ORDINANCE NO. 4235
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AMENDING SECTION 230. 26 OF THE HUNTINGTON BEACH " ZONING AND
SUBDIVISION ORDINANCE TITLED AFFORDABLE HOUSING
ZONING TEXT AMENDMENT NO. 19- 004)
WHEREAS, the Huntington Beach Planning Commission and Huntington BeachCity Council have held separate, duly noticed public hearingsto consider Zoning -I-ext Amendment No. 19-0004, which amendsChapter 230 of the Huntington BeachZoning and Subdivision Ordinance related to an updated, and clarified, " inclusionary housing ordinance'.
After due consideration of the findings and recommendations of the Planning Commission and all other evidence presented, the City Council finds that the aforesaid amendment is proper andconsistent with the General Plan; NOW, THEREFORE, the City Council of the City of 1-luntington Beachherebyordains as follows:
SECTION 1. Section 230. 26 of the Huntington Beach "Zoning Code is amended to read as follows:
A. Purpose.
1. Thepurposeof thischapteris to createan inclusionaryHousingOrdinanceto enhancethepublic welfareandimplementthegoals, objectivesandpoliciesof the Citv' sGeneralPlan, includingits HousingElement. It is intendedto encouragethe supply of extremely low, very low, lower, and moderate- income housing, on sites that are integrated, compatible with and complements adjacent uses.
2. '[" his Inclusionary }-lousing Ordinance is a tool the City utilizes to meet its commitment to provide housing affordable to all economic sectors.
B. Definitions.
1. AffordableHousingCost. Thepercentageof incomethatshallbeutilized to determinethemaximumhousingrelatedcostsas calculatedin accordancewith California Health and Safety Code ( 1-IKSC) Section 50052. 5 (standards for ownership units) and 1 & SC Section 50053 ( standards for rental units).
2. AffordableHousingUnit. A dwelling unit requiredby thisChapterto beaffordable to Extremely Low. Very Low, Lower. or Moderate Income 1-IOUSeholds. Accessory 21- 10164/ 263922
ORDINANCE NO. 4235
dwellingunits (ADUs) donotsatisfytheaffordablehousingobligationnordothey trigger the affordable housing obligation.
3. Area Median Income. The midpoint of a County' s gross income distribution adjusted for household size as determinedby the California Housing and Community Development Department ( HCD) annually.
4. Extremely Low- Income. Households whose incomes meet the standards defined by the H& SC Section 50106. or a successor statute.
5- Lower Income. Households whose incomes meet the standards defined by the 1-I& SC Section 50079. 5. or a successor statute.
6. Moderate- Income. Households whose incomes meet the standards defined by the MSC Section 50093, or a successor statute.
7. New Residential Project- Development that includes the creation of three or morenewdwelling units, conversionof nonresidentialusesto dwelling units, or the conversion of a use from a residential rental development to a residential ownership development.
8. OwnershipUnits. Dwelling unitsconstructedaspartof a New Residential Project, or contained within a rehabilitation project, offered for individual unit sale. including; but not limited to, single-family detachedor attachedhomes, condominiums, or cooperatives.
9. Phasingflan. A detailedplanprovidedby adeveloperthatoutlineseach segmentorphaseof constructionincludinghousingunitsandsiteimprovementstobe developed in a New Residential Project.
10. Very Low- Income. Households whose incomes meet the standardsdefined by the I-I& SC Section 50105. or a successor statute.
C. Applicability. Unless otherwise specified in the Specific Plan. this Section shall apply to New Residential Projects of three or more units in size.
I. Affordable HousingObligations. All New ResidentialProjectsmustberestricted. as set for herein. to contain a minimum of 10% of Affordable Housing Units. In the event a fractional unit is established. the Affordable Housing Unit count shall be 2 ORDINANCE NO. 4235
rounded up, unless paragraph (C)(2) of this sectionapplies. For projects providing affordable units onsite, an equivalent in-lieu fee may be paid insteadof rounding up.
2. Developers of residential projects may elect to fulfill the affordable housing obligations imposed by this Section by providing Affordable Housing Units at the New Residential Project site pursuantto subsectionD below (onsite pro(Iuction) or through an applicable alternative compliance option as provided by subsection E below ( alternatives to onsite production).
3. For purposesof determining the required number of Affordable Housing Units, only new units shall be counted. Construction of an accessory dwelling unit does not trigger the affordable housing obligation.
1). Options for Fulfilling Affordable Housing Obligations: On-Site Production
1. Affordable Ownership Housing Units
a. Pursuant to section 230. 26( 17), New Residential Project Owners or Developers shall placean affordability covenant on Ownership Units that is setat the iModerate- Income I-louschold affordability level.
b. The Affordable Housing Units shall be built concurrenHy with the market rate units as provided with an approved Phasing Plan.
c. The bedroom mix for the affordable units shall be proportional to the bedroom mix of the market rate units. The affordable units may be no more than 20% smaller in square footage than the average square footage of the market rate units.
d. All exterior and interior improvements, finishes, appliance packages, etc., for the affordable units shall be comparable to the base level market rate units.
2. Affordable Rental l-iousing Units within an Ownership 1-fousing Project a. The affordability covenant placedon Rental Units is setat the Low- Income level, but the developer may choose to fulfill the affordable housing requirement with units at the Very- Low or Extremely- Low Income level. b. A Market Rate Developer may createa separateaffordable housing parcel within the New Residential Development site and enter into an agreement with an Affordable 1-10usin6 Developer to construct, own, and operate the affordable 3 ORDINANCE NO. 4235
housingunits. TheAffordableHousingDeveloperis requiredto enterinto an Affordable Flousing Agreement with the City. subject to the following:
i. The Affordable Housing Developer shall have recent relevant experienceand be approved by the Community Development Director or their designee.
ii. The Affordable Housing Developer and/or 1%9arket Rate Developer may not request any financial assistance from the City.
c. The bedroom mix is not required to match the unit mix provided in the market rateownershiphousingproject. At least40% of theaffordableunitsshall include at least two bedrooms.
d. The affordable units shall be built concurrently with the market rate project.
The Affordable Housing Units may be constructedin phasesif the market rate projectisdevelopedin phases, with anapprovedPhasingPlan.
3. Affordable Rental Housing Units
a. Pursuant to section 230.26( P), New Residential Project owners or developers shallplaceanaffordabilitycovenanton RentalUnitsattheLow-Income Household affordability level, but the developer may choose to fulfill the affordable housing requirement with units at the Verv- l..ow or Extremely-Low Income Household affordability level.
b. The affordable units shall be built concurrent]\ with the market rate project.
TheAffordable1-lousingUnitsmaybeconstructedin phasesif themarketrate project is developed in phases, with an approved PhasingPlan. c. The bedroom mix for the affordable units shall be proportional to the bedroom mix of the market rate units. The affordable units may be no more than 20% smaller in square footage than the average square footage of the market rate units.
d. The minimum construction standards for interior improvements of the affordable units shall be the same as those imposed by the Low- Income Housing Tax Credit ( LIFITC).
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E. Options for Fulfilling Affordable Housing Obligations: Alternatives to On-Site Production
I. Off- Site Production of Affordable Housing Units
a. Except as may be required by the California Coastal Act or Government Code Section 65590 or a successor statute, developers may provide the required Affordable Housing Units off- site, at one or several sites. within the Citv of l-luntiwon Beach.
b. Pursuant to Section 230. 26( F), New Residential Project owners or developers shallplaceanaffordabilitycovenanton theoff-siteunitsthatis setat 15% of the total number of units included in the New Residential Project that Generatedtheaffordablehousingobligation. Theaffordabilitycovenant placedontheoff-siteAffordableHousingUnitsshallbeatthe Low-Income Household affordability level, but the developer may chooseto fulfill the affordablehousingrequirementwith unitsat theVery-Law or Extremely-Low IncomeHouseholdaffordability level. Theaffordabilitycovenantshall specifytheoff-siteAffordableHousingUnitsshallberentalunits. c. Theprovisionof theoff-siteAffordableHousingUnitsshallnotcreateanover concentration of Affordable Housing Unites in any specific area. d. Thedesign, buildingquality, andmaintenancestandardsshallbethe requirementsimposed by the LII ITC minimum construction standards. c. The bedroom mix for the affordable units is not required to match the mix providedin themarketrateprojectthatis subjectto theaffordablehousing obligations. At mininuurl, 40% of the affordable units shall include at least two bedrooms.
f. Pursuant to Section 230.26( F), a market rate developer may enter into an agreementwith an affordable housing developer to construct, own andoperate theoff-siteaffordablehousingproject. Theaffordablehousingdeveloperis required to enter into an Affordable Housing Agreement with the Cite, subject to the following:
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i. The Alfordable Housing Developer shall have recent relevant experience and be approved by the Community Development Director or their designee.
ii. The Affordable Housing Developer and/or Market Rate Developer may not requestany financial assistancefrom the City.
iii. All off- site affordable units shall be constructed prior to or concurrently with the market rate project that generatedthe affordable housing obligation. Ifthe market rate project is developed in phases, with an approved PhasingPlan, the affordable units may be developedalong with the first phaseof the market rate project. Final approval occupancy) of the first market rate residential unit shall be contingent upon the completion and public availability, or evidenceof the applicant'sreasonableprogresstowardsattainmentof completion, of the affordable units.
2. Existing Units Acquisition and Rehabilitation Projects The City Council hasthe discretion. but not the requirement, to approve a developer' s request to acquire, rehabilitate, and place affordability covenants on existing off- site units. The requestshall meeteither of the following threshold requirements in order to Fulfill a project' s affordable housing obligation:
a. 'I'he project(s) shall be identified asat-risk in the City' s Housing Element: or b. Theprojectis amotelthatcanbeadaptivelyreusedasresidentialunits.
Additional requirements for acquisition and rehabilitation projects:
a. The developer or owner shall place an affordable housing covenanton the AffordableHousingUnitsthatareequalto at least20% of theunitsin the New Residential Project that trigged the affordable housing obligation. b. The rents charged for the rehabilitated units shall be set at the lesser of the H& SC 50053 rents or at least 10% discount from the achievable market rents for the units. subject to annual monitoring and reporting. 6 ORDINANCE NO. 4235
c. If there are more units in the acquisition and rehabilitation project than are required to fulfill the affordable housing requirement. those units may be rented at market rate.
3. Land Dedication.
The City Council has the discretion, but not the requirement, to allow a developer to dedicate property in lieu of constructing Affordable Housing Units. The following requirements arc applicable to any property proposedto be dedicated:
a. The property shall be located within the City of l-luntington Beach. b. The developer shall convey the property to the City at no cost. c. The propertyproposedto bededicatedshallyield a minimumof 20% of the total units constructed within the market rate project:
i. The site's existing General Plan and zoning standardsshall allow for a residential useat a density sufficient to allow for the requisite number of affordable units to be developed without a density bonus request. ii. The site shall be suitable in terms of size. configuration, and physical characteristics to allow for the requisite number of affordable units to be developed on a cost efficient basis.
iii. The bedroom mix for the affordable units shall be proportional to the bedroom mix of the market rate units. The affordable units may be no more than 20% smaller in square footage than the average square footage of the market rate units.
d. The developer shall provide evidence of the following when the land dedication proposal is submitted:
i. A title report showing the developer/owner haslien- free, fee simple title. Any encumbrancesor easementsthat adversely impact the property'stitle shallbedisclosedandwill be factoredinto theestimated value of the interestsproposedto be conveyed to the City. ii. An appraisal dated within 30 days of the application by a Member Appraisal Institute ( MAI) appraiser.
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iii. A Phase I Environmental Site Assessment and a Phase Il Environmental Site Assessment if the Phase I report indicates that hazardous materials were potentially previously used on the site. iv. The property shall not contain any hazardousmaterials at the time the land dedication proposal is submitted. If hazardous materials . were previoush remediated, a site closure letter from the appropriate regulatory agencyshowing evidence that the site was remediatedto residential standards is required.
e. The property shall not havebeen improved with any residential use for at least five years prior to the submission of a land dedication proposal. 1'. Payment in full of all taxes and/ or assessments shall have been made when the proposal is submitted. and again prior to conveyanceof the property to the City. g. The construction of affordable units on the property shall not createan over concentration of logyincome housing in any specific area. h. The property shall be fully servedby the necessaryinfrastructure prior to conveyance to the City.
i. To assisttheCity in evaluatinglanddedicationproposals. thedevelopershall submit a conceptual site plan and narrative description of a project that could be developed on the property.
4. Pee Payment in Lieu of Construction
a. Developersof the following New Residential Project types may pay an in-lieu lee to fulfill Affordable ( lousing Obligations:
i. Ownership residential projects proposing any number of units. ii. Rental residential projects proposing 100 units or fewer. b. The amount of the in- lieu fees shall be calculated using the fee schedule established by Resolution of the City Council.
c. A project may be permitted to pay in-lieu feesif it does not meetthe eligibility standards of this section if the City Council determines, at its discretion, that the requirement to provide affordable housing units would impose an extreme hardship on the developer.
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d. One hundred percent of the Ices required by this section shall be paid prior to issuanceof a building permit. However, fir phasedprojects the developer may pay a pro rata share of the in- lieu fee concurrently with the issuance of building permits for each development phase, as approved by a Phasing Plan. e. Feespaid to fulfill the requirementsof this sectionshall be placed in the City' s Affordable Housing Trust Fund, the useof which is governedby subsectionF of this section.
f. Feespaid as a result of new residential projects shall be basedupon the total number of the new residential units which are to be constructed prior to the grant of any density bonus.
F. Nliseellaneous Provisions.
I. An Affordable Housing Agreement placing a covenant that rumswith the land and outlining all aspectsof the Affordable Housing Obligations, including but not limited to the affordability term for the restricted units. shall be executedbetween the applicant and the City and recorded with the Orange County Recorder' s Office.
2. TheAffordableHousingAgreementshallspecifyanaffordabilitytermof not less than 55 years for rental units or 45 years for ownership units.
3. In general, theAffordableHousineTrustFundsshallbeusedfor projectswhich have a minimum of 50% of the dwelling units affordable to very low- and low- income households, with at least 20% of the units available to very low- income households.
Concurrent with establishing the annual feeschedulepursuant to subsectionE of this section, theCity Councilshallby resolutionsetforthadditionalpermittedusesof Affordable Housing Trust Funds. To obtain Affordable Housing Trust Funds, the recipient shall enter into an affordable housing agreementasset forth above, and shall maintain the affordability of the units for a nninimum of 55 years. The funds may, at the discretion of the City Council, beused far pre-development costs, land or air rights acquisition, rehabilitation, land write downs, administrative costs, gap financing, or to lower the interest rate of construction loans or permanent financing.
4. New affordable units shall be occupied in the following manner:
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a. Any existing residentsshall be allowed to occupy their units until six months before the start of construction activities with proper notice. b. The developer shall provide relocation benefits to the occupantsof the affordable units that are displaced.
c. If residential rental units are being demolished and the existing tenant( s) meets the eligibility requirements, he/she shall be given the right of first refusal to occupy a comparable unit available in the new housing development affordable to the household at an affordable rent ( e.g. Extremely- Low Income, Very- Low Income, Low- Income, ivioderate Income, lk4arket Rate). d. If there are no qualified tenants, or if the qualified tenant(s) choosesnot to exercise the right of first refusal. or if no demolition of residential rental units occurs. thenqualifiedhouseholdsor buyerswill beselected.
G. Annual Program Review and Periodic . Adjustment of the Fee. Within ISO days after the last day of each fiscal year, the City Council shall review the statusof the City' s Affordable HousingTrust Fund, includingtheamountof feescollected, expendituresfrom theAffordable (lousingTrust Fund; andthedegreeto whichthefeescollectedpursuantto this chapterare assisting the City to provide and encouragelow- and moderate-income housing. The feeshallbeupdatedannuallyusingthe RealEstateandConstructionReport publishedby the RealEstateResearchCouncilof SouthernCalifornia. Thefeechanceshall bebasedon thepercentagedifferencein thenewhomepricesin OrangeCountypublished in the fourth quarter report for the then current year versusthe immediately preceding year. 10 ORDINANCE NO. 4235
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 52!hLdayof QGfobar' , 2021.
Mayor
ATTEST: APPROVED AS ORM:
City Clerk City Attorney
nLANrDROVED:
INITIATED AND APPROVED:
UMW
City Manager Director of Community Development
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STATE OF CALIFORNIA
COUNTY OF ORANGE ss:
CITY OF HUNTINGTON BEACH )
1, ROBIN ESTANISLAU. the duly elected, qualified City Clerk ofthe City of Huntington Beach, and ex- ollicio Clerk ofthe City Council of said City. do hereby certify that the whole number of members ofthe City Council ofthe City of Huntington Beach is seven: that the foregoing ordinance was read to said City Council at a Regular meeting thereof held on September 21, 2021, andwas again read to said City Council at a Regular meeting thereof held on October 5, 2021, and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council.
AYES: Bolton, Delgleize, Carr. Moser. Kalmick
NOES: Peterson
ABSENT: Posey
ABSTAIN: None
1. Robin Estanislau. CITY CLERK of the City of Huntington Beach and cc- olricio Clerk of the City Council. do hereby cenity that a synopsis of this ordinance has been published in 9 the Huntington reach Wave on October IJ, 202 1.
In accordance with the City Charter of said City.
Robin Estanislau. Citv Clerk City Clerk and ex-officio Clerk Deputy Ciuv Clerk ofthe City Council ofthe City
of 1-luntineton Beach. California