HomeMy WebLinkAbout17_IMPLEMENTATION_STATUS_OF_THE_2024_DOWNTOWN_COMMERCIAL_CORE_SPECIFIC_PLAN_AND_RED_HILL_SPECIFIC_PLMEETING DATE: AUGUST 4, 2026
TO: ALDO E. SCHINDLER, CITY MANAGER
FROM: ALEXA SMITTLE, COMMUNITY DEVELOPMENT DIRECTOR
SUBJECT: IMPLEMENTATION STATUS OF THE 2024 DOWNTOWN COMMERCIAL
CORE SPECIFIC PLAN AND RED HILL AVENUE SPECIFIC PLAN
ASSESSMENT REPORT
SUMMARY:
At this time, staff is providing a status update regarding potential Tustin City Code and
specific plan amendments related to density bonus, height standards, mixed use
requirements, and parking standards as further implementation of the City Council
approved 2024 Downtown Commercial Core Specific Plan and Red Hill Avenue Specific
Plan Assessment Report recommendations.
RECOMMENDATION:
Direct staff to continue analyzing and preparing potential Tustin City Code and/or specific
plan amendments related to density bonus, height standards, mixed use requirements,
and parking standards as further implementation of the City Council approved 2024
Downtown Commercial Core Specific Plan and Red Hill Avenue Specific Plan
Assessment Report recommendations through a future public hearing process to obtain
community input and a Planning Commission recommendation before returning to the
City Council for consideration.
FISCAL IMPACT:
There is no fiscal impact to receiving and filing this report. The analysis presented here
was grant funded through the Orange County Council of Governments.
CORRELATION TO THE STRATEGIC PLAN:
The proposed project furthers the objectives of the following Strategic Plan goal:
This project supports Strategic Plan Goal A, Economic and Neighborhood Development,
by evaluating ways in which to encourage investment in the Downtown Commercial Core
and Red Hill Avenue Specific Plans.
AGENDA REPORT Agenda Item _______
Reviewed:
City Manager _______
Finance Director _______
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N/A
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City Council Agenda Report
Specific Plan Analyses
August 4, 2026
Page 2
BACKGROUND AND DISCUSSION:
In 2023, the City initiated an assessment of the Downtown Commercial Core Specific
Plan (DCCSP) and Red Hill Avenue Specific Plan (RHASP) areas to remove barriers to
private investment and better incentivize development of vacant and underutilized sites.
A series of recommendations were presented to the City Council in early 2024 (2024
Report), and staff was directed to begin implementation efforts. Since that time, a number
of the recommended actions have been taken, including the public improvements
underway in Old Town currently, suspension of the workforce housing in-lieu fee, and
modifications to residential storage standards. This item presents ongoing efforts to
analyze additional strategies to foster investment in these areas.
The goal of the analysis (Attachment 1) is to provide greater flexibility for housing
development, and help guide development by providing clear, enforceable criteria that
align with other City adopted documents such as its General Plan, Housing Element, and
Zoning Ordinances.
2024 Study Topic Assessment
1 Density Bonus & Workforce
Housing Align TCC with current State law; continue research
on workforce housing
2 Limited Standalone
Residential
Permit residential only uses on infill parcels under
20,000 square feet where mixed-use development is
less feasible under that threshold
3 Building Height Add one story to incentivize development
4 Alternative/Shared Parking Allow shared parking agreements to reflect demand
and increase development capacity
Density Bonus and Workforce Housing
The 2024 Report (Attachment 2) recommended providing clarity to property owners on
how (a) density bonus projects and (b) workforce housing requirements function in the
two Specific Plans. The provisions of density bonus law are a State mandate, in which a
developer who provides affordable housing is entitled to receive increased density,
concessions, and waivers of development standards. The amount of benefit varies based
on the percentage of affordable units provided and their intended level of affordability.
The intent of the Density Bonus Law is to facilitate the development of affordable housing
and to implement the goals, objectives and policies of the City’s Housing Element.
Consistent with State law, TCC Section 9111, et seq., provides the local implementation
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Specific Plan Analyses
August 4, 2026
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of density bonuses. Due to the frequency of changes to State density bonus law, TCC
Section 9111 has become outdated.
An option is providing greater reference to State laws, so as laws change, the TCC would
remain consistent with the State legislation. Guidelines (Attachment 3) would be paired
with a revised ordinance (draft text in Attachment 4) to provide a more user-friendly
experience than navigating codes, offering clarity to property owners on utilizing density
bonus provisions. The TCC amendment and guidelines would be applicable citywide.
The City’s voluntary workforce housing requirement only applies to residential projects
that are within the DCCSP and RHASP; however, there is no reference to the program
within either of the specific plans. The 2024 Study suggested amendments to the specific
plans to provide clarity to developers. An assessment of the workforce housing program
is underway, to be presented to the City Council at a later date, followed by specific plan
amendments as needed.
Limited Standalone Residential
Currently, most areas within the DCCSP and all of the areas within the RHASP require
mixed-use or flexible-format retail with no residential-only development option. This
mixed-use mandate is often impractical for small, narrow, or irregular infill parcels (under
20,000 sq ft), since fitting both commercial and residential uses—along with separate
utilities, HVAC, loading areas, and access/parking—into a tight footprint can undermine
amenities, storefront quality, financing, and overall feasibility, potentially making projects
impossible or too costly to build. To identify which parcels would benefit, an analysis was
performed to identify lots under 20,000 sq ft and without higher sales-tax-generating uses
currently in place (see Attachment 5 for a map). Amending both specific plans to allow for
multi-family, residential-only development on these smaller lots only would make better
use of underused parcels, support flexible housing designs suited to tight sites, and grow
the local customer base for existing storefronts without hurting property values.
Building Height
The DCCSP allows heights of three to five stories, although the five-story limit is only
permitted adjacent to the freeway. The RHASP has a height limit of four stories. The
analysis studied increasing these height limits by one story (12 feet); however, additional
analysis would be performed to limit height changes in parcels adjacent/near historic
properties. The added height would not increase the number of units allowed within the
specific plans areas, which would still be controlled through the existing Residential
Allocation Reservation (RAR) process. Increasing the height would instead provide
additional flexibility to developers to build at a greater density, or offer opportunities for
larger units or enhanced amenities. To that end, because there is no change to the
number of residential units previously analyzed when the two specific plans were
adopted, building height modifications are expected to be exempt from the California
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Specific Plan Analyses
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Environmental Quality Act. The increased height would also support mixed-use
developments as the additional level of residential development can improve project
financial feasibility, supporting ground floor commercial uses.
Alternative/Shared Parking
The DCCSP and RHASP allow some alternative or shared parking for commercial and
mixed-use projects. Residential-only projects must provide all parking onsite. An initial
review of surrounding communities found that best practices include allowing standalone
residential projects to provide a parking study to determine if alternative parking would be
feasible. The analysis also studied allowing shared parking to reduce the parking
requirement for mixed use projects, and to allow parking to be shared between residential
projects and adjoining commercial developments.
Studies have shown that residential parking demand peaks intensely overnight while
commercial, retail, and office demand drops to near zero. Allowing residential projects to
take advantage of shared parking with an adjoining commercial use would provide
developers with the flexibility to design multi-family residential projects while further
reducing barriers as it relates to mixed use projects.
_____________________
Alexa Smittle
Director of Community Development
_____________________
Jay Eastman, AICP
Assistant Director - Planning
Attachments:
1. Analysis and Proposed Amendments to the DCCSP and RHASP
2. 2024 Downtown Commercial Core and Red Hill Avenue Specific Plan
Reassessments
3. Draft Density Bonus Guidelines
4. Draft Density Bonus Code Update
5. Map of parcels for residential-only uses
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Draft Analysis and Amendments to the
Red Hill Area and Downtown
Commercial Core Specific Plans
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EXECUTIVE SUMMARY
The Downtown Commercial Core Specific Plan (DCCSP) and the Red Hill Avenue
Specific Plan (RHASP) were both adopted in 2018 but have resulted in little
investment on underutilized lands. An assessment completed for the City by
Economic Planning Solutions (EPS) in 2024 identified barriers and challenges to
real estate investment in the DCCSP and RHASP. The EPS report recommended
planning and policy solutions to overcome the barriers and challenges, which
includes:
x Revisiting the voluntary workforce housing requirements.
x Identify areas where stand-alone residential projects could be permitted,
including how to incorporate parking.
x Modify the building height restrictions.
x Clarify implementation of density bonuses within each specific plan.
This report is intended to identify the next steps to implement these
recommendations, including identifying specific code changes that should be
incorporated into the DCCSP, RHASP, and Tustin City Code (TCC) to encourage
new residential development.
The report's analysis and recommendations are organized into four primary areas:
x Workforce Housing & Density Bonus Integration:Current specific plans lack
clear directives for developers regarding Tustin’s inclusionary housing
requirements. The report recommends updating the DCCSP and RHASP text
to explicitly reference Tustin City Code (TCC) Article 9, Chapter 9B.
Additionally, it recommends updating TCC Article 9, Chapter 1 to align
local density bonus regulations with evolving State law, and conducting a
modern market study to ensure current affordability thresholds remain
economically viable.
x Permitting Standalone Residential Projects: Universal mixed-use mandates
are structurally and financially impractical for small infill parcels under
20,000 square feet. To unlock these underutilized properties, the report
recommends amending both specific plans to permit standalone
multifamily residential projects on eligible small parcels, expanding the
local consumer base to support nearby commercial districts.
x Increasing Allowable Building Heights: Strict height limitations suppress
development capacity on highly constrained urban lots. Massing models
demonstrate that increasing allowable heights by 12 feet (one story)
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provides significant development potential with negligible visual impact on
bulk and scale. The report recommends amending building height limits to
62 feet (5 stories) in the RHASP, and increasing allowable stories in the
DCCSP's various development areas.
x Modernizing Parking Standards: Blended mixed-use developments and
shared parking structures create a "captive market" effect where peak
parking demands do not overlap, naturally lowering overall parking
demand by 20% to 40%. The report recommends amending both specific
plans to permit shared parking agreements for mixed-use projects and
allowing standalone residential properties to secure shared parking
agreements with adjoining commercial neighbors.
WORKFORCE HOUSING
The City of Tustin has a workforce housing ordinance, which is commonly referred
to as the City’s inclusionary housing requirement. The City’s workforce housing
ordinance is contained within TCC Article 9, Chapter 9B. This inclusionary housing
requirement applies to any residential project, including mixed use
developments, which are subject to the Residential Allocation Reservation (RAR)
process. Currently, the RAR process is only applicable to the DCCP and RHASP
areas.
Under TCC Section B9923, an applicant can choose one of the following to
comply with the workforce housing requirement:
Table 1 – TCC Workforce Housing Requirements
Option Very-Low
Income Units
Low Income
Units
Moderate
Income
Units
Total
Affordable
Units
In-Lieu Fee
Required
1 6.0% 4.5% 4.5% 15.0% No
2 7.5% 0.0% 5.0% 12.5% No
3 5.0% 0.0% 0.0% 5.0% Yes
4 0.0% 10.0% 0.0% 10.0% Yes
Alternative means of compliance are provided for projects with fewer than 20
units. This includes:
1. Constructing the units off-site or converting existing market rate units to
workforce housing. For this option, the offsite units or market rate units shall
be within the city.
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2. Payment of an in-lieu as established by City Council resolution.
3. The applicant can propose an alternative, including dedication of land,
which may be deemed acceptable by the City.
Density Bonus Law
State density bonus law is contained in California Government Code Section
65915 et. seq. These regulations are implemented locally through TCC Article 9,
Chapter 1. Density bonuses provide qualified housing projects with increased
density, concessions/incentives, and waivers/reductions of development
standards, pursuant to formulas within the legislation. To qualify for density bonus,
a housing project would need to be at least five units and include a minimum of
5% very low-income units, 10% low-income units, or 10% moderate-income units.
Further, projects that utilize Options 1 or 2 from Table 1 above could take
advantage of “stacked density” benefits set forth in Government Code Section
65915(v). These benefits allow for an increased density bonus for mixed income
affordability projects. For example, under Option 1 of the Voluntary Workforce
Housing requirements, a project that obtains RAR approval for 20 units would
need to provide the following affordable units:
Very Low-Income Units: 20 units x 6% = 1.2 units (rounded up to 2)
Low-Income Units: 20 units x 4.5% = 0.9 units (rounded up to 1)
Moderate-Income Units: 20 units x 4.5% = 0.9 units (rounded up to 1)
The stacked density bonus option allows the developer to add the increase the
density from two different income categories. In this case, using the very low-
income and moderate-income would maximize the developer benefit. Two very
low-income units would be 10% of the base density, providing a 32.5% increase.
One moderate-income unit would be 5% of the base density, providing a 20%
increase. Table 2 demonstrates the total project unit count.
Table 2 – Example Density Bonus
Category Units
Base Density 20
32.5% increase for very low-income 7
20% Stacked Density Bonus 4
Total Number of Units 31
In this scenario, the applicant would also be eligible for one incentive/concession
and an unlimited amount of development standard waivers/reductions. Density
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bonus law also provides a reduced parking requirement, but the City parking
requirements are already slightly lower, effectively eliminating this developer
benefit.
This analysis finds the City’s workforce housing ordinance, TCC Article 9B, does not
conflict with State density bonus law. However, while no inherent conflict exists,
the City’s density bonus regulations, TCC Article 9, Chapter 1 has not been
comprehensively updated since 2022. Several subsequent changes to State law
now affect this Chapter and require integration. Should any portion of the TCC
Article 9, Chapter 1 conflict with the current State law, State law would prevail.
Recommendation: Update TCC Article 9, Chapter 1 to ensure the City’s density
bonus regulations do not conflict with State law. Provide guidelines for easier
communication with property owners and developers.
Red Hill Avenue Specific Plan (RHASP)
Adopted in November 2018, the RHASP covers 36 acres of land adjacent to Red
Hill Avenue. Permitted land uses are intended to promote shopping, dining,
entertainment, employment and housing in a pedestrian-friendly environment.
Among these land uses are flexible format retail, a type of live/work land use, and
mixed-use development, which allows commercial and residential uses on the
same development site.
The RHASP permits up to 500 residential units, with 395 units allocated north of
Interstate 5, and 105 units to be located south of Interstate 5. Maximum densities
are not included in any of the development standards, instead the allocation of
units is dependent on the RAR process. Section 4.5 of the RHASP requires approval
of a RAR application to establish the base density of a project. As established in
TCC Article 9B, any residential project subject to an RAR application is subject to
the workforce housing requirement of TCC Chapter 9B, although this is not
explicitly stated in the RHASP. As a result, a potential developer could fail to
appropriately account for affordable units during their initial due diligence phase
and budget planning.
Recommendation: Update RHASP Table 4-1 (Permitted Land Use and Activities)
to include a reference the workforce housing requirement would apply to
residential projects. The update should read as follows (revised text in underline
and blue):
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Table 3 – Excerpt from Table 4-1 of the RHASP
Residential and Mixed-use
Land Use or Activity RHASP Planning Area Notes
Flexible Format Retail P/R See provision for allocation
of residential uses.Subject
to workforce housing
provisions listed in TCC
Article 9, Chapter 9B.
Mixed-Use Developments P/R Residential Use Permit
required for all residential
uses. Freestanding
residential uses are not
permitted at the ground
floor frontage along Red
Hill Avenue.Subject to
workforce housing
provisions listed in TCC
Article 9, Chapter 9B.
Downtown Commercial Core Specific Plan (DCCSP)
The DCCSP was adopted on July 3, 2018 in order to preserve and enhance the
downtown area of Tustin, a portion of which includes Old Town Tustin. Prior to
adoption of the DCCSP, residential uses were not permitted within the
commercially zoned areas of the specific plan. The DCCSP now allows mixed-use
residential projects, provided they are located behind or above the site’s
commercial frontages.
The maximum number of residential units under the DCCSP is 887, which is further
restricted per development area, as follows:
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Table 4 – RAR Bank in the DCCSP
Development Area (DA)Units
DA-1 45
DA-2 92
DA-3 200
DA-4 150
DA-5 0
DA-6 400
TOTAL 887
The DCCSP also authorizes the Community Development Director approve the
transfer of units between development areas, provided the total number of units
transferred does not exceed 25% of a DA’s initial allotment.
A developer wishing to build a housing or mixed-use project would first obtain
approval of an RAR application, which would authorize the number of units they
could build; then they would proceed through the entitlement process. As with
the RHASP, any residential project or mixed-use project would be subject to the
workforce housing requirement of TCC Chapter 9B, though this is not made clear
within the specific plan.
Recommendation: Update Table 5-1 (Residential Permitted Use Table) to include
a reference the workforce housing requirement would apply to residential
projects. The update should read as follows (revised text in underline and blue):
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Table 5 – Table 5.1 of the DCCSP
LAND USE
DCCSP DESIGNATIONS
See
foot-
note
(1)(2)
DM
(3)(4)(5)OT DC CI MF MH
Corresponding DA Number
DA-1DA-2DA-3DA-6BDA-6CPortionDA-4PortionDA-5PortionDA-2,4,5DA-6APortionDA-4RESIDENTIAL
Residentialin historic single-family
residences P -- -- -- -- P -- -- -- -- 1
Multifamily residential -- -- -- -- -- -- -- -- R --
2, 3, 6
Mixed-use residential R R R R R R -- -- -- --
2, 3, 6
Live/work units -- -- R R R R -- -- -- -- 4, 5, 6
Mobile home parks -- -- -- -- -- -- -- -- -- P
6
Key:
P Permitted Use requires Design Review in compliance with Chapter 6, Administration and
Implementation Plan.
R Requires discretionary approval of a Residential Allocation Reservation in compliance with Chapter 6,
Administration and Implementation Plan.
--ProhibitedUse
Footnotes:
1.See DCCSP Section 3.2.1 of Special Use Restrictions.
2.Parcels existing at the time of adoption of the DCCSP within the MF land use designation are
permitted one residentialunit byright, subject toTCC Section7262, Design Review, providedthe unit
is deducted from the residential bank (refer to Chapter 6).
3.See DCCSP Section 3.2.2 of Special Use Restrictions and Ordinance 1472 for approved Vintage multi-
family residential project in Multi-Family (MF).
4.Prohibited on principal streets; only allowed on non-principal streets (refer to Figure 2.3, Principal
or Non-Principal Streets) and subject to the Development Standards, Design Criteria, Entitlement
Processing and Required Findings applicable to vertical mixed Use.
5.See DCCSP Section 3.2.2 of Special Use Restrictions and Ordinance 1361 for allowable uses
within Prospect Village live/work project.
6.Subject to workforce housing provisions listed in TCC Article 9, Chapter 9B.
The footnote numbers in the above amendment may change based on the City
potentially adopting multiple amendments recommended in this report.
Workforce Housing Requirement
The EPS report found that the City should review the City’s inclusionary program
and conduct feasibility analysis to optimize rules and ensure consistency with the
City’s Housing Element, evolving State law, and economic considerations.
California Government Code Section 65850(g) authorizes a city to establish a
minimum number of units in a residential or mixed-use project that shall be
reserved for affordable households. However, this statute also requires that as part
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of the inclusionary (workforce housing) ordinance, a city shall include an
alternative means of compliance, such as in-lieu fees, land dedication, off-site
construction, or acquisition and rehabilitation of existing units. Any ordinance
adopted or amended after September 15, 2017, that applies to rental units and
requires more than 15% affordable housing on extremely low, very low, and/or
low housing would be subject to HCD review. Since the City does not exceed the
15% threshold, the workforce housing requirement did not trigger HCD review.
To investigate whether the inclusionary requirement creates a governmental
constraint to development, it is important to re-evaluate the affordability
requirements from time-to-time. A survey of seven surrounding cities was
conducted to compare with Tustin’s workforce housing requirements.
Table 6 – Inclusionary Requirements of Surrounding Cities
City Requirement
Santa Ana Ownership Units: 5% moderate income
Rental units: Either one of the following
x 5% extremely low-income
x 10% very low-income
x 15% low-income
or all of the following
x 2% extremely low-income
x 3% very low-income
x 5% low-income
Irvine Ownership and rental shall provide all of the following
x 5% extremely and/or very low-income
x 5% very low-income
x 5% moderate-income
Irvine also provides credit for providing larger units or
ownership units for the extremely, very low, and low
categories.
Orange No inclusionary requirement, but City Council has
adopted a policy to establish a target goal of 20% of the
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City Requirement
annual production of new residential housing as
affordable
Costa Mesa Rental units where density is permitted to be 60 dwelling
units per acre or higher shall provide either
x 5% very low-income
x 10% low-income
Rental units where density is permitted to be less than 60
dwelling units per acre shall provide either
x 4% very low-income
x 6% low-income
Anaheim Rental units shall provide both of the following
x 3% very low-income
x 7% low-income
Mission Viejo Ownership units shall provide the following
x 5% low-income
x 10% moderate-income
Rental units shall provide the following
x 7.5% very low-income
x 7.5% low-income
Fountain Valley All new residential projects with four or more units shall
provide 15% of the units to either extremely low-, very
low-, and low-income households.
The City of Tustin’s workforce housing requirement aligns with policies in
surrounding cities. However, because this standard was established in 2018, it may
not fully reflect subsequent shifts in the residential real estate market. To ensure
current policies do not inadvertently impose unnecessary governmental
constraints on development, an analysis should be conducted to include a
comprehensive review of the affordable housing unit thresholds and the impacts
of housing in-lieu fees on development.
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Recommendation: Conduct a market study of the workforce housing requirement
to ensure the thresholds are appropriate under current market conditions.
STANDALONE RESIDENTIAL PROJECTS
Even though the DCCSP authorizes mixed-use projects in the Downtown Mixed
Use (DM) and the Old Town (OT) districts, standalone multifamily residential
projects are only permitted in the Multi-Family (MF) district. The MF district is a small
triangular shaped area, bounded by Interstate 5 to the south, B Street to the east,
and Sixth Street to the north. Similarly, the RHASP only permits construction of
flexible format retail (a type of live/work unit) and mixed-use projects. Standalone
multifamily residential projects are not permitted in the RHASP.
The physical reality of urban infill parcels makes universal mixed-use mandates
structurally and financially impractical. Small (less than 20,000 square feet),
narrow, or irregularly shaped parcels face severe architectural and engineering
constraints when forced to integrate commercial and residential uses within a
limited footprint. Compelling these smaller lots to accommodate both uses
frequently compromises the project's viability by restricting the developer's ability
to satisfy parking demands, providing adequate residential amenities, or
designing appropriately sized ground-floor storefronts capable of attracting high-
quality tenants. This can also create obstacles to obtaining appropriate financing
for construction of the project. Furthermore, a functional mixed-use environment
typically requires complex structural isolation, including independent utility
services, dedicated HVAC zone, separate loading docks for commercial
deliveries, and entirely segregated access corridors and parking infrastructure for
shoppers and residents. For smaller parcels, these overlapping spatial and
mechanical requirements can consume the entirety of the ground-floor footprint.
This renders projects either physically impossible to design or cost-prohibitive to
construct.
Amending the DCCSP and RHASP to permit standalone multi-family residential
projects would unlock underutilized smaller lots, thereby enabling a range of
flexible residential products that could adapt seamlessly to tight footprints.
Ultimately, introducing standalone residential projects into a mixed-use district
would expand the local consumer base necessary to sustain existing, nearby
storefronts, reinforcing a symbiotic neighborhood economy without diluting
overall real estate value.
An analysis of the parcels on retail nodes within the DCCSP and RHASP was
conducted to determine which smaller lots would benefit from standalone
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residential projects. Properties with a lot size of 20,000 square feet and/or with a
higher sales tax generating use (e.g. gas stations, grocery stores, etc.) were
excluded. The 20,000 square foot limit was selected because when a parcel drops
below this threshold, the ratio of "support space" (parking, drive aisles, stairs,
lobbies, trash, utility vaults) to "revenue-generating space" (rentable retail and
apartments) becomes undesirable. Table 7 and 8 show sites that should be
allowed to construct standalone multifamily residential projects.
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Table 7 –Parcels Eligible for Standalone Residential in the DCCSP
Address APN Size Current Use
13432 Newport Ave 500-131-05 10,329 ƐƋ͘Ō͘Salon and vacant space
13732 Newport Ave 500-171-19 11,948 ƐƋ͘Ō͘ KĸĐĞ͕ŵĞĚŝĐĂů
n/a 401-163-10 14,596 ƐƋ͘Ō͘ ^ƵƌĨĂĐĞƉĂƌŬŝŶŐ
381 E 1st Street 401-141-10 11,005 ƐƋ͘Ō͘ DĞĚŝĐĂů
n/a 401-141-12 12,871 ƐƋ͘Ō͘ ^ƵƌĨĂĐĞƉĂƌŬŝŶŐ
101 E 1st Street 401-532-38 14,441 ƐƋ͘Ō͘ ŽŝŶĂƌǁĂƐŚ
ϭϯϬ ůĂŵŝŶŽZĞĂů 401-571-02 6,628 ƐƋ͘Ō͘ ĞŶƟƐƚ
205 W 1st Street 401-531-14 ϭϯ͕ϴϳϵƐƋ͘Ō͘ KĸĐĞ
215 W 1st Street 401-531-13 ϭϯ͕ϵϰϰƐƋ͘Ō͘ KĸĐĞ
301 W 1st Street 401-523-17 4,923 ƐƋ͘Ō͘ KĸĐĞ
305 W 1st Street 401-523-16 10,039 ƐƋ͘Ō͘Book store
112 N A Street 401-522-12 4,921 ƐƋ͘Ō͘ ^ƵƌĨĂĐĞƉĂƌŬŝŶŐ
425 W 1st Street 401-522-11 10,900 ƐƋ͘Ō͘ ƵƚŽƌĞƉĂŝƌ
465 W 1st Street 401-522-10 12,127 ƐƋ͘Ō͘ ,ŽŵĞ^ĞƌǀŝĐĞ
501 W 1st Street 401-521-14 7,951 ƐƋ͘Ō͘Wellness
505 W 1st Street 401-521-13 6,337 ƐƋ͘Ō͘Wellness
741 W 1st Street 401-302-13 10,590 ƐƋ͘Ō͘Vet
ϮϳϬ DĂŝŶ^ƚ 401-623-06 14,166 ƐƋ͘Ō͘ ^ƚŽƌĂŐĞ
ϭϲϬ DĂŝŶ^ƚ 401-623-02 6,682 ƐƋ͘Ō͘ WŚĂƌŵĂĐLJ
ϭϰϱtDĂŝŶ^ƚ 401-573-07 12,172 ƐƋ͘Ō͘ DĞĚŝĐĂů͕dŚĞƌĂƉLJ
ϭϮϱtDĂŝŶ^ƚ 401-573-13 10,896 ƐƋ͘Ō͘Vacant
Table 8 –Parcels Eligible for Standalone Residential in the RHASP
Address APN Size Existing Use
14122 Redhill Ave 432-031-21 11,780 sf iƯièe, ıedièÍl, deIJťisť
14092 Redhill Ave 432-401-09 17,595 sf
ĺIJveIJieIJť sťĺŘe,
iIJsŪŘÍIJèe ĺƯièe, ŕhĺIJe
ŘeťÍil
13802 Redhill Ave 500-022-11 15,301 sf «ÍèÍIJť
Recommendation: The City should amend the RHASP and DCCSP to allow
standalone residential parcels. As part of these updates, the City should include
a map of the above-listed addresses. The recommended text updates should
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read as follows (new text in underline and blue and deleted text is red and
strikethrough):
The following would be the proposed amendment for the DCCSP.
Table 9 – Table 5.1 of the DCCSP
LAND USE
DCCSP DESIGNATIONS
See
foot-
note
(1)(2)
DM
(3)(4)(5)OT DC CI MF MH
Corresponding DA Number
DA-1DA-2DA-3DA-6BDA-6CPortionDA-4PortionDA-5PortionDA-2,4,5DA-6APortionDA-4RESIDENTIAL
Residentialin historic single-family
residences P -- -- -- -- P -- -- -- -- 1
Multifamily residential R R R R R -- R -- R -- 2, 3, 6
Mixed-use residential R R R R R R -- -- -- --
2, 3
Live/work units -- -- R R R R -- -- -- -- 4, 5
Mobile home parks -- -- -- -- -- -- -- -- -- P
Key:
P Permitted Use requires Design Review in compliance with Chapter 6, Administration and
Implementation Plan.
R Requires discretionary approval of a Residential Allocation Reservation in compliance with Chapter 6,
Administration and Implementation Plan.
--ProhibitedUse
Footnotes:
1.See DCCSP Section 3.2.1 of Special Use Restrictions.
2.Parcels existing at the time of adoption of the DCCSP within the MF land use designation are
permitted one residentialunit byright, subject toTCC Section7262, Design Review, providedthe unit
is deducted from the residential bank (refer to Chapter 6).
3.See DCCSP Section 3.2.2 of Special Use Restrictions and Ordinance 1472 for approved Vintage multi-
family residential project in Multi-Family (MF).
4.Prohibited on principal streets; only allowed on non-principal streets (refer to Figure 2.3, Principal
or Non-Principal Streets) and subject to the Development Standards, Design Criteria, Entitlement
Processing and Required Findings applicable to vertical mixed Use.
5.See DCCSP Section 3.2.2 of Special Use Restrictions and Ordinance 1361 for allowable uses
within Prospect Village live/work project.
6.Within the DM(1), DM(2), DM(3), DM(4), DM(5), and DC districts, multifamily residential is only
permitted on properties shown on Figure 5.1
The footnote numbers in the above amendment may change based on the City
potentially adopting multiple amendments recommended in this report.
Furthermore, Figure 5.1, demonstrating the parcels where standalone multifamily
projects are allowed would need to be created as part of this amendment.
Additionally, the headers for Tables 5.2 and 5.3 would need to be updated as
follows:
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Table 10 – Excerpt from Table 5.2 of the DCCSP
MIXED USE AND MULTIFAMILY BUILDINGS
Development Standards for
DA-1, DA-2, DA-3, DA-6B & DA-6C
These Development Standards shall apply to both the residential and commercial components of mixed use
development, as well as all portions of multifamily buildings within DA-1, DA-2, DA-3, DA-6B and DA-6C. As
indicated in Table 5.1, Residential Permitted Use Table, residential component of any project mixed use
requires approval of a discretionary Residential Allocation Reservation (RAR), in addition to any other
entitlements required by the project, as provided in Section 6.1.3, Entitlement Processes. See also Section 5.4,
Residential Design Criteria, and Chapter 4, Commercial Design Criteria, for commercial components of
mixed use.
Mixed Use Development Standards DA-1 & DA-2 DA-3, DA-6B & DA-6C
Table 11 – Excerpt from Table 5.3 of the DCCSP
MIXED USE AND MULTIFAMILY BUILDINGS
Development Standards for
DA-4
These Development Standards shall apply to both the residential and commercial components of mixed use
development,, as well as all portions of multifamily buildings with-in DA-4. As indicated in Table 5.1, Residential
Permitted Use Table, residential component of any project mixed use requires approval of a discretionary
Residential Allocation Reservation (RAR) entitlement, in addition to any other entitlements required by the
project, as provided in Section 6.1.3, Entitlement Processes. See also Section 5.4, Residential Design Criteria, and
Chapter 4, Commercial Design Criteria, for commercial components of mixed use.
Mixed Use Development Standards DA-4
The following would be the proposed amendment for the RHASP.
Table 12 – Excerpt from Table 4-1 of the RHASP
Residential and Mixed-use
Land Use or Activity RHASP Planning Area Notes
Flexible Format Retail P/R See provision for allocation
of residential uses.
Mixed-Use Developments P/R Residential Use Permit
required for all residential
uses. Freestanding
residential uses are not
permitted at the ground
floor frontage along Red
Hill Avenue.
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Multifamily Residential P/R Only permitted on
properties shown on Figure
4.0. Residential Use Permit
required for all residential
uses.
Figure 4.0, demonstrating the parcels where standalone multifamily projects are
allowed would need to be created as part of this amendment. Additionally, the
header on Table 4-3 would need to be updated as follows:
Table 4-3 General Development Standards & Requirements
(Standards shown are minimums unless specified)
Development Standards Commercial (1)Mixed-Use/Multifamily (2)
BUILDING HEIGHT
** Note: further research is necessary for height restrictions in the DCCSP to
address historic property adjacency. This analysis will be incorporated prior to
consideration of height limit amendments.
Independent research on land-use policy has consistently recognized that
building-height limitations and other development regulations directly influence
a site's development capacity. In its 2017 report, The Governance of Land Use in
OECD Countries 1, the Organization for Economic Co-operation and
Development (OECD)—an international organization composed of 38 member
countries, including the United States—explains that regulations such as building-
height limits and floor area ratio (FAR) restrictions prevent densification by limiting
the amount of floor space that can be constructed on a property. The report
concludes that, collectively, these regulatory limitations reduce the amount of
residential and commercial development that can be built, thereby constraining
overall development capacity.
The report further explains that in urbanized areas where developable land is
limited, growth primarily occurs through vertical development. As available land
becomes increasingly constrained, accommodating additional growth requires
more efficient use of existing sites, including the ability to build upward.
Accordingly, allowing additional building height removes a regulatory constraint
1 ŚƩƉƐ͗ͬͬǁǁǁ͘ŽĞĐĚ͘ŽƌŐͬĐŽŶƚĞŶƚͬĚĂŵͬŽĞĐĚͬĞŶͬƉƵďůŝĐĂƟŽŶƐͬƌĞƉŽƌƚƐͬϮϬϭϳͬϬϱͬƚŚĞ-ŐŽǀĞƌŶĂŶĐĞ-of-land-use-ŝŶ-oecd-
ĐŽƵŶƚƌŝĞƐͺŐϭŐϳϰĂĨĐͬϵϳϴϵϮϲϰϮϲϴϲϬϵ-ĞŶ͘ƉĚĨ͕ĂĐĐĞƐƐĞĚ:ƵůLJϵ͕ϮϬϮϲ͘
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that would otherwise limit the amount of floor area that can be developed,
increasing a property's development potential while supporting more efficient
land utilization. Consistent with these recognized planning principles, the
proposed increase in allowable building height would expand the site's
development capacity by permitting additional floor area that could not
otherwise be achieved under the existing height limitation, thereby facilitating a
more efficient and productive use of the property.
A common concern with height increases is their potential impact on the visual
bulk and mass of the surrounding area. To evaluate how a one-story (12-foot)
height limit increase would affect these properties, two massing models were
developed. The first model analyzes a site within the DCCSP (365 W First Street),
and the second examines a site within the RHASP (14090 Redhill Avenue). Each
model compares the existing site improvements (shown in green) against the
maximum allowable building envelope (shown in blue) under current specific
plan regulations. These baselines are then contrasted against the proposed
height increase (shown in red).
In both cases, a significant shift in bulk and mass occurs when comparing existing
site improvements to the maximum building envelope allowed under current
regulations. Conversely, the transition from the current building envelope to the
proposed additional story yields a minimal visual impact. Furthermore, this bulk
and mass would be mitigated even further through the application of the specific
plan’s design guidelines. Given the clear advantages of increased floor area and
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enhanced development potential, which fosters a more efficient land utilization,
implementing the proposed height increase would be advantageous to the area.
Recommendation: The City should amend the RHASP and DCCSP to increase the
height of all buildings by 12 feet (one story). The recommended text updates
should read as follows (new text in underline and blue and deleted text is red and
strikethrough):
The following would be the proposed amendment for the RHASP.
Table 13 – Excerpt from Table 4-3 of the RHASP
Development Standards Commercial (1)Mixed-Use (2)
A Minimum Required Street
Frontage/Lot Width 70 feet x 100 feet
B Maximum Building Height
50 feet x 4 5 Stories and 50 62 feet
The following would be the proposed amendment for the DCCSP.
Table 14 – Excerpt from Table 5.2 of the DCCSP
Mixed Use Development Standards DA-1 & DA-2 DA-3, DA-6B & DA-6C
Building Height
(Parking structures below buildings, rooftop uses (including gardens, lounges, and pools/spas), and architecturalfeatures(including chimneys and towers) shall not be included in the height measurement.)
4 3 storiesmaximum Firstfloor plate 16 foot minimum
5 4 stories maximum
(6 5 stories maximumadjacent to freeway)First floor plate 16 footminimum
Table 15– Excerpt from Table 5.3 of the DCCSP
Table 16 – Excerpt from Table 5.4 of the DCCSP
Mixed Use Development Standards DA-4
Building Height
(Parking structures below buildings, rooftop uses, (including gardens, lounges, and pools/spas), and architectural features (including chimneys and towers) shall not be included in the height measurement.)
4 3 stories maximum
First floor plate 16 foot minimum
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PARKING FOR RESIDENTIAL PROJECTS
Existing Parking Regulations/Practices in the City
The City has recently updated their parking standards citywide, which also have
been applied to the RHASP and DCCSP. The revised standards have relaxed
parking requirements for residential and mixed-use developments. The updated
parking standards achieved the following:
1. Implemented a scalable parking requirement for multi-family residential
development based on the number of bedrooms per unit.
2. Allows tandem parking for residents’ parking spaces citywide. Tandem
parking continues to be prohibited for guest parking.
3. Removes the requirement for private storage areas within developments in
the RHASP and DCCSP; as well as remove the citywide requirement for
private storage cabinets within carports.
Parking in the RHASP and DCCSP
The RHASP includes parking regulations for residential, commercial, and mixed-
use development. Parking for residential and mixed-use development requires a
parking management plan as part of their RAR application. Furthermore, Flexible
Format Retail uses are calculated the same as residential uses. The RHASP also
allows for alternative/shared parking, which would require a parking and loading
study; however, this shared parking would not be permitted for stand-alone
residential projects.
For mixed-use projects in the DCCSP, a reduction of up to 20 percent of the
commercial portions of the project are permitted, but no reduction is allowed for
the residential portion. The reduction in commercial parking would also require
payment of a Parking Exception Fee to the City, a program which was established
for providing and maintaining public parking within the area, while reducing the
burden on businesses in the DCCSP to provide for all required parking on site.
Multi-Family Residential Development Standards DA-6A
Building Height
(Parking structures below buildings,rooftop uses (including gardens, lounges, and pools/spas),
and architectural features (including chimneys
and towers) shall not be included in the height
measurement.)
2 stories maximum adjacent to a
public street 5 4 stories
maximum in interior
6 5 stories maximum adjacent to
freeway
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Given that the updated parking standards were designed to modernize the City’s
multi-family residential development standards, the question remains how to
integrate residential parking in a commercial context. Doing this would provide
developers with the flexibility to design multi-family residential projects while
further reducing barriers as it relates to mixed use projects (vertical and horizontal;
and correlating public parking with private parking).
Parking in Other Communities
A survey was conducted of surrounding cities that have similar built environments
or projects that feature small, vertical mixed-use development. A summary of the
findings from each of these communities follows:
City of Irvine
x Residential Framework: Parking requirements are determined by housing type,
bedroom counts, and specific zoning or planning designations.
x Mixed-Use Classification: Commercial retail centers are classified as mixed-use
sites for parking purposes. Parking for these developments is calculated by
applying the city's standard automobile parking matrix to each individual on-
site use.
x Commercial Variability:Commercial parking ratios fluctuate based on district,
use, intensity, and project size. Certain uses, such as cinemas, scale their
requirements based on the total square footage.
x Irvine Business Complex (IBC):Features restricted parking zones dedicated
exclusively to residential uses and specific tenants. Permits a reduction in
standard parking requirements for mixed-use buildings or parcels, subject to
the submission and approval of a formal parking study.
x General Restrictions:Mixed-use projects may incorporate strictly enforced,
restricted residential parking spaces. Without an approved deviation,
developments default to the city's general standards.
City of Costa Mesa
x Regulatory Approach:Residential parking standards are dictated by housing
type, zoning districts, and specific plan guidelines.
x Shared Parking & Adjustments: Shared parking facilities in mixed-use
developments are governed by the Procedure for Determining Shared Parking
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Requirements. Amendments to these requirements can be authorized via a
Conditional Use Permit (CUP).
x Urban Plans (e.g., 19 West Urban Plan): Establish precise parking standards for
the residential components of a project, while requiring the commercial
components to comply with standard off-street parking regulations.
x Specific Plan Flexibility (e.g., North Costa Mesa Specific Plan): Allows parking
facilities to serve multiple developments and removes the requirement that
parking be located on the same parcel as the structure it serves, facilitating a
centralized, shared parking environment.
City of Santa Ana
x Location & Ownership Constraints: Parking facilities must be located on the
same site as the development or on a contiguous lot. Adjacent parking lots
must share the same ownership as the primary use or be legally restricted to
prevent the severance of parking rights through sale, lease, or conveyance.
x Mixed-Use Overlay Zone: Designed to integrate residential, commercial, and
transit-oriented developments; requires dedicated on-site parking to support
both commercial and residential components.
x In-Lieu Parking Fee Districts: Property owners can pay an in-lieu fee to receive
credit toward their off-street parking requirements. These fees are pooled by
the city to fund future public parking facilities within the district.
x In-Lieu Fee Eligibility: Restricted strictly to:
o Existing buildings that lack sufficient on-site parking and have lost their
nonconforming status.
o The intensification of use within an existing building. Eligibility does not
extend to new construction, building additions, or total reconstructions.
City of Orange
x Residential Ratios: Multifamily requirements are determined by unit count, unit
size, and parking type (enclosed vs. unenclosed). Ratios generally range from
1.2 to 2.6 spaces per unit.
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x Mixed-Use Design & Layout: Projects must feature direct pedestrian
connections between residential uses, commercial uses, and parking areas.
The code encourages clustered layouts that eliminate large intervening
parking lots, allowing visitors to park once and walk.
x Operational Restrictions: Non-residential outdoor uses within a mixed-use
project containing residential units are prohibited from operating between
10:00 PM and 6:00 AM.
x Separation & Sharing: Residential and non-residential parking spaces must
remain physically separated, though residential guest parking may be shared
with commercial uses.
x Creative Flexibility: While total parking counts must align with the municipal
code, applicants can submit a specialized parking study to justify creative
parking solutions, provided they demonstrate site feasibility and strong
pedestrian connectivity.
Summary of Survey
Based on this survey, integration of residential parking into a commercial
framework is achieved in other communities primarily through connectivity, time-
of-use shared models, and flexibility. Treating mixed-use developments under a
unified site umbrella rather than distinct uses can provide additional flexibility in
meeting the parking demands for the site. Stand-alone residential uses could also
take advantage of sharing parking with an adjoining commercial use, provided
a long term parking agreement is recorded to the property. A parking demand
study could demonstrate support for reduced parking standards by use while
ensuring peek residential and commercial parking demands do not occur
simultaneously without adequate facilities.
Research published jointly by the Urban Land Institute (ULI) and the National
Parking Association (NPA)2 supports the finding that a blended mixed-use
environment creates a "captive market" effect, significantly reducing overall
vehicle trips because patrons park their cars once to live, shop, and work in the
same space. Time-of-day demand modeling can demonstrate that residential
parking demand peaks intensely overnight while commercial, retail, and office
demand drops to near zero. By integrating these assets rather than enforcing
2 ŚƩƉƐ͗ͬͬǁǁǁ͘ũĚƐƵƉƌĂ͘ĐŽŵͬůĞŐĂůŶĞǁƐͬĐĂƐĞ-ƐƚƵĚLJ-ƐĞƌŝĞƐ-ďĞŶĞĮƚƐ-of-coral-67168
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separate parking minimums for each use the total required number of parking
spaces can be reduced by 20% to 40%3. Ultimately this lowers the cost of providing
new units, thus reducing a barrier to new development.
Recommendation: The City should amend the RHASP and DCCSP to allow shared
parking for mixed use projects and to allow shared parking between standalone
residential projects and adjoining commercial developments. The recommended
updates should read as follows (new text in underline and blue and deleted text
is red and strikethrough):
Red Hill Avenue Specific Plan
4.4.4 Off Street Parking and Loading Standards
C. Alternative/Shared Parking
Alternative Shared Parking Standards. Applicants may propose alternative
shared parking standards for parcels with a mixed-use development, a
standalone development,or development that is utilized at non-traditional
hours. The number of off-street parking spaces is stated in Article 9, Chapter
2, Part 6 of the TCC and Table 4-4, Parking Standards for Mixed-Use
Residential and Non-Residential/Commercial Development, of this Specific
Plan. Alternative standards for parking shall be considered by the Planning
Commission and applicants shall be required to comply with the following
procedures:
1. Mixed-use alternative parking standards are alternatives to required
parking as specified in the Specific Plan and the TCC and shall only
be permitted where shared parking is to be authorized/approved.
2. Requests for Shared Parking. The utilization of shared parking facilities
within the RHASP area is encouraged. Shared parking standards are
based on the assumption that patrons will use a single parking space
for more than one destination in certain locations within the Specific
Plan area and that the parking space will be open and available for
short-term parking to serve different uses which may have different
peak hours.
3. Ineligible Development. The following types of uses are not eligible to
use shared parking standards:
3 ŚƩƉƐ͗ͬͬŝƚĚƉ͘ŽƌŐͬǁƉ-ĐŽŶƚĞŶƚͬƵƉůŽĂĚƐͬϮϬϭϰͬϭϮͬ^ŚĂƌĞĚ-WĂƌŬŝŶŐͺ/dW͘ƉĚĨ
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a.New or Existing development that is not a component of
commercial or mixed-use.
b. New construction of hotel or office uses on parcels of 30,000
square feet or greater.
c. Standalone residential developments that are not utilizing a
shared parking agreement with an adjoining property.
4. Parking Study Required. Commercial uses, residential, and mixed-use
development requesting shared parking shall be required to prepare
a parking and loading study that demonstrates adequate parking
and loading facilities for average daily demand (rather than peak
daily demand).
a. The parking study may be used in lieu of the required parking
standards and provisions of this Specific Plan provided the
following conditions are met:
(i) The parking study provides sufficient acceptable
justification and evidence supporting modifications to
the prescribed standards;
(ii) The project demonstrates methods to reduce parking
demand, including but not limited to mixed-use,
shared parking facilities, transit access, pedestrian
amenities, and bike amenities.
5. Adequacy of Alternative Parking. Upon build-out of a development
project, if alternative parking measures are not working adequately
to address parking for a project, then required parking must be either
provided on-site, off-site or by other means deemed acceptable by
the Community Development Department.
6. Prohibition on Time Limits. Shared parking between standalone
residential units and adjoining commercial properties shall not be
limited by length of time or time of day, except as otherwise provided
by law.
7. Shared Parking Agreement. Shared parking between multiple
parking. shall record a shared parking agreement to the satisfaction
of the Community Development Director. The agreement shall run
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with the land, be effective on all successors and assignees, and shall
not be released without prior approval of the City.
Downtown Commercial Core Specific Plan
6.3.3 Modification of Parking Standards
Parcels located within the DCC may take advantage of alternative parking
requirements through various provisions:
x The DCCSP establishes new provisions unique to the DCC within the
following subsections.
x The DCCSP incorporates alternative parking provisions from the TCC that
were originally applicable only within the Parking Overlay District and/or the
Cultural Resources District to now apply to all parcels within the DCC as
provided below.
x The DCCSP references existing provisions for alternative parking
requirements in the TCC below.
For modifications that are discretionary, the review authority shall be the approval
body for the related project entitlement.
1. Mixed Use Parking Alternatives
A. Mixed Use Commercial Parking Reduction
A reduction in the required on-site commercial parking spaces for mixed
use development may be approved as provided in this subsection since
patrons to commercial establishments and residences located within
mixed use development have the ability to park once for a multiple
purpose trip. (Required parking for residential units shall not be reduced.)
Under the project Design Review application, the project approval
body may conditionally approve up to a 20 percent reduction in
parking space requirements for non-residential uses within a mixed use
development based on an applicant’s submittal of a parking analysis
prepared by a California licensed traffic engineer, provided the findings
specified in Section 6.6, Required Findings, are met.
B.Mixed Use Residential Parking on Adjacent Site(s)
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Within mixed use development, the required residential parking spaces
(including tenant and guest spaces) shall not be reduced in number,
but may be provided, in part or in whole, on an immediately abutting
parcel as provided in this subsection.Standalone residential parking
may enter into a shared parking agreement with an adjoining non-
residential property to accommodate all the uses. Up to a 20 percent
reduction in parking space requirements may be approved based on
an applicant’s submittal of a parking analysis prepared by a California
licensed traffic engineer, provided the findings specified in Section 6.6,
Required Findings, are met.Under the project Design Review
application, the project approval body may conditionally approve the
location of required tenant and/or guest parking spaces on an
immediately abutting parcel provided the applicant has submitted the
following (or they are made conditions of approval): 1) a signed
reciprocal access agreement between the owners of the subject
parcels, if deemed necessary by the Community Development Director
given the parking layout and circulation pattern, 2) a signed binding
lease agreement between the owners of the subject parcels to the
satisfaction of the City Attorney, 3) a covenant or other mechanism to
the satisfaction of the City Attorney recorded against the subject
parcels, and 4) documentation supporting the findings specified in
Section 6.6, Required Findings.
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Report
Downtown Commercial Core and
Red Hill Avenue Specific Plan
Reassessments
Prepared for:
City of Tustin
Prepared by:
Economic & Planning Systems, Inc.
November 16, 2023
EPS #224029
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Table of Contents
1. Introduction ............................................................................................. 1
2. Study Process and Methodology ................................................................. 2
3. Analysis Findings ...................................................................................... 3
4. Policy Options and Implementation Timeline ................................................ 5
5. Policy Impact on Development Feasibility................................................... 10
APPENDIX A: Reassessment Project Overview .................................................... 12
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List of Figures
Figure 1: The Tustin Development Trade Area includes Orange, Santa Ana, and Irvine. 3
Figure 2: Summary of Policy Options and Recommended Implementation Timeline ...... 5
Figure 3: Feasibility Impacts of Proposed Near-Term Policy Options on Large and
Small Sites ...................................................................................... 11
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Economic & Planning Systems, Inc.
Tustin Reassessments Report - 11-16-23.docx 1
1. Introduction
This report summarizes the findings and policy options developed as part of the
Specific Plan Reassessments study conducted by Economic & Planning Systems
(EPS) for the City of Tustin. The study's objective is to identify barriers and
challenges to real estate investment and redevelopment in the Downtown
Commercial Core Specific Plan (DCCSP) and Red Hill Avenue Specific Plan (RHASP)
areas and propose planning and policy solutions to overcome them.
The study and proposed policy options represent the next phase in refining the
policies of the two Specific Plans, originally adopted in 2018, to better achieve the
desired vision and goals. This work also implements one of the proposed housing
programs under the City of Tustin’s Housing Element for 2021-2029.
EPS worked with City Staff to prepare an action plan and timeline for implementation
of various policy options, which are tailored to the city's unique needs and goals.
The proposed policy options build upon existing City efforts, address the most
straightforward and attainable opportunities, and align with the visions embodied
in each Specific Plan. They are designed to help catalyze development and
stimulate investment in the Plan Area, thereby realizing the City Council's goal for
commercial revitalization and increased housing opportunities in Downtown and
the Red Hill Avenue corridor.
This study and associated policy options focuses on the factors affecting
development economics within the DCCSP and RHASP area. It is important to
emphasize that economic outcomes are only one lens for evaluating land use
policy decisions. Other key considerations outside the purview of this analysis
include, without limitation:
• Urban design and architecture
• Affordable housing
• Traffic and parking availability
• Environmental impacts
• Impacts to City finances
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2. Study Process and Methodology
The findings and analysis presented herein represent the culmination of a detailed
reassessment of the two Specific Plans that has included market analysis, local
and state policy review, developer / property owner interviews, stakeholder
outreach (including a series of meetings with Planning Commissioners and the
City Council’s Economic Development Ad Hoc Committee), and related tasks.
EPS also utilized Stakeholder input to identify a list of fourteen (14) potential
“opportunity sites” within both Specific Plan areas that might be well suited for
redevelopment. EPS then worked with City staff to identify five of these sites that
would be representative of likely development scenarios that might occur within
these areas, including both larger and smaller sites, as well as both occupied and
vacant sites.
To arrive at the proposed policy options, EPS tested the impact of various
regulatory changes on development feasibility at the key opportunity sites. EPS
created a generalized business case for a likely development project or building
prototype at each of the opportunity sites selected through the study process and
measured feasibility outcomes in terms of residual land value, or the amount that
developers could afford to pay for land after all accounting for all development
costs. The feasibility analyses reflect current market conditions, comparing values
to costs for specific development scenarios.
EPS also conducted sensitivity tests for various project parameters, which
revealed that certain policy changes can significantly improve development
feasibility. For example, relaxing requirements related to on-site parking, ground
floor retail, inclusionary housing, and residential density are all expected to
improve project economics. Reducing affordable housing and park fees are likely
to have a similar effect. Taken together, these measures can have a
transformative effect even on the opportunity sites with the most challenging
constraints from an economic perspective. The next step in implementing any of
these changes requires agreeing on what is appropriate and reasonable as well as
drafting detailed and specific policy proposals.
EPS prepared a separate Feasibility Analysis Technical Memorandum that
details the methodology and findings of the feasibility analysis. It includes
additional details on the scenarios, prototypes, and assumptions utilized to test
changes in development policies.
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3. Analysis Findings
EPS found that the fundamental economic characteristics within each Specific Plan
area are strong and favorable given Tustin’s location in a broader “Trade Area”
that includes parts of northern and central Orange County. The Trade Area, shown
Figure 1, is important because it incorporates the nearby locations that local
developers and investors compare against Tustin and the Specific Plan Areas
when considering investment opportunities.
Key market findings included:
• Tustin is strategically located and well connected to the regional economy
• Tustin has favorable socio-economic indicators for housing and related real
estate investment (e.g., income, education, age)
• Tustin’s retail market is sizable but has mixed market performance
• Tustin’s office market is not currently a major economic driver
• Tustin’s has a strong housing market but minimal new supply, which
suggests pent -up demand
• Redevelopment will be challenged by occupancy and revenue stream of
existing properties
Figure 1: The Tustin Development Trade Area includes Orange, Santa
Ana, and Irvine.
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Whether looking at socioeconomic indicators, rental data, or reputations for
schools and public safety, Tustin seems well-positioned relative to the trade area
for housing development, which has been the primary driver of trade area
redevelopment activity in recent years. Additionally, the area around Old Town
has several features that would be viewed favorably by real estate developers and
investors relative to nearby areas, especially its historic and walkable character
within a well-located suburban location. These attributes are well aligned with
current trends that are driving real estate demand, especially for housing.
Despite an overall favorable market context, EPS identified aspects of local policy
that are likely barriers to development feasibility in the Specific Plan areas,
including:
• Ground floor retail requirements
• Parking requirements
• Heigh limits
• Limitations of the Residential Allocation Reserve discretionary review process
• Park impact fees
• Inclusionary housing requirements
• Open space & storage requirements in residential buildings
These categories represent both standard drivers of development economics as
well as policy barriers unique to the DCCSP and RHSP. EPS utilized this list in
developing a set of Policy Options that were presented to City staff and the
Economic Development Ad Hoc Committee, and which are included in Appendix
A.
EPS also noted that rapidly evolving changes in state planning laws, including
rules around the State Density Bonus, reform of parking standards, and other
laws intended to help housing developers bypass lengthy or difficult approvals will
impact future development in Tustin. Even where these policies don’t directly
affect the Specific Plan Areas, they have and will likely continue to alter the
competitive environment in surrounding parts of northern and central Orange
County and thus indirectly impact the development economics of the Trade Area.
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4. Policy Options and Implementation
Timeline
Based on findings from the feasibility analysis, EPS worked with City staff to
propose a set of policy options and implementation timeline, which are
summarized in Figure 2 and further described below. In addition, a detailed EPS
presentation outlining the Specific Plan Area Policy Options to Consider is attached
in Appendix A to this report.
Figure 2: Summary of Policy Options and Recommended Implementation Timeline
Short term (6-12 months): Within the next year, options include the following:
► Implement preliminary parking standards update. Reduce base
residential parking ratios (from 2.25 spaces required per unit to 1.5-1.75
spaces per unit) to help stimulate multi-story infill and vertical mixed-use
development. Detailed research on residential parking standards and local
policy context is contained in the Parking Policy Context & Proposed
Strategies section of Appendix A.
► Set all residential Park Fees in the Plan Areas at an equal level
based on the current RHASP rate. Most projects in the Plan Areas must
currently pay parkland impact fees based on market land value. Tustin could
create an administrative rule to set “market” land value equal to $2.5 million
per acre for the purposes of park fee calculation. This is already the value
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established for non-subdivision projects in RHASP. This straightforward
change would provide more certainty and likely cost reduction for
developers as well as create internal consistency within the City’s policies,
reducing confusion for staff and potential project applicants.
► Temporarily suspend affordable housing in-lieu fee. As a near-term
strategy, waive the in-lieu fee for developers providing 5 percent Very-Low
Income units onsite. The City Council could introduce a motion to
temporarily suspend inclusionary housing in-lieu fees for all Specific Plan
area projects for 18-36 months. This would incentivize investment in the
Plan Areas by improving feasibility for all residential projects.
However, it is anticipated that some developers may still pursue on-site
affordable housing to utilize State density bonus and associated waivers,
especially before the City updates its policies related to parking and design
standards. If no development projects are initiated during the initial 18-36
months period, the City may utilize that information in updating its
affordable housing policies (in the mid- and long -term).
► Expand fee deferment. Adjust administrative rules to allow developers to
pay all impact fees at Certificate of Occupancy rather than at permit
issuance, which can have an outsized benefit on project financing for
developers with likely minimal impact on City finances. This could also be a
temporary, expiring benefit intended to create urgency for developers
before Mid-Term and Long-Term Policy Options can be implemented.
► Complete planned public realm improvements. This includes parklets
on El Camino Real and Main Street, as well as gateway signage and
streetscape improvements on Main Street.
Mid-term (12-24 months). Over the next two years, the following policy options may
be implemented in conjunction with adopting objective design standards:
► Expand developer services and educational materials. Continue efforts
to streamline permitting and implement a “one-stop shop” on the City
website for relevant information related to development (e.g., affordable
housing requirements, objective design standards, fee schedules, density
bonus). This can provide a resource for both developers and community
members to better understand City incentives and planning and entitlement
process for the Plan Areas.
► Revisit Voluntary Workforce Housing Program. Consider engaging a
consultant to review the City’s inclusionary program and conduct feasibility
analysis to optimize rules and ensure consistency with the City’s Housing
Element, evolving State law, and economic considerations. Temporary or
permanent waivers for small sites or vacant sites could be used as an
additional incentive for redevelopment in key locations.
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► Modify retail requirements and associated parking. The DCCSP
requires 100 percent retail frontage on many streets, providing minimal
flexibility. The City could require a lower percentage of retail and/or require
retail along fewer number of street frontages to increase development
feasibility and also avoid overbuilding of retail spaces that could lead to
empty storefronts in lower demand locations.
At the most important locations for retail, such as along the historic El
Camino Real in Old Town, the City could establish retail nodes and
incentivize retail building by making residential uses at these locations
allowable only as a bonus for providing retail frontage or square footage.
This strategy would discourage developers from trying to get around
building ground floor retail (e.g., through State Density Bonus waivers) at
these key locations. Determining the locations of these retail nodes could be
completed in tandem with establishing object ive design standards. The City
may also want to conduct a retail market study to help determine the size of
these nodes.
Given that the feasibility analysis findings indicate additional challenges for
small sites, the City could incentivize vertical mixed-use infill projects on
small sites, especially in Old Town, by clarifying and promoting its parking
in-lieu fee policy and/or further relaxing (retail) parking requirements for
such sites or at retail nodes. More relevant information on parking is
contained in the Parking Policy Context & Proposed Strategies section of
Appendix A.
► Eliminate the RAR Program and allow residential in most Plan Area
locations. The RAR was initially conceived to allow for housing development
on previously commercially-zoned properties and to provide certainty and
streamlining around environmental review. However, the program has had
limited success in encouraging development, likely due to the extended,
discretionary approval process that results in uncertainty around whether
and how much housing will be allowed or “allocated” for a given project.
Eliminating the RAR process and allowing residential uses in most Plan Area
locations will provide more certainty to developers (up until EIR unit count
limits are exceeded) and resolve potential inconsistency in the City’s
Housing Element by ensuring housing is permitted on all housing inventory
sites within the Plan Areas. Forthcoming objective design standards and
other Specific Plan requirements will still apply. Stakeholder interviews
confirmed broad consensus and support within the City of Tustin around
eliminating or replacing the RAR. Note that the City may choose to maintain
some limits on residential uses at key retail nodes (see prior bullet) to
incentivize desired development patterns.
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► Modify height restrictions. In some cases, providing additional height,
even if stepped back on the upper stories, will likely improve project
feasibility, especially for vertical mixed-use development on smaller sites in
the DCCSP. Implementing modest height increases outside of freeway -
adjacent parcels represents another policy option, especially where historic
resource protection is not a concern.
► Relax residential private storage requirements. Current storage
requirements were noted by a housing developer active in Tustin as unusual
and contributing to an increased cost of housing development. Developers
typically have approaches for determining an appropriate amount of storage
to meet the needs of tenants even when none is required. The City could
consider relaxing requirements for private on-site storage (e.g., remove
entirely, set as percentage of units, or look to match neighboring cities). If
deemed necessary, the City could conduct comparative research on
surrounding jurisdictions to help determine what code changes might be
appropriate. Revising these requirements could be done in conjunction with
expanding bike parking requirements, which also align with reduced vehicle
parking requirements.
► Clarify residential density bonus approach. Develop an official Schedule
or Brief (posted on website) to specify how City staff determines State
Density Bonus under the “form -based” code for the Specific Plan areas. This
would provide greater clarity for developers given that “form-based” codes—
where density is governed by height and design standards only, rather than
units per acre or floor area ratio—are still less common within California.
Long-term (24+ months): Over a longer-time frame, additional policy options
include the following::
► Increase residential (unit-count) capacity. If changes to the Specific
Plans are successful and result in multiple new development projects, there
may be a shortage of available residential units that can utilize the
Environmental Impact Report (EIR) conducted as part of the Specific Plans.
The City could consider updating the EIR with higher unit counts and/or
implementing an administrative waiver program for residential projects of
less than five acres within the Specific Plan areas that otherwise comply with
City policies and regulations (using CEQA Infill Exemption {Cal. Code Regs.
Tit. 14, § 15332}).
► Refine parking strategies and pursue supply investments. Implement
strategies to manage parking demand and supply as well as refine or
eliminate certain parking standards, plan/finance new facility investments,
update fees, and refine parking management (e.g., time limits, metering).
More relevant information is contained in the Parking Policy Context &
Proposed Strategies section of Appendix A.
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► Complete and expand public realm improvements and pursue
additional activation and branding initiatives. Complete any planned
capital projects to enhance the public realm and look to complement those
improvements by exploring activation and branding programs that engage
with businesses, property owners, public, etc. More relevant information and
examples of activation and branding initiatives are contained in the Long-
Term Action Options section of Appendix A.
► Expand economic development and site marketing efforts. Evaluate
the potential for targeted economic development projects or partnerships
that catalyze private investments. This could include, among other
initiatives, the creation of marketing materials (e.g., maps, brochures,
websites) to highlight investment opportunities and future projects within
the Specific Plan areas.
► Implement policies to accelerate redevelopment of vacant sites. If no
new development projects have been proposed on key vacant sites within
the Plan Areas over the next 24-36 months (after other policy options have
been implemented), consider implementing additional carrot/stick policy
options (e.g., waivers, concessions, taxes, code enforcement) and exploring
public-private partnerships at key vacant or under-utilized sites in the Plan
Areas. More relevant information and examples are contained in the Long
Term Action Options section of Appendix A.
City of Tustin public officials interviewed as part of this project have thus far
expressed a desire to openly contemplate a wide range of possible policy changes.
It is important to note that each of these changes comes with tradeoffs, including
potential impacts on neighborhood parking supply, city revenue, future continuity
of retail frontages, and inclusion of income-restricted housing units on-site at new
developments. In choosing the right set of policy changes, EPS recommends that
city officials carefully consider all potential tradeoffs, not just the economic
considerations analyzed as part of this analysis.
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5. Policy Impact on Development Feasibility
As noted at the outset, the goal of this study and suggested policy changes is to
decrease barriers to real estate investment and redevelopment and thereby spur
desired economic investment within the Specific Plan Areas. Visible impacts of
policy changes, such as construction of new buildings can take several years due
to the length of the development process. Investment and development activity is
also highly dependent on market conditions.
In 2023, overall macro market conditions for new development have worsened
significantly, primarily due to steadily escalating interest rates since mid 2022.
Higher interest rates make debt financing for construction and land purchases
much more expensive, and also reduce the amount that most individual home
purchasers and investors can afford to pay for newly built homes and apartments.
These decreases in price and valuation have happened at the same time as year-
over-year construction cost inflation has moved above 10 percent and Orange
Country apartment rents have cooled.
These market changes mean that few developers are likely to start construction
on new projects—both in Tustin and surrounding locations—until market
conditions improve, which may be more than a year. However, established and
sophisticated developers may begin the development process somewhat earlier, in
anticipation of those market improvements. This could involve entering into land
acquisition agreements and applying for project approvals in preparation for when
interest rates improve.
The proposed policy options are expected to increase feasibility and thereby
increase the likelihood that developers will choose to focus their new development
investments within the Specific Plan Areas instead of other nearby locations within
northern and central Orange County. Figure 3 below provides a summary of the
expected feasibility impacts from the set of proposed Near-Term Policy Options on
two example sites within the DCCSP: one large and one small.
As shown, the large site project becomes feasible under the Near-Term Policy
Options.1 On the other hand, the smaller site faces more challenging economics,
and the set of Near-Term Policy Options are not sufficient to make a development
project feasible.
1 A project is deemed feasible when the project results in sufficient proceeds, after construction
costs and profit, to pay a “residual land value” that is greater than the market value of the site
(which was estimated between $4.8 and $5.65 million for analyzed sites within the DCCSP)
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However, EPS notes that proposed Mid-Term and Long-Term Policy Changes such
as further parking reductions, adjustments to on-site affordable housing
requirements, or impact fee waivers could create a feasible project at this site.
These additional changes may be necessary to make development feasible at
smaller (e.g., less than one acre), constrained sites in and around the Old Town
area.
The feasibility results are based on more extensive analysis detailed separately in
the Feasibility Analysis Technical Memorandum.
Figure 3: Feasibility Impacts of Proposed Near-Term Policy Options on Large and
Small Sites
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APPENDIX A:
Reassessment Project Overview
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Economic & Planning Systems, Inc.
The Economics of Land Use
800 Wilshire Boulevard, Suite 410 Los Angeles, CA 90017
213.489.3838 www.epsys.com
Economic & Planning Systems, Inc.
The Economics of Land Use
CITY OF TUSTIN SPECIFIC PLAN REASSESSMENTS:
DOWNTOWN COMMERCIAL CORE (DCCSP)
RED HILL AVENUE (RHSP)
Reassessment Project
Overview
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AGENDA TODAY
Introduction and Background
Overview of Market Context and Opportunity
Stakeholder Input
City Policy Context
Development Feasibility Analysis
Policy Options and Implementation Workplan
Parking Policy Context and Strategies
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INTRODUCTION AND BACKGROUND
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WHO WE ARE
California-based firm
established in 1983
Specialists in urban
economics and public
finance
Balance of public and
private sector clients
Strong practice in
economics of infill
redevelopment
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STUDY OBJECTIVES AND CONTEXT
Objective
Identify barriers and challenges to real estate investment in DCCSP / RHASP Plan Areas. Provide planning and policy options to address them.
Context
DCCSP / RHASP not leading to type, amount of investment sought by Council
Housing Element commits to market evaluation, recommended policy changes that remove constraints on housing
Study is focused on factors affecting real estate development economics only
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OVERVIEW OF STUDY PROCESS AND DELIVERABLES
Market Position & Evaluation
–General understanding of demographic and market factors affecting development prospects
Policy Context
–Review of city and state programs, policies and requirements
Stakeholder Outreach & Engagement
–Spoke with Developers, Property Owners, City Councilmembers, and Planning Commissioners
High-Level Policy Options and Considerations
Opportunity Site Feasibility Analysis
–Technical analysis of development economics at selected Opportunity Sites to test impact of
incentives and policy changes and leading to final options to consider
Optional Analysis Tasks
–Analysis of parking strategies and policies
–Research on infrastructure financing sources
Final Policy Options to Consider for the Specific Plan Areas
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HIGH-LEVEL STUDY FINDINGS
1.Market Context and Opportunity
–For residential development, local market conditions do not appear to be a major barrier
based on Trade Area growth and activity
–For retail and office development, market conditions are less favorable, although limited
mixed-use or owner- / tenant-driven projects may be viable
2.City Policy Context
–City land-use policies and zoning appear to be at least a partial barrier to redevelopment
in Specific Plan Areas
–Range of possible solutions exist but will require political support and alignment with
city / community goals around development. Financial feasibility testing of certain policy
levers can provide clarity on potential impacts to project economics.
3.Property and Ownership Barriers/Considerations
–Some owners of strategically located sites appear reluctant to (re-) develop
–Revenue from existing uses represent a redevelopment hurdle
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MARKET CONTEXT AND OPPORTUNITY
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KEY TAKEAWAYS FROM THE DATA
Tustin has favorable socio-economic indicators
(e.g., income, education, age)
Strong residential demand throughout Trade
Area is positive indicator for Plan Areas:
Numerous higher-density residential
projects in Trade Area (mostly townhomes
and mid-rise; some vertical mixed-use)
Successful townhome project and recent
developer proposals in Plan Areas
New office and retail unlikely to drive
redevelopment due to poor/uncertain market
conditions
Housing is the most likely economic driver for
new development
TRADE AREA
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QUALITATIVE FINDINGS PROMISING FOR DEVELOPMENT
Tustin named on Fortune list of
25 Best Places to Live for Families
Both Plan Areas are centrally-located,
well-connected to transportation corridors
DCCSP has particular allure due to
historic, walkable character
Property owners report new townhomes have already
brought energy, younger demographic to Old Town
neighborhood
Informants indicate retail tenants priced out of
expensive OC markets (e.g., Newport Beach, Irvine)
interested in bringing trendy uses to second-
generation spaces in Tustin, Orange, etc.
Schools, safety rated better than some neighbors
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BROADER REAL ESTATE TRENDS ALSO PROMISING
Plan Areas (especially DCCSP) are poised to leverage broader market trends:
Development
Type Real Estate Trend DCCSP Area RHASP Area
Residential
Pandemic led to continued
interest in less-expensive,
more suburban markets
+Tustin and study areas are slightly cheaper than
Orange County on average
+Minimal new rental and for-sale product represents
major unmet market opportunity
Younger cohort seeks active
lifestyles, access to bike/ped
and recreation amenities
+Combination of high Walk
Score (89 vs 51 city avg.)
and attractive walking
environment
More typical, suburban
commercial corridor
with limited walk appeal
(Walk Score ~70)
Retail
Shift to place-based,
experiential retail in post-
pandemic age of online
shopping
+Unique historic character of
Old Town lends an inherent
sense of place
More limited sense of
place due to major
thoroughfare
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STAKEHOLDER INPUT
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DEVELOPMENT POLICY CONCERNS OF STAKEHOLDERS
Schedule
Certainty
Outcome
Multiple rounds of review can create delays and
increase entitlement costs, project timeframe
Some policies and requirements
are unclear and subjective
“Approvable”
projects may not be
financially feasible
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STAKEHOLDERS NOTED POSSIBLE OPPORTUNITY SITES
1. El Camino Plaza (7.81 ac)
2. Armstrong Site (4.1 ac)
3. Farmers’ Market Site (1.01 ac)
4. Radan ‘L’ Site (0.45 ac0
5. Jamestown Village (1.76 ac)
6. City Hall Site (9.63 ac)
7. School District Site (1.98 ac)
8. 125 W Main Street Site (0.25 ac)
9. Larwin Square (15.18 ac)
10. Stephen’s Square (2.95 ac)
11. Wienerschnitzel + War
Memorial Site (0.85 ac)
1
2
3
4
5
7
10
6
9
11
8
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…IN EACH OF THE SPECIFIC PLAN AREAS
1. Red Hill Plaza (8.25 ac)
2. Frontier Park (5.8 ac)
3. Red Hill Shopping Village (5.89 ac)
1
2
3
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CITY POLICY CONTEXT
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CITY POLICIES AND DEVELOPMENT FEASIBILITY
Both Plan Areas have unique policies and requirements that directly affect
development economics.
Standard policy drivers of project economics:
–Ground floor retail requirements
–Parking requirements
–Height limits
Development policy concerns noted by stakeholders:
–RAR / discretionary review process (for residential)
–Fees & inclusionary housing requirements
–Open space & storage requirements
Removing policy barriers / costs generally involves trade-offs.
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EVOLVING STATE LEGAL CONTEXT
Law / Statute Description DCCSP / RHSP
Application
State Density Bonus Law More units and / or concessions for
inclusionary housing.Partially overlaps with IHO
Housing Accountability Act
(HAA) + Amendments (SB 330,
8, 167; AB 1515, 3194)
Timely processing and “objective” standards for
housing approval. Restricts moratoriums or
caps.
Area Plans may be exempt as
housing is discretionary (if not in
conflict with Housing Element)
Housing on Commercial
Corridors (AB 2011)
Requires ministerial approval of housing on
“commercial corridors.” Including Density
Bonus, allows 38-72 units/ac. Projects must be
15% aff. and use “prevailing wage” labor.
Applies to sites with > 50 feet
frontage on streets > 70 ft. wide
where multi-family is “permitted”
SB 6 Allows housing on commercial sites by right,
but not “ministerial.”Requires “skilled & trained” labor.
Elimination of Parking Minimums
near Transit (AB 2097)
Eliminate parking minimums for projects < ½
mile from major transit (e.g., commuter rail,
bus lines with 15-minute headways)
City evaluating applicability
CEQA Infill Exemption (Cal. Code
Regs. Tit. 14, § 15332)
“Infill” projects bypass public review periods
and portions of CEQA if developers submit (and
City accepts) “Class 2 exemption findings”
City could prepare Class 2
exemption report template for
use by developers.
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POLICY OPTIONS CONSIDERED
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RECONSIDER RESIDENTIAL ALLOCATION RESERVE (RAR)
Barriers to Overcome:
RAR created uncertainty for housing developers and additional discretionary approval
step with “beauty contest” effect
Housing Element allocation of RAR bank to specific sites adds new uncertainty
Options
Modify / eliminate RAR approval process
Key Considerations
Increasing unit counts could require
CEQA consideration or EIR update
Other State housing law applicability
unclear (HAA + AB2011)
Reduction in administrative burden may
be an additional benefit
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REVISIT AFFORDABLE HOUSING REQUIREMENT
Barriers to Overcome:
Added cost / complexity of inclusionary housing
can be tipping point for some projects
Tustin developers have built few on-site affordable units
Options
Copy State Density formulas
Create incentive program that goes beyond State
Key Considerations
City’s affordable housing goals and obligation to achieve RHNA affordability targets
Developers will compare requirements with nearby jurisdictions (see next slide)
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MORE “SURGICAL” MIXED-USE (RETAIL) REQUIREMENTS
Barriers to Overcome:
Ground floor retail does not always add value for developers on mixed-use projects
Requiring too much ground floor retail can lead to vacant storefronts, reduce project
feasibility
Options
Develop more focused retail requirement in at key
nodes and less than 100% coverage along frontage
Create a retail “density bonus” or similar incentive
Considerations
Balance with City goals to protect / ensure retail
preservation and vitality
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ADDRESS VACANT & UNDERUTILIZED SITES
Barrier to Overcome: Vacant & Underutilized Sites with Reluctant Owners
Carrots
Expand flexible fee payment (e.g., upon completion vs permit issuance) to all housing types
Temporary / expiring benefits (e.g., fee waivers, RAR or IHO exemptions, fast-track approval)
Density allowances, financial concessions (including 1033 exchange)
Sticks
New/increased code enforcement, “public nuisance” policies, or façade/landscaping rules
Vacant land tax (requires voter approval)
Eminent domain for public facilities (e.g., park or parking) – a “high bar”
Other
Public-Private Partnerships (e.g., Development Agreements, shared parking)
Expand/continue matchmaking efforts (link owners with experienced developers)
Public investment and land assembly assistance (e.g., street vacations)
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PURSUE PARKING STRATEGIES AND INVESTMENT
Barriers to Overcome
Sometimes limited parking availability in Old Town at
peak hours – new development will need more capacity
Neighbors near RHASP have concerns about parking
Options
Revise requirements, plan for future public parking sites
Invest in better management practices
Consider short-term parking leases on vacant sites
Key Considerations
Parking is a major cost of development: public provision of parking can
help redevelopment feasibility
Need to identify best practices and best locations for additional capacity
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EXPAND DEVELOPER SERVICES & MARKETING
Barriers to Overcome
Developers and property owners may not understand or be aware of City plans, policies
and programs, especially if recently updated or changed
Developers value responsive, timely interactions with city, want to know what to expect
with no surprises
Options
Continue efforts towards a one-stop source of information on city website
Create marketing collateral summarizing what City is already doing: call out programs,
incentives, plan details, available sites, etc.
Continue efforts at streamlining applications, reviews, inspections, etc.
Key Considerations
Plain-language materials can be educational for both developers and residents
Simpler, more straightforward approval requirements save time for developers and staff
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COMPLETE PUBLIC REALM INVESTMENTS
Barriers to Overcome
Walking and biking environment within Plan Areas could be more
pleasant, easier, safer, with more bike parking options
Options
Implement pedestrian & bicycle improvements identified in
Specific Plans
Key Considerations
Need to identify funding sources
Provides multiple benefits: aesthetic improvement, driving/parking
alternatives, environmental benefit, supports active lifestyles
Location considerations:
–Largest impact may be to build on pedestrian-friendly Old Town with better connections
–Along major roads (Red Hill Ave, Newport Ave, and First Street), focus on nodes/intersections
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CREATIVE ECONOMIC DEVELOPMENT & PARTNERSHIPS
Barriers to Overcome
More vibrancy desired at all times of day, especially in Old Town
More attractions, marketing could establish Plan Areas as
destinations
Options
Establish tenanting, branding themes and/or dedicated ED staff
Provide city sponsorship to grow Merchants Association and/or
additional programming (food truck nights, street fair, etc.)
Partner with a vacant site developer to create temporary use
such as park space or pop-up business installation
Key Considerations
Negotiating a temporary use of vacant site may require entitlement guarantee
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POLICY TRADE-OFFS / POTENTIAL IMPACTS
Development feasibility is just one lens for evaluating land use decisions. City
must weigh other policy trade-offs, which may require more analysis.
Type of Trade Off Reducing barriers may…Comment
Urban design and architecture Produce taller, denser buildings that
may be unpopular
Objective Design Standards can address
most concerns
Affordable/inclusionary
housing
Produce few/no affordable housing
units
Minimal development also means
few/no affordable units
Traffic and other environmental
impacts
Increase traffic and other
infrastructure demands
Additional CEQA analysis may be
triggered after plans’ EIR caps; may
reduce VMT per capita
Long review periods for project
approval
Limit City’s ability to pick and choose
among projects
Objective Design Standards can address
most concerns
Development does not include
desired retail uses
Lead to residential-only buildings
where mixed-use desired
Already a risk; can incentivize by
differentiating retail node policy
New Burden on City Services Increase service expenditures but
also generates new tax revenue
New infill development likely to provide
net positive revenue to City
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DEVELOPMENT FEASIBILITY ANALYSIS
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HOW DO WE DETERMINE FEASIBILITY?
Residual land value (RLV) approach with static pro forma
Helps us answer the question:
–Is net value of a proposed project (before cost of land) equal or greater
than property / site value?
Project
Value
Project
Costs
(excluding land)
Site
Value
Two ways to
estimate site value:
comparable sales or
existing income stream
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GOAL IS TO INCREASE FEASIBILITY OF REDEVELOPMENT
Market
Value
Land
Acqui
sition
Direct
Costs
Soft
Costs
Project Value Project Cost
Market
Value
Land
Acquis
ition
Direct
Costs
Soft
Costs
Profit /
return
Project Value Project Cost
INFEASIBLE FEASIBLE Meeting return
thresholds are an
additional “cost.”
This hidden “cost”
increases with:
Project Risk
Project Timeline
Preliminarily, per unit
residential values in
Tustin appear
sufficient to cover
typical project costs.
Feasibility analysis is
forthcoming.
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INFILL DEVELOPMENT ECONOMICS CAN BE TRICKY
Infill redevelopment projects often higher cost than greenfield/vacant sites
Market
Value
Land
Acquisi
tion
Direct
Costs
Soft
Costs
Profit /
return
Project Value Project Cost
Buying a property with
existing tenants / revenue
stream
Demolition and/or environmental
“cleanup” related to prior use
Upgrading old infrastructure, access
Meeting parking requirements on
small / irregularly-shaped parcels
Preserving historic structures and
/or mitigating construction impacts
on neighboring properties
Often leads to higher costs
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CONTEXT FOR UNDERSTANDING RESULTS
Static pro forma feasibility analysis can show:
–Generalized business case for development given market conditions
–How policy changes will affect property development economics
in general, including for similar sites within Specific Plan area
–Economics (values vs costs) for a specific development project/scenario
Analysis does not show:
–Willingness or motivation of property owners to pursue development
or sell at a reasonable price
–Time and expense necessary to obtain entitlement
–Property specific factors that require due diligence (e.g., cost of
environmental clean-up, cost of buying out existing lease terms)
–Expertise or financial capacity of potential developers
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BASELINE SCENARIOS USED TO TEST POLICIES
Baseline scenarios conform to existing Specific Plan guidelines:
–Within Specific Plan height limits
–Meet affordable housing requirements (Voluntary Workforce Housing Program)
–Meet minimum retail frontage requirement
–Assume park impact fees set at market land value estimate
–Meet existing parking requirements
Test financial impact of certain policy options:
–Increasing height limits
–Waiving affordable housing in-lieu fee
–Reducing ground floor retail requirement
–Capping/reducing park impact fees
–Reducing required parking ratios
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CUSTOMIZED SCENARIOS FOR EACH OPPORTUNITY SITE
Analyzed capacity and
configuration of each
opportunity site to determine
appropriate/ efficient layouts
Utilizing development project
experience, focused on
constructing scenarios most
likely to be feasible (highest
and best use)
Applied prototypes that
reflect real world projects
from the Trade Area to create
two baseline (2) scenarios
each
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Current Policies
Residential Parking 2.25 per unit
Park Fees $32,256 per unit
Aff Units 5% Very-Low + Fee
($6,900 per unit)
NEAR TERM POLICY OPTIONS IMPROVE FEASIBILITY
Changes:
•Residential parking reduced to
1.59 spaces per units
•Park fee assumes land value
at $2.5M per acre
•Affordable Housing
In-Lieu Fee Set to $0
Near Term Policy
Options Implemented
1.6 per unit (avg)
$16,800 per unit
5% Very-Low +
$0 in Fees
Example Large Site
•Same as above +
in-lieu retail parking
Description 4-Story Horizontal Mixed-
Use (Wrap & Retail Strip)
Size 8.9 acres, 449 units
Residual Land
Value per acre $2,669,000
Feasibility
@ Existing Use Value Unlikely
Description 4-Story Vertical Mixed-Use
Size 0.45 acres, 40 units
Residual Land
Value per acre ($5,092,000)
Feasibility
@ Existing Use Value Infeasible
4-Story Horizontal Mixed-
Use (Wrap & Retail Strip)
8.9 acres, 449 units
$6,850,000
Feasible
4-Story Vertical Mixed-Use
0.45 acres, 40 units
$2,897,000
Unlikely
Example Small Site
Increased
from negative
to positive
157% increase
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POLICY OPTIONS & IMPLEMENTATION WORKPLAN
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POLICY OPTIONS & LEVERS CONSIDERED
RAR Process
Parking
Strategies
Other/Vacant
Site Incentives
Marketing /
Economic Development
Initiatives
Mixed-Use
Retail Requirements
Affordable
Housing Regulations
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IMPLEMENTATION TIME-FRAME OVERVIEW
Near-Term
(6 – 12 months)
Straight-forward,
easy-to-implement
administrative or
policy changes to
incentivize near-term
(re-) development
feasibility.
Mid-Term
(12 – 24 months)
Policies that further
improve feasibility for
residential mixed-use and
implemented in
conjunction with approval
of objective design
standards (ODS)
Long-Term
(24+ months)
Policies and programs
that may require longer
term planning and
implementation efforts,
including approval of
funding tools / resources
and CEQA analysis
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IMPLEMENTATION SCHEDULE FOR POLICY OPTIONS
Near-Term
(6 – 12 months)
•Preliminary residential parking standards update
•Set all residential Park Fees equal to RHASP rate
•Temporarily suspend affordable housing in-lieu fee
•Expand fee deferment
•Commence public realm improvements:
›Parklets on El Camino Real and Main Street
›Gateway signage and Main Street streetscape
Mid-Term
(12 – 24 months)
•Expand developer services and educational materials
•Revisit Voluntary Workforce Housing Program
Pending ODS:
•Modify retail requirements (incl. parking)
•Eliminate RAR Program
•Modify height restrictions
•Relax residential private storage requirements
•Clarify residential density bonus approach
Long-Term
(24+ months)
•Increase residential capacity
•Refine parking strategies and pursue supply investments
•Complete / expand public realm improvements and activation and branding initiatives
•Explore economic development, site marketing efforts
•Implement policies to accelerate redevelopment of vacant sites
Fall 2023
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NEAR-TERM ACTIONS (6 – 12 MONTHS)
Policy Option to Consider Description
Implement preliminary residential
parking standards update
Reduce Plan Area residential parking ratios (from 2.25 to 1.5-1.75 per unit) for
Specific Plan areas.
Set all residential Park Fees at
equal level based on RHASP rate
Create administrative rule to use “market” land value equal to $2.5 million per
acre for park fee calculation based on already established land value for non-
subdivision projects in RHASP. Provides certainty and likely cost reduction for
developers.
Temporarily suspend affordable
housing in-lieu fee
Introduce City Council motion to temporarily suspend inclusionary housing in-lieu
fee all Specific Plan area projects for 18-36 months. On-site requirements still to
remain in effect. Would be effective after the Housing Element Rezone, expected
October, 2024.
Expand fee deferment Adjust administrative rules to allow developers to pay all impact fees at
Certificate of Occupancy rather than at permit issuance.
Commence planned public realm
improvements
Commence construction of parklets on El Camino Real and Main Street, as well as gateway signage and streetscape improvements on Main Street.
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MID-TERM ACTIONS (12 – 24 MONTHS)
Policy Options to Consider Description
Expand developer services and
educational materials
Continue efforts to streamline permitting and implement a “one-stop shop” on
City website for relevant information (e.g., affordable housing requirements,
objective design standards, fee schedules, density bonus)
Revisit Voluntary Workforce Housing
Program
Conduct program review and feasibility analysis to optimize rules consistent with
Housing Element, evolving State law, economic considerations.
Modify retail requirements
and associated parking
Identify key retail nodes; allow residential only if sufficient ground floor retail is
provided. Consider relaxing retail parking rules for smaller, vertical mixed-use
projects (e.g., reduction for Old Town) and refine/promote in-lieu fee policy.
Eliminate RAR Program and allow
residential in most Plan Area
locations
Eliminate long, discretionary review/allocation process for residential to provide
developers more certainty (until EIR unit count limits are exceeded) and ensure
housing is allowed in most Plan Area locations (including all RHNA sites). ODS
and other Plan Area requirements will still apply.
Modify height restrictions Increase allowable heights where historic resource protection is not a concern.
Relax residential private storage
requirements
Relax requirement for private on-site storage for every unit (e.g., remove
entirely, set as percentage of units, or look to match neighboring cities).
Consider expanding bike / scooter parking requirements.
Clarify residential Density Bonus
Approach
City should develop an official Schedule or Brief (posted on website) to specify
how State Density Bonus is determined under Plan Area “form-based” rules.
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LONG-TERM ACTIONS (24+ MONTHS)
Policy Options to Consider Description
Increase residential (unit-count)
capacity
Update the EIR for the Specific Plan areas with higher unit counts or implement
administrative waiver program for compliant residential projects (using CEQA
Infill Exemption {Cal. Code Regs. Tit. 14, § 15332})
Refine parking strategies and pursue
supply investments
Implement strategies to manage parking demand and supply. Refine or
eliminate certain parking standards, plan/finance facility investments, update
fees, refine parking management (e.g., time limits, metering).
Complete and expand public realm
improvements, explore activation
and branding initiatives
Complete City capital projects to enhance public realm; explore complementary
activation and branding programs that engage with businesses, property
owners, public, etc.
Explore economic development and
site marketing efforts
Evaluate potential for targeted projects or partnerships that catalyze private
investments. Develop marketing materials to highlight investment opportunities
and future projects within the Specific Plan areas.
Implement policies to accelerate
redevelopment of vacant sites
Implement carrot/stick options (e.g., waivers, concessions, taxes, code
enforcement) and explore public-private partnerships at key sites.
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PARKING POLICY CONTEXT & PROPOSED STRATEGIES
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PARKING REQUIREMENTS SHOULD REFLECT GOALS
City Goals for DCCSP:
Create a synergistic, desirable, livable, walkable, and attractive area
Develop into a pedestrian-oriented, mixed-use district
Activate commercial area with residential uses
HIGH PARKING MINIMUMS AND WALKABILITY GOALS ARE AT ODDS
Downtown San Luis Obispo (Source: Wikimedia user “hakkun”)
Orange County (Source: CoStar)High parking minimums
Compatible with strip malls or low
density residential
More workable for large,
standalone sites
“Sea of parking” discourages walking
Self contained (no spillover effects)
Lower, flexible parking standards
Compatible with compact development,
diversity of uses, shared parking
Easier for small site / infill projects
Support good activity/energy: more
people out of cars, multipurpose trips,
“browsing” and window shopping
Requires management of spillover effects
(district approach)
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TUSTIN ALREADY REQUIRES MORE RESIDENTIAL PARKING THAN NEEDED
Tustin requires 2.25 parking spaces per unit
for all apartments, but…
Developers typically build less:
Approx. 1.8 spaces per unit
–Number of spaces built in new multifamily rental
developments* over the last 20 years in Irvine, Orange,
and Santa Ana
And residents also typically use fewer:
1.46 parking spaces per unit (and 1.06 per bedroom)
–The maximum parking usage observed in Sunnyvale, CA
during a large survey** conducted in 2013-2015
*Based on information obtained from CoStar for eleven properties with available parking data, representing 6,988 total apartments.
**Survey conducted in the San Francisco and San Jose region and included twenty-five market-rate apartment buildings, representing 6,700 total apartments.
Highest parking usage was observed in the cities of San Jose and Sunnyvale, CA, which have similar car ownership rates to northern Orange County.
Broadstone Archive, Irvine
Source: Flickr user “Art Prof”
Source: CoStar
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NEARBY CITIES HAVE LOWER RESIDENTIAL REQUIREMENTS
Project Type Tustin Orange [1]Irvine Santa Ana Density
Bonus [3]
Townhomes 3-4 BR 2 per unit 2 per unit 2 per unit 3 per unit 1.5 per unit
Wrap or
Podium
Multifamily
Studios 2 per unit 1.2 per unit 1 per unit 1 per unit 1 per unit
1BR 2 per unit 1.7 per unit 1.5 per unit 1 per unit 1 per unit
2BR 2 per unit 2 per unit 2 per unit 2 per unit 1.5 per unit
3BR 2 per unit 2.4 per unit 2 per unit 3 per unit 1.5 per unit
4BR 2 per unit 2.7 per unit 2 per unit 4 per unit 2.5 per unit
Additional
Visitor
Parking
0.25 per unit 0.3 per unit 0.4 per unit 0.25 per unit 0 per unit
Typical
Building
[2]
2.25 per
unit
2.07 per
unit
2.03 per
unit
1.69 per
unit
1.21 per
unit
[1] Multifamily project requirements reflect a project size of 51 units or greater.
[2] Based on average mix of unit sizes in new developments; includes additional visitor parking requirements.
[3] Developers in Tustin have recently utilized the density bonus, in part to get lower parking requirements.
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SUCCESSFUL DOWNTOWNS REQUIRE EVEN LESS PARKING
Project Type Tustin Downtown
Orange [1]
Downtown
Pasadena [2]
Downtown
San Luis
Obispo
Near High
Quality
Transit
Townhome [3]
and
Multifamily
(Wrap or
Podium)
Studios 2 per unit 1 per unit 0-1 per unit 0.5 per unit
ELIMINATED
STATEWIDE
AS OF
JAN 1, 2023
1BR 2 per unit 1.5 per unit 1.5 per unit 0.5 per unit
2BR 2 per unit 1.8 per unit 1.5 per unit 0.75 per unit
3BR 2 per unit 2 per unit 1.5 per unit 1.125 per unit
4BR 2 per unit 2 per unit 1.5 per unit 1.5 per unit
Additional
Visitor
Parking
0.25 per unit 0 per unit 0 per unit 0.1 per unit
Typical
Building
[4]
2.25 per
unit
1.56 per
unit
1.31 per
unit
0.61 per
unit
[1] Downtown Plaza District includes properties within the eight-block area bounded by Maple Avenue, Grand Street, Almond Avenue and Lemon Street.
[2] Central District of Pasadena has a parking maximum of 1 per unit for studios and 1.75 per unit for remaining types
[3] Tustin does not require visitor parking for “single-family housing.” Orange, Pasadena, and San Luis Obispo do not distinguish between different types
of residential uses within their downtown areas.
[3] Based on average mix of unit sizes in new developments; includes additional visitor parking requirements
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REFORM IS WIDESPREAD IN STATE AND BEYOND
Recent policy trend has been to reduce and
eliminate parking requirements
–Driven by demand*, housing crisis, climate change;
can also reduce cost of construction/housing
–Some jurisdictions have instituted maximums to
prioritize compact, walkable development
As of 2023, State eliminated all parking minimum
requirements near high-quality transit stops
–Includes ½-mile area around Tustin Metrolink station
–Does not currently affect the Specific Plan areas
*Per Urban Land Institute (2015), over 52% of people in U.S. and 63% of millennials would like to live where they do not need to use a car very often.
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NEW EXEMPTIONS IN TRADE AREA IMPACT TUSTIN
Tustin is affected by reduced
requirements in nearby
locations competing for real
estate development investment
Much of Santa Ana, parts of
Anaheim and Orange, can no
longer require parking
Developers active in the Trade
Area may choose to build in
these areas for favorable
project economics
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PRELIMINARY PARKING STANDARDS UPDATE
EPS feasibility analysis confirmed that
parking requirements strongly impact
project financials
–Not conducive to multi-story infill and
vertical mixed-use
–Especially difficult on smaller sites
EPS recommends reducing residential
parking ratios to 1.5 - 1.75 per unit
(blended) across Specific Plans
–Although a large change, expected to
have minimal spillover effects
SHORT-TERM ACTION (6-12 MONTHS)
Example Updated Residential Standards
Townhomes 3+ BR 2 per unit
Wrap or
Podium
Multifamily
Studios 1 per unit
1BR 1.25 per unit
2BR 1.5 per unit
3BR 2 per unit
4BR 2.5 per unit
Additional
Visitor
Parking
0.25 per unit
Typical
Building 1.6 per unit
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GROUND FLOOR RETAIL AND ASSOCIATED PARKING
Identify key nodes (e.g., Old Town district and other important locations) for
requiring ground floor retail, but relax elsewhere
–Requirements currently too ubiquitous; more specifics about size, character, and
location of desired walkable/retail district will aid development, avoid empty storefronts
–At nodes, can make housing a conditional use only if desired retail is built
Consider making it easier to include retail within mixed-use projects by further
reducing parking requirements
–e.g., 50% less parking required in Old Town district (like downtown San Luis Obispo)
Clarify and market in-lieu fee policy; consider updating in-lieu fee amounts
–Could limit policy to specific locations (e.g., Old Town district, small sites only)
–Could use fee to help finance new parking supply (long-term)
MID-TERM ACTION (12 – 24 MONTHS)
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REFINE PARKING STRATEGIES & PURSUE SUPPLY INVESTMENTS
Further refine or eliminate certain parking standards
–Consider additional reductions, especially for specific subarea (e.g., Old Town district)
Monitor and manage spillover effects:
–Implement time limits, metering at high volume locations to better manage existing
supply, reduce perception of parking shortage – may require parking study
Consider additional programs to reduce parking demand:
–Unbundled parking requirements (must charge rent for parking space)
–Bicycle / scooter parking requirements and associated parking standard reductions
–Invest in public parking for bicycles
Plan for additional supply Old Town supply as more development occurs
–Identify sites and consider potential financing options for public facilities
LONG TERM ACTION (24+ MONTHS)
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PARKING FACILITY FINANCING OPTIONS (OLD TOWN)
Parking structure or other capacity improvements should
be justified by a detailed study. Financing options include:
Developer fees and/or user fees
–In-lieu fees
–Impact Fees
–User fees (e.g., parking metering, permits)
Certificates of Participation (COP) bond
General Fund earmark
District Formation
–Enhanced Infrastructure Financing District (EIFD)
–Mello-Roos CFD or Business Improvement District
–Parking District
Public-Private Partnerships (e.g., shared parking)
Source: flickr user “Umberto Brayj“
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LONG TERM ACTION OPTIONS
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POLICIES TO ACCELERATE REDEVELOPMENT OF VACANT SITES
Incentives (Carrots)
Temporary / expiring benefits to create urgency
(e.g., fee waivers, affordable housing ordinance
exemptions, fast-track approval)
Additional density/zoning incentives,
financial concessions (including 1033 exchange)
Penalties (Sticks)
New or enhanced code enforcement, “public nuisance”
policies, or façade/landscaping rules
Vacant land tax (requires voter approval)
Eminent domain for public facilities (onerous process)
Other
Public-Private Partnerships (e.g., development agreements, shared parking facility)
Public investment, land assembly assistance (e.g., street vacations)
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ACTIVATION AND BRANDING INITIATIVES
OBJECTIVE
Establish Old Town as a “destination” and enhance vibrancy
at all times of day (target for Old Town) through a combination
of attractions/events and marketing
OPTIONS
Implement programming (food truck nights, street fair, outdoor
movies, etc.) or temporary use (park space, beer garden, pop-up
business installation) on a vacant site*
Continue to invest in signage, public art
Establish tenanting or branding goals and themes
Provide city sponsorship to grow Merchants Association
Dedicate staff resources
*Negotiating a temporary use of vacant site may require entitlement guarantee
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REFERENCE
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DCCSP RETAIL REQUIREMENTS
Definition from DCCSP:
Mixed-use commercial space shall span the
building width of Principal Street frontages and be
a minimum of 45 feet deep.
In horizontal mixed-use, residences are allowed
to be on the ground floor, provided they do not
front on a Principal Street.
Assumption:
Exemption for parking ingress/egress
Exemption for multifamily residential lobby
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DENSITY BONUS GUIDELINES Docusign Envelope ID: B3CA5FE0-27D5-8F26-8321-8D14214E4F7D
DRAFT CITY OF TUSTIN
DENSITY BONUS GUIDELINES
July 2026
Includes Revisions to Government Code §65915 et. seq. effective 1/1/2026
Community and Economic Development Department
300 Centennial Way
Tustin, CA 92780
(714) 573-3000
https://www.tustinca.org
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CONTENTS 1 INTRODUCTION
Types of Assistance
4 ELIGIBILITY
What’s Not Eligible
6 GENERAL REQUIREMENTS
9 ALLOWED DENSITY INCREASE
Rental, Ownership, and Shared Housing Units
Transitional Foster Youth, Disabled Veterans, or Homeless Persons
Density Bonus for Lower Income College Students
Commercial Development
Condominium Conversions
Senior Housing Development
Donation of Land
23 PARKING REQUIREMENTS
Maximum Parking Requirement
Special Parking Requirements
Additional Parking Standards
26 INCENTIVES AND CONCESSIONS
Number of Incentives/Concessions Allowed
Incentives for Housing with Childcare Facilities
Documentation for Incentive/Concession
Findings for Denial
31 WAIVERS AND REDUCTIONS OF DEVELOPMENT STANDARDS
Does Not Reduce Incentives/Concessions
Unlimited Density Projects
Findings for Denial
34 STANDARDS
Design and Distribution of Affordable Units
Replacement of Rental Units
Affordability Covenant Required
Occupancy and Resale of Ownership Units
38 APPROVAL PROCESS
TABLE OF
Density Bonus Application and Affordable Housing Plan
Affordable Housing Agreement
40 DEFINITIONS
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INTRODUCTION
In response to the affordable housing shortage, the State of California (State) enacted
the first density bonus law in 1979 to encourage development of low- and moderate-
income units. Over time, the law was amended and expanded to recognize the need for
housing for households at a wider range of income levels and with specialized needs
(i.e., senior, childcare, transitional foster youth, disabled veterans, homeless persons,
and students).
Density bonus law is codified as Government Code §§ 65915 et seq. (CG §65915), which
is provided in Appendix A. Density bonus law requires all jurisdictions to adopt an
ordinance that specifies how they will comply with State requirements. The City of
Tustin (City) has adopted Tustin Municipal Code (TCC) Article 9, Chapter 1, to implement
density bonus law. These guidelines are intended to assist property owners, developers,
and City staff with implementing GC § 65915 and TCC Article 9, Chapter 1.
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DENSITY BONUS BENEFITS
The intent of density bonus law is to provide a package of incentives to make the
development of affordable and special housing needs economically feasible. A project
may be eligible for multiple types of incentives under the law; however, the project
developer may not use every option available. Available benefits for an eligible project
include:
• Density Increase – An increase in the maximum number of dwelling units over
that which is allowed by the zoning or general plan land use designation for the
property. (Source: GC §65915(b)(1))
• Incentives and Concessions – A reduction in a development standard or other
requirement, such as minimum setbacks or maximum height limits; approval of
mixed-use zoning; or other regulatory incentives which result in identifiable and
actual cost reductions for the project. For example, a developer could request a
concession from complying with the objective design standard modulation
requirements in order to make constructing the units cheaper. (GC §65915(d)(1))
• Maximum Parking Requirements – A limitation on the amount of parking the City
can require, thereby reducing the minimum amount of parking required for a
project. (GC §65915(p)(1))
• Waivers or Reductions of Development Standards – The reduction or waiver of
any development standard that would physically prevent the project from being
built at the permitted density and with the granted concessions/incentives. For
example, a developer is unable to meet all of the development standards while
providing as many units as authorized by the zoning code. The developer could
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request a reduction in the required open space to provide enough area for the
units. (GC §65915(e)(1))
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ELIGIBILITY
Any housing development with five or more units is eligible for a density bonus,
including mixed-use development projects. In order to qualify, the housing development
or mixed-use project must meet one of the following categories listed in Table 1. When
multiple income levels are listed for a category, only one income level needs to be met
(e.g., if a development project provides 5% very-low-income and 10% low income, it
would be eligible for the benefits under the very-low-income category). (GC §65915(b))
Table 1 – Projects Eligible for Density Bonuses
Very-Low-Income Low-Income Moderate-Income
Units for Rent 5% of total units 10% of total units --
Units for Sale 5% of total units 10% of total units 10% of total units
Shared Housing Building 5% of total units 10% of total units --
Housing for Transitional Foster Youth 10% of total units -- --
Housing for Disabled Veterans 10% of total units -- --
Housing for Homeless Persons 10% of total units -- --
College Students -- 20% of total units --
Commercial Development 15% of total units 30% of total units --
Condominium Conversion 15% of units
converted
33% of units
converted
33% of units
converted
Senior Citizen Housing or Senior
Shared Housing Building
At least 35 dwelling units or a mobile home park, either of which
limit residency based on age.
Donation of Land One-acre of land to
be used for
affordable housing
-- --
Once a project is determined to be eligible, please refer to the density bonus, parking,
incentives/concessions, and waivers sections of these guidelines.
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What’s Not Eligible
The following projects are not eligible for density bonuses:
• Any housing development, including mixed-use development, that removes
existing affordable dwelling units, and which does not replace the affordable
units with equivalent size units at the same income affordability level (as required
by State law), shall not be eligible for increase in density, reduced parking,
incentives/concessions, or waivers (see replacement unit section for additional
requirements).
• Any mixed-use project that increases the proposed commercial floor area two
and half times above the maximum permitted by the base zone shall not be
eligible for incentives/concessions.
• Transient lodging, including, but not limited to hotels, motels, bed and breakfast
inns, proposed as part of a mixed-use development shall not be eligible for
incentives/concessions or waivers.
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GENERAL REQUIREMENTS
The following requirements shall apply to all density bonus projects:
1. Fractional Units – When calculating the number of dwelling units allowed for a
project, partial numbers shall be rounded up to the next whole number (e.g., 20.3
units would equal 21 units).
2. Mixed Income Development – If a housing development qualifies for a density
bonus under more than one eligibility category, the applicant shall select which
category they wish to utilize for the density bonus at the time they submit their
Density Bonus Application. Density bonuses from more than one category may
not be combined, unless the project meets the qualifications of Additional Density
Bonus as outlined in these guidelines.
3. General Plan & Zoning Consistency – The granting of a density bonus, in and of
itself, shall not be interpreted as requiring a General Plan amendment, Zoning
Map amendment, or other discretionary approval. However, nothing in State law,
the Tustin City Code (TCC), or these guidelines prevents the City from requiring a
General Plan amendment or Zoning Map amendment if one would be required
for the project without the request for a density bonus.
4. Financial Incentives – The provisions of Government Code §§65915-65918, TCC
Article 9, Chapter 1, and these guidelines do not require or limit the City from
providing direct financial incentives, including the provision of publicly owned
land, or the waiver of fees or dedication requirements. Financial incentives shall
be provided at the sole discretion of the City Council.
5. Increased Density Limit – A housing development shall not exceed the
cumulative total of base units allowed by the underlying zone and the allowed
bonus density units. Incentives, concessions, or development standard waivers
cannot be used to further increase density. (GC §65915(f) and §65915(o)(6))
6. Minimum Density Requirement – Government Code §65915(r) states, “This
chapter shall be interpreted liberally in favor of producing the maximum number
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of total housing units”. To this end, waivers and concessions/incentives cannot be
used to avoid minimum density requirements.
7. Reduced Density – An eligible housing development with a density bonus may
elect to provide a lesser percentage of density increase than what is allowed
under density bonus law, including, but not limited to, no increase in density. In
these cases, the applicant remains eligible for concessions or incentives, waivers
of development and design standards, and reduced parking.
8. Affordable Housing– The affordability requirements contained within TCC
Article 9, Chapter 1, Incentives for the Development of Affordable Housing, apply
to the base units of the housing project. For instance, if the base density of a
property allows for 100 units, and 15 of those units are affordable, then 15% of
the units are affordable. None-the-less, affordable units provided to comply with
the City’s inclusionary requirements (TCC Chapter 9B, Voluntary Workforce
Housing Incentive Program) may also qualify the project for density bonus law,
allowing the developer access to the incentives, waivers, and concessions as
described in this report..
9. Accessory Dwelling Units – A project must include at least five units to qualify
for the use of GC §65915 density bonus. HCD has interpreted GC §65915(o)(8)
and GC §65915(r)(2) to allow Accessory Dwelling Units (ADU) to count toward
the five unit minimum. However, because State law does not consider ADUs as
“density”, the ADUs cannot be used when calculating the base density units.
Additionally, because the City is prohibited from deed restricting the income level
of privately owned ADUs, such an ADU cannot qualify as an affordable unit under
density bonus law. This means a project with two market-rate primary units, one
low-income primary unit, and two ADUs, would have five units for purposes of
qualifying for a density bonus, and the affordability of base units proposed would
be 33% (i.e., one of three primary units).
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ALLOWE D DENSITY
INCREASE
Rental, Ownership, and Shared Housing Units
A housing development with rental, ownership, or shared housing units is entitled to
increase density as follows. Please note that moderate-income units may only be
applied to ownership housing developments. (GC §65915(f))
Table 2 – Allowed Density Increase for Rental, Ownership, and Shared Units
Resulting Density Bonus Percentage
(Varies by Affordability Proposed)
Percentage of Base
Units Proposed as
affordable
Very-Low-Income Low-Income Moderate-Income
5% 20% - -
6% 22.5% - -
7% 25% - -
8% 27.5% - -
9% 30% - -
10% 32.5% 20% 5%
11% 35% 21.5% 6%
12% 38.75% 23% 7%
13% 42.5% 24.5% 8%
14% 46.25% 26% 9%
15% 50% 27.5% 10%
16% 50% 29% 11%
17% 50% 30.5% 12%
18% 50% 32% 13%
19% 50% 33.5% 14%
20% 50% 35% 15%
21% 50% 38.75% 16%
22% 50% 42.5% 17%
23% 50% 46.25% 18%
24% 50% 50% 19%
25% 50% 50% 20%
26% 50% 50% 21%
27% 50% 50% 22%
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28% 50% 50% 23%
29% 50% 50% 24%
30% 50% 50% 25%
Percentage of Base
Units Proposed Very-Low-Income Low-Income Moderate-Income
31% 50% 50% 26%
32% 50% 50% 27%
33% 50% 50% 28%
34% 50% 50% 29%
35% 50% 50% 30%
36% 50% 50% 31%
37% 50% 50% 32%
38% 50% 50% 33%
39% 50% 50% 34%
40% 50% 50% 35%
41% 50% 50% 38.75%
42% 50% 50% 42.5%
43% 50% 50% 46.25%
44% 50% 50% 50%
100% 80% 80% 80%
In some cases, the City cannot apply a density limit (GC §65915(f)(3)(D)). To qualify for
unlimited density, the housing development must consist of 100% affordable units
(exclusive of the manager’s unit) that are designated for very low- and low-income
households, except that up to 20% of the total units (including density bonus units) in
the housing development may be designated for moderate-income households. In
addition to providing income-restricted units, one of the following shall apply:
1. The housing development is located within one-half (½) mile of a major transit
stop (see Figure 1) with unobstructed access to said major transit stop (for
purposes of density bonuses, major transit stops include future major transit
stops incorporated in the regional transportation plan); or
2. The housing development is located within a very low vehicle miles traveled area
(see Figure 2).
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Figure 1 Major Transit Stops
Source: SCAG
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Figure 2 Low VMT Areas
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Stacking Density Bonus
Typically, only one income level would apply towards density bonuses, but in certain
circumstances, an applicant can stack density bonuses (GC§65915(v)). To be eligible for
a “second” (stacked) density bonus, the project must first achieve the 50% density bonus
provided under one of the following income and affordability standards (GC
§65915(v)(1)).
1. 15% of the units are restricted and affordable to very low-income;
2. 24% of the units are restricted and affordable to low-income; or
3. 44% of the units in an ownership development are restricted and affordable to
moderate income.
In these cases, a housing development may then provide additional affordable units for
rent or for sale in the very low or the moderate categories, to further increase the density
bonus by the percentages presented in the following table.
Table 3 – Additional Density Increase
Density Bonus Percentage
Percentage of Base
Units Proposed Very-Low-Income Moderate-Income
5% 20% 20%
6% 23.75% 22.5%
7% 27.5% 25%
8% 31.25% 27.5%
9% 35% 30%
10% 38.75% 32.5%
11% - 35%
12% - 38.75%
13% - 42.5%
14% - 46.25%
15% - 50%
The density bonus amounts listed in Table 3 are added to the 50% density bonus that
was provided under the threshold income and affordability standards identified above.
For example, a development that fulfills an initial 15% very low-income requirement
would be provided an initial 50% density bonus (reference Table 2). Then, if that project
provides an additional 15% of the units for moderate-income households, it would be
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allowed to stack an additional density bonus of 50% (reference Table 3). This would
result in a total density bonus of 100%.
Limitations
When a developer uses both the standard density bonus and the stacking density bonus,
no more than 50% of the units provided shall be income restricted.
Special Requirements for Shared Housing Buildings
For shared housing buildings that either provide 5% of the units for very low-income
households or 10% for low-income households, the City cannot require a minimum unit
size or minimum bedroom count for the shared units (GC §65915(t)). However, the City
can apply a minimum to the non-shared units in the same project, provided the shared
housing units meet the requirements of the Building Code. (GC §65915(o)(7)(B))
Transitional Foster Youth, Disabled Veterans, or Homeless
Persons
A housing development where at least 10% of the units are for transitional foster youth,
disabled veterans, or homeless persons, with rents restricted at the very low-income
level, are entitled to a density bonus of 20%. (GC §65915(f)(3)(B))
Density Bonus for Lower Income College Students
A student housing development that reserves at least 20% of the units for low-income
students is entitled to a density bonus of 35% (GC §65915(f)(3)(C)). For the purposes of
student housing developments, a dwelling unit is one bed and its pro-rata share of
common areas.
To qualify for this density bonus, the following shall be met: (GC §65915(b)(1)(F)(i))
All the of units must be used
exclusively for undergraduate,
graduate, or professional
students who are enrolled full-
time at an institution of higher
education.
The institution must be accredited
by either the Western Association
of Schools and Colleges or the
Accrediting Commission for
Community and Junior Colleges.
The student housing must be
owned or leased by the institution
of higher education.
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All units in the student housing
shall be exclusively occupied by
the students of the institution.
The institution of higher
education shall either directly
operate the student housing or
shall enter into an operating
agreement with a third party
entity for its operation.
Priority for the affordable units
shall be given to lower income
students experiencing
homelessness.
The rent for affordable units shall
be calculated at thirty (30)
percent of sixty-five (65) percent
of the area median income for a
single-room occupancy unit (see
below).
NOTES ON STUDENT HOUSING:
•If the institution of higher learning does not have sufficient low-income student
enrollment to fill the income restricted units during the school year, GC Section
65915(b)(1)(F)(i)(ia) states that the requirement is not breached, however, the legislation
does not say how the unfilled units are treated. Without further clarification from the law,
there is a presumption that the units could be used for non-income restricted students.
•Students experiencing homelessness can either be verified by a homeless service
provider (see definitions) or directly by the institution of higher education if they have
knowledge of a person’s homeless status.
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Calculating Rent for Affordable Units
Calculations for affordable rents are prescribed by State law, and begin with the median
income by family size, which is published by the California Department of Housing and
Community Development (HCD) annually. The analysis starts with a determination of
the income limit based on the target household income and family size, which is
published by HCD annually 1.
2026 HCD Income Limits
Affordable housing cost is considered 30% of the gross income. For instance, for a four-
person very low-income household, 30% of $93,050 is $27,915 per year for housing,
which is $2,326 per month. A utility allowance is then deducted, which is based on the
number of bedrooms within the dwelling unit. For example, per the Orange County
Housing Authority, an all electric two-bedroom unit would be provided a $295 utility
allowance2. As a four person household would occupy a two bedroom unit, the resulting
maximum rent for a four-person, very-low-income household is $2,031. It is important
to note that the utility varies based on the actual number of bedrooms and types of
appliances provided, and may change from year to year.
1 https://www.hcd.ca.gov/funding/income-limits/state-federal-income-limits/state
2 Documents & Forms | Orange County Housing Authority
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Commercial Development
A commercial development that will also provide affordable housing through an
agreement with an affordable housing developer, either as a joint project or two
separate projects, is eligible for a density bonus including any eligible
concessions/incentives and/or development standard waivers. The agreement must be
between the commercial developer and a housing developer and shall identify how the
commercial developer will contribute to the affordable units. This can include, but may
not be limited to, the commercial developer building the units, donation of land to the
housing developer, or the commercial developer making a cash payment to the housing
developer. The agreement must be reviewed and approved by the City. (GC §65915.7)
The housing development can either be constructed on the site of the commercial
development or on a separate site that meets all of the following criteria:
1. The housing development site is within Tustin’s city limits.
2. The housing development site is in close proximity to public amenities including
schools and employment centers.
3. The housing development site is within one-half mile of a major transit stop.
The number and type of density bonus, incentive/concession, and/or waiver shall be
based on the mutual agreement between the City and developer. This may include, but
is not limited to, any of the following:
• Up to a 20% increase in maximum allowable intensity in the General Plan.
• Up to a 20% increase in maximum allowable floor area ratio.
• Up to a 20% increase in maximum height requirements.
• Up to a 20% reduction in minimum parking requirements.
• Use of a limited-use/limited-application elevator for upper floor accessibility.
• An exception to a zoning ordinance or other land use regulation.
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Nothing in this section shall preclude an affordable housing developer from seeking a
density bonus, concessions, waivers or reductions of development standards, or parking
ratios allowed.
Condominium Conversions
When converting apartments to condominiums, an applicant can request a density
bonus to increase the number of units on the property. The applicant has the option of
providing either 15% of the total units for very-low-income residents or 33% of the total
units for low- and/or moderate-income residents. (GC §65915.5(a))
Unlike other density bonuses, condominium conversions have the following additional
restrictions:
• The City shall grant either a density bonus of up to 25% to create additional units
or grant another incentive of equivalent financial value provided.
• All units, including income restricted units, shall be provided on-site.
• The applicant agrees to pay for the reasonably necessary administrative costs,
including, but is not limited to, staff costs, consultant fees, photocopy costs, and
mailing fees, incurred by the City.
• Apartments that are proposed for conversion to condominiums shall be ineligible
for a density bonus or other incentive if the apartments were previously granted
a density bonus, concession, incentives, or waiver or reduction of development
standards.
IMPORTANT NOTE ON COMMERCIAL DEVELOPMENTS:
•If the housing developer does not commence with construction of the affordable units in
accordance with timelines ascribed by the agreement, the City may withhold certificates of
occupancy for the commercial development under construction until the developer has
completed construction of the affordable units. (GC § 65915.7(g))
•The City is not permitted to reduce or waive fees that were adopted by an ordinance for
the commercial development. (GC § 65915.7(j))
•State provisions to allow density bonuses for commercial developments sunset on January
1, 2028, unless the State extends the deadline.
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• The condominium conversion shall comply with all requirements of the
Subdivision Map Act, as well as Article 9, Chapter 3 (Subdivisions) of the Tustin
City Code (TCC), including but not limited to TCC §9274.
The City is permitted to require such reasonable conditions on the granting of a density
bonus or other incentives of equivalent financial value as it finds appropriate, including,
but not limited to, conditions which assure continued affordability of units to subsequent
purchasers who are persons and families of very low-, low- and moderate-income
households.
Pre-application Process. An applicant may submit to the City a preliminary application
for the condominium conversion on a form provided by the Community Development
Director. Within ninety (90) days of receipt of the preliminary application, the City shall
notify the applicant in writing whether the application is eligible for a condominium
conversion pursuant to this section.
Senior Housing Development
A senior housing development that has at least 35 units is eligible for a 20% increase in
density above the units allowed by the base zoning. To qualify as a senior housing
development, the units must be age restricted such that at least one occupant of every
unit in the development is least 55 years old. For the purpose of considering a density
bonus, residential care facilities and assisted living facilities are considered senior
housing. (GC §65915(b)(1)(C))
Mobile Home Parks
Like senior housing developments, mobile home parks that are age restricted, such that
at least one occupant of every unit in the mobile home park is least 55 years old, is
eligible for a 20% density increase. However, mobile home parks do not need to meet
the 35 unit minimum.
Donation of Land
A housing developer may donate land for the development of very low-income housing
to obtain a density bonus. The amount of land to be donated must be at least one acre
and be large enough to accommodate the percentage of base units proposed under the
general plan and zoning designation, with a minimum of 40 units. (GC §65915(g))
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The allowed density increased for land donation is as follows:
Table 4 – Allowed Density Increase for Land Donation
Very Low-Income
Units as a
Percentage of Base
Units Proposed
Density Bonus
Percentage
Very Low-Income
Units as a
Percentage of Base
Units Proposed
Density Bonus
Percentage
10% 15% 21% 26%
11% 16% 22% 27%
12% 17% 23% 28%
13% 18% 24% 29%
14% 19% 25% 30%
15% 20% 26% 31%
16% 21% 27% 32%
17% 22% 28% 33%
18% 23% 29% 34%
19% 24% 30% 35%
20% 25%
These increases to density may be combined with other authorized increases to density,
provided the combined density increase does not exceed 35% above the base units
allowed by the zoning designation.
In order to qualify for a density bonus through donation of land, all of the following must
be met:
• The general plan and zoning designation of the donated land shall accommodate
at least the Housing Element default density of 30 dwelling units per acre. A
general plan amendment and rezone to accommodate an increase in density may
be part of the application.
• The donated land is, or will be, served by adequate public facilities and
infrastructure for the housing development.
• The donated land is either within the boundary of the housing development, or
upon approval of the City, within one-quarter (¼) mile of the boundary of the
housing development.
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• The land shall be donated and transferred to the City or a housing developer that
is approved by the City. The applicant shall donate and transfer the land no later
than the date of approval of the final subdivision map, parcel map, or residential
development application (GC §65915(g)(2)(A)).
• The donated and transferred land and the affordable units shall be subject to a
deed restriction recorded on the property at the time of transfer ensuring
affordability of the units in compliance with GC §65915(c)(1 and 2)
• The City shall not approve the final subdivision map, parcel map, or residential
development application (GC §65915(g)(2)(A)) for the housing development
unless and until all permits, other than building permits, for the development of
very-low-income housing have been issued for the donated and transferred land.
• The source of funding for the development of very low-income housing on the
donated and transferred land shall be identified by the developer and accepted
by the City not later than the date of approval of the final subdivision map, parcel
map, or residential development application (GC §65915(g)(2)(A)) for the
housing development.
Specific Plan Areas
This section applies only to sites within the Red Hill Avenue Specific Plan (RHASP) and
Downtown Commercial Core Specific Plan (DCCSP) areas. Both the RHASP and DCCSP
have an established maximum capacity for residential units, which is referred to as a
Residential Allocation Bank (RAB). Because there is a limited number of units authorized
for the specific plans, residential mixed use and multi-family residential projects must
“reserve” units from the RAB, which is done through Residential Allocation Reservation
(RAR) review process. The RAR process consists of two phases, with preliminary
distribution of units to a project in the first phase; and final allocation of units upon
approval of the proposed project in the second phase.
Since there are no established density limits within the RHASP or DCCSP, the RAB
reflects the maximum development potential in the specific plans, and therefore the RAR
reflects the maximum development potential for an individual site. As a result, the RAR
constitutes the base density for projects within the Specific Plans.
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Because both the RHASP and DCCSP have an inclusionary housing requirement, as
required by the City’s Voluntary Workforce Housing Incentive Program Ordinance,
residential projects within the specific plans automatically qualify for density bonus
concessions. However, because the RAR is only a limiting factor for a project when the
RAB has been depleted, an applicant may propose the development project they want
to build, and apply the inclusionary housing percentages and income levels of their
choice. As a result, determining the density bonus percentage of a project requires
that the City identify the number of base units by reversing the typical density bonus
calculation.
For example, if a builder wishes to construct a project with 48 total units, and include
the inclusionary requirement of 5% to very low-income families, the number of base
units would be determined by calculating the density bonus in reverse, as follows:
1. On Table 2 (Reference page 7), locate the “5% of Base Units Proposed” row. This
row identifies a 20% density bonus for very low-income units.
2. Using the 20% density bonus, divide the 48 total units desired by 1.20 to reverse
calculate the base units, which equals 40.
3. Since 5% of the base units are affordable, divide 40 by 1.05 (5%) to determine
the number of market rate units, which equals 38.095.
4. Subtract the market units (38.095) from the base units (40) to determine the
number of units affordable to very low-income families. Round 1.905 up to
determine the number of affordable units, which is 2.
5. This process determines that the 48 residential unit project would have 2 units
affordable to very low-income families, and 40 base units, which would be
removed from the RAB through the RAR process.
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PARKING REQUIREMENTS
Maximum Parking Requirement
Notwithstanding any other code, regulation, or ordinance for a housing development
that is eligible for a density bonus, the City may not require parking above the following
minimum parking ratios: (GC §65915(p)(1))
Table 5 – Maximum Parking Requirements
Dwelling Unit Size Onsite Parking per Unit
Studio to 1 Bedroom 1 space
2 to 3 Bedrooms 1.5 spaces
4 or more Bedrooms 2.5 spaces
Special Parking Requirements
In the following circumstances, a lower parking requirement applies:
Table 6 – Special Parking Requirements
Circumstance Parking
Requirement
A housing development with at least 20% low-income units
and is located within one-half (½) mile of a major transit stop
with unobstructed access. (GC §65915(p)(2))
0.5 spaces per unit
A housing development with at least 11% very low-income
units and is located within one-half (½) mile of a major transit
stop with unobstructed access. (GC §65915(p)(2))
0.5 spaces per unit
A housing development with at least 40% moderate-income
units and is located within one-half (½) mile of a major transit
stop with unobstructed access. (GC §65915(p)(2))
0.5 spaces per
bedroom
Rental housing project or shared housing building that is 100%
affordable to low-income, exclusive of the manager’s unit, that
is located within one-half (½) mile of a major transit stop with
unobstructed access from the housing development.
(GC§65915(p)(3))
No parking
required
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A housing development that is for-rent to individuals who are
55 years of age or older and has either paratransit service or
unobstructed access within one-half (½) mile to a fixed bus
route that operates at least eight times per day. (GC
§65915(p)(3))
No parking
required
A special needs housing development that has either
paratransit service or unobstructed access within one-half mile
of a fixed bus route that operates at least eight times per day.
(GC §65915(p)(3))
No parking
required
A supportive housing development that has either paratransit
service or unobstructed access within one-half mile of a fixed
bus route that operates at least eight times per day.
(GC§65915(p)(3))
No parking
required
Exception to Special Parking Requirements
The City may impose a higher parking requirement than what is listed in Table 6;
however, to do so the City must conduct an area-wide or jurisdiction-wide parking study
(parking studies that are over seven years old are not considered valid for this purpose).
The parking study must include, but may not be limited to, an analysis of parking
availability, differing levels of
transit access, walkability
access to transit services, the
potential for shared parking,
the effect of parking
requirements on the cost of
market-rate and subsidized
developments, and the lower
rates of car ownership for low-
income and very low-income
individuals, including seniors
and special needs individuals.
(GC §65915(p)(7)
If the City makes a finding that
there is substantial evidence,
based on the parking study, that a higher parking ratio is needed, then the City can apply
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the higher parking ratio, up to the maximum parking requirements set forth in Table 5.
(GC §65915(p)(7))
Additional Parking Standards
Except as modified by these guidelines, all other provisions of Tustin City Code Article
9, Chapter 2, Part 6 (Off-Street Parking) shall apply. (GC §65915(p)(4))
• Location of Parking: A multi-family residential housing development may provide
on-site parking through uncovered or tandem parking; however, a parking space
that is tandem to another parking space shall be assigned to the same unit. On-
street parking shall not be counted towards meeting parking requirements.
• Rounding: If the total number of parking spaces required for a housing
development is other than a whole number, the number shall be rounded up to
the next whole number.
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INCENTIVES AND
CONCESSIONS
An incentive or concession is a regulatory relief that results in an identifiable and actual
cost reduction in providing affordable units (GC §65915(c). This can mean any of the
following:
• A reduction in the development
standards, including but not limited
to, a height limitation, a setback
requirement, a floor area ratio, an
open space requirement, a reduced
parking requirement in excess of the
provisions identified above, or
architectural design requirements
(provided the reduction of the
architectural design standard does
not violate the building code). 3
• Approval of a mixed-use project in
conjunction with the housing
development, if the nonresidential
portion of the mixed-use project will
reduce the cost of the housing
development; is compatible with the
residential portion of the housing
development; and is compatible with adjacent existing or planned development.
• A reduction or waiver of any City imposed fee or dedication of land. It is important
to note that approval of a fee reduction or waiver of fee and/or dedication of land
Photo by Jude Wilson on Unsplash
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shall be at the sole discretion of the City Council, and is not required to be
approved.
• Any other regulatory incentives that will result in identifiable, financially
sufficient, and actual cost reductions.
Number of Concessions Allowed
The following is the number of concessions allowed for qualified housing developments:
(GC §65915(d)(2))
Table 7 – Concessions
Number
Allowed
Very-Low-Income
Percentage
Low-Income
Percentage
Moderate-Income
Percentage
Low-Income
Student Housing
Percentage
1 5% 10% 10% 20%
2 10% 17% 20% 23%
3 15% 24% 30% -
4 16% - 45% -
Incentives for Housing with Childcare Facilities
A density bonus eligible housing development that also includes a childcare facility,
other than a large or small family day care home, that will be located on the same site
as the development, shall be eligible for one the following incentives (GC §65915(h)):
1. Additional residential floor area equal to or greater than the floor area of the
childcare facility; or
IMPORTANT NOTE ON CONCESSIONS:
State law includes provisions to allow a fifth incentive/concession for projects in which
100% of the units are subject to defined affordability requirements (GC § 65915(b)(1)(g)
and that are either within ½ mile of a Major Transit Stop or within a Very-Low Vehicle Miles
Traveled Area. (GC § 65915(d)(2)(D))
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2. A concession that contributes to the economic feasibility of the childcare facility
(e.g., reduction of development standards, reduced parking requirements, or a
financial incentive if approved by the City Council).
The density increase or the concession associated with the inclusion of a childcare facility
is provided in addition to the number of allowed concessions listed above in Table 7.
City Approval of Incentive for Childcare
The City shall require, as a condition of approving the housing development with
childcare, that:
1. The childcare facility shall remain in operation at least as long as the density
bonus units are required to remain affordable; and
2. The children that attend the childcare facility shall come from families that meet
the same mix of income as the density bonus units. As an example, if 5% of the
units are very low-income and 10% percent of the units are low income, then 5%
of the children shall come from very-low-income families and 10% children shall
come from low-income families.
The City may deny a request to provide a density bonus for a childcare facility if it finds,
based upon substantial evidence, that the community has adequate childcare facilities.
Documentation for a Requested Concession
The applicant must provide reasonable documentation establishing that a concession
would result in an identifiable and actual cost reduction in providing the affordable units.
Applicants shall include a detailed statement in their project narrative describing
IMPORTANT NOTE ON DOCUMENTATION:
The City will not ask for a special study or proforma to justify the incentive or concession,
but the applicant needs to provide enough support information to show the identifiable
and actual cost reduction.
Once documentation is submitted to the City, the City may ask for additional information
or clarification on the documentation; however, the burden falls upon the City to disprove
the information submitted.
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each concession, how the concession would reduce costs in providing the affordable
housing, and the estimated amount of cost reductions that would result from the
concession.
Findings for Denial
When an applicant makes a request for a concession, State law requires the City to
approve the request, unless, based on substantial evidence, the City adopts one or more
of the following findings (GC §65915(d)(1)):
1. The incentive or concession does not result in identifiable and actual cost
reductions to provide for affordable housing costs for ownership housing units, or
for rents required for the income-restricted units; or
2. The concession would have a specific adverse impact upon public health and
safety, or on any real property listed in the California Register of Historical
Resources and for which there is no feasible method to satisfactorily mitigate or
avoid the specific adverse impact without rendering the development
unaffordable to low- and moderate-income households; or
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3. The concession would be contrary to state or federal law.
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WAIVERS AND REDUCTIONS
OF DEVELOPMENT
STANDARDS
The City is prohibited from applying any development standard or objective design
standard that would have the effect of physically precluding the construction of a
development project that includes affordable units. As part of their application, the
applicant for a density bonus may submit a proposal to the City to waive or reduce
development standards that would otherwise preclude or inhibit construction of housing
development at the densities or with the incentives permitted. The number of
development or design standards that can be requested for waiver or reduction are not
limited. (GC §65915(e)(1))
Does Not Reduce Concessions
The applicant’s request to waive or reduce development standards or objective design
standards does not reduce the available concessions for which the project qualifies.
IMPORTANT NOTES ON DEVELOPMENT STANDARD WAIVERS OR REDUCTIONS:
The City is not required to approve a waiver or reduction of a development standard for
projects that are within ½ mile of a Major Transit Stop and take advantage of the
unlimited density option. These projects would still be eligible for incentives/concessions.
(GC §65915(f)(3)(D)(ii))
The California Appellate Court has ruled that a developer cannot be required to reduce
or remove amenities, nor can they be forced to redesign the project to avoid the need for
a waiver or reduction of development standards. (see Banker’s Hill 150 v. City of San
Diego, 74 Cal. App. 5th 755 (2022)).
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Documentation for Waivers or Development Standards
Reductions
The applicant must provide reasonable documentation establishing that development
standard being requested to be waived or reduced would otherwise physically preclude
the development of the project at the density and with the concession(s) permitted under
GC §65915(d) and (f). Applicants should include a detailed statement in their project
narrative describing each waiver/reduction being requested and how applying the
full development standard would preclude the project.
Findings for Denial
When an applicant makes a request for a waiver or reduction to a development standard
or objective design standard, State law requires the City to approve the request, unless,
based on substantial evidence, the City adopts one or more of the following findings:
(GC §65915(e)(1))
1. The waiver or reduction of development standards or objective design standards
would have a specific adverse impact upon public health or safety, and for which
there is no feasible method to satisfactorily mitigate or avoid the specific adverse
impact.
2. The waiver or reduction of development standards or objective design standard
would have an adverse impact on any real property listed in the California
Register of Historical Resources.
IMPORTANT NOTE ON DOCUMENTATION:
The City will not ask for a special study or alternative development analysis to support
the request for a waiver or reduction of a development standard, but the applicant needs
to provide enough support information to demonstrate how the imposition of the
development standard physically precludes the proposed project from being developed.
Once documentation is submitted to the City, the City may ask for additional information
or clarification on the documentation; however, the burden falls upon the City to disprove
the information submitted.
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3. The waiver or reduction of development standards or objective design standard
would be contrary to state or federal law.
4. The development standard or objective design standard proposed to be waived
or reduced would not physically preclude the construction of the development at
the densities permitted, or with the permitted concessions.
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STANDARDS
Design and Distribution of Affordable Units
Affordable units shall be designed and distributed within the housing development as
follows:
• Number of Bedrooms. Affordable units shall reflect the range of numbers of
bedrooms provided in the residential development project as a whole;
• Comparable Quality and Facilities. Affordable units shall be comparable to the
market-rate units in regards to the facilities provided (e.g., laundry, recreation,
etc.) and in the quality of construction and exterior design;
• Access. In mixed-income multi-unit structures, the occupants of the affordable
housing units shall have the same access to common entrances and any common
areas, including parking areas, as the occupants of the market-rate housing units;
• Size and Finish. Affordable units may be smaller and have different interior
finishes and features than the market-rate units; and
• Location. Affordable units shall be distributed throughout the residential
development. For example, in a mixed-income multi-unit structure, affordable
units shall not be isolated to a specific floor or an area of a specific floor.
Replacement of Rental Units
An application for a density bonus on any property with existing, vacated, or demolished
rental units that are/were subject to a recorded affordable housing covenant or are/were
occupied by very low- or low-income households shall be subject to the following: (GC
§65915(c)(3)(A-D))
• Occupied Units. For dwelling units that are occupied on the date of the
application, the housing development shall provide at least the same number of
affordable units of equivalent size to be made available at affordable rent or
affordable housing cost to, and occupied by, persons or families in the same or
lower income category as those households in occupancy.
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• Vacant or Demolished Units. For rental dwelling units that have been vacated or
demolished within the five years preceding the application, the housing
development shall provide at least the same number of affordable units of
equivalent size as existed at the highpoint of those units in the five years
preceding the application. These units are to be made available at affordable rent
or affordable housing cost to, and occupied by, persons and families in the same
or lower income category as those persons and families in occupancy at that time.
• Unknown Household Income. If the income of the existing occupants or
occupants within the past five years is unknown to the City or the applicant, it
shall be rebuttably presumed that the rental dwellings units were occupied by
low-income and very-low-income renter households as determined by the most
recently available data from the United States Department of Housing and Urban
Development’s Comprehensive Housing Affordability Strategy database.
The database can be found at https://www.huduser.gov/portal/datasets/cp.html.
Rental Housing Projects
Affordable Rents
The Affordable Rent for rental units is calculated using the methodology defined in
California Health and Safety Code § 50053. (GC §65915(c)(1)(B)(i))
Required Covenant Period
The applicant shall record a covenant on the property guaranteeing that the affordability
of the dwelling units for at least 55 years, or a longer time if required by the construction
or mortgage financing assistance program, mortgage insurance program, or rental
subsidy program. (GC §65915(c)(1)(A))
Ownership Housing Projects
Affordable Sales Price
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The Affordable Sales Price for ownership housing units is determined using the
methodology defined in California Health and Safety Code § 50052.5. (GC
§65915(c)(2)(A)(i))
Occupancy
An applicant shall agree to ensure, and the City shall ensure, that the affordable units
that qualified the applicant to receive a density bonus meet one of the following
conditions: (GC §65915(c)(2)(A))
1. Initially sold to and occupied by a person or family whose household income
meets the target AMI for which the density bonus was granted; or
2. If the unit is not purchased by an income qualified person or family within 180
days following the issuance of a certificate of occupancy, the unit may be
purchased by a Qualified Nonprofit Housing Corporation.
Resale
If an owner of an affordable unit wishes to sell or otherwise convey the unit, they must
share a portion of the equity of the dwelling unit with the City. (GC §65915(c)(2)(A)) As
part of the approval of the affordable ownership unit, the developer and the City will
enter into an equity sharing agreement, which will be recorded to the property. The
equity sharing agreement shall specify the following:
• The seller of the unit shall retain the value of any improvements, the down
payment, and the seller’s proportionate share of appreciation; and
• The City shall recapture:
o Any initial subsidy, which is defined as the fair market value of the home
at the time of its initial sale minus the Affordable Sales Price paid by the
homebuyer plus the amount of any downpayment assistance or mortgage
assistance.
o A proportionate share of the appreciation achieved upon the resale of the
unit.
The City will use its share within five years towards increasing, improving, and
preserving the community's supply of affordable housing.
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APPROVAL PROCESS
4
Density Bonus Application and Affordable Housing Plan
The application used to review density bonus requests is the Density Bonus Application
and includes an Affordable Housing Plan. Tustin Municipal Code Article 9, Chapter 1,
Part 4 provides the standards for review and approval of the application. The application
will be considered ministerially, or will be processed concurrently with any other
entitlement required for the development. The application should include:
• A legal description of the project site.
• A letter specifying the density bonus,
concessions, and waivers being
requested.
• A vicinity map showing uses and
transit.
Photo by City of Tustin
• Project plans (site plan, floor plan,
elevations, etc.).
• Description of existing dwelling units
on the site, if applicable.
• Supporting information for the
concessions and waivers.
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All applications that include a request for a density bonus, concession, waiver or
reduction of a development standard, or parking reduction pursuant to GC §65915 are
reviewed concurrently with the first application for the discretionary or ministerial permit
first required for the housing development. No additional discretionary approval solely
for review of a project using density bonus or related benefits shall be required.
Affordable Housing Agreement
As part of approval, the applicant would be required to enter into an Affordable Housing
Agreement (AHA). The AHA, which will be reviewed by the City Attorney and
Community Development Director, shall be executed in a recordable form prior to the
issuance of a building permit for any portion of a housing development, and shall be
binding upon all future owners and successors in interest.
The AHA will include items such as:
• Identification and details about the
affordable units.
• Length of term of affordability.
• Maximum Allowable Rent or Sales
Price.
• Maximum allowable deposit amount
for rental units.
• The rules and procedures for
qualifying tenants, establishing
affordable rent, filling vacancies, and
maintaining the affordable units for
qualified tenants.
• Provisions requiring owners to verify
tenant incomes and maintain books
and records to demonstrate
compliance with this chapter.
• Provisions requiring owners to
submit an annual report to the City.
• Prohibition of subletting of rental
units or renting of ownership units.
• Requirements of the sale of
ownership units, such as equity
sharing agreements, limits on resale
to target income groups, etc.
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DEFINITIONS
“Affordable Housing” means housing for which the allowable housing expenses paid
by a qualifying household shall not exceed a specified fraction of the county median
income, adjusted for household size. This includes housing designated for acutely low,
extremely low-, very low-, low-, and moderate-income households.
“Base Density” means the maximum number of dwelling units allowed under the
Zoning Ordinance, specific plan, or the General Plan Land Use Element, or, if a range of
density is permitted, means the greatest number of units allowed by the specific zoning
district, specific plan, or the Land Use Element applicable to the project.
“Childcare Facility” Has the meaning set forth in GC §65915(h), and means a child
daycare facility, other than a family daycare home, including, but not limited to, infant
centers, preschools, extended daycare facilities, and school-age childcare center.
Childcare facility does not include public or private primary or secondary education
facilities.
“Condominium Conversion” means the conversion of existing apartments, or other
rental units, into ownership property that consists of an undivided interest in common in
a portion of real property coupled with a separate interest within the boundaries of the
dwelling unit.
“Density Bonus” a density increase over the maximum allowable residential density
under applicable zoning and Land Use Element of the General Plan as of the date of
application.
“Development Standard” means a site or construction condition, including, but not
limited to, a height limitation, setback requirement, floor area ratio, an onsite open-space
requirement, or a parking ratio that applies to a housing development pursuant to any
ordinance, general plan element, specific plan, or other local condition, law, policy,
resolution, or regulation. Development standards shall not mean an impact fee,
inclusionary housing requirement, dedication of land, or any other provision of the TMC
not contained in Article 9.
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“Disabled Veteran” has the meaning set forth in GC §18541 and means any veteran
who is currently declared by the United States Veterans Administration to be ten percent
(10%) or more disabled as a result of service in the armed forces. Proof of such disability
shall be deemed conclusive if it is of record in the United States Veterans Administration.
“Equivalent Financial Value” means a concession that would result in a reduction in cost
to the developer/property owner based upon the land cost per dwelling unit and shall
be calculated based upon the difference in the value of the land with and without the
density bonus.
“Equivalent Size Dwelling Unit” means a dwelling unit that replaces another dwelling
unit and contains at least the same number of bedrooms as the unit being replaced. (GC
§65915(c)(3)(D))
“Extremely low-income household” means a household whose gross income does not
exceed thirty (30) percent of the area median income for the County of Orange, adjusted
for family size, as published and periodically updated by the State Department of
Housing and Community Development pursuant to California Health and Safety Code
§50106.
“Foster Youth” has the meaning set forth in Cal. Education Code §66025.9 and means
a person in California whose dependency was established or continued by a court of
competent jurisdiction, including a tribal court, on or after the youth's 13th birthday and
who is no older than 25 years of age at the commencement of the academic year.
“Homeless Person” shall have the same meaning as that phrase is defined in §11302
of the federal McKinney-Vento Homeless Assistance Act (42 U.S.C. Ch. 119).
“Housing Development” has the meaning set forth in GC §65915(i), and means a
development project for five (5) or more residential dwelling units, including mixed-use
developments, subdivisions, or common interest development. A housing development
may consist of residential units or unimproved residential lots, and either a project to
substantially rehabilitate and convert an existing commercial building to residential use,
or the substantial rehabilitation of an existing multifamily dwelling where the result of
the rehabilitation would result in a net increase in available residential units. For
purposes of calculating a density bonus, the residential units shall be on contiguous sites
that are the subject of one (1) development application but do not have to be based upon
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individual subdivision maps or parcels. The density bonus shall be permitted in
geographic areas of the housing development other than the areas where the units for
the lower income households are located.
“Low-Income Household” means a household whose gross income does not exceed
eighty (80) percent of the area median income for the County of Orange, adjusted for
family size, as published and periodically updated by the State Department of Housing
and Community Development pursuant to California Health and Safety Code §50079.5.
Sometimes referred to as lower-income households.
“Lower Income Student” has the meaning set forth in GC §65915(o)(4) and means a
student who has a household income and asset level that does not exceed the level for
Cal Grant A or Cal Grant B award recipients as set forth in Education Code
§69432.7(k)(1). The eligibility of a student to occupy a unit for lower income students
under this section shall be verified by an affidavit, award letter, or letter of eligibility
provided by the institution of higher education in which the student is enrolled or by the
California Student Aid Commission that the student receives or is eligible for financial
aid, including an institutional grant or fee waiver from the college or university, the
California Student Aid Commission, or the federal government.
“Major Transit Stop” has the meaning set forth in California Public Resources Code
§21155(b) and means a site containing an existing rail or bus rapid transit station or the
intersection of two (2) or more major bus routes with a frequency of service interval of
20 minutes or less during the morning and afternoon peak commute periods; or any
other transit stop identified as a “major transit stop” by the Southern California
Association of Governments (SCAG) in the most recent adopted version of the regional
transportation plan.
“Moderate-Income Household” means a household whose gross income does not
exceed one hundred twenty (120) percent of the area median income for the County of
Angeles, adjusted for family size, as published and periodically updated by the State
Department of Housing and Community Development pursuant to California Health and
Safety Code §50093.
“Qualified Nonprofit Housing Corporation” as defined in GC §65915(c)(2)(B), a
nonprofit housing corporation organized pursuant to §501(c)(3) of the Internal Revenue
Code that has received a welfare exemption under §214.15 of the Revenue and Taxation
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Code for properties intended to be sold to low-income families who participate in a
special no-interest loan program and meets all of the following requirements pursuant
to a recorded contract that satisfies all of the requirements specified in paragraph (10)
of subdivision (a) of §402.1 of the Revenue and Taxation Code:
(A) The nonprofit corporation has a determination letter from the Internal Revenue
Service affirming its tax-exempt status pursuant to §501(c)(3) of the Internal
Revenue Code and is not a private foundation as that term is defined in §509 of
the Internal Revenue Code.
(B) The nonprofit corporation is based in California.
(C) All of the board members of the nonprofit corporation have their primary
residence in California.
(D) The primary activity of the nonprofit corporation is the development and
preservation of affordable home ownership housing in California that
incorporates within their contracts for initial purchase a repurchase option that
requires a subsequent purchaser of the property that desires to resell or convey
the property to offer the qualified nonprofit corporation the right to repurchase
the property prior to selling or conveying that property to any other purchaser
pursuant to an equity sharing agreement or affordability restrictions on the sale
and conveyance of the property that ensure that the property will be preserved
for lower income housing for at least 45 years for owner-occupied housing units
and will be sold or resold only to persons or families of very low, low, or moderate
income, as defined in §50052.5 of the California Health and Safety Code.
“Shared Housing Building” has the meaning set forth in GC §65915(o)(7) and means a
residential or mixed-use structure, with five or more shared housing units and one or
more common kitchens and dining areas designed for permanent residence of more than
30 days by its tenants. The kitchens and dining areas within the shared housing building
shall be able to adequately accommodate all residents. If a local ordinance further
restricts the attributes of a shared housing building beyond the requirements
established in this section, the local definition shall apply to the extent that it does not
conflict with the requirements of this section. A shared housing building” may include
other dwelling units that are not shared housing units, provided that those dwelling
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units do not occupy more than 25 percent of the floor area of the shared housing
building. A shared housing building may include 100 percent shared housing units.
“Shared Housing Unit” has the meaning set forth in GC §65915(o)(7) and means one or
more habitable rooms, not within another dwelling unit, that includes a bathroom, sink,
refrigerator, and microwave, is used for permanent residence, that meets the “minimum
room area” specified in §R304 of the California Residential Code (Part 2.5 of Title 24 of
the California Code of Regulations), and complies with the definition of “guestroom” in
§R202 of the California Residential Code. If a local ordinance further restricts the
attributes of a shared housing building beyond the requirements established in this
section, the local definition shall apply to the extent that it does not conflict with the
requirements of this section. “Shared housing unit” for purposes of a residential care
facility for the elderly, as defined in §1569.2 of the Health and Safety Code, includes a
unit without an individual kitchen where a unit may be shared by unrelated persons, and
a unit where a room that may be shared by unrelated persons meets the “minimum room
area” requirements of clause (i).
“Specific Adverse Impact” has the meaning set forth in GC §65589.5(d)(2), and
includes: Significant, quantifiable, direct, and unavoidable impact, based on objective,
identified written public health or safety standards, policies, or conditions as they existed
on the date the application was deemed complete. The following shall not constitute a
specific, adverse impact upon the public health or safety: (1) inconsistency with the
zoning ordinance or general plan land use designation, or (2) the eligibility to claim a
welfare exemption under subdivision (g) of §214 of the Revenue and Taxation Code.
“Unobstructed Access” means access to a major transit stop that the income qualified
resident of the housing development is able to walk or bike to from the residence
without encountering natural or constructed impediments, which include, but are not
limited to, freeways, rivers, mountains, harbors and other bodies of water, but does not
include residential structures, shopping centers, parking lots, or rails used for transit with
legal pedestrian access through the property.
“Very-Low-Income Household” means a household whose gross income does not
exceed fifty (50) percent of the area median income for the County of Los Angeles,
adjusted for family size, as published and periodically updated by the State Department
of Housing and Community Development pursuant to California Health and Safety Code
§50105.
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“Very Low Vehicle Travel Area” has the meaning set forth in GC §65915(o)(10) and
means an urbanized area, as designated by the United States Census Bureau, where the
existing housing development generates vehicle miles traveled per capita that is below
85 percent of either regional vehicle miles traveled per capita or city vehicle miles
traveled per capita. For purposes of this paragraph, “area” may include a travel analysis
zone, hexagon, or grid. For the purposes of determining “regional vehicle miles traveled
per capita” pursuant to this paragraph, a “region” is the entirety of incorporated and
unincorporated areas governed by a multicounty or single-county metropolitan planning
organization, or the entirety of the incorporated and unincorporated areas of an
individual county that is not part of a metropolitan planning organization.
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CHAPTER 1 – RESIDENTIAL DENSITY BONUS
PART 1 – GENERAL
9111 – PURPOSE
The purpose of this Chapter is to provide incentives for the production of housing for very
low-, low-, moderate-income, senior citizens, transitional foster youth, lower income
students, disabled veterans and homeless persons in accordance with the California
Density Bonus Law (Government Code section 65915 et seq.).
9112 – ADMINISTRATION AND REGULATIONS
The City Manager may from time to time adopt rules and regulations to implement the
provisions of this Chapter consistent with the California Density Bonus Law.
9113 – APPLICATION, PROCESSING, AND DOCUMENTION
(a) Application. In addition to any other review required for a proposed housing
development project, applications for a density bonus shall be filed with the
planning division. The application shall be filed concurrently with an application for
the required land use action.
(b) Processing. City staff shall process the application for a density bonus in the same
manner as, and concurrently with, the application for the land use approval that is
required by this Code.
(c) Documentation. The applicant shall submit reasonable documentation to establish
eligibility for a requested density bonus and reduced parking ratios.
9114 – REPLACEMENT HOUSING
Pursuant to subdivision (c)(3) of Government Code Section 65915, the applicant will be
ineligible for a density bonus or other incentives unless the applicant complies with the
replacement housing requirements therein, including in the following circumstances:
(a) The housing development project is proposed on any parcel(s) on which rental
dwelling units are subject to a recorded covenant, ordinance, or law that restricts
rents to levels affordable to persons and families of lower or very low income;
(b) The housing development project is proposed on any parcel(s) on which rental
dwelling units that were subject to a recorded covenant, ordinance, or law that
restricted rents to levels affordable to persons and families of lower or very low
income have been vacated or demolished in the five-year period preceding the
application;
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(c) The housing development project is proposed on any parcel(s) on which the
dwelling units are occupied by lower or very low-income households; or
(d) The housing development project is proposed on any parcel(s) on which the
dwelling units that were occupied by lower or very low-income households have
been vacated or demolished in the five-year period preceding the application.
911 5 – DENSITY BONUS AWARDED
For a housing development project qualifying pursuant to the requirements of
Government Code Section 65915 or 65915.5, the City shall grant a density bonus in an
amount specified by Government Code Section 65915 or 65915.5, as those sections may
be amended from time to time. Except as otherwise required by Government Code
Section 65915, the density bonus units shall not be included when calculating the total
number of housing units that qualifies the housing development project for a density
bonus.
9116 – CALCULATION
“Density bonus” means a density increase over the otherwise maximum allowable gross
residential density as of the date of application, or, if elected by the applicant, a lesser
percentage of density increase, including, but not limited to, no increase in density. For
the purpose of calculating the density bonus, subject to subdivision (o) of Government
code Section 65915, the “maximum allowable residential density” or “base density” shall
be the greatest number of units allowed to be developed on the parcel(s) under this title,
an applicable specific plan, or the Land Use Element of the General Plan.
9117 – INCENTIVES/CONCESSIONS
The City shall grant the applicant the number of incentives and concessions required by
Government Code Section 65915. The City shall grant the specific concession(s) or
incentive(s) requested by the applicant, unless it makes any of the relevant written
findings stated in Government Code Section 65915(d).
9118 – PHYSICAL CONSTRAINTS
Except as restricted by Government Code Section 65915, the applicant for a density
bonus may submit a proposal for the waiver or reduction of development standards that
have the effect of physically precluding the construction of a housing development project
incorporating the density bonus and any incentives or concessions granted to the
applicant. A request for a waiver or reduction of development standards shall be
accompanied by documentation demonstrating that the waiver or reduction is physically
necessary to construct the housing development project with the additional density
allowed pursuant to the density bonus and incorporating any incentives or concessions
required to be granted.
9119 – PARKING
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The applicant may request, and the City shall grant, a reduction in parking requirements
in accordance with Government Code Section 65915(p), as that section may be amended
from time to time.
9120 – DENSITY BONUS LAW
a) Compliance. The applicant shall comply with all requirements stated in
Government Code Section 65915 et seq. The requirements of Government Code
Section 65915 et seq., and any amendments thereto, shall prevail over any
conflicting provision of this Code.
b) Excluded Development. An applicant shall not receive a density bonus or any other
incentive or concession if the housing development project would be excluded
under Government Code Section 65915.
c) Interpretation. The provisions of this subdivision shall be interpreted to implement
and be consistent with the requirements of Government Code Section 65915 et
seq. Any changes to Government Code Section 65915 et seq. shall be deemed to
supersede and govern over any conflicting provisions contained herein.
9121 – AGREEMENT REQUIRED
The property owner(s) shall enter into a housing incentive agreement with the City
pursuant to Part 2 of this Chapter, which satisfies the criteria set forth in subdivision (c) of
Government Code Section 65915.
PART 2 – HOUSING INCENTIVE AGREEMENT
9121 – PURPOSE AND INTENT
The purpose of this Part is to establish minimum requirements and procedures for the
preparation, execution, and recording of housing incentive agreements establishing
covenants to ensure the initial and continued affordability of income restricted residential
dwelling units required to be provided in conjunction with the approval of a housing
development project, the award of density bonus, grant of incentives/concessions, or a
reduction of parking standards pursuant to the provisions of this Code or state law.
9122 – DEFINITIONS
As used in this Part, the following terms shall have the following meanings:
a) “Affordable units” means residential dwelling units required to be made affordable
to, and occupied by, households with incomes that do not exceed the limits
specified in applicable law for moderate-income, low-income, very low-income, or
extremely low-income households, as applicable, at an affordable rent or
affordable housing cost, pursuant to state law or any provision of this Code.
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b) “Owner” means the record owner or owners of the parcel or parcels on which a
proposed housing development project containing affordable units is located.
c) “Housing Incentive Agreement" means an agreement entered into between an
owner and the City pursuant to this Part.
9123 – REQUIREMENT FOR HOUSING INCENTIVE AGREEMENT
Whenever an applicant for a housing development project offers to or is required as a
condition of development pursuant to state law or any provision of this Code to provide a
specified number or percentage of affordable units as part of the project, the owner shall
enter into a housing incentive agreement with the City meeting the requirements of this
Part in the form approved by the City Attorney.
9124 – REQUIRED PROVISIONS OF HOUSING INCENTIVE AGREEMENT
Unless otherwise provided by law or authorized by the City Manager, each housing
incentive agreement shall include provisions addressing or requiring the following:
a) Identification of Affordable Units. The number, affordability level, unit size mix, and
location requirements for the affordable units shall be set forth in the housing
incentive agreement.
1. Unit Size Mix. To the extent practicable, the size and bedroom count of the
affordable units reserved and allocated for each income category shall at all
times be proportional to the size and bedroom count mix of all units in the
project, provided, however, that the property owner may substitute a larger
unit for a smaller unit.
2. Location Requirements. For mixed income projects, affordable units shall
be integrated with the market rate units so that there is a mix of affordable
and market rate units in each building, and the project shall comply with the
requirements set forth in Health and Safety Code Section 17929. For
affordable units that will be offered for sale, the housing incentive agreement
shall specifically identify each affordable unit. For affordable units that will
be rented, the housing incentive agreement shall require the affordable
units to be "floating" units that are not permanently designated, provided
that at no time shall a majority of the affordable units be congregated to a
specific section of the project.
b) Timing of Construction. The housing incentive agreement shall require that the
affordable units be constructed concurrently with or prior to other units in the
housing development project project.
c) Affordability Period for Affordable Units. The housing incentive agreement shall
require that the affordable units remain affordable to, and be occupied by, persons
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and families of the required income level at an affordable rent or affordable housing
cost, as applicable, for the minimum period of time required by law. Where a
minimum affordability period is not otherwise specified by statute or ordinance, the
required affordability period shall be a minimum of 30 years.
d) Annual Tenant Income Verification, Compliance Reporting, and Certification. For
projects containing affordable units that will be rented, the housing incentive
agreement shall include uniform provisions requiring the owner to verify and certify,
prior to the initial occupancy, and annually thereafter, that, each tenant household
occupying an affordable unit meets the applicable income and eligibility
requirements established for the affordable unit, and to annually prepare a
compliance report and certify that the affordable units are in compliance with the
housing incentive agreement.
e) For-Sale Affordable Units.
1. For projects containing affordable units that will be offered for sale, the
housing incentive agreement shall include uniform provisions requiring the
initial buyer(s) of each affordable unit meet the applicable income and
eligibility requirements established for the affordable unit and occupy the
affordable unit at all times until resale of the affordable unit to another
qualified buyer.
2. Where applicable, the housing incentive agreement shall contain provisions
satisfying the criteria set forth in paragraph (2) of subdivision (c) of
Government Code Section 65915.
3. The housing incentive agreement shall also require the initial purchaser
and, if applicable, each subsequent purchaser, of an affordable unit, to
execute and/or record one or more agreements and/or restrictive covenants
benefiting and enforceable by the City, which address, among other things,
the purchaser's obligations pertaining to certification of income, financing or
refinancing of the unit, occupancy of the unit, property maintenance,
insurance, periodic certification of compliance with applicable agreement
terms, and re-sale of the unit (collectively, "Homebuyer Documents").
4. Homebuyer Documents may include, without limitation promissory notes,
deeds of trust, reimbursement agreements, option agreements, equity
sharing agreements, and/or other covenants and regulatory documents
necessary to ensure continued compliance with pertinent provisions of
applicable law, conditions of approval, and the housing incentive agreement
for the required affordability period.
f) Annual Compliance Report. Each housing incentive agreement shall contain
provisions requiring the owner to submit an annual compliance report containing
specified information to the City in a form reasonably satisfactory to City Manager
and to annually certify that the affordable units are in compliance with the
requirements of the housing incentive agreement.
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g) Maintenance Standards. The housing incentive agreement shall contain uniform
provisions governing the owner's maintenance obligations and the City's rights in
the event the owner fails to adhere to its maintenance obligations.
h) Recordkeeping Requirements. The housing incentive agreement shall contain
uniform provisions requiring the owner to maintain affordable unit sales
documents, tenant leases, income certifications, and other books, documents, and
records related to the sale or rental of the affordable units and operation of the
project for a period of not less than five years after creation of each such record;
to allow the City to inspect any such books, documents, or records and to conduct
an independent audit or inspection of such records at a location that is reasonably
acceptable to the City Manager upon prior written notice; and to permit the City
and its authorized agents and representatives to access the property and examine
the housing units and to interview tenants and employees for the purpose of
verifying compliance with the housing incentive agreement.
i) Marketing and Sale of For-Sale Affordable Units. For projects containing affordable
units that will be offered for sale, the housing incentive agreement shall contain
provisions requiring the owner: (a) to prepare and obtain the City's approval of a
marketing program for the sale of the affordable units to qualified purchasers prior
to the issuance of a certificate of occupancy for any portion of the project; (b) to
thereafter market the affordable units in accordance with the marketing program;
and (c) to provide the City with periodic reports with respect to the sale of the
affordable units. Except as otherwise approved by the City, the marketing program
shall include, without limitation: (i) a plan for and detailed description of how the
owner will solicit and identify potential qualified purchasers for the affordable units;
(ii) a description of the process the owner will implement to evaluate and select
qualified purchasers for the affordable units; (iii) the form of the purchase and sale
agreement the owner proposes to enter into with qualified purchasers; (iv) copies
of forms, disclosures, and other documents owner intends to provide to qualified
purchasers; and (v) such other information reasonable requested or required by
the City.
j) Marketing and Management Plan for Rental Affordable Units. For projects
containing affordable units that will be rented, the housing incentive agreement
shall contain uniform provisions regarding property management and
management responsibilities and shall require the owner to prepare and obtain the
City's approval of a management plan for the project prior to the issuance of a
certificate of occupancy for any portion of the project. The marketing and
management plan shall address in detail, without limitation, the following matters:
(a) how the owner plans to market the affordable units to prospective tenant
households; (b) procedures for the selection of tenants of rental affordable units,
including a description of how the owner plans to certify the eligibility of tenant
households; (c) procedures for annually verifying income and recertifying the
eligibility of tenants of rental affordable units; (d) the standard form(s) of rental
agreement(s) the owner proposes to enter into with tenants of affordable units; (e)
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procedures for the collection of rent; (f) procedures for eviction of tenants; (g)
procedures for ensuring that the required number and unit size mix of rental
affordable units is maintained and that "floating" affordable units do not become
congregated to a certain area of the building or project; (h) the owner's procedures
for complying with its monitoring and recordkeeping obligations; (i) the owner's
property management duties; (j) the owner's plan to manage and maintain the
project and the affordable units; (k) the rules and regulations of the property and
manner of enforcement; and (l) a program addressing security and crime
prevention at the project.
k) Annual Compliance Report. Each housing incentive agreement shall contain
provisions requiring the owner to submit an annual compliance report containing
specified information to the City in a form reasonably satisfactory to City Manager
and to annually certify that the affordable units are in compliance with the
requirements of the housing incentive agreement.
l) Maintenance Standards. The housing incentive agreement shall contain uniform
provisions governing the owner's maintenance obligations and the City's rights in
the event the owner fails to adhere to its maintenance obligations.
m) Recordkeeping Requirements. The housing incentive agreement shall contain
uniform provisions requiring the owner to maintain affordable unit sales
documents, tenant leases, income certifications, and other books, documents, and
records related to the sale or rental of the affordable units and operation of the
project for a period of not less than five years after creation of each such record;
to allow the City to inspect any such books, documents, or records and to conduct
an independent audit or inspection of such records at a location that is reasonably
acceptable to the City Manager upon prior written notice; and to permit the City
and its authorized agents and representatives to access the property and examine
the housing units and to interview tenants and employees for the purpose of
verifying compliance with the housing incentive agreement.
n) Provisions Regarding Tenant Choice Vouchers. For projects containing rental
affordable units, the housing incentive agreement shall include uniform provisions
regarding the acceptance of federal certificates for rent subsidies pursuant to the
existing program under Section 8 of the United States Housing Act of 1937, or its
successor (i.e., "Tenant Choice Vouchers"), which shall include the following
requirements and limitations:
1. The owner shall accept as tenants persons who are recipients of Tenant
Choice Vouchers on the same basis as all other prospective tenants;
provided, the owner shall not rent one of the affordable units to a tenant
household holding a Tenant Choice Voucher unless none of the housing
units not restricted to occupancy by the affordability covenants are
available. If the only available housing unit is an affordable unit, the owner
shall no longer designate the housing unit rented to a tenant household
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holding a Tenant Choice Voucher as an affordable unit, shall designate the
next available housing unit as an affordable unit, and shall make available,
re-strict occupancy to, and rent such newly designated affordable unit to a
qualified tenant at the applicable affordable rent pursuant to the affordability
covenants, such that at all times reasonably possible all of the required
affordable units shall not be occupied by tenants holding Tenant Choice
Vouchers.
2. Furthermore, in the event the owner rents an affordable unit to a household
holding a federal certificate, the rental agreement (or lease agreement, as
applicable) between the owner, as landlord, and the tenant shall expressly
provide that monthly rent charged shall be the affordable rent required for
the affordable unit (not fair market rent) and that the rent collected directly
from such tenant holding a federal certificate shall be not more than the
specified percentage of the tenant's actual gross income pursuant to the
applicable federal certificate program regulations; i.e., the rent charged to
such tenant under the rental agreement shall be the affordable rent
chargeable under the affordability covenant and not fair market rent for the
area, as would otherwise be permitted under the applicable federal
certificate program.
3. The owner shall not apply selection criteria to Tenant Choice Voucher
holders which are more burdensome than criteria applied to any other
prospective tenants.
4. If and to the extent these restrictions conflict with the provisions of Section
8 of the United States Housing Act of 1937 or any rules or regulations
promulgated thereunder, the provisions of Section 8 of the United States
Housing Act of 1937 and all implementing rules and regulations thereto shall
control.
o) Monitoring and Administration Fees.
1. Rental Projects. For projects containing affordable units that will be rented,
to the extent permitted by state and federal law, each housing incentive
agreement shall contain a provision requiring the owner to pay an annual
fee to reimburse the City for the estimated reasonable costs incurred by the
City in monitoring the owner's compliance with, and otherwise
administering, the housing incentive agreement, including, but not limited
to, the City's review of annual compliance reports and conduct of
inspections and/or audits.
2. For-Sale Projects. For projects containing affordable units that will be
offered for sale, each housing incentive agreement shall contain a provision
requiring the owner to reimburse the City for the estimated reasonable costs
incurred by the City to the extent permitted by State and Federal law: (i) to
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monitor the owner's compliance with, and to otherwise administer, the
housing incentive agreement, prior to the initial ale of each affordable unit,
and (ii) to monitor each subsequent purchaser's compliance with, and to
administer, the homebuyer documents following the initial sale of each
affordable unit.
p) Recordation. Each housing incentive agreement entered into pursuant to this Part
shall be recorded as a covenant against the property prior to final or parcel map
approval, or, where the housing development project does not include a map, prior
to issuance of a building permit for any structure in the housing development
project. The housing incentive agreement shall remain a senior, non-subordinate
covenant and as an encumbrance running with the land for the full term thereof. In
no event shall the housing incentive agreement be made junior or subordinate to
any deed of trust or other documents providing financing for the construction or
operation of the project, or any other lien or encumbrance whatsoever for the entire
term of the required covenants.
q) Delegation of Authority. The City Manager is authorized to approve and execute
each housing incentive agreement and any amendments thereto on behalf of the
City. The City shall maintain authority of each housing incentive agreement and
the authority to implement each housing incentive agreement through the City
Manager. The City Manager shall have the authority to make approvals, issue
interpretations, waive provisions, make and execute further agreements and/or
enter into amendments of each housing incentive agreement on behalf of the City.
r) Fees. The City may charge a fee or fees to recover the City's reasonable costs to
implement the provisions of this Part. Any such fees shall be adopted by resolution
of the City Council to the extent permitted by State and Federal law.
s) Reimbursement of Professional Fees and Costs. To the extent not factored into
the fee or fees established pursuant to subsections d and g, in addition to such
fees, the applicant and/or owner shall reimburse the City for the actual fees and
costs charged for the services of attorneys and/or other professional third-party
consultants engaged by the City to provide consultation, advice, analysis, and/or
review or preparation of documents in connection with the following:
1. Preparation of the housing incentive agreement, agreements with initial
purchasers of for-sale affordable units, and other ancillary documents.
2. Establishing the affordable sales price, and verifying the incomes and
eligibility of prospective buyers, of for-sale affordable units.
3. Review of the initial marketing plan for projects containing for-sale
affordable units or the marketing and management plan for projects
containing rental affordable units required as part of the housing incentive
agreement entered into pursuant to this Part and any amendments thereto.
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4. Review of annual compliance reports submitted by an owner pursuant to a
housing incentive agreement.
5. Inspections and audits.
6. Preparation of Housing incentive agreement; Reimbursement Agreement.
Unless otherwise approved by the City Manager, each housing incentive
agreement shall be prepared by the City at the cost of the applicant and/or
owner. Prior to the City commencing preparation of a housing incentive
agreement, the applicant and/or owner shall execute a reimbursement
agreement with the City in a form approved by the City Attorney and provide
a deposit to the City in an amount sufficient to cover the estimated total
professional fees and costs to be incurred by the City for preparation of the
housing incentive agreement, as determined by the City Manager in his or
her reasonable discretion. The City Manager is authorized to execute said
reimbursement agreement on behalf of the City.
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