Chapter 17.40 CITYWIDE AFFORDABLE HOUSING REQUIREMENTS

Chapter 17.40
CITYWIDE AFFORDABLE HOUSING REQUIREMENTS

Sections:

17.40.010 Application.

17.40.020 Definitions.

17.40.030 Affordable housing plan.

17.40.040 Calculation of floor area.

17.40.050 General requirements for affordable units.

17.40.060 Affordable housing fees.

17.40.070 Exemptions.

17.40.080 Affordable housing requirements – Residential ownership projects.

17.40.090 Affordable housing requirements – Residential rental projects.

17.40.100 Affordable housing requirements – Nonresidential projects.

17.40.110 Affordable housing requirements – Mixed use projects.

17.40.115 Density incentive – East Tasman Specific Plan.

17.40.116 Affordability levels – Patrick Henry Drive specific plan.

17.40.120 Application and review procedures.

17.40.130 Enforcement.

17.40.010 Application.

The regulations set forth in this chapter apply to any new construction, additional floor area or conversion of residential ownership, residential rental, nonresidential and mixed use development. (Ord. 1974 § 1, 1-23-18).

17.40.020 Definitions.

“Affordable housing agreement” means an agreement between the applicant and the City guaranteeing the affordability of rental or ownership dwelling units in accordance with the provisions of this chapter.

“Affordable housing cost” or “affordable ownership cost” means a sales price resulting in projected average monthly housing payments, during the first calendar year of a household’s occupancy, including interest, principal, mortgage insurance, property taxes, homeowners’ insurance, homeowners’ association dues, if any, and a reasonable allowance for utilities, property maintenance and repairs.

“Affordable housing master fee schedule” means the schedule of fees established by resolution of the City Council.

“Affordable housing plan” means a detailed plan submitted to the Community Development Department by the applicant, owner or developer indicating how the proposed project will comply with the requirements of this chapter.

“Affordable rent” means the total monthly housing expenses for a rental affordable unit, as defined in California Code of Regulations, Title 25, Sections 6910 through 6924.

“Affordable sales price” means the maximum affordable housing cost for purchasers of dwelling units, as defined in California Code of Regulations, Title 25, Sections 6910 through 6924.

“Affordable unit” means an ownership or rental dwelling unit that is affordable to households with very low, low or moderate income levels.

“Applicant” or “developer” means the owner or subdivider with a controlling proprietary interest in the community ownership project, or the person or organization making application hereunder.

“Approval authority” shall mean the board, body or individual(s) otherwise empowered by this Code or State law to approve the development application.

“Area median income” or “AMI” means the annual median income for Santa Clara County, adjusted for household size, as published periodically in the California Code of Regulations, Title 25, Section 6932, or its successor provision.

“City affordable housing fund” means a fund or account designated by the City to maintain and account for all monies received from housing in-lieu fees, impact fees, penalties, repayments owed to the City when an affordable unit is sold and any other fees associated with the provision of affordable housing pursuant to this chapter. The purpose of the fund is to assist in providing housing that is affordable to extremely low, very low, low and moderate income households and cover administrative costs of the affordable housing programs run through the Community Development Department.

“Complete application” means an application for a residential, nonresidential or mixed use development that has been determined to be complete by the Community Development Department.

“Development agreement” means a development agreement enacted by legislation between the City and a qualified applicant pursuant to Government Code Sections 65864 through 65869.5.

“Dwelling” means a building or portion thereof, but not including a vessel or boat, house trail or mobile home, designed or used exclusively for residential occupancy, including one-family dwelling units, two-family or duplex dwelling units, and multiple-family units, but not including motels, or boarding or lodging houses.

“Dwelling, duplex” means a building designed to provide dwelling units for occupancy by two families living independently of each other.

“Dwelling, multiple” means a building or portion thereof used and designed as a residence for three or more families living independently of each other, including apartment houses, apartment hotels, and flats, but not including automobile courts, motels or boarding houses.

“Dwelling, single-family” means a detached building designed for and/or occupied by one family.

“Existing floor area” means legally existing gross floor area at the time of application for a planning permit or legally existing floor area that was demolished not more than one year prior to the filing of the application for a planning permit. Affordable housing units demolished as part of a project will not be considered existing floor area.

“Extremely low income households” means households whose income does not exceed the extremely low income limits applicable to Santa Clara County, as published and periodically updated by the State Department of Housing and Community Development.

“Filing requirement” shall mean, for the purposes of this chapter, an application for a residential, nonresidential or mixed use development on file with the Community Development Department with a planning application (including property owner signature), a substantial set of detailed planning drawings, and all planning application fees paid in full.

“Gross floor area” (for the purposes of this chapter) means the area computed from the outside dimensions of the building, including but not limited to, all common areas, ancillary uses to residential buildings such as gyms or community rooms, entrances, stairwells, garages or internal parking space, mezzanine floors and any other design features or other internal floor area of the building, expressed in square feet and fractions thereof.

“Housing development” means a project for the construction of residential units with a minimum of three dwellings, including a subdivision or common interest development. “Housing development” also includes either (1) a project to substantially rehabilitate and convert an existing nonresidential building to residential use, or (2) substantial rehabilitation of an existing multiple-family dwelling where the result of the rehabilitation would be a net increase in available residential units.

“Impact fee” means a fee paid by an applicant, owner or developer into the City affordable housing fund imposed on nonresidential development projects and established by resolution of the City Council and updated from time to time to mitigate the impact of residential and nonresidential projects on the need for affordable housing in the City. Current fees are outlined in the affordable housing master fee schedule and are referred to as affordable housing fees.

“In-lieu fee” means a fee paid in lieu of providing an on-site or off-site affordable housing requirement by an applicant, owner or developer into the City affordable housing fund imposed on for-sale and rental residential development projects and established by resolution of the City Council and updated from time to time to mitigate the impact of affordable housing in the City. Current fees are outlined in the affordable housing master fee schedule and are also referred to as affordable housing fees.

“Low income household” means households whose income does not exceed the low income limits applicable to Santa Clara County, as published and periodically updated by the State Department of Housing and Community Development.

“Market-rate unit” means a housing unit or the legal lot for such unit offered on the open market at the prevailing market rate for purchase or rental.

“Moderate income households” means households whose income does not exceed the moderate income limits applicable to Santa Clara County, as published and periodically updated by the State Department of Housing and Community Development.

“Nonresidential development project” means any planned district, subdivision map, conditional use permit or other discretionary or nondiscretionary City land use approval, which authorizes new construction of gross square feet of nonresidential space, the conversion of residential use to a nonresidential use, or the conversion of exempt space (as provided in SCCC 17.40.070) to nonexempt space, including, but not limited to, retail, hotel, motel (including motel, motor hotel, inn and auto court), office, professional office, other commercial (as defined as permitted uses in Chapters 18.34, 18.36 and 18.38 SCCC), light industrial, data centers and warehouses.

“Planning approval” means any discretionary or nondiscretionary approval of a residential, nonresidential project or mixed use project, including but not limited to a comprehensive, precise or specific plan adoption or amendment, rezoning, zoning ordinance amendment, general plan amendment, tentative map, parcel map, conditional use permit, variance or architectural review.

“Residential” means a building or portion of a building designed or used exclusively for dwelling purposes.

“Residential development project” means any planned district, subdivision map, conditional use permit or other discretionary or nondiscretionary City land use approval, which authorizes three or more new dwelling units or live-work units or residential lots, or a combination of three or more residential lots, new dwelling units and live-work units including, but not limited to, detached single-family dwellings, duplexes, multiple-family dwelling structures, condominium or townhouse development, condominium conversions and land subdivisions intended to be sold or rented to the general public.

“Residential ownership project” means any residential project that includes the creation of three or more residential dwelling units that may be sold individually. A residential ownership project also includes condominium conversions.

“Residential rental project” means any residential project or property under common ownership and control that creates one or more net new dwelling units that cannot be lawfully sold individually.

“Very low income households” means the households whose income does not exceed the very low income limits applicable to Santa Clara County, as published and periodically updated by the State Department of Housing and Community Development. (Ord. 1974 § 1, 1-23-18).

17.40.030 Affordable housing plan.

An application for a development project shall include a written affordable housing plan describing how the project will comply with the provisions of this chapter. The affordable housing plan shall be processed concurrently with all other applications required for the project. The approving authority shall consider the affordable housing plan when acting upon the project. The approving authority shall impose conditions of approval to carry out the purposes of this chapter. (Ord. 1974 § 1, 1-23-18).

17.40.040 Calculation of floor area.

Requirements are applicable to the net additional floor area (gross floor area) of all new development apart from those identified in SCCC 17.40.070, including, but not limited to, all common areas, entrances, stairwells, garages or internal parking space, mezzanine floors and any other design features or other internal floor area of the residential or nonresidential building, expressed in square feet and fractions thereof. (Ord. 1974 § 1, 1-23-18).

17.40.050 General requirements for affordable units.

(a) Affordable units shall be reasonably dispersed throughout the project, unless otherwise approved by City Council through a development agreement, and shall contain, on average, the same number of bedrooms and shall be comparable to the design of the market-rate units in terms of appearance, materials and finished quality of the market-rate units in the project. There shall not be significant identifiable differences between affordable and market-rate dwelling units which are visible from the exterior of the dwelling units and the size and design of the dwelling units shall be reasonably consistent with the market-rate units in the development. Affordable units shall have the same access to project amenities and recreational facilities as market-rate units.

(b) Affordable units shall be constructed within a similar timeline as the construction of market-rate units. No building permit shall be issued for any market-rate unit unless a proportional number of building permits have been issued for affordable units and no certificates of occupancy or final inspections shall be issued for any market-rate units unless a proportional number of certificates of occupancy or final inspections have been issued for affordable units.

(c) All affordable rental units shall be sold or rented only to qualified extremely low, very low, low or moderate income households and all affordable ownership units shall be sold only to qualified extremely low, very low, low or moderate income households pursuant to procedures and guidelines established by the City.

(d) For-sale and rental affordable units shall be maintained as affordable housing for a period as identified in the City Below Market Purchase Program Policies and Procedures Manual, but not less than twenty (20) years applicable to for-sale units and fifty-five (55) years applicable to rental units.

(e) Any household that occupies an affordable unit must occupy that unit as its principal residence, unless otherwise approved in writing for rental to a third party for a limited period of time due to household economic hardship, as determined by the City.

(f) No household may begin occupancy of an affordable unit until the income level of the household has been verified and determined to be eligible to occupy that unit by the City. (Ord. 1974 § 1, 1-23-18).

17.40.060 Affordable housing fees.

(a) The City shall adopt, by resolution, current fee levels (in-lieu and impact fees) as well as administrative guidelines necessary for the implementation of this chapter. Unless otherwise modified by the City Council, affordable housing fees will automatically adjust for inflation annually, using the Engineering News-Record McGraw-Hill Construction Weekly Building Cost Index for San Francisco. If this index ceases to exist, the Community Development Director shall substitute another construction cost index, which in his/her judgment is as nearly equivalent to the original index as possible. The automatic fee adjustment, as modified by the City Council, will occur when the City conducts its annual update of the municipal fee schedule.

(b) The applicant shall pay in-lieu and impact fees prior to receipt of the occupancy certificate of the building or dwelling. Applicable fees will be determined at time of payment.

(c) All payment of in-lieu fees and other penalties and payments made to the City under this chapter shall be deposited into the City affordable housing fund. (Ord. 1974 § 1, 1-23-18).

17.40.070 Exemptions.

The following development projects are exempt from the provisions of this chapter:

(a) Additions, remodeling or construction of a single residential unit or duplex unit on an existing lot of record, including accessory dwelling units.

(b) Commercial square footage within a mixed use development where the commercial space is integrated into a single building that also includes residential development at a density of thirty (30) dwelling units per acre or greater and where the commercial square footage does not exceed twenty thousand (20,000) square feet.

(d) Day care, nursery and school facilities.

(e) Hospitals.

(f) Other nonresidential uses not listed above, but which the City Council determines will have a minimal impact upon the demand for affordable housing and to be exempt pursuant to City Council resolution. (Ord. 1974 § 1, 1-23-18).

17.40.080 Affordable housing requirements – Residential ownership projects.

The provisions of this section shall apply to all residential ownership projects, including the residential ownership portion of any mixed use project, except for any resident ownership project exempt under SCCC 17.40.070.

(a) Residential ownership projects of ten or more units must provide at least fifteen percent (15%) of the units at affordable housing costs for extremely low, very low, low and moderate income households, or some combination of those income categories. A developer shall select income categories for each of the affordable units such that the average income of purchasers will not exceed one hundred percent (100%) of AMI. Residential ownership projects of fewer than ten units may either provide one dwelling at an affordable housing cost for a household earning up to one hundred percent (100%) of AMI, or pay an in-lieu fee identified for residential ownership projects in the affordable housing master fee schedule.

(b) Where the calculation of affordable housing requirements described in this section result in a fractional unit, the applicant shall either pay an in-lieu fee to the City affordable housing fund or the development shall provide an additional unit to satisfy the requirement.

(c) Calculation of the number of affordable units required by this section shall be based on the number of dwelling units in the residential project.

(d) The in-lieu fee will be calculated as follows:

(Gross square feet of total residential floor area) minus (gross square feet of existing residential floor area) multiplied by (per square foot fee) equals (total housing in-lieu or impact fee).

(e) The sales prices for the affordable units shall be determined pursuant to the City of Santa Clara Below Market Purchase Program Policies and Manual.

(f) The City Council may authorize a developer to provide a percentage of affordable units lower than fifteen percent (15%), if such units are restricted to extremely low, very low or low income households and would represent an equal or greater amount of value in subsidy. Such requests shall be memorialized through a development agreement.

(g) The City Council may authorize a developer to utilize an alternate means of compliance with subsection (a) of this section, in part or in whole, such as a dedication of land for affordable housing, the development of affordable units at an off-site location, or some combination thereof. In either case, the City priority shall be for a location that is accessible to public transit. Such an alternative shall be memorialized through a development agreement.

(1) For a dedication of land, the value of the land must be at least equivalent to the value of the subsidy that would be required to produce the inclusionary units otherwise required under subsection (a) of this section.

(2) For the provision of units off site, the developer must commit to constructing the units within a time frame comparable to what the City would achieve through the inclusionary requirement. In addition, the developer must construct a greater number of affordable units than would be required under subsection (a) of this section, or at least an equal number of units with a greater degree of affordability. (Ord. 1974 § 1, 1-23-18).

17.40.090 Affordable housing requirements – Residential rental projects.

The provisions of this section shall apply to all residential rental projects, including the residential rental portion of any mixed use project, except for any resident rental project exempt under SCCC 17.40.070.

(a) Residential rental projects of ten or more units must provide at least fifteen percent (15%) of the units at affordable housing costs made available at affordable rental prices to extremely low, very low, low and moderate income households as long as the distribution of affordable units averages to a maximum of one hundred percent (100%) area median income. Residential rental projects of fewer than ten units may either provide an affordable unit or pay an in-lieu fee identified for residential rental projects in the affordable housing master fee schedule.

(b) Where the calculation of affordable housing requirements described in this section results in a fractional unit, the applicant shall either pay an in-lieu fee to the City affordable housing fund or the development shall provide an additional unit to satisfy the requirement.

(Gross square feet of total residential floor area) minus (square feet of existing residential floor area) multiplied by (per square foot fee) equals (total housing impact fee).

(d) Calculation of the number of affordable units required by this section shall be based on the number of dwelling units in the residential project.

(e) The rental prices shall be determined pursuant to the total monthly housing expenses for a rental affordable unit, as defined in California Code of Regulations, Title 25, Sections 6910 through 6924.

17.40.100 Affordable housing requirements – Nonresidential projects.

The provisions of this section shall apply to all new construction of nonresidential projects, including the nonresidential portion of any mixed use project.

(a) Affordable housing requirements applicable through nonresidential projects may be met through payment of an impact fee as identified in the affordable housing master fee schedule.

(b) The impact fee will be calculated on a per square foot basis for net new gross floor area. The formula below shall be used in calculating the amount of the housing impact fee:

(Gross square feet of total nonresidential floor area) minus (square feet of existing nonresidential floor area) multiplied by (per square foot fee) equals (total housing impact fee).

(c) As an alternative to payment of the impact fee, a developer or applicant or owner may request to mitigate the housing impacts through construction of affordable residential units on an appropriate housing site, the dedication of land for affordable housing or the provision of other resources to provide affordable housing. The City Council may approve this request if the proposed alternative furthers affordable housing opportunities in the City, at a value greater than or equal to the otherwise applicable impact fee and agreed with the City through a development agreement. (Ord. 1974 § 1, 1-23-18).

17.40.110 Affordable housing requirements – Mixed use projects.

The provisions of this section shall apply to all new construction of mixed use projects, except for the commercial portion of a mixed use project where the commercial space does not exceed twenty thousand (20,000) square feet and is integrated into a single structure that also includes residential development at a density of thirty (30) units per acre or greater or any other nonresidential project exempt under SCCC 17.40.070.

(a) Affordable housing requirements on the residential gross floor area portion of the mixed use project shall be met in line with the provisions of SCCC 17.40.080 or 17.40.090, depending on whether the residential units, as proposed, are for-sale or rental units.

(b) Affordable housing requirements applicable on the nonresidential gross floor area portion of the mixed use project shall be met in line with the provisions of SCCC 17.40.100.

(c) As an alternative to payment of the impact fee, a developer or applicant or owner may request to mitigate the housing impacts through construction of affordable residential units on an appropriate housing site, the dedication of land for affordable housing or the provision of other resources to provide affordable housing. The City Council may approve this request if the proposed alternative furthers affordable housing opportunities in the city equal to the payment of the impact fee and agreed with the City through a development agreement. (Ord. 1974 § 1, 1-23-18).

17.40.115 Density incentive – Tasman East Specific Plan.

(a) Notwithstanding any other provision of this chapter, for either ownership or rental housing developed under the Transit Neighborhood Zoning Designation in the Tasman East Specific Plan Area, the following affordable housing requirements apply:

Project Density	Incremental Affordable Housing Requirement (Phase I – project applications filed through August 1, 2019)	Incremental Affordable Housing Requirement (Phase II – project applications filed after August 1, 2019)
Density ≤ 120 DU/AC	10%	15%
120 DU/AC < Density ≤ 140 DU/AC	8%	12%
Density > 140 DU/AC	5%	10%

(b) The affordability requirement is calculated on an incremental basis, meaning that for a project with a density of greater than one hundred forty (140) DU/AC in Phase I, the portion that equates to the first one hundred twenty (120) DU/AC of density would be calculated using the ten percent affordability requirement, with the affordability requirement being eight percent for the increment of units greater than one hundred twenty (120) and less than or equal to one hundred forty (140) DU/AC, and five percent for the increment of units over one hundred forty (140) DU/AC.

(c) Affordable units shall be priced such that the distribution of affordable units in a development averages to a maximum of one hundred percent (100%) area median income. (Ord. 1992 § 3, 11-27-18).

17.40.116 Affordability levels – Patrick Henry Drive specific plan.

For either ownership or rental housing developed under the Patrick Henry Drive area zoning districts in the Patrick Henry Drive specific plan area, the following affordable housing requirements apply:

(a) Notwithstanding SCCC 17.40.080(a), residential ownership projects of ten or more units must provide at least fifteen percent (15%) of the units at affordable housing costs for extremely low, very low, low, moderate and above-moderate income households, or some combination of those income categories. A developer shall select income categories for each of the affordable units in three equal affordability levels such that for five percent of the units, the average income of purchasers will not exceed fifty percent (50%) of AMI; for the second five percent of the units, the average income of purchasers will not exceed eighty percent (80%) of AMI; and for the third five percent of the units, the average income of purchasers will not exceed one hundred twenty percent (120%) of AMI. Residential ownership projects of fewer than ten units may either provide one dwelling at an affordable housing cost for a household earning up to eighty percent (80%) of AMI, or pay an in-lieu fee identified for residential ownership projects in the affordable housing master fee schedule.

(b) Notwithstanding SCCC 17.40.090(a), for residential rental projects of ten or more units, a developer shall select income categories for each of the affordable units in three equal affordability levels such that for five percent of the units, the average income of purchasers will not exceed fifty percent (50%) of AMI; for the second five percent of the units, the average income of purchasers will not exceed eighty percent (80%) of AMI; and for the third five percent of the units, the average income of purchasers will not exceed one hundred twenty percent (120%) of AMI. Residential rental projects of fewer than ten units may either provide an affordable unit at an affordable housing cost for a household earning up to eighty percent (80%) of AMI, or pay an in-lieu fee identified for residential rental projects in the affordable housing master fee schedule.

(c) In-Lieu Fee for Rental Units. In order for residential development projects under the Patrick Henry Drive zoning districts in the Patrick Henry Drive plan area to satisfy the affordable housing requirement through payment of an in-lieu fee, the City Council shall establish a fee per square foot for the specific plan area to reflect the reduced average AMI of eighty percent (80%). (Ord. 2045 § 3, 4-5-22).

17.40.120 Application and review procedures.

(a) Upon receiving a complete application, along with an affordable housing plan as outlined in SCCC 17.40.030, the Community Development Director shall determine the conditions necessary to comply with the requirements for provision of affordable housing units, payment of in-lieu or impact fee, or land dedication as set forth in this chapter and said conditions shall be proposed to the approving authority as conditions of approval for the project.

(b) At the time of project approval, the approving authority shall consider the recommendation of the Community Development Director and make a final determination as to the affordable housing requirement to be fulfilled by the applicant, owner or developer.

(c) Any payment of housing impact fees and in-lieu fees imposed under this chapter shall be payable to the City prior to issuance of certificate of occupancy for a development project subject to this chapter or at a time otherwise specified by City Council ordinance or resolution.

(d) The requirements of this chapter are minimum requirements. The City may require additional affordable units or additional measures to further affordable housing to the extent it has authority to do so without respect to this chapter.

(e) The City Manager may adopt guidelines and/or procedures for implementing this chapter. (Ord. 1974 § 1, 1-23-18).

17.40.130 Enforcement.

(a) The provisions of this chapter shall apply to all applicants proposing or constructing a development governed by this chapter. No planning approval shall be issued for development after the “effective date” unless it is in compliance with the terms of this chapter.

(b) It shall be a misdemeanor for any person(s) or entity to sell or rent an affordable unit under this chapter at a price or rent exceeding the maximum allowed under this chapter or to a household not qualified under this chapter.

(c) The City Attorney shall be authorized to enforce the provisions of this chapter and all regulatory agreements and resale controls placed on affordable units by civil action and any other proceeding or method permitted by law.

(d) The City may revoke, deny or suspend any permit or development approval for a residential project which has failed to comply with this chapter.

(e) Failure of any official or agency to impose the requirements of this chapter shall not excuse any applicant or owner from the requirements of this chapter.

(f) The City shall be entitled to recover all its costs, including reasonable attorney’s fees incurred in enforcing this chapter. (Ord. 1974 § 1, 1-23-18).