AN ORDINANCE OF THE CITY OF SANTA CRUZ AMENDING TITLE 24 OF THE SANTA CRUZ MUNICIPAL CODE, THE ZONING ORDINANCE, BY AMENDING CHAPTER 24.16 PART 3, DENSITY BONUS PROVISIONS FOR RESIDENTIAL UNITS, SECTIONS 24.16.205, 21.16.255, 24.16.260, AND 24.16.270 BE IT ORDAINED By the City of Santa Cruz as follows: Section 1. Sections 24.16.205, 24.16.255, 24.16.260, and 24.16.270 of the Santa Cruz Municipal Code is hereby amended to read as follows: Chapter 24.16 AFFORDABLE HOUSING PROVISIONS Part 3: DENSITY BONUS PROVISIONS FOR RESIDENTIAL UNITS 24.16.205 DEFINITIONS. For purposes of this Part 3 of Chapter 24.16, the following definitions shall apply. Unless specifically defined below, words or phrases shall be interpreted as to give this Part 3 its most reasonable interpretation. 1. Affordable ownership costs means a sales price resulting in projected average monthly housing costs, during the first calendar year of a household s occupancy, including mortgage payments, property taxes, homeowners insurance, and homeowners association dues, if any, and a reasonable allowance for utilities, property maintenance, and repairs, which do not exceed the following: a. For moderate income households: one hundred ten percent of area median income adjusted for assumed household size based on unit size, multiplied by thirtyfive percent, and divided by twelve. b. For lower income households: seventy percent of area median income adjusted for assumed household size based on unit size, multiplied by thirty percent and divided by twelve. c. For very low income households: fifty percent of area median income adjusted for assumed household size based on unit size, multiplied by thirty percent and divided by twelve. The city may determine sales prices of affordable units by any reasonable method so long as average monthly housing payments of eligible households do not exceed those permitted by this definition. 1247\08\2420993.2 8/16/2018
2. Affordable rent means monthly housing expenses, including rent, utilities, and all fees for housing services, which does not exceed the following: a. For lower income households: sixty percent of area median income, adjusted for assumed household size based on unit size, multiplied by thirty percent and divided by twelve. b. For very low income households: fifty percent of area median income, adjusted for assumed household size based on unit size, multiplied by thirty percent and divided by twelve. c. For federally subsidized units under the Housing Choice Voucher/Section 8 Program or other similar federal programs, federal rental terms may be applied at the discretion of the Planning and Community Development Director. 3. Affordable units are dwelling units which are affordable to very low, lower, or moderate income households as defined by this Part 3 and are subject to rental, sale, or resale provisions to maintain affordability. 4. Area median income is area median income for Santa Cruz County as published by the State of California pursuant to California Code of Regulations, Title 25, Section 6932, or successor provision. 5. Assumed household size based on unit size is a household of one person in a studio apartment, two persons in a one bedroom unit, three persons in a two bedroom unit, and one additional person for each additional bedroom thereafter. 6. Child care facility is a child day care facility other than a family day care home, as defined in Section 24.22.355 of the Municipal Code, including, but not limited to, infant centers, preschools, extended day care facilities, and school age child care centers. 7. Commercial development is a construction project for non-residential uses. 8. Commercial development bonus is a modification of development standards mutually agreed upon by the city and a commercial developer that is provided to a commercial development eligible for such a bonus under Section 24.16.258. Examples of a commercial development bonus include an increase in floor area ratio, increased building height, or reduced parking. 9. Density bonus is a density increase over the otherwise allowable maximum residential density on a site, granted pursuant to this Part 3 of Chapter 24.16 or, if elected by the applicant, a lesser percentage of density increase, including, but not limited to, no increase in density. 10. Density bonus units are residential units granted pursuant to this Part 3 of Chapter 24.16 which exceed the otherwise allowable maximum residential density for a housing development. 11. Development standard is any site or construction condition that applies to a housing development pursuant to any ordinance, general plan element, specific plan, or other local condition, law, policy, resolution, or regulation. A site and construction condition is a 2
development regulation or law that specifies the physical development of a site and buildings on the site in a housing development. 12. First approval is the first of the following approvals to occur with respect to a housing development: specific plan, development agreement, planned development permit, tentative map, minor land division, use permit, design permit, building permit, or any other permit listed in Section 24.04.030. 13. Household income is the combined adjusted net household income for all adult persons living in a living unit as calculated pursuant to California Code of Regulations, Title 25, Section 6916, or successor provision, or its successor provision. 14. Household, low or lower income is a household whose income does not exceed the lower income limits applicable to Santa Cruz County, as published and periodically updated by the California Department of Housing and Community Development pursuant to Section 50079.5 of the California Health and Safety Code. 15. Household, moderate income is a household whose income does not exceed the moderate income limits applicable to Santa Cruz County, as published and periodically updated by the California Department of Housing and Community Development pursuant to Section 50079.5 of the California Health and Safety Code. 16. Household, very low income is a household whose income does not exceed the very low income limits applicable to Santa Cruz County, as published and periodically updated by the State Department of Housing and Community Development pursuant to Section 50105 of the California Health and Safety Code. 17. Housing development is a development project on contiguous lots that are the subject of one development application, consisting of five or more residential units (not including any density bonus units), including single-family and multifamily and single room occupancy units, for sale or for rent. For the purposes of this Part 3, housing development also includes a subdivision or a common interest development consisting of five or more residential units or unimproved residential lots, a mixed-use development that includes five or more residential units or unimproved residential lots, the substantial rehabilitation and conversion of an existing commercial building to residential use, and the substantial rehabilitation of an existing multifamily dwelling, where the rehabilitation or conversion would create a net increase of at least five residential units. In all cases density bonus units are not included for the purpose of determining whether the development consists of five or more units or lots. 18. Incentives and concessions are regulatory concessions as listed in Section 24.16.255. 19. Inclusionary unit is an ownership or rental dwelling unit or single-room occupancy unit within a housing development which is required under Part 1 of Chapter 24.16 to be rented at affordable rents or sold at an affordable ownership cost to specified households. 20. Major transit stop is an existing site, or a site included in the regional transportation plan, that contains a rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes 3
or less during the morning and afternoon peak commute periods. A housing development is considered to be within one-half mile of a major transit stop if all parcels within the housing development have no more than 25 percent of their area farther than one-half mile from the stop and if not more than 10 percent of the units or 100 units, whichever is less, in the housing development are farther than one-half mile from the stop. 21. Market rate unit is a dwelling unit which is not an affordable unit as defined in this Part 3. 22. Maximum residential density is the maximum number of residential units allowed in a housing development by the city s zoning ordinance and by the land use element of the general plan on the date that the application for the housing development is deemed complete. If the maximum density allowed by the zoning ordinance is inconsistent with the density allowed by the land use element of the general plan, the land use element density shall prevail. This definition is used to calculate a density bonus pursuant to this Part 3 of Chapter 24.16. 23. Partnered housing agreement is an agreement approved by the city between a commercial developer and a housing developer identifying how the commercial development will provide housing available at affordable ownership cost or affordable rent. A partnered housing agreement may consist of the formation of a partnership, limited liability company, corporation, or other entity recognized by the state in which the commercial developer and the housing developer are each partners, members, shareholders, or other participants, or a contract between the commercial developer and the housing developer for the development of both the commercial development and the housing development. 24. Small ownership unit or SOU is a dwelling unit containing no more than one bedroom and floor area ranging from four hundred to six hundred fifty square feet, located on a separate subdivided parcel and included in a housing development where all dwelling units are SOU units and are offered for sale to the general public. 25. Special needs housing is any housing, including supportive housing, intended to benefit, in whole or in part, persons identified as having special needs relating to mental health; physical disabilities; developmental disabilities, including without limitation intellectual disability, cerebral palsy, epilepsy, and autism; and risk of homelessness, and housing intended to meet the housing needs of persons eligible for mental health services funded in whole or in part by the Mental Health Services Fund, created by Cal. Welf. & Inst. Code 5890. 26. Unobstructed access to a location means that a resident is able to access the location without encountering natural or constructed impediments. (Ord. 2006-19 2 (part), 2006). 24.16.255 STANDARDS FOR INCENTIVES AND CONCESSIONS AND WAIVERS FOR HOUSING DEVELOPMENTS. 1. For purposes of this Part 3, concessions and incentives include the following: 4
a. A reduction of site development standards or a modification of zoning code requirements or architectural design requirements which exceed the minimum building standards provided in Cal. Health & Safety Code Division 13, Part 2.5 (commencing with Section 18901) and which result in identifiable and actual cost reductions to provide for affordable ownership costs or affordable rents. b. Approval of mixed-use development in conjunction with the housing development if nonresidential land uses will reduce the cost of the housing development and if the city finds that the proposed nonresidential uses are compatible with the housing development and with existing or planned development in the area where the proposed housing development will be located. c. Other regulatory incentives or concessions proposed by the developer or the city which result in identifiable and actual cost reductions to provide for affordable ownership costs or affordable rents. 2. Concessions Not Requiring a Financial Pro Forma. The following concessions and incentives may be approved without any requirement that the applicant demonstrate to the city that the requested concession or incentive results in identifiable and actual cost reductions to the project to provide for affordable ownership costs or affordable rents: a. Up to a twenty percent (20%) reduction in a yard setback requirement, with each structure in a required yard setback counting as one concession or incentive; b. Up to a twenty percent (20%) increase in maximum lot coverage; c. Up to a twenty percent (20%) reduction in required landscape area; d. Up to a twenty percent (20%) reduction in required common open space area or private open space area per unit, or the elimination of private open space for twenty percent (20%) of units; e. Reduction of off-street parking requirements as described in Section 24.16.260(5); f. Approval of a city rental housing density bonus pursuant to Section 24.16.220(1), if the density bonus is greater than that to which the developer would otherwise be entitled; or g. Approval of fee waivers pursuant to Part 4 of this Chapter 24.16. 3. Concessions Requiring a Financial Pro Forma. For requests for any concessions other than those listed in Section 24.16.255(2) above, the applicant shall provide a pro forma demonstrating to the city that the requested concession or incentive results in identifiable and actual cost reductions to the project to provide for affordable ownership costs or affordable rents. 4. Applicants may seek a waiver or modification of development standards that will have the effect of physically precluding the construction of a housing development eligible for a density 5
bonus at the density or with the incentives or concessions permitted by this Part 3. The applicant shall bear the burden of demonstrating that the development standards that are requested to be waived will have the effect of physically precluding the construction of the housing development with the density bonus and incentives. 5. Nothing in this section requires the city to provide direct financial incentives for the housing development, including but not limited to the provision of publicly owned land or waiver of fees or dedication requirements. (Ord. 2006-19 2 (part), 2006). 24.16.260 STANDARDS FOR DENSITY BONUS HOUSING DEVELOPMENTS. 1. Affordable units qualifying a housing development for a density bonus shall remain affordable as follows: a. Rental units affordable to very low and lower income households shall remain affordable to the designated income group for a minimum of fifty-five years or for a longer period of time if required by any construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program applicable to the dwelling units, except that lower income units in a condominium conversion project shall remain affordable in perpetuity. b. For-sale units affordable to very low, lower, or moderate income households shall remain affordable in perpetuity. 2. Affordable units qualifying a housing development for a density bonus shall be reasonably dispersed throughout the housing development and compatible with the design of market rate units in terms of appearance, materials, and finished quality. The applicant may reduce the interior amenities and square footage of affordable units, provided all units conform to all requirements of Titles 18 and 19 of the Santa Cruz Municipal Code and are at least seventy-five percent (75%) of the average square footage of all market rate units in the development with the same bedroom count. 3. For developments with multiple market rate unit types containing differing numbers of bedrooms, affordable units qualifying a housing development for a density bonus shall be representative of the market rate unit mix. 4. All building permits for affordable units qualifying a housing development for a density bonus shall be issued concurrently with, or prior to, issuance of building permits for the market rate units, and the affordable units shall be constructed concurrently with, or prior to, construction of the market rate units. Occupancy permits and final inspections for affordable units qualifying a housing development for a density bonus shall be approved concurrently with, or prior to, approval of occupancy permits and final inspections for the market rate units. (Ord. 2006-19 2 (part), 2006). 6
24.16.270 CITY REVIEW OF APPLICATION FOR DENSITY BONUSES AND OTHER INCENTIVES. 1. An application for a density bonus, incentive, concession, waiver, modification, modified parking standard, or commercial development bonus pursuant to this Part 3 shall be reviewed at a noticed public hearing as part of the first approval of the housing development by the approval body with authority to approve the housing development within the timelines prescribed by Government Code Section 65950 et seq. However, if review by the Planning Commission or City Council is not required, the application shall be heard by the Zoning Administrator. Any decision regarding a density bonus, incentive, concession, waiver, modification, modified parking standard, or commercial development bonus may be appealed as provided in Section 24.16.285. In accordance with state law, neither the granting of a concession or incentive, nor the granting of a density bonus, shall be interpreted, in and of itself, to require a general plan amendment, zoning change, variance, or other discretionary approval. 2. Before approving an application for a density bonus, incentive, concession, waiver, modification, modified parking standard, or commercial development bonus, the approval body shall make the following findings, as applicable: a. The housing development is eligible for a density bonus and any concessions, incentives, waivers, modifications, or modified parking standards requested; conforms to all standards for affordability included in this section; and includes a financing mechanism for all implementation and monitoring costs. b. Any requested incentive or concession will result in identifiable and actual cost reductions to provide for affordable rents or affordable ownership costs based upon appropriate financial analysis and documentation if required by Section 24.16.255. c. If the density bonus is based all or in part on dedication of land, the approval body has made the findings included in Section 24.16.230. d. If the density bonus, incentive, or concession is based all or in part on the inclusion of a child care center, the development conforms to the standards included in Section 24.16.235. e. If the density bonus incentive or concession is approved for a condominium conversion, the development conforms to the standards included in Section 24.16.240. f. If the incentive or concession includes mixed-use buildings or developments, the nonresidential land uses will reduce the cost of the housing development and the proposed nonresidential uses are compatible with the housing development and with existing or planned development in the area where the proposed housing development will be located. g. If a waiver or modification is requested, the applicant has shown that the development standards for which the waiver or modification is requested will have the effect of physically precluding the construction of the housing development at the densities or with the incentives or concessions permitted by this Part 3. 7
h. If a commercial development bonus is requested, the project complies with the requirements of Section 24.16.258, the city has approved the partnered housing agreement, and the bonus has been mutually agreed upon by the city and the commercial developer. i. If the housing development or the commercial development is in the coastal zone, any requested density bonus, incentive, concession, waiver, modification, modified parking standard, or commercial development bonus is consistent with all applicable requirements of the certified Santa Cruz local coastal program, with the exception of density. 3. If the required findings can be made, and a request for an incentive or concession is otherwise consistent with this section, the approval body may deny an incentive or concession only if it makes a written finding, based upon substantial evidence, of one of the following: a. The incentive or concession does not result in identifiable and actual cost reductions to provide for affordable rents or affordable ownership costs; or b. The incentive or concession would have a specific adverse impact upon public health or safety, or the physical environment, or on any real property that is listed in the California Register of Historic Resources, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to lower-, very-low- and moderate-income households. For the purpose of this subsection, specific adverse impact means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified, written public health or safety standards, policies, or conditions, as they existed on the date that the application was deemed complete; or c. The concession or incentive is contrary to state or federal law. 4. If the required findings can be made, and a request for a waiver or modification is otherwise consistent with this section, the approval body may deny the requested waiver or modification only if it makes a written finding, based upon substantial evidence, of one of the following: a. The modification would have a specific adverse impact upon health, safety, or the physical environment, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to lower-, verylow- and moderate-income households. For the purpose of this subsection, specific adverse impact means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified, written public health or safety standards, policies, or conditions as they existed on the date that the application was deemed complete; or b. The modification would have an adverse impact on any real property that is listed in the California Register of Historic Resources; or c. The waiver or modification is contrary to state or federal law, which may include a finding that the development standards for which the waiver is requested would not have the effect of physically precluding the construction of the housing development with the density bonus and incentives permitted. 8
5. If a density bonus or concession is based on the provision of child care centers, and if the required findings can be made, the approval body may deny the bonus or concession only if it finds, based on substantial evidence, that the city already has adequate child care centers. (Ord. 2017-20 1 (part), 2017: Ord. 2006-19 2 (part), 2006). Section 2. This ordinance shall be in force and take effect thirty (30) days after its final adoption. PASSED FOR PUBLICATION this 28 th day of August, 2018, by the following vote: AYES: NOES: ABSENT: DISQUALIFIED: Councilmembers Mathews, Chase, Noroyan; Vice Mayor Watkins. Councilmembers Krohn, Brown. Mayor Terrazas. None. ATTEST: ss/bonnie Bush, Interim City Clerk Administrator APPROVED: ss/martine Watkins, Vice, Mayor vote: PASSED FOR FINAL ADOPTION this day of, 2018, by the following AYES: NOES: ABSENT: DISQUALIFIED: APPROVED: David Terrazas, Mayor ATTEST: Bonnie Bush, City Clerk Administrator This is to certify that the above and foregoing document is the original of Ordinance No. 2018-10 and that it has been published or posted in accordance with the Charter of the City of Santa Cruz. Bonnie Bush, City Clerk Administrator 9