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HomeMy WebLinkAbout03 PC REPORT ORDINANCE NO 1491 INCLUSIONARY HOUSING AGENDA REPORT ITEM 43 MEETING DATE: FEBRUARY 13, 2018 TO: PLANNING COMMISSION FROM: JERRY CRAIG, DEPUTY DIRECTOR OF ECONOMIC DEVELOPMENT SUBJECT: ORDINANCE NO. 1491, INCLUSIONARY HOUSING RECOMMENDATION That the Planning Commission adopt Resolution No. 4358, recommending that the Tustin City Council adopt Ordinance No. 1491, adding Chapter 9B to Article 9 of the Tustin City Code relating to Inclusionary Housing. BACKGROUND AND DISCUSSION Summary of Ordinance Ordinance No. 1491 would add Chapter 9B to the Tustin City Code entitled "Inclusionary Housing." The proposed ordinance would require developers of residential or mixed-use developments that would create 20 or more new, additional, or modified dwelling units to make up to 15% of the total dwelling units created available as affordable units targeted to specific income levels.' Of these affordable housing units, 6% must be made available to very low-income households, 4.5% must be made available to low-income households, and 4.5% must be made available to moderate-income households. Alternatively, 12.5% of the total dwelling units in the residential project may be made available at an affordable housing cost, provided that 7.5% of these units are made available to very low-income households, and 5% are made available to moderate-income households. The proposed ordinance's inclusionary housing requirements may also be satisfied by alternative means including: (1) the provision of affordable units off-site within City limits, (2) the payment of an in-lieu fee (to be established by separate resolution of the City Council), or (3) by other alternate options deemed acceptable by the City (e.g., the dedication of land for affordable housing). Any in-lieu fees collected would be deposited into a separate account designated as the City of Tustin inclusionary housing fund. Monies deposited in the inclusionary housing fund would be expended exclusively to provide housing affordable to extremely low, very low, low, and moderate-income The proposed ordinance's inclusionary housing requirements mirror those upheld by the California Supreme Court in Califi)"ma Building Indust)-y.-kmiciation r. City of San.hxw, 61 Cal 4`h 435 (20 15)discussed below. 13114692 1 Planning Commission Report Inclusionary Housing February 13, 2018 Page 2. deposited in the inclusionary housing fund would be expended exclusively to provide housing affordable to extremely low, very low, low, and moderate-income households in the City of Tustin, and for administration and compliance monitoring of the inclusionary housing program established by the proposed ordinance. Tustin Legacy Specific Plan Exemption Development within the Tustin Legacy Specific Plan area would not be subject to the proposed ordinance's inclusionary housing requirements. Whereas the proposed ordinance would require residential projects consisting of 20 or more dwelling units to make 12.5% to 15% of the total units available as affordable units, 21% of the residential' development that has occurred to date in Tustin Legacy is affordable. This is because the City, as fee owner of the parcels suitable for residential development in Tustin Legacy, has routinely required the provision of affordable housing through negotiated Disposition and Development Agreements("DDAs"). For example,the Amalfi and Anton Legacy apartment communities provide affordable housing within Tustin Legacy pursuant to DDAs; the City is currently negotiating an Exclusive Negotiation Agreement with Jamboree Housing for a permanent homeless housing and affordable housing project. Given the current allocation of affordable units within the Tustin Legacy, and the City's ability to require affordable housing solutions as part of the DDA process, Staff has expressly excluded the Tustin Legacy Specific Plan area from the proposed ordinance to preserve maximum flexibility for City Council as it oversees future development within the specific plan area. Legal AuthoritX California Constitution Article XI, Section 7, grants each city and county the power"to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws." This is generally referred to as the police power of local governments. Using this police power, many municipalities have adopted "inclusionary housing" ordinances that require developers of both rental and ownership housing to ensure that a certain percentage of dwelling units in a new development be provided as affordable units. In June of 2015, in the decision of California Building Industry Association v. City of San Jose, 61 Cal.4t' 435 (2015), the California Supreme Court upheld the City of San Jose's inclusionary housing ordinance, which required all new residential development.projects of 20 or more owner-occupied units to sell'at least 15% of the for-sale units at a price that is affordable to low-or moderate-income households. The challenged ordinance also allowed developers to opt out of the 15% requirement by dedicating land elsewhere or by paying in-lieu fees to the City. The Supreme Court concluded that the ordinance was a proper exercise of the police power, and did not constitute an exaction upon the developers' 1244692.1 Planning Commission Report Inclusionary Housing February 13, 2018 Page 3 property. Consequently, a municipality need not demonstrate that an essential nexus or rough proportionality exists between its inclusionary housing requirements and the projected impact of the proposed land use. Further, the Supreme Court affirmed that enforcing inclusionary housing requirements to address a growing housing problem is "constitutionally legitimate" and cited the severe scarcity of affordable housing in Califomia in its decision. In September of 2017, the Governor approved Assembly Bill No. 1505 ("AB 1505") restoring the authority of cities and counties to extend inclusionary housing requirements to rental housing developments, and thereby superseding the 2000 decision of Palmer/Sixth Street Properties, L.P., et al. v. City of Los Angeles, 175 Cal.App. 4th 1396 (2009). In Palmer, the Court of Appeals held that an inclusionary housing ordinance, as applied to rental housing, conflicted with and was preempted by the Costa-Hawkins Rental Housing Act, which-allows residential landlords to set the initial rent levels at the start of a tenancy. The Court of Appeals found that "forcing Palmer to provide affordable housing units at regulated rents in order to obtain project approval [was] clearly hostile to the right afforded under the Costa-Hawkins act to establish the initial rental rate for a dwelling unit." AB 1505,which added subsection (g)to Section 65850 of the Govemment Code, expressly authorizes municipalities to adopt inclusionary housing ordinances that require, as a . condition of development of residential rental units, that the development include a certain percentage of residential rental units affordable to and occupied by moderate-income, low- income, very low-income, or extremely low-income households. Additionally, AB 1505 requires any inclusionary housing ordinance to provide alternative means of compliance that may include, but are not limited to in-lieu fees, land dedication, off-site construction, or acquisition and rehabilitation of existing units. State of Household Income and Housing in Tustin 9,1.89 households, thirty-four percent (34%) of the total number of households in Tustin, earn less than $50,000 ($24.04ihour) annually. In relation to the Orange County Median Income, these households are considered, at minimum, low income. In order for a household earning less than $50,000 per year not be considered rent burdened, 30% of income going to rent, their rent would need to be $1,250 per month or less. In December 2017, the average rent for a one bedroom in Tustin was $1,787 per month and $2,139 per month for a two bedroom. When considering the average rents for one and two bedroom units in relation to rent burden, it is understood that the average rent is a combination of lower and higher rents. There are opportunities to rent these units for less than the average, but rents of more than $1,250 per month leave a household rent burdened. The average rent of $1,787 per month is 43% of a household's income earning less than $50,000. This assumes all 9,189 households only need a one-bedroom unit. If these 1294692.1 Planning Commission Report Inclusionary Housing February 13, 2018 Page 4 households require a two-bedroom unit or larger, 51% of their income would be required for the average rent of two-bedroom unit, leaving them severely rent burdened. Currently, there are 1,003 rent-restricted affordable rental units in Tustin. 166 of these units are for moderate income households earning from $73,920 for a household of one to $105,600 for a household of four. The remaining units, 837, are for very low income households, whose income can range ,from $30,800 (household of one) to $44,000 (household of four), and low income households, whose income can range from $49,280 (household of one) to $70,400 (household of four). The Tustin Housing Authority administers 281 affordable ownership units, with 160 available for very low and low income households. There are 832 mobile homes and secondary units in Tustin and for the sake of argument will be assumed available for very low and low income households. In addition, there are 397 Tustin households using Department of Housing and Urban Development ("HUD") Section 8 vouchers. Accounting for the 837 rent-restricted very low and low income rental units, 160 very low and low income ownership units, 832 mobile homes and secondary units and 397 Section 8 vouchers, there are 2,226 affordable housing opportunities for these 9,189 households earning less than $50,000 annually. The remaining 6,963 households (76%) are at risk of being rent burdened. The City of Tustin's 2013 Housing Element identifies 11,266 Tustin households as rent burdened. The larger number takes into account households who are earning more than $50,000 annually but who are rent burdened. Included in this number is both renters and owners. According to the 2007.2011 American Community Survey data, there are 3,386 low income renter households who are rent burdened. These rent burdened households are not renting one of the 2,266 affordable housing units identified above. Although the City of Tustin 2008-09 to 2017-18 Comprehensive Affordable Housing Strategy report is over ten years old, it reported similar findings in relation to rent burden. In 2006, 25.7% of renters in Tustin, or 3,080 households, paid more than 30 percent of their income for housing. Whichever numbers are considered, there are at least 3,000 renter households who are rent burdened and a significant number of those who could be one to two : paychecks away from being homeless. CONSISTENCY WITH REGIONAL HOUSING NEEDS ASSESSMENT The Regional Housing Needs Assessment ("RHNA") for Tustin during the 2014-2021 Housing Element requires 283 very low income units, 195 low income units, 224 moderate income units, and 525 above moderate income units. To date, 98 very low income units (35%), 74 low income units(38%), 102 moderate income units have been produced.(46%). In regards to above moderate income units, almost 200% have been built or entitled. 1294692.1 Planning Commission Report Inclusionary Housing February 13, 2018 Page 5 In regards to the 2006-2013 Housing Element, the City achieved 88% of the very low income unit goal, 49% of the low income unit goal, and 62% of the moderate income unit goal. In relation to the total number of units produced, 33% of the units were affordable as compared to the goal of 58%. Under the current Housing Element, 23% of the units produced to date are affordable as compared to the goal of 57%. 2006-2013 RHNA 2014-2021 RHNA Income Level Goal Actual % Goal Actual % Very low 512 451 88% 283 98 35% Low 410 200 49% 195 74 38% Moderate 468 288 62% 224 102 46% Total Affordable 1,390 939 68% 702 274 39% Above Moderate 991 1 1,920 1.94% 525 1,046 199% TOTAL 2,381 1 2,859 1,227 1,320 As noted above, the City, as the fee owner of Tustin Legacy residential land, can require the development of affordable housing and insure the City moves in a positive direction towards the RHNA goals. In order to affect development of affordable housing outside of Tustin Legacy, the 15% Inclusionary Housing requirement will assist the City in meeting thesegoals, is consistent with RHNA, and encourage the development of affordable housing outside of Tustin Legacy. ENVIRONMENTAL ANALYSIS Ordinance No. 1491 is not subject to the California Environmental Quality Act ("CEQA"; Cal. Pub. Resources Code Section 21000 et seq.). The proposed ordinance will not commit the City to approve any particular project, or any aspect of any particular project, now or any time in the future. Any project subject to the proposed ordinance will require its own review for CEQA compliance. As a result, the proposed ordinance does not have any reasonably foreseeable environmental consequences or commit the City to a definite course of action. Thus, the proposed.ordinance is not a "project" subject to CEQA. (Public Resources Code § 21065; CEQA Guidelines § 15378(a); CEQA Guidelines § 15352(a).) Further, to the extent the proposed ordinance establishes the inclusionary housing fund, the proposed ordinance is, a government funding mechanism expressly excluded from CEQA's definition of "project." (CEQA Guidelines § 15378(b)(4).) Even if the proposed ordinance were construed to be a project, it can be seen with certainty that there is no possibility that the proposed ordinance may have a significant effect on the environment for the foregoing reasons and thus fails within CEQA's "common sense" exemption. (CEQA Guidelines § 15061(b)(3).). 1294692.1 Planning Commission Report Inclusionary Housing February 13, 2018 Page 6 CITY ATTORNEY REVIEW The City Attorney has reviewed the content and form of Ordinance No. 1491. PUBLIC NOTICE A public notice was published in the Tustin News on January 4, 2018, informing the public of proposed code amendment. Jerry Craig Deputy Dire oro c ��ic Development ttachment A: Planning Commission Resolution No. 4358 Attachment B: Draft Ordinance No. 1491 Attachment C: The Housing Futures Initiative—Building Industry Association of Orange County 1294692.1 ATTACHMENT A Planning Commission Resolution No. 4358 RESOLUTION NO. 4358 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF TUSTIN, CALIFORNIA, RECOMMENDING THAT THE CITY COUNCIL ADOPT ORDINANCE NO. 1491, ADDING CHAPTER 913 TO ARTICLE 9 OF THE TUSTIN CITY CODE RELATING TO INCLUSIONARY HOUSING. The Planning Commission of the City of Tustin does hereby resolve as follows: I. The Planning Commission finds and determines as follows: A. That many municipalities have adopted inclusionary housing ordinances that require, as a condition of development of residential units, that the development include a certain percentage of owner-occupied or rental units affordable to, and occupied by, extremely low, very low, low, or moderate income households. B. That the California Supreme Court has affirmed that adopting inclusionary housing ordinances is a constitutional exercise of the local police power (CBIA v. City of San Jose, 61 CalAt' 435 (2015)). C. That on September 29, 2017, the Governor approved Assembly Bill No. 1505 ("AB 1.505"), adding subdivision (g) to Section 65850 of the Government Code. AB 1505 provides additional authorization for municipalities to adopt inclusionary housing ordinances. D. That in support of AB 1505, the Legislature noted that since the 1970s, more than 170 .jurisdictions have enacted inclusionary housing ordinances to meet their affordable housing needs. Additionally, the Legislature proclaimed that inclusionary housing ordinances have provided quality affordable housing to more than 80,000 Californians, including the production of an estimated 30,000 units of affordable housing in the last decade. E. That implementing an inc[usionary housing program in the City of Tustin would serve to enhance the public welfare by establishing policies that foster the construction of housing affordable to households of extremely low, very low, low, and moderate incomes, help the -City meet its share of regional housing needs, and implement the City of Tustin General Plan Housing Element's goals and policies. F. That the addition of Chapter 9B -- Inclusionary Housing to Article 9 of the Tustin City Code is consistent with AB 1505. 1294162,1 Resolution No. 4358 Page 2 G. That the addition of Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code is consistent with the City of Tustin General Plan Housing Element in that it complies with the following goals and policies: Goal 1: Provide an adequate supply of housing to meet the need for a variety of housing types and the diverse socioeconomic needs of all community residents. Policy 1.1: Promote the construction of additional dwelling units to accommodate Tustin's share of regional housing needs identified by the Southern California Association of Governments (SCAG), in accordance with adopted land use policies. Policy 1.5: Promote the dispersion and integration of housing for low- and very-low income families throughout the community as opposed to within any particular geographic area, neighborhood, or project. Policy 1.7: Utilize various resources, where feasible, to assist in creating opportunities which will expand opportunities for development of affordable housing in the community. Policy 3.1: Encourage new housing construction for home- ownership in a mixture of price ranges. H. The proposed addition of Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code is not subject to the California Environmental Quality Act ("CEQA"; Cal. Pub. Resources Code Section 21000 et seq.). Ordinance No. 1491 will not commit the City to approve any particular project, or any aspect of any particular project, now or any time in the future. Any project subject to the Ordinance will require its own review for CEQA compliance. As a result, the Ordinance does not have any reasonably foreseeable environmental consequences or commit the City to a definite course of action. Thus, the Ordinance is not a "project" subject to CEQA. (Public Resources Code § 21065; CEQA Guidelines § 15378(a); CEQA Guidelines § 15352(a).) Further, to the extent the Ordinance establishes the inclusionary housing fund, the Ordinance is, a government funding mechanism expressly excluded from CEQA's definition of "project." (CEQA Guidelines § 15378(b)(4).) Even if the Ordinance were construed to be a project, it can be seen with certainty that there is no possibility that the Ordinance may have a significant effect on the environment for the foregoing reasons and thus falls within CEQA's "common sense" exemption. (CEQA Guidelines § 15061(b)(3).) 1. That on February 13, 2018, a public hearing was duly noticed, called, and held on the addition of Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code by the Planning Commission. 1294162.1 Resolution No. 4358 Page 3 II. The Planning Commission hereby recommends that the City Council adopt Ordinance No. 1491 adding Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code, attached hereto. PASSED AND ADOPTED at a regular meeting of the Planning Commission of the City of Tustin held on the 13th day of February, 2018. RYDER TODD SMITH Chairperson ELIZABETH A. BINSACK Planning Commission Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF TUSTIN ) I, Elizabeth A. Binsack, the undersigned, hereby certify that I am the Planning Commission Secretary of the City of Tustin, California; that Resolution No. 4337 was passed and adopted at a regular meeting of the Tustin Planning Commission, held on the 13th day of February, 2018, by the following vote: PLANNING COMMISIONER AYES: PLANNING COMMISIONER NOES: PLANNING COMMISIONER ABSTAINED: PLANNING COMMISIONER ABSENT: ELIZABETH A. BINSACK Planning Commission Secretary 1294162.1 ATTACHMENT B Draft Ordinance No. 1491 DRAFT ORDINANCE NO. 1491 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, ADDING CHAPTER 913 TO ARTICLE 9 OF THE TUSTIN CITY CODE RELATING TO INCLUSIONARY HOUSING. The City Council of the City of Tustin does hereby ordain as follows: SECTION I. The City Council finds anddetermines as follows: A. That this Ordinance is being adopted pursuant to the City's police power authority to regulate the development and use of real property within its jurisdiction to promote the public welfare. B. That many municipalities have adopted inclusionary housing ordinances that require, as a condition of development of residential units, that the development include a certain percentage of owner-occupied or rental units affordable to, and occupied by, extremely low, very low, low, or moderate income households. C. That the California Supreme Court has affirmed that adopting inclusionary housing ordinances is a constitutional exercise of the local police power (CBIA v. City of San Jose, 61 Cal.4" 435 (2015)). D. That on September 29, 2017, the Governor approved Assembly Bill No. 1505 ("AB 1505"), adding subdivision (g) to Section '65850 of the Government Code. AB 1,505 provides additional authorization for municipalities to adopt inclusionary housing ordinances. E. That in support of AB 1505, the Legislature noted that since the 1970s, more than 170 jurisdictions have enacted inclusionary housing ordinances to meet their affordable housing needs. Additionally, the Legislature proclaimed that inclusionary housing ordinances have provided quality affordable housing to more than 80,000 Californians, including the production of an estimated 30,000 units of affordable housing in the last decade. F. That the City Council desires to implement an inclusionary housing program to enhance the public welfare by establishing policies that foster the construction of housing affordable to households of extremely low, very low, low, and moderate incomes, help the City meet its share of regional housing needs, and implement the City of Tustin General Plan Housing Element's goals and policies. G. That the addition of Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code is consistent with AB 1505. 1293626.1 Ordinance No. 1491 Page 2 H. That the addition of Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code is consistent with the City of Tustin General Plan Housing Element in that it complies with the following goals and policies: Goal 1: Provide an adequate supply of housing to meet the need for a variety of housing types and the diverse socioeconomic needs of all community residents. Policy 1.1: Promote the construction of additional dwelling units to accommodate Tustin's share of regional housing needs identified by the Southern California Association of Governments (SCAG), in accordance with adopted land use policies. Policy 1.5: Promote the dispersion and integration of housing for low- and very-low income families throughout the community as opposed to within any particular geographic area, neighborhood, or project. Policy 1.7: Utilize various resources, where feasible, to assist in creating opportunities which will expand opportunities for development of affordable housing in the community. Policy 3.1: Encourage new housing construction for home- ownership in a mixture of price ranges. I. That on February 13, 2018, a public hearing was duly noticed, called, and held on the addition of Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code by the Planning Commission. J. That on February 13, 2018, the Planning Commission adopted Resolution No. 4358, and recommended that the City Council adopt Ordinance No. 1491 adding Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code. K. That on March , 2018, a public hearing was duly noticed, called, and held by the City Council to consider the Planning Commission's recommendation and the addition of Chapter 9B — Inclusionary Housing to Article 9 of the Tustin City Code. SECTION II. Chapter 9B — Inclusionary Housing is hereby added to Article 9 of the Tustin City Code to read as follows: CHAPTER 9B - INCLUSIONARY HOUSING 1293626.1 Ordinance No. 1491 Page 3 PART 1 - GENERAL B9911 - PURPOSE The purpose of this Chapter is to enhance the public welfare by establishing policies which require the development of housing affordable to households of extremely low, very low, low, and moderate incomes, meet the City's regional share of housing needs, and implement the goals and objectives of the Tustin General Plan Housing Element, by requiring the inclusion of affordable housing units within new residential developments. B9912 - DEFINITIONS Whenever the following terms are used in this Chapter, they shall have the meaning established by this Section: "Affordable housing cost" means the housing cost for dwelling units as defined by California Health and Safety Code Section 50052.5 for owner-occupied housing and the affordable rent for rental units as defined by California Health and Safety Code Section 50053, as applicable. "Applicant" or "developer" means a person, persons, or entity that applies for a residential project andalso includes the owner or owners of the property if the applicant does not own the property on which development is proposed. "Common ownership or control" refers to property owned or controlled by the same person, persons, or entity, or by separate entities in which any shareholder, partner, member, or family member of an investor of the entity owns ten percent (10%) or more of the interest in the property. "Contiguous property" means any parcel of land that is: (a) Touching another parcel at any point; (b) Separated from another parcel at any point only by a public right of way, private street or way, or public or private utility, service, or access easement; or (c) Separated .from another parcel only by other real property of the applicant which is not subject to the requirements of this Chapter at the time of the development approval application by the applicant. "Density bonus units" means dwelling units approved in a residential development pursuant to California Government Code Section 65915 et seq. and Tustin City Code Section 9111 et seq., that are in excess of the maximum residential density otherwise permitted by the City of Tustin General Plan or Tustin City Code. 1293626,1 Ordinance No. 1491 Page 4 "Development approval" means a tentative map, parcel map, conditional use permit, development agreement, or any other discretionary permit excluding general plan amendments, zoning and rezoning, annexation, and specific plans. "Extremely low income household" shall have the definition given in California Health and Safety Code Section 50106. "For-sale" means and refers to any dwelling unit, including a condominium, stock cooperative, community apartment, or attached or detached single family home, for which a parcel or tentative and final map is required for the lawful subdivision of the parcel upon which the dwelling unit is located or for the creation of the unit in accordance with the Subdivision Map Act (California Government Code Section 66410 et seq.), or any residential development including such for-sale dwelling units. "Inclusionary housing agreement" means an agreement in conformance with Section B9932 of this Chapter between the City and an applicant, governing how the applicant shall comply with this Chapter. "Inclusionary housing fund" means the fund created by the City in which all fees collected in compliance with this Chapter shall be deposited pursuant to Section B9929 of this Chapter. "Inclusionary housing guidelines" means the requirements for implementation and administration of this Chapter as may be promulgated by the City Manager pursuant to Section B9942 of this Chapter. "Inclusionary housing plan" means a plan containing all of the information specified in and submitted in conformance with Section B9932 of this Chapter specifying the manner in which inclusionary units will be provided in conformance with this Chapter and the inclusionary housing guidelines, and consistent with the City of Tustin General Plan and Article 9 of the Tustin City Code. "Inclusionary unit" means a dwelling unit required by this Chapter to be affordable to very low, low, or moderate income households. "Low income household" shall have the definition given in California Health and Safety Code Section 50079.5. "Market rate unit" means a new dwelling unit in a residential project that is not an inclusionary unit as defined by Section B9912 of this Chapter. "Mixed use residential development" means any development that combines residential land uses with office, commercial, light industrial, or business park land uses. "Moderate income household" shall have the definition given in California Health and Safety Code Section 50093(b). 1293626.1 Ordinance No. 1491 Page 5 "Rental" means and refers to a dwelling unit that is not a for-sale dwelling unit, and does not include any dwelling unit, whether offered for rental or sale, that may be sold as a result of the lawful subdivision of the parcel upon which the dwelling unit is located or creation of the unit in accordance with the Subdivision Map Act (California Government Code Section 66410 et seq.), or any residential development including such rental dwelling units. "Residential project" means any residential development, including any mixed use residential development, requiring a development approval for which an application has been submitted to the City, and where the project: (a) Would create twenty (20) or more new, additional, or modified dwelling units by: (1) The construction or alteration of structures, (2) The conversion of a use to residential from any other use, or (3) The conversion of a use to for-sale residential from rental residential use. (b) Is contiguous to property under common ownership or control where the combined residential capacity of all of the applicant's property pursuant to the general plan designation or zoning at the time of the development approval application for the residential development is twenty (20) or more residential units. "Very low income household" means a household earning no more than the amount defined by California Health and Safety Code Section 50105. PART 2 - APPLICABILITY AND INCLUSIONARY UNIT REQUIREMENTS B9921 - APPLICABILITY The provisions of this Chapter shall apply to: (a) All residential projects, as defined in Section B9912 of this Chapter, except for any residential project exempt under Section B9922 of this Chapter; and (b) All residential projects and contiguous property that is under common ownership or control. B9922 - EXEMPTIONS 1293626.1 Ordinance No. 1491 Page 6 This Chapter shall not apply to any of the following: (a) Applications for a development approval that include a residential project for which an application has been deemed complete prior to the effective date of the ordinance codified in this Chapter, (b) A residential project that is the subject of a development agreement under applicable provisions of the California Government Code that expressly provide for an exclusion to this Chapter or provide for a different amount of inclusionary units from that specified by this Chapter, provided the development agreement was executed by the City prior to the effective date of the ordinance codified in this Chapter. (c) A residential project located within the Tustin Legacy Specific Plan (SP-1 Specific Plan). (d) A residential project for which a housing incentive agreement has been approved pursuant to Section 9142 of Article 9, Chapter 1, Part 4 of this Code, provided that the housing incentive agreement is effective prior to the effective date of the ordinance codified in this Chapter, and there is no uncured breach of the housing incentive agreement before issuance of a certificate of occupancy for the project. (e) A residential project for which a development approval has been approved by the City by no later than the effective date of the ordinance codified in this Chapter. Upon expiration of any development approval, and unless otherwise exempted, the residential project shall be subject to the inclusionary housing requirements of this Chapter, and shall not proceed until such time as an inclusionary housing plan is approved in conjunction with any other required development approval or amendment thereto. The exemption set forth in this Subsection shall not apply to any discretionary extension of a development approval or land use approval beyond its initial term granted after the effective date of the ordinance codified in this Chapter. B9923 - INCLUSIONARY UNIT REQUIREMENTS Ali new residential projects, as defined in Section B9912 and as specified in Section 89921, shall include inclusionary units. Calculations of the number of inclusionary units required by this Section shall be based on the number of dwelling units in the residential project, excluding any density bonus units as defined in Section 89912 of this Chapter. (a) On-site inclusionary requirement. Unless otherwise exempted from this Chapter, residential projects shall include inclusionary units upon the same site as the residential project as follows: 1293626.1 Ordinance No. 1491 Page 7 Fifteen percent (15%) of the total dwelling units in the residential project shall be made available at an affordable housing cost. Of these affordable housing units, 6 percent (6%) shall be made available to very low-income households, four and a half percent (4.5%) shall be made available to low- income households, and four and a half percent (4.5%) shall be made available to moderate-income households. Alternatively, twelve and one- half percent (12.5%) of the total dwelling units in the residential project shall be made available at an affordable housing cost. Of these affordable housing units, seven and one-half percent (7.5%) shall be made available to very low-income households, and five percent (5%) shall be made available to moderate-income households. 89924 - FRACTIONAL UNITS In computing the total number of inclusionary units required in a residential project, fractions shall be rounded up to the next whole number. 89925 - CONTIGUOUS PROPERTY UNDER COMMON OWNERSHIP AND CONTROL An applicant shall not avoid the requirements of this Chapter by submitting piecemeal development approval applications. At the time of the application for a development approval for a residential project, the applicant shall identify all contiguous property under common ownership and control. The applicant shall not be required to construct inclusionary units upon the contiguous property at the time of the application; however, the applicant shall be required to include the contiguous property under common ownership or control in its inclusionary housing plan. The inclusionary housing agreement shall be recorded against the residential project and all contiguous property under common ownership or control and shall require compliance with this Chapter upon development of each contiguous property at such time as there are development approval applications that would authorize a total of twenty (20) or more residential units for the residential project and the contiguous property under common ownership or control. 89926 - RESIDENTIAL PROJECT WITH BOTH FOR-SALE AND RENTAL UNITS When a residential project includes both for-sale and rental dwelling units, the provisions of this Chapter that apply to for-sale residential projects shall apply to that portion of the development that consists of for-sale dwelling units, while the provisions of this Chapter that apply to rental residential projects shall apply to that portion of the development that consists of rental dwelling units. 89927 - OPTIONS TO SATISFY INCLUSIONARY REQUIREMENTS 1293626.1 Ordinance No. 1491 Page 8 (a) On-site units. The primary means of complying with the inclusionary unit requirements of this Chapter shall be the provision of on-site inclusionary units in accordance with Section 89923. A developer may only satisfy the requirements of this Chapter by means of an alternative to on-site inclusionary units in accordance with the requirements and procedures of this Section. (b) Off-site units. The inclusionary unit requirements of Section 89923 may be satisfied, in whole or in part, by the construction of new inclusionary units, or the conversion of existing market rate units to inclusionary units, offsite within the City's jurisdictional boundary. All inclusionary units developed off-site of the residential project in accordance with this Subsection shall comply with the following criteria: (1) The off-site location has a general plan designation that authorizes residential uses and is zoned for residential development at a density to accommodate at least the number of otherwise required inclusionary units within the residential project; (2) The off-site location is suitable for development of the inclusionary units in terms of configuration, physical characteristics, location, access, adjacent uses, and other relevant planning and development criteria; (3) Environmental review for the off-site location has been completed for the presence of hazardous materials and geological review for the presence of geological hazards and all such hazards are or shall be mitigated to the satisfaction of the City prior to acceptance of the site by the City; (4) The construction schedule for the off-site inclusionary units shall be included in the inclusionary housing plan and the inclusionary housing agreement; (5) Any off-site inclusionary units shall be constructed and made available for occupancy prior to or concurrently with the market rate residential project pursuant to Section 89928; (6) Any off-site inclusionary housing units shall be substantially comparable to the market rate units included in the residential project in terms of quality of design, materials and finish; and (7) Any off-site inclusionary housing units shall be substantially comparable to the market rate units included in the residential project in terms of gross floor area of habitable space and number of bedrooms per unit. 1293626.1 Ordinance No. 1491 Page 9 (c) In-lieu fee, The inclusionary unit requirements of Section 89923 may be satisfied, in whole or in part, by payment to the City of an inclusionary housing in-lieu fee, as may be established by resolution of the City Council, provided that such fee is received by the City after the issuance of the development approval for the residential project, but prior to the issuance of the certificate of occupancy for the first market rate unit in the residential project. All in-lieu fees collected under this Subsection shall be deposited in the inclusionary housing fund. (d) Alternative option. The inclusionary unit requirements of Section B9923 may be satisfied, in whole or in part, by an alternative option acceptable to the City, which may include without limitation the dedication of land for affordable housing. B9928 - STANDARDS (a) Location within the residential project. All inclusionary units shall be: (1) Reasonably dispersed throughout the residential project; (2) Proportional, in number of bedrooms, gross floor area of habitable space, and location, to the market rate units; (3) Comparable to the market rate units in terms of quality of design, materials, finish and appearance; (4) Permitted the same access to community amenities and recreational facilities, as the market rate units; and (5) Provided functionally equivalent parking when parking is offered to the market rate units. (b) Timing of construction. All inclusionary units in a residential project, or any off-site inclusionary units, shall be constructed and made available for occupancy prior to or concurrently with the market rate units. If the City approves a phased project, a proportional share of the required inclusionary units shall be provided within each phase of the residential project. (c) General Prohibitions 1293626.1 Ordinance No. 1491 Page 10 (1') No person shall sell or rent an inclusionary unit at a price or rent in excess of the maximum amount allowed by any restriction placed on the unit in accordance with this Chapter. (2) No person shall sell or rent an inclusionary unit to a person or persons that do not meet the income restrictions placed on the unit in accordance with this Chapter. (3) No person shall provide false or materially incomplete information to the City or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which the person is not eligible. 89929 - INCLUSIONARY HOUSING FUND (a) All monies collected pursuant to this Chapter shall be deposited into a separate account to be designated as the City of Tustin inclusionary housing fund. (b) The monies in the inclusionary housing fund shall be expended exclusively to provide housing affordable to extremely low, very low, low, and moderate income households in the City of Tustin, and administration and compliance monitoring of the inclusionary housing,program. PART 3 - CONTINUING AFFORDABILITY 89939 - CONTINUING AFFORDABILITY (a) Execution and recording of documents. The Director of Economic Development or designee may require execution and recording of documents necessary to ensure enforcement of this Chapter, including but not limited to promissory notes, deeds of trust, resale restrictions, rights of first refusal, options to purchase, and/or other documents, which shall be recorded against the residential project, all inclusionary units, and any site subject to the provisions of this Chapter. Affordability documents for for- sale owner-occupied inclusionary units shall also include subordinate shared appreciation documents permitting :the City to capture at resale the difference between the market rate value of the inclusionary unit and the affordable housing cost, plus a share of appreciation realized from an unrestricted sale in such amounts as deemed necessary by the City to replace the inclusionary unit. (b) Affordability periods. All inclusionary units shall remain affordable to the targeted income group for no less than the time periods set forth in California Health and Safety Code Sections 33413(c)(1) and (2), as may be amended. 1293626.1 Ordinance No. 1491 Page 11 (c) Unless otherwise required by law, all promissory note repayments, shared appreciation payments, or other payments collected under this Section shall be deposited in the inclusionary housing fund. (d) Any household that occupies an inclusionary unit must occupy that unit as its principal residence, unless otherwise approved in writing by the Director of Economic Development or his or her designee for rental to a third party for a limited period of time due to household hardship, as specified in the inclusionary housing guidelines. (e) No household may begin occupancy of an inclusionary unit until the household has been determined to be eligible to occupy that unit. Rental inclusionary units shall continue to be rented to income eligible households at an affordable housing cost for the entire term of the inclusionary housing restriction. The inclusionary housing guidelines shall establish standards for determining household income, maximum occupancy, affordable housing cost, provisions for continued monitoring-of tenant eligibility, and other eligibility criteria. B9932 - INCLUSIONARY HOUSING PLAN AND INCLUSIONARY HOUSING AGREEMENT (a) Inclusionary Housing Plan. The developer shall submit an inclusionary housing plan in a form specified by the Director of Community Development or designee, detailing how the provisions of this Chapter will be implemented for the proposed residential project. The inclusionary housing plan and its supportive documents, plans, and details shall be submitted at the same time as the development approval application materials for the residential project. Upon submittal, the Director shall determine if the inclusionary housing plan is complete and conforms to the provisions of this Chapter and, if applicable, the inclusionary housing guidelines. No project approval shall be issued for a residential project subject to this Chapter until an inc[usionary housing plan has been approved. Any person may appeal any decision of the Director of Community Development in accordance with Section 9294 of this Code. (b) Inclusionary Housing Agreement. Where the inclusionary housing requirements of this Chapter will be satisfied through the provision of on-site or off-site inclusionary units, prior to the approval of any final or parcel map or issuance of any building permit or certificate of occupancy for a residential project subject to this Chapter, the City and Developer shall execute and cause to be recorded an inclusionary housing agreement containing those provisions necessary to ensure the requirements of this Chapter are satisfied. The inclusionary housing agreement shall be recorded against the entire residential project property and any other 1293626:1 Ordinance No. 1491 Page 12 property used for the purposes of providing inclusionary housing pursuant to this Chapter. PART 4 - ADMINISTRATION AND ENFORCEMENT 89941 - MONITORING OF COMPLIANCE The inclusionary housing guidelines may and each inclusionary housing agreement shall include provisions for the monitoring by the City of each residential project and each inclusionary unit for compliance with the terms of this Chapter, the inclusionary housing guidelines, and the applicable inclusionary housing agreement. Such provisions shall require annual compliance reports to be submitted to the City by the owner and the City shall conduct periodic on-site audits to insure compliance with all applicable laws, policies, and agreements. The developer and inclusionary unit .owners or tenants are required to cooperate with the City in promptly providing all information requested by the City in monitoring compliance with program requirements. B9942 - ADMINISTRATIVE FEES AND PROCEDURES (a) The City Council may adopt fees for the costs of administering this Chapter, including an annual monitoring fee and an inclusionary housing plan submittal fee. (b) The City Manager may promulgate inclusionary housing guidelines for the implementation and administration of all-aspects of this Chapter. B9943 - ENFORCEMENT (a) Violation. Any violation of this Chapter, any development approval or entitlement issued pursuant to any provisions of this Code, or the terms of any inclusionary housing agreement entered into pursuant to this Chapter constitutes a misdemeanor and is deemed a public nuisance. (b) Forfeiture of funds. Any individual who sells an inclusionary unit in violation of this Chapter shall be required to forfeit any money in excess of the affordable housing cost at such time. Any individual who rents an inclusionary unit in violation of this Chapter shall be required to forfeit all money so obtained. Recovered funds shall be deposited into the inclusionary housing fund. (c) Legal actions. The City may institute any appropriate legal actions or proceedings necessary to ensure compliance with this Chapter, including actions; 1293626.1 Ordinance No. 1491 Page 13 (1) To disapprove, revoke, or suspend any permit, including a building permit, certificate of occupancy, development approval or discretionary approval; and (2) For injunctive relief or damages. (d) Recovery of costs. In any action to enforce this Chapter, or an inclusionary housing agreement recorded hereunder, the City shall be entitled to recover its reasonable attorney's fees and costs. SECTION 111. Effective Date. This Ordinance shall take effect on the 31St day after its adoption. The City Clerk or his or her duly appointed deputy shall certify to adoption of the Ordinance and cause this Ordinance to be published as required by law. SECTION IV.CEQA Exemption. The City Council finds that this Ordinance is not subject to the California Environmental Quality Act ("CEQA"; Cal. Pub. Resources Code Section 21000 et seq.). The Ordinance does not commit the City to approve any particular project, or any aspect of any particular project, now or any time in the future. Any project subject to the Ordinance will require its own review for CEQA compliance. As a result, the Ordinance does not have any reasonably foreseeable environmental consequences or commit the City to a definite course of action. Thus, the Ordinance is not a "project" subject to CEQA. (Public Resources Code § 21065; CEQA Guidelines § 15378(a); CEQA Guidelines § 15352(a).) Further, to the extent the Ordinance establishes the inclusionary housing fund, the Ordinance is, a government funding mechanism expressly excluded from CEQA's definition of "project." (CEQA Guidelines § 15378(b)(4).) Even if the Ordinance were construed to be a project, it can be seen with certainty that there is no possibility that the Ordinance may have a significant effect on the environment for the foregoing reasons and thus falls within CEQA's "common sense" exemption. (CEQA Guidelines § 15061(b)(3).) SECTION V. Severability. If any section, subsection, sentence, clause, phrase or portion of this Ordinance is for any reason held out to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of Tustin hereby declares that it would have adopted this Ordinance and each section, subsection, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. PASSED AND ADOPTED, at a regular meeting of the City Council for the City of Tustin on this day of 12018. 1243626.1 Ordinance No. 1491 Page 14 AL MURRAY, MAYOR ATTEST: ERICA N. RABE, CITY CLERK STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF TUSTIN ) CERTIFICATION FOR ORDINANCE NO. 1491 Erica N. Rabe, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, does hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Ordinance No. 1491 was duly passed, and adopted at a regular meeting of the Tustin City Council held on the _day of , 2018, by the following vote: COUNCILPERSONS AYES: COUNCILPERSONS NOES: COUNCILPERSONS ABSTAINED: COUNCILPERSONS ABSENT: Erica N. Rabe, City Clerk Published: 1293626A ATTACHMENT C The Housing Futures Initiative Building Industry Association of Orange County f r _ , ^ n rq e a' ,yam .... - •� THE HouSING FUTURES INITLAT Providing leadership and tools to ensure a broad range of housing is available to keep our communities vibrant and economy strong. f Promoting a Diverse Housing Supply to Meet the Needs U16rajl&u Dear Community Leader: The development of new homes offered at a varietyof price A F17 points is not only important for the building industry—it's important for all of Orange County ` Studies tell us housing is out of reach for too many. $82,180 is now the minimum qualifying income to afford a home in Orange County. 915,,,l of homes are unaffordable to teachers.A$32 hourly wage is necessary to lease a typical two bedroom apartment. These figures should be alarming to all of us. We're at risk of losing our youth and the diverse workforce that makes our economy strong. The net migration for the Southern California region is-41,187 The Housing Initiative is aur effort to reverse this trend. Its recommendations provide a roadmap to the creation of housing that is attainable and meets the needs of our local cities and economy F The benefits of our collective efforts can be many and wide ranging. The approval t . and creation of new communities can provide funding to modernize local a infrastructure, increase property values and promote heathier communities. Let's draw upon our collective talents and build a more vibrant and sustainable Orange County. Sincerely Donna Kelly 2014 President Building Industry Association of Orange County The Housing Futures Initiative I Ly AVC, 0 mendations 1. Existing Opportunities: F,xisting _ « 3. Create New Incentives; �z3l�l S k ^I' >>aral Plans and zoning documents sups—sucid as a reduction ii I �iilding pro ride apportunitis to build � "; ��'" r�� W cutbacks or parking requirenGt nts�^an hones that can be olEered at lower be taken to attract development of _ , prise points,These opportunities income-restricted housing. need to be identified and prorno#ed to stakeholders. ' 2. Modernize Zoning:.: 1 . 4 variel-,� i housing can be provided by adopting flexible development - m standards and mc�dernrzan� �.i � �rng S��ecilically, char :._shoal,i 1'(: designed tot . 'hal affordabl'c li 'ushi. ...Y. Voo Learn o , r a act hle xecutive Officer Mike Balsam �.rY ZI 5 4. Expedite the Process ` 'IalIIning Ih( ;4opment prc : .. I r housing that mer, an -inderserved ilsed can be accomplished by last-tracking permits and even pry approving Program El Rs for residential propeity.A menu of stratr:gio: can be,provided to municipalilic:s. S. Klatch Housing with Transportation: Key d(,, , ; j e is .w. ii . ,ding allorda,-If_:Itt.;u:•. I I .-)Iter, d� ilr —,:need—access to tra nsporlal ion services. An emphasis should be placed on locating affordable new hone opportunities near train stations. bus stops and other forms of public Iranspvrtation. � h. Enlist Community and Business Partners: t cculil'��is 3 Jaxaltonge lu[ all% i i� l Ili f 2 ca G1Clworllll"iellI Arid tfon LIJ, ;1C I:. pail nerrhip -;Jtl'runi., i, I] h ! I. �.. hi�;,in,-;::sc4uminlijniV, :ndil ;mda���catF lc�ralf�rdahl:,l�,_•_:����.a�� : ,tc�ll:.. t 944-777-3864• Finding Solutions Throu, h Coflaborrf Lq Powered by more than 1,000 member companies, the BIA/OC is committed to supporting the creation of housing at all levels of affordability as the foundation of vibrant and sustainable communities. This is why the BIA/OC brought together a group of distinguished stakeholders (from the Kennedy Commission to the Orange County Business Council) to seek out solutions to the problem of a lack of attainable housing in Orange County. The blousing Futures Initiative is the result of this collaboration. The recommendations set forth Initiativein the encoura 9ehdlldesigned d development of broad range Initiative� a � ,� e eveoP of housing at all levels of affordability. Housing Advocates Academic Experts Legal Experts We applaud the Building Industry lers/Builders Association and its partners for advocating D" " for the development of housing at all levels Lenders of affordability. The strength of our local cities Financial Analysts and economy are absolutely dependent on a Business Leaders diverse supply of housing.`° Shari Battle Senior Vice President Bank of America i i 24 Executive Park, Suite Too, Irvine, CA 92614 t: 949-553-9500 f, 949-769-8943 ORANGE COUNTY ;� i BUSINESS CQ[�N01, I