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HomeMy WebLinkAbout04 PC REPORT ORDINANCE NO. 1491 INCLUSIONARY HOUSING • AGENDA REPORT ITEM #4 MEETING DATE: MARCH 27, 2018 TO: PLANNING COMMISSION FROM: .TERRY 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 Planning Commission Public Hearin — Februa 13 2018 On February 13, 2018, the Planning Commission held a Public Hearing on the adoption of Resolution No. 4358, recommending that the Tustin City Council adopt Ordinance 1491. After a staff presentation, public comments and discussion, the Planning Commission noted their concerns and moved to continue the item for six weeks and directed staff to include "tools" that would incentivize development as part of the Ordinance. Summary of Ordinance As a result of the Planning Commission's direction to reconsider the Inclusionary Housing Ordinance in light of the Building Industry Association (BIA) of Orange County's recommendations in their "Housing Futures Initiative" document, Ordinance No. 1491 has been revised to require Inclusionary Housing only in those instances where an application has been submitted to the City to (1) rezone a property from an industrial or commercial district to residential district, (2) change a property's zoning designation from one lower- density residential district to another higher-density residential district, or (3) to develop residential uses within the Red Hill Specific Pian Area, the Downtown Commercial Core Specific Plan Area or any other specific plan area that has a provision for Residential Allocation Reservations. Rezoning, increasing density, and introducing residential units into commercially zoned retail properties addresses the concept of "modernizing zoning" as recommended by BIA and these tools will incentivize development while allowing the 1294692 1 Planning Commission Report Inclusionary Housing March 27, 2018 Page 2 City to address affordable housing through an inclusionary policy. In short, the ordinance would apply to those projects that experience the benefit of increased property values as a result of City approvals. BIA has recommended, "enlisting community and business partners". The City has collaborated with Salvation Army, Orange County Rescue Mission, Human Options, Families Forward and OC Gateway to Housing to provide transitional housing for the homeless. The City has incorporated affordable units into the following neighborhoods: Columbus Grove, Columbus Square, Tustin Field I and II, Amalfi, and Anton Legacy. The City is currently in discussions with Jamboree Housing, Family Promise of Orange County, and HomeAid Orange County to provide additional housing opportunities for low- income households. Ordinance No: 1491 would add Chapter 913 to the Tustin City Code entitled "Inclusionary Housing" and provides residential or mixed-use residential developments required to comply with inclusionary housing with the following four options to satisfy the requirements: 1. Provide affordable units on-site. 15% of the total units are made available as affordable to specific income levels.' Of these affordable units, 6%. must be; available to very low-income households, 4.5% must be available to low-income households, and 4.5% must be available to moderate-income households. Alternatively,12.5% of the total dwelling units in the residential project may be available at an affordable price, provided 7.5% of these units are available to very low-income households, and 5% are available to moderate-income households; 2. Provide affordable units off-site within City limits; 3. Pay an in-lieu fee (to be established by separate resolution of the City Council); or 4. Propose an alternate option deemed acceptable by the City (e.g., the dedication of land for affordable housing). In-lieu fees collected will be deposited into a separate account designated as the City of Tustin Inclusionary Housing Fund. Monies deposited in the inclusionary housing fund will 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 1 The proposed ordinance's inclusionary housing requirements mirror those upheld by the California Supreme Court in California Building Industry Association v. City of.San Jose,61 Cal.0 435(2015)discussed below. 1294692,1 I Planning Commission Report Inclusionary Housing March 27, 2018 Page 3 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. The Ordinance makes the following findings: A. The City of Tustin General Plan Housing Element promotes the dispersion and integration of affordable housing throughout the City. a. New affordable housing within the City in the last 10 years have been developed at Tustin Legacy which has resulted in a geographical concentration; and b. Affordable housing comprises 21% of the total residential development at Tustin Legacy. B. In order to effectuate balanced development within the Tustin Legacy Specific Plan and continue to meet the City's responsibility for a financially self-sustaining project, the City must optimize land sales in support of the following: a. Design and install an infrastructure program including regional backbone and local backbone to facilitate development at Tustin Legacy Specific Plan; and b. Limited resources of the City in meeting capital and operating needs require flexibility in using land sale proceeds. C. The City, as fee owner of property within the Tustin Legacy Specific Plan, can and does require the provision of affordable housing units, depending on circumstances, through Disposition and Development Agreements and Ground Lease Agreements. 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 1294692.1 Planning Commission Report Inclusionary Housing March 27, 2018 Page 4 area from the proposed ordinance to preserve maximum flexibility for City Council as it oversees future development within the specific plan area. Le al Authorit 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 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.4th 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 Iow- 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' 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 California 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." I294692.1 Planning Commission Report Inclusionary Housing March 27, 2018 Page 5 AB 1505, which added subsection (g) to Section 65850 of the Government 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. 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. 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 goat'. 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 1,920 194% 525 1,046 199% TOTAL 2,381 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 these goals, is consistent with RHNA, and will encourage the development of affordable housing outside of Tustin Legacy. 1294692.1 Planning Commission Report Inclusionary Housing March 27, 2018 Page 6 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 falls within CEQA's "common sense" exemption. (CEQA Guidelines § 15061(b)(3).) 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 February 1 , 2018, informing the public of proposed code amendment. Jerry Craig ,� Deputy Di ttor of co mic Development Att6chmentA'Revised Planning Commission Resolution No. 4358 Attachment B: Revised Draft Ordinance No. 1491 1.294692 1 ATTACHMENT A REVISED 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. 149'1, 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 (CB1A v. City of San Jose, 61 Cal.e 435 (2015)). C. 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 1505 provides additional authorization for municipalities to adopt inclusionary housing ordinances. 1 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 inclusionary 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 Iow, 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. 1294162.3 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. That development within the Tustin Legacy Specific Plan area would be exempt from the requirements of the inclusionary housing program and that such an exemption is appropriate as follows: a. The City of Tustin General Plan Housing Element promotes the dispersion and integration of affordable housing throughout the community. 1. All new affordable housing units within the City in the last 10 years have been developed at Tustin Legacy which has resulted in a geographical concentration; and ii. Affordable housing comprises 21% of the total residential development at Tustin Legacy. b. In order to effectuate balanced development within the Tustin Legacy Specific Plan and continue to meet the City's responsibility for a financially self-sustaining project, the City must optimize land sales in support of the following: 1294162.3 Resolution No. 4358 Page 3 i. Design and installation of a multi-decade backbone infrastructure program to facilitate development of the Tustin Legacy Specific Plan; and ii. Limited resources of the City in meeting capital and operating needs require flexibility in using land sale proceeds. c. The City, as fee owner of property within the Tustin Legacy Specific Plan, often requires the provision of affordable housing units, depending on circumstances, through negotiated Disposition and Development Agreements and Ground Lease Agreements. I. Inclusionary housing requirements would apply to development applications seeking to: (1) rezone a property from an industrial or commercial district to a residential district; (2) rezone a property from a lower-density residential district to an higher-density residential district; or (3) utilize a Residential Allocation Reservation in the Red Hill Specific Plan Area or Downtown Commercial Core Specific Plan areas, or any other specific plan area providing for a Residential Allocation Reservation as my be adopted by the City Council. When adding new residential' uses in the aforementioned manner, the City is required to provide for consideration of affordable housing consistent with the Regional Housing Needs Assessment and the City of Tustin General Plan Housing Element. Requiring the provision of inclusionary housing and/or payment of in-lieu fees in these instances is directly proportionate to and commensurate: with the benefits conferred to -the applicant/property owner. J. The proposed addition of Chapter 9B — Inclusionary Housing to Article 9 of thelustin 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).) 12941 62.3 Resolution No. 4358 Page 4 K. "That on March 27, 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. 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 27th day of March, 2018. RYDER TODD SMITH Chairperson ELIZABETH A. BINSACK Planning Commission Secretary 1294162.3 Resolution No. 4358 Page 5 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 27th day of March, 2018, by the following vote: PLANNING COMMISIONER AYES: PLANNING COMMISIONER NOES: PLANNING COMMISIONER ABSTAINED: PLANNING COMMISIONER ABSENT: ELIZABETH A. BINSACK Planning Commission Secretary 1294162.3 ATTACHMENT B REVISED DRAFT ORDINANCE NO. 1491 DRAFT ORDINANCE NO. 9491 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, ADDING CHAPTER 9113 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 and determines 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 1505 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. 1293626,2 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 development within the Tustin Legacy Specific Plan area would be exempt from the requirements of the inclusionary housing program and that such an exemption is appropriate as follows: a. The City of Tustin General Plan Housing Element promotes the dispersion and integration of affordable housing throughout the community. i. All new affordable housing within the City in the last 10 years have been developed at Tustin Legacy which has resulted in a geographical concentration; and ii. Affordable housing comprises 21% of the total residential development at Tustin Legacy. b. In order to effectuate balanced development within the Tustin Legacy Specific Plan and continue to meet the City's responsibility for a 1293626.2 Ordinance No. 1491 Page 3 financially self-sustaining project, the City must optimize land sales in support of the following: 1. Design and installation of a multi-decade backbone infrastructure program to facilitate development of the Tustin Legacy Specific Plan; and ii. Limited resources of the City in meeting capital and operating needs require flexibility in using land sale proceeds. c. The City, as fee owner of property within the Tustin Legacy Specific Plan, often requires the provision of affordable housing units, depending on circumstances, through negotiated Disposition and Development Agreements and Ground Lease Agreements. J. That on March 27, 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. K. That on March 27, 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. L. That on April 17, 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 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 1293626,2 Ordinance No. 1491 Page 4 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 and also 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. "Development approval" means a tentative map, parcel map, conditional use permit, development agreement, or any other discretionary permit. "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. 1293626.2 Ordinance No. 1491 Page 5 "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). "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 to (1) rezone a property from an industrial or commercial district to residential district, (2) change a property's zoning designation from one lower- density residential district to another higher-density residential district, or (3) to develop 1293626.2 Ordinance No. 1491 Page 6 residential uses within the Red Hill Specific Plan Area, the Downtown Commercial Core Specific Plan Area or any other specific plan area that has a provision for Residential Allocation Reservations, and where the project: (a) Would create 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 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 1293626.2 Ordinance No. 1491 Page 7 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 All new residential projects, as defined in Section B9912 and as specified in Section B9921, 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 B9912 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: 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, six 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 1293626.2 Ordinance No. 1491- Page 8 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. B9924 - 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. B9925 - 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. B9926 - 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. B9927 - OPTIONS TO SATISFY INCLUSIONARY REQUIREMENTS (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 139923. 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 B9923 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 1293626.2 Ordinance No. 1491 Page 9 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 B9928; (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. (c) In-lieu fee. The inclusionary unit requirements of Section B9923 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. 1293626.2 i Ordinance No. 1491 Page 10 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 (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. 1293626.2 Ordinance No. 1491 Page 11 B9929 - 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 B9931 - 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. (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. 1293626,2 Ordinance No. 1491 Page 12 (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 inclusionary 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 recordedagainst the entire residential project property and any other property used for the purposes of providing inclusionary housing pursuant to this Chapter. PART 4 - ADMINISTRATION AND ENFORCEMENT B9941 - 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 1293626.2 Ordinance No. 1491 Page 13 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. 89943 - 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: (1) To disapprove, revolve, 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. 1293626.2 Ordinance No. 1491 Page 14 SECTION Ill. 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 AL MURRAY, MAYOR ATTEST: ERICA N. RABE, CITY CLERK 1293626.2 Ordinance No. 1491 Page 15 1 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: 1293626.2