CITY OF LOS ANGELES CALIFORNIA

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1 DEPARTMENT OF ClTY PLANNING 200 N. SPRING ST REF^, ROOM 525 LO5 ANCELES, CA AND 6262 VAN NVYS BLVD., SUITE 351 VAN NUYS, CA ClTY PLANNING COMMISSION JANE ELLISON USHER PRESIDENT WILLIAM ROSCHEN VICE-PRESIDENT DlECO CARDOSO REGINA M. FREER ROBIN R. HUGHES SABRINA KAY FR. SPENCER T. KEZIOS CINDY MONTAQEZ MICHAEL K. WOO CABRIELEWILLIAMS COMMISSION EXECUTIVE ASSISTAM ( CITY OF LOS ANGELES CALIFORNIA ANTONIO R. VILLARAIGOSA MAYOR EXECUTIVE OFFICES 5. GAIL COLDBERC, AlCP DIRECTOR (213) EVA YUAN-MCDANIEL DEPUTY DIRECTOR (21 3) FAX: (213) INFORMATION 121 3) May 5,2008 Planning and Land Use Management Committee Council of the City of Los Angeles City Hall, Room 395 Los Angeles, CA ATTN: Barbara Greaves, Legislative Assistant ClTY PLAN CASE NO CA - Draft Mello Act Ordinance and Procedures Transmitted herewith is a proposed ordinance (Appendix B) that adds a new Section and a new Section to the Los Angeles Municipal Code establishing regulations to comply with the Mello Act, a statewide law enacted in 1982 to help protect and increase the supply of affordable housing in the Coastal Zone. Also transrr~itted are inter-departmental Administrative Procedures to implement and enforce the new regulations. On November 9, 2006, the City Planning Commission considered a staff report and proposed Mello Act Ordinance referenced as Appendix A. Following a public hearing, the Commission formed a subcommittee to further review the issues that had been raised. The matter was continued until January 11, The subcomrr~ittee met twice, on December 5, 2006, and also on January 8, On January 11, 2007, also following a public hearing, the Commission heard and unanimously approved the subcommittee's recommendations, as amended. Staff subsequently prepared a revised ordinance (Appendix B) and Administrative Procedures in accordance with the Commission's direction. On March 8, 2007, aga.in following a public hearing, the Commission adopted the reports and findings of the Planning Department staff as its reports and findings. The Commission also approved Appendix B and the revised Administrative Procedures, but with several modifications as suggested by the Legal Aid Foundation of Los Angeles. The modifications approved by the Commission are as follows: AN EQUAL EMPLOYMENT OPPORTUNITY - AFFIRMATIVE ACTION EMPLOYER w a r n

2 Modifications to Appendix B Recommended by the Legal Aid Foundation and Approved by the City Planning Commission Section E, 5 (a), Tenure. This section should be modified as follows. A converted or demolished affordable existing residential unit may only be replaced with an affordable replacement unit of the same tenure type. For example, if the converted or demolished unit was a rental unit then the replacement unit must also be a rental unit. Likewise, if the converted or demolished affordable existing residential unit was an ownership unit then the replacement unit must also be an ownership unit. Similarly, inclusionary residential units provided by a developer at either an on-site or off-site location must be of the same tenure type as the proposed market-rate project. For example, if the market-rate project consists of rental units then the inclusionary residential units must also be rental units, and if the market-rate project consists of ownership units then the inclusionary residential units must also be ownership units. The restriction on tenure type also applies to affordable replacement units subsidized with in-lieu fees. lnclusionary residential units subsidized with in-lieu fees, however, may be rented, leased or sold without restriction. 2. Section E, 5 (c), Approved Provision Methods. This section should be moved to Section H, Alternative Compliance Proposals. 3. Section I, Appeals. This section should be revised to incorporate a requirement that the appellate body's actions be consistent with both the Mello Act and the Settlement Agreement. A definition of "Settlement Agreement" should be added to Section B, Definitions. 4. Section 1, 2, Infeasibility. Language should be added to clarify the relationship between the Housing Department and the consultant preparing the report evaluating a developer's claim of economic infeasibility. (Please note that staff's recommended modifications to this Section are discussed in Attachment 1 Modifications to Administrative Procedures Recommended by the Legal Aid Foundation and Approved by the City Planning Commission 5. Section 3.2, Send Notice to Households. This section sho1.11d also include a referral to Susanne Browne at the Long Beach office of the Legal Aid Foundation of Los Angeles. 6. Section 3.5, Identify and Determine if Any Evictions Were For the Purpose of Evading the Mello Act. This section should be revised to reference a substantial number of notices to evict.

3 7. Section 5.3, Right of First Refusal. Both the project applicant and the Housing Department should send notice to the last household to occupy the removed or converted affordable existing residential unit of its right of first refusal. (Please note that staffs recorr~mended modifications to this Section are discussed in Attachment 1.) 8. Section 12.0, Notice. Existing language in this section should be clarified and additional notice requirements as referenced in the Settlement Agreement should be added. This action was taken by the following vote: Moved: Seconded: Ayes: Absent: Vacancy: Hughes Usher Freer, Kezios, Woo Cardoso, Kay, Roschen One b u ~abriae Williams, Commission Executive Assistant II I/ cityplanning Commission Attachments: 1. Modifications to Appendix B and the Administrative Procedures Recommended by the Housing and Planning Departments 2. Letter from the Housing Department dated April 20, Findings 4. Revised Appendix B (Ordinance) and Administrative Procedures 5. Report from HR&A on Recommended In-Lieu Fees CC: Jeri Burge, Assistant City Attorney Susanne Browne, Legal Aid Foundation of Los Angeles Deanna Kitamura, Western Center on Law and Poverty

4 Modifications to Appendix B and the Administrative Procedures Recommended by the Housing and Planning Departments Subsequent to the City Planning Commission's action on March 8, 2007, the Housing Department submitted a letter to the Planning Department dated April 20, 2007 itemizing a variety of issues concerning the draft Mello Act Ordinance and Administrative Procedures. After a series of meetings between the two Departments it was agreed that the following modifications would be recommended for the Planning and Land Use Management Committee's approval. These recommended modifications are discussed below and identified in the attached draft ordinance and procedures using a strikeout and underline format. Modifications to Appendix B Section F, 5, Annual Adjustment. The draft ordinance requires that the in-lieu fees be adjusted every year to account for any change in land and construction costs. The City's Mello Act consultant, Hamilton, Rabinovitz & Alschuler (HR&A), had recommended that the adjustment reflect the change that had occurred during the preceding calendar year, with the adjusted fees taking effect the start of the new fiscal year. Staff proposes language to reflect this recommendation. The new fees would take effect on July 1 of every year, and reflect either the increase or decrease in land and construction costs,that occurred during the preceding calendar year. Sectio~i 1, 2, Infeasibility. The draft ordinance allows project applicants to appeal Mello Act conditions based on infeasibility. To ensure that appeals based on infeasibility are properly and adequately reviewed, the ordinance provides a mechanism for third-party review by a qualified, outside consultant. The consultant would independently evaluate any claim of infeasibility, applying objective evaluation measures to determine whether compliance with the Mello Act conditions would in fact render the project infeasible. Only a consultant placed on a City-authorized list could prepare the report, with the appellant required to cover all of the consultant's costs. To carry out this provision the ordinance further required the appellant to pay an initial fee to the Housing Department. The Housing Department would then directly contract with the consultant, and subsequently bill the appellant if the initial fee did not cover all of the consultant's costs. Given the administrative burden, with the requirement to prepare contracts, disburse payments, and provide project accounting, as well as the difficulty in collecting funds if the appellant does not pay for consultant costs not covered by the initial fee, it was decided to recommend deletion of this feature. City staff would, however, review each consultant's report and require "revisions as are necessary to ensure that the report is objective, accurate and unbiased." Specifically, the consultant's report would only be forwarded to the appellate body after City staff had reviewed it and determined it was adequate.

5 Modifications to Appendix B and the Administrative Procedures Recommended by the Housing and Planning Departments Subsequent to the City Planning Commission's action on March 8, 2007, the Housing Department submitted a letter to the Planning Department dated April 20, 2007 itemizing a variety of issues concerning the draft Mello Act Ordinance and Administrative Procedures. After a series of meetings between the two Departments it was agreed that the following modifications would be recommended for the Planning and Land Use Management Committee's approval. These recommended modifications are discussed below and identified in the attached draft ordinance and procedures using a strikeout and underline format. Modifications to Appendix B Section F, 5, Annual Adjustment. The draft ordinance requires that the in-lieu fees be adjusted every year to acco~~nt for any change in land and construction costs. The City's Mello Act consultant, Hamilton, Rabinovitz & Alschuler (HR&A), had recommended that the adjustment reflect the change that had occurred during the preceding calendar year, with the adjusted fees taking effect the start of the new fiscal year. Staff proposes language to reflect this recommendation. The new fees would take effect on July 1 of every year, and reflect either the increase or decrease in land and construction costs that occurred during the preceding calendar year. Section 1, 2, Infeasibility. The draft ordinance allows project applicants to appeal Mello Act conditions based on infeasibility. To ensure that appeals based on infeasibility are properly and adequately reviewed, the ordinance provides a mechanism for third-party review by a qualified, outside consultant. The consultant would independently evaluate any claim of infeasibility, applying objective evaluation measures to determine whether compliance with the Mello Act conditions would in fact render the project infeasible. Only a consultant placed on a City-authorized list could prepare the report, with the appellant required to cover all of the consultant's costs. To carry out this provision the ordinance further required the appellant to pay an initial fee to the Housing Department. The Housing Department would then directly contract with the consultant, and subsequently bill the appellant if the initial fee did not cover all of the consultant's costs. Given the administrative burden, with the requirenient to prepare contracts, disburse payments, and provide project accounting, as well as the difficulty in collecting funds if the appellant does not pay for consultant costs not covered by the initial fee, it was decided to recommend deletion of this feature. City staff would, however, review each consultant's report and require "revisions as are necessary to ensure,that the report is objective, accurate and unbiased." Specifically, the consultant's report would only be forwarded to the appellate body after City staff had reviewed it and determined it was adequate.

6 Fees - In Effect on Ordinance's Effective Date througt June 30,2008 Coastal Zone Subarea Fee to Provide 2-9 Unit Projects Unit Projects - Pacific Palisades Venice-Playa Del Rey San Pedro-Harbor One Required Affordable Replacement Unit $31 9,386 $296,959 $212,128 Fee Per Market-Rate Unit in a New Housing Development or Condominium Conversion $12,775 $1 1,878 $8,485 Fee Per ~arket- Rate Unit in a New Housing Development or Condominium Conversion $31,939 $29,696 $21, Fees - In Effect on July 1,2008 through June 30, Coastal Zone Subarea Fee to Provide 2-9 Unit Projects - I 10+ Unit Projects - One Required Affordable Replacement Unit Fee Per Market-Rate Unit in a New Housing Development or Fee Per Market- Rate Unit in a New Housing Development or 1 1 I condominium 1 condominium i Pacific Palisades Venice-Playa Del Rey San Pedro-Harbor $ $31 3;394 $21 6,595 Conversion $ , $1 2,536 $8,664 Conversion $ , $31,339 $21,660

7 Antonlo R. Vlllaralgosa, Mayor Merceder Mlrqwz. General Manage W. 7th Street 8th FI.. Lor Angeles. CA iel / fax April 20, 2007 Alan Bell Planning Associate City Planning Department 200 N. Spring Street, Los Angeles, CA RE: ISSUES AND CONCERNS REGARDING THE DRAFT MELLO ORDINANCE AND PROCEDURES Dear Alan: The Los Angeles Housing Department (LAHD) has reviewed the draft Mello Ordinance and Procedures you forwarded to our department. As the City Attorney is drafting the final ordinance, LAHD is proposing certain changes relative to the roles and responsibilities entertained for the City Planning, Building and Safety, and Housing Departments. The following issues are either not addressed, or require further clarification to the draft ordinance's provisions: a. Redefine one-for-one replacement units as like-for-like replacement units. (Draft Ordinance Section 1.E.3) a. Ensure that replacement or inclusionary units provided by the developer/owner are restricted by covenant prior to issuance of the Certificate of Occupancy. Also, any appeal that results in off-site units, should only be permitted if the off-site units already exist, land for new construction is in place and the owner/developer has the financial capability of performing as promised. A covenant to restrict units cannot be drafted until a location is identified per the City Attorney. (Draft Ordinance Section 1.E.5.f) b. Reduce the annual monitoring fee from $370 to $75, which covers the cost of monitoring. (Mello Act Ordinance Administrative Fees, Section G.) c. Provide penalties for non-compliance. (Not addressed in current Draft Ordinance.) d. Assign the Los Angeles Department of City Planning (LADCP), with the assistance of LAHD, to develop the method by ~vhich the LAHD will adjust the in-lieu fees annually, since the LADCP has established with the initial methodology developed by its consultant. In addition, require any City department identified as the source of relevant data for the computation of the in-lieu fee annual adjustment to provide same to LAHD An Equal Opportunity Affirmative Action Employer

8 Draft Mello Ordinance and Procedures Page 2 on an annual basis for that purpose within 30 days of its request. (Draft Ordinance Section 1.F.5) Inasmuch as it currently lacks the capacity, the LAHD is not prepared to undertake the following activities assigned to it by the draft ordinance and recommends the following changes: a. Reassign, redefine or delete the requirement to track the right of first refusal. (Procedure 5.3) b. Reassign the determination of economic infeasibility to the Planning Department, since this is part of a Planning appeals process. The economic analysis of infeasibility would be completed by a consultant hired by the LADCP and paid for by the project applicant, similar to other planning processes with reliance on consultant expertise. (Draft Ordinance Section 1.1.2) c. Reassign administration of the Mello Act Ordinance Appeals Trust Fund to the LADCP, since the determination of infeasibility would be made by LADCP. (This Trust Fund collects payments by the developer enabling the city to hire a consultant to determine the economic feasibility of the development.)(draft Ordinance Section ) d. Place the burden of meeting Mello requirements for approved provision methods on the ownerideveloper. The ownerideveloper would therefore have to prove to the satisfaction of the appeals body that: 1)the building was completely and continuously unoccupied for more than one year; has been rehabilitated to comply with all applicable codes; is substantially rehabilitated with a useful life of not less than 55 years (Procedures and 7.1); and that, 2) any eviction preceding a request for Mello determination was not done to evade the Mello ordinance (Procedure 3.5). The following broad issues need to be resolved and addressed in the Procedures to ensure future efficiencies on the part of LAHD, LADCP, and LADBS. a. The current draft Ordinance (and resulting procedures) will call for an increased number of hand-offs between the LAHD, LADCP and LADBS, as owners/developers attempt to comply with its various requirements. These include a hand off procedure from LADCP to LAHD requesting a Mello determination and providing needed documentation for such (Draft Ordinance l.e.l), hand off procedure with appropriate documentation notifying the appropriate department that necessary fees have been paid(various sections in Draft Ordinance), hand off from LADCP of final Mello Act Project Permit Compliance (Draft Ordinance 1.G), appropriate contacts for various notices between departments, etc. LAHD recommends that these three departments work together to establish the necessary procedures to implement the Ordinance.

9 Draft Mello Ordinance and Procedures Page 3 b. Currently, LAHD signs off for a building permit or Certificate of Occupancy as soon as a Conditional Clearance Letter or Covenant has been executed. LAHD recommends allowing LAHD to retain this authority inasmuch as it is the incentive that ensures the developerlowner completes the process. c. Currently, LAHD has no knowledge of construction commencement or completion on a Land use or Mello project. LAHD recommends that LADBS and LADCP, with the assistance of the LAHD, develop procedures for notifying LAHD of the date work is commenced on an affordable housing project and when the Certificate of Occupancy has been issued. By making these changes to the Ordinance, the resulting procedures would simplify the development/building process for developers and property owners under the Mello Act, decreasing costs for the developer as well as the City. The procedures should provide for a One-Stop building permit process, in line with the Mayor's policy. I am certain that our departments can further improve on the proposed Ordinance and Procedures by reviewing them with an eye to improving future cost effectiveness and program efficiencies. Please contact Margie Lopez (213) to schedule a time for us to work on resolving these issues. Sincerely, MERCEDES MARQUEZ General Manager By: cc: ~at~n%&k Beth Stochl Assistant General Manager Housing Development Jane Usher, City Planning Commission Gail Goldberg, LADCP Jane Blumenthal, LADCP Andrew Adelman, LADBS Nick Delli Quadri, LADBS Margie Currier, City Attorney Ken Fong, City Attorney Yolanda Chavez, LAHD Shahry Deyhimy, LAHD

10 Findings That the City Council: Adopt the staff report dated November 9, 2006 and the supplemental staff reports dated January I I, 2007 and March 8,2007 as its reports on the subject; and Adopt the findings in the staff report dated March 8, 2007: 1. In accordance with Charter Section 556, the proposed ordinance (Appendix B) is in substantial conforniance with the purposes, intent, and provisions of the General Plan. The ordinance implements Housing Element Goal 1, "A City where housing production and preservation result in an adequate supply of ownership and rental housing affordable to people of all income levels, races, ages, and suitable for all needs;" Housing Element Objective 1.I., "Encourage production and preservation of an adequate supply of rental and ownership housing to meet the identified needs of persons of all income levels and special needs;" Housing Element Policy 1.I.8, "Encourage and support public and private programs to increase the availability of affordable rental housing for all city residents;" and Housing Element Objective 2.5, "Encourage equitable distribution of affordable housing throughout the City." The ordinance implements these Housing Element provisions by requiring a minimum of ten percent of all residential units in condominium conversions and new housing projects of ten or more units (for rent and for sale) to be affordable to very low income households. The required inclusionary units must be located on-site. In addition, condominium conversions and new housing projects of two to nine units (for rent and for sale) must pay an in-lieu fee that would be deposited into the Coastal Zone Affordable Housing Trust Fund. The ordinance implements Housing Element Policy 2.5.2, "Discourage development, demoli,tion, and conversions that contribute to the loss of affordable housing and encourage one-for-one replacement (based on bedroom count) of demolished affordable units;" and Housing Element Policy 1.1.4, "Support the preservation of existing mobile home parks." To implement Policy 2.5.2, the ordinance requires that removed or converted affordable existing residential units be replaced one-for-one with affordable replacement units. Consistent with Policy 1.I.I and pursuant to the Mello Act, the ordinance also defines "existing residential units" to include mobile homes and mobile home lots. As such, these units would also be subject to the ordinance's replacement provisions. The ordinance implements Housing Element Policy 2.5.4, "Actively promote the financing of affordable housing;" and Policy 1.1.7, "Support public and private programs to maximize home ownership opportunities (including homeowner counselingltraining) through provision of private and public programs such as subsidized interest loans, reduced down payments, and loan counseling and

11 packaging." -The ordinance's in-lieu fees will be deposited into the Coastal Zone Affordable Housing Trust Fund. As a source of local matching funds, these in-lieu fees can be used to leverage additional state and federal dollars at a ratio of 3:l to expand the pool of money that can be used to provide affordable housing in the Coastal Zone. in accordance with Charter Section 558 (b) (2), the proposed ordinance (Appendix B) will have no adverse effect upon the general plan, any specific or community plans, or any other plans being created by the City Planning Department. The ordinance does not amend or affect the general, specific, or corr~munity plans, or any other plans being created by the City Planning Department that apply to the Coastal Zone. Furthermore, the ordinance advances the Housing Element goals, policies, and objectives set forth above; and 3. in accordance with Charter Section 558 (b) (2), the proposed ordinance (Appendix B) will be in conformity with the public necessity, convenience, general welfare, and good zoning practice. The ordinance will preserve existing affordable housing while providing new inclusionary units to address the shortage of affordable housing in tlie Coastal Zone. The ordinance does not change any zoning regulations or development standards in the Coastal Zone. 4. Pursuant to CEQA and City guidelines for the implementation thereof, a Negative Declaration (EIVV ND) was published on October 12, On all nieasures the proposed ordinance (Appendix B) will have either no or a less than significant effect on the environment. The proposed ordinance makes no changes to existing zoning, any specific plans or any other land use regulations that affect the physical environment. All projects subject to the ordinance require separate environmental clearance, as applicable.

12 APPENDIX B Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM PROPOSED ORDINANCE FOR DISCUSSION An ordinance adding a new Section and a new Section to the Los Angeles Municipal Code establishing regulations to protect and increase the supply of housing affordable to households with Very Low, Low, or Moderate lncomes in the... Coastal Zone; THE PEOPLE OF THE CITY OF LOS ANGELES DO ORDAIN AS FOLLOWS: Section I. A new Section is hereby added to Article 2 of Chapter 1 of the Los Angeles Municipal Code to read: A. Purpose. In accordance with California Government Code Section (k), the purpose of this section is to establish regulations to protect and increase the supply of housing affordable to households with Very Low, Low, or Moderate lncomes in the Coastal Zone. These regulations shall be known as the "Mello Act Ordinance." B. Definitions. l'lotwithstanding any provisions of this chapter to the contrary, the following definitions shall apply to this ordinance: Administrative Procedures means.the procedures adopted by resolution of the Council to administer and enforce this ordinance. Affordable Existing Residential Unit means an existing Residential Unit occupied by a household with a Very Low, Low, or Moderate Income, as determined by the Los Angeles Housing Department (LAHD). Affordable Housing lncentives Guidelines refers to the definition of "Affordable Housing lncentives Guidelines" in Section A 25 (b) of this Code. Affordable Housing Provision Plan is a document that shows how Affordable Replacement Units or lnclusionary Residential Units will be provided in accordance with this ordinance, the Administrative Procedures, and the Affordable Housing lncentives Guidelines.

13 DISCUSSION DRAFT B-2 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM Affordable Replacement Unit means a Residential Unit that has the same number of bedrooms as the Affordable Existing Residential Unit that was removed or converted, and is also a "Restricted Affordable Unit" as defined in Section A 25 (b) of this Code. Coastal Dependent Use means any non-residential development or use that requires a site on or adjacent to the sea to be able to function at all. Coastal Related Use means any non-residential development or use that is dependent on a Coastal Dependent Use. Coastal Zone means the Coastal Zone, as defined in California Public Resources Code, Division 20 (commencing with Section 30000), including, but not limited to, the Coastal Zone portions of Venice, San Pedro, Pacific Palisades, Playa Vista, Wilmington, Fort MacArthurNVhite Point, PalmsIMarina Freeway Area, and Del Ray Lagoon, as depicted on the City of Los Angeles Coastal Zone maps, as prepared and maintained by the Department of City Planning. In the case of any discrepancy, the Public Resources Code shall govern. Coastal Zone Affordable Housing Trust Fund is the reserve account described in Chapter 128, Division 5 of the Los Angeles Administrative Code. Extended Coastal Zone means that area within the City of Los Angeles within three miles of the inland boundary of the Coastal Zone. Feasible (Infeasible) means (not) capable of being accomplished in a successful manner within a reasonable period of time taking into account economic, environmental, social and technical factors. lnclusionary Residential Unit means a Residential Unit that is also a "Restricted Affordable Unit." as defined in Section A 25 (b) of this Code, but is not an Affordable Replacement Unit. Local Coastal Program refers to the definition of "Local Coastal Program" in Section B of this Code. Mello Act Project Permit Compliance shall mean a decision by the assigned decision-maker that a Project complies with the regulations set forth in Section

14 CPC CA DISCUSSION DRAFT 5-3 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM E of this Code, either as submitted or with conditions imposed to achieve compliance. Pacific Palisades Coastal Zone means that area of the City of Los Angeles depicted as subarea one on the Coastal Zone map attached to the Administrative Proced 1.1 res. Pacific Palisades Extended Coastal Zone means that area of the City of Los Angeles depicted as subarea two on the Coastal Zone map attached to the Administrative Procedures. Project means any action requiring a building permit approved by LADBS or a discretionary land use approval approved by a decision-maker that: (1) removes one or more existing Residential Units through a change to a non-residential use-change of Use; (2) converts one or more existing Residential Units to a condominium, cooperative, or similar form of ownership-condominium Conversion; (3) removes one or more existing Residential Units through the complete or partial demolition of a building, or by combining two or more units to make a larger unit-demolition; or (4) creates one or more new Residential Units for rent or for sale, either through new construction or the adaptive reuse of existing, non-residential buildings -New Housing. Project Applicant means the person, partnership, corporation, governmental organization or other entity filing an application for a Project with either LADBS or LADCP. Rental Housing Production Fees means the fees set forth in Section K of this Code. Residential Unit means a dwelling unit, efficiency dwelling unit, light housekeeping room, or joint living and work quarters, as defined in Section of this Code; a mobile home, as defined in California Health and Safety Code Section 18008; a mobile home lot in a mobile home park, as defined in California Health and Safety

15 CPC CA DISCUSSION DRAFT B-4 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM Code Section 18214; or a guest room or efficiency unit in a residential hotel, as defined in California Health and Safety Code Section (b)(l). San Pedro-Harbor Coastal Zone means that area of the City of Los Angeles depicted as subarea five on the Coastal Zone map attached to the Administrative Procedures. San Pedro-Harbor Extended Coastal Zone means that area of the City of Los Angeles depicted as subarea six on the Coastal Zone map attached to the Administrative Procedures. Settlement Agreement means the settlement agreement between the City of Los Angeles and the Venice Town Council, Inc., the Barton Hill Neighborhood Organization, and Carol Berman concerning the implementation of the Mello Act in the Coastal Zone portions of the City of Los Angeles that went into effect on January 2, Venice-Playa Del Rey Coastal Zone means that area of the City of Los Angeles depicted as subarea three on the Coastal Zone map attached to the Administrative Procedures. Venice-Playa Del Rey Extended Coastal Zone means that area of the City of Los Angeles depicted as subarea four on the Coastal Zone map attached to the Administrative Procedures. Very Low, Low, or Moderate Income Household means a household with an annual income pursuant to Sections ,50093,50105, and of the California Health and Safety Code. C. Relationship to Existing Regulations. The relationship between this ordinance and other regulations that also apply to the Coastal Zone is set forth below: 1. Every Project in the Coastal Zone must receive.the proper review pursuant to this ordinance regardless if the Project is regulated by any geographically specific plan or Local Coastal Program. This requirement also applies to any Project exempted from the requirement to obtain a coastal development permit. 2. In the case of conflict between this ordinance, any geographically specific plan, Local Coastal Program, or any other regulation, the requirement that results in the

16 CPC CA DISCUSSION DRAFT B-5 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM largest number of Affordable Replacement Units or lnclusionary Residential Units shall apply- 3. This ordinance shall not abrogate any existing development agreement between a property owner and the City of Los Angeles executed prior to this ordinance's effective date. 4. This ordinance and the Administrative Procedures shall replace and supercede the interim administrative procedures that are attached as Exhibit A to the Settlement Agreement. D. Administrative Procedures. City decision-makers, departments, staff, employees, agents, officers, commissions and appellate bodies must administer and enforce this ordinance in accordance with the Administrative Procedures. E. Regulations. I. Affordable Existing Residential Units. LAHD shall have up to 60 days from the date of referral by LADCP to determine if any existing Residential Units in a Change of Use, Condominium Conversion or Demolition Project are Affordable Existing Residential Units. This time limit may be extended as mutually agreed upon in writing by LADCP and LAHD. In the event 'that an existing Residential Unit is occupied by more than one person or family, and if at least one such person or family (excluding dependents) is of Very Low, Low, or Moderate Inconie, then the existing Residential Unit shall be considered to be an Affordable Existing Residential Unit. Exemptions: No Residential Unit shall be considered to be an Affordable Existing Residential Unit if it: (I) was completely and continuously unoccupied for more than one year immediately prior to the filing of an application for a Change of Use, Condominium Conversion or Demoli.tion Project; (2) is a one-family dwelling occupied by its owner or owners at the time the application for a Change of Use, Condominium Conversion or Demolition Project is filed, except for a mobile home, as defined in California Health and Safety Code Section 18008; or a mobile home lot in a mobile home park, as defined in California Health and Safety Code Section 18214; or (3) is in a building a governmental agency has declared a public nuisance pursuant to Division 13 (commencing with Section 17000) of the California Health and Safety Code; Chapter IX, Article 1, Division 89 of this Code; or any subsequent provision of this Code adopted pursuant to Division 13 of the California Health and Safety Code.

17 CPC CA DISCUSSION DRAFT B-6 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM 2. Change of Use and Demolition Projects. No Change of Use or Demolition Project that removes one or more existing Residential Units (including market-rate Residential Units) for purposes of a new non-residential use shall be approved unless the new non-residential use is a Coastal Dependent Use. Examples of Coastal Dependent Uses include but are not limited to fisheries and boating and harbor facilities. Affordable Existing Residential Units that are removed must be replaced pursuant to Section E 3 of this Code. 3. Affordable Replacement Units. All Affordable Existing Residential Units that are removed or converted must be replaced one-for-one with Affordable Replacement Units. (a) Location. An Affordable Replacement Unit must be located on the same site as the Affordable Existing Residential Unit that was removed or converted. (b) Affordability Level. An Affordable Replacement Unit must be offered at the same level of affordability as the Affordable Existing Residential Unit that was removed or converted. (c) Right of First Refusal. The last household to occupy a removed or converted Affordable Existing Residential Unit shall have a right of first refusal to occupy an Affordable Replacement Unit when it becomes available for occupancy, but must have a qualifying income, as determined by LAHD. (d) Legal Status. An Affordable Existing Residential Unit shall be subject to the provisions of this subdivision regardless if it was legally permitted or not. 4. lnclusionary Residential Units. All New Housing and Condominium Conversion Projects consisting of two or more Residential Units must either provide lnclusionary Residential Units on-site or pay an in-lieu fee, depending on Project size. Exemption: The requirements set forth in this subdivision shall not apply to additional market-rate Residential Units included in a New Housi~g Project pursuant to a density bonus, as set forth in Section A 25 of this Code. (a) Requirements. This ordinance's requirements concerning lnclusionary Residential Units are set forth in the following chart:

18 CPC CA DISCUSSION DRAFT B-7 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM Coastal Zone Subarea 2-9 units Project Size' 10 or more units Pacific Palisades The Project Applicant must pay an in-lieu fee of $1 2,775 for every market-rate Residential Unit in the Project. fee shall take effect on the date this ordinance takes effect and remain in effect throuqh June 30, On Julv 1, 2008 the fee shall be $12,681 and remain in effect throuqh June 30, A rrrinimum of ten percent of all Residential Units on-site must be affordable to Very Low Income Households. The in-lieu fees shown in strike-out were approved by the City Planning Commission on March 8, 2007, for The new in-lieu fees shown in underline, for , were calculated by HR&A using the fee adjustment methdology shown in Section 8.1 of the Administrative Procedures, as approved by the City Planning Commission on March 8, 2007.

19 CPC CA DISCUSSION DRAFT 6-8 Changes Shown in Strike-out and Underline are Housing and Planning Departmenf Staff Recommendations to PLUM Venice-Playa Del Rey The Project Applicant must pay an in-lieu fee of $1 1,878 for every market-rate Residential Unit in the Project. This fee shall take effect on the date this ordinance takes effect and remain in effect throuqh June 30, On Julv 1, 2008 the fee shall be $12,536 and remain in effect throuqh June 30, A minimum of ten percent of all Residential Units on-site must be affordable to Very Low Income Households. San Pedro- Harbor The Project Applicant must pay an in-lieu fee of $8,485 for every market-rate Residential Unit in the Project. This fee shall take effect on the date this ordinance takes effect and remain in effect through June 30, On Julv 1, 2008 the fee shall be $8,664 and remain in effect throuqh June 30, A minimum of ten percent of all Residential Units on-site must be affordable to Very Low Income Households. (b) Project Size Adjustment. Any required Affordable Replacement Units shall first be subtracted from total Project size before applying the requirements set forth in Section E 4 of this Code. (c) Fractions. The number of lnclusionary Residential Units required onsite pursuant to Section E 4 of this Code shall be rounded upwards from fractions of one-half (%) and more to result in one more required lnclusionary Residential Unit. Fractions of less,than one-half (%) must be paid as an in-lieu fee pursuant to the Administrative Procedures.

20 CPC CA DISCUSSION DRAFT 6-9 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM 5. Additional Regulations. The following additional regulations shall apply to the provision of Affordable Replacement Units and lnclusionary Residential Units. (a) Tenure. The following restrictions shall apply to the tenure of Affordable Replacement Units and Inclusionary Residential Units: (1) Affordable Replacement Units. If removed or converted Affordable Existing Residential Units were rental Residential Units then the Affordable Replacement Units must.also be rental Residential Units. Likewise, if the removed or converted Affordable Existing Residential Units were ownership Residential Units then the Affordable Replacement Units must also be ownership Residential Units. This restriction on tenure applies to Affordable Replacement Units provided by a Project Applicant and also to Affordable Replacement Units provided by a Coastal Zone Affordable Housing Trust Fund provider under contract to LAHD. (2) lnclusionary Residential Units. If the market-rate Residential Units in a New Housing Development will be for rent then the lnclusionary Residential Units provided either on-site or off-site must also be for rent. Likewise, if,the market-rate Residential Ur~its in a New Housing Development will be for sale then the lnclusionary Residential Units provided either on-site or off-site must also be for sale. This restriction on tenure applies to lnclusionary Residential Units provided by a Project Applicant but does not apply to lnclusionary Residential Units provided by a Coastal Zone Affordable Housing Trust Fund provider under contract to LAHD. (b) Availability for Occupancy. Affordable Replacement Units must be available for occupancy within three years of the date that work commenced on the Change of Use, Condominium Conversion or Demolition Project. lnclusionary Residential Units must be available for occupancy as follows: (1) if provided on-site by the Project Applicant, at the same time as the market-rate Residential Units are available for occupancy; (2) if provided off-site by the Project Applicant, within three years of the date LAHD approves the Affordable Housing Provision Plan; or (3) if provided by a Coastal Zone Affordable Housing Trust Fund provider, within three years of the date a contract is executed between LAHD and the provider.

21 CPC CA DISCUSSION DRAFT B-10 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM (c) Affordable Housing lncentives Guidelines. Affordable Replacement UI- its and lnclusionary Residential Units must be provided in accordance with the Affordable Housing Incentives Guidelines, as applicable. (d) Affordable Housing Provision Plan. Project Applicants that will directly provide required Affordable Replacement Units or lnclusionary Residential Units must prepare an Affordable Housing Provision Plan for LAHD's review and approval. (e) Affordability Covenant and Agreement. LAHD shall develop and the Project Applicant shall record a covenant and agreement guaranteeing that required Affordable Replacement Units and lnclusionary Residential Units shall remain affordable for at least 55 years from the date the covenant and agreement is recorded. Tenants, rental applicants, purchasers and prospective purchasers of the Affordable Replacement Units or the lnclusionary Residential Units shall have the right to seek an injunction to enforce the affordability criteria, or to raise the affordability criteria as a defense or counterclaim to a claim for rent or possession directly against the owner, manager, and/or their successors in interest, of those units. (f) Registration and Occupancy Monitoring. All Affordable Replacement Units and lnclusionary Residential Units provided pursuant to this ordinance must be registered with LAHD. LAHD shall annually monitor each Affordable Replacement Unit and lnclusionary Residential Unit to ensure that it remains affordable to and occupied by a Very Low, Low, or Moderate Income Household. All registration and occupancy monitoring fees as set forth in Section G of this Code must be paid. F. Coastal Zone Affordable Housing Trust Fund. Pursuant to Chapter 128, Division 5 of the Los Angeles Administrative Code, LAHD shall administer the Coastal Zone Affordable Housing Trust Fund. 1. Collection and Deposit of Fees. LADBS shall collect and deposit in-lieu fees into the Coastal Zone Affordable Housing Trust Fund. 2. Payment of Fees. In-lieu fees must be paid in full prior to LADBS's issuance of any permits. Alternatively, Project Applicants may post a performance bond, acceptable to LAHD, that guarantees full payment of the in-lieu fees within one year of LADBS's issuance of any permits.

22 DISCUSSION DRAFT Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM 3. Other Affordable Housing Fees. If in-lieu fees, Rental Housing Production Fees, or any other similar affordable housing fees all apply to a Project, then the greatest of these fees shall apply. Any fees collected shall first be deposited into the Coastal Zone Affordable Housing Trust Fund. Then, to the extent that there are fees above and beyond those required for deposit into the Coastal Zone Affordable Housing Trust Fund, those additional fees shall be deposited into the Rental Housing Production Fund or similar applicable affordable housing trust fund or reserve account. 4. Use of Fees. In-lieu fees may only be used to finance the development of Affordable Replacement Units or lnclusionary Residential Units, or to subsidize homeowner association monthly maintenance assessments or special assessments for income qualified owners of the Affordable Replacement Units or lnclusionary Residential Units, as deterrr~ined by LAHD. These fees may not be used to cover the City's costs related to administering the Coastal Zone Affordable Housing Trust Fund or this ordinance. 5. Annual Adjustment. Every year LAHD shall adjust the in-lieu fees set forth in this ordinance to account for the amuai change in construction and land costs in each Coastal Zone subarea durinq the precedinq calendar year. -The adiusted fees shall take effect on Julv 1 of each year and remain in effect throuqh June 30 of the followins Vear. The City Council shall adopt the adjusted in-lieu fees by resolution, which shall automatically supersede the fees previously adopted bv the City Council. 6. Location. In-lieu fees must be spent in the same Coastal Zone subarea where the fees were collected. If that is lnfeasible then the fees must be spent in the Extended Coastal Zone subarea adjacent to the Coastal Zone subarea where the fees were collected. If that is lnfeasible then fees collected in the Pacific Palisades Coastal Zone subarea must be spent in either the Venice-Playa Del Rey Coastal Zone or Extended Coastal Zone subareas; fees collected in the Venice-Playa Del Rey Coastal Zone subarea must be spent in either the Pacific Palisades Coastal Zone or Extended Coastal Zone subareas; and fees collected in the Harbor-San Pedro Coastal Zone subarea must be spent in either the Venice-Playa Del Rey Coastal Zone or Extended Coastal Zone subareas. If that is lnfeasible then the fees may be spent anywhere in the Coastal Zone or Extended Coastal Zone but nowhere else. 7. Affordability Level. Pursuant to Section E 3 (b) of this Code, an Affordable Replacement Unit subsidized with in-lieu fees must be offered at the same level of affordability as the Affordable Existing Residential Unit.that was removed or converted. lnclusionary Residential Units subsidized with in-lieu fees must be affordable to Very Low Income Households. If that is lnfeasible then the fees must be spent on

23 CPC CA DISCUSSION DRAFT B-12 Changes Shown in Strike-out and Underline are Housing and Planning Deparfment Staff Recommendations to PLUM lnclusionary Residential Units affordable to Low lncome Households. If that is Infeasible then the fees must be spent on lnclusionary Residential Units affordable to Moderate Income Households. 8. Approved Provision Methods. In-lieu fees may be spent on providing Affordable Replacement Units or lnclusionary Residential Units through either new construction from the ground up or the adaptive reuse of existing non-residential buildings. If these methods are Infeasible then in-lieu fees may be spent on providing Affordable Replacement Units or lnclusionary Residential Units through either purchase and conversion of existing market-rate Residential Units, including Residential Units under construction, or purchase and rehabilitation of vacant residential buildings. 9. Tenure. The tenure of required Affordable Replacement Units subsidized with in-lieu fees must conform to the requirements set forth in Section E 5 (a) (1) of this Code. Pursuant to Section E 5 (a) (2) of this Code there is no restriction on the tenure of lnclusionary Residential Units subsidized with in-lieu fees. Such lnclusionary Residential Units may be either rented, leased or sold. G. Mello Act Project Permit Compliance. A Mello Act Project Permit Compliance is required if the Project is a Change of Use or Demolition Project prohibited by Section E 2 of this Code; a New Housing or a Condominium Conversion Project of two or more Residential Units; or Affordable Existing Residential Units will be removed or converted. I. Notice of Exemption. If a Project does not require a Mello Act Project Permit Compliance then the Project Applicant shall be issued a notice of exemption. 2. Application. To apply for a required Mello Act Project Permit Compliance,,the Project Applicant must file an application at a public office of the LADCP, on a form provided by the Department, and include all information as required by the Administrative Procedures. In addition, the Project Applicant must pay the applicable adrr~ir~istrative fee set forth in Section D of this Code. 3. Authority. The assigned decision-maker shall have the authority to approve, approve with conditions, or deny an application for a Mello Act Project Permit Compliance. 4. Finding. In order to grant a Mello Act Project Permit Compliance the assigned decision-maker must find that the Project, either as submitted or conditioned, complies with the regulations set forth in Section E of this Code.

24 DISCUSSION DRAFT B-13 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM 5. Limitation. The granting of a Mello Act Project Permit Compliance shall not imply compliance with any other provisions of this Code. 6. Expiration Period. A Mello Act Project Permit Compliance shall become null and void if not utilized within two years of its effective date. For purposes of this subdivision, "utilized" shall mean that work on the Project has begun and been carried on diligently without substantial suspension or abandonment. The assigned decisionmaker may extend the expiration period pursuant to an application filed by the Project Applicant at any public office of the LADCP, accompanied by payment of a fee equal to that specified in Section M of this Code. The application must be filed prior to the expiration date, and set forth the reasons why an extension of time is needed. If good and reasonable cause exists then the assigned decision-maker may extend the expiration period by up to one year. 7. Procedures. If a Project requires both a Mello Act Project Permit Compliance and one or more other discretionary land use approvals, then the procedures set forth in Section of this Code concerning multiple approvals shall govern. If a Project orlly requires a Mello Act Project Permit Compliance and no other discretionary land use approvals, then the assigned decision-maker is the Director of Planning and the procedures set forth below shall govern: (a) Optional Public Informational Meeting. The Director may hold a public informational meeting concerning an application for a Mello Act Project Permit Compliance if the Director decides that doing so would be in the public interest. In that event, notice of the meeting shall be provided following the procedures set forth in Section (b) of this Code. (b) Time Limit and Failure to Act-Transfer of Jurisdiction. The Director shall make a decision approving, approving with conditions or denying an application for a Mello Act Project Permit Compliance within 75 days after the date the application is deemed complete. This time limit may be extended as mutually agreed upon in writing by the Project Applicant and the Director. If the Director fails to act within this time limit then the transfer of jurisdiction procedures set forth in Section C 5 of this Code shall govern. H. Alternative Compliance Proposals. To apply for one or more deviations from the regulations set forth in Section E of this Code the Project Applicant must submit an alternative compliance proposal by filing an appeal pursuant to Section of this Code. The appellate body shall have the authority to approve,

25 CPC CA DISCUSSION DRAFT 6-14 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM approve with conditions, or deny an alternative compliance proposal. In reviewing alternative compliance proposals the appellate body must comply with the following: 1. Change of Use and Demolition Projects. -The appellate body may approve a Change of Use or Demolition Project otherwise prohibited by Section E 2 of this Code only if it first finds that a residential use is no longer Feasible at the Project site. If the appellate body approves the Change of Use or Demolition Project then any Affordable Existing Residential Units that are removed must be replaced pursuant to Section E 3 of this Code. 2. Affordable Replacement Units. The appellate body may approve the following deviations from the regulazions set forth in Section E 3 of this Code. (a) Off-Site Options. If the appellate body finds that it is lnfeasible for an Affordable Replacement Unit to be located on-site then it may allow the unit to be located off-site in the same Coastal Zone subarea where the Affordable Existing Residential Unit was removed or converted. If that is lnfeasible then the Affordable Replacement Unit must be located in the Extended Coastal Zone subarea adjacent to the Coastal Zone subarea where the Affordable Existing Residential Unit was removed or converted. If that is lnfeasible then the Affordable Replacement Unit for an Affordable Existing Residential Unit removed or converted in the Pacific Palisades Coastal Zone subarea must be located in either the Venice-Playa Del Rey Coastal Zone or Extended Coastal Zone subareas; the Affordable Replacement Unit for an Affordable Existing Residential Unit removed or converted in the Venice-Playa Del Rey Coastal Zone subarea must be located in either the Pacific Palisades Coastal Zone or Extended Coastal Zone subareas; and the Affordable Replacement Unit for an Affordable Existing Residential Unit removed or converted in the San Pedro-Harbor Coastal Zone subarea must be located in either the Venice-Playa Del Rey Coastal or Extended Coastal Zone subareas. If that is lnfeasible then the Affordable Replacement Unit may be located anywhere in the Coastal Zone or Extended Coastal Zone but nowhere else. (b) In-Lieu Fee. If,the appellate body finds that it is lnfeasible for the Project Applicant to directly provide an Affordable Replacement Unit either on-site or off-site in the Coastal Zone or Extended Coastal Zone then it may approve payment of the following in-lieu fees:

26 CPC CA DISCUSSION DRAFT 8-15 Changes Shown in Strike-out and Undelline are Housing and Planning Deparfment Staff Recommendations to PLUM Coastal Zone Subarea where Affordable Existing Residential Unit was Removed or Converted Pacific Palisades Fee Per Required Affordable Replacement Unit 2 $319,386. This fee shall take effect on the date this ordinance takes effect and remain in effect through June On Julv 1, 2008 the fee shall be $ and remain in effect throuah June 30,2009. Venice-Playa Del Rey $296,959. This fee shall take effect on the date this ordinance takes effect and remain in effect throuqh June On Julv the fee shall be $313,394 and remain in effect throuah June San Pedro-Harbor $212,128. This fee shall take effect on the date this ordinance takes effect and remain in effect throuah June On Julv 1,2008 the fee shall be $216,595 and remain in effect throuqh June 30, lnclusionary Residential Units. The appellate body may approve the following deviations from the regulations set forth in Section E 4 of this Code for New Housirlg or Condominium Conversion Projects of ten or more Residential Units. (a) On-Site Options. If the appellate body finds that it is Infeasible for a minimum of ten percent of all Residential Units affordable to Very Low Income Households to be located on-site then it may approve a reduction in the number of 2 The in-lieu fees shown in strike-out were approved by the City Planning Commission on March 8, The new in-lieu fees shown in underline were calculated by HR&A using the fee adjustment methdology shown in Section 8.1 of the Administrative Procedures approved by the City Planning Commission on March

27 CPC CA DISCUSSION DRAFT 6-16 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM required lnclusionary Residential Units. If that is lnfeasible then it may allow some or all of the lnclusionary Residential Units to be affordable to Low Income Households. If that is lnfeasible then it may allow some or all of the lnclusionary Residential Units to be affordable to Moderate Income Households. (b) Off-Site Options. If the appellate body finds that it is lnfeasible for required lnclusionary Residential Units to be located on the same site as the Project's market-rate Residential Units then the lnclusionary Residential Units may be located off-site but only in the same Coastal Zone subarea. If that is lnfeasible then the lnclusionary Residential Units must be located in the Extended Coastal Zone subarea adjacent to the Coastal Zone subarea where the market-rate Project is proposed. If that is lnfeasible then the lnclusionary Residential Units for a market-rate Project proposed in the Pacific Palisades Coastal Zone subarea must be located in either the Venice- Playa Del Rey Coastal Zone or Extended Coastal Zone subareas; the Inclusionary Residential Units for a market-rate Project proposed in the Venice-Playa Del Rey Coastal Zone must be located in either the Pacific Palisades Coastal Zone or Extended Coastal Zone subareas; and the lnclusionary Residential Units for a marketrate Project proposed in the San Pedro-Harbor Coastal Zone subarea must be located in either the Venice-Playa Del Rey Coastal or Extended Coastal Zone subareas. If that is lnfeasible then the lnclusionary Residential Units may be located anywhere in the Coastal Zone or Extended Coastal Zone but nowhere else. (c) In-Lieu Fee. If the appellate body finds that it is lnfeasible for the Project Applicant to directly provide lnclusionary Residential Units either on-site or offsite in the Coastal Zone or Extended Coastal Zone then it may approve payment of the following in-lieu fees:

28 CPC CA DISCUSSION DRAFT B-17 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM Coastal Zone Subarea Where Market- Rate New Housing or Condominium Conversion Project is Proposed Pacific Palisades Venice-Playa Del Rey San Pedro-Harbor Fee for Every Market-Rate Residential Unit in the Project 3 $31,939. This fee shall take effect on the date this ordinance takes effect and remain in effect throuqh June 30, On Julv 1, 2008 the fee shall be $31,702 and remain in effect throuqh June 30, $29,696. This fee shall take effect on the date this ordinance takes effect and remain in effect throuqh June 30, On Julv 1, 2008 the fee shall be $31,339 and remain in effect through June 30, $21,213. This fee shall take effect on the date this ordinance takes effect and remain in effect throuqh June 30, On Julv the fee shall be $21,660 and remain in effect throuah June 30, Reduced Unit Sizes. If the appellate body finds that it is Infeasible for Affordable Replacement Units or lnclusionary Residential Units to be comparable in size to the market-rate Residential Units in the same Project then it may permit reduced unit sizes but not below the following: 500 square feet for units with one bedroom; 800 square feet for units with two bedrooms; 1,000 square feet for units with three bedrooms; and 1,200 square feet for units with four or more bedrooms. 5. Approved Provision Methods. Affordable Replacement Units or lnclusionary Residential Units that the appellate body approves for off-site provision pursuant to this The in-lieu fees shown in strike-out were approved by the City Planning Commission on March 8, The new in-lieu fees shown in underline were calculated by HR&A using the fee adjustment methdology shown in Section 8.1 of the Administrative Procedures approved by the City Planning Commission on March 8, 2007.

29 CPC CA DISCUSSION DRAFT B-18 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM subsection may or~ly be provided through either new construction from the ground up or the adaptive reuse of existing non-residential buildings. However, if the appellate body finds that it is Infeasible for a Project Applicant to provide required Affordable Replacement Units or lnclusionary Residential Units through these methods then it may approve the purchase and rehabilitation of vacant residential buildings. I. Appeals. The Project Applicant or any other person aggrieved by,the decisionmaker's decision may appeal the Mello Act Project Permit Compliance to the designated appellate body. The appellate body may, by resolution, reverse or modify, in whole or in part, the Mello Act Project Permit Compliance, so long as it finds that its decision is consistent with the Mello Act and the Settlement Agreement. The appellate body's decision shall be final and effective as provided in Charter Section Decision. The appellate body shall make its decision, based on the record, as to whether the decision-maker erred or abused its discretion. Appellants shall have the burden of proof, and shall present substantial evidence and specific facts to support their appeal. Appellants must set forth specifically the points at issue and the reasons for the appeal. If a violation of federal or state law or of the federal or state constitutions is claimed, then the appeal shall set forth the basis upon which the appellant makes this claim. 2. Infeasibility. Project Applicants may submit appeals based on a claim that compliance with the regulations set forth in Section E of this Code would render their Projects Infeasible. If the basis for the claim is economic Infeasibility then the initial decision-maker or appellate body may require the appellant to p q#eks ~n * A r,++ hire a qualified and independent consultant to prepare a report evaluating the merits of this claim. The Proiect Applicant mav onlv hire a consultant selected bv the Citv and placed on an a~proved list of Mello Act Ordinance consultants M I A 9 I-1 * The consultant's report shall be submitted to the initial decision-maker or appellate body within 60 days of the initial decision-maker's or appellate's body request, or within an extended period as mutually qgreed upon in writing by LADCP. the Proiect Applicant and P The Citv shall review each report and reserves the riqht to

30 CPC CA DISCUSSION DRAFT B-19 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM require such revisions as are necessarv to ensure that the report is obiective, accurate and unbiased. The Proiect A~plicant is fullv responsible for compensatinq - the consultant for all costs related to preparation of the report. 3. Limitation. Notwithstanding Section of this Code, the appellate body may only grant appeals based on a claim that compliance with the regulations set forth in Section E 3 of this Code concerning Affordable Replacement Units would render the Project Infeasible when: (a) only one residential structure is proposed for removal or conversion and it contains only one or two Residential Units; or (b) two or more residential structures are proposed for removal or conversion and they contain no more 'than ten Residential Units; or (c) the non-residential use that will replace one or more residential structures proposed for removal or conversion is a Coastal Dependent Use or a Coastal Related Use that is consistent with the provisions of the land use plan portion of the applicable Local Coastal Program that has been certified as provided in Section of the Public Resources Code. 4. Procedures. If a Project requires both a Mello Act Project Permit Compliance and one or more other discretionary land use approvals, then the procedures set forth in Section of this Code concerning multiple approvals shall govern. If a Project only requires a Mello Act Project Permit Compliance and no other discretionary land use approvals, then the appellate body is the Area Planning Commission and the procedures set forth below shall govern: (a) Filing of an Appeal. An appeal must be filed within 15 days of the date of mailing of the Director of Planning's Mello Act Project Permit Compliance on forms provided by LADCP. The Mello Act Project Permit Compliance becomes final and effective upon the close of the 15-day appeal period if not appealed, or as provided below if appealed. The Commission shall not consider any appeal not filed within the 15-day appeal period. The filing of an appeal stays proceedings in the matter until the Commission has made a decision. Once an appeal is filed, the Director shall transmit the appeal and the file to the Commission, together with any reports that may have been prepared responding to the allegations made in the appeal.

31 CPC CA DISCUSSION DRAFT B-20 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM (b) Public Hearing. Before acting on any appeal, the Commission shall set the matter for public hearing, at which evidence shall be taken. The Commission may conduct the hearing itself, or may designate a hearing officer to conduct the hearing. The Commission shall give notice in all of the following manners: (1) By at least one publication in a newspaper of general circulation in the City of Los Angeles, designated for that purpose by the City Clerk, no less than 24 days prior to the date of the hearing; and (2) By mailing a written notice no less than 24 days prior to the date of the hearing to the parties specified in Section J of this Code. (c) Time for Appellate Decision. The Commission shall act within 75 days after the expiration of the appeal period, or within any additional period that the Project Applicant and the Commission both agree to in writing. The Commission's failure to adopt a resolution within this time period shall be deemed a denial of the appeal. J. Notice. A copy of the notice of exemption, Mello Act Project Permit Compliance, notice of the optional public informational meeting, notice of appellate body public hearing, and appeal decision shall be mailed to: the Project Applicant; to the owner of the subject property, if other than the Project Applicant; to all occupants of buildings in a Chavge of Use, Condominium Conversion or Demolition Project; to the owners of all properties abutting, across the street or alley from, or having a common corner with the subject property; to all persons who have filed written requests for notice with LADCP; the applicable Council office; LADBS; LAHD; the Department of Neighborhood Empowerment; and to all persons as required by the Administrative Procedures. K. Annual Report. Every year after the effective date of this ordinance LAHD shall compile, with the assistance of LADBS and LADCP, a report that covers the period from July 1 through June 30 of the prior year. L. Severability. If any provisions of this ordinance are found to be unconstitutional or otherwise invalid by any court of competent jurisdiction, that invalidity shall not affect the remaining provisions of this ordinance, which can be implemented without the invalid provision, and to this end the provisions of this ordinance are declared to be severable.

32 CPC CA DISCUSSION DRAFT B-21 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

33 CPC CA DISCUSSION DRAFT B-22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

34 CPC CA DISCUSSION DRAFT B-23 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM Sec. 2,3; A new Section is hereby added to Article 9 of Chapter 1 of the Los Angeles Municipal Code to read: MELLO ACT ORDINANCE ADMINISTRATIVE FEES. In addition to all other fees payable to the City of Los Angeles, the following administrative fees must be paid in connection with Section of this Code, otherwise known as the "Mello Act Ordinance." A. A fee of $ shall be charged and collected by the Los Angeles Housing Department (LAHD) when the affordability status of an existing Residential Unit is determined, and $ when redetermined, pursuant to Section E 1 of,this Code. B. If an in-lieu fee pursuant to Section E of this Code is paid, then a surcharge equal to five percent of the total amount of the in-lieu fee shall be charged and collected by LADBS on behalf of LAHD. C. A fee of $ shall be charged and collected by LAHD when an Affordable Housing Provision Plan prepared by a Project Applicant is reviewed, pursuant to Section E 5 (e) of this Code. D. Pursuant to Section G of this Code, the Los Angeles Department of City Planning (LADCP) shall charge and collect: I. A fee of $ when applications for a Mello Act Project Permit Compliance and a discretionary land use approval are concurrently filed; or 2. A fee of $ when only an application for a Mello Act Project Permit Compliance is filed. E. If a Mello Act Project Permit Compliance is appealed pursuant to Section of this Code, then LADCP shall charge and collect: 1. The appeal fees connected to the discretionary land use approval if it was filed concurrently with an application for a Mello Act Project Permit Compliance; or

35 CPC CA DISCUSSION DRAFT B-24 Changes Shown in Strike-out and Underline are Housing and Planning Deparfment Staff Recommendations to PLUM 2. The appeal fees set forth in Section B of this Code if only an application for a Mello Act Project Permit Compliance was filed. G A one-time registration fee of $ shall be charged and collected by LAHD each time a certificate of occupancy is issued for an Affordable Replacement Unit or an lnclusionary Residential Unit. Thereafter, an annual fee of $3i43-W $75.00 shall be charged and collected by LAHD each time the occupancy of an Affordable Replacement Unit or an lnclusionary Residential Urrit is monitored pursuant to Section E 5 (f) of this Code. Sec.,4 4 The City Clerk shall certify...

36 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM MELLO ACT ORDINANCE ADMINIS'TRATIVE PROCEDLIRES Applicable to the Coastal Zone in the City of Los Angeles Adopted by Resolution of the Los Angeles City Council on Council File No.

37 TABLE OF CONTENTS 1.O INTRODUCTION AND SUMMARY INITIAL SCREENING AFFORDABLE EXlSTllVG RESIDENTIAL UNITS CHANGE OF USE AND DEMOLITION PROJECTS AFFORDABLE REPLACEMENT UNITS INCLUSIONARY RESIDENTIAL UNITS 11 REGULATIONS APPLICABLE TO BOTH AFFORDABLE 12 REPLACEMENT UNlTS AND INCLUSIONARY RESIDENTIAL UNlTS 8.0 COASTAL ZONE AFFORDABLE HOUSING TRUST FUND MELLO ACT PROJECT PERMIT COMPI-IANCE ALTERNATIVE COMPLIANCE PROPOSALS APPEALS NOTICE ANNUAL REPORT 18 ATTACHMENTS 1. MATRIX OF INTER-DEPARTMENTAL RESPONSIBILITIES 2. MAP OF THE COASTAL ZONE AND EXTENDED COASTAL ZONE IN THE CITY OF LOS ANGELES. Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 2 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

38 1.0 INTRODUCTION AND SUMMARY These Administrative Procedures augment and give further detail to Section of the Los Angeles Municipal Code (LAMC), which establishes regulations known as the "Mello Act Ordinance" pursuant to California Government Code Section (k). The purpose of the Mello Act Ordinance is to protect and increase the supply of housing affordable to Very Low, Low, or Moderate Income Households in the Coastal Zone. The ordinance accomplishes this purpose by requiring that all Affordable Existing Residential Units that are removed or converted are replaced one-for-one with Affordable Replacement Units. In addition, the ordinance requires that a minimum of ten percent of all Residential Units in New Housirlg and Condominium Conversion Projects of ten or more Residential Units be affordable to Very Low Income Households, on-site. Such Projects of two to nine Residential Ur~its must pay an in-lieu fee. 1.I ADMINISTRATION AND ENFORCEMENT The following three City departments shall have shared responsibility for administering and enforcing the Mello Act Ordinance: 0 Los Angeles Department of Building and Safety (LADBS); 0 Los Angeles Department of City Planning (LADCP); and D Los Angeles Housing Department (LAHD). A matrix of inter-departmental responsibilities is attached as Attachment AREA The Coastal Zone in the City of Los Angeles consists of three distinct geographic subregions: D Q Cl Pacific Palisades; Venice-Playa Del Rey; and San Pedro-Harbor. The Extended Coastal Zone is defined as that area within the City of Los Angeles within three miles of the inland boundary of the Coastal Zone. The Coastal Zone and the Extended Coastal Zone are depicted on,the map attached as Attachment 2. Mello Act Ordinance DRAFT ADMlNlSTRATlVE PROCEDURES Page 3 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

39 1.3 PROJECTS SUBJECT TO THE MELLO ACT ORDINANCE There are four types of Projects subject to the Mello Act Ordinance: Q Change of Use-A Project that removes one or more existing Residential Ur~its through a change to a non-residential use; 0 Condominium Conversion-A Project that converts one or more existing Residential Units to a condominium, cooperative, or similar form of ownership. Q Q Demolition-A Project that removes one or more existing Residential Units through the complete or partial demolition of a building, or by combining two or more units to make a larger unit; and New Housing-A Project that creates one or more new Residential Units for rent or for sale, either through new construction or the adaptive reuse of existing, non-residential structures. 1.4 DEFINITIONS Capitalized terms used in these Administrative Procedures shall have the same meaning as capitalized terms used in the Mello Act Ordinance. 2.0 INITIAL SCREENING The following Administrative Procedures augment the Mello Act Ordinance's requirement that every Project in the Coastal Zone receive the proper review. [LAMC Sec C I] 2.1 APPLICATIONS FOR A BUILDING PERMIT LADBS shall screen all building permit applications in the Coastal Zone to identify Projects subject to the Mello Act Ordinance. 0 If a Project does not require a Mello Act Project Permit Compliance, LADBS shall issue a notice of exemption; and Q If a Project requires a Mello Act Project Permit Compliance, LADBS shall refer the Project Applicant to LADCP for follow-up processing. Mello Act Ordinance DRAFT ADMlNlSTRA TIVE PROCEDURES Page 4 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

40 2.2 APPLICATIONS FOR A DISCRETIONARY LAND USE APPROVAL LADCP shall screen all discretionary land use approval applications in the Coastal Zone to identify Projects subject to the Mello Act Ordinance. Discretionary land use approvals include any action that requires the approval of a decision-maker (e.g., Director of Planning, Advisory Agency, Zoning Adrr~inistrator, City Planning Commission or Area Planning Commission). If a Project does not require a Mello Act Project Perrr~it Compliance, LADCP shall issue a notice of exemption; 0 If a Project requires a Mello Act Project Permit Compliance, LADCP shall require the Project Applicant to file an application for a Project Permit Compliance; If a Project requires both a Mello Act Project Permit Compliance and one or more other discretionary land use approvals, LADCP shall charge and collect the fee set forth in LAMC Section D 1 ; and 0 If a Project only requires a Mello Act Project Permit Compliance and no discretionary land use approvals, LADCP shall charge and collect the fee set forth in LAMC Section D PROJECT INFORMATION LADCP shall not deem an application for a Mello Act Project Permit Conipliance complete until the Project Applicant has provided the following information: A complete description of the proposed Project, including detailed plans and photographs; 0 Number of existing Residential Units that will be removed or converted; tl The number of bedrooms for each Residential Unit that will be removed or converted; 0 Number of proposed new Residential Units, if applicable, broken down by the number of units that will be for-sale and the number that will be for-rent; and O.ther information deemed necessary by LADCP to adequately review the application for a Mello Act Project Permit Compliance. Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 5 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

41 2.4 CASE FILES LADCP shall assign an "MEL" suffix to the case file for each Project that requires a Mello Act Project Permit Compliance. If a Project requires a Mello Act Project Perrr~it Compliance and one or more other discretionary land use approvals, LADCP shall insert the Project information in the case file for the discretionary land use approval or approvals. The Project Permit Compliance will be processed as part of the discretionary land use approval or approvals; and If a Project only requires a Mello Act Project Permit Compliance and no other discretionary land use approvals, LADCP shall set up a separate case file. The Project Permit Compliance will be processed as a stand-alone action. 3.0 AFFORDABLE EXISTING RESIDENTIAL UNITS The following Administrative Procedures augment the Mello Act Ordinance's requirement that the affordability status of existing Residential Units that will be removed or converted be determined. [LAMC Sec E EXEMPTIONS If an existing Residential Unit does not qualify for one of the following three exemptions set forth in Sections 3.1.I, 3.1.2, and below then LAHD shall complete Sections 3.2 through 3.6 below. The Proiect Applicant must sup~lv proof to LADCP that it qualifies for an exemption Vacant Unit Exemption No Residential Unit shall be considered to be an Affordable Existing Residential Unit if it was completely and continuously unoccupied for more than one year immediately prior to the filing of an application for a Change of Use, Condominium Conversion or Demolition Project Owner-Occupied Exemption No one-family dwelling shall be considered to be an Affordable Existing Residential Unit if it is occupied by its owner or owners at the time the application for a Change of Use, Condominium Conversion or Demolition Project is filed, except for a mobile home, as defined in California Health and Safety Code Section 18008, or a mobile home lot in a mobile home park, as defined in California Health and Safety Code Section Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 6 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

42 3.1.3 Public Nuisance Exemption No Residential Unit shall be considered to be an Affordable Existing Residential Unit if it is in a building a governmental agency has declared a public nuisance pursuant to Division 13 (commencing with Section 17000) of the California Health and Safety Code; Chapter IX, Article 1, Division 89 of this Code; or any subsequent provision of this Code adopted pursuant to Division 13 of the California Health and Safety Code. To qualify for the public nuisance exemption the Project Applicant must submit a certified title report indicating that a public nuisance declaration has been recorded against the residential structure and has not been terminated. In reviewing certified title reports, LADBS must take Government Code Section (b) (4) into account: "For purposes of this subdivision, no building, which conforms to the standards which were applicable at the time the building was constructed and which does not constitute a substandard building, as provided in Section of the Health and Safety Code, shall be deemed to be a public nuisance solely because the building does not conform to one or more of the current provisions of the Uniform Building Code as adopted within the jurisdiction for new construction. " 3.2 SEND NOTICE TO HOUSEHOLDS LAHD shall send a notice to all households currently residing in the building proposed for a Change of Use, Condominium Conversion or Demolition Project. The notice must contain the following information: 0 A description of the proposed Change of Use, Condominium Conversion or Demolition Project; 0 A description of the Mello Act Ordinance and the City's Mello Act compliance review process; U A description of the rights.that households determined to have a Very Low, Low, or Moderate Income have, including a right of first refusal to occupy an Affordable Replacement Unit pursuant to Section 5.3 below; 0 A referral to the following two organizations: Western Center on Law and Poverty, Inc Wilshire Boulevard, S~~ite 208 Los Angeles, CA Attn: Deanna Kitamura or alternative specified person Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 7 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

43 Legal Aid Foundation of Los Angeles 11 0 Pine Avenue, Suite 420 Long Beach, CA Attn: Susanne Browne or alternative specified person; and CI A LAHD telephone number to call for additional information. 3.3 DETERMINE HOUSEHOLD INCOME BASED ON MONTHLY HOUSING COST OR ACTUAL INCOME DATA If current monthly housing cost data indicates that the existing Residential Unit is affordable to a Very Low, Low, or Moderate lncome Household, then LAHD shall presume that the Residential Unit is occupied by a Very Low, Low, or Moderate lncome Household. If current monthly housing cost data does not indicate that the existing Residential Unit is affordable to a Very Low, Low, or Moderate lncome Household, then LAHD shall collect prior monthly housing cost data for at least the previous three years. If the average monthly housing cost over that period indicates that the existing Residential Unit is affordable to a Very Low, Low, or Moderate lncome Household, then LAHD shall presume that the Residential Unit is occupied by a Very Low, Low, or Moderate lncome Household. If three years of monthly housing cost data is not available or readily obtainable, then LAHD shall determine household income through the direct collection and verification of actual income data. 3.4 DETERMINE ACCURACY OF HOUSEHOLD INCOME BASED ON MONTHLY HOUSING COST DATA LAHD shall provide households and Project Applicants with the opportunity to verify the accuracy of household income determinations based on monthly housing cost. LAHD shall provide households presumed not to have a Very Low, Low, or Moderate lncome with the opportunity to submit data verifying actual income. Likewise, LAHD shall provide Project Applicants with a roster of households presumed to have a Very Low, Low, or Moderate Income, who may then submit data verifying actual income. LAHD is responsible for verifying the accuracy of any submitted income data. LAHD shall use actual income data to correct any incorrect household income determinations based on monthly housing cost. Mello Act Ordinance DRAFT ADMlNlSTRA TlVE PROCEDURES Page 8 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

44 3.5 IDENTIFY AND DETERMINE IF ANY EVICTIONS WERE FOR THE PURPOSE OF EVADING THE MELLO ACT LAHD shall conduct an investigation concerning evictions or notices to terminate a tenancy as set forth below: A Residential Unit shall be deemed occupied by a Very Low, Low or Moderate lncome Household if the household was evicted from that Residential Unit within one year prior to the filing of an application for a Change of Use, Condominium Conversion or Demolition Project that will remove or convert the Residential Unit and if the eviction was for the purpose of avoiding the requirements of the Mello Act Ordinance. If a substantial number of Very Low, Low or Moderate lncome Households received notices to terminate tenancy from a single residential development within one year prior to the filing of an application for a Change of Use, Condominium Conversion or Demolition Project then the evictions or notices shall be presumed to have been for the purpose of avoiding the requirements of the Mello Act Ordinance and the Project Applicant shall bear the burden of proving that the evictions or notices were not for the purpose of avoiding the requirements of the Mello Act Ordinance. LAHD shall identify those Residential Units presl-~med to have a Very Low, Low or Moderate Income based on its investigation. 3.6 PREPARE A WRITTEN REPORT LAHD shall prepare and submit to LADCP a written report, as follows: ADDRESS OF STRUCTURE COASTAL ZONE SUBAREA NUMBER OF EXISTING RESIDENTIAL UNITS NUMBER OF AFFORDABLE EXISTING RESIDENTIAL UNITS Structure 1 Structure 2 Structure 3 Structure 4 Structure 5 Mello Act Ordinance DRAFT ADMlNlSTRA TlVE PROCEDURES Page 9 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

45 LAHD shall provide the following information for each Affordable Existing Residential Unit: D D D Address; Names of household members; and Number of bedrooms. 4.0 CHANGE OF USE AND DEMOLITION PROJECTS There are no Adrr~ir~istrative Procedures that augment the Mello Act Ordinance's regulations prohibiting Change of Use or Demolition Projects that remove one or more existing Residential Units (including market-rate Residential Units) for purposes of a new non-residential use unless the new non-residential use is a Coastal Dependent Use. [LAMC Sec E AFFORDABLE REPLACEMENT UNITS The following Administrative Procedures augment the Mello Act Ordinance's requirement that all Affordable Existing Residential Units that are removed or converted be replaced one-for-one with Affordable Replacement Units. [LAMC Sec E DATE WORK COMMENCED Required Affordable Replacement Units must be ready for occupancy within three years of the date that "work commenced" on the Change of Use, Condorr~inium Conversion or Demolition Project. The date that "work commenced" shall be established as follows: D Change of Use or Demolition Project-the date that LADBS issued the building permit. LADBS shall send LAHD a copy of the building permit; Condominium Conversion Project-the date that LADBS issued the building permit, if the Conversion requires a building permit. LADBS shall send LAHD a copy of the building permit; and Condominium Conversion Project-the date Council approved the final map for recording, if the Conversion does not require a building permit. LADCP shall send LAHD a copy of Council's action. 5.2 AFFORDABILITY LEVEL An Affordable Replacement Unit must be offered at the same level of affordability as the removed or converted Affordable Existing Residential Unit it will replace. Accordingly, if LAHD determined that the Affordable Existing Residential Unit was: Mello Act Ordinance DRAFT ADMINISTRA TIVE PROCEDURES Page 10 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

46 O Cl Cl occupied by a Very Low lncome Household, then the Affordable Replacement Unit must be affordable to a Very Low lncome Household; or was occupied by a Low lncome Household, then the Affordable Replacement Unit must be affordable to a Low or Very Low lncome Household; or was occupied by a Moderate lncome Household, then the Affordable Replacement Unit must be affordable to a Moderate, Low, or Very Low lncome Household. 5.3 RIGHT OF FIRST REFUSAL The Project Applicant or Coastal Zone Affordable Housing Trust Fund provider must notify LAHD when an Affordable Replacement Unit is available for occupancy. LAHD shall then require the Project Applicant or Coastal Zone Affordable Housing Trust Fund provider to provide notice to the last household to occupy the Affordable Existing Residential Unit that was removed or converted. The notice shall explain that if the household has a qualifying income then a right of first refusal on an Affordable Replacement Unit shall be granted. A COPY of the notice shall be ~rovided to LAHD. 6.0 INCLUSIONARY RESIDENTIAL UNITS The following Administrative Procedures augment the Mello Act Ordinance's requirements concerning lnclusionary Residential Units for New Housing and Condominium Conversion Projects of two or more Residential Units. [LAMC Sec E 41 A minimum of ten percent of all Residential Units on the site of New Housing and Condominium Conversion Projects of ten or more Residential Units must be affordable to Very Low lncome Households. Fractions of one-half (%) and more shall be rounded upwards to result in one more required lnclusionary Residential Unit. Fractions of less than one-half (%) must be paid as an in-lieu fee. The in-lieu fee shall be calculated as a percentage of the in-lieu fees shown in the following chart: Mello Act Ordinance DRAFT A DMlNlSTRA TI VE PROCEDURES Page 11 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

47 Coastal Zone Subarea where New Housing or Condominium Conversion Project is Proposed Pacific Palisades Venice-Playa Del Rey San Pedro-Harbor In-Lieu Fee (In Effect from Julv 1,2008 throush June 30,2009) $- $ $%6$59 $31 3,394 $5%2+33 $21 6,595 For example, a New Housing Project in the Venice-Playa Del Rey Coastal Zone Subarea consisting of 22 rental units would be required to make two Residential Units on-site affordable to Very Low Income Households (22 x.i 0 = 2.2 units). The fractional 0.2 unit would be translated into an in-lieu fee by multiplying it against $- $313,394, the fee required to provide one lnclusionary Residential Unit in the Venice- Playa Del Rey Coastal Zone subarea ($- $ x.2 = $54;342 $62,679). In this example the Project would therefore have to: provide two on-site lnclusionary Residential Units affordable to Very Low Income Households; and pay an in-lieu fee of $- $ REGULATIONS APPLICABLE TO BOTH AFFORDABLE REPLACEMENT UNITS AND INCLUSIONARY RESIDENTIAL UNITS The following Administrative Procedures augment the Mello Act Ordinance's additional regulations applicable to the provision of both Affordable Replacement Units and lnclusionary Residential Units. [LAMC Sec E 5 ] 7.1 AFFORDABLE HOUSING PROVISION PLAN Project Applicants that will directly provide required Affordable Replacement Units or lnclusionary Residential Units must prepare an Affordable Housing Provisior~ Plan for LAHD's review and approval. The Affordable Housing Provision Plan must document how required Affordable Replacement Units or lnclusionary Residential Units will be provided in accordance with the Mello Act Ordinance, these Administrative Procedures, and the Affordable Housing Incentives Guidelines. Each Plan must include the following information: Mello Act Ordinance DRAFT ADMlNlSTRA TIVE PROCEDURES Page 12 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

48 CI CI CI Address where Affordable Replacement Units or lnclusionary Residential Units will be provided. LAHD shall not approve an Affordable Housinq Provision Plan for off-site provision unless a s~ecific address is provided. Methods by which Affordable Replacement Units or lnclusionary Residential Units will be provided; Description of tlie Affordable Replacement Units or lnclusionary Residential Units that will be provided, including the number of bedrooms, square footage, and the number of parking spaces that will be provided, including guest parking; 0 Affordable housing incentives that will be used, including density bonuses or other incentives provided by LAMC Section A 25; CI Financing plan, including tax credits and public subsidies; Project completion timetable; and 0 Other information deemed necessary by LAHD. LAHD may require that a performance bond be posted or that other financial assurances be made to assure compliance with the final, approved Affordable Housing Provision Plan. LAHD may also require that periodic progress reports be filed that describe the progress being made in implementing the approved Affordable Housing Provision Plan. 7.2 REGISTRATION AND OCCUPANCY MONITORING All Affordable Replacement Units and lnclusionary Residential Units provided pursuant to the Mello Act Ordinance must be registered with LAHD. LAHD shall annually monitor each Affordable Replacement Unit and lnclusionary Residential Unit to ensure that it remains affordable to and occupied by a Very Low, Low, or Moderate Income Household. All registration and occupancy monitoring fees as set forth in LAMC Section G must be paid. LAHD's monitoring procedures may include a requirement that owners of Affordable Replacement Units or lnclusionary Residential Units submit tenant income information that has been verified by third party sources. Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 13 of 22 Changes Shown in Sfrike-ouf and Underline are Housing and Planning Departmenf Sfaff Recommendations fo PLUM

49 8.0 COASTAL ZONE AFFORDABLE HOUSING TRUST FUND The following Administrative Procedures augment the Mello Act Ordinance's requirement that LAHD administer the Coastal Zone Affordable Housing Trust Fund. [LA MC Sec F] 8.1 ANNUAL ADJUSTMENT OF IN-LIEU FEES LAHD shall annually adjust the in-lieu fees set forth in the Mello Act Ordinance to account for the weighted average annual change in construction and land costs in each Coastal Zone subarea durinq the preceding calendar vear, using the following procedures: Q Q Q The annual change in construction cost shall be measured using the average annual change in Engineering News Record's Building Cost index for Los Angeles County or a similar construction cost index applicable to multi-family housiqg construction in Los Angeles County; The annual change in land cost shall be measured using the annual change in median condominium sales prices within the ZIP codes that most closely correspond to each Coastal Zone subarea. (These data are published by the Los Angeles Times each January for the preceding calendar year, using Los Angeles County Assessor data compiled by Dataquick Information Systems. They are also available on a subscription basis from other vendors, such as First American Real Estate Solutions.); The relative balance between land cost inflation, as measured by the change in the median condominium sales price, and construction cost inflation, as measured by the change in the construction cost index, shall be determined as follows. The land cost share of the inflation index shall be based on the average assessed value of land divided by total assessed value, and the construction cost share of the inflation index shall be based on the average assessed value of improvements divided by total assessed value, for representative condominium units constructed in each Coastal Zone subarea during the previous five years. For example, if the average ratio of assessed value for land to total assessed value for the representative condominiums was 65 percent and the average ratio of assessed value for improvements to total assessed value was 35 percent, the land cost share of the in-lieu fee inflation factor would be 65 percent, and,the construction cost share of the in-lieu fee inflation factor would be 35 percent; and 0 The total inflation factor applied to the prior year's in-lieu fees shall be the sum of the annual construction cost index change value multiplied by the construction cost share of the inflation factor, plus the annual charrge in median condominium Mello Act Ordinance DRAFT ADMlNlSTRA TlVE PROCEDURES Page 74 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

50 prices for each Coastal Zone subarea ZIP Code multiplied by the median condominium price change share of the inflation factor. 8.2 COUNCIL APPROVAL -The Council shall adopt the adjusted in-lieu fees by resolution, based on LAHD's report. 8.3 APPROVED PROVISION METHODS In-lieu fees may be spent on providing Affordable Replacement Units or lnclusionary Residential Units through either new construction from the ground up or the adaptive reuse of existing non-residential buildings. If these methods are Infeasible then the inlieu fees may be spent on providing Affordable Replacement Units or lnclusionary Residential Units through either of the following two additional approved provision methods: Purchase and Rehabilitation of Vacant Residential Buildings Purchase and rehabilitation of vacant residential buildings subject to the conditions set forth in Section 10.2 of these Administrative Procedures Purchase of Existing Market-Rate Residential Units Purchase of existing market-rate Residential Units, including units under construction, subject to the following conditions: C1 CI None of the units are occupied by a Very Low, Low or Moderate Income Household; and All applicable provisions of the Rent Stabilization Ordinance, as set forth in LAMC Sec , et seq., are complied with. 9.0 MELLO ACT PROJECT PERMIT COMPLIANCE The following Administrative Procedures augment the Mello Act Ordinance's requirements concerning the required Mello Act Project Permit Compliance. [LAMC Sec G] Cl Through its appropriate administrative office, the decision-maker or appellate body must notify LAHD when a Mello Act Project Perrrlit Compliance is final. A Mello Act Project Permit Compliance is "final" when the time lirr~it for filing an appeal has passed and no appeal was filed, or, if an appeal was filed, the final appellate body has issued its decision; Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 15 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

51 CL CL LAHD is responsible for enforcing the conditions set forth in the final Mello Act Project Permit Compliance; and LADBS may not issue any building permit or certificate of occupancy for a Project subject to the Mello Act Ordinance unless a valid notice of exemption has been issued or LAHD has determined that the Project Applicant has complied with all of the conditions set forth in the final Mello Act Project Permit Compliance. ALTERNATIVE COMPLIANCE PROPOSALS The following Administrative Procedures augment the Mello Act Ordinance's provisions concerning alternative compliance proposals. [LAMC Sec H] 10.1 CHANGE OF USE AND DEMOLITION PROJECTS The appellate body may approve a Change of Use or Demolition Project otherwise prohibited by LAMC Section E 2 only if it first finds that a residential use is no longer Feasible at the Project site. If the appellate body approves the Change of Use or Demolition Project then any Affordable Existing Residential Units that are removed must be replaced pursuant to LAMC Section E 3. The appellate body must use the following critiera in considering claims that a residential use is no longer Feasible at the Project site: The City's presumption is that residential uses are Feasible at the Project site; Q The Project Applicant has the burden of proof. Proximity to other existing, viable residential uses is strong evidence that a residential use is Feasible; A Project Applicant may not claim Infeasibility merely because the site is zoned commercial. Commercial zones in the City of Los Angeles generally permit residential uses. However, in some cases a "Q" or "Dl' limitation may be imposed on a particular property which prohibits residential uses; If the existing, underlying zoning or any other applicable regulation prohibits all residential uses, then the Project Applicant may cite those facts if challenging the City's presumption that a residential use is Feasible at the Project site. If a Project Applicant has non-conforming or other rights which permit a continued residential use, then the Project Applicant may not contend that.the existing zoning renders a residential use Infeasible; Mello Act Ordinance DRAFTADMINISTRATIVE PROCEDURES Page 76 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

52 A Project Applicant may not initiate and obtain approval for a zone change which prohibits residential uses and subsequently claim lnfeasibility based on that zone change; O O A Project Applicant may not claim lnfeasibility merely because the site is zoned industrial if a Zoning Administrator had previously approved joint living and work quarters for that site. A Zoning Administrator's grant runs with the land; A Project Applicant may not claim economic lnfeasibility unless it can clearly document an inability to rent or sell the current premises based on the site's unique characteristics or circumstances. Unique characteristics or circumstances include proximity to noxious and incompatible existing uses that are likely to remain, and that render a continued residential use Infeasible. If challenging the City's presumption, an Applicant may not cite mere proximity to corr~mercial or industrial uses; 0 A Project Applicant may claim lnfeasibility due to the site's unique geologic or other topographical features which render it unsafe for human habitation. Project Applicants must provide supporting documentation; and O A Project Applicant may not claim lnfeasibility because the current premises are dilapidated or are in a state of disrepair due to the Project Applicant's failure to make reasonable repairs or to adequately maintain the site. The City may require the Project Applicant to correct substandard conditions before it will further consider a Project Applicant's challenge of the City's presumption APPROVED PROVISION METHODS Affordable Replacement Units or lnclusionary Residential Units that the appellate body approves for off-site provision may only be provided through either new construction from the ground up or the adaptive reuse of existing non-residential buildings. However, if the appellate body finds that these methods are Infeasible for a Project Applicant 'then it may approve the purchase and rehabilitation of vacant residential buildings subject to.the following conditions: LAHD inspects and approves the building proposed for purchase and rehabilitation; Q The building was completely and continuously unoccupied for more than one one year immediately prior to LAHD's inspection; The building shall be rehabilitated to comply with all applicable building and fire and lifetsafety standards set forth in City Codes; Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 17 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

53 The rehabilitation will be substantial, as determined by LAHD; and LAHD verifies that the useful life of the building will be not less than 55 years after rehabilitation APPEALS There are no Administrative Procedures that augment the Mello Act Ordinance's provisions concerning appeals [LAMC Sec I] NOTICE The following Administrative Procedures augment the Mello Act Ordinance's notice requirements. [LAMC Sec J] For a period of two years after the effective date of the Mello Act Ordinance copies of the documents listed in LAMC Sec J and Section VIII, Q of the Settlement Agreement shall be mailed to the person or persons designated for this purpose by attorneys for the plaintiffs in the matter of Venice Town Council, et al., vs. City of Los Angeles, BC After the end of this two-year period copies of the documents referenced above shall only be niailed to this person or persons if the proper written request for such notice has been filed with the appropriate City office ANNUAL REPORT The following Administrative Procedures augment the Mello Act Ordinance's requirement 'that every year after the effective date of the Mello Act Ordinance LAHD shall compile, with the assistance of LADBS and LADCP, a report that covers the period from July 1 through June 30 of the prior year. [LAMC Sec K] No later than 60 working days after June 30 the required annual report must be submitted to the Mayor and the City Council and released to the public. It must contain,the information listed below: 13 As provided by LADBS, the number of new Residential Units for which the City issued building permits in the Coastal Zone; 3 As provided by LADCP, the number of lnclusionary Residential Units that the City required to be provided, either wlthin the Coastal Zone or the Extended Coastal Zone; Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 18 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

54 CI LI CI CI As provided by LADBS and LAHD, the number and location of new lnclusionary Residential Units for which cons,truction was completed, either within the Coastal Zone or the Extended Coastal Zone; As provided by LADCP, the number and location of Affordable Existing Residential Units approved for removal or conversion; As provided by LADCP, the number and location of Affordable Replacement Units that the City required to be provided, either within the Coastal Zone or.the Extended Coastal Zone; and As provided by LADBS and LAHD, the nurr~ber and location of Affordable Replacement Units for which construction was completed, either within the Coastal Zone or the Extended Coastal Zone. This information must be organized by Very Low, Low, and Moderate Income Household categories. Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 19 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

55 ATTACHMENT 1 MATRIX OF INTER-DEPARTMENTAL RESPONSIBILITIES TASK LADBS LADCP LAHD Initial Screening 1. Screen building permit applications to identify Projects subject to the Mello Act Ordinance. X 2. Screen discretionary land use approval applications to identify Projects subject to the Mello Act Ordinance. X 3. Issue notice of exemption to Projects that do not require a Mello Act Project Permit Compliance. X X 4. Take in applications for a Mello Act Project Permit Conipliance and collect all relevant Project information. X 5. Set up case files for Projects that only require a Mello Act Project Permit Compliance and no discretionary I land use approval. 6. Include Project information in case files that require both a Mello Act Project Permit Compliance and a discretionary land use approval. X X Affordable Existing Residential Units 7. ldentify existing Residential Ur~its that qualify for the vacant unit exemption. - X X 8. Identify existing Residential Units that qualify for the owner-occupied unit exemption for one-family dwellings. X 9. Identify existiug Residential Units that qualify for the public nuisance exemption. X - X 10. Determine the affordability status of Residential Units that do not qualify for an exemptio~i and notify LADCP of results. X Mello Act Ordinance DRAFT ADMINISTRATIVE PROCEDURES Page 20 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

56 TASK LADBS LADCP LAHD Mello Act Project Permit Compliance 11. Review applications. X 12. Approve, approve with conditions, or disapprove applications. X Appeals 13. Review and process appeals. X 14. Pursuant to the initial decision-maker's or appellate body's request, oversee the consultant's preparation of a report when the basis for the appeal is a claim that application of the regulations set forth in the Mello Act Ordinance would render the Project economically Infeasible. - X X Notice 15. Carry out all notice requirements as set forth in the Mello Act Ordinance and these Administrative Procedures. X Enforcement 16. Review and approve Affordable Housing Provision Plans submitted by Project Applicants. X 17. Develop Covenant and Agreements for recording by the Los Angeles County Recorder. X 18. Notify LAHD of date work commenced on Change of Use, Demolition, and Condominium Conversion Projects that require a building permit. X 19. Notify LAHD of date work commenced on Condominium Conversion Projects that do not require a building permit. X * Mello Act Ordinance DRAFT ADMINISTRA TIVE PROCEDURES Page 21 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

57 TASK LADBS LADCP LAHD 20. Annually monitor occupancy of Affordable Replacement Units and lnclusionary Residential Units to ensure they are occ~~pied by qualified Very Low, Low or Moderate Income Households. X Coastal Zone Affordable Housing Trust Fund 21. Collect and deposit in-lieu fees into the Coastal Zone Affordable Housing Trust Fund. X 22. Prepare and issue Notices of Funding Availability. X 23. Award funds and negotiate and execute contracts with affordable housing providers. X 24. Annually adjust in-lieu fees and submit to Council for approval. X 25. Carry out all other tasks required to manage the Coastal Zone Affordable Housing Trust Fund, as set forth in Chapter 128, Division 5 of the Los Angeles Administrative Code. X Annual Report 26. Compile and release required annual report with assistance of LADBS and LADCP. X Mello Act Ordinance DRAFT ADMINISTRA TlVE PROCEDURES Page 22 of 22 Changes Shown in Strike-out and Underline are Housing and Planning Department Staff Recommendations to PLUM

58 ATTACHMENT 2 MAP OF THE COASTAL ZONE AND EXTENDED COASTAL ZONE IN THE CITY OF LOS ANGELES

59 City of Los Angeles COASTAL Pacific Palisades Coastal Pacific Palisades Extended Coastal Venice - Playa Del Rey Coastal Venice - Playa Del Rey Extended Coastal San Pedro - Harbor Coastal San Pedro - Harbor Extended Coastal Zone The boundaries a1 the Coastal Zone are based a, data suppplied by the Calilornla Coastal Cornmisslon. January The Coastal Zone is deflned in the California Public Resources Code (P R C ). Dlvnscon 20 (commenang with Section 30000). pursuanl lo the Californla Coastal Ad of Venice Freeway3 - Major Saeets Coastal Zone Extended Coastal Zone Coastal Zone Boundary Boundary between the Pacific Palisades and - Playa Del Rey Extended Coastal Zone Subareas Boundary IS Sanla Mon~ca Blvd Transportation Network Copyrighl lcl Thomas Brolneis Maps loc Cl"0lL01 Angab. mannmg Oapa,,mn, GLI Goldblg DII~CO~ PISPDID~ by Sysbms and GS Dr8slon. ianuarr2007

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