ORDINANCE NO. _____
AN ORDINANCE OF THE CITY COUNCIL OF
THE CITY OF ANAHEIM ADDING CHAPTER
17.40 TO TITLE 17 OF THE ANAHEIM
MUNICIPAL CODE ESTABLISHING
INCLUSIONARY HOUSING REQUIREMENTS
FOR NEW RESIDENTIAL PROJECTS
WHEREAS, the State of California has a statewide housing affordability crisis, which also manifests at the regional and local level; and
WHEREAS, the City recognizes the importance of continuing to proactively develop affordable housing in Anaheim to meet the need of families who live and work in the City; and WHEREAS, on August 14, 2018, the City Council adopted, by Resolution, an Affordable Housing Policy Statement, which declares that addressing the City’s affordable housing needs is a priority, and established a voluntary, incentive-based approach to promote and facilitate affordable housing development, including the Housing Ambassador Program, which to date has resulted in developers making voluntary financial contributions totaling $561,000, to be used at the City’s discretion; and
WHEREAS, the City of Anaheim’s Regional Housing Needs Allocation (RHNA) for the 2021-2029 Housing Element period indicates that the City has a total housing need of 17,453 units, including: 3,767 units for very low-income families; 2,397 units for low-income families; 2,945 units for moderate-income families; and, 8,344 units for above moderate-income families; and WHEREAS, in 2021, a City Council Housing Ad Hoc working group recommended a policy that establishes an Affordable Housing Development Fee, which is outlined in the City’s draft 2021-2029 Housing Element, under Section 4 – Policy Strategy #1: Housing Production Strategy 1A(i): Affordable Housing Development Fee, which was proposed to support a City affordable housing trust fund and production program; and WHEREAS, on August 20, 2024, the Anaheim City Council adopted Ordinance No. 6588 establishing the Anaheim Local Housing Trust Fund (A-LHTF) to assist in developing and maintaining affordable housing in the City; and
WHEREAS, inclusionary housing ordinances are another tool to address affordable housing challenges, with the primary purpose being the production of affordable housing units; and
WHEREAS, many jurisdictions, pursuant to their police power, have adopted inclusionary housing requirements applicable to both rental and ownership housing that require developers to ensure that a certain percentage of housing units in a new development be affordable to moderate and lower income households; and
WHEREAS, State of California Assembly Bill (AB) 1505 (Chapter 486, Statutes of 2017), effective January 1, 2018, authorizes the legislative body of any city or county to adopt an inclusionary housing ordinance that includes residential rental units affordable to lower and moderate income households (California Government Code section 65850(g)); and WHEREAS, according to AB1505 legislative findings, inclusionary housing ordinances have provided quality affordable housing to over 80,000 Californians, including the production of an estimated 30,000 units of affordable housing in the last decade alone; and, since the 1970’s, over 170 jurisdictions have enacted inclusionary housing ordinances to meet their affordable housing needs; and
WHEREAS, on August 20, 2024, Housing and Community Development staff presented background information to the City Council on the continuing need for funding and policies to address affordable housing needs in Anaheim, and following a robust discussion, the City Council directed staff to return with more specific details regarding inclusionary housing policies; and WHEREAS, on September 10, 2024, Housing and Community Development staff returned to City Council with more specific details regarding inclusionary housing policies, and after further discussion, the City Council directed staff to return with an inclusionary housing ordinance that requires the production of onsite affordable housing units, or alternative compliance procedures, including the payment of an in-lieu fee; and
WHEREAS, if City Council introduces the proposed inclusionary housing ordinance, staff will return to City Council with a fee resolution to establish the amount of the alternative compliance in-lieu fee; and
WHEREAS, any fees paid in lieu of producing affordable housing will be deposited in the Anaheim Local Housing Trust Fund (A-LHTF) to be used to address local housing needs.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ANAHEIM DOES ORDAIN AS FOLLOWS:
SECTION 1.
Title 17 (Land Development and Resources) of the Anaheim Municipal Code is amended to add Chapter 17.40, which shall read in its entirety as follows:
CHAPTER 17.40. INCLUSIONARY HOUSING
Section 17.40.010 – Purpose
The purpose of this chapter is to establish an inclusionary housing program that facilitates the production and availability of housing affordable to a broad range of households with varying income levels within the City to meet current and future affordable housing needs.
Section 17.40.020 – Applicability
This chapter shall apply to any proposed residential or mixed-use project with twenty (20) or more dwelling units, in which an application for the project was formally submitted to the city on or after October 8, 2024, or in the case of a by right project building permit applications were submitted to the city on or after October 8, 2024, unless otherwise exempted; provided, however, that this chapter shall not be applied in a manner that conflicts with applicable State law.
Section 17.40.030 – Exemptions
The requirements of this chapter shall not apply to the following:
.010 – Residential projects with less than twenty (20) dwelling units; .020 – Conversions of existing multi-family residential developments such as apartments to residential common interest developments (condominiums) for ownership housing;
.030 – Reconstruction of any residential structures that have been destroyed by fire, flood, earthquake, or other act of nature;
.040 – Residential building additions, repairs or remodels; .050 – Any residential project for which the city entered into a development agreement pursuant to California Government Code section 65964 prior to the effective date of the inclusionary housing ordinance.
.060 – Any residential project for which the city enters into a development agreement pursuant to California Government Code section 65964 on or after the effective date of the inclusionary housing ordinance that provides affordable housing obligations comparable to this chapter.
Section 17.40.040 – Definitions
As used in this chapter the following terms shall have the meanings set forth below; terms not specifically defined herein shall have the meanings ascribed to them elsewhere in this code:
Affordable Rent. The maximum affordable housing cost minus any housing costs that are imposed on the tenant on a mandatory basis. The affordable housing cost is based on the percentages of AMI identified in the following table, as adjusted for household size appropriate for the unit (as defined in California Health and Safety Code section 50052.5), times 30%:
Income Category: Percentage of AMI:
Moderate-Income 110%
Low-Income 80%
Very Low-Income 50%
Affordable Sales Price. The maximum price that can be charged to a moderate income household based on the calculation methodology defined in California Health and Safety Code section 50052.5.
Affordable Unit. A dwelling unit that is required to be rented at the affordable rent or sold at the affordable sales price to very low-income, low-, and moderate-income households.
Anaheim Local Housing Trust Fund. The fund into which all collected in-lieu fees, and any other fees related to this chapter, are deposited for the purposes of furthering affordable housing goals within the City.
Applicant. A person or entity that applies for approval or approvals for a residential project and/or owns the property or properties on which a residential project is proposed.
Area Median Income (AMI). The median household income of households in Orange County, adjusted for household size, as determined by the California Housing and Community Development department (HCD).
Director. The Director of Housing and Community Development, or designee.
Density Bonus. An increase in the number of units permitted in a proposed Residential Project provided pursuant to State Density Bonus Law as set forth in California Government Code sections 65915, et seq.
Gross Annual Household Income. As defined in 25 Cal. Code Regs. Section 6914, including any successor section thereto.
Inclusionary Housing Agreement. A legally binding recorded agreement and/or deed restriction in a form satisfactory to the Director and the City Attorney setting forth those provisions necessary to ensure that the requirements of the chapter are met.
Inclusionary Housing Plan. A plan containing all the information specified and submitted in conformance with this chapter specifying the manner in which affordable units will be provided.
In-Lieu Fee. The fee payable as an alternative to the construction of on-site affordable units.
Low-Income Household. A household with a gross annual household income between 51% and 80% of AMI for Orange County as defined in California Health and Safety Code section 50079.5.
Market-Rate Unit. A dwelling unit offered on the open market at the prevailing market- rate for purchase or rental.
Moderate-Income Household. A household with a gross annual household income between 81% and 110% of AMI for Orange County as defined in California Health and Safety Code section 50093.
Ownership Project. A residential project that is intended to be sold for homeownership.
Rental Project. A residential project that is intended to be rented to tenants.
Residential Project. A project undertaken for the purpose of development of land for residential purposes that requires the issuance of a discretionary approval or the issuance of a permit, including a building permit for construction, and that will include twenty (20) or more dwelling units.
Very Low-Income Household. A household with a gross annual household income that does not exceed 50% of AMI for Orange County, as defined in California Health and Safety Code section 50105.
Section 17.40.050 – Inclusionary Housing Requirements
The following requirements and standards shall apply to any for residential project subject to this chapter:
.010 – Project Threshold. The inclusionary housing requirement is applicable to any proposed residential project with twenty (20) dwelling units or more. .020 – Number of Affordable Units. The minimum number of dwelling units required to be set aside as affordable units and the required affordability level(s) of the units are specified as follows:
.0201 – Rental Projects. An applicant of a rental project shall fulfill their obligation with onsite production of at least 10% affordable rental units, including at least 7% at or below the low-income level and at least 3% at or below the very-low income level.
.0202 – Ownership Projects. An applicant of an ownership project shall fulfill their obligation with onsite production of at least 5% affordable ownership units at or below the moderate income level.
.0203 – Fractional Calculation. For any partial affordable unit calculated, the applicant shall round up the calculation to the highest whole number or pay a fractional in-lieu fee payment in accordance with the adopted in-lieu fee schedule.
.0204 – Parcel or Lot Merger. An applicant shall not avoid the requirements of this chapter by submitting piecemeal planning permit applications. At the time of the application for first approval for the residential project, the applicant shall identify all contiguous property under common ownership and control. The applicant shall not be required to construct dwelling units upon the contiguous property at the time of the application for first approval; however, the applicant shall be required to include the contiguous property under common ownership or control in its inclusionary housing plan. The inclusionary housing agreement shall be recorded against the residential project and all contiguous property under common ownership or control and shall require compliance with this chapter upon development of each contiguous property at such time as there are planning permit applications that would authorize residential units for the residential development and the contiguous property under common ownership or control.
.030 – Covenant Period. For rental projects, the affordable units shall remain affordable for not less than fifty-five (55) years or as stated in the inclusionary housing agreement or other agreement(s). After fifty-five (55) years the affordability covenant may be removed only if the property is redeveloped as a non-residential use. For ownership projects, the affordable units shall be initially sold to and occupied by a moderate income household, as required, shall be offered at an affordable sales price, and shall be subject to an equity sharing agreement as provided in state and local Density Bonus law.
.040 – Timing of Construction. The affordable units shall be constructed concurrently with or prior to the construction of market rate units. In phased developments, the affordable units shall be constructed in proportion to the number of dwelling units in each phase of the market rate project. The applicant shall provide a Construction Phasing Plan as part of their project plans for review by the director or their designee prior to the submittal of plans for a building permit. .050 – Unit Size. The size of the affordable units shall be the same size as the market rate units, but the final review authority may consider and approve affordable units no more than 15% smaller in square footage than the average square footage of the market rate units.
.060 – Bedroom Mix. The bedroom mix of the affordable units shall be proportional to the market rate units or as otherwise agreed in the inclusionary housing agreements or other approved agreements with the City.
.070 – Design. All exterior and interior improvements including floor plan design, finishes/materials, etc. for the affordable units shall be comparable, if not same, to the market rate units. The affordable units shall have same access to and enjoyment of all community amenities/facilities in the residential project. The final review authority may consider and approve alternative exterior and/or interior design improvements for the affordable units as long as it is comparably the same to the market rate units.
.080 – Location. Affordable units shall be dispersed and evenly distributed throughout a residential project and not clustered in a particular area of the development or as otherwise agreed at the City’s discretion in an inclusionary housing agreement.
Affordable units within a residential project that share a common entrance or access shall not have separate entrances or access for market rate and affordable units. .090 – Certificate of Occupancy. No certificate of occupancy will be issued for any corresponding market rate unit in a new residential project prior to completion of the required affordable units (including offset) and/or payment of in-lieu fees. .100 – Anaheim Preference. Subject to applicable fair housing laws, give reasonable preference and consideration to the housing needs of the target population residing in, employed in, or offered employment in the City of Anaheim, including but not limited to, priority placement on a written waiting list of available units.
Section 17.40.060 – Alternative Compliance Procedures
The following are the alternative options to fulfill the requirements of this chapter:
.010 – In-Lieu Fees. The payment of in-lieu fees may be used to fulfill the affordable housing requirement for residential projects and any fractional number of affordable units required.
.0101 – In-lieu fees shall be paid prior to the issuance of the first building permit for the residential project, unless specified and/or agreed elsewhere in recorded agreement(s) with the City. For phased developments, the applicant may pay a pro rata share of the in-lieu fee concurrently with the issuance of a building permit for each phase.
.0102 – In-lieu fees shall be paid according to a fee schedule adopted by the City Council. The in-lieu fee schedule shall be adjusted periodically on an annual basis or as determined by the City Council or their designee and shall be adopted by resolution.
.0103 – All in-lieu fees collected shall be deposited into the Anaheim Local Housing Trust Fund.
.020 – Offsite Construction. Affordable units may be constructed offsite only upon a determination by the director or their designee that onsite production of affordable units is economically infeasible. If this alternative compliance option is chosen, then the offsite affordable units must be constructed prior to or concurrently with construction of the market rate residential project.
.0201 – The offsite affordable units shall comply with all applicable requirements pursuant to this chapter for onsite production of affordable units. .0202 – The offsite location shall be located within the City of Anaheim boundaries and shall be located within a reasonable distance from the market rate residential project that is subject to the affordable housing requirement. .0203 – For residential projects for which a master plan is required, the affordable units may either be provided onsite or offsite on a separate parcel within the residential project’s approved master plan boundaries.
.030 – Land Dedication. An applicant may dedicate, without cost to the City, land (single or multiple parcels) within the City of Anaheim boundaries that is sufficient to accommodate the number of affordable units required by the market rate project.
The following requirements are applicable to any land proposed to be dedicated to the City to fulfill the affordable housing requirement:
.0301 – The land to be dedicated to the City shall be located in the City of Anaheim. .0302 – The General Plan and zoning standards shall allow for residential use at a density sufficient to allow for the market rate project’s required number of affordable units to be constructed.
.0303 – The land shall be suitable in terms of size, configuration, and physical characteristics, including existing utilities, streets, and other infrastructure improvements necessary to allow for the market rate project’s required number of affordable units to be constructed.
.0304 – The value of the land shall be equivalent or comparable to the in-lieu fee payment that would be applicable to the proposed residential project. .0305 – The applicant shall provide property related report(s) to demonstrate the suitability and value of the land to be dedicated, including but not limited to, title report, appraisal report, and environmental site assessment(s).
Section 17.40.070 – Inclusionary Housing Agreement and Inclusionary Housing Plan The applicant shall prepare and submit a draft inclusionary housing agreement and inclusionary housing plan as part of the proposed residential project’s planning application(s). The director shall review and determine if the plan and agreement are complete and in substantial conformance with the requirements of this chapter. This section shall not apply to residential projects where the developer fulfills their obligation with payment of in-lieu fees or land dedication. .010 – Inclusionary Housing Plan Requirements. The applicant shall submit a plan detailing how the requirements of this chapter will be implemented. The plan shall include, but not be limited to, the following information:
.0101 – The location, structure, proposed tenure and size of the proposed market rate and affordable units.
.0102 – The total number of affordable units to be provided and the calculations used to determine the number of required affordable units. .0103 – A floor plan and site plan depicting the location of the affordable units. .0104 – The income level targets for each affordable unit. .0105 – The mechanisms that will be used to assure that the affordable units remain affordable for the required term as specified in this chapter. .0106 – A marketing plan for the process by which qualified households will be reviewed and selected to rent affordable units.
.0107 – Construction phasing plan schedule with the anticipated completion and opening date and as applicable for phased residential projects. .020 – Inclusionary Housing Agreement Requirements. Upon final project approval, the developer shall execute and record an inclusionary housing agreement in a form approved by the City Attorney, prior to approval of any final or parcel map or issuance of any building permit, whichever occurs first, and that at a minimum specifies the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential renters of the affordable units, consistent with the approved inclusionary housing plan and any administrative procedures adopted pursuant to this chapter. .0201 – An inclusionary housing agreement will not be required for projects that will be satisfying their affordable housing requirement through payment to the City of an in-lieu fee.
.0202 – The City Council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required.
Section 17.40.080 – Anaheim Local Housing Trust Fund
All in-lieu fees, promissory note repayments, shared appreciation payments and other funds collected under this chapter shall be deposited into the Anaheim Local Housing Trust Fund and expended exclusively to provide or assure continued provision of affordable housing in the City through, including but not limited to, acquisition, construction, development assistance, rent subsidies, or first-time homebuyer programs, and for the associated costs of administering and monitoring these programs.
Section 17.40.090 – Density Bonus
Pursuant to State Density Bonus Law (California Government Code sections 65915, et seq.), if the applicant is proposing to provide affordable units in exchange for an increase in density, concessions, incentives, or waivers/modifications of development standards, the affordable units required to fulfill the density bonus may also count as affordable units required by this chapter, provided they also meet, or exceed, the requirements outlined in this chapter.
Section 17.40.100 – Compliance Monitoring
To ensure that affordable units constructed pursuant to this chapter are properly maintained and continue to comply with the applicable provisions of this chapter, the applicant or responsible party at the time shall submit annual compliance reports to the City for review. In addition, the City shall conduct periodic onsite audits to ensure compliance with all applicable laws, policies, and agreements. The City Council may adopt fees for the costs of monitoring and compliance review.
Section 17.40.110 – Administrative Procedures
The City Manager is authorized to adopt administrative rules, regulations, policies, guidelines, standards, and/or procedures necessary to implement the provisions of this chapter, including but not limited to, eligibility requirements and/or preference standards that may be applied in the selection of homebuyers and tenants.
Section 17.40.120 – Enforcement
.010 – Violations of this chapter may be enforced by all available remedies at law or in equity.
.020 – Failure of any city official, employee, or agent to fulfill and/or enforce the requirements of this chapter shall not excuse any person or property from the requirements of this chapter.
SECTION 2.
Adoption of this Ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3) (General Rule). Under Section 15061(b)(3), the activity is covered by the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the project is exempt from CEQA. This Ordinance will not affect the physical environment by permitting a new use or intensifying an existing use. Instead, the Ordinance establishes inclusionary housing requirements through a range of means for individual projects.
There is no potential for the changes to result in significant impact on the environment.
Furthermore, the Ordinance is not considered a project as defined pursuant to Public Resources Code section 21065 because the Ordinance will not cause either direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
SECTION 3.
The City Council of the City of Anaheim hereby declares that should any section, paragraph, sentence, phrase, term or word of this ordinance be declared for any reason to be invalid; it is the intent of the City Council that it would have adopted all other portions of this ordinance independent of the elimination of any such portion as may be declared invalid. If any section, subdivision, paragraph, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconstitutional, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance, and each section, subdivision, paragraph, sentence, clause and phrase thereof, irrespective of the fact that any one (or more) section, subdivision, paragraph, sentence, clause or phrase had been declared invalid or unconstitutional.
SECTION 4.
The City Clerk shall certify to the passage of this ordinance and shall cause the same to be printed once within fifteen (15) days after its adoption in the Anaheim Bulletin, a newspaper of general circulation, published and circulated in the City of Anaheim and thirty (30) days from and after its final passage, it shall take effect and be in full force.
THE FOREGOING ORDINANCE was introduced at a regular meeting of the City Council of the City of Anaheim held on the ____ day of ______________, 2024, and thereafter passed and adopted at a regular meeting of said City Council held on the ____ day of ______________, 2024, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
CITY OF ANAHEIM
By: __________________________________
MAYOR OF THE CITY OF ANAHEIM
ATTEST:
______________________________________
CITY CLERK OF THE CITY OF ANAHEIM