Chapter 18.03
RESIDENTIAL DENSITY BONUS (Effective Outside Coastal Zone) Revised 1/25

Sections:

18.03.010    Purpose. Revised 1/25

18.03.020    Definitions. Revised 1/25

18.03.030    Application procedures. Revised 1/25

18.03.040    General provisions. Revised 1/25

18.03.050    Affordable unit design and construction. Revised 1/25

18.03.060    Regulatory agreements. Revised 1/25

18.03.070    Interpretation. Revised 1/25

18.03.010 Purpose. Revised 1/25

This chapter establishes procedures to implement state density bonus law, as set forth in California Government Code Sections 65915 through 65918, as may be amended from time to time. State density bonus law provides density bonuses and other incentives to facilitate production of affordable and senior housing. This chapter also implements general plan housing element policies to provide additional housing in Capitola for lower-income households, seniors, and persons with special needs. (Ord. 1066 § 2 (Att. 3), 2024)

18.03.020 Definitions. Revised 1/25

A. State Density Bonus Law. Definitions in state density bonus law apply to the terms in this chapter.

B. Other Incentives. As used in this chapter, the term “other incentives” includes the following:

1. Incentives and concessions (Government Code Section 65915(k)).

2. Waiver or reduction of development standards (Government Code Section 65915(e)).

3. Reduced parking ratios (Government Code Section 65915(p)). (Ord. 1066 § 2 (Att. 3), 2024)

18.03.030 Application procedures. Revised 1/25

A. Concurrent Request. An applicant shall request a density bonus and other incentives concurrently with the first permit application required by the city for the housing development.

B. Submittal Requirements. An application for a density bonus and other incentives shall be filed on the form provided by the community development department, together with all required information, materials and application fees.

C. Application Review.

1. The city shall review a request for a density bonus and other incentives concurrently with the permit application required for the housing development.

2. The city shall notify the applicant whether the application is complete in a manner consistent with the timelines specified in Government Code Section 65943.

3. When the city deems the application complete, the city shall provide the applicant with a determination of the following:

a. The amount of density bonus, calculated pursuant to Government Code Section 65915(f), for which the applicant is eligible.

b. If the applicant requests a parking ratio pursuant to Government Code Section 65915(p), the parking ratio for which the applicant is eligible.

c. If the applicant requests incentives and concessions pursuant to Government Code Section 65915(d) or waivers pursuant to Government Code Section 65915(e), whether the applicant has provided adequate information for the city to review and take action on the requested incentives and/or waivers.

D. City Action.

1. General.

a. The city shall consider a request for a density bonus and other incentives concurrently with the permit application required for the housing development. The same review authority that acts on the permit application shall also act on density bonus and other incentive request.

b. For permit applications that require a public hearing, a staff report shall describe project conformance with state density bonus law as demonstrated by application materials submitted pursuant to subsection B of this section (Submittal Requirements).

2. Incentives and Concessions. The city shall grant an incentive or concession (Government Code Section 65915(k)) requested by the applicant unless it makes a written finding, based upon substantial evidence, of any of the following:

a. The proposed incentive or concession does not result in identifiable and actual cost reductions to provide for affordable housing costs, as defined in Health and Safety Code Section 50052.5; or for affordable rents, as defined in Health and Safety Code Section 50053.

b. The proposed incentive or concession would be contrary to state or federal law; or

c. The proposed incentive or concession would:

i. Have a specific, adverse impact, as defined in Government Code Section 65589.5(2)(d), upon the public health or safety or on any real property that is listed in the California Register of Historic Resources; and

ii. There is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the housing development unaffordable to low- and moderate-income households.

3. Waiver or Reduction in Development Standards. The city shall grant a waiver of development standards (Government Code Section 65915(e)) requested by the applicant unless it makes a written finding, based upon substantial evidence, of any of the following:

a. The proposed waiver would be contrary to state or federal law.

b. The proposed waiver would have an adverse impact on any real property listed in the California Register of Historic Resources.

c. The proposed waiver would:

i. Have a specific, adverse impact, as defined in Government Code Section 65589.5(2)(d), upon the public health or safety; and

ii. There is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the housing development unaffordable to low- and moderate-income households.

4. Child Care Centers. If a child care center complies with the requirements of Government Code Section 65915(h), the decision-making body may deny a density bonus or incentive that is based on the provision of child care facilities only if it makes a written finding, based on substantial evidence, that the city already has adequate child care facilities.

5. Coastal Zone. For a housing development within the coastal zone, the review authority must find that the requested density bonus or other incentive is consistent with the certified local coastal program, with the exception of density. The granting of a density bonus or an incentive shall not be interpreted, in and of itself, to require a local coastal plan amendment.

E. Appeals. Appeals of the permit decision required for the housing development shall include all requests under state density bonus law. (Ord. 1066 § 2 (Att. 3), 2024)

18.03.040 General provisions. Revised 1/25

A. Density Bonus Calculation.

1. All density bonus calculations resulting in fractional units are rounded up to the next whole number.

2. In determining the number of affordable units required to qualify for a density bonus, units added by a density bonus are not included in the calculations.

B. One Density Bonus Allowed.

1. Except where a housing development is eligible for an additional bonus pursuant to Government Code Section 65915(v), each housing development is entitled to only one density bonus.

2. If a housing development qualifies for a density bonus under more than one category, the applicant shall identify the category under which the density bonus is requested to be granted.

C. Density Bonus Amount.

1. The applicant may accept a lesser percentage of density bonus than the housing development is entitled to, or no density bonus, but no reduction is permitted in the percentages of affordable units required by state density bonus law.

2. Regardless of the number of affordable units, no housing development is entitled to a density bonus greater than what is authorized under state density bonus law.

D.  Inclusionary Requirement.

1. On-site units that satisfy the city’s inclusionary housing requirements in Chapter 18.02 (Affordable (Inclusionary) Housing) and will be constructed concurrently with the housing development may qualify the housing development for a density bonus if those units meet the requirements of state density bonus law.

2. Payment of fees in lieu of providing affordable units under Section 18.02.050 (In-lieu housing fees and alternative compliance options) does not qualify a housing development for a density bonus.

E. Financial Incentives.

1. Nothing in this chapter requires the provision of direct financial incentives from the city for the housing development, including, but not limited to, the provision of financial subsidies, publicly owned land, fee waivers, or waiver of dedication requirements.

2. The city, at its sole discretion, may choose to provide such direct financial incentives. (Ord. 1066 § 2 (Att. 3), 2024)

18.03.050 Affordable unit design and construction. Revised 1/25

A. Timing. Building permits, final inspections, and certificates of occupancy shall be issued concurrently for the market rate units and for all affordable units that qualified the project for a density bonus, incentive, waiver, or parking reduction.

B. Appearance and Quality.

1. Affordable units shall be comparable in exterior appearance and overall quality of construction to market rate units in the same housing development.

2. Interior finishes and amenities may differ from those provided in the market rate units, but neither the workmanship nor the products may be of substandard or inferior quality as determined by the city.

C. Unit Size. To comply with fair housing laws, the affordable units shall contain the same proportional mix of bedroom sizes as the market-rate units.

D. Access to Amenities. In mixed-income buildings, the occupants of the affordable units shall have the same access to the common entrances and to the common areas, parking, and amenities of the project as the occupants of the market-rate housing units.

E. Location within Building. Affordable units shall be located throughout a building and not isolated on one floor or to an area on a specific floor. (Ord. 1066 § 2 (Att. 3), 2024)

18.03.060 Regulatory agreements. Revised 1/25

A. General.

1. If a density bonus or other incentive is approved pursuant to this chapter, the applicant shall enter into a binding affordable housing agreement or restrictive covenant, as described below, with the city. This agreement or covenant shall implement state density bonus law and ensure compliance with this chapter.

2. The agreement or covenant shall be in a form approved by the city attorney and executed by the city manager or their designee.

3. The agreement or covenant shall be binding on all future owners and successors in interest.

4. The applicant shall record the agreement or covenant against the housing development prior to final or parcel map approval, or, where a map is not being processed, prior to issuance of building permits for the housing development.

B. Rental Projects. For affordable rental projects, the applicant shall enter into an affordable housing agreement with the city that:

1. Requires the continued affordability of all rental units that qualified the applicant for the density bonus or other incentive for a minimum of fifty-five years or a longer period of time if required by the construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program;

2. Identifies the type, size and location of each affordable unit;

3. Specifies the eligible occupants;

4. Specifies phasing of the affordable units in relation to the market-rate units; and

5. Contains other relevant provisions approved by the city attorney.

C. For-Sale Projects.

1. For projects with affordable for-sale units, the applicant shall enter into an affordable housing agreement with the city that requires the following:

a. The initial purchasers of those for-sale units that qualified the applicant for the density bonus or other incentive shall be persons and families of lower or moderate income, as applicable; and

b. If any for-sale unit is not purchased by an income-qualified household within one hundred eighty days after the issuance of the certificate of occupancy, then the unit(s) must be sold pursuant to a contract that satisfies the requirements of Revenue and Taxation Code Section 402.1(a)(10) to a qualified non-profit housing corporation as defined in state density bonus law and that the units are offered at an affordable housing cost, as that cost is defined in Health and Safety Code Section 50052.5.

2. The agreement shall contain other relevant provisions approved by the city attorney.

3. The city shall enforce an equity sharing agreement consistent with state density bonus law unless it conflicts with the requirements of another public funding source or law.

D. Market-Rate Senior Projects. For market-rate senior projects, the applicant shall enter into a restrictive covenant with the city to require the housing development to be operated as “housing for older persons” consistent with state and federal fair housing laws. (Ord. 1066 § 2 (Att. 3), 2024)

18.03.070 Interpretation. Revised 1/25

If any portion of this chapter conflicts with state density bonus law or other applicable state law, state law shall supersede this chapter. Any ambiguities in this chapter shall be interpreted to be consistent with state density bonus law. Statutory references in this chapter include successor provisions. (Ord. 1066 § 2 (Att. 3), 2024)