXX
Page 12 of 17
(4) Inheritance of inclusionary units. Upon the death of an owner of an owner-
occupied inclusionary unit, title in the property may transfer to the surviving joint tenant
or heir (in the case of the death of a sole owner or all owners of the household).
(5) Forfeiture. If an inclusionary unit for sale is sold for an amount in excess of
the resale price controls required by this section, the buyer and the seller shall be jointly
and severally liable to the city for the amount in excess of the affordable housing cost at
the time of such sale of the inclusionary unit. Recovered funds shall be deposited into the
inclusionary housing fund. Notwithstanding the foregoing, city may allow the buyer and
seller to cure any violation of the resale price controls within one hundred eighty (180)
days.
(f) Rental units.
(1) Time limit for inclusionary restrictions. A rental inclusionary unit shall remain
restricted to the target income level group at the applicable affordable housing cost for
fifty-five (55) years.
(2) Certification of renters. The owner of any rental inclusionary unit shall
certify, on a form provided by the city, the income of all members of the household above
the age of eighteen (18) at the time of the initial rental and annually thereafter.
(3) Forfeiture. Any lessor who leases an inclusionary unit in violation of this
article shall be required to forfeit to the city all money so obtained. Recovered funds shall
be deposited into the inclusionary housing fund.
(g) Execution and recording of documents. The executive director may require the
execution and recording of whatever documents are required to ensure enforcement of
this section; including, but not limited to, promissory notes, deeds of trust, resale
restrictions, rights of first refusal, options to purchase, and/or other documents, which
shall be recorded against all inclusionary units.
(h) General prohibitions.
(1) No person shall sell or rent an inclusionary unit at a price or rent in excess
of the maximum amount allowed by any restriction placed on the unit in accordance with
this article.
(2) No person shall sell or rent an inclusionary unit to a person or persons that
do not meet the income restrictions placed on the unit in accordance with this article.
(3) No person shall provide false or materially incomplete information to the city
or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which
that person is not eligible.
(i) Principal residency requirement.
Ordinance No. NS-XXX
Page 13 of 17
1. The owner or lessee of an inclusionary unit shall reside in the
unit for not less than ten (10) out of every twelve (12) months.
2. No owner or lessee of an inclusionary unit shall lease or
sublease, as applicable, an inclusionary unit without the prior permission of the executive
director.
Sec. 41-1907. Reserved.
Sec. 41-1908. Enforcement.
(a) Violation. Any violation of this article constitutes a misdemeanor.
(b) Forfeiture of funds. Any individual who sells an inclusionary unit in violation of this
article shall be required to forfeit any money in excess of the affordable housing cost at
such time. Any individual who rents an inclusionary unit in violation of this article shall be
required to forfeit all money so obtained. Recovered funds shall be deposited into the
inclusionary housing fund.
(c) Legal actions. The city may institute any appropriate legal actions or proceedings
necessary to ensure compliance with this article, including actions:
(1) To disapprove, revoke, or suspend any permit, including a building permit,
certificate of occupancy, or discretionary approval; and
(2) For injunctive relief or damages.
(d) Recovery of costs. In any action to enforce this article, or an inclusionary housing
agreement recorded hereunder, the city shall be entitled to recover its reasonable
attorney's fees and costs.
Sec. 41-1909. Inclusionary housing fund.
(a) Inclusionary housing fund. There is hereby established a separate fund of the city,
to be known as the inclusionary housing fund. All monies collected pursuant to this article
shall be deposited in the inclusionary housing fund. Additional monies from other sources
may be deposited in the inclusionary housing fund. The monies deposited in the
inclusionary housing fund shall be subject to the following conditions:
(1) Monies deposited into the inclusionary housing fund must be used to
increase and improve the supply of housing affordable to moderate, low, very low, and
extremely low income households in the city as specified in the city's affordable housing
funds policies and procedures. A priority will be on the creation of new affordable housing
opportunities for large families currently living in the City. Other eligible uses of the
inclusionary housing fund include but are not limited to:
(i) Creating affordable units from the existing market rate housing stock
including but not limited to, the purchase and rehabilitation of units.
Ordinance No. NS-XXX
Page 14 of 17
(ii) Funding one-time programs for code enforcement, quality of life, and
general health and safety activities.
(iii) Implementing and promoting programs addressing housing security,
eviction prevention, and housing legal assistance for city residents.
(iv) Funding reasonable administrative or related expenses associated
with the administration of this article.
(2) The fund shall be administered by the executive director, or his or her
designee, who may develop procedures in the city's affordable housing funds policies and
procedures to implement the purposes of the inclusionary housing fund consistent with
the requirements of this article and any adopted budget of the city.
(3) Monies deposited in accordance with this section shall be used in
accordance with the affordable housing funds policies and procedures, housing element,
consolidated plan, or subsequent plan adopted by the city council to construct,
rehabilitate, or subsidize affordable housing or to recapture affordable housing at risk of
market conversion, or to assist other government entities, private organizations, or
individuals to do so. Permissible uses include, but are not limited to, assistance to housing
development corporations, equity participation loans, grants, pre-home ownership co-
investment, pre-development loan funds, participation leases, or other public-private
partnership arrangements. The inclusionary housing fund may be used for the benefit of
both rental and owner-occupied housing.
(4) A developer receiving funding from the inclusionary housing fund shall
implement a local preference in their resident selection criteria and marketing policies
meeting guidelines established by the executive director.
(5) A developer receiving funding from the inclusionary housing fund, as well
as its contractors and subcontractors at every tier performing work for the new housing
units is encouraged and should negotiate in good faith to provide the City with an
enforceable commitment that a minimum 30% of the labor utilizing 2 or more construction
trades be performed by a “Skilled and Trained Workforce” as defined in Public Contract
Code section 2601 to complete the construction of the project and shall also include a
minimum of 35% of all work-hours for the project be performed in accordance with local
hire policies approved by the City Council.
Sec. 41-1910. Administrative.
(a) In-lieu fee calculation. The amount per square foot of the inclusionary housing in-
lieu fee shall be subject to city council review and consideration as needed.
(b) Administration fees. The council may by resolution establish reasonable fees and
deposits for the administration of this article including an annual monitoring fee and an
inclusionary housing plan submittal fee.
Ordinance No. NS-XXX
Page 15 of 17
(c) Monitoring/audits. At the time of initial occupancy, and annually thereafter, the city
will monitor the project to ensure that the income verifications are correct and in
compliance with the inclusionary housing administrative procedures. For ownership units,
the city shall monitor to verify that owner-occupancy requirements are maintained.
Developer/property owners are required to cooperate with the city in promptly providing
all information requested by the city in monitoring compliance with program requirements.
The city will conduct periodic random quality control audits of inclusionary units to ensure
compliance with rules and requirements. Such audits may include verification of
continued occupancy in inclusionary units by eligible tenants, compliance with the
inclusionary housing plan and agreement, and physical inspections of the residential
project.
(e) Administrative procedures. The city manager is hereby authorized and directed
to promulgate administrative procedures for the implementation of this article.
Secs. 41-1911—41-1999. Reserved.
Section 5. If any section, subsection, sentence, clause, phrase or portion of this
ordinance is for any reason held to be invalid or unconstitutional by the decision of any
court of competent jurisdiction, such decision shall not affect the validity of the remaining
portions of this ordinance. The City Council of the City of Santa Ana hereby declares that
it would have adopted this ordinance and each section, subsection, sentence, clause,
phrase or portion thereof irrespective of the fact that any one or more sections,
subsections, sentences, clauses, phrases, or portions be declared invalid or
unconstitutional.
Section 6. This Ordinance shall become effective thirty (30) days after its
adoption.
Section 7. The Clerk of the Council shall certify the adoption of this ordinance
and shall cause the same to be published as required by law.
ADOPTED this _______ day of ___________, 2021.
_________________________
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:_________________________
John M. Funk
Ordinance No. NS-XXX
Page 16 of 17
Sr. Assistant City Attorney
AYES: Councilmembers ______________________________________
NOES: Councilmembers _______________________________________
ABSTAIN: Councilmembers _______________________________________
NOT PRESENT: Councilmembers _______________________________________
Ordinance No. NS-XXX
Page 17 of 17
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached
Ordinance No. NS-____________ to be the original ordinance adopted by the City
Council of the City of Santa Ana on _______________, and that said ordinance was
published in accordance with the Charter of the City of Santa Ana.
Date: ________________ ____________________________________
Clerk of the Council
City of Santa Ana
Ordinance No. NS-XXX
Page 1 of 17
ORDINANCE NO. NS-________
ZONING ORDINANCE AMENDMENT NO. 2021-03 AN
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA REPEALING AND REENACTING IN ITS
ENTIRETY ARTICLE XVIII.I. OF CHAPTER 41 OF THE
SANTA ANA MUNICIPAL CODE REGARDING THE
HOUSING OPPORTUNITY ORDINANCE
THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines,
and declares as follows:
A. On November 28, 2011, the Santa Ana City Council adopted Ordinance No.
NS-2825, known as the Housing Opportunity Ordinance and appearing as “Article XVIII.I.
– Housing Opportunity Ordinance” (“Housing Opportunity Ordinance”) of Chapter 41 of
the Santa Ana Municipal Code. The Housing Opportunity Ordinance was adopted to
implement the City’s Housing Element Goal of providing affordable housing within the
City.
B. On September 1, 2015, the City Council adopted Ordinance No. NS-2881,
which amended the Housing Opportunity Ordinance in various respects, including
applicability, options to satisfy inclusionary requirements, and calculation of the in-lieu
housing fee. These amendments were intended to make the inclusionary housing
requirements more predictable for housing developers and to incentivize the production
of more affordable housing.
C. In response to impacts of the COVID-19 pandemic on the development and
construction of housing in the City, including the reduction of housing starts, the City
Council adopted Ordinance No. NS-2994 on September 1, 2020. Ordinance No. NS-
2994 further amended the Housing Opportunity Ordinance to lower the in-lieu housing
fee for all projects from $15 to $5 per square foot, adjust the trigger of the ordinance, and
expand the eligible uses of in-lieu fees collected by the City.
D. On March 2, 2021, at the direction of the City Council, an Ad Hoc Committee
for Housing was formed. The Ad Hoc Committee reviewed the Housing Opportunity
Ordinance and recommended certain changes. The Ad Hoc Committee’s
recommendations were presented and discussed at the City Council Meeting on July 6,
2021.
E. On July 26, 2021, the City Council conducted a work-study session to
further evaluate the Committee’s recommendations and to receive input from key
stakeholders and members of the public. The City Council provided direction to staff to
prepare amendments to the Housing Opportunity Ordinance concerning the applicability
Ordinance No. NS-XXX
Page 2 of 17
and triggers for the ordinance, adjustments to the in-lieu fee calculation, set-aside units,
and options for satisfaction of inclusionary requirements.
F. On September 7, 2021, the City Council further considered this matter and
provided additional direction to staff regarding proposed amendments to the Housing
Opportunity Ordinance.
G. At the City Council meeting of October 5, 2021, staff received direction to
initiate the adoption hearing in order for the City Council to consider the changes
recommended by the Housing Ad Hoc Committee.
H. On October 25, 2021, the Planning Commission held a duly noticed public
hearing on the proposed amendments and considered the staff report, recommendations
by staff, and public testimony concerning the proposed Ordinance. The Planning
Commission recommended that the City Council adopt the proposed Ordinance.
I. The Request for City Council Action for this Ordinance dated __________,
2021 and duly signed by the Executive Director of the Planning and Building Agency shall,
by this reference, be incorporated herein, and together with this ordinance, any
amendments or supplements, and oral testimony, constitute the necessary findings for
this ordinance.
Section 2. The City Council finds and determines that this Ordinance is not
subject to the California Environmental Quality Act (CEQA) pursuant to Sections
15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a
direct or reasonably foreseeable indirect physical change in the environment, as there is
no possibility it will have a significant effect on the environment and it is not a "project",
as defined in Section 15378 of the CEQA Guidelines. Furthermore, the proposed
Ordinance falls within the "common sense" CEQA exemption set forth in CEQA
Guidelines Section 15061(b)(3), excluding projects where "it can be seen with certainty
that there is no possibility that the activity in question may have a significant effect on the
environment." Adoption of this Ordinance will not have a significant effect on the
environment because the proposed changes will only modernize, update, and clarify
existing affordable and inclusionary housing requirements responding to the current
economic and housing trends in the City and will not cause a physical change in the
environment.
Section 3. Article XVIII.I of Chapter 41 of the Santa Ana Municipal Code is
hereby repealed in its entirety.
Section 4. Article XVIII.I. of Chapter 41 of the Santa Ana Municipal Code is
hereby reenacted and amended to read in its entirety as follows:
ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY AND CREATION
ORDINANCE
Ordinance No. NS-XXX
Page 3 of 17
Sec. 41-1900. Purpose.
This article establishes standards and procedures to encourage the development of
housing that is affordable to a range of households with varying income levels. The
purpose of this article is to encourage the development and availability of affordable
housing by requiring the inclusion of affordable housing units within new developments
when the number of units exceed the densities permitted under the general plan, zoning
classification, or the conversion of rental units to condominium ownership.
Sec. 41-1901. Definitions.
As used in this article, the following terms shall have the following meanings:
Adjusted for household size appropriate for the unit means a household of one person
in the case of a studio unit, two (2) persons in the case of a one-bedroom unit, three (3)
persons in the case of a two-bedroom unit, four (4) persons in the case of a three-
bedroom unit, and five (5) persons in the case of a four-bedroom unit.
Administrative procedures means those regulations promulgated by the executive
director pursuant to section 41-1910 of this article.
Affordable housing cost means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified, as follows:
Extremely low-income households. Thirty (30) percent of the income of a
household earning thirty (30) percent of the Orange County median income adjusted for
family size appropriate for the unit.
Very low-income households. Thirty (30) percent of the income of a household
earning fifty (50) percent of the Orange County median income adjusted for family size
appropriate for the unit.
Low-income households. Thirty (30) percent of the income of a household earning
eighty (80) percent of the Orange County median income for family size appropriate for
the unit.
Moderate-income households. Thirty (30) percent of the income of a household
earning one hundred twenty (120) percent of the Orange County median income adjusted
for family size appropriate for the unit.
The qualifying limits for extremely low-income, very low-income, low-income and
moderate-income households are established and amended annually pursuant to Section
8 of the United States Housing Act of 1937. The limits are published by the Secretary of
Housing and Urban Development.
Developer means any association, corporation, firm, joint venture, partnership,
person, or any entity or combination of entities, which seeks city approval for all or part of
a residential project.
Development agreement means an agreement approved by the city council between
a property owner and the city pursuant to Government Code section 65864, et seq.
Executive director means the executive director of community development for the
city.
Ordinance No. NS-XXX
Page 4 of 17
General plan means the adopted general plan for the City of Santa Ana.
Inclusionary housing agreement means a legally binding agreement between the
developer and the city, in a form and substance satisfactory to the executive director and
the city attorney, and containing those provisions necessary to ensure that the
requirements of this article are satisfied, whether through the provision of inclusionary
units or through an approved alternative method.
Inclusionary housing fund means the fund created by the city in which all fees collected
in compliance with this article shall be deposited.
Inclusionary housing plan means the plan submitted by the developer, in a form
specified by the executive director, detailing how the provisions of this article will be
implemented for the proposed residential project.
Inclusionary unit means a dwelling unit that will be offered for sale or rent to extremely
low, very low, low, or moderate-income households, at an affordable housing cost, in
compliance with this article.
Low-income units, very low-income units, and extremely low-income units means
inclusionary units restricted to occupancy by low, very low, and extremely low-income
households, respectively, at an affordable housing cost.
Market rate units means dwelling units in a residential project that are not inclusionary
units.
Moderate-income units means inclusionary units restricted to occupancy by
moderate-income households at an affordable housing cost.
Regulatory agreement means an agreement entered into between the City of Santa
Ana or the Santa Ana Community Development Agency and a developer by which the
developer covenants to keep certain housing units at an affordable housing cost for a
specified period of time.
Rehabilitated units/rehabilitation means the improvement of a unit in substandard
condition to a decent, safe and sanitary level. Units are in substandard condition when,
while they may be structurally sound, they do not provide safe and adequate shelter, and
in their present condition endanger the health, safety or well-being of the occupants.
Residential project/project means any of the following:
A subdivision resulting in the creation of five (5) or more residential lots or
residential condominium units; or
The new construction of a project consisting of five (5) or more multi-family units;
or
The new construction of five (5) or more separate houses or dwelling units; or
The conversion of five (5) or more existing residential rental units to condominium
ownership.
Target area means that area designated by the city from time to time, on an as-needed
basis, as a priority area for rehabilitation due to health and safety concerns.
Ordinance No. NS-XXX
Page 5 of 17
Total housing costs the total monthly or annual recurring expenses required of a
household to obtain shelter. For a rental unit, total housing costs shall include the monthly
rent payment and utilities paid by the tenant (excluding telephone and television). For an
ownership unit, total housing costs shall include the mortgage payment (principal and
interest), insurance, homeowners' association dues (if applicable), private mortgage
insurance (if applicable), taxes, utilities, an allowance for maintenance and any other
related assessments.
Sec. 41-1902. Applicability and inclusionary unit requirements.
(a) Applicability. The requirements of this article shall apply to any new project
comprised of five (5) or more residential lots or residential units, including new
construction and condominium conversions, which meets one or all of the following
applicability thresholds:
(1) A change in use to allow for residential or that exceeds the general plan or
zoning prescribed densities or percentage of residential development of the subject
property at the time of application.
(2) Implementation of the permitted residential density or percentage of residential
development allowed as a result of city initiated zone changes or city initiated general
plan amendments after November 28, 2011.
(3) Increase of the permitted percentage of residential development allowed for a
mixed-use development above the percentage permitted under the zoning classification
at the time of application.
(4) Development of new residential uses or increase of the permitted residential
density or percentage of residential development within an overlay zone approved
pursuant to Division 28 of Article I of this Chapter.
(5) Conversion of rental units to condominium ownership.
(b) Applications. The inclusionary requirements shall only apply to the incremental
units beyond that which is allowed as prescribed in Subsection (a) above.
(c) Units for sale. If the new residential project consists of units for sale, then a
minimum of ten (10) percent of the total number of units in the project shall be sold to
moderate-income households.
(d) Rental units. If the new residential project consists of rental units, the inclusionary
units shall be constructed as follows:
(1) A minimum of twenty (20) percent of the units shall be rented to low-income
households, or
(2) A minimum of fifteen (15) percent shall be rented to very low-income
households, or
Ordinance No. NS-XXX
Page 6 of 17
(3) A minimum of ten (10) percent shall be rented to extremely low-income
households, or
(4) A minimum of fifteen (15) percent shall be available at an affordable housing
cost of which five (5) percent rented to low-income households, five (5) percent rented to
very low-income households, and five (5) percent rented to extremely low-income
households.
(e) Rounding of quantities in calculations. In calculating the required number of
inclusionary units, fractional units shall be rounded-up to the next whole unit. The
developer may choose to pay an in-lieu fee set forth in section 41-1904(c) for the fractional
units, which shall be calculated based on the number of habitable square feet applicable
in each case.
(f) Displacement of existing inclusionary units. Notwithstanding any other provision of
this article, any residential project subject to this article that results in the displacement of
extremely low, very low and/or low-income household(s) shall be required to provide on-
site inclusionary units as required by this article.
(g) Compliance with article. All inclusionary units required by this article shall be sold
or rented in compliance with this article.
Sec. 41-1903. Exempt projects.
The following are exempt from the requirements of this article:
(a) Development agreements. A residential project that is the subject of a
development agreement under applicable provisions of the California Government Code
that expressly provides for an exclusion to this article, provides for a different amount of
inclusionary units, or provides for a different specified method for determining the in-lieu
fee provisions of this ordinance, such as the timing of payment or the point in time for
determining the applicable in-lieu fee amount, to satisfy the inclusionary units from that
specified by this article.
(b) Project with regulatory agreement. A residential project for which a regulatory
agreement has been approved, provided that the regulatory agreement is effective at the
time the residential project would otherwise be required to comply with the requirements
of this article, and there is no uncured breach of the regulatory agreement before issuance
of a certificate of occupancy for the project. This may include a residential project that has
obtained a density bonus under article XVI.I of the Santa Ana Municipal Code. Such
projects cannot be used to satisfy the inclusionary requirement for another project.
(c) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41,
Article XVI.II - Adaptive Reuse.
(d) Development Projects Approved Under the Provisions of Ordinance No. NS-2994
Adopted on September 1, 2020. A development project that has received entitlement
Ordinance No. NS-XXX
Page 7 of 17
approvals by city council action prior to November 16, 2021 to construct new residential
units is hereby determined to have vested the right to carry out the completion and
construction of the project under the regulations and provisions of Ordinance No. NS-
2994. The vested regulations and provisions in accordance with this section shall
terminate if any or all of the entitlement approvals become invalid for any reasons or have
expired under the various applicable time limits established in the Santa Ana Municipal
Code. A list these projects and the vested right(s) under Ordinance No. NS-2994 are
attached hereto as Exhibit A and is incorporated herein by reference.
Sec. 41-1904. Options to satisfy inclusionary requirements.
(a) On-site units. The primary means of complying with the inclusionary requirements
of this article shall be the provision of on-site inclusionary units in accordance with section
41-1902 above. A developer may only satisfy the requirements of this article by means of
an alternative to on-site inclusionary units in accordance with the requirements and
procedures of this section.
(b) Off-site units.
(1) New units. The developer may satisfy the inclusionary unit requirements for
the project, in whole or in part by constructing the required new inclusionary housing at a
different location within the city borders at the ratio of one square foot of habitable
inclusionary unit space for each required habitable square foot. While the total habitable
square footage area of the required new inclusionary units must be the same as the sum-
total of the number of habitable square feet for the project as directed by this ordinance,
the number of units and bedrooms associated with the off-site units may be approved by
the review authority of the city, consistent with the type of affordable housing needed at
the time of project review.
(2) Rehabilitated units outside a designated target area. The developer may
satisfy the inclusionary unit requirements for the project, in whole or in part by
substantially rehabilitating existing housing units elsewhere within the borders of the city
at a rate of one and one-half (1½) habitable square feet per each required habitable
square foot of inclusionary units.
(3) Rehabilitated units within a designated target area. Upon application, the
developer may satisfy the inclusionary unit requirements for the project, in whole or in
part by substantially rehabilitating existing housing units elsewhere within the borders of
the city at a rate of one habitable square foot per each required habitable square foot of
affordable inclusionary units.
(c) In-lieu fee.
(1) Five (5) or more units. For a residential project comprised of five (5) or more
residential lots or residential units, the developer may elect to satisfy the inclusionary unit
requirements for the project, in whole or in part, by payment of a fee in-lieu of constructing
Ordinance No. NS-XXX
Page 8 of 17
some or all of the required units. The total amount of the fee allowed by this section shall
be calculated using the In-Lieu Fee Schedule in section 41-1904(c)(1)(i) multiplied by the
sum total of the number of habitable square feet within the entire project, as measured
from the exterior walls of the residential units. This calculation does not include exterior
hallways, common areas, landscape, open space or exterior stairways.
(i) In-Lieu Fee Schedule
Units Fee Per Square Foot of
Habitable Area
5 – 9 $10.00
10 – 14 $11.66
15 – 19 $13.32
20 or more $15.00
(ii) Local Skilled and Trained Workforce Incentive. The in-lieu fee for
fifteen (15) or more units shall be reduced if the developer voluntarily provides the City
with an executed enforceable commitment to use a “Skilled and Trained Workforce” as
defined in Public Contract Code section 2601 to complete the construction of the project
as follows:
Use of Skilled and Trained
Workforce
Fee Per Square Foot of
Habitable Area
30% of workforce utilizing
2 or more construction
trades
$10.00
60% of workforce utilizing
3 or more construction
trades
$5.00
A minimum of 35% of the above work-hours shall be
performed in accordance with local hire policies
approved by the City Council.
(2) Timing of payment. The total fee amount for the entirety of a project is
calculated, determined, and set at the time of issuance of the first building permit for the
project. All in-lieu fees allowed by this section shall be paid no later than prior to issuance
of the first occupancy approval for any construction which adds net residential units. If
the city approves a phased project, a proportional share of the required fee shall be paid
within each phase of the residential project. The in-lieu fees collected by the city are city
funds over which the city has complete and absolute discretion.
(3) Inclusionary housing fund. Fees collected in compliance with this section
shall be deposited in the inclusionary housing fund.
Ordinance No. NS-XXX
Page 9 of 17
Sec. 41-1904.1. Inclusionary housing development incentives for production of
units.
(a) In order to make the production of new inclusionary units on-site or off-site or off-
site rehabilitated units, certain incentives, standards and concessions shall be allowed
and prescribed as set forth herein below. Such concessions shall not be available to those
developers that choose to pay an in lieu fee rather than build the units. The developer
may opt to take advantage of up to two (2) concessions among the following possible
concessions:
(1) Parking concession. One on-site parking space for each zero to one
bedroom unit; two (2) on-site parking spaces for each two (2) to three (3) bedroom unit;
two and one-half (2½) parking spaces for each four (4) or more bedroom unit.
(2) Concession on one of the following Zoning Code site development
standards:
(i) Setback reduction of up to twenty-five (25) percent reduction on
subject property;
(ii) Height increase of up to twenty (20) additional feet.
(b) A developer of a for sale residential project proposing to provide on-site moderate
income units and a surrounding community benefit may opt to take advantage of up to
three (3) of the above concessions. The surrounding community benefit will include but
not be limited to park improvements, urban community gardens, developer-funded down
payment assistance, or subsidy of services, activities or programs.
Sec. 41-1905. Housing plan and housing agreement.
(a) Submittal and execution. The developer shall comply with the following
requirements:
(1) Inclusionary housing plan. The developer shall submit an inclusionary
housing plan in a form specified by the executive director, detailing how the provisions of
this article will be implemented for the proposed residential project. The inclusionary
housing plan and its supportive documents, plans, and details shall be submitted at the
same time as the site plan and application materials for the original project. All
inclusionary housing plans shall be subject to the approval of the executive director and
subject to appeal processes and procedures set forth in the Santa Ana Municipal Code.
2) Inclusionary housing agreement. The developer shall execute and cause to
be recorded an inclusionary housing agreement. The inclusionary housing agreement
shall be a legally binding agreement between the developer and the city, executed by the
city manager, or his or her designee, and in a form and substance satisfactory to the
executive director and the city attorney, and containing those provisions necessary to
ensure that the requirements of this article are satisfied, whether through the provision of
inclusionary units or through an approved alternative method.
Ordinance No. NS-XXX
Page 10 of 17
(b) Discretionary approvals. No discretionary approval shall be issued for a residential
project subject to this article until the developer has submitted an inclusionary housing
plan.
(c) Issuance of building permit. No building permit shall be issued for a residential
project subject to this article unless the executive director has approved the inclusionary
housing plan, and any required inclusionary housing agreement has been recorded.
(d) Issuance of certificate of occupancy. A certificate of occupancy shall not be issued
for a residential project subject to this article unless the approved inclusionary housing
plan has been fully implemented.
Sec. 41-1906. Standards.
(a) Location within project, relationship to non-inclusionary units. All inclusionary units
shall be:
(1) Reasonably dispersed throughout the residential project;
(2) Proportional, in number of bedrooms, gross floor area of habitable space,
and location, to the market rate units;
(3) Comparable to the market rate units included in the residential project in
terms of design, materials, finished quality, and appearance; and
(4) Permitted the same access to project amenities and recreational facilities,
as are market rate units.
(b) Timing of construction. All inclusionary units in a residential project shall be
constructed concurrent with, or before the construction of the market rate units. If the city
approves a phased project, a proportional share of the required inclusionary units shall
be provided within each phase of the residential project.
(c) Location outside the proposed original project. For projects where the developer
proposes to either produce new inclusionary units or rehabilitate existing off-site units to
meet the inclusionary affordable housing requirements of this ordinance, the off-site
project(s) containing the required inclusionary units shall be subject to the following
requirements:
(1) The sum-total area (in habitable square feet) of all the newly constructed
off-site inclusionary units shall be the same number of habitable square feet of
inclusionary area as required by this ordinance. For the purpose of the calculation of the
number of square feet of required inclusionary housing, the total gross habitable square
feet of the housing units of the original market rate project shall be used, as measured
from exterior walls to exterior walls of the market units provided as the base for
calculation. The common areas, exterior hallways, stairways, patios, and balconies shall
not be calculated in determining the number of required square feet of inclusionary
housing production. All new or rehabilitated units must meet all current zoning and
general plan standards.
Ordinance No. NS-XXX
Page 11 of 17
(2) While the total number of square feet of inclusionary housing requirement
is calculated based on the requirements of this ordinance, the number of units, bedrooms
and other amenities on the proposed off-site inclusionary housing location shall be
approved by the review authority commensurate with the size and type of units most in
demand at the time of submittal of the application.
(3) Any off-site affordable inclusionary housing project shall be substantially
comparable to the market rate units included in the residential project in terms of quality
of design, materials and finishes.
(4) If tenants are displaced due to rehabilitation of housing to meet the
inclusionary unit requirement, the developer shall be responsible for relocation costs as
required by state law.
(5) No city, housing authority, or public funds, subsidies, or participation of any
kind shall be expended on the production or building of any inclusionary housing projects
associated with meeting the inclusionary unit requirement.
(d) Timing of construction. All inclusionary units in a residential project or proposed
off-site new inclusionary units or rehabilitated units shall be constructed concurrent with,
or before the construction of the market rate units. If the city approves a phased project,
a proportional share of the required inclusionary units shall be provided within each phase
of the residential project.
(e) Units for sale.
(1) Time limit for inclusionary restrictions. A unit for sale shall be restricted to
the target income level group at the applicable affordable housing cost for a minimum of
fifty-five (55) years.
(2) Certification of purchasers. The developer and all subsequent owners of an
inclusionary unit offered for sale shall certify, on a form provided by the city, the income
of the purchaser and that such owners will live in such inclusionary unit as their primary
residence.
(3) Resale price control. In order to maintain the availability of inclusionary units
required by this article, the resale price of an owner occupied inclusionary unit shall be
limited to the lesser of the fair market value of the unit as established by a licensed real
estate agent based upon three (3) comparable properties or the restricted resale price.
For these purposes, the restricted resale price shall be the applicable affordable housing
cost.
(4) Inheritance of inclusionary units. Upon the death of an owner of an owner-
occupied inclusionary unit, title in the property may transfer to the surviving joint tenant
or heir (in the case of the death of a sole owner or all owners of the household).
Ordinance No. NS-XXX
Page 12 of 17
(5) Forfeiture. If an inclusionary unit for sale is sold for an amount in excess of
the resale price controls required by this section, the buyer and the seller shall be jointly
and severally liable to the city for the amount in excess of the affordable housing cost at
the time of such sale of the inclusionary unit. Recovered funds shall be deposited into the
inclusionary housing fund. Notwithstanding the foregoing, city may allow the buyer and
seller to cure any violation of the resale price controls within one hundred eighty (180)
days.
(f) Rental units.
(1) Time limit for inclusionary restrictions. A rental inclusionary unit shall remain
restricted to the target income level group at the applicable affordable housing cost for
fifty-five (55) years.
(2) Certification of renters. The owner of any rental inclusionary unit shall
certify, on a form provided by the city, the income of all members of the household above
the age of eighteen (18) at the time of the initial rental and annually thereafter.
(3) Forfeiture. Any lessor who leases an inclusionary unit in violation of this
article shall be required to forfeit to the city all money so obtained. Recovered funds shall
be deposited into the inclusionary housing fund.
(g) Execution and recording of documents. The executive director may require the
execution and recording of whatever documents are required to ensure enforcement of
this section; including, but not limited to, promissory notes, deeds of trust, resale
restrictions, rights of first refusal, options to purchase, and/or other documents, which
shall be recorded against all inclusionary units.
(h) General prohibitions.
(1) No person shall sell or rent an inclusionary unit at a price or rent in excess
of the maximum amount allowed by any restriction placed on the unit in accordance with
this article.
(2) No person shall sell or rent an inclusionary unit to a person or persons that
do not meet the income restrictions placed on the unit in accordance with this article.
(3) No person shall provide false or materially incomplete information to the city
or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which
that person is not eligible.
(i) Principal residency requirement.
1. The owner or lessee of an inclusionary unit shall reside in the
unit for not less than ten (10) out of every twelve (12) months.
Ordinance No. NS-XXX
Page 13 of 17
2. No owner or lessee of an inclusionary unit shall lease or
sublease, as applicable, an inclusionary unit without the prior permission of the executive
director.
Sec. 41-1907. Reserved.
Sec. 41-1908. Enforcement.
(a) Violation. Any violation of this article constitutes a misdemeanor.
(b) Forfeiture of funds. Any individual who sells an inclusionary unit in violation of this
article shall be required to forfeit any money in excess of the affordable housing cost at
such time. Any individual who rents an inclusionary unit in violation of this article shall be
required to forfeit all money so obtained. Recovered funds shall be deposited into the
inclusionary housing fund.
(c) Legal actions. The city may institute any appropriate legal actions or proceedings
necessary to ensure compliance with this article, including actions:
(1) To disapprove, revoke, or suspend any permit, including a building permit,
certificate of occupancy, or discretionary approval; and
(2) For injunctive relief or damages.
(d) Recovery of costs. In any action to enforce this article, or an inclusionary housing
agreement recorded hereunder, the city shall be entitled to recover its reasonable
attorney's fees and costs.
Sec. 41-1909. Inclusionary housing fund.
(a) Inclusionary housing fund. There is hereby established a separate fund of the city,
to be known as the inclusionary housing fund. All monies collected pursuant to this article
shall be deposited in the inclusionary housing fund. Additional monies from other sources
may be deposited in the inclusionary housing fund. The monies deposited in the
inclusionary housing fund shall be subject to the following conditions:
(1) Monies deposited into the inclusionary housing fund must be used to
increase and improve the supply of housing affordable to moderate, low, very low, and
extremely low income households in the city as specified in the city's affordable housing
funds policies and procedures. A priority will be on the creation of new affordable housing
opportunities for large families currently living in the City. Other eligible uses of the
inclusionary housing fund include but are not limited to:
(i) Creating affordable units from the existing market rate housing stock
including but not limited to, the purchase and rehabilitation of units.
(ii) Funding one-time programs for code enforcement, quality of life, and
general health and safety activities.
Ordinance No. NS-XXX
Page 14 of 17
(iii) Implementing and promoting programs addressing housing security,
eviction prevention, and housing legal assistance for city residents.
(iv) Funding reasonable administrative or related expenses associated
with the administration of this article.
(2) The fund shall be administered by the executive director, or his or her
designee, who may develop procedures in the city's affordable housing funds policies and
procedures to implement the purposes of the inclusionary housing fund consistent with
the requirements of this article and any adopted budget of the city.
(3) Monies deposited in accordance with this section shall be used in
accordance with the affordable housing funds policies and procedures, housing element,
consolidated plan, or subsequent plan adopted by the city council to construct,
rehabilitate, or subsidize affordable housing or to recapture affordable housing at risk of
market conversion, or to assist other government entities, private organizations, or
individuals to do so. Permissible uses include, but are not limited to, assistance to housing
development corporations, equity participation loans, grants, pre-home ownership co-
investment, pre-development loan funds, participation leases, or other public-private
partnership arrangements. The inclusionary housing fund may be used for the benefit of
both rental and owner-occupied housing.
(4) A developer receiving funding from the inclusionary housing fund shall
implement a local preference in their resident selection criteria and marketing policies
meeting guidelines established by the executive director.
(5) A developer receiving funding from the inclusionary housing fund, as well
as its contractors and subcontractors at every tier performing work for the new housing
units is encouraged and should negotiate in good faith to provide the City with an
enforceable commitment that a minimum 30% of the labor utilizing 2 or more construction
trades be performed by a “Skilled and Trained Workforce” as defined in Public Contract
Code section 2601 to complete the construction of the project and shall also include a
minimum of 35% of all work-hours for the project be performed in accordance with local
hire policies approved by the City Council.
Sec. 41-1910. Administrative.
(a) In-lieu fee calculation. The amount per square foot of the inclusionary housing in-
lieu fee shall be subject to city council review and consideration as needed.
(b) Administration fees. The council may by resolution establish reasonable fees and
deposits for the administration of this article including an annual monitoring fee and an
inclusionary housing plan submittal fee.
(c) Monitoring/audits. At the time of initial occupancy, and annually thereafter, the city
will monitor the project to ensure that the income verifications are correct and in
Ordinance No. NS-XXX
Page 15 of 17
compliance with the inclusionary housing administrative procedures. For ownership units,
the city shall monitor to verify that owner-occupancy requirements are maintained.
Developer/property owners are required to cooperate with the city in promptly providing
all information requested by the city in monitoring compliance with program requirements.
The city will conduct periodic random quality control audits of inclusionary units to ensure
compliance with rules and requirements. Such audits may include verification of
continued occupancy in inclusionary units by eligible tenants, compliance with the
inclusionary housing plan and agreement, and physical inspections of the residential
project.
(e) Administrative procedures. The city manager is hereby authorized and directed
to promulgate administrative procedures for the implementation of this article.
Secs. 41-1911—41-1999. Reserved.
Section 5. If any section, subsection, sentence, clause, phrase or portion of this
ordinance is for any reason held to be invalid or unconstitutional by the decision of any
court of competent jurisdiction, such decision shall not affect the validity of the remaining
portions of this ordinance. The City Council of the City of Santa Ana hereby declares that
it would have adopted this ordinance and each section, subsection, sentence, clause,
phrase or portion thereof irrespective of the fact that any one or more sections,
subsections, sentences, clauses, phrases, or portions be declared invalid or
unconstitutional.
Section 6. This Ordinance shall become effective thirty (30) days after its
adoption.
Section 7. The Clerk of the Council shall certify the adoption of this ordinance
and shall cause the same to be published as required by law.
ADOPTED this _______ day of ___________, 2021.
_________________________
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:_________________________
John M. Funk
Sr. Assistant City Attorney
Ordinance No. NS-XXX
Page 16 of 17
AYES: Councilmembers ______________________________________
NOES: Councilmembers _______________________________________
ABSTAIN: Councilmembers _______________________________________
NOT PRESENT: Councilmembers _______________________________________
Ordinance No. NS-XXX
Page 17 of 17
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached
Ordinance No. NS-____________ to be the original ordinance adopted by the City
Council of the City of Santa Ana on _______________, and that said ordinance was
published in accordance with the Charter of the City of Santa Ana.
Date: ________________ ____________________________________
Clerk of the Council
City of Santa Ana
2021 List of Entitled Projects Vested Under the
Regulations and Provisions of Ordinance No. NS-2994
The development projects listed in Table 1 have received entitlement approvals by Planning Commission and/or City Council action
prior to November 16, 2021, to construct new residential units and are hereby determined to have vested the right to carry out the
completion and construction of the project under the regulations and provisions of Ordinance No. NS-2994 (HOO). The vested
regulations and provisions shall automatically terminate if any or all of the entitlement approvals become invalid for any reasons or
have expired under the various applicable time limits established in the Santa Ana Municipal Code or any applicable State Covid-19
pandemic relief or other applicable time extension provisions. Ordinance No. NS-2994 is incorporated herein by reference.
Table 1. Entitled Projects Vested Under the Regulations and Provisions of Ordinance No. NS-2994
No. Project Address Project Name Number of
Dwelling Units
HOO Compliance Requirements
1. 1122 N. Bewley Street Bewley Townhomes 10 Provide inclusionary units as required
under NS-2994 or payment of in-lieu of
$5/sf
2. 301 N. Mountain View Street Mountain View
Townhomes
8 Provide inclusionary units as required by
NS-2994 or payment of in-lieu of $5/sf
3. 200 N. Cabrillo Park Drive The Madison 260 Provide inclusionary units as required by
NS-2994 or payment of in-lieu of $5/sf
4. 1109 N. Broadway One Broadway Plaza 415 $15/sf in-lieu payment under a project
Mutual Declaration
5. 3025 W. Edinger Avenue Haphan Townhomes 17 Provide inclusionary units as required by
NS-2994 or payment of in-lieu of $5/sf
6. 2800 N. Main Street/Specific
Plan No. 4
MainPlace Mall
Transformation 1,900
residential units
1,900 Provide inclusionary units as required by
NS-2994 or payment of in-lieu of $5/sf
7. 419 N. Harbor Boulevard
(previously 421 N. Harbor
Boulevard)
Fifth and Harbor
Mixed Use Apartments
94 Provide inclusionary units as required by
NS-2994 or payment of in-lieu of $5/sf
8. 3417 W. Fifth Street West Fifth Villas 8 Provide inclusionary units as required by
NS-2994 or payment of in-lieu of $5/sf
The development projects listed in Table 2 have received entitlement approvals by Planning Commission or City Council action prior
to November 16, 2021, but did not triggered HOO provisions and have been identified herein for implementation clarity.
Table 2. Entitled Projects Not Triggering HOO requirements
No. Project Address Project Name Number of
Dwelling Units
HOO Compliance Requirements
1. 201 W. Third Street 3rd and Broadway 171 HOO provisions not applicable to project
2. 409 E. Fourth Street and 509 E.
Fourth Street
4th and Mortimer 169 HOO provisions not applicable to project
3. 1801 E. Fourth Street Central Pointe 644 HOO provisions not applicable to project
4. 200 E. First American Way Legado at the Met 278 HOO provisions not applicable to project
5. 114 E. Fifth Street and 115 E.
Fifth Street
Rafferty (4th + Main) 220 HOO provisions not applicable to project
2021 Affordable Housing Opportunity
& Creation Ordinance
NOVEMBER 16, 2021
1
Proposed Action & Recommendation
Zoning Ordinance Amendment No. 2021-03 repealing and reenacting Article XVIII.I. of Chapter 41 of the Santa Ana Municipal Code regarding the Housing Opportunity Ordinance
Consider the recommendations made by the Planning Commission and take one of the following options:
o Approve first reading of the Ordinance as presented;
o Approve first reading of the Ordinance incorporating the changes recommended by the Planning Commission; or
o Approve first reading of the Ordinance with the incorporation of changes desired by the City Council
2CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
.
Background
o November 28, 2011 –Ordinance No. NS-2825 establishing the HOO
to implement the City’s Housing Element Goal of providing
affordable housing within the City
o September 1, 2015 –Ordinance No. NS-2881 amending HOO to
make the inclusionary housing requirements predictable for housing
developers and incentivize the production of affordable housing by
addressing applicability provisions, options to satisfy inclusionary
requirements, and calculation of the in-lieu housing fee
o September 1, 2020 –Ordinance No. NS-2994 amending the HOO
responding to impacts of the COVID-19 pandemic on the
development and construction of housing in the City by lowering the
in-lieu fee option amount from $15 to $5 per square foot, adjusting
the trigger of the ordinance to apply to general plan amendments
only, and expanding the eligible uses of in-lieu fees collected by the
City
3CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Background
o March 2, 2021 –City Council established Ad Hoc Committee for
Housing to address various housing issues including the HOO
o Ad Hoc recommendations were presented, discussed, and
commented on by the City Council at their regular meetings of
July 6th , July 26th, and September 7th of 2021
o City Council also provided a forum to receive input from key
stakeholders and members of the public
o Directed staff to reach out to the developers and business &
labor organizations
o October 5, 2021 –City Council directed to staff proceed with final
drafting of the amendments to the HOO and to proceed with the
adoption process
o October 25, 2021 –Planning Commission Public Hearing
4CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
City Council Desired Changes
5CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Policy Enhancements & Changes
•Revert to the triggers and in-lieu fee amount of the pre-September
2020 Ordinance
•Incentivize projects to incorporate skilled & trained workforce
•Incentivize local hire
•Prioritize production of housing for large families
•Prioritize down payment assistance
•Address regulatory applicability & vesting
•Incentivize onsite construction
•Extend period for payment of the in-lieu fee
Key Amendments Presented to Planning
Commission Addressing Desired Changes
6CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Code Section Summary of Proposed Changes Accomplishing City Council Desired Changes
Title Updates title of the Ordinance to 2021 AFFORDABLE HOUSING OPPORTUNITY & CREATION
ORDINANCE
41-1900 Expands scope to also require affordable housing for zoning classification changes exceeding
permitted densities
41-1901 Updates and deletes outdated definitions
41-1902 Establishes triggers and requirements reflective of the pre-2020 HOO & establishes project
vesting trigger
41-1903 Clarifies exempt projects
41-1904 Revises the in-lieu fee and changes the timing of payment to make the larger fee more
reasonable and to help reduce carrying costs during construction
41-1904 (c)(1)(i)
& (ii)
Incorporates a sliding scale for the reduction of the in-lieu fee to $5 or $10 depending on the
level of utilization of a skilled and trained workforce and local hire
41-1909 Prioritizes spending for large families,down payment programs, and additional one-time
programs addressing housing security, eviction prevention, and housing legal assistance for
city residents
41-1910 Provides for periodic review at the option of the City Council
Planning Commission
The Commission voted 4:3:0 (Ayes:Alderete, Pham, Ramos, Woo;
Noes:Calderon, McLoughlin, Morrissey) to forward the draft
Ordinance with the following recommendations:
1.Increase the minimum inclusionary percentage for all income
categories
2.Increase the minimum starting dollar amount in the proposed
in-lieu fee sliding scale
3.Permit projects that have been approved (entitled) by the City
prior to the adoption date of the proposed Ordinance to vest
the existing regulations and provisions of the Housing
Opportunity Ordinance under Ordinance No. NS-2994
7CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Draft Provision:
◦41-1902. Applicability: Applies to projects that have not been issued a building permit or have not paid their
HOO in-lieu fee as of November 17, 2021
◦Planning Commission recommends vesting of entitled projects instead. This would allow currently entitled
development projects to vest the regulations and provisions of the HOO in effect at the time when the
project was proposed and approved by the City. It will also help to maintain the financial assumptions and
constructability of the project as approved.
◦To be consistent with the above changes, Section 41-1903 (Exempt Projects) should be clarified to also
include a provision addressing projects to be vested under Ordinance No. NS-2994 and to include a vesting
project list (Exhibit 5 to report).
◦41-1902. Inclusionary Requirements
◦Planning Commission recommended increasing each income category by 5%. Prior to considering
increasing the inclusionary percentage, additional analysis is recommended to evaluate the impacts of
these changes to the constructability of a project.
8CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Summary of Key Amendments Recommended
by Planning Commission with Modifications
As drafted PC Recommended Change
15%Low Income
10% Very Low Income
5% Extremely Low Income
10% Blended Income (5:3:2)
20%
15%
10%
15%
Draft Provision:
◦41-1904. In Lieu Fee: Draft Ordinance revises the in-lieu fee and changes the timing of payment as follows:
◦increase the in-lieu fee from $5 per habitable square foot to establish a sliding scale with a $6 -$15 range per
habitable square foot.
◦Prior to considering increasing the bottom step of the sliding scale and reducing the differential between each step
in the draft Ordinance, additional analysis is recommended to evaluate the constructability of a project in the 5-19
unit categories. It is challenging for small infill projects to construct affordable units onsite. If the in-lieu fee
amount is not aligned with the market gap, these smaller projects may not be feasible.
◦41-1904. Timing of payment. The draft extends the timing of payment from issuance of the building permit to issuance
of the certificate of occupancy, allowing a developer the option to pay after the project is developed in order to make the
larger fee more reasonable and to help reduce carrying costs during construction.
◦PC discussed the need to provide clarity on the timing of payment when the City approves a phased development
project. For consistency, timing payment should be proportional to each phase consistent with the timing of
construction of affordable units which is also proportional with each phase (Section 41-1906(b)) of a project. This
change would meet the intent of reducing the carrying cost during the project construction phase.
◦Planning Commission recommended increasing each income category by 5% Prior to considering
9CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Units Fee Per Square Foot of
Habitable Area PC Recommended Change
5 –9 $6.00 $10.00
10 –14 $9.00 $11.66
15 –19 $12.00 $13.32
20 or more $15.00 $15.00
Summary of Key Amendments Recommended
by Planning Commission with Modifications
Summary of Key Amendments Recommended
by Planning Commission as Originally Drafted
1.Title: Update the title of the Ordinance: 2021 Affordable Housing
Opportunity & Creation Ordinance
2.41-1900 Purpose: Expands the scope of the to also require affordable
housing for zoning classification changes exceeding permitted densities in
addition to GPA.
3.41-1901Definition: Deletes “Entitled Residential Project” and “Prior
Project” definition and modifies various definitions to include a new
category for extremely low-income.
4.41-1902 Applicability: The HOO would apply to projects of 5 or more
units requiring a zone change or general plan amendment, including city
initiated zone changes and general plan amendments since November 28,
2011.
10CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
5.41-1904 In-Lieu Fee Options: Removes the 2020 incentive for “Entitled Residential
Projects” to obtain building permits during the current economic climate. The
provision for “Entitled Residential Projects” no longer applies after October 1, 2021.
6.41-1904 (c)(1)(i) & (ii) Skilled and Trained Workforce & Local Hire Incentives: This
section is amended to incentivize the use of a skilled and trained workforce and local
hire
◦Starting at projects with 15 or more housing units
◦30% STW, 2 trades & 35% local hire = $10/sf
◦60% STW, 3 trades & 35% local hire = $5/sf
7.41-1909 Inclusionary Housing Fund: Clarifies the use of the in-lieu fees collected
◦Prioritize large families, housing security, eviction prevention, legal assistance.
8.41-1910 –Periodic review of in-lieu fee by City Council as needed.
11CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Summary of Key Amendments Recommended
by Planning Commission as Originally Drafted
2015 HOO Applicable Areas
12CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Potential HOO Applicable Areas
13CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Recommendation
Consider the recommendations made by the Planning
Commission and take one of the following options:
o Approve first reading of the Ordinance as presented;
o Approve first reading of the Ordinance incorporating the
changes recommended by the Planning Commission; or
o Approve first reading of the Ordinance with the
incorporation of changes desired by the City Council
14CITY OF SANTA ANA, PLANNING AND BUILDING AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
City Council Discussion
NOVEMBER 16, 2021
15