HomeMy WebLinkAboutItem 7b. Introduce two Ordinances 1) Repeal and Replace Chapter 17.138 (Inclusionary Housing Ordinance) and 2) Amend Title 4 to Add Chapter 4.60 (Commercial Linkage Fee) Item 7b
Department: Community Development
Cost Center: 4003
For Agenda of: 7/19/2022
Placement: Public Hearing
Estimated Time: 90 minutes
FROM: Michael Codron, Community Development Director
Prepared By: Rachel Cohen, Senior Planner
SUBJECT: REPEAL AND REPLACE THE CITY OF SAN LUIS OBISPO’S MUNICIPAL
CODE CHAPTER 17.138 (INCLUSIONARY HOUSING REQUIREMENTS)
TO UPDATE REGULATIONS FOR CONSISTENCY WITH THE 6TH
CYCLE HOUSING ELEMENT, AMEND TITLE 4 OF THE CITY OF SAN
LUIS OBISPO MUNICIPAL CODE TO ADD CHAPTER 4.60 TO
ESTABLISH A COMMERCIAL LINKAGE FEE, AMEND INCLUSIONARY
HOUSING IN-LIEU FEES IN ACCORDANCE WITH CHAPTER 17.138 OF
TITLE 17, ESTABLISH THE AMOUNTS OF COMMERCIAL LINKAGE
FEES IN ACCORDANCE WITH CHAPTER 4.60 OF TITLE 4 OF THE SAN
LUIS OBISPO MUNICIPAL CODE, AND AMEND THE COMPREHENSIVE
FEE SCHEDULE
RECOMMENDATION
Planning Commission recommends the following actions:
1. Introduce a draft Ordinance entitled, “An Ordinance of the City Council of the City of
San Luis Obispo, California, approving the repeal and replacement of the City of San
Luis Obispo’s Municipal Code Chapter 17.138 (Inclusionary Housing Requirements)
to update regulations for consistency with the 6th Cycle Housing Element with an
exemption from Environmental Review (CEQA); and
2. Introduce a draft Ordinance entitled, “An Ordinance of the City Council of the City of
San Luis Obispo, California, amending Title 4 of the City of San Luis Obispo Municipal
Code to add Chapter 4.60 to establish a Commercial Linkage Fee with an exemption
from Environmental Review (CEQA)”; and
3. Adopt a Resolution entitled, “A Resolution of the City Council of the City of
San Luis Obispo, California, amending Inclusionary Housing In-Lieu Fees in
accordance with Chapter 17.138 of Title 17 and establishing the amounts of
Commercial Linkage Fees in accordance with Chapter 4.60 of Title 4 of the San Luis
Obispo Municipal Code and amending the Comprehensive Fee Schedule”; and
4. Direct staff to develop new incentives for housing developers to ensure the success
of Housing Element Programs such as Flexible Density Downtown, Missing Middle
Housing, and SB9/Subdivision Regulations Update; and
5. Direct staff to investigate grants and other options for funding of additional affordable
housing programs, such as a First-Time Homebuyers Program.
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Item 7b
POLICY CONTEXT
The purpose of this item is for the City Council to consider an update of the City’s
Inclusionary Housing Ordinance (IHO). The recommendation is in support of the City
Council’s policy to increase the amount of affordable housing production in the City. Work
to complete this task started in 2019 and benefitted from the public outreach process
conducted during the update of the 2020 Housing Element. This project, along with
several other important initiatives to increase affordable housing production, are included
in Community Development’s work program in support of the 2021-23 Financial Plan
Major City Goal for Housing and Homelessness.
The City’s Major City Goal states, “The City will prioritize new and ongoing Housing
Element policies and programs that focus on facilitating the increased production of
affordable and workforce housing, in addition to market rate housing; …”
In order to increase the development of additional deed restricted, affordable housing
units, the Housing Element update included Program 2.13 – “Update the Inclusionary
Housing Ordinance, including Table 2A, based on findings and recommendations in the
2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to
evaluate the City’s ability to provide affordable housing in the proportions shown in the
Regional Housing Needs Allocation, per Policy 2.4.”
Goal 2 in the 6th Cycle Housing Element is “Affordability: Accommodate affordable
housing production that helps meet the City’s Quantified Objectives.” The City’s
Quantified Objectives are the number of housing units that will be planned, built,
rehabilitated, and preserved during the Housing Element’s planning period. Importantly,
Housing Element Policy 2.41 focuses on housing production for all financial strata of the
City's population, as allocated in the Regional Housing Needs Allocation (RHNA). Very
low-, low-, and moderate-income housing units account for 58% (1,948 units) of the City’s
total RHNA.
The best way to provide for these units is through an effective Inclusionary Housing
Ordinance that includes deed-restricted affordable housing within new housing
developments. The IHO also provides for a funding stream that enables the City’s non-
profit partners to construct a variety of affordable housing types that the market does not
produce on its own.
The update of the Inclusionary Housing Ordinance, together with ongoing implementation
of the Major City Goal work plan listed in the following table, are designed to work in
concert to accomplish the vision for housing in our community, as expressed in the City’s
General Plan.
1 Encourage housing production for all financial strata of the City's population, as allocated in the Regional
Housing Needs Allocation, for the 6th cycle planning period. The number of units per income category are:
extremely low and very low income, 825 units; low income, 520 units; moderate income, 604 units; and
above moderate income, 1,405 units.
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Item 7b
Table 1: 2019-2023 Major City Goal Work Plan
REPORT-IN-BRIEF
HE
Program
No.
Housing Work Program Implementation
Status
6.22
Objective
Design
Standards
Update the City’s municipal code to expand objective
design standards within one year of the adoption of
the Housing Element Update.
Completed
2.17
Objective
Design
Standards
Allowance of developments that include at least 20%
low income affordable units by-right. Completed
2.18
Objective
Design
Standards
Utilize objective design standards to allow residential
uses by-right for developments that include at least
20% low income units
Completed
5.5
Zoning
Code
Update
Update the Zoning Regulations to allow mixed-use
development within Service Commercial (C-S) and
Manufacturing (M) zones
Completed
6.23
Zoning
Code
Update
Update the development review process and expand
the thresholds of each review level (minor,
moderate, and major) to eliminate or reduce the
number of public hearing required for housing
projects within one year of adopting the Housing
Element.
Completed
2.13 IHO
Update
Update the Inclusionary Housing Ordinance,
including Table 2A, based on findings and
recommendations in the 2020 Affordable Housing
Nexus Study and conduct further feasibility analysis
in order to evaluate the City’s ability to provide
affordable housing in the proportions shown in the
Regional Housing Needs Allocation, per Policy 2.4.
In Process.
4.6 IHO
Update
Amend the City’s Inclusionary Housing Ordinance to
require that affordable units in a development be of
similar size, number of bedrooms, character and
basic quality as the non-restricted units in locations
that avoid segregation of such units, including
equivalent ways to satisfy the requirement. Also
evaluate adjusting the City’s allowable sales prices for
deed-restricted affordable units per a variety of unit
types.
In Process.
2.15 Flexible
Density
Update of the Zoning Regulations and Community
Design Guidelines to incorporate flexible density
development options in Downtown Core and portions
of Upper Monterey and Mid-Higuera Special Focus
Areas.
In Process.
Anticipated to
be completed by
June 2023.
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Item 7b
The City Council has tasked the Community Development Department with updating the
Inclusionary Housing Ordinance (IHO) as part of the 2021-23 Major City Goal work
program to increase the production of affordable housing. The IHO requires a specified
percentage of deed restricted, moderate- and lower-income housing units to be provided
in new residential developments and establishes a commercial linkage fee so that
commercial development can contribute to addressing the related housing demand.
The City is required to accommodate 3,354 residential units as a part of its 6 th Cycle
Regional Housing Needs Allocation (RHNA). By 2021, the City met 100 percent of its total
allocation for “Above Moderate” housing units (1,411 units), but only has met 11 percent
(208 units) of the total number of needed affordable units. The housing market is not
producing housing that is affordable to moderate- and lower-income households, and as
a result, the City’s IHO is being updated to increase affordable housing in the community
to help achieve quantified objectives related to affordable housing.
In 2019 the City hired consultant David Paul Rosen and Associates (DRA) to complete
an Affordable Housing Nexus Study. The Study confirmed that both market-rate
residential and commercial development are inducing demand for affordable housing that
is not being met by the current housing market. Information from the Nexus Study was
utilized to develop Program 2.132 in the City’s 6th Cycle Housing Element (adopted on
November 17, 2020).
After the Nexus Study was completed and presented to the City Council, Economic &
Planning Systems, Inc. (EPS) conducted a Feasibility Analysis in 2021 of the City’s
proposed affordable housing requirements and in-lieu fees and commercial linkage fees.
EPS provided a preliminary recommendation that was presented to City Council on March
1, 2022 (details of the Nexus Study and Feasibility Analysis recommendations are
provided in Attachment G). Council provided the following comments:
1. Supported the removal of Table 2A (Inclusionary Housing Adjustment Factors).
2. Agreed that inclusionary housing requirements be based on project type, rather
than zoning or location.
2 Update the Inclusionary Housing Ordinance, including Table 2A, based on findings and recommendations
in the 2020 Affordable Housing Nexus Study and conduct further feasibility analysis in order to evaluate the
City’s ability to provide affordable housing in the proportions shown in the Regional Housing Needs
Allocation, per Policy 2.4
6.20 Subdivision
Update
Evaluate and update the Subdivision Regulations,
within three years of Housing Element adoption, to
support small lot subdivisions, ownership bungalow
court development and other alternatives to
conventional subdivision design.
In Process.
Anticipated to
be completed by
June 2023.
5.4
Missing
Middle
Housing
Evaluate and implement “missing middle” housing
types (e.g. duplex, triplex, quadplex, cottages, etc.)
to increase housing options in the City within three
years of adopting the Housing Element.
In Process.
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Item 7b
3. Supported an increased Commercial Linkage fee.
4. Agreed with the list of duties of a BMR Administrator, and provided further
guidance to work with the BMR Administrator to establish the following:
a. Local preference for San Luis Obispo residents or employees, or others
who often commute to the city; and
b. Long term affordability (maintaining deed-restricted units as long as
possible).
5. Directed staff to continue outreach with various stakeholders and the community.
Staff released a draft of the proposed amendments to the IHO for public review on May
11, 2022 on the City’s Inclusionary Housing Ordinance Update website. The public was
invited to provide comments on Open City Hall, through e-mail, or by telephone.
Presentations were made to the SLO Chamber of Commerce, Economic Development
Committee, and members of the Developer’s Roundtable. On June 8, 2022, the Planning
Commission (PC) reviewed the draft IHO and unanimously recommended the City
Council adopt amendments to the IHO (see Table 2 for a summary of the amendments).
Table 2: Summary Key Requirements of the Inclusionary Housing Ordinance
Proposed Amendments
Where the IHO applies Citywide
Table 2A Adjustments Remove (requirement no longer adjustable)
Shared Equity Purchase
Program
Available for residential development projects that include
affordable housing units for sale in excess of the inclusionary
housing requirement for the project.
Residential*
For Sale 10% (5% low-income units and 5% moderate income)
For Sale In-lieu Fee** $25 per square foot
For Rent 6% (3% very low-income and 3% low-income)
For Rent In-lieu Fee** $20 per square foot
Commercial***
Commercial
Development
Office, service, hotel, and retail uses: $6 per square foot
Industrial and Institutional Uses: $5 per square foot
*IHO would be applied to all market rate residential units.
**Residential projects of 10 units or less would have the ability to pay a fraction of the in-lieu fee or provide
one Moderate income unit to meet their inclusionary requirement.
*** All commercial square footage would be required to pay the Commercial Linkage fee. Projects that
contain less than 2,500 square feet of new gross floor area of commercial space would no longer be exempt.
Based on public comment, the PC made a separate motion recommending the City
Council give direction to staff to work on identifying exemptions to IHO requirements for
key Housing Element programs, such as Missing Middle and Flexible Density, as they
are brought forward for consideration. These are projects that are expected to enable the
production of a wide variety of housing types downtown and in that may be affordable to
Workforce Income and other above-moderate income households. Appropriate
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Item 7b
adjustments to the IHO could help ensure the success of these creative, new housing
programs.
In addition, public feedback indicates a strong desire to pursue other revenue streams
that could create even more affordable housing, including a down-payment assistance
program. Staff recommends that the City Council provide direction to staff to investigate
a variety of Federal, state, and local grant opportunities and other options for creating
revenue to support expanded affordable housing programs. If existing revenues are
explored (i.e. general fund), then expenditure offsets will need to be identified for
corresponding reductions.
DEFINITIONS AND TERMS USED IN THIS REPORT
Affordable Housing - Housing which can be purchased or rented by a household with very low-
, low-, or moderate- income, as described in the City’s affordable housing standards. By law, the
upper income limit for “extremely-low income” households is 30 percent of the area median
income; the upper income limit for "very-low income" households is 50 percent of the area median
income; the upper limit for "lower income" households is 80 percent of the area median income;
and the upper limit for "moderate-income" households is 120 percent of the area median income.
Regional Housing Needs Allocation (RHNA) – The City’s projected housing need during the
Housing Element planning period is determined through the Regional Housing Needs Allocation
(RHNA) process, which is based on projected Statewide growth in households as determined by
the California Department of Housing and Community Development (HCD). HCD distributes the
Statewide projected housing need among the regions in the State, where each regional council
of government allocates the projected regional growth to local jurisdictions within the region. The
total housing need for each jurisdiction is distributed among income categories, requiring each
jurisdiction to plan to meet the need for housing for households at all income levels.
Nexus Study – An established methodology to determine the nexus between market-rate
residential development and nonresidential development and the need for affordable housing in
the City. The study identifies the maximum nexus-based affordable housing impact fees and
commercial linkage fees needed to cover the affordability gap.
Feasibility Analysis – An evaluation of the maximum nexus-based affordable housing impact
fees and commercial linkage fees calculated to determine the financially feasible level of impact
fees and linkage fees that can be absorbed by new development.
Inclusionary housing unit - A dwelling unit required under the provisions of Chapter 17.138 of
the Municipal Code, and which is priced to be affordable to households that qualify as moderate,
low, very-low or extremely-low income under the City’s Affordable Housing Standards.
Market rate - The highest price a willing buyer would pay and a willing seller would accept, both
being fully informed and in an open market, as determined by an appraiser.
Workforce Income Household - A household with an income that exceeds 121% but does not
exceed 160% of the area median income (AMI).
Missing Middle Housing – Describes a range of multi-family housing types that are house-scale
and architecturally compatible within existing neighborhoods.
DISCUSSION
Background on the Local Zoning Ordinance – the Inclusionary Housing Ordinance
The City’s first Inclusionary Housing Ordinance (IHO) was adopted in 1999. The purpose
of an IHO is to require new housing development projects to include a specified
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percentage of deed restricted, moderate- and lower-income3 housing units (otherwise
referred to as affordable housing in this report) in new residential developments or pay a
fee. More than 1,200 deed-restricted or otherwise secured affordable dwellings have
been planned for, entitled, or built since the City’s adoption of its IHO in 1999. The City
has granted, loaned, or committed over $10,750,000 of affordable housing in-lieu funds
to assist with the development of over 500 of these deed-restricted affordable housing
units during this same time period
The Need for More Affordable (Moderate and Lower Income) Housing
The City’s Housing Element includes a Regional Housing Needs Allocation (RHNA), set
by the State, that the City must work towards achieving. For the 5 th Cycle RHNA (2014-
2019), the City saw 1,272 housing units permitted. 1,052 of the units (over 200 percent
of the RHNA number) were above moderate and the City only met 33 percent of the
allocated affordable housing units (see Table 3 below) required by the State.
Table 3: Progress Towards 5th Cycle Quantified Objectives (1/1/14 to 6/30/19)
Income Level
(% of County
Median
Income)
5th Cycle
RHNA
Allocation
Building Permitted Units Issued by Affordability Total
Units
by
Income
Level
Total
Units
Remaining
by Income
Level
Year
1
(2014)
Year
2
(2015)
Year
3
(2016)
Year
4
(2017)
Year
5
(2018)
Year 6a
(01/01/19 -
06/30/19)
Extremely Low
& Very Low 285 35 1 19 41 70 0 166 119
Low 179 16 1 1 9 4 4 35 144
Moderate 202 8 2 3 0 0 6 19 183
Above
Moderate 478 146 168 111 164 212 251 1,052 -574
Total Units 1,144 205 172 134 214 286 261 1,272
Total Remaining for RHNA Period: 446
Source: Community Development Department, 2019
In 2019, the City received its RHNA as a part of the 6th Cycle Housing Element update
(see Table 4). Quickly, by 2021, the City had already met its total allocation for “Above
Moderate” housing units. Unfortunately, the City’s housing market is producing housing
that is not affordable to moderate- and lower-income households. Within the same time
period, the City has only permitted 10.7 percent of the needed affordable housing units
and the proposed IHO update is intended to improve this outcome.
With the exception of ADUs (Accessory Dwelling Units)4, the City can only meet affordable
housing targets through its requirement that a percentage of all new housing units be
3 These Standards are updated annually by the Community Development Department and remain in effect
per each corresponding fiscal year (July 1 - June 30). The Standards show income limits for the City and
County of San Luis Obispo, as published by the State Department of Housing and Community Development
(HCD). https://www.slocity.org/government/department-directory/community-development/affordable-
housing/affordable-housing-standards/-fsiteid-1
4 Section 65583.1 of State housing element law allows local governments to identify realistic capacity for
ADUs in addressing a locality’s share of the regional housing need. The identification of realistic capacity
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Item 7b
deed-restricted for affordability. The IHO is supported by nexus and feasibility analyses
and is a best practice to ensure that affordable housing units are constructed within, or
concurrent with “Above Moderate” income category housing units. Ultimately,
inclusionary housing policies will ensure that new City neighborhoods are inclusive of the
full range of household incomes represented in the City’s workforce.
Table 4: Progress Towards 6th Cycle Quantified Objectives, 2019-2028
Income Level
(% of County Median
Income)
6th Cycle
RHNA
Allocation
Building Permitted Units Issued by
Affordability Total
Units by
Income
Level
Total Units
Remaining
by Income
Level
Year
1
(2019)
Year
2
(2020)
Year
3
(2021)
Years 4 – 10
(2022 -
2028)
Extremely
Low & Very
Low
Deed
Restricted 825
0 14 35 - 49
776 Non-Deed
Restricted 0 0 0 - 0
Low
Deed
Restricted 520
6 0 56 - 62
382 Non-Deed
Restricted 0 30 46 - 76
Moderate
Deed
Restricted 603
8 5 8 - 21
582 Non-Deed
Restricted 0 0 0 - 0
Above
Moderate 1,406 523 416 472 - 1,411 0
Total Units 3,354 537 465 617 - 1,619
Total Remaining for RHNA
Period: 1,735
Source: Community Development Department, Building Permits Issued, 2021
Previous Council or Advisory Body Action
April 21, 2020: City Council received the Affordable Housing Nexus Study that
determined that both residential and commercial development are inducing demand for
affordable housing that is not being met by the housing market. The Nexus Study included
the maximum justifiable nexus fees the City could implement to meet the affordable
housing demand incurred by current development. However, the Study recommended
that the City adopt fees less than the maximums because fees at these high levels would
affect the financial feasibility of development as well as the competitiveness of
development in the City.
should be based on the development trends of ADUs in the previous housing element planning period and
other relevant factors. The County of San Luis Obispo conducted a market study for ADUs, including
information from the City of San Luis Obispo, and found that approximately 50 percent of the ADU s
constructed meet low-income housing rental costs.
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The Study’s findings verify that there is a nexus that justifies the City having an
Inclusionary Housing Ordinance that applies to both residential and commercial
development (4.21.20 Council Report and Meeting Minutes).
March 1, 2022: City Council conducted a Study Session for the purposes of providing
background information and analysis of the City’s current affordable housing
requirements, a preliminary recommendation5 on updates to the City’s Inclusionary
Housing Ordinance, a commercial linkage fee recommendation, and an overview of
progress of onboarding the City’s Below Market Rate (BMR) Housing Administrator
(3.1.22 Council Report and Meeting Minutes). Council provided the following comments
and direction to staff:
1. Supported the removal of Table 2A (Inclusionary Housing Adjustment Factors).
2. Agreed that inclusionary housing requirements be based on project type, rather
than zoning or location.
3. Supported an increased Commercial Linkage fee.
4. Agreed with the list of duties of a BMR Administrator, and provided further
guidance to work with the BMR Administrator to establish the following:
a. Local preference for San Luis Obispo residents or employees, or others
who often commute to the city; and
b. Long term affordability (maintaining deed-restricted units as long as
possible).
5. Directed staff to continue outreach with various stakeholders and the community.
The recommendations in this report directly respond to the March 1, 2022 direction.
June 8, 2022: The Planning Commission (PC) reviewed the draft IHO and unanimously
recommended the City Council adopt the ordinance with staff’s proposed modifications.
The modifications included the elimination of the exemption of residential projects of less
than five units. The draft Ordinance (Attachment A) includes the recommended
modifications. There was public comment during the public hearing concerning potential
impacts the recommended draft IHO may have on the development of smaller, compact
market-rate development. One specific concern was that requirements of the IHO for
affordable housing may burden small infill housing projects that would otherwise support
missing middle housing. In order to provide opportunities to address this concern, the PC
also made a motion recommending the City Council give direction to staff to work on
identifying exemptions to Inclusionary Housing requirements for key Housing Element
programs, such as the pending Missing Middle and Flexible Density programs, when they
are brought forward for consideration. (6.8.22 PC Report and Meeting Minutes).
5 The preliminary recommendations provided as a part of the Study Session were derived from a Feasibility
Analysis completed in 2022 that tested the feasibility of a range of inclusionary requirements and affordable
housing fee levels and compared those costs to the revenues that could be generated given the various
mixes of market-rate and affordable housing and/or fee levels. Based on this analysis, the preliminary
recommendation included several revisions to the City’s existing affordable housing inclusionary program
for new residential and mixed-use development and introduced a nexus-based commercial linkage fee for
non-residential uses.
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Item 7b
Public Input on the Elimination of Table 2A and Staff Response
Preceding the PC hearing on June 8, 2022, staff received public comment as agenda
correspondence on the draft IHO, including a letter from the SLO Chamber of Commerce.
Staff provided a response to key issue areas raised by the Chamber in PC agenda
correspondence.
The key issue discussed in the letter and reiterated during public comment at the PC
meeting was the elimination of Table 2A. The Chamber’s letter states, “We recognize that
2A needs to be updated, however, the risks of eliminating it all together are too great. The
demand for larger, more expensive housing is significant and without incentives like Table
2A, missing middle housing will be even less likely to be produced.”
As previously stated, the purpose of the IHO update is to produce more affordable
housing. Table 2A was established as an amendment to the original IHO to encourage
the development of projects with higher density and smaller unit sizes, which would be
considered affordable-by-design within the City. The intent was that these smaller units
would sell or be rented to households that meet moderate- or lower-income standards.
This concept has not produced affordable housing in practice. The Feasibility Analysis
found that the development that meets the size and density criteria established by Table
2A is still not affordable at any income level other than above moderate, which the City is
already over-producing. Some examples of new, smaller units for rent and for sale are
provided below:
Vintage (an apartment complex in the Orcutt Area Specific Plan), a studio unit
(500 square feet) rents for $2,385 per month, where the maximum allowed rent for
a moderate-income studio unit is $1,426, which is based on a household income
threshold of 80–120% of the Average Median Income (AMI).
Harvest Lofts, at San Luis Ranch, where (according to their website) a one-
bedroom 436 square foot unit is for sale starting at $404,900; low-income threshold
for purchase is $187,800 and $328,650 at the modera te-income threshold.
Heirloom, at San Luis Ranch, provides a three-bedroom, 1,564 square foot unit,
for sale, starting at $786,385; low-income threshold for purchase is $244,200 for a
three-bedroom and $427,175 at the moderate-income threshold.
Table 5 below provides a snapshot of recent projects that have utilized Table 2A and
shows how many affordable, deed-restricted units were lost. Unfortunately, if the results
are smaller homes on smaller lots, those homes are still not affordable to households
earning 120% or less of Area Median Income (AMI). As a result, the elimination of Table
2A is recommended to increase the production of affordable housing while the City works
to implement a variety of other programs that are targeted to provide housing for
households earning above 120% of AMI.
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Table 5: Recent projects that have utilized Table 2A
Year
Approved Project Name Number
of Units
Number of
Affordable
Units
Income Level
Number of
Units w/out
Table 2A
2019 Terraza 28 1 Moderate 2
2021 Bullock Ranch* 192 7 2 Low, 5 Mod 29
2017
West Creek
(Vintage & Noveno)* 172 10 Moderate 26
2018 The Connect 78 1 Moderate 4
2020 Laurel Creek 100 1 Moderate 5
2016 The Yard 43 1 Moderate 3
2005 Avivo 161 2 Moderate 9
2018 Twin Creeks 94 3 2 Low, 1 Mod 5
2020
Orcutt Road
Apartments 10 1 Moderate 1
Total 878 27 84
* Projects located within Expansion Areas have an Inclusionary Housing Requirement of 15%
Additional Tools that Accomplish the City’s Housing Objectives
The evolution of density bonus law (DBL) in recent years provides developers with an
opportunity to provide more affordable housing in exchange for relaxed development
requirements.6 In addition, the City can grant an additional density bonus as a further
incentive to help projects with affordable housing to pencil out.
A developer who meets the requirements of the state law is entitled to receive density
bonuses and other benefits as a matter of right. In the case of a project that is at least
20% low income, the project would be automatically entitled to move forward with building
permits.
Most importantly, projects that qualify for DBL are not subject to IHO requirements .
Developers also benefit from waivers or concessions that allow the City to grant
deviations from development standards such as reduced setbacks, increased height, or
reduced parking. These relaxed standards along with density bonuses allow more market
rate units on the site than the zone would otherwise allow, which makes development o f
affordable housing more economically feasible.
6 The Density Bonus Law (found in California Government Code Sections 65915 – 65918) provides
developers with tools to encourage the development of affordable and senior housing, including up to a
50% increase in project densities for most projects, depending on the amount of affordable housing
provided, and an 80% increase in density for projects which are completely affordable. The City’s
regulations contained in Chapter 17.140 of the Municipal Code exceed state standards.
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In addition to density bonuses, the City supports several other tools to increase production
of a variety of housing types including:
Streamlined development review process for housing projects.
Objective Design Standards that allow eligible residential projects to be reviewed
through a ministerial process.
Mixed-use development allowed by right in all Service-Commercial and
Manufacturing zones.
Existing tools that incentivize smaller infill development include:
As proposed, the IHO in-lieu fee is based on square footage- smaller units will
have lower fees;
Density bonus provisions in Chapter 17.140 of the Municipal Code (higher density
development with the inclusion of affordable units);
Ministerial review and reduced fees for ADUs and JADUs;
Tiered fee structure that provides substantial reductions in cost for smaller
residential units for water, sewer and transportation impact fees;
Fractional density allowances based on unit size and number of bedrooms;
Minimum density allowances based on Zoning designations; and
Implementation of SB 9 (California H.O.M.E Act).
Creative New Market-Rate Housing Options in the Works
Currently, the City is seeing the most significant production upswing in market-rate
housing in the past twenty years. The vast majority of planned housing production in the
City (in the Orcutt Area, Margarita Area, Avila Ranch, San Luis Ranch and Froom Ranch)
will not be impacted by the proposed changes to the IHO. This includes over 3,000 units
of newly entitled housing. This new housing is serving the community well. New homes
in Avila Ranch or San Luis Ranch, for example, prioritize sales to current SLO residents
and employees, and these homes are selling.
Future projects are in the works to ensure that the City continues to provide a diverse set
of housing opportunities for residents. The City’s Downtown Flexible Density program will
remove density limits for downtown housing units of 600 square feet or less. The Missing
Middle Housing Program will enable duplex, tri-plex, bungalow court, and other house-
scale, multi-family housing projects to be developed in qualifying R-1 locations throughout
the City. Together, these projects would have the capacity to enable production of over
1,000 units of market-rate housing to serve the workforce and a variety of other local
housing needs.
As part of the Planning Commission and staff recommendation, the Council is being
asked to direct staff to consider appropriate exemptions or adjustments from the IHO
when these programs move forward for consideration. In addition, public feedback to staff
and the Planning Commission indicates a strong interest in the City pursuing other
revenue streams that could create even more affordable housing, including through a
down-payment assistance program.
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Item 7b
Staff is also recommending that the City Council provide direction to staff to investigate a
variety of Federal, state, and local grant opportunities and other options for creating
revenue to support expanded affordable housing programs.
Public Engagement
Public outreach regarding the Inclusionary Housing Ordinance began in 2020 with the
presentation to City Council on April 21st about the completed Nexus Study. On June 2,
2020, staff submitted a Memo to the Planning Commission about the Nexus Study. The
Nexus Study was used to inform new programs within the 6th Cycle Housing Element
Update.
As a part of the Housing Element update, staff facilitated eight presentations, meetings,
online surveys, and a public workshop (details of the public outreach are provided in
Appendix G of the 6th Cycle Housing Element). Participants of the community workshop
and the online survey were invited to answer the following questions: “What type of
housing is needed most in our community?” and “What housing issues exist in the
community?” Approximately 100 individuals participated in the in-person workshop and
online survey and identified affordable housing as the type of housing needed most and
the biggest housing issue of the community.
Figure 1: A word cloud created from the comments received from the 6 th Cycle
Housing Element workshop and online survey participants.
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Item 7b
With the completion of the Feasibility Analysis in January 2021, staff presented the
preliminary IHO recommendation to Council on March 1st as part of a Study Session. On
March 2, 2022, staff presented the to the Chamber of Commerce. On May 11, 2022, City
staff released the draft IHO amendments for public review. The proposed amendments
were made available to the public through the City’s Website with opportunities for public
feedback via email, phone, mail and Open City Hall. In May 2022 staff presented the draft
IHO to the Chamber of Commerce and the members of the Developer’s Roundtable. Staff
has continued to engage with interested individuals and the Chamber of Commerce
(which created a Task Force to work directly with staff on this topic).
Public notice of this hearing has been published in a widely circulated local newspaper,
and hearing agendas for this meeting have been posted at City Hall, consistent with
adopted notification procedures. Email notices have been provided for each public
meeting to those on the interested parties list.
CONCURRENCE
Staff from the Housing and Homelessness Division of Community Development concur
with the proposed changes to the Inclusionary Housing Ordinance.
ENVIRONMENTAL REVIEW
The proposed amendments to the Municipal Code Title have been assessed in
accordance with the authority and criteria contained in the California Environmental
Quality Act (CEQA), the state CEQA Guidelines, and the environmental regulations of the
City. Specifically, the proposed amendments have been determined to be exempt from
further environmental review pursuant to CEQA Guidelines Section 15061(b)(3), the
“Common Sense” exemption, because the proposed actions will have no possibility of a
significant effect on the environment and will not cause impacts as all projects subject to
the Inclusionary Housing Ordinance will be required to comply with all relevant City
standards, codes, and regulations, including environmental review.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2022-23
Funding Identified: Yes
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Item 7b
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $N/A $ $ $
State
Federal
Fees
Other:
Total $ $ $ $
The implementation of Housing Element Programs was adopted as a part of the 2021 -
2023 Financial Plan. Funding was provided as a part of the Community Development
Department budget appropriation for staff resources to implement Housing Element
programs such as Program 2.13.
The City’s applicable fee schedule will be updated according to City Council action and
incorporate the fees as approved.
ALTERNATIVES
1. The City Council could direct staff to conduct further outreach and return with
a revised IHO and recommendation. This alternative is not recommended because
the Community Development Department work program includes a significant number
of additional projects that should be completed before June 30, 2023. Further work on
the IHO would forestall these efforts. Therefore, staff is hopeful that changes to the
recommendation directed by the City Council can be incorporated into an action during
the public hearing.
2. The City Council could change the percentage of affordable housing required
by the IHO and/or the amount of in-lieu fees. The affordable housing requirements
and in-lieu fee amounts contained in the IHO are based on a detailed analysis
prepared by the City’s consultant, EPS. There is alignment between the affordable
housing percentage requirement contained in the proposed IHO update and the
corresponding in-lieu fees. Reducing these requirements is not recommended,
however, the City Council’s decision is a pure policy choice, and the Council has
plenary authority to make revisions as long as they comply with applicable state and
Federal housing law. If the Council majority decides that a reduced affordable housing
requirement best balances all policy considerations, then staff would recommend
reducing the for-sale percentage requirement from 10% to 8% (3% low and 5%
moderate). In addition, this change should be made together with a reduction in the
in-lieu fee amount from $25 per square foot, to $20 per square foot to maintain
consistency with the feasibility analysis.
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Item 7b
ATTACHMENTS
A - Draft Ordinance repealing and replacing the City of San Luis Obispo Municipal Code
Chapter 17.138 (Inclusionary Housing Requirements)
B - Draft Ordinance amending Title 4 of the City of San Luis Obispo Municipal Code to
establish a commercial linkage fee
C - Draft Resolution for Inclusionary In-lieu and Commercial Linkage Fees
D - Legislative Draft of the Inclusionary Housing Ordinance
E - PC Resolution No. PC-1061-2022 recommending Council repeal and replace IHO and
review In-lieu Fees and Commercial Linkage Fees
F - Effect of CCCI Increase and Implications for the Inclusionary Housing Ordinance
Update
G - Affordable Housing Analysis and Recommendations
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O ______
ORDINANCE NO. _____ (2022 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE REPEAL AND
REPLACEMENT OF THE CITY OF SAN LUIS OBISPO’S MUNICIPAL
CODE CHAPTER 17.138 (INCLUSIONARY HOUSING REQUIREMENTS)
TO UPDATE REGULATIONS FOR CONSISTENCY WITH THE 6TH
CYCLE HOUSING ELEMENT WITH AN EXEMPTION FROM
ENVIRONMENTAL REVIEW (CEQA)
WHEREAS, on January 5,1999, The City adopted its first Inclusionary Housing
Ordinance contained in Ordinance No. 1346; and
WHEREAS, on June 13, 2007, and update was made to the Inclusionary
Housing Ordinance regarding resident selection process for inclusionary housing
contained in Ordinance No. 1508; and
WHEREAS, a Nexus Study was reviewed by Council on April 21,2020 to
determine the feasibility of increasing the required amount of affordable housing in
housing projects and implementing that into the City’s Inclusionary Housing Ordinance;
and
WHEREAS, the City Council of the City of San Luis Obispo conducted a web-
based public hearing via teleconference on November 17, 2020, for the purpose of final
adoption of the sixth cycle update to the General Plan Housing Element that included
Program 2.13 that states, “Update the Inclusionary Housing Ordinance, including Table
2A, based on findings and recommendations in the 2020 Affordable Housing Nexus
Study and conduct further feasibility analysis in order to evaluate the City’s ability to
provide affordable housing in the proportions shown in the Regional Housing Needs
Allocation, per Policy 2.4”; and
WHEREAS, in April 2021, the City hired Economic & Planning Systems, Inc.
(EPS) to conduct a feasibility analysis based on the findings and recommendations
included in the Nexus Study and current market information and provide preliminary
recommendations for updates to the City’s existing Inclusionary Housing Ordinance; and
WHEREAS, the State of California Office of Housing and Community
Development, on September 3, 2021, certified the City of San Luis Obispo’s 6 th Cycle
General Plan Housing Element as in full compliance with State Law; and
WHEREAS, a Study Session was held by City Council on March 1, 2022, to review
the preliminary recommendations of the feasibility analysis; and
WHEREAS, on May 11, 2022, the City published a draft of the proposed
amendments to Municipal Code Chapter 17.138 for public review; and
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WHEREAS, the Planning Commission of the City of San Luis Obispo conducted
a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California on June 8, 2022, for the purpose of recommending amendments to implement
programs of the 6th Cycle Housing Element by updating the Inclusionary Housing
Ordinance; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California on July 19, 2022, for the purpose of introducing an ordinance to repeal and
replace Chapter 17.138 (Inclusionary Housing Requirements); and
WHEREAS, notices of said public hearing were made at the time and in the
manner required by law.
WHEREAS, the City Council has duly considered all evidence, including the
testimony of the applicant, interested parties, and the evaluation and recommendations
by staff, presented at said hearing.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Findings. Based upon all the evidence, the City Council makes the
following findings:
1. The proposed amendments to Title 17 of the Municipal Code are consistent
with the 6th Cycle Housing Element Program 2.13 which states, “Update the
Inclusionary Housing Ordinance, including Table 2A, based on findings and
recommendations in the 2020 Affordable Housing Nexus Study and conduct
further feasibility analysis in order to evaluate the City’s ability to provide
affordable housing in the proportions shown in the Regional Housing Needs
Allocation, per Policy 2.4.”
2. The proposed amendments to Title 17 of the Municipal Code are consistent
with the 6th Cycle Housing Element Program 4.6 which states, “Amend the
City’s Inclusionary Housing Ordinance to require that affordable units in a
development be of similar size, number of bedrooms, character and basic
quality as the non-restricted units in locations that avoid segregation of such
units, including equivalent ways to satisfy the requirement. Also evaluate
adjusting the City’s allowable sales prices for deed-restricted affordable units
per a variety of unit types.”
3. The repeal and replacement of Chapter 17.138 of the Municipal Code for
qualifying development projects will not alter the character of the City or cause
health safety or welfare concerns because the amendment is consistent with
the General Plan and directly implements City goals and policies.
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SECTION 2. Environmental Determination. The proposed amendments to the
Municipal Code Title have been assessed in accordance with the authority and criteria
contained in the California Environmental Quality Act (CEQA), the state CEQA
Guidelines, and the environmental regulations of the City. Specifically, the proposed
amendments have been determined to be exempt from further environmental review
pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption,
because the proposed actions will have no possibility of a significant effect on the
environment and will not cause impacts. In this case, the proposed repeal and
replacement of the Inclusionary Housing Ordinance is consistent with State Law and the
City’s 6th Cycle Housing Element and will not have an significant effect and project
specific environmental review will be required.
SECTION 3. Action. The City Council hereby repeals and replaces, in its entirety,
Chapter 17.138, entitled “Inclusionary Housing Requirements”, of the San Luis Obispo
Municipal Code as set forth and incorporated herein.
Chapter 17.138: Inclusionary Housing Requirements
Sections:
17.138.010 – Purpose
17.138.020 – Applicability and Exclusions
17.138.030 – Definitions
17.138.040 – Inclusionary Housing Requirements
17.138.050 – Standards for Inclusionary Units
17.138.060 – In-Lieu Housing Fee
17.138.070 – Inclusionary Housing Proposal
17.138.080 – Procedures
17.138.090 – Eligibility Requirements
17.138.100 – Shared Equity Purchase Program
17.138.110 – Administration, Management, and Monitoring
17.138.120 – Enforcement
17.138.010 – Purpose
The purpose and intent of this Chapter are: 1) to promote the public welfare by increasing
the production and availability of affordable housing units; 2) to establish an inclusionary
housing requirement which implements General Plan policies guiding land use and
housing development; and 3) to ensure that affordable housing units established
pursuant to the provisions of this Chapter are located in a manner that provides for their
integration with market rate units.
17.138.020 – Applicability and Exclusions
A. This Chapter shall apply to all residential development projects. Residential projects
that have been deemed complete in the planning entitlement process or have
submitted a complete building permit application the time the replacement
ordinance goes into effect, are subject to the prior Inclusionary Housing Ordinance.
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The following types of residential projects are exempt:
1. Residential additions, repairs, or remodels, provided that such work does not
increase the number of existing dwellings;
2. The addition or inclusion of Accessory Dwelling Units associated with an existing
or proposed residential or mixed-use development;
3. Affordable housing projects in which 100 percent of the dwellings to be built
will be sold or rented in conformance with the City’s Affordable Housing
Standards (excluding any on-site manager unit);
4. Housing projects that include a density bonus.
5. Emergency projects or projects which the Council determines are necessary
to protect public health and safety;
6. Development projects which the Director determines are essentially
noncommercial or nonresidential in nature, which provide educational, social,
or related services to the community and which are proposed by public
agencies, nonprofit agencies, foundations, and other similar organizations;
7. Projects which replace or restore a structure damaged or destroyed by fire, flood,
earthquake, or other disaster within three years prior to the application for the
new structure(s) (see Chapter 17.92 Nonconforming Structure).
17.138.030 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the
meaning set forth below. For all other definitions, the provisions of Article 9 (Definitions)
of this Title shall apply.
A. “Administrator” means Below Market Rate Program Administrator which may either
be the City itself or a third-party administrator acting as an agent for the City in
connection with all aspects of the operation of the City's Below Market Rate program
pursuant to an Agreement entered into between the City and the Administrator, as
such agreement may be amended or replaced from time to time.
B. “Affordable” means housing which can be purchased or rented by a household with
very low-, low-, or moderate- income, as described in the City’s affordable housing
standards.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit
is below the cost of what a current market rate unit would be and is affordable to
extremely low-, very low-, low-, or moderate-income households.
D. “Borrower” shall be defined as one who meets the eligibility requirements for
purchasing an inclusionary affordable unit.
E. “Commercial Linkage Fee” means the fee paid by the applicant of commercial
development projects to mitigate the impacts that such developments have on the
demand for affordable housing in the City (see Municipal Code Chapter 4.60).
F. “Density bonus” means a density increase over the maximum density otherwise
allowable under the Zoning Regulations, Chapter 17.140.
G. “Early resale” shall mean the sale, lease, or transfer of property within seven years
of the initial close of escrow for Equity Share Inclusionary Units.
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H. “Equity Share” shall mean the shared equity of appreciation between the City and
the Borrower on inclusionary units when agreements specifically allow for affordable
units to be sold at market-rate after a 7-year period.
I. “Fee Schedule” means fees that for-sale and for-rent units are subject to and are
paid to either the City or the Administrator for associated costs related to but not
limited to eligibility screening, income verification, marketing of affordable units, and
the close of escrow or completion of new lease agreements for affordable units.
J. “Inclusionary housing unit” means a dwelling unit required under the provisions of
this Chapter, and which meets the City’s affordable housing standards.
K. “Low-” or “lower-income households” shall have the meaning set forth in Health and
Safety Code Section 50079.5; provided the income of such persons and families
shall not exceed 80 percent of the median income within the City as published and
periodically updated by the State Department of Housing and Community
Development.
L. “Market rate” shall mean the highest price a willing buyer would pay and a willing
seller would accept, both being fully informed and in an open market, as
determined by an appraiser.
M. “Moderate-income households” shall have the meaning set forth in Health and
Safety Code Section 50079.5; provided the income of such persons and families
exceed 80 percent but are less than or equal to 120 percent of the median income
within the City as published and periodically updated by the State Department of
Housing and Community Development.
N. “Commercial development project” shall mean development projects which result in
the construction or conversion of structures for the purpose of conducting business,
including but not limited to retail sales, restaurants, offices, gas stations,
manufacturing, etc.
O. “Residential development project” shall mean development projects which result in
the construction or conversion of structures, including, but not limited to, single-
unit attached or detached homes, apartments, condominiums, live/work units,
mixed-use, mobile homes, transitional housing or supportive housing, and group
housing.
P. “Very low-income” shall have the meaning set forth in Health and Safety Code
Section 50079.5; provided the income of such persons and families shall not
exceed 50 percent of the median income within the City as published and
periodically updated by the State Department of Housing and Community
Development.
17.138.040 – Inclusionary Housing Requirements
A. General Requirements. All non-exempt residential development projects shall
include inclusionary units as required by this chapter. If the calculated number of units
results in a fraction, the number shall be rounded as described in Section
17.138.080(A).
1. Construct the required number of inclusionary units for Residential or Mixed-Use
projects;
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2. Pay an in-lieu fee for Residential or Mixed-Use projects; or
3. Pay a commercial linkage fee (see Municipal Code Chapter 4.60) for new Non-
Residential or Non-Residential portions of Mixed-Use project(s).
B. Residential Requirements
1. Ownership Dwelling Units. Ten (10) percent of the dwelling units (see Section
17.138.080.A) shall be made available for sale to eligible households with five
(5) percent for low-income households (fractional units may be rounded down to
the next whole number) and five (5) percent for moderate-income households
(fractional units may be rounded up to the next whole number). See Section
17.138.080.A for more information regarding fractional numbers.
2. Rental Dwelling Units. Six (6) percent of the dwelling units (see Section
17.138.080.A: Fractional Numbers) shall be made available for rent to eligible
households with three (3) percent for very low-income households (fractional
units may be rounded down to the next whole number) and three (3) percent for
low-income households (fractional units may be rounded up to the next whole
number).
3. In-Lieu Housing Fees. An applicant may pay in-lieu fees to the City rather than
construct inclusionary units on site for residential projects (see Section
17.138.060: In-Lieu Housing Fee).
C. Non-Residential Requirements
1. Commercial, Office, Service, Hotel, Retail, Industrial, and Institutional
Uses. An applicant shall pay a commercial linkage fee based on the gross
square footage of the non-residential space in accordance with Municipal Code
Chapter 4.60.
D. Mixed-Use Development Requirements
1. Dwelling Units & Commercial Space. For mixed-use development, the
inclusionary housing requirement is determined in accordance with subsection
B of this Section for all dwelling units in addition to subsection C of this Section
for all new commercial square footage within the development project. For
example, a for-rent mixed-use project includes twenty (20) residential units and
5,000 square feet of commercial space: the inclusionary requirement would be
two (2) affordable units (20 x 6% = 1.2 rounded to 2) and a commercial linkage
fee would be applied to the 5,000 square feet of commercial space.
17.138.050 – Standards for Inclusionary Units
A. Standards. Inclusionary units must meet the following standards:
1. Inclusionary units shall be dispersed throughout the residential development
projects to prevent a concentration of affordable units within the development
project.
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2. Inclusionary units shall be consistent with the design of market rate units in terms
of exterior appearance, materials, and finished quality.
3. The applicant may reduce square footage of inclusionary units as compared to
the market rate units as long as the minimum square footage of the affordable
units are no less than seventy-five percent of the average size of all market rate
units in the residential development project with the same bedroom count. For
the purpose of this subsection, the “average size” of a unit with a certain bedroom
count equals the total square footage of all market rate units with that bedroom
count in the residential development project divided by the total number of
market rate units with the same bedroom count in the residential development
project.
4. For residential development projects with multiple market rate unit types
containing differing numbers of bedrooms, inclusionary units shall be
representative of the market rate unit mix. For example, a for sale, residential
project includes fifty (50) dwelling units; ten (10) three-bedroom units, twenty
(20) two-bedroom units, and twenty (20) one-bedroom units. To represent the
units within the residential project, the five (5) required inclusionary units would
be one (1) three-bedroom, two (2) two-bedrooms and two (2) one-bedrooms.
5. The required inclusionary units shall be constructed concurrently with market
rate units, unless an alternative development schedule is otherwise stipulated
by the applicable Review Authority of the residential development project.
6. Inclusionary units shall be subject to the City’s and/or the Administrator’s Fee
Schedule in accordance with Section 17.138.110.
17.138.060 – In-Lieu Housing Fee
A. Payment of In-Lieu Fee. The developer may, at their discretion, choose to pay a
fee, as established by a resolution of the City Council, to the City in lieu of
constructing affordable units to meet their inclusionary housing requirement.
B. In-Lieu Fee Calculation. In-lieu fees shall be calculated using the new, habitable
square footage, as defined by California Building Code, included within the
residential development project.
C. Affordable Housing Fund. All in-lieu fees collected shall be deposited into the
Affordable Housing Fund. The fund shall be administered by the Finance Director
and shall be used exclusively to provide funding for the provision of affordable
housing and for reasonable costs associated with the development of affordable
housing, at the discretion of the Council.
D. Timing. In-lieu fees shall be paid prior to building permit issuance. For projects
constructed in phases, in-lieu fees shall be paid in the proportion that the phase
bears to the overall project.
17.138.070 – Inclusionary Housing Plan
A. Application Requirements. An applicant proposing a project for which inclusionary
housing is required shall submit a statement with their planning application or
building permit (whichever applies), describing the project’s inclusionary housing
plan. The statement shall include:
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1. A project description that includes details regarding the proposed residential
development project such as, but not limited to total number of dwelling units,
number of bedrooms per dwelling unit, square footage of all units (both
residential and commercial), type of project (rental or ownership), etc.;
2. A description of the inclusionary housing plan for each construction phase,
including the method chosen to meet the inclusionary housing requirement and
including all of the following information including but not limited to:
a. Whether the unit is for sale or rental;
b. The number, location, unit type, tenure, number of bedrooms and baths, floor
plan, construction schedule of all inclusionary units;
c. Preliminary calculation of in-lieu fees or commercial linkage fee as
applicable;
d. Other information which the Director determines necessary to adequately
evaluate the proposal.
17.138.080– Procedures
A. Fractional Numbers. In determining the number of dwellings that are required to be
built pursuant to Section 17.138.040.B fractional units shall be rounded up to the next
higher whole number unit. If a project contains 10 units or less and the number of
required inclusionary dwellings results in a fractional unit, an applicant may pay the
in-lieu fee for the fractional unit or provide one Moderate affordable unit in the project.
For example, a residential project proposes to construct six (6) dwelling units for rent.
Per Section 17.138.040, the project would have an inclusionary housing requirement
of 0.36. The applicant may pay an in-lieu fee for the fractional amount or deed restrict
one of the six (6) dwelling units for Moderate-income households.
B. Affordable Housing Agreement. The applicant shall complete and sign an
Affordable Housing Agreement.
1. Submittal of an Affordable Housing Agreement. Applicants of residential
development projects subject to this Chapter shall submit an affordable housing
agreement on forms provided by the City and pay a processing and recordation
fee.
2. Timing. All building permits for inclusionary units in a residential development
project shall be issued concurrently with, or prior to, issuance of building permits
for the market rate units.
3. Construction Schedule. The inclusionary units shall be constructed
concurrently with, or prior to, construction of the market rate units, unless
otherwise stipulated by the applicable Review Authority of the residential
development project. Occupancy permits and final inspections for inclusionary
units in a residential development shall be approved concurrently with, or prior
to, approval of occupancy permits and final inspections for the market rate units.
4. Review and Approval. The draft agreement shall be reviewed by the Director
and City Attorney for compliance with project approvals, City policies and
standards, and applicable codes. Following approval and signing of the
agreement by the parties, the final agreement shall be recorded, and relevant
terms and conditions shall be recorded as a deed restriction on those lots or
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affordable units subject to affordability requirements. The affordable housing
agreement shall be binding to all future owners and successors in interest.
5. Term. The affordable housing agreement shall ensure that affordability is
maintained for the longest period allowed or required by State law, but not less
than 45 years for ownership and 55 years for rental.
6. Exemption for In-Lieu Fee Payment. An affordable housing agreement shall
not be required for projects which meet their inclusionary housing requirement
through the payment of in-lieu fees.
17.138.090 – Eligibility Requirements
A. Program Requirement. Only households qualifying as extremely low-, very low-, low-
or moderate income, pursuant to the affordable housing standards, shall be eligible
to rent, purchase, or occupy inclusionary units developed or funded in compliance
with this requirement. For-sale inclusionary housing units shall be owner-occupied
for the term of the affordable housing agreement.
B. Eligibility Screening. The City or an Administrator designated by the City shall
screen prospective renters or buyers of affordable units. Buyers of affordable units
shall enter into an agreement with the City. Occupants must be selected by means
of an open, public process which ensures that individuals of a group of interested
participants are selected in accordance with the City’s BMR Ownership and Rental
Housing Guidelines. Private selection of individuals by project owners is not
permitted for any affordable units.
17.138.100 – Shared Equity Purchase Program
When a residential development project includes affordable housing units for sale in
excess of the inclusionary housing requirement for the project, the additional units may
be offered under the Shared Equity Purchase Program.
A. Under this program, the qualified buyer of a designated affordable dwelling unit
shall enter into a shared equity agreement with the City. Said agreement shall be
recorded as a lien against the purchased property, at no interest, securing and
stating the City’s equity share in the property. The City’s equity share shall be
calculated by the Director, and shall be the decimal percentage of the property’s
value resulting from:
1. The difference between the property’s market value and the actual price paid
by the homeowner, divided by the market value; and/or, when applicable
2. The amount of subsidy provided by the City to the homeowner to purchase
the property, divided by the
property’s market value.
B. Upon sale, the City’s equity share shall be repaid to the City from the proceeds
of the sale, less the City’s percentage share of title insurance, escrow fees, and
documentary transfer taxes, at the close of escrow. The proceeds from the sale
shall be deposited into the City’s Affordable Housing Fund and shall be used for
the purposes set forth in Health and Safety Code § 33334.2(e).
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C. In the event of “early resale,” owners of properties subject to the Shared Equity
Purchase Program shall either: (1) pay an equity recapture fee to the City as
described in the schedule below, in addition to the City’s equity share, or (2) sell the
property to another eligible household. If the owner chooses to pay the equity
recapture fee, the recapture fee shall be paid to the City upon resale at close of
escrow, based on the following schedule:
Table 8-1: Percent of Equity Build-up
Recaptured Year % of Equity Build-up
Recaptured 0 – 3 100%
4 75% + City’s Equity Share
5 50% + City’s Equity Share
6 25% + City’s Equity Share
7 and after 0% + City’s Equity Share
The recapture amount shall be determined prior to the calculation of escrow closing
costs.
17.138.110 –Administration, Management, and Monitoring
Inclusionary rental and owner units shall be managed and operated by the property
owner, or the owner’s agent, for the term of the affordable housing agreement. Sufficient
documentation shall be submitted to ensure compliance with this Chapter, to the
satisfaction of the Director.
A. Duties of Program Administrator. The City may either handle in-house or contract
for administration of the BMR Ownership Housing Program and monitoring
compliance with the requirements of this Chapter to a program Administrator
pursuant to an agreement executed between the City and the Administrator in
accordance with the approved fee schedule. At a minimum, the Administrator shall
perform the following services:
1. Maintain and administer the City’s BMR Ownership and Rental Housing
Guidelines and Affordable Housing Standards.
2. Screen and select qualified buyers and renters according to the City’s
Ownership and Rental Housing Guidelines and Affordable Housing Standards
and maintain qualified owner and renter eligibility list;
3. Maintain a list of eligible mortgage lenders for financing the purchase of
inclusionary units in accordance with the BMR Ownership Housing Guidelines;
4. Market new and vacant BMR for-sale and rental units within the City’s affordable
housing inventory.
5. Monitoring compliance with terms and conditions of the occupancy and sale
restrictions.
Page 612 of 753
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17.138.120 – Enforcement
A. Enforcement. No building permit shall be issued, nor shall any other development
entitlement be granted for a residential development project subject to this Chapter
that does not meet these requirements. No inclusionary unit shall be rented or sold
except in accordance with these requirements and the affordable housing standards.
INTRODUCED on the ___ day of _________, 2022, AND FINALLY ADOPTED by
the Council of the City of San Luis Obispo on the ___ day of ________, 2022, on the
following vote:
AYES:
NOES:
ABSENT:
__________________________
Mayor Erica A. Stewart
ATTEST:
_________________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
__________________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
__________________________
Teresa Purrington,
City Clerk
Page 613 of 753
Page 614 of 753
O _____
ORDINANCE NO. _____ (2022 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AMENDING AMEND TITLE 4 OF THE CITY
OF SAN LUIS OBISPO MUNICIPAL CODE TO ADD CHAPTER 4.60
TO ESTABLISH A COMMERCIAL LINKAGE FEE WITH AN
EXEMPTION FROM ENVIRONMENTAL REVIEW (CEQA)
WHEREAS, the City of San Luis Obispo (“City”) aims to provide sufficient levels
of affordable housing for its residents; and
WHEREAS, development of new commercial projects encourages new residents
to move to the City, and some of the employees needed to meet the needs of new
commercial development earn incomes only adequate to pay for affordable housing; and
WHEREAS, because there is a need for additional affordable housing within the
City, these employees might otherwise be forced to live in less-than-adequate housing
within the City, pay a disproportionate share of their incomes to live in adequate housing
within the City, or commute ever-increasing distances to their jobs from housing located
outside of the City, thereby harming the City’s ability to attain goals articulated in the City’s
General Plan; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a web-
based public hearing via teleconference on November 17, 2020, for the purpose of final
adoption of the sixth cycle update to the General Plan Housing Element that included
Program 2.13, which provides, “Update the Inclusionary Housing Ordinance, including
Table 2A, based on findings and recommendations in the 2020 Affordable Housing Nexus
Study and conduct further feasibility analysis in order to evaluate the City’s ability to
provide affordable housing in the proportions shown in the Regional Housing Needs
Allocation, per Policy 2.4”; and
WHEREAS, on April 21, 2020, City Council reviewed a Nexus Study prepared by
David Paul Rosen and Associates (DRA) which confirmed that both market-rate
residential and commercial development are creating demand for affordable housing that
is not being met by the current housing market; and
WHEREAS, pursuant to Government Code Section 66001, the Nexus Study
establishes that there is a reasonable relationship between the commercial linkage fees
and the commercial development on which it is imposed and between the need for
affordable housing and the commercial development projects against which the fee is
charged; and
WHEREAS, in April 2021, the City hired Economic & Planning Systems, Inc.
(EPS) to conduct a feasibility analysis of the City’s inclusionary housing requirements
based on the findings and recommendations included in the Nexus Study; and
Page 615 of 753
Ordinance No. ______ (Series 2022) Page 2
O _____
WHEREAS, the City may adopt and impose commercial linkage fees to mitigate
the impact of commercial development projects on available affordable housing in the
City under the authority of Sections 66000 et seq. of the California Government Code
(“Mitigation Fee Act”); and
WHEREAS, the commercial linkage fees will be placed in the City’s Affordable
Housing Fund and the fees will be used solely to increase the supply of housing
affordable to extremely low, very low, low, and moderate-income residents; and
WHEREAS, the State of California Office of Housing and Community
Development, on September 3, 2021, certified the City of San Luis Obispo’s 6 th Cycle
General Plan Housing Element as in full compliance with State Law; and
WHEREAS, A Study Session was held by City Council on March 1, 2022, to review
staff’s recommended amendments to Chapter 17.138, that were derived from the Nexus
Study and the EPS financial analysis; and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public
hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California on July 19, 2022, for the purpose of introducing an ordinance to implement
commercial linkage fees; and
WHEREAS, notices of said public hearing were made at the time and in the
manner required by law.
WHEREAS, the City Council has duly considered all evidence, including the
testimony of the applicant, interested parties, and the evaluation and recommendations
by staff.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Findings. Based upon all the evidence, the City Council makes the
following finding:
1. All recitals are true and correct and are incorporated herein by reference.
2. The proposed amendments to Title 4 are also consistent with the 6th Cycle
Housing Element and implements program 2.13.
Page 616 of 753
Ordinance No. ______ (Series 2022) Page 3
O _____
SECTION 2. Environmental Determination. The proposed amendments to the
Municipal Code Title have been assessed in accordance with the authority and criteria
contained in the California Environmental Quality Act (CEQA), the state CEQA
Guidelines, and the environmental regulations of the City. Specifically, approval of fees
and/or charges is not a “project” for the purposes of CEQA, pursuant to CEQA Guidelines,
Section 15378(b)(4); and even if considered a “project” under CEQA, would be exempt
from CEQA review pursuant to CEQA Guidelines Section 15061(b)(3), the “Common
Sense” exemption, because the proposed ordinance will have no possibility of a
significant effect on the environment and will not cause impacts.
SECTION 3. Action. The City Council hereby adds Chapter 4.60, entitled
“Commercial Linkage Fees”, to the San Luis Obispo Municipal Code as set forth and
incorporated herein.
Chapter 4.60: Commercial Linkage Fees
Sections:
4.60.010 – Purpose.
4.60-020 – Definitions.
4.60.030 – Fees to be set by resolution.
4.60.040 – Payment of fees.
4.60.050 – Exemptions.
4.60.060 – Disposition and use of fees.
5.60.070 - Enforcement
4.60.010 – Purpose
A. Encourage the development and availability of housing affordable to a broad range
of households with varying income levels within the city as mandated by State law,
California Government Code Section 65580 and following.
B. Offset the demand for affordable housing that is created by new development and
mitigate environmental and other impacts that accompany new commercial
development by protecting the economic diversity of the City’s housing stock;
reducing traffic, transit and related air quality impacts by allowing more residents to
live near their workplace; promoting jobs/housing balance; and reducing the
demands placed on transportation infrastructure in the region.
C. Promote the City’s policy to provide an adequate number of affordable housing units
to the City’s housing stock in proportion to the existing or projected need in the
community, as identified by the Housing Element.
D. Support the Housing Element goal of assisting in the development of new housing
that is affordable at all income levels and the policies and actions that support this
goal.
E. Encourage the production of the very low, low, and moderate income units planned
for in the Housing Element of the General Plan.
Page 617 of 753
Ordinance No. ______ (Series 2022) Page 4
O _____
4.60.020 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the
meaning set forth below.
A. “Administrator” means Below Market Rate Program Administrator which may either
be the City itself or a third party administrator acting as an agent for the City in
connection with all aspects of the operation of the City's Below Market Rate program
pursuant to an Agreement entered into between the City and the Administrator, as
such agreement may be amended or replaced from time to time.
B. “Affordable housing agreement” means a written agreement between a builder and
the City as provided by Section 17.138.080.B.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit
is below the cost of what a current market rate unit would be and is affordable to
extremely low-, very low-, low-, or moderate-income households.
D. “Commercial development project” shall mean development projects which result in
the subdivision of land and/or the construction or conversion of structures for the
purpose of conducting business, including but not limited to hotels, retail sales,
restaurants, offices, gas stations, research and development uses and
manufacturing.
E. “Commercial linkage fee” means the fee paid by applicant of commercial
development projects to mitigate the impacts that such developments have on the
demand for affordable housing in the City.
F. “First approval” means the first discretionary approval to occur with respect to a
commercial development project or, for commercial projects not requiring a
discretionary approval, the issuance of a building permit.
G. “Inclusionary housing plan” means a plan for a residential development project
submitted by an applicant as provided by Section 17.138.070.
H. “Planning permit” means any discretionary approval of a residential or mixed use
project, including but not limited to a comprehensive or specific plan adoption or
amendment, rezoning, tentative map, parcel map, conditional use permit, variances,
or architectural review.
4.60.030 – Fees to be Set by Resolution
The amount of commercial linkage fee imposed on applicants of commercial development
projects shall be determined by resolution adopted by the City Council and may be
adjusted annually by the percentage change in the Consumer Price Index for all Urban
Consumers (CPI-U). Commercial linkage fees shall not exceed the cost of mitigating the
impact of the commercial development projects on the availability of affordable housing
in the city.
Page 618 of 753
Ordinance No. ______ (Series 2022) Page 5
O _____
4.60.040 – Payment of Fees
A. A commercial linkage shall be applied to commercial development projects involving
new construction and additional gross square footage to existing commercial
buildings. If a development is exempt from the fee at initial construction, but later
converts to a commercial development project, the converted square footage will be
subject to the fee.
B. Any commercial linkage fee shall be paid in full prior to the issuance of the first
building permit for the commercial development project subject to the fee or at a time
otherwise specified by Council Resolution. If no building permit is required, the fee
shall be paid before a conversion of use may take place. The fee shall be calculated
based on the fee schedule in effect at the time the building permit is issued as
adopted by the City Council.
4.60.050 – Exemptions
A. The following commercial projects are exempt from the provisions of this chapter.
1. City buildings and facilities and those public facilities entitled to an exemption
under state law.
2. Schools, places of public assembly, cultural institutions, childcare facilities,
nursing homes, residential care facilities, and skilled nursing facilities.
3. Projects which replace or restore a structure damaged or destroyed by fire, flood,
earthquake, or other disaster within three years prior to the application for the new
structure(s) (see Chapter 17.92 Nonconforming Structure).
4.60.060 – Disposition and Use of Fees
Commercial linkage fees collected shall be deposited into the Affordable Housing Fund.
The fund shall be administered by the Finance Director and shall be used exclusively to
provide funding for the provision of affordable housing and for reasonable costs
associated with the development of affordable housing, at the discretion of the Council.
4.60.070 – Enforcement
A. Payment of the commercial linkage fee is the obligation of the builder of a commercial
development project. The City may institute any appropriate legal actions or
proceedings necessary to ensure compliance herewith, including, but not limited to,
actions to revoke, deny, or suspend any permit or development approval.
B. The City Attorney and Community Development Director shall be authorized to
enforce the provisions of this chapter and all affordable housing agreements,
regulatory agreements, by civil action and any other proceeding or method permitted
by law.
Page 619 of 753
Ordinance No. ______ (Series 2022) Page 6
O _____
C. Failure of any official or agency to fulfill the requirements of this chapter shall not
excuse any builder or owner from the requirements of this chapter. No permit,
license, map, or other approval or entitlement for a commercial development project
shall be issued, including without limitation a final inspection or certificate of
occupancy, until all applicable requirements of this chapter have been satisfied.
D. The remedies provided for in this chapter shall be cumulative and not exclusive and
shall not preclude the City from any other remedy or relieve to which it otherwise
would be entitled under law or equity.
INTRODUCED on the ___ day of _________, 2022, AND FINALLY ADOPTED
by the Council of the City of San Luis Obispo on the ___ day of ________, 2022, on the
following vote:
AYES:
NOES:
ABSENT:
__________________________
Mayor Erica A. Stewart
ATTEST:
_________________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
__________________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
__________________________
Teresa Purrington,
City Clerk
Page 620 of 753
R _____
RESOLUTION NO. _____ (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN LUIS OBISPO, CALIFORNIA, AMENDING INCLUSIONARY
HOUSING IN-LIEU FEES IN ACCORDANCE WITH CHAPTER 17.138 OF
TITLE 17 AND ESTABLISHING THE AMOUNTS OF COMMERCIAL
LINKAGE FEES IN ACCORDANCE WITH CHAPTER 4.60 OF TITLE 4 OF
THE SAN LUIS OBISPO MUNICIPAL CODE AND AMENDING THE
COMPREHENSIVE FEE SCHEDULE
WHEREAS, the State of California has found that local governments have a
responsibility to use the powers vested in them to facilitate the development of housing
and to make adequate provision for the housing needs of all economic segments of the
community (Government Code Section 65580(d); and
WHEREAS, on August 16, 2022, the City Council of the City of San Luis Obispo
adopted an ordinance amending inclusionary housing requirements, including
inclusionary housing in-lieu fees, as codified in Chapter 17.138 of Title 17 of the San Luis
Obispo Municipal Code (“Inclusionary Housing Ordinance”); and
WHEREAS, on August 16, 2022, the City Council of the City of San Luis Obispo
adopted an ordinance establishing a Commercial Linkage Fee on Non-Residential
development as codified in Chapter 4.60 of Title 4 of the San Luis Obispo Municipal Code
(the “Commercial Linkage Ordinance)”; and
WHEREAS, the purpose and findings supporting the adoption of the Inclusionary
Housing In-Lieu Fee are set forth in the Inclusionary Housing Ordinance; and
WHEREAS, the purpose and findings supporting the adoption of the Commercial
Linkage Fee are set forth in Commercial Linkage Fee Ordinance; and
WHEREAS, the Council desires to establish herein the amount of the Inclusionary
Housing In-Lieu Fees for residential development and Commercial Linkage Fees for
specified non-residential land uses in the City; and
WHEREAS, the Comprehensive Fee Schedule will be updated to reflect all new
and updated fees; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Luis
Obispo as follows:
SECTION 1. Recitals. The recitals set forth above are hereby adopted as the
findings of the City in adopting the policies herein.
Page 621 of 753
Resolution No._______ (2022 Series) Page 2
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SECTION 2. Environmental Determination. Amending the inclusionary in-lieu
housing fee and establishment of a commercial linkage fee is not considered a project
subject to the California Environmental Quality Act (“CEQA”) pursuant to Section
15378(b)(4) of the CEQA Guidelines, which excludes the following from the definition of
projects: the creation of a government funding mechanism or other government fiscal
activities which do not involve any commitment to a specific project which may result in
a potentially significant physical impact on the environment.
SECTION 3. Inclusionary Housing In-Lieu Fee. Applicants opting to pay an
inclusionary housing in-lieu fee in accordance with Chapter 17.138 of the San Luis
Obispo Municipal Code shall pay the fee based on the habitable square footage of space
within the residential development project as follows:
Residential unit type Fee per square foot
New for-sale housing $25.00
New rental housing $20.00
SECTION 4. Commercial Linkage Fee. The Commercial Linkage Fees adopted
in Chapter 4.60 of the City of San Luis Obispo Municipal Code are hereby established in
the following amounts and shall be computed as follows:
All Commercial Development Projects and all Non- Residential portions of a project
subject to Chapter 4.60 shall pay the commercial linkage fee based on the gross
square footage of each use included in the proposed project as follows:
Non-Residential Use Fee per square foot
Office, Service, Retail, Hotel $6.00
Industrial, Manufacturing $5.00
Page 622 of 753
Resolution No._______ (2022 Series) Page 3
R _____
SECTION 5. Effective Date. This Resolution shall take effect upon the effective
date of both the Inclusionary Housing Ordinance and the Commercial Linkage Fee
Ordinance.
Upon motion of _______________________, seconded by
_______________________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2022.
__________________________
Mayor Erica A, Stewart
ATTEST:
___________________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
____________________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on _______________________.
__________________________
Teresa Purrington,
City Clerk
Page 623 of 753
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Title 17 – ZONING REGULATIONS
DRAFT
Chapter 17.138: Inclusionary Housing Requirements
Sections:
17.138.010 – Purpose
17.138.020 – Applicability and Exclusions
17.138.030 – Definitions
17.138.040 – General StandardsInclusionary Housing Requirements
17.138.050 – ProceduresStandards for Inclusionary Units
17.138.060 – In-Lieu Housing Fee
17.138.070 – AffordableInclusionary Housing Fund EstablishedProposal
17.138.080 – Real Property DedicationProcedures
17.138.090 – IncentivesEligibility Requirements
17.138.100 – Project Application
17.138.110 – Required Agreements
17.138.120 – Program Requirements
17.138.130 – Eligibility Screening
17.138.140 – Affordability Restrictions
17.138.150 – Shared Equity Purchase Program 17.138.160 – Early Resale of Shared Equity Properties
17.138.170 –17.138.110 – Administration, Management, and Monitoring
17.138.180120 – Enforcement and Appeals
17.138.190 – Severability
17.138.010 – Purpose
The purpose and intent of this Chapter are: 1) to promote the public welfare by increasing the production and availability
of affordable rental housing units; 2) to establish an inclusionary housing requirement which implements General Plan
policies guiding land use and housing development; and 3) to ensure that affordable housing units established pursuant
to the provisions of this Chapter are located in a manner that provides for their integration with market rate units.
17.138.020 – Applicability and Exclusions
A. This Chapter shall apply to development all residential development except projects consisting of five or more
residential lots or new dwelling units, and to commercial development projects consisting of 2,500 square feet or
more of gross floor area.
Tthe following types of residential development projects are excludedexempt:
1. Residential developments of four units or less;
2. New commercial developments of less than 2,500 square feet of gross floor area;
3.1. Residential and commercial building additions, repairs, or remodels, provided that such work does not
increase the number of existing dwellings by four or more units or result in an increase in commercial gross
floor area of 2,500 square feet or more;
2. The addition or inclusion of Accessory Dwelling Units associated with an existing or proposed residential or
mixed-use development;
4. The conversion of less than five dwelling units to condominiums within any five-year period;
5.3. Commercial condominium conversions which do not result in the creation of new dwellings;
6.4. Affordable housing projects in which 100 percent of the dwellings to be built will be sold or rented in
conformance with the City’s aAffordable hHousing sStandards (excluding any on-site manager unit);
5. Housing projects that include a density bonus.
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DRAFT
7.6. Emergency projects or projects which the Council determines are necessary to protect public health and
safety;
8.7. Development projects which the Director determines are essentially noncommercial or nonresidential in
nature, which provide educational, social, or related services to the community and which are proposed by
public agencies, nonprofit agencies, foundations, and other similar organizations;
9.8. Projects which replace or restore a structure damaged or destroyed by fire, flood, earthquake, or other disaster
within three years prior to the application for the new structure(s) (see Chapter 17.92 Nonconforming
Structure);
10. Projects for which an approved tentative map or vesting tentative map exists, or for which a construction
permit was issued prior to the effective date of the ordinance codified in this Chapter and the permittee has
performed substantial work and incurred substantial liabilities and which continue to have unexpired permits.
17.138.030 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the meaning set forth below. For all
other definitions, the provisions of Article 9 (Definitions) of this Title shall apply.
A. “Administrator” means Below Market Rate Program Administrator which may either be the City itself or a third-
party administrator acting as an agent for the City in connection with all aspects of the operation of the City's Below
Market Rate program pursuant to an Agreement entered into between the City and the Administrator, as such
agreement may be amended or replaced from time to time.
A.B. “Affordable” means housing which can be purchased or rented by a household with very low-, low-, or moderate-
income, as described in the City’s affordable housing standards.
B. “Building valuation” shall mean the total value of all construction work for which a construction permit is required,
as determined by the Chief Building Official using the Uniform Building Code.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit is below the cost of what a
current market rate unit would be and is affordable to extremely low-, very low-, low-, or moderate-income
households.
D. “Borrower” shall be defined as one who meets the eligibility requirements for purchasing an inclusionary affordable
unit.
E. “Commercial Linkage Fee” means the fee paid by the applicant of commercial development projects to mitigate
the impacts that such developments have on the demand for affordable housing in the City (see Municipal Code
Chapter 4.60).
C.F. “Density bonus” means a density increase over the maximum density otherwise allowable under the Zoning
Regulations, Chapter 17.140.
D. “Development project” shall mean an activity for which a subdivision map or constructionbuilding permit is
required, including new buildings and building additions or remodels, but not including changes in ownership,
occupancy, management, or use.
E. “Expansion area” means a land area proposed for annexation to the City or annexed after the adoption date of the
ordinance codified in this Chapter.
F. “Housing Authority” refers to the Housing of Authority of San Luis Obispo (HASLO).
G. “Early resale” shall mean the sale, lease, or transfer of property within seven years of the initial close of escrow
for Equity Share Inclusionary Units.
H. “Equity Share” shall mean the shared equity of appreciation between the City and the Borrower on inclusionary
units when agreements specifically allow for affordable units to be sold at market-rate after a 7-year period.
I. “Fee Schedule” means fees that for-sale and for-rent units are subject to and are paid to either the City or the
Administrator for associated costs related to but not limited to eligibility screening, income verification, marketing
Page 626 of 753
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DRAFT
of affordable units, and the close of escrow or completion of new lease agreements for affordable units.
G.J. “Inclusionary housing unit” means a dwelling which is builtunit required under the provisions of this Chapter, and
which meets the City’s affordable housing standards.
H.K. “Low-” or “lower-income households” shall have the meaning set forth in Health and Safety Code Section 50079.5;
provided the income of such persons and families shall not exceed 80 percent of the median income within the
CountyCity as published and periodically updated by the State Department of Housing and Community
Development.
I.L. “Market valuerate” shall mean the highest price a willing buyer would pay and a willing seller would accept, both
being fully informed and in an open market, as determined by an appraiser or other qualified professional.
fully informed and in an open market, as determined by an appraiser.
J.M. “Moderate-income households” shall include those have the meaning set forth in Health and Safety Code Section
50079.5; provided the income of such persons and families whose incomes exceed 80 percent but are less than
or equal to 120 percent of the median income within the CountyCity as published and periodically updated by the
State Department of Housing and Community Development.
K. “Real property” shall mean land and improvements, if any, including anything permanently affixed to the land,
such as buildings, walls, fences, and paved areas.
N. “Non-residentia Commercial developmentl project” shall mean development projects which result in the
construction or conversion of structures for the purpose of conducting business, including but not limited to retail
sales, restaurants, offices, gas stations, manufacturing, etc.
L.O. “Residential development project” shall mean development projects which result in the subdivision of land and/or
the construction or conversion of dwellingsstructures, including, but not limited to, single-unit attached or
detached homes, apartments, condominiums, live/work studiosunits, mixed-use, mobile homes, transitional
housing or supportive housing, and group housing.
M.P. “Very low-income” shall have the meaning set forth in Health and Safety Code Section 50105, defined as
“50079.5; provided the income of such persons and families whose incomes doshall not exceed the qualifying
limits for very low-income families as established and amended from time to time in compliance with Section 850
percent of the United States Housing Act of 1937, and median income within the City as published in the California
Administrative Code.”and periodically updated by the State Department of Housing and Community Development.
17.138.040 – General StandardsInclusionary Housing Requirements
A. Methods of Meeting Requirements. New development projects shall satisfy the inclusionary housing
requirements, as specified in Tables 2 and 2A of the General Plan Housing Element (also included below) which
require that all nonexempt development projects shall contribute toward the production of affordable housing by
constructing at least one affordable dwelling unit or paying an in-lieu fee. To meet the requirements, the
developer shall comply with one or more of the following methods:
A. 1. General Requirements. All non-exempt residential development projects shall include inclusionary units as
required by this sectionchapter. If the calculated number of units results in a fraction, the number shall be rounded
as described in Section 17.138.080(A).: Fractional Numbers, unless otherwise specified.
1. Construct the required number of affordable dwelling units, as specified in Table 2 of the Housing Element,
as adjusted by Table 2A of the Housing Element; orinclusionary units for Residential or Mixed-Use projects; 2. Pay an in-lieu fee as described in Table 2, as adjusted by Table 2A. For development projects in which the
adjustment factor under Table 2A equals zero (“0”), the minimum adjustment factor shall be 0.25 (resulting in a
minimum in-lieu fee of 1.25 percent of the building valuation for development projects and commercial
developments in expansion areas, and 3.75 percent of building valuation for residential developments in
expansion areas); or
3. Dedicate real property for affordable housing; or
4. Provide for the rehabilitation of existing housing units that are vacant and in poor physical condition or are
Page 627 of 753
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Title 17 – ZONING REGULATIONS
DRAFT
otherwise uninhabitable; or
5. Use a combination of the above methods, to the approval of the Director.
Housing Element Table 2 – Inclusionary Housing Requirement
Type of Housing Development
Residential – Adjust Requirements per Table 2A below Commercial Location In City Limits Build 3% low5 or 5% moderate income Affordable
Dwelling Units (ADUs2), but not less than 1 ADU per
project; or3
pay in-lieu fee equal to 5% of building valuation.4
Build 2 ADUs per acre, but not less
than 1 ADU per project; or3
pay in-lieu fee equal to 5% of
building valuation In Expansion Area Build 5% low5 - and 10% moderate income ADUs, but
not less than 1 ADU per project;
or pay in-lieu fee equal to 15% of building valuation.
Build 2 ADUs per acre, but not less
than 1 ADU per project; or
pay in-lieu fee equal to 5% of
building valuation.
Notes:
1. Residential developments of four or less dwellings, and commercial developments of 2,500 gross square feet of floor area or less are
exempt from these requirements.
2. Affordable Dwelling Units must meet City affordability criteria listed in Goal 2.1 of the Housing Element.
3. Developer may build affordable housing in the required amounts, pay in-lieu fee based on the above formula, or dedicate real property,
or a combination of these, to City approval.
4. "Building valuation" shall mean the total value of all construction work for which a permit would be issued, as determined by the Chief
Building Official.
5. Low income includes the subsets of extremely low and very low-income categories.
Housing Element Table 2A – Inclusionary Housing Adjustment Factors
Project Density
(Density Units/Net Acre)1
Inclusionary Housing Requirement Adjustment Factor2
Average Unit Size (square feet)
Up to 1,100 1,101 – 1,500 1,501 – 2,000 2,001 – 2,500 2,501 – 3,000 >3,000
36 or more 0 0 0.75 1.0 1.25 1.5
24 – 35.99 0 0 0.75 1.0 1.25 1.5
12 – 23.99 0 0.25 1.0 1.25 1.5 1.75
7 – 11.99 0 0.5 1.0 1.25 1.5 1.75
<7 0 0.5 1.25 1.5 1.75 2.0
Notes:
1. Including allowed density bonus, where applicable.
2. Multiply the total base Inclusionary Housing Requirement (either housing or in-lieu percentage) by the adjustment factor to determine
requirement. At least one enforceably restricted affordable unit is required per development of five or more units.
B. Affordable Housing Standards. Affordable dwelling units constructed must meet City affordable housing standards
and must be consistent with affordability policies in the General Plan Housing Element.
C. Concurrent Development. The required inclusionary units shall be constructed concurrently with market value units
unless the developer and the Director agree within an affordable housing agreement to an alternative development
schedule.
17.138.050 – Procedures
A. Fractional Numbers. In determining the number of dwellings that are required to be built pursuant to Table 2,
fractional units shall be rounded up to the next higher whole number unit.
B. Determining Adjustment Factor Using Project Density and Average Unit Size. To determine the adjustment
factor in Table 2A, project density shall be calculated by dividing the total number of density units proposed (including
density bonus where applicable) by the development project site’s net area. Average floor area shall be calculated
by dividing the total gross floor area of all dwellings (excluding garages) within the development project by the total
number of dwellings. Dedicated open space shall not be included in a site’s net area.
2. Pay an in-lieu fee for Residential or Mixed-Use projects; or
3. Pay a commercial linkage fee (see Municipal Code Chapter 4.6056: Development Impact Fees) for new Non-
Residential or Non-Residential portions of Mixed-Use project(s).
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B. Residential Requirements
1. Ownership Dwelling Units. Ten (10) percent of the dwelling units (see Section 17.138.080.A: Fractional
Numbers) shall be made available for sale to eligible households with five (5) percent for low-income
households (fractional units may be rounded down to the next whole number) and five (5) percent for
moderate-income households (fractional units may be rounded up to the next whole number). See Section
17.138.080.A (Fractional Numbers) for more information regarding fractional numbers.
2. Rental Dwelling Units. Six (6) percent of the dwelling units (see Section 17.138.080.A: Fractional Numbers)
shall be made available for rent to eligible households with three (3) percent for very low-income households
(fractional units may be rounded down to the next whole number) and three (3) percent for low-income
households (fractional units may be rounded up to the next whole number).
3. In-Lieu Housing Fees. An applicant may pay in-lieu fees to the City rather than construct inclusionary units
on site for residential projects (see Section 17.138.060: In-Lieu Housing Fee).
C. Non-Residential Requirements
1. Commercial, Office, Service, Hotel, Retail, Industrial, and Institutional Uses. An applicant shall pay a
commercial linkage fee based on the gross square footage of the non-residential space within the
development project that result in an increase in gross floor area of 2,500 square feet in accordance with
Municipal Code Chapter 4.60.
D. C. Mixed-Use Development Projects Requirements
1. Dwelling Units & CommercialNon-Residential Space. For mixed-use development projects with five or
more dwellingsor 2,500 square feet or more of new non-residential square footage, the inclusionary housing
requirement is determined by: (1) using Table 2 to calculate the base inclusionary requirement for the
commercial use, and (2) using Table 2A to adjust the base requirement based on project density and average
unit size, as described inin accordance with subsection (B) of this Section.B of this Section for all dwelling
units in addition to subsection C of this Section for all new commercial square footage within the development
project. For example, a for-rent mixed-use project includes twenty (20) residential units and 5,000 square feet
of commercial space: the inclusionary requirement would be two (2) affordable units (20 x 6% = 1.2 rounded
to 2) and a commercial linkage fee would be applied to the 5,000 square feet of commercial spacetimes the
commercial linkage fee.
17.138.050 – Standards for Inclusionary Units
A. Standards. Inclusionary units must meet the following standards:
1. Inclusionary units shall be dispersed throughout the residential or mixed-use development projects to prevent
a concentration of affordable units within the development project.
2. Inclusionary units shall be consistent with the design of market rate units in terms of exterior appearance,
materials, and finished quality.
3. The applicant may reduce square footage of inclusionary units as compared to the market rate units as long
as the minimum square footage of the affordable units are no less than seventy-five percent of the average
size of all market rate units in the residential development project with the same bedroom count. For the
purpose of this subsection, the “average size” of a unit with a certain bedroom count equals the total square
footage of all market rate units with that bedroom count in the residential development project divided by the
total number of market rate units with the same bedroom count in the residential development project.
4. For residential development projects with multiple market rate unit types containing differing numbers of
bedrooms, inclusionary units shall be representative of the market rate unit mix. For example, a for sale,
residential project includes fifty (50) dwelling units; ten (10) three-bedroom units, twenty (20) two-bedroom
units, and twenty (20) one-bedroom units. To represent the units within the residential project, the five (5)
required inclusionary units would be one (1) three-bedroom, two (2) two-bedrooms and two (2) one-bedrooms.
5. The required inclusionary units shall be constructed concurrently with market rate units, unless an alternative
development schedule is otherwise stipulated by the applicable Review Authority of the residential
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development project.
6. Inclusionary units shall be subject to the City’s and/or the Administrator’s Fee Schedule in accordance with
Section 17.138.110.
D. Timing. The inclusionary housing requirement shall be met prior to issuance of a certificate of occupancy for the first
unit in a building, or the first building in a complex to be constructed or remodeled; or for subdivisions, prior to Final
Map approval; or prior to building permit issuance, for projects for which a certificate of occupancy is not issued; or
as otherwise agreed to by the Director as part of tentative map, rezoning, Minor Use Permit, Conditional Use Permit,
or other development approval.
E. Affordable Housing Agreement. To meet the requirement, the developer may enter into an agreement with the
City, the Housing Authority of San Luis Obispo (HASLO), nonprofit housing provider, or other qualified housing
provider approved by the Director to construct, refurbish, convert, operate, and maintain the required affordable
housing. Such affordable housing agreements shall be to the approval of the Director and shall be in a form approved
by the City Attorney.
17.138.060 – In-Lieu Housing Fee
A. A. Payment of In-Lieu Fee. The developer may, at his or hertheir discretion, choose to pay a fee, as established
by a resolution of the City Council, to the City in lieu of constructing affordable dwellingsunits to meet thistheir
inclusionary housing requirement. B. Amount and Method of Payment. The dollar amount and method of payment of the in-lieu fee shall be as described
in Table 2 of Appendix N of the General Plan Housing Element, and where applicable, as adjusted by Table 2A in
Appendix N of the General Plan Housing Element, to the approval of the Director. For subdivisions in which the
construction valuation is not known, the Director shall estimate the average construction valuation based on lot area,
land value, and applicable City development standards. The developer shall use the estimated average construction
valuation to determine the amount of in-lieu fees.
B. C. In-Lieu Fee Calculation. In-lieu fees shall be calculated using the total square footage of new, habitable
square footage, as defined by California Building Code, included within the residential development project. In-lieu
fees shall be calculated using the new, habitable square footage, as defined by California Building Code, included
within the residential development project. In-lieu fees for Final Maps or Parcel Maps which are subject to
Inclusionary Housing Requirements, Timing. In-lieu fees shall be paid prior to release of occupancy of the first dwelling within a residential development; or for residential subdivisions to be built out by others, prior to final subdivision map approval; or prior to occupancy for new commercial buildings or remodels; or prior to building permit issuance, for projects for which a certificate of occupancy is not issued; or as otherwise provided by written agreement between the developer and City, to the approval of the Director. For mixed-use developments, these regulations shall apply to whichever occupancy release is first issued.
B. 17.138.070 – Affordable Housing Fund Establi shed
C. The City hereby establishes an . All in-lieu fees collected shall be deposited into the Affordable Housing Fund. The
fund shall be administered by the Finance Director and shall be used exclusively to provide funding for the
provision of affordable housing and for reasonable costs associated with the development of affordable housing,
at the discretion of the Council. In-lieu fees collected shall be deposited into the Affordable Housing Fund, to the
satisfaction of the Director of Finance.
C.
D. Timing. In-lieu fees shall be paid prior to building permit issuance. For projects constructed in phases, in-lieu fees
shall be paid in the proportion that the phase bears to the overall project. release of occupancy of the first dwelling
within a residential development; or for residential subdivisions to be built out by others, prior to final subdivision
map approval; or prior to occupancy for new commercial buildings or remodels; or prior to building permit issuance,
for projects for which a certificate of occupancy is not issued; or as otherwise provided by written agreement
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between the developer and City, to the approval of the Director. For mixed-use developments, these regulations
shall apply to whichever occupancy release is first issued.17.138.080 – Real Property Dedication
A. Irrevocable Offer to Dedicate Real Property. At the discretion of the Council, an irrevocable offer to
dedicate real property equal or greater in value to the in-lieu fee which would otherwise be required may be offered to the City, or to an affordable housing provider designated by the City, instead of providing the required
number of affordable dwellings or paying in-lieu fees. The City shall have the option of negotiating with the applicant regarding dedications of properties with greater value that the in-lieu fee to achieve an equitable dedication. In considering an offer to dedicate real property, the Council must find that the dedication of real
property will provide equal or greater public benefit than constructing affordable units or paying in-lieu fees, based on the following criteria and additional criteria set forth in Government Code Section 65915(g)(2)(A-H): 1. Valuation of the land and/or improvements to be dedicated relative to other methods of meeting the
requirement;
2. Suitability of the land and/or improvements for housing, including General Plan conformity, size, shape,
topography, and location; and 3. Feasibility of developing affordable housing, including General Plan consistency, and availability of
infrastructure. B. Real Property Valuation. The valuation of real property offered in lieu shall be determined by the
Director, based upon an appraisal made by a qualified appraiser mutually agreed to by the developer and the City. Costs associated with the appraisal, title insurance and transfer, recordation, and related costs shall be borne by the developer. C. Agreement and Timing. The real property dedication shall be by deed or other instrument acceptable
to the City and shall be completed by recordation through of the Office of County Clerk-Recorder prior to occupancy release of the first residential unit or commercial building in the development; or prior to building
permit issuance, for projects for which a certificate of occupancy is not issued; or as otherwise provided by written agreement between the developer and the City. 17.138.090 – Incentives
A. Eligibility for Incentives. The developer may be eligible to receive or to request development incentives in
return for constructing affordable housing in connection with a development project, pursuant to Chapter 17.140
(Affordable Housing Incentives), as part of a City planning application. Incentives or other forms of financial assistance
may be offered by the City to the extent that resources are available for this purpose and to the degree that such
incentives or assistance will help achieve the City’s housing goals. B. Affordable Housing Agreement. Any incentives provided by the City, beyond those incentives to which a
developer may be automatically entitled to under Chapter 17.140 (Affordable Housing Incentives) shall require approval
by the appropriate review authority and shall be set out in an affordable housing agreement. The form and content of
such agreement shall be to the approval of the City Attorney and the Director. Developers are further encouraged to
utilize other local, State or Federal assistance, when available, to meet the affordable housing standards.
17.138.070 – Inclusionary Housing Plan
17.138.100 – Project Application
A. A. Method of Application. Requirements. An applicant/developer proposing a project for which
affordableinclusionary housing is required shall submit a statement with the standardtheir planning application,
or building permit (whichever applies), describing the project’s inclusionary housing proposalplan. The
developer’s statement shall include:
1. 1. A briefproject description of the proposalthat includes details regarding the proposed residential
development project such as, but not limited to total number of dwelling units, number of bedrooms per
dwelling unit, square footage of all units (both residential and commercial), type of project (rental or
ownership), etc.;
2. A description of the inclusionary housing plan for each construction phase, including the method chosen to
meet the inclusionary housing requirement; and including all of the following information including but not
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limited to:
a. Whether the unit is for sale or rental;
b. The number, type and location of affordable, unit type, tenure, number of bedrooms and baths, floor plan,
construction schedule of all inclusionary units; term of affordability; preliminary
a.c. Preliminary calculation of in-lieu fees; or offer of land dedication or commercial linkage fee as applicable; 2. How the proposal meets General Plan policies and inclusionary housing requirements;
3. Plans and other exhibits showing preliminary site layout, grading, building elevations, parking and other site
features, location of affordable dwelling units, and (where applicable) market value dwelling units;
4. Description of incentives requested, including exceptions from development standards, density bonuses, fee
waivers or other incentives; and
b.d. 5. Other information which the Director determines necessary to adequately evaluate the proposal,
including but not limited to the method proposed to award occupancy of the affordable units.
17.138.110080 – Required AgreementsProcedures
A. Fractional Numbers. In determining the number of dwellings that are required to be built pursuant to Section
17.138.040.B Table 2, fractional units shall be rounded up to the next higher whole number unit. If a project contains
10 units or less and the number of required inclusionary dwellings results in a fractional unit, an applicant may pay
the in-lieu fee for the fractional unit or provide one Moderate affordable unit in the project. For example, a residential
project proposes to construct six (6) dwelling units for rent. Per Section 17.138.040, the project would have an
inclusionary housing requirement of 0.36. The applicant may pay an in-lieu fee for the fractional amount or deed
restrict one of the six (6) dwelling units for Moderate-income households.
B. A. Affordable Housing Agreement. The applicant shall complete and sign an Affordable Housing Agreement.
1. Submittal of an Affordable Housing Agreement. Applicants and developers forof residential development
projects subject to this Chapter shall, as a condition of development approval, submit an affordable housing
agreement on forms provided by the City and pay a processing and recordation fee.
2. Timing. All building permits for inclusionary units in a residential development project shall be issued
concurrently with, or prior to, issuance of building permits for the market rate units, or final recordation of a
final or parcel map, whichever occurs first.
3. Construction Schedule. The inclusionary units shall be constructed concurrently with, or prior to,
construction of the market rate units, unless otherwise stipulated by the applicable Review Authority of the
residential development project. Occupancy permits and final inspections for inclusionary units in a residential
development shall be approved concurrently with, or prior to, approval of occupancy permits and final
inspections for the market rate units.
1.4. Review and Approval. The draft agreement shall be reviewed by the Director and City Attorney for
compliance with project approvals, City policies and standards, and applicable codes. Following approval
and signing of the agreement by the parties, the final agreement shall be recorded, and relevant terms
and conditions shall be recorded as a deed restriction on those lots or affordable units subject to affordability
requirements. The affordable housing agreement shall be binding to all future owners and successors in
interest.
5. B. Term. The affordable housing agreement shall ensure that affordability is maintained for the longest
period allowed or required by State law, but not less than 45 years for ownership and 55 years for rental.
2.6. Exemption for In-Lieu Fees Payment. An affordable housing agreement shall not be required for projects
which meet their inclusionary housing requirement through the payment of in-lieu fees.
17.138.120 – 090 – Eligibility Requirements
A. Program Requirement. Only households qualifying as extremely low-, very low-, low-, or moderate income, pursuant
to the affordable housing standards, shall be eligible to rent, purchase, or occupy inclusionary units developed or
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funded in compliance with this requirement. For-sale inclusionary housing units shall be owner-occupied for the
term of the affordable housing agreement.
17.138.130 –
B. Eligibility Screening. The Housing Authority City or other housing provideran Administrator designated by the
City shall screen prospective renters or buyers of affordable units. Renters or bBuyers of affordable units shall
enter into an agreement with the City. Occupants must be selected by means of an open, public process which
ensures that individuals of a group of interested participants have equal probability of selection.are selected in
accordance with the City’s BMR Ownership and Rental Housing Guidelines. Private selection of individuals by
project owners is not permitted for any affordable units.
17.138.140 – Affordability Restrictions
Developers of affordable units for sale shall specify the type of affordability restriction to be applied. The developer shall
choose to either: (1) participate in a shared equity purchase program, as described in Section 17.138.150, or (2) enter
into an affordable housing agreement to ensure that affordability is maintained for the longest period allowed or required
by State law.
17.138.15017.138.100 – Shared Equity Purchase Program
When a residential development project includes affordable housing units for sale in excess of the inclusionary housing
requirement for the project, the additional units may be offered under the Shared Equity Purchase Program.
A. Under this program, the qualified buyer of a designated affordable dwelling unit shall enter into a shared equity
agreement with the City. Said agreement shall be recorded as a lien against the purchased property, at no interest,
securing and stating the City’s equity share in the property. The City’s equity share shall be calculated by the
Director, and shall be the decimal percentage of the property’s value resulting from:
1. The difference between the property’s market value and the actual price paid by the homeowner, divided by
the market value; and/or, when applicable
2. The amount of subsidy provided by the City to the homeowner to purchase the property, divided by the
property’s market value.
B. Upon sale, the City’s equity share shall be repaid to the City from the proceeds of the sale, less the City’s
percentage share of title insurance, escrow fees, and documentary transfer taxes, at the close of escrow. The
proceeds from the sale shall be deposited into the City’s Affordable Housing Fund and shall be used for the
purposes set forth in Health and Safety Code § 33334.2(e). 17.138.160 – Early Resale of Shared Equity Properties
C. In the event of “early resale,” owners of properties subject to the shared equity purchase programShared Equity
Purchase Program shall either: (1) pay an equity recapture fee to the City as described in the schedule below, in
addition to the City’s equity share, or (2) sell the property to another eligible household. “Early resale” shall mean
the sale, lease, or transfer of property within seven years of the initial close of escrow. If the owner chooses to pay
the equity recapture fee, the recapture fee shall be paid to the City upon resale at close of escrow, based on the
following schedule:
Table 8-1: Percent of Equity Build-up Recaptured
Year % of Equity Build-up Recaptured
0 – 3 100%
4 75% + City’s Equity Share
5 50% + City’s Equity Share
6 25% + City’s Equity Share
7 and after 0% + City’s Equity Share
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The recapture amount shall be determined prior to the calculation of escrow closing costs.
17.138.170110 –Administration, Management, and Monitoring
Inclusionary rental and owner units shall be managed and operated by the property owner, or the owner’s agent, for
the term of the affordable housing agreement. Sufficient documentation shall be submitted to ensure compliance with
this Chapter, to the satisfaction of the Director.
A. Duties of Program Administrator. The City may either handle in-house or contract for administration of the BMR
Ownership Housing Program and monitoring compliance with the requirements of this Chapter to a program
Administrator pursuant to an agreement executed between the City and the Administrator in accordance with the
approved fee schedule. At a minimum, the Administrator shall perform the following services:
1. Maintain and administer the City’s BMR Ownership and Rental Housing Guidelines and Affordable Housing
Standards.
2. Screen and select qualified buyers and renters according to the City’s Ownership and Rental Housing
Guidelines and Affordable Housing Standards and maintain qualified owner and renter eligibility list;
3. Maintain a list of eligible mortgage lenders for financing the purchase of inclusionary units in accordance with
the BMR Ownership Housing Guidelines;
4. Market new and vacant BMR for-sale and rental units within the City’s affordable housing inventory.
5. Monitoring compliance with terms and conditions of the occupancy and sale restrictions;
17.138.180120 – Enforcement and Appeals
A. Enforcement. No final subdivision map shall be approved, nor building permit shall be issued, nor shall any
other development entitlement be granted for a residential development project whichsubject to this Chapter that
does not meet these requirements. No inclusionary unit shall be rented or sold except in accordance with these
requirements and the affordable housing standards.
B. Appeals. The Director shall administer and interpret these requirements, subject to applicable codes and City
procedures. Decisions of the Director are appealable, subject to the Zoning Regulations Chapter 17.126 (Appeals).
17.138.190 – Severability
If any provision of this Chapter or the application thereof to any person or circumstances is held invalid, the remainder
of the Chapter and the application of the provision to other persons or situations shall not be affected thereby.
Page 634 of 753
RESOLUTION NO. PC- 1061-2022
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF
SAN LUIS OBISPO, CALIFORNIA, RECOMMENDING THE CITY
COUNCIL INTRODUCE AND ADOPT AN ORDINANCE AMENDING
TITLE 17 (ZONING REGULATIONS) OF THE MUNICIPAL CODE,
REPEALLING AND REPLACING CHAPTER 17.138 (INCLUSIONARY
HOUSING REQUIREMENTS) FOR QUALIFYING DEVEOPMENT
PROJECTS WITH AN EXEMPTION FROM ENVIRONMENTAL REVIEW
(CEQA) AS REPRESENTED IN THE PLANNING COMMISSION
AGENDA REPORT AND ATTACHMENTS DATED JUNE 8, 2022
(CITYWIDE; CODE-0261-2022)
WHEREAS, on January 5,1999, The City adopted its first Inclusionary Housing
Ordinance contained in Ordinance No. 1346; and
WHEREAS, on June 13, 2007, and update was made to the Inclusionary
Housing Ordinance regarding resident selection process for inclusionary housing
contained in Ordinance No. 1508; and
WHEREAS, a Nexus Study was reviewed by Council on April 21, 2020 to
determine the feasibility of increasing the required amount of affordable housing in
housing projects and implementing that into the City’s Inclusionary Housing Ordinance;
and
WHEREAS, the City Council of the City of San Luis Obispo conducted a web-
based public hearing via teleconference November 17, 2020, for the purpose of final
adoption of the sixth cycle update to the General Plan Housing Element that included
Program 2.13 that states, “Update the Inclusionary Housing Ordinance, including Table
2A, based on findings and recommendations in the 2020 Affordable Housing Nexus
Study and conduct further feasibility analysis in order to evaluate the City’s ability to
provide affordable housing in the proportions shown in the Regional Housing Needs
Allocation, per Policy 2.4”; and
WHEREAS, in April 2021, the City hired Economic & Planning Systems, Inc.
(EPS) to conduct a feasibility analysis based on the findings and recommendations
included in the Nexus Study and current market information and provide preliminary
recommendations for updates to the City’s existing Inclusionary Housing Ordinance; and
WHEREAS, the State of California Office of Housing and Community
Development, on September 3, 2021, certified the City of San Luis Obispo’s 6th Cycle
General Plan Housing Element as in full compliance with State Law; and
WHEREAS, a Study Session was held by City Council on March 1, 2022, to review
the preliminary recommendations of the feasibility analysis; and
WHEREAS, on May 11, 2022, the City published a draft of the proposed
amendments to Municipal Code Chapter 17.138 for public review; and
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Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 2
WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a
public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California on June 8, 2022, for the purpose of recommending amendments to Chapter
17.138; and
WHEREAS, notices of said public hearing were made at the time and in the
manner required by the law; and
WHEREAS, the Planning Commission has duly considered all evidence, including
the testimony of the applicant, interested parties, and the evaluation and
recommendations by staff, presented at said hearing.
NOW, THEREFORE, BE IT RESOLVED, by the Planning Commission of the City
of San Luis Obispo as follows:
SECTION 1. Findings. Based upon all evidence, the Planning Commission makes
the following findings:
1. The proposed commercial linkage fees and inclusionary housing in-lieu fees
are supported by the 2020 Affordable Housing Nexus and 2021 Feasibility
Analysis.
2. The proposed amendments to Title 17 of the Municipal Code are consistent
with the 6th Cycle Housing Element Program 2.13 which states, “Update the
Inclusionary Housing Ordinance, including Table 2A, based on findings and
recommendations in the 2020 Affordable Housing Nexus Study and conduct
further feasibility analysis in order to evaluate the City’s ability to provide
affordable housing in the proportions shown in the Regional Housing Needs
Allocation, per Policy 2.4.”
3. The proposed amendments to Title 17 of the Municipal Code are consistent
with the 6th Cycle Housing Element Program 4.6 which states, “Amend the
City’s Inclusionary Housing Ordinance to require that affordable units in a
development be of similar size, number of bedrooms, character and basic
quality as the non-restricted units in locations that avoid segregation of such
units, including equivalent ways to satisfy the requirement. Also evaluate
adjusting the City’s allowable sales prices for deed-restricted affordable units
per a variety of unit types.”
4. The replacement of Chapter 17.138 to Title 17 of the Municipal Code will not
alter the character of the City or cause health safety or welfare concerns
because the amendment is consistent with the General Plan and directly
implements City goals and policies.
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Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 3
SECTION 2. Environmental Determination. The proposed amendments to the
Municipal Code Title have been assessed in accordance with the authority and criteria
contained in the California Environmental Quality Act (CEQA), the state CEQA
Guidelines, and the environmental regulations of the City. Specifically, the proposed
amendments have been determined to be exempt from further environmental review
pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption,
because the proposed actions will have no possibility of a significant effect on the
environment and will not cause impacts. In this case, the proposed repeal and
replacement of the Inclusionary Housing Ordinance is consistent with State Law and the
City’s 6th Cycle Housing Element and will not have an significant effect and project
specific environmental review will be required.
SECTION 3. Action. The Planning Commission hereby recommends the
introduction of an ordinance to City Council to repeal and replace, in its entirety, Chapter
17.138, entitled “Inclusionary Housing Requirements”, of the San Luis Obispo Municipal
Code as set forth in Exhibit A and incorporated herein.
Upon motion of Commissioner Jorgensen seconded by Commissioner Hopkins and
on the following roll call vote:
AYES: Commissioner Francis, Commissioner Hopkins, Commissioner
Jorgensen, Commissioner Munoz-Morris, Vice Chair Kahn, and
Chair Quincey
NOES: None
REFRAIN: None
ABSENT: Commissioner Wulkan
The foregoing resolution was passed and adopted this 8th day of June 2022.
_____________________________
Tyler Corey, Secretary
Planning Commission
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Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 4
EXHIBIT A
Chapter 17.138: Inclusionary Housing Requirements
Sections:
17.138.010 – Purpose
17.138.020 – Applicability and Exclusions
17.138.030 – Definitions
17.138.040 – Inclusionary Housing Requirements
17.138.050 – Standards for Inclusionary Units
17.138.060 – In-Lieu Housing Fee
17.138.070 – Inclusionary Housing Proposal
17.138.080 – Procedures
17.138.090 – Eligibility Requirements
17.138.100 – Shared Equity Purchase Program
17.138.110 – Administration, Management, and Monitoring
17.138.120 – Enforcement
17.138.010 – Purpose
The purpose and intent of this Chapter are: 1) to promote the public welfare by increasing the
production and availability of affordable housing units; 2) to establish an inclusionary housing
requirement which implements General Plan policies guiding land use and housing
development; and 3) to ensure that affordable housing units established pursuant to the
provisions of this Chapter are located in a manner that provides for their integration with market
rate units.
17.138.020 – Applicability and Exclusions
A. This Chapter shall apply to residential development projects consisting of five or more
residential lots or new dwelling units.
B. The following types of residential development projects are exempt:
1. Residential projects of four new units or less;
2. Residential additions, repairs, or remodels, provided that such work does not
increase the number of existing dwellings by five or more dwelling units;
3. The addition or inclusion of Accessory Dwelling Units associated with an existing or
proposed residential or mixed-use development;
4. Affordable housing projects in which 100 percent of the dwellings to be built will
be sold or rented in conformance with the City’s Affordable Housing Standards
(excluding any on-site manager unit);
5. Housing projects that include a density bonus.
6. Emergency projects or projects which the Council determines are necessary to protect
public health and safety;
7. Development projects which the Director determines are essentially noncommercial
or nonresidential in nature, which provide educational, social, or related services to
the community and which are proposed by public agencies, nonprofit agencies,
foundations, and other similar organizations;
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CODE-0261-2022 (Citywide)
Page 5
8. Projects which replace or restore a structure damaged or destroyed by fire, flood,
earthquake, or other disaster within three years prior to the application for the new
structure(s) (see Chapter 17.92 Nonconforming Structure);
17.138.030 – Definitions
For the purposes of this Chapter, the following words and phrases shall have the meaning set
forth below. For all other definitions, the provisions of Article 9 (Definitions) of this Title shall
apply.
A. “Administrator” means Below Market Rate Program Administrator which may either be the
City itself or a third-party administrator acting as an agent for the City in connection with all
aspects of the operation of the City's Below Market Rate program pursuant to an Agreement
entered into between the City and the Administrator, as such agreement may be amended
or replaced from time to time.
B. “Affordable” means housing which can be purchased or rented by a household with very
low-, low-, or moderate- income, as described in the City’s affordable housing standards.
C. “Below Market Rate (BMR)” means that the affordability level of an inclusionary unit is below
the cost of what a current market rate unit would be and is affordable to extremely low-, very
low-, low-, or moderate-income households.
D. “Borrower” shall be defined as one who meets the eligibility requirements for purchasing an
inclusionary affordable unit.
E. “Commercial Linkage Fee” means the fee paid by the applicant of commercial development
projects to mitigate the impacts that such developments have on the demand for affordable
housing in the City (see Municipal Code Chapter 4.60).
F. “Density bonus” means a density increase over the maximum density otherwise
allowable under the Zoning Regulations, Chapter 17.140.
G. “Early resale” shall mean the sale, lease, or transfer of property within seven years of the
initial close of escrow for Equity Share Inclusionary Units.
H. “Equity Share” shall mean the shared equity of appreciation between the City and the
Borrower on inclusionary units when agreements specifically allow for affordable units to be
sold at market-rate after a 7-year period.
I. “Fee Schedule” means fees that for-sale and for-rent units are subject to and are paid to
either the City or the Administrator for associated costs related to but not limited to eligibility
screening, income verification, marketing of affordable units, and the close of escrow or
completion of new lease agreements for affordable units.
J. “Inclusionary housing unit” means a dwelling unit required under the provisions of this
Chapter, and which meets the City’s affordable housing standards.
K. “Low-” or “lower-income households” shall have the meaning set forth in Health and Safety
Code Section 50079.5; provided the income of such persons and families shall not exceed
80 percent of the median income within the City as published and periodically updated by
the State Department of Housing and Community Development.
L. “Market rate” shall mean the highest price a willing buyer would pay and a willing seller would
accept, both being fully informed and in an open market, as determined by an appraiser.
Page 639 of 753
Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 6
M. “Moderate-income households” shall have the meaning set forth in Health and Safety Code
Section 50079.5; provided the income of such persons and families exceed 80 percent but
are less than or equal to 120 percent of the median income within the City as published and
periodically updated by the State Department of Housing and Community Development.
N. “Commercial development project” shall mean development projects which result in the
subdivision of land and/or the construction or conversion of structures for the purpose of
conducting business, including but not limited to retail sales, restaurants, offices, gas
stations, manufacturing, etc.
O. “Residential development project” shall mean development projects which result in the
subdivision of land and/or the construction or conversion of structures, including, but not
limited to, single-unit attached or detached homes, apartments, condominiums, live/work
units, mixed-use, mobile homes, transitional housing or supportive housing, and group
housing.
P. “Very low-income” shall have the meaning set forth in Health and Safety Code Section
50079.5; provided the income of such persons and families shall not exceed 50 percent of
the median income within the City as published and periodically updated by the State
Department of Housing and Community Development.
17.138.040 – Inclusionary Housing Requirements
A. General Requirements. All non-exempt residential development projects shall include
inclusionary units as required by this chapter. If the calculated number of units results in a
fraction, the number shall be rounded as described in Section 17.138.080(A).
1. Construct the required number of inclusionary units for Residential or Mixed-Use
projects;
2. Pay an in-lieu fee for Residential or Mixed-Use projects; or
3. Pay a commercial linkage fee (see Municipal Code Chapter 4.60) for new Non-
Residential or Non-Residential portions of Mixed-Use project(s).
B. Residential Requirements
1. Ownership Dwelling Units. Ten (10) percent of the dwelling units (see Section
17.138.080.A) shall be made available for sale to eligible households with five (5)
percent for low-income households (fractional units may be rounded down to the next
whole number) and five (5) percent for moderate-income households (fractional units
may be rounded up to the next whole number). See Section 17.138.080.A for more
information regarding fractional numbers.
2. Rental Dwelling Units. Six (6) percent of the dwelling units (see Section 17.138.080.A:
Fractional Numbers) shall be made available for rent to eligible households with three
(3) percent for very low-income households (fractional units may be rounded down to
the next whole number) and three (3) percent for low-income households (fractional
units may be rounded up to the next whole number).
3. In-Lieu Housing Fees. An applicant may pay in-lieu fees to the City rather than
construct inclusionary units on site for residential projects that would create five (5) or
more dwelling units or parcels (see Section 17.138.060: In-Lieu Housing Fee).
Page 640 of 753
Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 7
C. Non-Residential Requirements
1. Commercial, Office, Service, Hotel, Retail, Industrial, and Institutional Uses. An
applicant shall pay a commercial linkage fee based on the gross square footage of the
non-residential space in accordance with Municipal Code Chapter 4.60.
D. Mixed-Use Development Requirements
1. Dwelling Units & Commercial Space. For mixed-use development with five or more
dwelling units, the inclusionary housing requirement is determined in accordance with
subsection B of this Section for all dwelling units in addition to subsection C of this
Section for all new commercial square footage within the development project. For
example, a for-rent mixed-use project includes twenty (20) residential units and 5,000
square feet of commercial space: the inclusionary requirement would be two (2)
affordable units (20 x 6% = 1.2 rounded to 2) and a commercial linkage fee would be
applied to the 5,000 square feet of commercial space.
2. Commercial Space. For mixed-use development with four or less residential units, only
the base inclusionary housing requirement for non-residential square footage shall be
provided in accordance with subsection C of this Section. For example, a for-rent mixed-
use project includes four (4) residential units and 5,000 square feet of commercial
space: a commercial linkage fee would be applied to the 5,000 square feet of
commercial space.
E. Residential Final Maps or Parcel Maps
1. Residential Subdivisions. Tentative Maps as defined in Chapter 16.10 “Tentative
Maps” of the Municipal Code, that result in five (5) or more residential lots or parcels,
which do not include any associated or required development plan, and are intended
for independent development, shall pay the In-Lieu Housing Fee (see Section
17.138.060: In-Lieu Housing Fee) at the time of building permit submittal.
17.138.050 – Standards for Inclusionary Units
A. Standards. Inclusionary units must meet the following standards:
1. Inclusionary units shall be dispersed throughout the residential development projects to
prevent a concentration of affordable units within the development project.
2. Inclusionary units shall be consistent with the design of market rate units in terms of
exterior appearance, materials, and finished quality.
3. The applicant may reduce square footage of inclusionary units as compared to the
market rate units as long as the minimum square footage of the affordable units are no
less than seventy-five percent of the average size of all market rate units in the
residential development project with the same bedroom count. For the purpose of this
subsection, the “average size” of a unit with a certain bedroom count equals the total
square footage of all market rate units with that bedroom count in the residential
development project divided by the total number of market rate units with the same
bedroom count in the residential development project.
4. For residential development projects with multiple market rate unit types containing
differing numbers of bedrooms, inclusionary units shall be representative of the market
rate unit mix. For example, a for sale, residential project includes fifty (50) dwelling units;
ten (10) three-bedroom units, twenty (20) two-bedroom units, and twenty (20) one-
bedroom units. To represent the units within the residential project, the five (5) required
inclusionary units would be one (1) three-bedroom, two (2) two-bedrooms and two (2)
one-bedrooms.
Page 641 of 753
Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 8
5. The required inclusionary units shall be constructed concurrently with market rate units,
unless an alternative development schedule is otherwise stipulated by the applicable
Review Authority of the residential development project.
6. Inclusionary units shall be subject to the City’s and/or the Administrator’s Fee Schedule
in accordance with Section 17.138.110.
17.138.060 – In-Lieu Housing Fee
A. Payment of In-Lieu Fee. The developer may, at their discretion, choose to pay a fee, as
established by a resolution of the City Council, to the City in lieu of constructing affordable
units to meet their inclusionary housing requirement.
B. In-Lieu Fee Calculation. In-lieu fees shall be calculated using the total square footage of
new, habitable square footage, as defined by California Building Code, included within the
residential development project. Final Maps or Parcel Maps shall pay the In-Lieu Housing
Fees consistent with Section 17.138.040E.,
C. Affordable Housing Fund. In-lieu fees shall be calculated using the new, habitable square
footage, as defined by California Building Code, included within the residential development
project. Final Maps or Parcel Maps in-lieu fees shall be calculated at time of individual lot
development using the new, habitable square footage included within the residential
development project.
D. Timing. In-lieu fees shall be paid prior to building permit issuance. For projects constructed
in phases, in-lieu fees shall be paid in the proportion that the phase bears to the overall
project.
17.138.070 – Inclusionary Housing Plan
A. Application Requirements. An applicant proposing a project for which inclusionary
housing is required shall submit a statement with their planning application or building
permit (whichever applies), describing the project’s inclusionary housing plan. The
statement shall include:
1. A project description that includes details regarding the proposed residential
development project such as, but not limited to total number of dwelling units, number
of bedrooms per dwelling unit, square footage of all units (both residential and
commercial), type of project (rental or ownership), etc.;
2. A description of the inclusionary housing plan for each construction phase, including the
method chosen to meet the inclusionary housing requirement and including all of the
following information including but not limited to:
a. Whether the unit is for sale or rental;
b. The number, location, unit type, tenure, number of bedrooms and baths, floor plan,
construction schedule of all inclusionary units;
c. Preliminary calculation of in-lieu fees or commercial linkage fee as applicable;
d. Other information which the Director determines necessary to adequately evaluate
the proposal.
Page 642 of 753
Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 9
17.138.080– Procedures
A. Fractional Numbers. In determining the number of dwellings that are required to be built
pursuant to Section 17.138.040.B fractional units shall be rounded up to the next higher
whole number unit. If a project contains 10 units or less and the number of required
inclusionary dwellings results in a fractional unit, an applicant may pay the in-lieu fee for the
fractional unit or provide one Moderate affordable unit in the project. For example, a
residential project proposes to construct six (6) dwelling units for rent. Per Section
17.138.040, the project would have an inclusionary housing requirement of 0.36. The
applicant may pay an in-lieu fee for the fractional amount or deed restrict one of the six (6)
dwelling units for Moderate-income households.
B. Affordable Housing Agreement. The applicant shall complete and sign an Affordable
Housing Agreement.
1. Submittal of an Affordable Housing Agreement. Applicants of residential
development projects subject to this Chapter shall submit an affordable housing
agreement on forms provided by the City and pay a processing and recordation fee.
2. Timing. All building permits for inclusionary units in a residential development project
shall be issued concurrently with, or prior to, issuance of building permits for the market
rate units.
3. Construction Schedule. The inclusionary units shall be constructed concurrently with,
or prior to, construction of the market rate units, unless otherwise stipulated by the
applicable Review Authority of the residential development project. Occupancy permits
and final inspections for inclusionary units in a residential development shall be
approved concurrently with, or prior to, approval of occupancy permits and final
inspections for the market rate units.
4. Review and Approval. The draft agreement shall be reviewed by the Director and City
Attorney for compliance with project approvals, City policies and standards, and
applicable codes. Following approval and signing of the agreement by the parties,
the final agreement shall be recorded, and relevant terms and conditions shall be
recorded as a deed restriction on those lots or affordable units subject to affordability
requirements. The affordable housing agreement shall be binding to all future owners
and successors in interest.
5. Term. The affordable housing agreement shall ensure that affordability is maintained
for the longest period allowed or required by State law, but not less than 45 years for
ownership and 55 years for rental.
6. Exemption for In-Lieu Fee Payment. An affordable housing agreement shall not be
required for projects which meet their inclusionary housing requirement through the
payment of in-lieu fees.
17.138.090 – Eligibility Requirements
A. Program Requirement. Only households qualifying as extremely low-, very low-, low-, or
moderate income, pursuant to the affordable housing standards, shall be eligible to rent,
purchase, or occupy inclusionary units developed or funded in compliance with this
requirement. For-sale inclusionary housing units shall be owner-occupied for the term of the
affordable housing agreement.
Page 643 of 753
Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 10
B. Eligibility Screening. The City or an Administrator designated by the City shall screen
prospective renters or buyers of affordable units. Buyers of affordable units shall enter into
an agreement with the City. Occupants must be selected by means of an open, public
process which ensures that individuals of a group of interested participants are selected in
accordance with the City’s BMR Ownership and Rental Housing Guidelines. Private
selection of individuals by project owners is not permitted for any affordable units.
17.138.100 – Shared Equity Purchase Program
When a residential development project includes affordable housing units for sale in excess of
the inclusionary housing requirement for the project, the additional units may be offered under
the Shared Equity Purchase Program.
A. Under this program, the qualified buyer of a designated affordable dwelling unit shall enter
into a shared equity agreement with the City. Said agreement shall be recorded as a lien
against the purchased property, at no interest, securing and stating the City’s equity share
in the property. The City’s equity share shall be calculated by the Director, and shall be
the decimal percentage of the property’s value resulting from:
1. The difference between the property’s market value and the actual price paid by the
homeowner, divided by the market value; and/or, when applicable
2. The amount of subsidy provided by the City to the homeowner to purchase the
property, divided by the
property’s market value.
B. Upon sale, the City’s equity share shall be repaid to the City from the proceeds of the
sale, less the City’s percentage share of title insurance, escrow fees, and documentary
transfer taxes, at the close of escrow. The proceeds from the sale shall be deposited into
the City’s Affordable Housing Fund and shall be used for the purposes set forth in Health
and Safety Code § 33334.2(e).
C. In the event of “early resale,” owners of properties subject to the Shared Equity Purchase
Program shall either: (1) pay an equity recapture fee to the City as described in the schedule
below, in addition to the City’s equity share, or (2) sell the property to another eligible
household. If the owner chooses to pay the equity recapture fee, the recapture fee shall be
paid to the City upon resale at close of escrow, based on the following schedule:
Table 8-1: Percent of Equity Build-up Recaptured
Year % of Equity Build-up Recaptured
0 – 3 100%
4 75% + City’s Equity Share
5 50% + City’s Equity Share
6 25% + City’s Equity Share
7 and after 0% + City’s Equity Share
The recapture amount shall be determined prior to the calculation of escrow closing costs.
Page 644 of 753
Planning Commission Resolution No. PC-1061-2022
CODE-0261-2022 (Citywide)
Page 11
17.138.110 –Administration, Management, and Monitoring
Inclusionary rental and owner units shall be managed and operated by the property owner, or
the owner’s agent, for the term of the affordable housing agreement. Sufficient documentation
shall be submitted to ensure compliance with this Chapter, to the satisfaction of the Director.
A. Duties of Program Administrator. The City may either handle in-house or contract for
administration of the BMR Ownership Housing Program and monitoring compliance with
the requirements of this Chapter to a program Administrator pursuant to an agreement
executed between the City and the Administrator in accordance with the approved fee
schedule. At a minimum, the Administrator shall perform the following services:
1. Maintain and administer the City’s BMR Ownership and Rental Housing Guidelines and
Affordable Housing Standards.
2. Screen and select qualified buyers and renters according to the City’s Ownership and
Rental Housing Guidelines and Affordable Housing Standards and maintain qualified
owner and renter eligibility list;
3. Maintain a list of eligible mortgage lenders for financing the purchase of inclusionary
units in accordance with the BMR Ownership Housing Guidelines;
4. Market new and vacant BMR for-sale and rental units within the City’s affordable
housing inventory.
5. Monitoring compliance with terms and conditions of the occupancy and sale
restrictions;
17.138.120 – Enforcement
A. Enforcement. No final subdivision map shall be approved, nor building permit issued,
nor shall any other development entitlement be granted for a residential development
project subject to this Chapter that does not meet these requirements. No inclusionary unit
shall be rented or sold except in accordance with these requirements and the affordable
housing standards.
Page 645 of 753
Page 646 of 753
M EMORANDUM
To: Tyler Corey, Deputy Director of Community Development
From: Ashleigh Kanat, Principal
Subject: Effect of CCCI Increase and Implications for the Inclusionary
Housing Ordinance Update; EPS #191142
Date: July 8, 2022
Based on Municipal Code 4.56.040, the Development Impact Fee
schedule is evaluated and established each year (to be effective July 1 of
each year) in conformance with the California Construction Cost Index
(CCCI) as published by the California Department of General Services.
The percent increase from April 2021 to April 2022 is 24.5%.
In the absence of market context, an annual fee increase of 24.5% is
extraordinary. However, the CCCI is tied to construction cost data that is
tracked by the California Department of General Services, and, in
general, we are in a time of substantial inflationary pressures.
Policy Justification
The policy reason for annual indexing based on changes in construction
costs is to ensure the City can continue to use fee revenue to fund
required capital improvements even as construction costs increase over
time. Without annual indexing, the City’s ability to fund infrastructure
projects to mitigate the effects of new development would erode, even
though the City’s obligation to deliver those projects would remain.
When the City adopts an impact fee program, there is an implied
commitment to deliver the identified capital improvements. If the fee
revenue does not keep pace with increases in construction costs, other
sources of revenue, including the General Fund, would be required.
Relationship to Residential Values and Feasibility
If the value of homes (based on transaction data) in San Luis Obispo
was static (i.e., did not change during the past year), there would be
particular cause for concern with the July 1, 2022 increase because
residential developers would have to absorb increases in construction
costs and increases in development impact fees without the possibility of
recovering those cost increases in the final sales price (or through
Page 647 of 753
Memorandum July 8, 2022
Effect of CCCI Increase Page 2
Z:\Shared\Projects\Oakland\191000s\191142_SLO_AH_Fees\Deliverables\191142_DraftMemo_market context_2022Jul08.docx
increases in rental revenue). This would almost certainly have the effect of discouraging new
development from occurring.
However, based on Redfin calculations of home data from MLS and/or public records, the median
home price increased 26.3 percent year-over-year, as of May 2022. In May of 2021, the median
home price was approximately $794,000; twelve months later (in May 2022), the median home
price is $1,002,716.
While the inflationary pressures in the economy are challenging, so long as market prices of new
development (residential home prices and rents and commercial rents) are also increasing,
concerns about the fee increases having a negative impact on feasibility are reduced, as both
costs and values are increasing proportionally.
Page 648 of 753
Attachment G:
Affordable Housing Analysis and Recommendations
2020 Affordable Housing Nexus Study
A lot has changed since 1999 and as a part of the 2019-21 Financial Plan a core priority
identified in the Housing and Homelessness Major City Goal (MCG) work scope and
action plan was to complete an Affordable Housing Nexus Study to establish a rational
nexus between market-rate residential development and nonresidential development and
the need for affordable housing in the City as required by law. The last time a similar study
was completed was in 2004. In 2020 the City hired consultant David Paul Rosen and
Associates (DRA) to complete an Affordable Housing Nexus Study. The Study confirmed
that both market-rate residential and commercial development are inducing demand for
affordable housing that is not being met by the current housing market.
The Nexus Study recommendation is based on the maximum justifiable Nexus fees the
City could implement to meet the affordable housing demand incurred by current
development. Overall, the Study recommended that the City adopt fees less than the
maximums because fees at these high levels would affect the financial feasibility of
development as well as the competitiveness of development in the City. It should be noted
that while incomes increased since the Nexus Study was completed, development costs
have increased more – that broadening gap would result in still-higher nexus-maximum
fees. Recommendations from the Nexus Study are provided below in Table 1.
Following completion of the Nexus Study, the City began work on updating the City’s
Housing Element consistent with State law. On November 17, 2020, the City Council
adopted the 6th Cycle Housing Element, which includes the City’s Regional Housing
Needs Allocation (RHNA)1, and housing policies and programs for the 2020-2028
planning period. Program 2.13 in the 6th Cycle Housing Element specifically requires that
City staff update the Inclusionary Housing Ordinance based on the information provided
in the Nexus Study.
1 The City’s projected housing need during the Housing Element planning period is determined through the
RHNA allocation process, based on projected Statewide growth in households as determined by the
California Department of Housing and Community Development (HCD), and regionally allocated through
the San Luis Obispo County Council of Government (SLOCOG). The total housing need for each jurisdiction
is distributed among income categories and included in the Housing Element so that plans, policies, and
standards may be created to help meet needs within the elements planning term. The City has a RHNA of
3,354 total housing units to plan for in the 6th cycle, with 826 allocated for the Very Low Income Category,
520 in the Low Income Category, 603 in the Moderate Income Category and 1,406 in the Above Moderate
Income Category. In 2021, the City met its total allocation for “Above Moderate” housing units, issuing 472
permits for that category in 2021 and 1,411 in the last 3 years. This leaves 1,735 units needed to meet the
6th Cycle RHNA allocation, with 44% reserved for Extremely Low and Very Low Income, 22% for Low, and
34% for Moderate.
Page 649 of 753
Attachment G
Affordable Housing Analysis and Recommendations
Page 2
2022 Feasibility Analysis
The Nexus Study provides the connection for requiring additional affordable housing as
a part of new development but did not take into account what amount of affordable
housing would be feasible in a new development. In April 2021, the City hired Economic
& Planning Systems, Inc. (EPS) to conduct a feasibility analysis of the City’s proposed
affordable housing requirements and in-lieu fees and commercial linkage fees based on
the findings and recommendations included in the Nexus Study and market factors.
EPS tested the feasibility of a range of inclusionary requirements and affordable housing
fee levels by preparing financial pro formas reflecting the expected costs of new
development, based on the Nexus Study and supplemental market research, and
comparing those costs to the revenues that could be generated given the various mixes
of market-rate and affordable housing and/or fee levels. Based on this analysis, EPS
recommended several revisions to the City’s existing affordable housing inclusionary
program for new residential and mixed-use development and introduced a nexus-based
commercial linkage fee for non-residential uses based on their feasibility analysis. EPS
developed a preliminary recommendation for changes to the City’s Inclusionary Housing
Ordinance based on their Feasibility Analysis, which was presented to City Council on
March 1, 2022. A summary of the EPS recommendations is provided below in Table 1.
Summary Comparison of Affordable Housing Analysis and Recommendations:
Table 1 provides a comparison between the City’s current IHO, the recommendations
from the Nexus Study and Feasibility Analysis.
Table 1: Comparison of the City’s Current IHO, the 2020 Nexus Study’s
recommendation, and the recommendation based on EPS’ feasibility analysis.
Current IHO Nexus Study
Recommendation
Feasibility Analysis
Recommendation
Where the
IHO applies
Requirements differ
within City Limits and
Expansion Areas
Same requirements
Citywide (no distinction
between City Limits vs.
Expansion Areas)
Same requirements
Citywide (no distinction
between City Limits vs.
Expansion Areas)
Table 2A
Adjustments
Applies to projects
that qualify
Remove Remove
Residential
For Sale
Within City Limits:
3% low or 5%
moderate income
Expansion Area: 5%
low and 10%
moderate income
Citywide: 15% (5% at low
and 10% at moderate)
Citywide: 10% (5%
low-income units and
5% moderate income)
Page 650 of 753
Attachment G
Affordable Housing Analysis and Recommendations
Page 3
Current IHO Nexus Study
Recommendation
Feasibility Analysis
Recommendation
For Sale In-
lieu Fee
Within City Limits:
5% of building
valuation
Expansion Area:
15% of building
valuation
Citywide: Apply on a square
foot basis (no specific
amount recommended)
Citywide: $25 per
square foot
For Rent
Within City Limits:
3% low or 5%
moderate income
Expansion Area: 5%
low and 10%
moderate income
Citywide: 15% very low-
and low-income units (5%
very low and 10% at low)
Citywide: 6% (3% very
low-income and 3%
low-income)
For Rent In-
lieu Fee
Within City Limits:
5% of building
valuation
Expansion Area:
15% of building
valuation
Citywide: Apply on a square
foot basis (no specific
amount recommended).
Maximum Justifiable Nexus
fees: $48.33 - $113.99 per
square foot
Citywide: $20 per
square foot
Commercial
Commercial
Development
Within City Limits &
Expansion Area: 2
affordable units per
acre or 5% of
building valuation
Citywide: Maximum
justifiable nexus fees: $69-
173 per square foot.
Recommended Fee Range
(based on other
jurisdictions):
Other Non-residential Uses:
$2 to $5 per square foot
Industrial Uses: $1 to $4 per
square foot
Citywide:
Office, service, hotel,
and retail uses: $5 per
square foot
Industrial and
Institutional Uses: $4
per square foot
Page 651 of 753
Page 652 of 753
Introduce two ordinances and related
resolutions that:
1) Repeal and Replace Chapter 17.138
(Inclusionary Housing Ordinance) and
2) Amend Title 4 to Add Chapter 4.60
(Commercial Linkage Fee)
City Council
July 19, 2022
Inclusionary Housing Ordinance (IHO) Update
2
The IHO is the City’s primary tool for
providing affordable housing integrated
with market-rate housing.
Inclusionary Housing Ordinance (IHO) Update
3
Middle of the road proposal to increase
production of deed-restricted affordable
housing in the City.
Council policy focus should be on the
percentage of affordable housing
required for for-sale and rental projects.
Commercial linkage fee designed to
replicate existing in-lieu fee.
Table 2A
4
Recent actions to incentivize smaller footprint housing:
Zoning Regulations update for compatible infill development
Objective Design Standards
Streamlined Development Review
Tiered Impact Fee Structure for TIF,Water,Sewer
Allowed MU development in all C-S and M zones
Based on PC recommendation:
Direct staff to add similar incentives to support success of other policy projects
Seek other funding sources to provide even more affordable housing
Housing Options in the Works
5
IHO is one piece of the puzzle
Major City Goal task list:
Flexible Density Downtown
Missing Middle Housing
Subdivision Regulations Update
Alternatives intended to address concerns
CAR Alternative #2 (for sale 8%and $20/s.f.option)
Flexible application of design criteria
Expanded use of fractional units
JADU exemption
Recommendation
6
Planning Commission recommends the following actions:
1.Introduce a draft Ordinance approving the repeal and replacement of the City of
San Luis Obispo’s Municipal Code Chapter 17.138 (Inclusionary Housing
Requirements)to update regulations for consistency with the 6th Cycle Housing
Element with an exemption from Environmental Review (CEQA);and
2.Introduce a draft Ordinance amending Title 4 of the City of San Luis Obispo
Municipal Code to add Chapter 4.60 to establish a Commercial Linkage Fee with
an exemption from Environmental Review (CEQA)”;and
3.Adopt a Resolution amending Inclusionary Housing In-Lieu Fees in accordance
with Chapter 17.138 of Title 17 and establishing the amounts of Commercial
Linkage Fees in accordance with Chapter 4.60 of Title 4 of the San Luis Obispo
Municipal Code and amending the Comprehensive Fee Schedule.”
Recommendation
7
Planning Commission recommends the following direction to staff:
4.Direct staff to develop new incentives for housing developers to ensure the
success of Housing Element Programs such as Flexible Density Downtown,
Missing Middle Housing,and SB9/Subdivision Regulations Update;and
5.Direct staff to investigate grants and other options for funding of additional
affordable housing programs,such as a First-Time Homebuyers Program.
Housing Element
8
▪2019-2020 6th Cycle Housing Element Update
▪Program 2.13:Update the Inclusionary Housing Ordinance,
including Table 2A,based on findings and recommendations in
the 2020 Affordable Housing Nexus Study and conduct further
feasibility analysis in order to evaluate the City’s ability to
provide affordable housing in the proportions shown in the
Regional Housing Needs Allocation,per Policy 2.4.
▪High Priority Program Implementation
▪July 2022 adoption date
Housing Element
9
▪Approximately 100 individuals participated in an in-person
workshop and online survey and identified affordable housing
as the type of housing needed most and the biggest housing
issue of the community.
Housing Element
10
▪Goal 2:Affordability -Accommodate affordable housing
production that helps meet the City’s Quantified Objectives
(RHNA).
▪Goal 4:Mixed-Income Housing -Preserve and accommodate
existing and new mixed-income neighborhoods and seek to
prevent neighborhoods or housing types that are segregated
by economic status.
▪Goal 6:Housing Production -Facilitate the production of
housing to meet the full range of community housing needs.
*RHNA -Regional Housing Needs Allocation
Housing Element
11
Major City Goals
12
▪Housing and Homelessness:The City will prioritize new
and ongoing Housing Element policies and programs that
focus on facilitating the increased production of
affordable and workforce housing,in addition to market
rate housing;…
▪Diversity,Equity &Inclusion:In response to our
commitment to making San Luis Obispo a more
welcoming and inclusive city for all,continue to develop
programs and policies to support diversity,equity,and
inclusion initiatives and advance the recommendations of
the DEI Task Force.
▪April 2020:Nexus Study presented to Council.
▪Determined that both residential and commercial development
are creating demand for affordable housing that is not being
met by the housing market.
▪March 2022:Preliminary recommended amendments to IHO
based on the Feasibility Analysis presented to Council as part
of a Study Session.
▪The recommendation included revisions to the City’s existing
affordable housing inclusionary program and introduced a
nexus-based commercial linkage fee for non-residential uses.
Nexus Study & Feasibility Analysis
13
Staff received the following comments:
▪Proposed development will be serving a different market than the time
studied.
▪Outside forces including inflation,supply chain issues,processing delays
and changes in Fed policy all impact our local housing market.
▪The analysis has cherry-picked data and market factors from a very
favorable period of time,which no longer exist,or would not exist over the
term of the ordinance.
Relevance of the Nexus Study and the Feasibility Analysis
14
Attachment F:
▪While the inflationary pressures in the
economy are challenging,so long as
market prices of new development
(residential home prices and rents and
commercial rents)are also increasing,
concerns about the fee increases having a
negative impact on feasibility are reduced,
as both costs and values are increasing
proportionally.
Relevance of the Nexus Study and the Feasibility Analysis
15
Proposed IHO Amendments
16
Current IHO Proposed Amendments
Where the IHO applies Requirements differ within City Limits and Expansion
Areas Citywide
Table 2A Adjustments Applies to projects that qualify Remove (requirement no longer adjustable)
Residential
For Sale
Within City Limits: 3% low or 5% moderate income
Expansion Area: 5% low and 10% moderate income 10% (5% low-income units and 5% moderate income)
For Sale In-lieu Fee
Within City Limits: 5% of building valuation
Expansion Area: 15% of building valuation $25 per square foot
For Rent
Within City Limits: 3% low or 5% moderate income
Expansion Area: 5% low and 10% moderate income 6% (3% very low-income and 3% low-income)
For Rent In-lieu Fee
Within City Limits: 5% of building valuation
Expansion Area: 15% of building valuation $20 per square foot
Commercial
Commercial
Development
Within City Limits & Expansion Area: 2 affordable units
per acre or 5% of building valuation
Office, service, hotel, and retail uses: $6 per square
foot
Industrial and Institutional Uses: $5 per square foot
Projects that have been entitled,deemed complete,have vesting rights,or
have submitted a complete building permit will not be subject to the amended
Inclusionary Housing Ordinance.
Applicability
17
The purpose of the IHO update is to produce more affordable housing.
Table 2A was established to encourage projects with higher density and
smaller unit sizes and be sold or rented to households that meet moderate-or
lower-income standards.
However,in practice Table 2A has not produced affordable housing.
The policy decision for the City Council is about how much affordable housing
the City should require as a percentage of market-rate housing development.
The feasibility analysis that the current recommendation was based on
indicates that development would be financially feasible with the proposed
affordable housing percentage requirements.
Table 2A
18
Housing Opportunities
19
▪The Inclusionary Housing Ordinance is only one tool that the City utilizes to achieve
housing objectives.
▪Additional tools the City utilizes are:
▪Density Bonus Projects (Exempt from IHO)
▪A streamlined Development Review process
▪Objective Design Standards
▪Ministerial review of ADUs and JADUs
▪SB 9
▪Minimum density allowances
▪Fractional density units
▪Tiered impact fee structure that incentivizes smaller units
▪The City is also working on 3 additional programs,Missing Middle,Flexible Density,
Subdivision Regulations updates to support additional housing within the City.
Council Direction Items
20
The Planning Commission recommended the City Council give direction to
staff to:
▪Build-in exclusions or adjustments to IHO requirements for key Housing
Element programs,such as the pending Missing Middle and Flexible
Density programs,when brought forward for consideration.
▪Investigate grants and other options for funding of additional affordable
housing programs.
Alternatives
21
▪Reduced Requirement:If the Council majority decides that a reduced
affordable housing requirement best balances all policy considerations,staff
would recommend reducing the for-sale requirement from 10%to 8 %(3%low
and 5%moderate).In addition,this change should be made together with a
reduction in the in-lieu fee amount from $25 per square foot,to $20 per
square foot to maintain consistency with the feasibility analysis.
▪Fractional Numbers:If a majority of City Council would like parity for projects
larger than 10 units then the proposal to allow fractional units to pay in-lieu
fees for projects less than 10 units could be expanded to all projects,
regardless of size.
Alternatives
22
Flexibility in Style and Location of Affordable Housing Units:If a majority
of the City Council would like more flexibility in the application of these standards,
changes can be proposed,or direction can be provided to the Community
Development Director to approve proposals that meet the intent of this section.The
Director’s authority to interpret the code is provided in Zoning Regulations Section
17.04.020.A.
JADUs Exemption:If the Council majority decides that JADUs should be
exempt from the IHO,staff recommends the following language highlighted
below be added to Section 17.138.020.A(2):
“The addition or inclusion of Accessory Dwelling Units (ADUs)or Junior
Accessory Dwelling Units (JADUs)associated with an existing or proposed
residential or mixed-use development;
Recommendation
23
1.Introduce a draft Ordinance approving the repeal and replacement of the City of San Luis Obispo’s
Municipal Code Chapter 17.138 (Inclusionary Housing Requirements)to update regulations for
consistency with the 6th Cycle Housing Element with an exemption from Environmental Review (CEQA);
and
2.Introduce a draft Ordinance amending Title 4 of the City of San Luis Obispo Municipal Code to add
Chapter 4.60 to establish a Commercial Linkage Fee with an exemption from Environmental Review
(CEQA)”;and
3.Adopt a Resolution amending Inclusionary Housing In-Lieu Fees in accordance with Chapter 17.138 of
Title 17 and establishing the amounts of Commercial Linkage Fees in accordance with Chapter 4.60 of
Title 4 of the San Luis Obispo Municipal Code and amending the Comprehensive Fee Schedule.”
4.Direct staff to develop new incentives for housing developers to ensure the success of Housing Element
Programs such as Flexible Density Downtown,Missing Middle Housing,and SB9/Subdivision Regulations
Update;and
5.Direct staff to investigate grants and other options for funding of additional affordable housing programs,
such as a First-Time Homebuyers Program.
Additional Slides
24
Current IHO Requirement
25
On March 1,2022,staff presented the preliminary recommended amendments to the
IHO and Council provided the following comments:
1.Supported the removal of Table 2A (Inclusionary Housing Adjustment Factors).
2.Agreed that inclusionary housing requirements be based on project type,rather
than zoning or location.
3.Supported an increased Commercial Linkage fee.
4.Agreed with the list of duties of a BMR Administrator,and provided further
guidance to work with the BMR Administrator to establish the following:
Local preference for San Luis Obispo residents or employees,or others who
often commute to the city;and
Long term affordability (maintaining deed-restricted units as long as possible).
5.Directed staff to continue outreach with various stakeholders and the community.
Council Study Session: Preliminary Recommendation
26
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(2015.5 C.C.P.)
STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United Stares and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party interested in the
above entitled matter. I am the principal clerk
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of San Luis Obispo, and which has been
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notice of which the annexed is a printed copy
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in the year 2022
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IdaSAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
The San Luis Obispo City Council invites all
interested persons to attend a public hearing on
Tuesday, July 19, 2022 with Closed Session at 5:09
p.m. and the Regular Meeting beginning at 6.,00
p.m. held in the Council Chambers at City Hall, 990
Palm Street, San Luis Obispo. Please note that Zoom
participation will not be supported, as this will
be an in -person meeting. Meetings can be viewed
remotely on Government Access Channel 20 or
streamed live from the City's YouTube channel at
httpl/voutube slo city. Public comment, prior to the
start of the meeting, may be submitted in writing via
U.S. Mail delivered to the City Clerk's office at 990
Palm Street, San Luis Obispo, CA 93401 or by email
to emailcouncil®slocitv ora
PUBLIC HEARING ITEMS. -
The City Council will consider entering into a Mills
Act Historical Property Preservation Contract
with the owners of a Master List Property located
at 211 Charm Street, known as the "Muller-
Noggle House and Garage" (HIST-0174-2022).
For more information, you are invited to contact
Graham Buftema of the City'; Community
Development Departmental (805) 781-7111
orbyemail at
gbuftemafslocrrvora
• A Public Hearing to Introduce an Ordinance to
repeal and replace Chapter 17.138 (Inclusionary
Housing Requirements) of Title 17 (Zoning
Regulations) of the City of San Luis Obispo
Municipal Code. The purpose of this Ordinance
is to update regulations for consistency with the
6th Cycle Housing Element, amend Title 4 (Fees)
to add Chapter 4.60 (Commercial Linkage Fees)
to establish a Commercial Unkage Fee, amend
Inclusionary Housing In-Ueu Fees in accordance
with Chapter 17.138 (Inclusionary Housing
Requirements) of Title 17 (Zoning Regulations),
establish the amounts of Commercial Linkage
Fees in accordance with newly added Chapter
4.60 (Commercial Linkage Fees) of TNe 4 (Fees),
and amend the Comprehensive Fee Schedule.
(CODE-0261-2022)
For more information, you are invited to contact
Rachel Cohen of the Drys Community
Development Department at f805)781-7574
orby email at
tcphenftlocity.ora.
The City Council may also discuss other hearings or
business items before or after the items listed above.
If you challenge the proposed project in court, you
may be limited to raising only those issues you or
someone else raised at the public hearing described
in this notice, or in written correspondence delivered
to the City Council at, or prior to, the public hearing.
Council Agenda Reports for this meeting will be
available for review one week in advance of the
meeting date on the Citys website, under the Public
Meeting Agendas web page: htmslfwww slocdv
orgligovernment/m avor-a nd & itv-counciUaaendas-
and-minutes. Please call the City Clerk's Office at
(8051781-7100 for more information. The City Council
meeting will be televised live on Charter Cable
Channel 20 and live streaming on the City's YouTube
channel httoWyoutube slo.cit .
July7,2022