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HomeMy WebLinkAbout50A - ORD - AMEND HOUSING OPPORTUNITY ORDREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: SEPTEMBER 15, 20166 TITLE: RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: . °6! Q As Recommended C] As Amended ❑ Ordinance on 1" Reading M Ordinance on Vd Reading M Implementing Resolution ® Set Public Hearing For CONTINUED TO FiLE NUMBER Adopt an ordinance approving Zoning Ordinance Amendment No. 2015 -03. PLANNING COMMISSION ACTION At its special meeting on July 20, 2015 by a vote of 3 :2 (Mill & l erino opposed; Alderete & Gartner absent), the Planning Commission recommended that the City Council adopt an ordinance approving Zoning Ordinance Amendment No. 2015 -03 to update the existing Housing Opportunity Ordinance (HOO) requirements for the inclusion of affordable housing in certain residential development projects. The Planning Commission, with a 3:2 vote, made no changes to the modifications outlined in the attached staff report (Exhibit A). DESCRIPTION The update of the Housing Opportunity !Ordinance was considered by City Council on August 4, 2015. Staff's recommendation for the ordinance on August 4 included the following: • Residential Projects over 20 units provide Inciusionary Units on -site • Provide for off -site construction of units (1 for 1); • Allow rehabilitation of off -site units at 1.5 rehabilitated units in -lieu of 1 newly constructed unit (1 to 1 for Target Areas); • Inolusionary Unit production 100% responsibility of developer; no City or Housing Authority assistance; • Calve developer height density and standards modifications when affordable units are provided on -site; All Inclusionary Units (rental and ownership) 55 years; « Exempt adaptive reuse projects from inclusionary requirements; Developer may opt 15 % low- income inclusionary or 10 % very low income; Apply only to conversions for number of units in excess of General Plan prescribed densities; Remove Takings Determination from ordinance; Remove Executive Director Discretionary Authority; 50A -1 Zoning Ordinance Amendment 2015 -03 September 15, 2015 Page 2 Simplify In -Lieu fee calculation ($5 /square foot of habitable space) only applicable to projects of 20 or fewer units; Allow pipeline projects the option of paying $5 /square foot. The following is a summary of the changes made at the Council meeting on August 4, 2015 and adopted on September 1, 2015. Change in -lieu fee to $5 per square foot for projects of 20 units and fewer and $15 per square foot for projects of 21 units and above. Change "moderate income" definition to 80% of area median income. The new definition is the same as State's definition of "low income household." • Pipeline projects have an option of paying $15 per square foot. Subsequently, changes made at the Council meeting on September 1, 2015 to be presented for a new let reading on September 15, 2015 were as follows: Allow pipeline projects to pay either their existing agreed upon in -lieu fee or $9.35 per square foot, Allow developers of for -sale units the option of renting out their inclusionary units or selling them to qualified low- income households. Allow the height, density, parking, and other permitted concessions only on projects when developers opt to provide their inclusionary housing units on -site or off -site as permitted by the ordinance. However, such concessions will not be permitted to the developers who take the in -lieu fee option. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal No. 5 Community Engagement and Sustainability, Objective No. 3 (facilitate diverse housing support efforts to preserve and improve livability in Santa Ana neighborhoods). FISCAL IMPACT There is no fiscal impact associated with this action. assan Hagh ni, AltP Executive Director Planning & Building Agency HH:rb HH \Reports \HOO Amendments Report to CC Sept 15 2915 Exhibit: A. Planning Commission Staff Report B. ordinance 50A -2 Health, Livability, opportunities and REQUEST FOR Planning Commission Action WWK lI&eX*67in[urlE 3L7�ilTil��iIT�c77 i- JULY 20, 2015 TITLE: PUBLIC HEARING — ZONING ORDINANCE AMENDMENT NO. 2016-03 TO UPDATE THE HOUSING OPPORTUNITY ORDINANCE AND ADAPTIVE REUSE ORDINANCE (STRATEGIC PLAN NO. 5, 31 Hassan Haghani, AICP & Prepared by Melanie McCann, AICP ' T Exe tive Director PLANNING COMMISSION SECRETARY APPROVED ❑ As Recommended ❑ As Amended ❑ Set Public Hearing For DENIED • Applicant's Request • Staff Recommendation CONTINUED TO -v yYActing PI ning Ma ager Recommend that the Planning Commission recommend that the City Council adopt an ordinance approving Zoning Ordinance Amendment No. 2015 -03. Request of Applicant The City of Santa Ana is requesting to update the existing Housing Opportunity Ordinance (HOO) and Adaptive Reuse Ordinance (ARO) to make it much more predictable for applicants and to increase affordable housing production in conjunction with new market rate housing development. Proiect Description The Housing Element of the General Plan identifies the long range plans for housing throughout the city. The Housing Opportunity Ordinance was established to implement a component of the Housing Element by playing an active role in the provision of affordable housing within the City of Santa Ana. The ordinance update proposes to modify the requirements related to Historic Adaptive Reusefretrofitting of existing buildings; revise the "alternatives" to construction of new affordable housing units on -site; and clarify the options and procedures available to applicants in meeting the HOO. Proiect Background On November 28, 2011, the City Council adopted the Housing Opportunity Ordinance that applied to proposals for five or more housing units. Residential projects are required to provide fifteen percent of the total number of units as affordable, whether the project is for sale or rental. The existing ordinance applies to those developments requesting a zoning amendment from a non - residential to a residential zone (including City - initiated re- zones), an increase in density, a conversion to the residential provision of an overlay zone, or conversion of apartments to condominiums. F011iG3`r1 y 1 J Zoning Ordinance Amendment 2015 -03 July 20, 2015 Page 2 On October 27, 2014, the City Council adopted the Adaptive Reuse Ordinance (ARO) to allow the reuse of vacant and/or obsolete buildings within specific areas of the City. One of the provisions of the ARO, Section 41 -1652 (d)(1), requires all adaptive reuse projects to comply with the HOO. Project Analvsis A review of the contents of the MOO has revealed that certain components of the ordinance prevent staff from consistent implementation of the ordinance. In reviewing the existing ordinance, staff has identified a few areas that warrant a revision to the existing Housing Opportunities Ordinance. Issues to (Consider, In examining the existing ordinance, staff has identified the following items as points of confusion that may be impediments to new housing production and production of new affordable housing units in the city: Constraints on Adaptive Reuse of Historic Structures and Retrofitting of Existing Buildings - This particular issue revolves around the cost of adaptive reuse of historic buildings (which has the public benefit of preserving historic resources by making them economically productive) or retrofitting of existing building stock for a new use, typically switching the use from commercial to residential, thereby minimizing the carbon footprint of the reuse of the building and eliminating the need to turn such buildings into landfill. In both categories, the inclusionary housing requirement adds a cost to the developer on the already high cost of restoration and retrofitting of the existing buildings, which can be costly due to extensive fire and building safety upgrades necessary. Already Built or Entitled (but not Built) Projects - The existing HOO does not fully consider the economics of inclusionary housing requirements on entitled or built projects. The current version of the HOO retroactively applies to projects that were entitled under different sets of circumstances and conceived under very specific economic assumptions when they were entitled. The retroactive application of inclusionary housing requirements drastically changes the economics of the projects from the assumptions that supported the originally approved projects. An existing project that was entitled or built under a set of economic assumptions may become economically unviable once the inclusionary requirement has been added to its costs. Viable Alternatives for On -site Production of Inclusionary Affordable Housing Units — The current ordinance does not really allow off site production of affordable units as a means to meet the inclusionary affordable housing standard. Instead, in practice, it allows the developer to negotiate lower in -lieu fees for up to 100% of the inclusionary requirement. This particular item works as an impediment to the intent of the Housing Opportunities Ordinance in two ways: 1) It removes the consistency and predictability that can assure applicants of the actual cost of their development when formulating their application, and 2) By allowing up to 100 % of the inclusionary requirement to be fulfilled through a negotiated in -lieu fee, it lessens or eliminates the opportunity to produce affordable housing units at no cost to the public in conjunction with production of new market rate housing. y 1 1 I Zoning Ordinance Amendment 2015 -03 July 20, 2015 Page 3 Calculation of the In -Lieu Housing Fee — The terms, conditions, and exact cost of in -lieu housing fee are not clearly spelled out and can change from project to project. In practice, this has resulted in different projects negotiating different fees, often with no new affordable housing units produced. In addition, the current HOO does not fully address the fair inclusionary housing requirement for new projects that have more contemporary products that do not fully adhere to traditional housing product types (e,g., "micro units," lofts, and unfinished space). As such, it is not always clear how the developer can best meet their inclusionary requirements. Further, given the current popularity of studios, one- and two - bedroom apartments, the product types produced by current development don't always meet the City's affordable family housing needs. Proposed Amendments. Based on the issues identified above and a number of other minor concerns, staff proposes the ordinance to be revised as follows: • Calculate the required inclusionary housing requirement in square feet to allow production of affordable housing types that are most needed in the community (e.g., family housing vs. one or two bedroom units); • Clarify the length of affordability to be 55 years, regardless of whether the units are rental or ownership units; • The developer may opt to provide the inclusionary affordable housing as follows: 0 15% if the affordable housing provided is for low- income families; a 10% if the affordable housing provided is for very low - income families; 0 15% if the affordable housing provided is for moderate income families. However the moderate income housing provision is only applicable and allowed when the application is for a 100% ownership housing project. • Exempt projects approved prior to the date of adoption of the original Housing Opportunities Ordinance; • Exempt adaptive reuse of historic structures from the 1100; • Exempt retrofitting of existing buildings for a new use from the HOO; • Allow for off -site construction of inclusionary housing units at the rate of one square foot of new housing for each square foot of required inclusionary housing; • Allow rehabilitation of existing off -site housing to meet inclusionary requirement, provided • Off -site rehabilitated units are produced at a rate of 1 square foot per each required square foot of inclusionary affordable housing within a City - designated "Target Area." • Off -site rehabilitated units are produced at a rate of 1.5 square feet of newly rehabilitated housing per each (1) square foot of required inclusionary affordable housing when the rehabilitated housing is outside a City - designated "Target Area." • When a building is acquired by a developer to be rehabilitated to meet the developer's inclusionary housing requirement, the developer is 100% responsible for the terms and costs of relocation of existing tenants. • Remove the entire section on "takings determination" from the ordinance, as recent case law has established that inclusionary housing standards do not constitute a taking. y ll Zoning Ordinance Amendment 2015 -03 July 20, 2015 Page 4 • Apply inclusionary housing requirements to conversion of apartments to condominiums only when the density of the building being converted exceeds the densities allowed under the General Plan and only to the incremental portion of the density that is over the General Plan prescribed densities on site. • Remove the in -lieu fee option for applications for projects of 21 or more units. For such projects, the developer is to produce the inclusionary affordable housing requirement either on -site or off - site as provided by the ordinance. • Require all inclusionary affordable units to be produced 100% by the developer with no subsidy or financial assistance from the City of Santa Ana or the Santa Ana Successor Agency. • In order to make the production of new affordable housing units on -site or off -site or off -site rehabilitated units, adopt op, rtions of the incentives, standards and concessions allowed and prescribed under California State - adopted S131818. The developer may opt to take advantage of up to two (2) concessions among the following possible concessions: • Parking Concession — ■ one (1) onsite parking spaces for each 0 -1 bedroom unit; • two (2) onsite parking spaces for each 2 -3 bedroom unit; 2 Y2 parking spaces for each 4 or more bedroom unit. • Concession on one of the following Zoning Code site development standards: • Setback reduction — up to 25% reduction on subject property; • Height - up to 20 additional feet; • Density Bonus: • An applicant must select only one housing affordability income level to merit a density bonus. A combination of affordable housing income levels is not permitted to be combined to increase the amount of density bonus. • For each 1 percent increase above 15 percent in the percentage of units affordable to low income households, the density bonus shall be increased by 1.5 percent up to a maximum of 35 percent. • For each 1 percent increase above 10 percent in the percentage of units affordable to very low income households, the density bonus shall be increased by 2.5 percent up to a maximum of 35 percent. • Only projects targeted for condos and other ownership units may provide moderate income housing to meet their affordable inclusionary housing requirement. For each 1 percent above 15 percent of the percentage of units affordable to moderate income households, the density bonus shall be increased by 1 percent up to a maximum of 35 percent. Calculate in -lieu fee at $5 per square foot of required inclusionary affordable housing. For the purposes of this ordinance, the square footage of the development is calculated as the sum -total of the number of square feet within the habitable units, measured from the exterior wall to exterior wall of the habitable units. This calculation does not include hallways, common areas, landscaping, open space, stairways, etc. y 1 M Zoning Ordinance Amendment 2015 -03 July 20, 2015 Page 5 • Allow pipeline projects for which applicants have submitted affordable housing plans to pay the inclusionary housing in -lieu fee, but for which the housing plans have not been finalized, to pay the affordable housing in -lieu fee adopted with this ordinance. • Evaluate the components of this ordinance and provide options for Council consideration in 3 years. Stakeholder Outreach and Discussion: To provide input on the proposed amendments to the Housing Opportunity Ordinance, all known current stakeholders were invited for two consecutive in -depth discussions, one on July 9, 2015 and a second on July 13, 2015. The stakeholders represented a variety of interests including market rate and affordable housing developers, affordable housing advocates, and members of the real estate community. The individuals who were in attendance in at least one of the two discussion meetings are listed in Exhibit 2. Public notification included a mailing to interested parties. In addition, a notice was published in the Orange County Reporter advertising the Planning Commission public hearing. CEQA Analysis In accordance with the California Environmental Quality Act, the proposed project is exempt from further review pursuant to Section 15061 (b)(3), as there is no potential for causing a significant impact on the environment due to the adoption of the ordinance. Categorical Exemption Environmental Review No. 2015 -77 will be filed for this project. Strategic Plan Alignment Approval of this item supports the City's efforts to meet Goal No, 5 Community Health, Livability, Engagement and Sustainability, Objective No. 3 (facilitate diverse housing opportunities and support efforts to presence and improve livability in Santa Ana neighborhoods). Conclusion Based on the analysis provided within this report, staff recommends that the Planning Commission recommend that the City Council adopt an ordinance approving Zoning Ordinance Amendment No. 2015-03. Melanie G. McCann, AICP Associate Planner HH:rb HHIDocuments1H001H00 Amendments Report to PC July 20 2015 50A -7 Zoning Ordinance Amendment 2015 -03 July 20, 2015 Page 6 Attachments: Exhibit 1 _ Proposed Housing Opportunity Ordinance Exhibit 2 — Stakeholders Present at discussion Meetings y 1 M • LS 7,16, 16 ORDINANCE NO. NS -XXXX AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AMENDING ARTICLE XVIIIJ OF THE SANTA ANA MUNICIPAL CODE REGARDING THE HOUSING OPPORTUNITY ORDINANCE AND AMENDING THE ADAPTIVE REUSE ORDINANCE TO EXEMPT SUCH PROJECTS FROM THE APPLICATION OF THE HOUSING OPPORTUNITY ORDINANCE THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES ORDAIN 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 City Council adopted the Housing Opportunity Ordinance (HOO) that applied to proposals for five or more housing units. Residential projects are required to provide fifteen percent of the total number of units as affordable, whether the project is for sale or rental. The existing ordinance applies to those developments requesting a zoning amendment from a non - residential to a residential zone (including City - initiated re- zones), an increase in density, a conversion to the residential provision of an overlay zone, or conversion of apartments to condominiums. B. A review of the contents of the HOO has revealed that certain components of the ordinance prevent staff from fair and even - handed implementation of the ordinance. In reviewing the existing ordinance, staff has identified a few areas that warrant a revision to the existing Housing Opportunities Ordinance. C. In examining the existing ordinance, staff has identified the following items as points of confusion that may be impediments to new housing production and production of new affordable housing units in the City: constraints on adaptive reuse of historic structures and retrofitting of existing buildings, already built or entitled (but not yet built) projects, viable alternatives for on -site production of inclusionary affordable housing units, and the calculation of the in -lieu housing fee. D. Amendments to the WOO are necessary for the clarification of these issues. SECTION 2, Article XVIII.I (Housing Opportunity Ordinance) is hereby amended such that it reads as follows: Article XVIII.I - Housing Opportunity Ordinance Exhibit ! y LS 7.16.15 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 whose Applications were deemed complete after November 28 2011 • or twelve an residents^ u cv to -one- that- &e"erm;t aes; er the conversion of rental units to condominium ownership when the number of units exceed the densities permitted under the General Plan. 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 persons in the case of a one - bedroom unit, three persons in the case of a two- bedroom unit, four persons in the case of a three- bedroom unit, and five 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, in accordance with Sections 50052.5 and 50053 of the Health & Safety Code Very Low - Income Households. Thirty percent of the income of a household earning 50 percent of the Orange County median income adjusted for family size appropriate for the unit. Low - Income Households. Thirty percent of the income of a household earning 70 percent of the Orange County median income for for -sale units, and 30 percent of the income of a household earning 60 percent of the Orange County median income for rental units, adjusted in either case for family size appropriate for the unit. Moderate Income Households. Thirty -five percent of the income of a household earning 110 percent of the Orange County median income for for -sale units, and 30 percent of the income of a household earning 110 percent of the Orange County 50A -10 LS 7.16.15 median income for rental units, adjusted in either case for family size appropriate for the unit. In the event of a conflict between the fractions specified in this definition and those found in Sections 50052.5 and 50053 of the Health & Safety Code, the fractions specified by State law shall control. "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. "Executive Director" means the Executive Director of Community Development 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 of Santa Ana 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 Very Low, Low or Moderate - Income Households, at an affordable housing cost, in compliance with This Article. "Low- Income Households" means 'lower income households" as that term is defined by Section 50079.5 of the Health & Safety Code. "Low-Income Units, Moderate- Income Units, and Very Low - Income Units" means Inclusionary Units restricted to occupancy by Low, Moderate, or Very 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 Households" means "persons and families of low or moderate income" as that term is defined by Section 50093 of the Health & Safety Code. 1, 01 ,4L,1g=rrrrrrrr 1. 1101411 1 Will 50A -11 LS 7.16.15 "Pipeline Proiect" 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 Redevelepme -nt Developmen# 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. "Residential Project" means any of the following: A subdivision resulting in the creation of 5 or more residential lots or residential condominium units; or The new construction of a project consisting of 5 or more multi - family units; or The new construction of 5 or more separate houses or dwelling units; or The conversion of 5 or more existing residential rental units to condominium ownership. "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. "Very Low - income Households" means "very low income households " as that term is defined by Section 50105 of the Health & Safety Code. Sec, 41 -1902. Applicability and Inclusionary Unit Requirements (a) Applicability'^" "agges. The requirements of this Article shall apply to any new Residential Project located within azene that— has --be r residen wEier 50A -12 LS 7.16.15 ohange ai49w6-- aPAnsFease— t&4he-- ' t w residential density y v zoning in- place as oft# 1e -e # estive- date- of-- this_er&nanse the City, including new construction and condominium conversions which exceed the General Plan prescribed densities. (b) Applications. The requirements of this Article shall apply to any new Residential Project proposed in connection with an application to do any of the following: (1) Increase the permitted residential density of the subject property above the density permitted by applicable zoning at the time of the application. The (2) Increase in the permitted residential density or percentage of residential (3) Increase 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 applicable zoning (3 }-- GY ®n }�veJrjt� yp ry al-o 4 ,wAri aI-{lmd es inolading blout not �irT1' I[ CSiiV 'tllU��IT4Gii.TICRTIii "Q —IiG CGY' C V Y V�.IM wT(tYQ i�.a�+. (4) Approval of new proycts in an overlay zone site plan permitting residential land uses pursuant to Division 28 of this Chapter. (5) Convert rental units to condominium ownership. The inclusionary (c) Units for sale. If the new Residential Project consists of units for sale, then a minimum of 15- percent of the total number of units in the project shall be sold to Moderate- Income Households, or lower. (d) Rental units. If the new Residential Project consists of rental units, then a minimum of 15- percent of the units shall be rented to low Low- Income Households. or 10- percent rented to Very Low - Income Households. OWN e^ (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 50A -13 LS 7.16.15 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 a s.g -g �+" e pe=unito (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 Very Low and/or Low an4/er- Moderate- Income Household(s) shall be required to provide on -site Inclusionary Units as required by this Article. (g) 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) Applications deemed complete. A Applications that include a Residential Project for which a development application has been deemed complete prior to November 28, 2011. (b) 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 or provides for a different amount of Inclusionary Units from that specified by this Article, provided the development agreement was adopted on or before November 28, 2011. (c) 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. Sec. 41 -1904. AtWnativesr 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, 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. 50A -14 LS 7.16.15 1. New Units. The Developer may satisfy the Inclusionary Unit requirements borders at the ratio of one square foot of affordable unit for each required square foot. While the total square footage area of the required new affordable units must be the same as the sum -total of the number of square feet for the proiect as directed by this ordinance the number of unit and housing needed at the time of project review. 2. Rehabilitated Units Outside a Designated Target Area. UpGn- appiisaticm -by t! u�peand ^'- �the�i n��;e Gitt+ Ssu+�sil 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 of Santa Ana at a rate of 1 "/: square feet per each 8. the same number as required on -site units. AA+icf— stfferble units —e� .. t= IN c. e number of new units that will be required under the off -site unit provision in the Target Area will be the same number as required on -site units. (c) In -lieu fee. (1) 20 or fewer units. In the case of a Residential Project containing between 5 and 20 residential lots or residential units, the Developer may elect to satisfy 50A -15 LS 7.16.15 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. (2) Calculation of fee. The amount of the fees allowed by this Section shall be edology- -to -be se aA44n4he Arimivr'c Frnfi++n drnn d ec `rh. + . [aW�rneithed(•�legjy4s -base e ]-tari+'rrrtoYrcnrpti.- r'IVOCUi' it .r.^r -•tea afferdaWliiy- gap-assoeiated w 'required - uff6rdabie h6� units on site es .., . _ propesed4:�esidential 4ejest five dollars per square foot (35.00 /ft.Z) of the sum total of the number of square feet within the habitable units as measured from the exterior walls of the residential units. This calculation does not include hallways, common areas, landscape, open space or stairways (3) Timing of payment. The Developer shall pay any in -lieu fees allowed by this Section in full before issuance of a the first Building Permit for any portion of the Residential. Project, including any non - residential portions of a mixed -use development. (4) Inclusionary Housing Fund. Fees collected in compliance with this Section shall be deposited in the Inclusionary Housing Fund. Sec. 41- 1904.1. Affordable Housing Development Incentives (a) in order to make the production of new affordable housing units on -site or off -site or advantage of up to two (2) concessions among the following possible concessions: spaces for each 4 or more bedroom unit. (2) Concession on one of the following Zoning Code site development standards: iii) Density Bonus such that: density bonus shall be increased by 1.5 percent up to a maximum of 35 percent. 50A -16 LS 7.18.15 c) For each 1 percent increase above 10 percent in the affordable inclusionary housing requirement. For each 1 bonus shall be increased by 1 percent up to a maximum of 35 Dercent. 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. if the "d housing plan +aelFides •alternatives -te -en- site -units ual et�ie pity- Geune+l; then - The Inclusionary Housing Plan and its supportive documents plans, and details shall be submitted at project. All Inclusionary Housing Plans shall be subject to the approval of the Executive Director PAarhqing-- 4er+n*s1en and subject to appeal processes and procedures set forth in the Santa Ana Municipal Code. to -the 42#y- Gouncil. •- Any- suueh, appeal- s Fiatl be fitted -witd ifteep (15)- day8 of tFie decision el I n niieg •arrrrr�+esier� (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 50A -17 LS 7.16.15 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. to meet the inclusionary affordable housing requirements of this ordinance the ofF site oroiect(s) containing the required inclusionary units shall be subject to the following requirements: (1) determining the number of required square feet of inclusionary housing 50A -18 LS 7.96.15 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 housinq requirement is calculated based on the requirements of this ordinance the number of units, Woe of affordable units mostly needed at the time of submittal of the application. terms of quality of design, materials and finishes (4) If tenants are displaced due to rehabilitation of housing to meet 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. phased proiect a proportional share of the required InclusionarV_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 45 5vears. (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. (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 comparable properties or the restricted resale price. For these purposes, the restricted resale price shall be the applicable Affordable Housing Cost. 50A -19 (fl LS 7.16. 15 (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 entire purchase price of the unit. Recovered funds shall be deposited into the Inclusionary Housing Fund. Notwithstanding the foregoing, it shall be within the discretion of the E�eGtN DiTeuter City Council to allow the buyer and seller to cure any violation of the resale price controls within 180 days. Rental units. (1) Time limit for inclusionary restrictions. A rental unit shall remain restricted to the target income level group at the applicable affordable housing cost, for 55 years. (2) Certification of renters. The owner of any rental Inclusionary Units shall certify, on a form provided by the City, the income of all members of the household above the age of 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) The Executive Director documents are required limited to promissory no' options to purchase, an Inclusionary Units, (h) General Prohibitions. may require the execution and recording of whatever to ensure enforcement of this Section; including but not =s, deeds of trust, resale restrictions, rights of first refusal, /or other documents, which shall be recorded against all (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. 50A -20 LS 7.16.15 (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 out of every twelve 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 •- iffpg. r- .. o c - Lgi x 50A -21 LS 7.16.15 6. D kr _ - t- :t .0 Sec. 41 -9908. Enforcement (a) Any violation of this Article constitutes a misdemeanor. (b) Forfeiture of funds. Any individual who sells or 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, and Very Low, and Extremely Law Income Households in the City. Monies may also be used to cover 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 to implement the purposes of the Inclusionary Housing Fund consistent with the requirements of this Article and any adopted budget of the City. 50A -22 LS 7.16.15 (3) Monies deposited in accordance with this Section shall be used in accordance with the City's Housing Element, Consolidated Plan, or subsequent plan adopted by the City Council to construct, rehabilitate, or subsidize affordable housing or 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 Inciusionary Housing Fund may be used for the benefit of both rental and owner - occupied housing. Sec. 41 -1910. Administrative 31 2018 staff shall report on the effectiveness of this ordinance and provide nations for Council consideration on the components of this ordinance, including, but not limited to, the monetary amount of inclusionary in -lieu fee per square foot. (c) 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. compliance with the Inclusionary Housing Administrative Procedures, Property Residential Project. (e) Administrative Procedures. The City Manager is hereby authorized and directed to promulgate Administrative Procedures for the implementation of this Article, 50A -23 LS 7.16.15 SECTION 3. Santa Ana Municipal Code section 41 -1652 is hereby amended such that it reads as follows: Sec. 41 -1652. Applicability. The change of use of an existing, economically obsolete building into a new, more productive use such as apartments, condominiums or live /work units is permitted subject to compliance with the following standards: a) Eligibility. Projects must meet the following criteria to be an eligible Adaptive Reuse Project: Project site shall be located in one of the Project Incentive Areas, as defined in section 41- 1651(e). The building must be an Eligible Building, as defined in section 41- 1651(b). b) Development Standards. Adaptive Reuse Projects shall, at a minimum, be in compliance with the following development standards: 1. The residential units shall be a minimum of 500 square feet in size. 2. The ground floor of a multi -level building with three stories or more containing street frontage shall be used as commercial /retail space. 1 Common area spaces for the building, such as lobbies and recreation rooms, when located on the ground floor, may not exceed 50% of the ground floor square footage. 4. Open space shall be provided at a rate of 10 percent of the building square footage, and may be public or private and shall be disbursed throughout the building, At least 25 percent of the open space shall be in the form of a community /recreation room(s). The remaining open space may consist of private balconies (50 square feet minimum), pool and spa areas, and public courtyards. Public courtyards shall Include seating areas, enhanced landscaping, barbeque areas and other amenities as determined by the Planning Division. Historically Significant Buildings shall comply with chapter 30 of this Santa Ana Municipal Code, fagade easements and any other related historic guidelines, including the Secretary of the Interior Standards for any necessary exterior modifications. 50A -24 LS 7.16.15 C) Project Incentives. Adaptive Reuse projects that comply with the Development Standards are eligible for the following project incentives: The project can exceed the maximum general plan density for the site provided the Adaptive Reuse Project is in compliance with the development standards. 2. Existing building setbacks may remain and shall be considered legal nonconforming, but no further encroachments shall be permitted into any nonconforming setback. 3. The height of the structure, if it exceeds the maximum height of the zoning district, may remain and shall be considered legal nonconforming, and any rooftop construction shall be included within the height exemption. 4. A new loading zone shall not be required if the existing building does not have an existing loading zone. 5. New parking spaces shall not be required for any converted use within the building, but any new square footage that includes any new units shall require additional parking at a minimum rate of 2 spaces per unit. MIe s_a SECTION 4. Pursuant to the California Environmental Quality Act ("CEQA") and the State CEQA Guidelines, the adoption of this ordinance is exempt from CEQA review pursuant to 14 California Code of Regulations section 15061, as there is no potential for causing a significant impact on the environment due to the adoption of the ordinance. As a result, Categorical Exemption Environmental Review No. 2015 -77 will be filed for this project. SECTION 5. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance and each section, subsection, phrase or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional. 50A -25 LS 7.16.15 ADOPTED this day of 2015. Miguel A. Pulido Mayor APPROVED AS TO FORM: Sonia Carvalho, City Attorney By: Lisa Storck Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS -XXX to be the original ordinance adopted by the City Council of the City of Santa Ana on 2015, 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 50A -26 City of Santa Ana Inclusionary Housing Ordinance Update Stakeholder Participants (July 9, 2015 & July 13, 2015) NAME ORGANIZATION /COMPANY Blake Hopkins AMCAL Steve La Motte _ Building Industry Assoc., Orange County Mike Balsamo Building Industry Assoc., Orange County Todd Cottle C & C Development Barry Cottle C & C Development Kim Prijatel City Ventures Ryan Aeh City Ventures Roger Kinoshita Jamboree Housing Vicki Ramirez Jamboree Housing_ Andrew Mason Public Law Center Pamela Sapetto Sapetto Real Estate Solutions Tad Springer T. E. Springer Associates Cesar Covarrubias The Kennedy_ Commission Linda Tang The Kennedy Commission Julie Castaneda The Kennedy Commission Ryan Ogulnick Vineyards Development Corp. Amalia Orantes Maddy Spencer W41113Y 50A -27 50A -28 LS 9.'10.15 ORDINANCE NO, NS -XXX AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AMENDING ARTICLE XVIII.I OF THE SANTA ANA MUNICIPAL CODE REGARDING THE HOUSING OPPORTUNITY ORDINANCE THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES ORDAIN AS FOLLOWS: SECTION 1. The City Council of the City of Santa Ana hereby finds, determines, and declares as follows: A. On September 1, 2015, City Council recently updated the Housing Opportunity Ordinance (Ordinance No. NS -2881) to allow for more consistent implementation of the ordinance as well as to simplify the calculation of the in lieu fee. B. Upon review of the updated ordinance, a few additional areas were identified that warrant an amendment to the updated Housing Opportunity Ordinance. SECTION 2. The following sections of Article XVIII.I (Housing Opportunity Ordinance) are hereby amended as follows: Sec. 41.1902. Applicability and Inclusionary Unit Requirements (a) Applicability. The requirements of this Article shall apply to any new Residential Project located within the City, including new construction, and condominium conversions which exceed the General Plan prescribed densities. (b) Applications. The requirements of this Article shall apply to any new Residential Project proposed in connection with an application to do any of the following: (1) Increase the permitted residential density of the subject property above the density permitted bypplicable zoningt- the time of the appiicatien. - The - -- inclusionary requirements shall only apply to the incremental increase in the number of units beyond that which is allowed by the applicable zoning. (2) Increase in the permitted residential density or percentage of residential development allowed due to City initiated zone changes after November 28, 2011. (3) Increase the permitted percentage of residential development allowed for a mixed -use development above the percentage at the time of the application. Exhibit B Ordinance No, 2015 -XXX Page 1 of 5 50A -29 LS 9.10.15 The inclusionary requirements shall only apply to the incremental increase in the number of units beyond that which is allowed by the applicable zoning. (4) Approval of new projects in an overlay zone site plan permitting residential land uses pursuant to Division 28 of this Chapter. (5) Convert rental units to condominium ownership. The inclusionary requirements shall only apply to the incremental increase in the number of units beyond that which is allowed by the applicable zoning. (c) Units for sale. If the new Residential Project consists of units for sale, then a minimum of 15- percent of the total number of units in the project shall be sold or rented to Low Income Households. (d) Rental units. If the new Residential Project consists of rental units, then a minimum of 15- percent of the units shall be rented to Low - Income Households, or 10- percent rented to Very 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- 19O4(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 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. 41.1904.1. 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 units. The Developer may opt to take advantage of up to two (2) concessions among the following possible concessions: Ordinance No, 2015 -XXX Page 2 of 5 50A -30 LS 9.10.15 (1) Parking Concession: one (1) on -site parking space for each 0 -1 bedroom unit; two (2) on -site parking spaces for each 2 -3 bedroom unit; 2'/2 parking spaces for each 4 or more bedroom unit. (2) Concession on one of the following Zoning Code site development standards: (i) Setback reduction of up to 25% reduction on subject property; (ii) Height increase of up to 20 additional feet; (iii) Density Bonus such that: a) An applicant must select only one housing affordability income level to merit a density bonus. A combination of affordable housing income levels is not permitted to be combined to increase the amount of density bonus. b) For each 1 percent increase above 15 percent in the percentage of units affordable to low income households, the density bonus shall be increased by 1.5 percent up to a maximum of 35 percent. c) For each 1 percent increase above 10 percent in the percentage of units affordable to very low income households, the density bonus shall be increased by 2.5 percent up to a maximum of 35 percent. 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 foot. (b) Pipeline 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 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 Lg.35 $4,5:89 per square foot of habitable space for the entire Project's inclusionary housing obligation. (c) 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. 2015 -XXX Page 3 of 5 50A -31 LS 9.10.15 (d) 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 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. SECTION 3, Pursuant to the California Environmental Quality Act ("CEQA") and the State CEQA Guidelines, the adoption of this ordinance is exempt from CEQA review pursuant to 14 California Code of Regulations section 15061, as there is no potential for causing a significant impact on the environment due to the adoption of the ordinance. As a result, Categorical Exemption Environmental Review No. 2015 -_ will be filed for this project. SECTION 4. If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance and each section, subsection, phrase or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared invalid or unconstitutional. ADOPTED this day of September 2015. APPROVED AS TO FORM: Sonia Carvalho, City Attorney Lisa Storck Assistant City Attorney Miguel A. Pulido 50A -32 Ordinance No. 2015 -XXX Page 4 of 5 LS 9.10.15 AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS -XXX to be the original ordinance adopted by the City Council of the City of Santa Ana on 2015, 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 50A -33 Ordinance No. 2015 -XXX Page 5 of 5 50A -34