Chapter 17.10 AFFORDABLE HOUSING REQUIREMENTS

The County of Santa Cruz declares that the citizens of the County with average and below average incomes are experiencing a housing shortage. Whereas the goal of the County is to achieve a balanced community with housing available for households of all income levels, there exists within the County a shortage of housing that is affordable to persons with average and below average incomes. Increasingly, persons with average and below average incomes who work and/or live within the County are unable to locate housing at prices they can afford; economically disadvantaged households are increasingly excluded from living in Santa Cruz County.

Federal and State housing subsidy programs are not sufficient by themselves to satisfy the housing needs of average and below average income households. The County finds that the high cost of both existing and newly constructed housing is not conducive to the provision of housing affordable to average and below average income households, and that continued new development which does not include lower cost housing will serve further to aggravate the current housing shortage. New development of higher cost housing which does not include affordable units aggravates the existing shortage of affordable housing by absorbing the supply of available residential land. This reduces the supply of land for housing affordable to households of average and below average incomes and increases the price of remaining residential land. At the same time, new higher cost housing contributes to the demand for goods and services and increases local employment at average and below average income wage levels, which increases the demand for and exacerbates the shortage of housing available to persons and households with average or below average incomes. Similarly, new nonresidential development increases local employment at average and below average income wage levels, which also increases demand for and exacerbates the shortage of housing affordable to persons at those income levels.

The County finds that the housing shortage for persons of average and below average incomes is detrimental to the public health, safety and welfare. The County further finds that it is a public purpose of the County of Santa Cruz as mandated by Measure J, a voter-adopted referendum measure, that housing be made available for persons with average and below average incomes, and that such supply of housing remains affordable to subsequent purchasers. The County further finds that it is a public policy of the State of California, as mandated by the requirements for the Housing Element of the County General Plan, for the County to adopt land use policies that will accommodate an adequate supply of housing for all economic segments of the community and for local governments to use the powers vested in them to facilitate the development of housing for all income levels. The County further desires to ensure that affordable housing remains affordable to subsequent purchasers.

The purpose of this chapter is to enhance the public welfare and to assure that future residential and nonresidential development mitigates its impacts on the need for affordable housing by contributing to the provision of housing units affordable by households of average and below average incomes. A further purpose is to achieve the housing objectives contained in State law and in the Santa Cruz County General Plan and the Local Coastal Program Land Use Plan. [Ord. 5200 § 1, 2015; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 1, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3039, 1981; Ord. 3025, 1980; Ord. 3002, 1980].

17.10.020 Definitions.

For the purpose of this chapter, the following words and phrases shall be defined as set forth in this section:

“Administering agency” means the Santa Cruz County Planning Department or any other agency as determined by the Board of Supervisors, which is involved in the administration of the County’s Affordable Housing Program.

“Affordable housing” means housing which is sold or rented to moderate, low, very low, or extremely low income households at an affordable sales price or affordable rent, as applicable, and as defined, required, regulated, and allowed by this chapter and by the affordable housing guidelines. “Affordable units” are the same as “inclusionary units” for the purposes of this chapter.

“Affordable housing guidelines” means the Santa Cruz County affordable housing guidelines adopted and revised from time to time by the Board of Supervisors to implement this chapter (previously entitled the “Santa Cruz County Affordable Housing Program Income, Asset, and Unit Price Guidelines”).

“Affordable rent” and “affordable sales price” are as defined in the affordable housing guidelines.

“Applicant” means any person, firm, partnership, association, joint venture, corporation, entity, or combination of entities seeking County permits and approval.

“Assumed household size” means one person in a studio dwelling unit, two persons in a one bedroom dwelling unit, three persons in a two bedroom dwelling unit, and one additional person for each additional bedroom thereafter.

“Average income households” has the same meaning as “moderate income households” for the purposes of this chapter.

“Below average income households” includes extremely low, very low, and low income households.

“Decision-making body” means the body with the authority to approve a residential or nonresidential project, as applicable.

“Dwelling unit” means a dwelling designed for occupancy by one family or household.

“Eligible purchaser” means a household which is qualified by the administering agency, according to procedures established by the County, as meeting the requirements of this chapter for the purchase of an ownership affordable unit; or a public body or nonprofit entity providing affordable housing.

“Eligible renter” means a household which is qualified by the administering agency, according to procedures established by the County, as meeting the requirements of this chapter for the rental of a rental affordable unit; or a public body or nonprofit entity providing affordable housing.

“Extremely low income households” means households whose income does not exceed the extremely low income limits applicable to Santa Cruz County as published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development.

“Final inspection” means an inspection performed by the administering agency to verify completion of a residential or nonresidential project per approved plans and to allow occupancy of the housing units or nonresidential development.

“HUD” means the U.S. Department of Housing and Urban Development.

“Inclusionary units” means dwelling units which are affordable to moderate, low, very low, or extremely low income households, as defined, required, regulated, and allowed by this chapter and by the affordable housing guidelines, and which are included within a residential project or otherwise provided pursuant to this chapter. “Inclusionary units” are the same as “affordable units” for the purposes of this chapter.

“Low income households” means households whose income does not exceed the low income limits applicable to Santa Cruz County as published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development

“Market rate unit” means a dwelling unit in a residential project which is not an affordable unit.

“Median income” means the median income, adjusted for family size, applicable to Santa Cruz County, as published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development.

“Moderate income household” means households whose income does not exceed the moderate income limits applicable to Santa Cruz County as published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development.

“New dwelling unit” means a dwelling unit that is newly constructed on a site or a newly created residential lot, but not replacement units.

“Nonresidential project” means any development for which a discretionary permit or building permit is required, other than those developments involving solely residential projects, that includes the new construction of gross square feet of nonresidential space and the conversion of a residential use to a nonresidential use.

“Ownership residential project” means any residential project that includes the creation of one or more new dwelling units that may be sold individually. A residential ownership project also includes the conversion of apartments to condominiums and any residential project with a recorded condominium plan or map.

“Rental residential project” means any residential project that creates new dwelling units that cannot be sold individually, including Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) except as detailed in SCCC 13.10.681(G)(2)(a).

“Residential project” means any development for which a discretionary permit or building permit is required that includes the creation of one or more new dwelling units or lets intended for residential development, conversion of nonresidential uses to dwelling units, or a condominium conversion. One residential project includes any of the following:

(1) An application for a residential development at one location, whether to be constructed at one time or in phases. “One location” includes all adjacent parcels of land owned or controlled by the applicant, the property lines of which are contiguous at any point, or the property lines of which are separated only by a public or private street, road, or other public or private right-of-way, or separated only by the lands owned or controlled by the applicant.

(2) Concurrent adjacent residential projects developed by applicants on adjacent properties either at one time or in phases. “Adjacent properties” includes all adjacent parcels of land owned or controlled by the applicants, the property lines of which are contiguous at any point, or the property lines of which are separated only by a public or private street, road, or other public or private right-of-way, or separated only by the lands owned or controlled by the applicants; and “concurrent” applications include all applications which have been submitted to and are concurrently being processed for action by the County. If the property ownership and application for one residential project contain no parties in whole or in part, or their spouses, who are also a party to the property ownership and application of the concurrent adjacent development, the concurrent applications may be considered as separate residential projects upon a showing satisfactory to the decision-making body that neither residential project receives any direct financial benefit by virtue of the concurrent adjacent development.

(3) Sequential adjacent residential projects applied for by the same owner or applicant and developed on the same or adjacent properties either at one time or in phases. “Same owner or applicant” includes any person who participates in any development application as a full or part owner or applicant or a spouse of such person; “adjacent properties” includes all adjacent parcels of land owned or controlled by the owner and/or applicant, the property lines of which are contiguous at any point, or the property lines of which are separated only by a public or private street, road, or other public or private right-of-way, or separated only by the lands owned or controlled by the owner and/or applicant; and “sequential” residential projects include all residential projects for which applications have been submitted to the County within a period of 10 years.

“Section 8” means the major Federal housing program known as the “Housing Choice Voucher Program” in which eligible renters receive financial assistance to rent dwelling units.

“Very low income households” means households whose income does not exceed the very low income limits applicable to Santa Cruz County as published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development. [Ord. 5326 § 27, 2020; Ord. 5325 § 27, 2020; Ord. 5271 § 1, 2018; Ord. 5200 § 1, 2015; Ord. 5133 § 1, 2012; Ord. 4879 § 1, 2007; Ord. 4876 § 1, 2007; Ord. 4755 §§ 1, 2, 2004; Ord. 4662 § 1, 2002; Ord. 4425 § 1, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 3, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3002, 1980].

17.10.030 Ownership residential projects—Inclusionary housing requirements.

(A) Ownership Residential Projects Subject to Inclusionary Housing Requirements. An ownership residential project shall be subject to the inclusionary housing requirements of this section if it will result in the creation of:

(1) Seven or more new dwelling units;

(2) Parcels providing building sites for a total of seven or more new dwelling units; or

(3) A combination of new dwelling units and parcels together providing for a total of seven or more new dwelling units.

(B) Inclusionary Housing Requirement. Ownership residential projects identified in subsection (A) of this section shall provide affordable units equal to a minimum of 15 percent of the total number of new dwelling units and new residential building sites in the residential project. All required affordable units shall be constructed within the residential project as required by SCCC 17.10.032. As an alternative to the requirements of this subsection (B), applicants may propose to meet their affordable housing requirement through the alternatives provided in subsection (C) of this section. Ownership residential projects which generate a fractional affordable housing obligation shall pay an affordable housing impact fee equivalent to the fractional amount, as specified in SCCC 17.10.034. The applicant may elect to construct an additional affordable unit instead of paying the fractional fee, and may also consider using the density bonus provisions of Chapter 17.12 SCCC.

(C) Alternatives to Satisfy Inclusionary Housing Requirement. As an alternative to the construction of affordable units within an ownership residential project as required by subsection (B) of this section, the affordable housing requirement may be satisfied by one or a combination of the following alternatives if approved by the decision-making body at the time of the approval of the residential project:

(1) Payment of an affordable housing impact fee consistent with SCCC 17.10.034, at the rate shown in the unified fee schedule for projects subject to this section; or

(2) Participation in the existing unit conversion program pursuant to SCCC 17.10.037; or

(3) Financial contribution to a nonprofit sponsored affordable housing project on a different site as specified in SCCC 17.10.036. Where an applicant proposes to satisfy the affordable housing requirement through this alternative, the total affordable unit requirement shall be based on the total number of new dwelling units and new undeveloped residential building sites at both sites; or

(4) Provision of rental affordable units on site pursuant to SCCC 17.10.039.

(D) Ownership Unit Affordability Requirements.

(1) Term of Restrictions. Affordable units shall remain affordable to the required income level for the life of the unit.

(2) Sales Price. Affordable units created as required by subsection (B) of this section shall be sold at a sales price affordable to moderate income households. The County shall establish maximum affordable sales prices pursuant to the pricing guidelines in the affordable housing guidelines adopted by the Board of Supervisors.

(3) Unit Occupancy. The income and assets of eligible purchasers shall not exceed the limits for a moderate income household. The County shall establish maximum allowable household income and asset levels in the affordable housing guidelines. Sale and occupancy of affordable units shall not be allowed until the buyer is certified by the County or its administering agency as an eligible purchaser.

(E) Development Permit and Tentative Map Procedures.

(1) Development Application. All maps and other materials submitted with an application for approval of any residential project subject to the affordable housing requirements of this section shall either explicitly identify residential units and/or residential parcels within the residential project sufficient to satisfy the project’s affordable housing requirements or propose the payment of an affordable housing impact fee. The applicant may propose an alternative to the provision of on-site units as permitted by subsection (C) of this section.

(2) Development Conditions. The conditions of approval of a residential project subject to this section shall designate the alternative for satisfying the affordable housing requirements. Those residential projects that will include construction of affordable units on site shall identify those residential units and/or residential parcels within the residential project that will satisfy the project’s affordable housing requirements.

(3) Application for a Density Bonus. An application for a density bonus or any incentives, parking reductions, or waivers under Chapter 17.12 SCCC shall be submitted concurrently with the application for the first discretionary permit or other permit required for the residential project and shall be processed concurrently with that application. If the applicant proposes to use affordable units that qualify a project for a density bonus to meet the requirements of this chapter, those affordable units must meet the requirements of both Chapter 17.12 SCCC and this chapter.

(F) Participation Agreement Procedures. Prior to the recording of the final or parcel map or the issuance of any building permits, an affordable housing program participation agreement shall be signed by the Planning Director, or designee, on behalf of the County and by all owners of the property. The participation agreement shall be binding on the heirs, assigns and successors in interest of the property owner and shall be recorded in the official records of Santa Cruz County. The participation agreement shall include, at the minimum, the following provisions:

(1) Binding of the Residential Project Site. The participation agreement shall contain the affordable housing requirements established for the residential project, regardless of which affordable housing alternative is approved and shall encumber the entire property on which the residential project is to be developed with the obligation to fulfill those affordable housing requirements.

(2) Lien on Designated Parcels. The participation agreement shall create an enforceable lien on each of the affordable parcels designated in the conditions of project approval, or alternately on every parcel in a residential project where affordable housing impact fee alternative is chosen, to allow for collection of an affordable housing impact fee pursuant to SCCC 17.10.034 regardless of the alternative approved to satisfy the affordable housing requirement for the residential project. This lien is intended to allow for collection of the affordable housing impact fee(s) if needed to enforce compliance with the requirements of this chapter and shall be released by the County upon fulfillment of the project’s affordable housing obligations.

(3) Modification of Affordable Housing Alternative. The applicant may submit to the Planning Director a request to change the manner in which the affordable housing requirement is being met. If the Planning Director finds that the proposed revision meets the requirements of the alternative prescribed by this chapter, the Director may approve the amendment. The decision-making body shall be informed of the Planning Director’s decision within 14 days of that determination and may request to hear the proposed modification within 10 days of receiving notice of the Planning Director’s decision. The County may impose reasonable conditions to ensure compliance with the provisions of this chapter. In the event of such an amendment, and if required, a new participation agreement shall be executed and recorded in accordance with the requirements of this section.

(4) Project Covenants, Conditions and Restrictions. The participation agreement shall include a provision prohibiting any amendments to a project’s covenants, conditions and restrictions that would increase the proportion of the homeowners’ association assessment payable by any affordable unit and shall create a right of judicial enforcement exclusively in favor of the owner of each affordable unit in the project and by the County.

(5) Enforcement. The participation agreement shall permit the County to enforce the agreement by any proceeding or method permitted at law of authorized by this chapter. [Ord. 5286 § 11, 2018; Ord. 5271 § 2, 2018; Ord. 5200 § 1, 2015; Ord. 5133 § 2, 2012; Ord. 5123 § 1, 2012; Ord. 4879 §§ 2, 3, 4, 2007; Ord. 4876 § 2, 2007; Ord. 4843 § 2, 2006; Ord. 4817 § 3, 2006; Ord. 4783 § 4, 2005; Ord. 4767 § 4, 2004; Ord. 4662 § 2, 2002; Ord. 4509 § 2, 1998].

17.10.031 Inclusionary housing in-lieu fee for small residential projects.

Repealed by Ord. 5200. [Ord. 4662 § 3, 2002].

17.10.032 Residential projects—Requirements for on-site affordable units.

(A) Applicability. The requirements in this section are applicable to all on-site affordable units, including ownership affordable units and rental affordable units.

(B) Affordable Unit Standards. Affordable units may include reduced interior amenities compared to the market rate units; provided, that the affordable units comply with all requirements in the affordable housing guidelines as well as the following standards:

(1) Unit Location. The affordable units shall be distributed throughout the development project. This distribution requirement may only be waived by the decision-making body upon a finding that such distribution is infeasible for one or more of the following reasons:

(a) Significant topographic or other constraints exist rendering such distribution infeasible; or

(b) Substantially improved site design will result from such waiver; or

(d) Significant economic hardship that does not apply to other projects in the County will result from such distribution.

(2) Parcel Size. The parcels on which the affordable units are located shall be no smaller than the smallest parcel on which market rate units in the project are to be located.

(3) Bedroom Count. The average bedroom count in the affordable units shall not be less than the average bedroom count in the market rate units in the project are to be located.

(4) Exterior Design. The exterior design of the affordable units shall be consistent with the market rate units in the development based on exterior design details, materials and number of stories, with no significant identifiable differences between the units visible from the street. In addition, the size of affordable units shall be reasonably consistent with the rest of the project, with an affordable unit size not less than 75 percent of the average size of market rate units, unless the decision-making body finds that a smaller unit size will provide adequate and decent affordable housing, the affordable units will provide dwelling units compatible with the market rate units, and a larger unit size would impose a financial hardship on the applicant. In no case shall an affordable unit size be less than the minimum specified by the affordable housing guidelines.

(C) Timing of Completion. All affordable units shall be constructed prior to or concurrently with the construction of market rate units. Affordable units shall be made available for occupancy either prior to or concurrently with the date that the market rate units in the residential project are made available for occupancy and in the same ratio as the affordable unit requirement. For example, for a residential project with a 15 percent affordable housing requirement, at least one affordable unit shall receive a final inspection concurrently with or prior to the final inspection of every six market rate units until all of the required affordable units have received a final inspection. The Planning Director may approve modifications to these timing requirements based on approved project phasing. In no case shall the last market rate unit in the residential project receive a final inspection until the last affordable unit in the project has received a final inspection.

(D) Recording of Declaration of Restrictions. At the initial sale of the affordable unit, the buyer shall sign a declaration of restrictions and other documents as approved by County Counsel, which may include without limitation options and deeds of trust, which subject the affordable unit to the requirements of this chapter and the County’s affordable housing guidelines, including the specific ownership and occupancy restrictions established for the units pursuant to SCCC 17.10.030. The restrictions shall be permanently binding on the heirs, assigns and successors in interest of the property owner and shall be recorded in the official records of Santa Cruz County. [Ord. 5200 § 1, 2015; Ord. 4879 § 5, 2007; Ord. 4662 § 4, 2002; Ord. 4509 § 2, 1998].

17.10.034 Residential projects—Affordable housing impact fees.

(A) Fee Authorization. Affordable housing impact fees for residential projects may be established by resolution of the Board of Supervisors and amended from time to time as appropriate. Any such fees shall be part of the County’s unified fee schedule. Such fees shall not exceed the cost of mitigating the impact of market rate housing on the need for affordable housing in the County.

(B) Residential Projects Subject to Affordable Housing Impact Fee. An affordable housing impact fee shall be paid for the following residential projects if such a fee has been established by resolution of the Board of Supervisors:

(1) Ownership residential projects which will result in the creation of six or fewer new dwelling units, lots, or combination of lots and units, unless the owner has elected to construct one affordable unit on site.

(2) Rental residential projects unless rental affordable units are provided as required by SCCC 17.10.039.

(3) Fractional affordable housing obligations for ownership residential projects creating seven or more new dwelling units or lots or combination of lots and units, unless the owner has elected to construct one additional affordable unit on site.

(4) Net new square footage over 500 square feet for additions, replacements and remodels.

(C) Affordable Housing Impact Fee as an Alternative to On-Site Inclusionary Requirements. An applicant for an ownership residential project subject to the requirements of SCCC 17.10.030 and required to construct on-site affordable units may pay the adopted affordable housing impact fee, if approved by the decision-making body at the time of the approval of the residential project, as an alternative to provision of some or all of the required on-site affordable units. Such request may be granted at the discretion of the decision-making body, appealable to the Board of Supervisors, if a finding is made, based on the evidence before the decision-making body, that granting the request would serve the purposes of this chapter to an equal or greater extent than provision of inclusionary units within the project.

(D) Payment of Affordable Housing Impact Fees.

(1) Any required affordable housing impact fee shall be paid prior to issuance of a final occupancy certificate or final building permit inspection, whichever occurs first, for the first market-rate unit or other habitable structure in the project. The amount of any affordable housing impact fee shall be based upon the fee schedule in effect at the time of payment.

(2) If the affordable housing impact fee alternative is used for a residential project that must record a participation agreement described in SCCC 17.10.030(F), the project applicant may opt to pay this fee for the subject parcel(s) prior to recordation of the final map or final parcel map rather than record the agreement.

(E) Fee Payments Nonrefundable. All affordable housing impact fee payments shall be nonrefundable once they have been received by the County.

(F) Release of Project Encumbrances. Concurrent with the payment of an affordable housing impact fee from a dwelling unit in a project, the County shall record a release of any affordable housing encumbrances imposed on that unit. [Ord. 5286 § 12, 2018; Ord. 5271 § 3, 2018; Ord. 5200 § 1, 2015; Ord. 4662 § 5, 2002; Ord. 4599 § 1, 2000; Ord. 4509 § 2, 1998].

17.10.035 Affordable housing requirements and incentives for land division.

Repealed by Ord. 4509. [Ord. 4081, 1990].

17.10.036 Development of off-site affordable units by affordable housing partnerships.

(A) A developer of an ownership residential project may meet the project’s affordable housing obligation off site in an affordable housing development undertaken in partnership with a nonprofit developer when approved by the decision-making body based on the following findings:

(1) The off-site affordable housing project receiving a financial contribution from the developer of the ownership residential project contains more than the number of affordable units which would otherwise have been required for the combined projects (beyond the 15 percent affordable housing requirement), or an equal number of affordable units required by both projects but at a deeper level of affordability (i.e., affordable to households with lower incomes);

(2) Based on a review of the financial and legal agreements between the developer of the ownership residential project and the nonprofit partner, the County has determined that the developer of the ownership residential project is providing reasonable financial and other support to the affordable housing project in exchange for being allowed to satisfy the affordable housing obligations of the ownership residential project;

(3) The affordable housing partnership either owns, has an option to purchase, or otherwise has the right to build on the property on which the off-site affordable housing project will be developed;

(4) The site for the off-site affordable housing project has in place the proper zoning and General Plan designation for the proposed off-site project and a complete application has been submitted to the County for all discretionary entitlements needed for the affordable housing project;

(5) The nonprofit affordable housing developer has obtained enforceable commitments for all necessary financing for the project, or the County has approved a feasible plan for the financing of the project;

(6) The affordable housing project can reasonably be expected to be constructed and occupied within two years of completion of the ownership residential project; and

(7) The average number of bedrooms per unit in the affordable housing project is equivalent to the average number of bedrooms per unit in the residential ownership project for that portion of the affordable housing project receiving the financial contribution from the developer of the ownership residential project; or the nonprofit affordable housing project is designed to serve a special segment of affordable housing which would not require an equivalent number of bedrooms per unit.

(B) The financial contributions of the developer of the ownership residential project to the affordable housing partnership shall be held in trust by the County for distribution to the nonprofit housing developer at such time as other financing has been obtained and the project is ready for construction. In the event the affordable housing project is not constructed within a two-year period of the completion of the ownership residential project, or if, prior to the termination of the two-year period, the County reasonably determines that the affordable project is not likely to ever be constructed, the County may transfer such funds to be irrevocably deposited in the Measure J trust fund.

(C) More than one developer may participate in an off-site housing partnership with the same affordable housing development as long as all the findings of this section are made for each ownership residential project. [Ord. 5200 § 1, 2015; Ord. 4509 § 2, 1998].

17.10.037 Existing unit conversion program.

(A) Existing Unit Conversion Program. When approved by the decision-making body, the developer of an ownership residential project may meet the project’s affordable housing obligation by participating in the existing unit conversion program described in this section. This program allows developers to satisfy their affordable housing requirements through the purchase of existing units for fair market value and sale of existing dwelling units at an affordable sales price pursuant to the following requirements and applicable sections of the affordable housing guidelines:

(1) At least two existing market rate units shall be converted to an affordable unit for each inclusionary unit that would otherwise be required to be built on site.

(2) The converted units shall be located in the same planning area as the ownership residential project. The Planning Director may approve exceptions to this requirement upon written request from the applicant; provided, that the Director finds that the exception is consistent with the intent and purposes of this chapter.

(B) Recording of Declaration of Restrictions. As a condition of sale, the purchasers of the converted units shall execute the standard affordable housing declaration of restrictions described in SCCC 17.10.050 and shall otherwise be subject to the requirements of that section.

(C) Timing of Completion. Converted units shall be made available for occupancy either prior to or concurrently with the date that the market rate units in the residential project are made available for occupancy and in the same ratio as the affordable unit requirement. For example, for a residential project with a 15 percent affordable housing requirement, at least two converted units shall be transferred to eligible purchasers concurrently with or prior to the final inspection of every six market rate units until all of the converted units required for the residential project have been sold at an affordable sales price to eligible purchasers. In no case shall the last market rate unit in the residential project receive a final inspection until the last converted unit in the residential project has been sold to an eligible purchaser at an affordable sales price. [Ord. 5200 § 1, 2015; Ord. 5123 § 1, 2012; Ord. 4662 § 6, 2002].

17.10.038 Dedication of residential parcels.

Repealed by Ord. 4662. [Ord. 4509 § 2, 1998].

17.10.039 Residential projects—Rental affordable units.

(A) Provision of Rental Affordable Units. As an alternative to providing affordable units on site as required by SCCC 17.10.030 or paying affordable housing impact fees for rental housing as required by SCCC 17.10.034, an applicant may propose to provide 15 percent of the dwelling units in the residential project as rental dwelling units available at affordable rent for low income households for the life of the unit, unless a shorter term is required by a government-provided mortgage financing assistance program, rental subsidy program, or similar financial assistance program.

(B) Rent Regulatory Agreement. Prior to the recording of a final or parcel map or the issuance of any building permits, a rent regulatory agreement shall be signed by the Planning Director, or designee, on behalf of the County and by all owners of the property. The rent regulatory agreement shall be permanently binding on all heirs, assigns and successors in interest of the property owner and shall be recorded in the official records of Santa Cruz County.

The rent regulatory agreement shall include, at the minimum, the following provisions:

(1) Number, type, location, approximate size, and construction scheduling of all dwelling units;

(2) Required rent levels and means for determining rents;

(3) Provision for income certification and screening of potential occupants of affordable units and ongoing monitoring;

(4) Provisions for marketing the affordable units; and

(5) Such additional terms as reasonably required to ensure affordability in perpetuity of the rental affordable units.

(C) Timing of Completion. Rental affordable units shall be made available for occupancy either prior to or concurrently with the date that the market rate units in the residential project are made available for occupancy and in the same ratio as the affordable unit requirement. For example, for a residential project with a 15 percent affordable housing requirement, at least one rental affordable unit shall receive a final inspection concurrently with or prior to the final inspection of every six market rate units until all of the rental affordable units required for the residential project have received a final inspection. In no case shall the last market rate unit in the residential project receive a final inspection until the last rental affordable unit in the residential project has received a final inspection.

(D) Marketing of Rental Affordable Units. The developer shall submit to the administering agency a certification of the availability of the rental affordable units prior to final inspection. In the event of a subsequent vacancy, the owner shall notify the administering agency, using a notice of intent to rent, that the unit is available for rental. The units shall be rented to eligible renters, as certified by the administering agency. The owner shall have discretion in the selection of eligible renters; provided that, except for the amount of rent to be charged, the same rental terms and conditions are applied to tenants of rental affordable units as to all other tenants, and no other or additional fees are charged. All households renting rental affordable units shall be offered leases of at least 12 months in duration.

(E) Monitoring Fee. For each rental affordable unit provided, the owner may be required to pay to the County an annual monitoring fee that does not exceed the County’s costs to monitor the affordable unit, if such a fee is adopted by resolution of the Board of Supervisors. [Ord. 5271 § 4, 2018; Ord. 5200 § 1, 2015].

17.10.040 Priority processing.

Applications for approval of residential projects that meet the requirements below shall qualify for priority processing by the County. Once an application is certified by the Planning Department as complete and eligible for such processing, the project will be immediately assigned to staff for processing in advance of all nonpriority applications including scheduling for environmental review (if required) and subsequent scheduling for public hearing and final action by the decision-making body or bodies. The following residential projects shall be eligible for priority processing:

(A) Standard Density Projects. Residential projects which are developed within the standard density limits of the applicable zone districts and in which 25 percent or more of the new dwelling units or lots are proposed to be affordable to moderate, lower or very low income households.

(B) Bonus Density Projects. Residential projects which have requested a density bonus under Chapter 17.12 SCCC and in which 35 percent or more of the new dwelling units or lots are proposed to be affordable to moderate, lower or very low income households. Priority processing shall be considered an incentive as defined in SCCC 17.12.040. [Ord. 5271 § 5, 2018; Ord. 5200 § 1, 2015; Ord. 4817 § 4, 2006; Ord. 4509 § 2, 1998].

17.10.050 Initial sale and resale of ownership affordable units.

(A) Ownership affordable units, including converted units, shall be sold by the developer at a price that does not exceed an affordable sales price to eligible purchasers. An affordable housing declaration of restrictions and other documents as approved by County Counsel, which may include without limitation options and deeds of trust, all consistent with the requirements of this chapter, shall be entered into by the Planning Director or designee on behalf of the County and by the purchaser concurrent with the sale of the units. The declaration of restrictions and other documents shall be permanently binding on all heirs, assigns and successors in interest of the property owner and shall be recorded in the official records of Santa Cruz County.

(B) The owner of an ownership affordable unit, on its resale, shall sell the unit to an eligible purchaser at a price that does not exceed an affordable sales price. Prior to offering the affordable unit for sale, the owner shall send a written notice of intent to sell to the administering agency. The administering agency will then notify the owner of the current maximum affordable sales price. Prior to the close of the sale, the owner shall notify the administering agency of the proposed sales price, and the administering agency shall review the proposed sale to assure conformance with this chapter and with the affordable housing guidelines.

(C) The purchaser of the affordable unit shall be required to enter into an affordable housing declaration of restrictions and/or other documents which incorporate all current policies contained in this chapter and the affordable housing guidelines.

(D) Closing costs and title insurance shall be paid pursuant to the custom and practice in the County of Santa Cruz at the time of opening of escrow. No additional charges or fees shall be imposed by the seller on the purchaser of an affordable unit, except for administrative fees charged by the administering agency established in the affordable housing guidelines.

(E) All purchasers of an ownership affordable unit shall verify in a form acceptable to the County that the unit is being purchased for the purchaser’s primary place of residence, and that if this unit ceases to function as his or her primary residence, it will either be sold according to the requirements of this section or rented to an eligible low, very low, or extremely low income household as certified by the administering agency in accordance with the requirements of SCCC 17.10.070.

(F) The following transfers of title or any interest therein shall not be treated as a sale or resale under the provisions of this section; provided, however, that the affordable housing restrictions shall continue to run with the title to said unit following such transfers:

(1) Transfers by devise or inheritance to the owner’s spouse, surviving joint tenant, or child; or

(2) Transfers of title to a spouse as part of a divorce or dissolution proceeding or in connection with marriage; or

(3) Acquisition of the unit by an employer pursuant to an employer sponsored relocation program, and subsequent sale by the employer to an eligible purchaser or the County. In order for this exception to be applied, a new affordable housing declaration of restrictions shall be recorded, both when the employer acquires the unit and when the unit is sold to an eligible purchaser. No rental of the unit is permitted under this exception. [Ord. 5200 § 1, 2015; Ord. 4755 § 3, 2004; Ord. 4425 § 4, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 6, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3234 § 3, 1982; Ord. 3002, 1980].

17.10.060 Owner-builder unit requirements.

Repealed by Ord. 5200. [Ord. 4755 § 4, 2004; Ord. 4425 § 5, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 7, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3002, 1980].

17.10.070 Rentals by Measure J unit owners.

(A) The administering agency may permit the owner-occupant of an ownership affordable unit to rent the unit, subject to the following requirements:

(1) The owner-occupant shall file a request to rent with the administering agency prior to offering the unit for rent.

(2) The administering agency may deny the request to rent if the proportion of units rented in the residential project exceeds 25 percent or if the unit is included in a residential project that was assisted by the former redevelopment agency’s Low and Moderate Income Housing Fund.

(3) The owner of an affordable unit who is determined by the administering agency to have rented the unit without the consent of the administering agency or for rents in excess of the amounts permitted under this chapter shall only be eligible to convert the unit to a rental unit if the owner, within 30 days after receipt of notice from the administering agency, cures the violation by paying to the administering agency the amount of any excess rents collected by the owner and by recording an amended declaration of restrictions as described in subsection (B)(1) of this section. If the owner fails to cure the violation within the 30-day period, the County may exercise its option to purchase the unit in conformance with the declaration of restrictions and other documents and the affordable housing guidelines.

(B) If the administering agency approves the request to rent:

(1) The owner shall record an amended declaration of restrictions stating that the unit is a rental unit subject to this chapter and the affordable housing guidelines and acknowledging that the limitation on rents is consistent with the Costa-Hawkins Act. The owner shall be bound by the requirements of this chapter and the affordable housing guidelines.

(2) The unit shall be rented at affordable rent either:

(a) To households participating in the Housing Authority of the County of Santa Cruz Section 8 Housing Assistance Program;

(b) To eligible renter households earning low, very low, or extremely low incomes.

(3) For the initial and any subsequent vacancy, the owner shall notify the administering agency, using a notice of intent to rent, that the unit is available for rental. The unit shall be rented to eligible renters, as certified by the administering agency. The owner shall have discretion in the selection of eligible renters. No additional fees may be charged other than affordable rent.

(4) All households renting rental affordable units shall be offered leases at least 12 months in duration. The rent stipulated in this lease shall not be higher than affordable rent.

(C) At the expiration of the tenant’s lease, the owner of the affordable unit may reoccupy the unit. The owner shall notify any tenants and the administering agency at least 120 days prior to the owner’s reoccupancy of the unit, and the owner and the administering agency may release the amended declaration of restrictions.

(D) If the owner determines to sell the unit, the owner shall notify the administering agency, in writing, of the owner’s intent to sell. The sales price shall be set at the level allowed under the affordable housing guidelines in effect at the time of the sale. The owner may sell the unit to an eligible purchaser as described in SCCC 17.10.050. If, and only if, the amended declaration of restrictions explicitly allows, the owner may also sell the unit to an investor-owner in accordance with SCCC 17.10.050 and with the provisions of the affordable housing guidelines, except that the income of investor-owners is not restricted and the investor-owner may not occupy the unit. Units sold to investor-owners must be rented to eligible renters at affordable rent. The purchaser of the affordable unit shall be required to enter into a declaration of restrictions and/or other documents which incorporate all current policies contained in this chapter and the affordable housing guidelines and acknowledges that the restriction on rents is consistent with the Costa-Hawkins Act. [Ord. 5215 § 1, 2015; Ord. 5200 § 1, 2015; Ord. 4755 § 5, 2004; Ord. 4425 § 6, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 8, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3234 § 4, 1982; Ord. 3002, 1980].

17.10.075 Lease-purchase unit requirements.

Repealed by Ord. 5200. [Ord. 4755 § 6, 2004; Ord. 4425 § 7, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 9, 1986; Ord. 3666 § 1, 1985].

17.10.080 Eligibility for rent or purchase.

(A) As part of the affordable housing guidelines, the County shall establish income requirements for moderate, low, very low, or extremely low income households; asset requirements for purchasers or renters of affordable units; and formulas for establishing maximum dwelling unit monthly rents and maximum sales prices. In establishing guidelines for extremely low, very low, low, and moderate household incomes, the County shall consider median household income and household size. The County may adopt additional administrative guidelines as necessary to provide for additional eligibility criteria or to assure the affordability of units.

(B) The administering agency shall review the assets and incomes of prospective purchasers and renters of affordable units and shall inform them of the requirements of this program. [Ord. 5200 § 1, 2015; Ord. 4425 § 8, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 10, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3002, 1980].

17.10.083 Nonresidential projects—Affordable housing impact fees.

(A) Fee Authorization. Affordable housing impact fees for nonresidential projects may be established by resolution of the Board of Supervisors and amended from time to time as appropriate. Any such fees shall be part of the County’s unified fee schedule. Such fees shall not exceed the cost of mitigating the impact of nonresidential projects on the need for affordable housing in the County.

(B) Payment of Fee. Any required affordable housing impact fee shall be paid prior to issuance of a final occupancy certificate or final building permit inspection, whichever occurs first, for the any nonresidential structure within the project. The amount of any affordable housing impact fee shall be based upon the fee schedule in effect at the time of payment.

(C) Provision of Affordable Units. As an alternative to payment of the affordable housing impact fee, an applicant for a nonresidential project may submit a request to mitigate the affordable housing impacts of such development through the construction of affordable units. The decision-making body determines, based on substantial evidence, that provision of the affordable units is consistent with the County General Plan and Housing Element and will provide as much or more affordable housing at the same or lower income levels. [Ord. 5286 § 13, 2018; Ord. 5200 § 1, 2015].

17.10.087 Measure J trust fund.

All affordable housing impact fees received pursuant to this chapter and all earnings from investment of the fees shall be deposited into a separate trust fund, known as the Measure J trust fund, maintained by the County. The trust fund shall be expended at the discretion of the Board of Supervisors for the purposes of developing or preserving affordable units in the County, for other activities which increase the affordable housing stock in the County, and for reasonable administrative costs. [Ord. 5200 § 1, 2015].

17.10.090 Default, foreclosure, and loss of the unit.

(A) In the event a notice of default is recorded on an ownership affordable unit that has been sold to an eligible purchaser, the County shall have the option to purchase the unit within the statutory reinstatement period following the recording of the notice of default, and the failure of the owner to cure the default. The sales price for the defaulted unit shall be the amount that the owner would have received under the resale price provisions of the affordable housing guidelines, including owner responsibility for certain repairs, or the unrestricted fair market value, whichever is less. If the County exercises its option, it will pay to the owner any balance of the funds remaining after paying any amounts due to holders of liens, payment of the costs of sale, and any costs of repairs chargeable to the owner. The County may assign its option to an eligible purchaser. The administering agency is authorized to act on behalf of the County to exercise options to purchase under this section.

(B) In the event the County does not exercise its option to purchase an ownership affordable unit and it is sold to an eligible purchaser prior to the trustee’s sale or judicial foreclosure, the units shall be subject to all the restrictions of this chapter, and the owner shall be deemed in compliance with the provisions of this chapter, except as subsection (C) of this section may apply. In the event of a trustee’s sale or judicial foreclosure for ownership affordable units that have not been sold to an eligible purchaser or for rental affordable units, the conditions of project approval and this chapter shall no longer apply.

(C) In the event of the occurrence of any of the circumstances described in subsection (C)(1) of this section, any surplus proceeds remaining after payment of legal liens approved by the County of Santa Cruz on the unit shall be distributed as directed in subsection (C)(2) of this section.

(1) This subsection shall apply to any affordable unit which is:

(a) Sold at a trustee’s sale or judicial foreclosure; or

(b) Destroyed and insurance proceeds are distributed to the owner instead of being used to rebuild; or

(c) Condemned and the proceeds thereof are distributed to the owner, or in the event of termination of the eminent domain action, the proceeds are distributed to owner; or

(d) Liquidation of a homeowners’ association and distribution of the assets of the association to its members, including the owner.

(2) Surplus proceeds from an affordable unit subject to this subsection shall be distributed as follows:

(a) To the owner up to, but not to exceed, the net amount (after payment of legal liens approved by the County of Santa Cruz, costs of sale, and any cost of repairs chargeable to the owner) that the owner would have received under the resale price provisions of the affordable housing guidelines had the County been able to exercise its option to purchase the unit on the date of the foreclosure sale, destruction, condemnation, or liquidation.

(D) The provisions of this section shall not apply to special purpose projects or owner-builder units. [Ord. 5215 § 2, 2015; Ord. 5200 § 1, 2015; Ord. 4755 § 7, 2004; Ord. 4425 § 9, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 11, 1986; Ord. 3502 § 1, 1984; Ord. 3357 § 1, 1983; Ord. 3329 § 1, 1982; Ord. 3234 § 5, 1982; Ord. 3002, 1980].

17.10.100 Conflict of interest.

Following are those individuals who, by virtue of their position or relationship, are found to be ineligible to purchase or rent an affordable unit as their residence:

(A) All employees and officials of the County of Santa Cruz or the Housing Authority of the County of Santa Cruz by the authority of their position, policy-making authority or influence affecting County housing programs.

(B) The developer or owner of the affordable unit to be purchased or rented.

(C) The immediate relatives, employees, and anyone gaining significant economic benefit from a direct business association with public employees, officials, developers, or owners who are not eligible to purchase or rent an inclusionary unit.

(D) The provisions of this section shall not apply to special purpose projects or owner-builder units. [Ord. 5200 § 1, 2015; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 11, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3002, 1980].

17.10.105 Violations.

(A) It shall be unlawful and a violation of this chapter for the developer or owner of an affordable housing unit or any employee or agent of such developer or owner to sell or rent an affordable unit to anyone who has not first been qualified as eligible by the administering agency.

(B) It shall be unlawful and a violation of this chapter for the developer or owner of an affordable unit or any employee or agent of such developer or owner to sell or rent an affordable unit to any person who has a conflict of interest as defined in SCCC 17.10.100.

(C) It shall be unlawful and a violation of this chapter for the developer or owner of an affordable unit or any employee or agent of such developer or owner to sell an affordable unit for an amount which exceeds the affordable sales price or to rent an affordable unit for an amount which exceeds the affordable rent; and it shall be further unlawful and a violation of this chapter for any such person to solicit, require or accept in connection with the sale or rental of an affordable unit any payment or other contribution of cash, property, or services from a purchaser or renter, the value of which when added to the sales price or rent paid for an affordable unit would exceed the affordable sales price or affordable rent prescribed for the affordable unit.

(D) It shall be unlawful and a violation of this chapter for any person to wilfully and knowingly make a false statement or representation, or knowingly fail to disclose a material fact, for the purpose of qualifying as eligible to purchase or rent an affordable unit. [Ord. 5200 § 1, 2015; Ord. 4425 § 10, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 11, 1986; Ord. 3502 § 1, 1984].

17.10.110 Enforcement.

(A) The provisions of this chapter shall apply to all agents, successors and assigns of an applicant. No building permit or occupancy permit shall be issued, nor any development approval be granted which does not meet the requirements of this chapter. The County shall suspend or revoke any building permit or development approval upon finding a violation of any provision of this chapter.

(B) In addition to the provisions of subsection (A), (C), (D) or (E) of this section, the tenant(s), upon giving written notice to the administering agency, may file a civil action to recover from the owner the amount of any rent charged in excess of affordable rent, if the tenant was an eligible renter during the period of time for which the tenant seeks reimbursement of the excess rent.

(C) Any person, firm, or corporation, whether as principal, agent, employee or otherwise, violating or causing the violation of any of the provisions of this chapter, shall be guilty of a misdemeanor, and upon conviction thereof shall be punishable for each offense by a fine of not more than $500.00 or by imprisonment in the County jail for a term not exceeding six months, or by both fine and imprisonment. Such person, firm, or corporation shall be deemed to be guilty of a separate offense for each and every day during any portion of which any violation of this chapter is commenced, continued, or permitted by such person, firm, or corporation, and shall be punishable as herein provided.

(D) The County may institute actions in law or equity for the enforcement of this chapter.

(E) In addition to any other available remedy, if it is determined that rents in excess of affordable rent have been charged to a tenant residing in a rental affordable unit, the landlord shall be liable for a civil penalty in the amount of $2,500 plus any excess rent not recovered by a tenant under subsection (B) of this section. If the County does not otherwise recover its reasonable attorney’s fees and other legal costs from the landlord, the County shall deduct its reasonable attorney fees and other legal costs from the amounts collected pursuant to this section and deposit the balance into the Measure J trust fund. [Ord. 5200 § 1, 2015; Ord. 5043 § 1, 2009; Ord. 4755 § 8, 2004; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 11, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3002, 1980].

17.10.120 Appeals and waivers.

(A) Any applicant or other person whose interests are adversely affected by any determination in regard to the requirements of this chapter may appeal in accordance with the provisions of SCCC 18.10.320, governing appeal of Level III staff approvals. The appeal shall set forth specifically wherein the action taken fails to conform to the provisions of this chapter.

(B) Any person aggrieved by any action involving denial, suspension or revocation of a building or occupancy permit or denial, suspension or revocation of any development approval, or any other action involving the provisions of this chapter may appeal such action or determination in accordance with the provisions of SCCC 18.10.310.

(C) As part of an application for the first approval of a residential project or nonresidential project, an applicant may apply for a reduction, adjustment, or waiver of the requirements of this chapter based upon a showing that applying the requirements of this chapter would result in an unconstitutional taking of property or would result in any other unconstitutional result. The applicant shall set forth in detail the factual and legal basis for the claim, including all supporting technical documentation, and shall bear the burden of presenting the requisite evidence to demonstrate the alleged unconstitutional result. The County may assume each of the following when applicable:

(1) The applicant will benefit from any incentives set forth in the County Code; and

(2) The applicant will provide the most economical affordable units feasible in terms of financing, construction, design, location and tenure.

The Board of Supervisors, based upon legal advice provided by or at the behest of County Counsel, may approve a reduction, adjustment, or waiver if it determines that applying the requirements of this chapter would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property. The reduction, adjustment, or waiver shall be approved only to the extent necessary to avoid an unconstitutional result, after adoption of written findings, and based on legal analysis and the evidence. If a reduction, adjustment, or waiver is granted, any change in the residential or nonresidential project shall invalidate the reduction, adjustment, or waiver, and a new application shall be required for a reduction, adjustment, or waiver pursuant to this section. [Ord. 5200 § 1, 2015; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 11, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3002, 1980].

17.10.130 Annual report and administration.

(A) The administering agency shall prepare a written assessment of the status and effectiveness of the affordable housing program in conjunction with each Housing Element update. The assessment may include recommendations as warranted for modifications to program requirements that would increase effectiveness or update provisions in light of changing legal or economic circumstances.

(B) In addition to any other powers or duties heretofore prescribed for the administering agency, the administering agency shall have the following powers and duties:

(1) To monitor compliance with the provisions of this chapter and to refer to the Board of Supervisors for appropriate action any person violating the provisions of this chapter.

(2) To provide for the administration of this chapter and to make recommendations to the Board of Supervisors regarding program changes. [Ord. 5200 § 1, 2015; Ord. 4425 § 11, 1996; Ord. 4081, 1990; Ord. 3881 § 1, 1987; Ord. 3802 § 11, 1986; Ord. 3502 § 1, 1984; Ord. 3329 § 1, 1982; Ord. 3002, 1980].