HomeMy WebLinkAbout04-18-2017 Item 9, Dietrick/Codron Meeting Date: 4/18/2017
FROM: Christine Dietrick, City Attorney
Michael Codron, Community Development Director
SUBJECT: REPORT PURSUANT TO CALIFORNIA ELECTIONS CODE SECTION 9212
ON THE PROPOSED INITIATIVE MEASURE TO REPEAL CHAPTER 15.10
OF THE SAN LUIS OBISPO MUNICIPAL CODE ENTITLED “RENTAL
HOUSING INSPECTION” AND TO ADOPT NEW CHAPTER 15.10
ENTITLED “NON-DISCRIMINATION IN HOUSING.”
RECOMMENDATION
Receive a report on the potential impacts of the proposed Initiative Measure Repealing Chapter
15.10 of the San Luis Obispo Municipal Code entitled “Rental Housing Inspection” (RHIP) and
adopting New Chapter 15.10 Entitled “Non-Discrimination in Housing.”
REPORT-IN-BRIEF
On March 21, 2017, the City Council directed staff to return with a report on the potential
impacts associated with the proposed Initiative. The Rental Housing Inspection Ordinance has
already been repealed by the City Council by ordinance, which will become effective April 20,
2017. Given that the section sought to be repealed by the initiative measure will not exis t within
two days of Council’s consideration of this report and that Council has already acted to repeal,
the focus of the report is on the effects of Council adoption or voter approval of a new provision
in the City’s Municipal Code, entitled “Non-Discrimination in Housing.”
This report evaluates the effects that this new “Non-Discrimination in Housing” Municipal Code
provision would have on City operations, including its implementation of key housing programs
and policies. Whether the proponents intended the identified potential outcomes or not, the plain
language of the Initiative, not its presumed intent, must take precedence in analyzing how it will
be implemented and interpreted if enacted, either by the Council or via a vote of the City
electorate.
To determine if the Initiative may apply to an existing program or policy, City staff applied a
simple three-part test, using the language of the Initiative, as follows:
1. Is the policy, program, intrusion, or inspection compulsory (e.g. mandatory)?
2. Does it apply to a dwelling unit?
3. Does the program or policy discriminate, either facially or by virtue of its potential
impact, on the basis of “age, income, disability, gender, race, ethnicity, sexual identity, or
inability or ability to own a home.”
Based on this analysis, staff has identified the following programs and policies that may be
impacted by or conflict with the Initiative if it is enacted.
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1. Inclusionary Housing Requirement
2. Mobile Home Rent Stabilization Ordinance
3. Mobile Home Park Conversion
4. Residential Rental Property Licensing and Tax
5. Homestay Regulations
6. Accessory Dwelling Unit Ordinance (Proposed)
The report assesses the potential impacts to these programs, per California Elections Code §
9212. Staff’s analysis concludes that the impacts are uncertain, but could be significant. The
uncertainty arises because the proposed Initiative does not include any clear definitions or
language or accompanying regulations that expressly allows for preferential discrimination or
differential treatment based on “age, income, disability, gender, race, ethnicity, sexual identity,
or inability or ability to own a home.” As a result, it is unclear if the Initiative would broadly
prohibit the City from engaging in any form of differential treatment i n programs applicable to
residential dwelling units based on membership in the categories specified in the Initiative, even
if permissible under state or federal law. If the Initiative were interpreted to prohibit any form of
discrimination, even preferential treatment to achieve an important public purpose (e.g. more
affordable housing), then the City’s ability to continue to conduct important housing programs
could be in subject to legal challenge. The City’s ability to implement the programs listed above
would be frustrated if a successful legal challenge were presented that compelled the City to
comply with such an interpretation of the Initiative.
DISCUSSION
Background
Proponents filed an Initiative Measure to repeal Chapter 15.10 of the San Luis Obispo Municipal
Code, entitled “Rental Housing Inspection” and to adopt a new Chapter 15.10 entitled “Non -
Discrimination in Housing” (the “Initiative”, Attachment A). The City Clerk determined that the
proponents obtained the required number of valid signatures necessary to qualify the Initiative
for a special ballot. On March 21, 2017, the City Council ordered a report pursuant to Elections
Code § 9212. The City Council also asked staff to report on areas of the City’s existing policies,
programs and ordinances that may be affected by the proposed Initiative, as well as the
availability of City actions to minimize or address any potentially adverse impacts of the
proposed measure.
The report must be presented to the City Council no later than 30 days after the elections official
certifies the sufficiency of the Initiative. Following receipt of the report, the City Council must
either adopt the ordinance in the Initiative, without alteration, within 10 days of presentation of
the report, or call for a Special Election and submit the ordinance in the Initiative to the voters.
The Initiative Measure
The body of the Initiative proposes to repeal Chapter 15.10 of the San Luis Obispo Municipal
Code, entitled “Rental Housing Inspection,” and to adopt a new Chapter 15.10, entitled “Non-
Discrimination in Housing.” The Initiative also includes a request that the ordinance be
submitted immediately to a vote of the people at a special election pursuant to Elections Code
Section 9214.
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With regard to the first portion, the repeal, on March 21, 2017, the City Council adopted
Ordinance No. 1632 (2017 Series) repealing Chapter 15.10 of the San Luis Obispo Municipal
Code. The Ordinance becomes effective on April 20, 2017. Accordingly, unless Ordinance No.
1632 is subject to referendum, the Council has taken legislative action on this portion of the
Initiative, repealing Chapter 15.10. Thus, the municipal code section that is the subject of the
Initiative measure repeal provision will not exist, rendering the repeal provision moot at the time
of final Council action to adopt the measure or a vote of the electorate on the measure.
Notwithstanding the Council’s prior action to repeal Section 15.10, the measure as a whole
includes additional prohibitions on future Council action in the proposed replacement measure
that are not mooted by Council action. With regard to the second portion, the City Council has
two choices: to either adopt the ordinance in the Initiative without alteration or call a special
election. An important distinction between Council legislative action and initiative measures is
that Council may reverse or amend its legislative actions by majority vote of the Council, while
only a subsequent vote of the people can amend or repeal an initiative measure, whether enacted
by the Council without a vote or approved by majority vote of the electorate.
Authorization for the Impacts Report
This report is prepared in accordance with the California Elections Code § 9212, which
authorizes the City Council to request a report regarding the Initiative’s potential impacts,
including:
(1) Its fiscal impact.
(2) Its effect of the internal consistency of the city’s general and specific plans, including the
housing element, the consistency between planning and zoning, and the limitations on
city actions under Section 65008 of the Government Code and Chapters 4.2
(commencing with Section 65913) and 4.3 (commencing with Section 65915) of the
Division 1 of Title 7 of the Government Code.
(3) Its effect on the use of land, the impact on the availability and location of housing, and
the ability of the city to meet its regional housing needs.
(4) Its impact on funding for infrastructure of all types, including, but not limited to,
transportation, schools, parks, and open space. The report may also discuss whether the
measure would be likely to result in increased infrastructure costs or savings, including
the costs of infrastructure maintenance, to current residents and businesses.
(5) Its impact on the community’s ability to attract and retain business and employment.
(6) Its impact on the uses of vacant parcels of land.
(7) Its impact on agricultural lands, open space, traffic congestion, existing business districts,
and developed areas designated for revitalization.
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(8) Any other matters the legislative body request to be in the report.”
REPORT ON THE IMPACTS OF THE INITIATIVE
The following analysis of the recitals and actual language of the proposed Initiative is intended
to provide context and identify the framework in which staff is evaluating the potential impacts
of its passage. Whether the proponents intended the identified potential outcomes or not, the
plain language of the Initiative, not its intent, must take precedence in analyzing how it will be
implemented and interpreted if enacted, either by the Council or via a vote of the City electorate.
If the plain language cannot be ascertained, then a court will consider other factors in interpreting
the measure, such as legislative history and other tools of statutory construction.
If the Non-Discrimination in Housing provision is enacted, in order to more fully implement the
provision, the City Council could later adopt legislation or regulations establishing definitions or
clarifying the City’s interpretation with regard to any conflicts the provision may have with some
of the City’s programs or policies, which may be argued to discriminate on the basis of some of
the characteristics cited in the provision (see discussion below). However, any such legislation or
interpretive regulations must be consistent with the language proposed in the Initiative. Any
legislation that is argued to be inconsistent is subject to challenge.
The Initiative’s Recitals
The Initiative Measure includes the following four recitals:
WHEREAS, the People of San Luis Obispo seek to protect the privacy of all residents
from discriminatory inspections invading residents’ privacy that violate the First, Fourth
and Fifth Amendments of the U.S. Constitution; and
WHEREAS, Chapter 15.10 requires mandatory intrusive inspections inside homes in San
Luis Obispo violating the privacy of City residents under the First, Fourth and Fifth
Amendments; and
WHEREAS, Chapter 15.10 is so vague that City Officials are authorized to silently
discriminate in determining whose home to target based on age, income, political
activity, or status as a renter or an owner; and
WHEREAS, Chapter 15.10 must be abolished and replaced with a Non-Discrimination in
Housing Ordinance to protect residents’ privacy in San Luis Obispo.
One of the recitals states that “Chapter 15.10 requires mandatory intrusive inspections inside
homes in San Luis Obispo violating the privacy of City residents under the First, Fourth and
Fifth Amendments.” The RHIP program went into effect on May 19, 2015. During its
implementation, 3,323 rentals were registered and 915 inspections occurred. If the Council were
to adopt the ordinance, with recitals that the City’s program violates the First, Fourth and Fifth
Amendments of the United States Constitution, the recital could ex pose the City to litigation and
potential civil rights liability. Specifically, the recital could be used against the City as an
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admission of wrongdoing by a person challenging any inspection conducted or fee charged as
part of the program based on a claim of violation of that person’s First, Fourth and Fifth
Amendments rights. The recitals are particularly troubling given that there is current litigation
pending against the City alleging the same or very similar legal violations as are reflected in the
recitals and the adoption of the recitals by the City could be used against the City in the
litigation.
Initiative Language
The text of new Chapter 15.10 proposed by the Initiative is as follows:
Chapter 15.10 NON-DISCRIMINATION IN HOUSING
SECTION 15.10.010 The City of San Luis Obispo shall not discriminate against any
person based upon age, income, disability, gender, race, ethnicity, sexual identity, or
inability or ability to own a home, by imposing any compulsory program, policy,
intrusion or inspection applicable to any residential dwelling unit. No determination to
conduct an inspection of any dwelling shall be based substantially on any occupant’s
age, income, disability, gender, race, ethnicity, sexual identity or status as an owner or
renter of such dwelling.
The Initiative consists of two sentences. The first sentence more broadly addresses limitations on
imposing any compulsory program, policy, intrusion or inspection applicable to any residential
dwelling unit based on membership in specified categories. The second sentence addresses
restrictions on the bases for decisions to conduct any inspection based on membership in a
similar, but not identical, list of categories.
Analysis of Sentence One
The City of San Luis Obispo shall not discriminate against any person based upon
age, income, disability, gender, race, ethnicity, sexual identity, or inability or
ability to own a home, by imposing any compulsory program, policy, intrusion or
inspection applicable to any residential dwelling unit.1
1. Interpretation of “…shall not discriminate against any person…”
Black's Law Dictionary (10th ed. 2014) defines discrimination as: “1. The intellectual faculty of
noting differences and similarities. 2. The effect of a law or established practice that confers
privileges on a certain class or that denies privileges to a certain class because of race, age, sex,
nationality, religion, or disability…3. Differential treatment; esp., a failure to treat all persons
1 Grammatically, the first sentence of the new Chapter 15.10 in the Initiative has a syntax problem in that the
sentence structure assumes that the imposition of a compulsory program, policy, intrusion or inspection applicable to
any residential dwelling unit constitutes a form of discrimination. In other words, the way this sentence is composed,
the sentence structure suggests that one discriminates against certain specified groups simply by imposing a
compulsory program or policy applicable to residential dwellin g units and then prohibits discrimination, as defined,
as applied to specified groups.
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equally when no reasonable distinction can be found between those favored and those not
favored.” By inclusion of the word “against,” the language of the measure appears calculated to
focus on the second or third definitions above, rather than simply the act of noting differences.
However, the measure itself does not include a definition of prohibited discrimination for
purposes of the measure. Under the second definition of discrimination above, the language
could be interpreted as prohibiting any action either conferring or denying privileges b ased on
defined categories discussed further below. Without further clarification, discrimination in favor
of one group of people (e.g., low income residents for deed restricted low income housing) could
be asserted as prohibited discrimination against another group (i.e., higher income or non-income
qualifying individuals), even where the intent may be to provide protection to members of
groups included in the measure and perceived as disadvantaged or in need of special protection.
As it relates to the third definition above, the language of the proposed measure makes no
reference to and provides no guidance as to whether differential treatment among the members of
the defined classes could be permissible based on reasonable distinctions and legitimate
governmental purposes; it simply state a per se prohibition against discrimination by the City.
Some state statutes also prohibit discrimination by cities against specified protected classes,
which are not identical to those in the Initiative, in specified areas. For example, the California
Fair Employment and Housing Act (FEHA), Gov. Code §§ 12900 et seq., makes it unlawful for a
City “[t]o discriminate through public or private land use practices, decisions, and authorizations
because of race, color, religion, sex, gender, gender identity, gender expression, sexual
orientation, familial status, marital status, disability, genetic information, national origin, source
of income, or ancestry…” (italicized categories indicate the use of the same category in the
proposed measure). Under the definitions included in FEHA, “Discrimination includes, but is not
limited to, restrictive covenants, zoning laws, denials of use permits, and other actions authorized
under the Planning and Zoning Law…, that make housing opportunities unavailable.” Gov. Code
§ 12955. FEHA expressly provides that, in order to justify an action, law or practice that has a
discriminatory effect, the public agency must demonstrate that it was necessary to achieve an
important purpose sufficiently compelling to override the discriminatory effect and effectively
carries out the purpose it is alleged to serve. Gov. Code § 12955.8(b).
By way of further comparison, California Planning and Zoning Law, Gov. Code §§ 6500 et seq.,
forbids discrimination against affordable housing by local government agencies exercising their
planning and land use powers. However, Gov. Code §65008(e)(2) expressly allows a local
agency to give preferential treatment for affordable housing developments. Likewise, § 3607(b)
of the federal Fair Housing Act (42 U.S.C. § 3601 et seq.) exempts “housing for older persons”
from the Act’s prohibitions against discrimination because of familial status. In other words, the
state and federal statutory provision that prohibit discrimination expressly authorize some forms
of discrimination, in the form of express favoritism or protection of certain vulnerable classes of
people or areas of statewide concern, such as affordable housing.
Also, the California Constitution, Article I, Section 31 prohibits discrimination by cities, and
other public entities, on the basis of race, sex, color, ethnicity or national origin in operation of
public employment, education or contracting. [There are numerous other inalienable and other
rights in the state and federal Constitutions].
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The proposed Initiative does not have any language or accompanying legislation that expressly
allows for or exempts from its coverage preferential discrimination or differential treatment
based on “age, income, disability, gender, race, ethnicity, sexual identity, or inability or ability
to own a home.” It is unclear if this language locally prohibits the City from engaging in any
form of differential treatment whatsoever based on the stated characteristics in the Initiative, for
any compulsory program, policy, intrusion or inspection applicable to any residential dwelling
unit, even if such preferential treatment would otherwise be allowed under state or federal law.
In other words, although state and federal law prohibit local agencies from engaging in
discriminatory conduct affecting certain classes of people, many of these laws expressly allow
cities to engage in discriminatory (preferential or protective) action when that action relates to a
particular group of people (i.e. housing for older people), gives preferential treatment in an area
of governmental concern (affordable housing and Gov. Code §65008(e)(2)), or when the purpose
or objective of the law or action is justified by articulated governmental objectives and meets the
level of scrutiny prescribed by the applicable law or laws.2
The first sentence of the proposed replacement language is also unclear whether it applies only to
a program or policy that facially discriminates against the specified classifications in the Non-
Discrimination in Housing Ordinance or whether it is also intended to prohibit facially neutral
policies or programs that may be alleged to have a discriminatory effect on one of the specified
classifications. It is likewise unclear whether a program or policy that expressly favors or
provides for preferential treatment based on one of the specified characteristics would constitute
discrimination against other members of the a group based on that same characteristic (i.e., if a
housing program favors or provides a benefit to low income individuals and requires
contributions from those of greater financial means to support the program, does the program
facially violate the ordinance based on income discrimination?).
2. Interpretation of “…based upon age, income, disability, gender, race, ethnicity,
sexual identity, or inability or ability to own a home…”
As stated above, current state and federal law prohibits discrimination in housing based on race,
color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status,
national origin, ancestry, familial status, source of income, disability or genetic information.
2 Similarly, the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution requires
States to give equal treatment of the law to all persons. In deciding whether a particular law or action violates the
Equal Protection Clause, courts have used three distinct tests depending on the classification of actions and/or the
rights that are affected. For example, laws or actions that distinguish on the basis of a suspect class such as race or
national origin are subject to “strict scrutiny” (The state must have a compelling interest in passing the law and he
differential treatment must be necessary to accomplish that purpose, with no less restrictive alternative available to
achieve the compelling interest) Laws or actions that affect other classifications, based on other classes, such as sex
or gender are subject to “intermediate scrutiny ” (in order to survive legal challenge, the law must further a n
important governmental purpose and be substantially related to achieving that interest)Laws or actions which do not
classify on the basis of a suspect class or do not involve a fundamental right are subject to a much more deferential
standard of “rational basis” (if there is no suspect class or fundamental right implicated by the law, it will be
presumed to be constitutional if it is rationally related to achieving a legitimate government purpose). The proposed
measure applies to categories that are typically subject to differing levels of scrutiny and includes categories that do
not exist under state law without any definitions and without any direction as to what level of scrutiny might be
applicable to an evaluation of a law that distinguishes based on one of the defined classes for purposes of the local
antidiscrimination provision.
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Some of the initiative’s protected classes (race, disability, gender) are preempted by state law
under FEHA (see Government 12993(c),12955(l)) and state judicial decisions interpreting those
terms would apply. Some are similar, but not identical to classes protected under state law
(“income” in Initiative versus “source of income” in FEHA; “ethnicity” in Initiative versus
“race” or “national original” in FEHA (Note: there is an interplay and occasional overlap
between “race”, ”ethnicity” and “national origin. “Race or ethnicity” is defined in several
Education Code sections as including “national origin”, and referenced in numerous state and
federal statutes); “sexual identity” in Initiative versus “gender identity”, “gender expression”
or “sexual orientation” in FEHA). Others are completely new (“inability or ability to own a
home”).
State and federal law do not recognize “sexual identity” as a protected class and there is no
definition of that term under state or federal law. In addition, state and federal law do not
recognize “inability or ability to own a home” as a protected class and, similarly, there is no
definition or determining criteria either under established law or included in the Initiative.
Because state and federal law do not define “sexual identity,” or “inability or ability to own a
home,” and because the Initiative does not define what these classifications mean, it is unclear to
whom the defined prohibition on discrimination would apply and, what compulsory programs,
policies, intrusions or inspections applicable to any residential dwelling unit might be implicated
by these undefined classes.
Initiative Sentence Two
No determination to conduct an inspection of any dwelling shall be based
substantially on any occupant’s age, income, disability, gender, race, ethnicity,
sexual identity or status as an owner or renter of such dwelling.
The second sentence of the proposed Initiative includes some, but not all, of the classifications
referenced in the first sentence. Instead of repeating the last classification from the prior clause
of “inability or ability to own a home,” this sentence adds a new classification of “status as an
owner or renter” regarding the City’s bases for a determination to conduct an inspection or
“intrusion” of a dwelling unit.
Programs Potentially Affected by the Initiative
Attached to this report is a matrix of various City programs and policies, which facially
differentiate between or establish preferences or protections based on the classes included in the
Initiative (Attachment C). Again, the level of impact for each program is dependent on the scope
and applicability of the language in the ordinance in the proposed Initiative, which is unclear for
the reasons discussed above.
To determine if the Initiative may impact an existing program or policy, City staff applied a
simple three-part test, using the language of the initiative, as follows:
1. Is the policy, program, “intrusion”, or inspection compulsory (e.g. mandatory)?
2. Does it apply to a dwelling unit?
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3. Does the program or policy differentiate, either facially or in its effects, on the basis of
“age, income, disability, gender, race, ethnicity, sexual identity, or inability or ability to
own a home.”
Assuming a broad interpretation, the most significant programs and policies that have a high
likelihood of being impacted by the proposed Initiative, if enacted, are the: (1) City’s
Inclusionary Housing Requirement, San Luis Obispo Municipal Code § 17.91; (2) City’s Mobile
Home Rent Stabilization Ordinance, San Luis Obispo Municipal Code § 5.44; and (3) City’s
Mobile Home Park Conversion ordinance, San Luis Obispo Municipal Code § 5.45. Three
additional programs that may be impacted by the Initiative, if enacted, include the City’s
requirement for residential rental businesses to obtain a license and pay the associated tax, the
City’s Homestay Regulations, and its proposed Accessory Dwelling Unit Regulations.
1. Inclusionary Housing Requirement
The City’s inclusionary housing ordinance is a compulsory program and policy which requires
development projects to either: construct a certain number of residential dwelling units which are
then deed restricted for sale or rent to very low, low and moderate income households, pay an in-
lieu fee based on a specified formula to support the development of affordable housing, or
dedicate property for the development of affordable housing. The City’s inclusionary housing
program expressly establishes income based standards for restrictions and qualification for
benefits and requires property owners/developers who profit from land development in the City
to fund the program or dedicate units to achieve the stated public purpose of advancing
affordable housing production in the City. While the program facially discriminates based on
income, state law expressly establishes this as a lawful form of discrimination in California
Planning and Zoning Law. Gov. Code §65008(e)(2). Because the proposed Initiative does not
provide such an exemption from its prohibition on income based discrimination, it is unclear if
the plain language of the ordinance would prohibit the City continuing with implementation of
its local affordable requirements and enforcing its income based eligibility requirements,
notwithstanding that doing so is clearly permitted under state law antidiscrimination provisions.
If the measure passed, the City could attempt to adopt interpretive guidelines or legislation
establishing an exemption or authorization of the program under the measure. However, any
such Council adopted measures could themselves be subject to challenge based on allegations
that they conflict with or misinterpret the Initiative measure language.
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2. Mobile Home Rent Stabilization Ordinance
The City’s Mobile Home Rent Stabilization Ordinance is a compulsory program whereby mobile
home park owners are restricted from increasing rent for a tenant beyond a specified amount,
except upon certain conditions and subject to certain procedures. A mobile home is considered a
dwelling unit under the City’s zoning regulations. In enacting the program, the Council found
that rent increases were “particularly hard upon and unfair to residents of mobile home parks
within the city” and that a “[l]arge numbers of these residents are senior citizens and others on
fixed incomes who installed their mobile homes in the city when the present inflationary rent
increases could not reasonably have been foreseen.”
Mobile home park owners may challenge this compulsory program under the Non-
Discrimination in Housing Ordinance as discrimination against mobile home park owners, and
discrimination in favor of the tenants, potentially based on assumptions the program makes based
on the income differentials and capacities of park owners versus tenants, age and/or the ability or
inability to own a home (based on the need to rent space for one’s mobile home in a mobile
home park). Furthermore, as reflected in the Mobile Home Rent Stabilization Ordinance’s
recitals, the intent and/or effect of the law was to provide certain protections to a class of
individuals – lower income and senior citizens - for whom the City found mobile home parks
provide an important source of affordable housing in the City.
If the proposed measure is enacted and the City rent control provisions were challenged as
prohibited under the anti-discrimination measure, the City would certainly argue strongly that the
program does not discriminate against any person based on one of the defined classes and that
mobile home park rent control is a form of permissible protection of a significant source of
affordable housing within the City. Staff c annot predict with any certainty whether such
arguments would prevail.
3. Mobile Home Park Conversion
The City’s Mobile Home Park Conversion Ordinance imposes certain restrictions and
requirements on the conversion of a mobile home park located within the City to another non -
mobile home park use. In enacting this ordinance, the City found, among other things, that the
City’s Mobile Home Parks constitute a significant and virtually irreplaceable source of
affordable housing for City residents and serves as an entry point into a housing market that
otherwise may be inaccessible for moderate, low and very low income individuals and famil ies.
The same analysis regarding the Mobile Home Rent Stabilization Ordinance equally applies
here. The underlying purpose of the City’s Mobile Home Park Conversion Ordinance is to
provide certain protections on a class of individuals - lower income and senior citizens – who
rely on the availability and preservation of affordability of this type of housing.
Programs that are the same, or similar to, each of those outlined above have withstood challenge
under state law. However, the outcome of a challenge under the proposed Non-Discrimination in
Housing Ordinance is unclear because of the ambiguity with the added categories on which
“discrimination” is prohibited. The lack of clarity results from the absence of any express
exemptions or authorization of lawful preferences/protections/discrimination under the
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ordinance, and the lack of clarity regarding the legal standard of review under which the City’s
regulations might be evaluated (i.e. strict or intermediate scrutiny, the rational basis test, or some
other level of scrutiny similar to FEHA) under the ordinance.
4. Residential Rental Property Licensing and Tax
The City currently collects business license fees and taxes from the owners of residential rental
properties. The program is a compulsory program applicable to all residential rental units and, by
definition, to residential units based solely upon whether the unit is being rented/non-owner
occupied. To the extent that such a program could be argued to be imposed based on one’s
“inability or ability to own a home”, then it could be argued to be prohibited under the proposed
Initiative. If the proposed measure is enacted and the City’s program was challenged, the City
would argue that the program is imposed equally upon individuals who clearly do have the
ability to own a home based upon the voluntary choice to operate one’s home as a business,
which is not a protected category under the ordinance. However, it is unclear what is meant by
“inability or ability to own a home…” or whether the proposed measure intends to equate that
phrase with the language in the second clause regarding inspection determinations based on
“status as an owner or renter of such a dwelling.” This is an area that would require further
analysis if the Initiative were enacted. Currently, the City collects approximately $200,000 per
year in business tax associated with residential rental properties.
5. Homestay Regulations
Section 17.08.140.E.6 of the City’s Zoning Regulations state that homestays shall be limited to
only the owner-occupied dwelling unit on the property. In other words, the regulations only
permit an owner of a dwelling to obtain the necessary permit to operate a homestay and renters
of residential dwelling units are not permitted to operate homestays. Any homeowner wishing to
operate a homestay is required to obtain a permit. Thus, while the decision to operate a
homestay is voluntary, the City’s permitting requirements to operate lawfully would appear to
constitute a compulsory program applicable to the dwelling unit under the proposed measure.
Moreover, during the public meetings at which the City Council considered homestay and
vacation rental permitting, the Council heard testimony from several individuals to the effect that
their ability to continue to afford their homes relied on their continued ability to operate a
homestay. The applicability of that compulsory program and the ability to obtain a pe rmit to
operate a homestay under that program lawfully could be argued to be based on one’s ability to
own a home and to discriminate against those who do not have the ability to own a home. Again,
if challenged, the City would argue that the compulsory program applies based on one’s decision
to operate one’s home as a business, not based upon the ability or inability to own a home.
However, it is uncertain whether such an argument would prevail against a challenge under the
proposed measure, if enacted.
6. Accessory Dwelling Unit Ordinance (Proposed)
The City’s Secondary Dwelling Unit Regulations also include an owner-occupancy requirement.
Specifically, Zoning Regulations section 17.21.010.C.4 includes the following provision: Owner
Occupancy. Either the primary unit or secondary dwelling unit must be owner-occupied as an
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owner’s primary residence. Currently, City staff is moving forward with a recommendation to
update the Secondary Dwelling Unit Regulations to implement new State law. The new law
changes the name of secondary dwelling units to accessory dwelling units, and includes a variety
of other changes. Limiting permits to construct accessory dwelling units to properties that are
owner-occupied is still permitted under the State law, and maintaining this provision is
recommended by the Planning Commission. The owner occupancy requirement is clearly a
compulsory policy or program applicable to a residential dwelling unit as articulated under the
proposed measure. However, staff’s analysis is that the policy is based on an owner’s occupancy
of a property, not on the ability or inability to own a home and, therefore would be outside the
scope of the ordinance. However, again, to the extent that the intent of the ordinance is to equate
the ownership ability provision with the “status as a renter or owner,” provision, the policy could
be argued to be invalid on the premise that it precludes (discriminates against) an owner from
building an accessory dwelling unit based upon the status of the occupancy of the owner’s
property by a renter, rather than the owner. The non-parallel language between the first and
second sentence of the proposed measure, the lack of definition or clarity of the term “inability
or ability to own a home” and the relationship between the ability/inability to own and
owner/renter distinctions make it impossible to reach a conclusion regarding potential impacts on
this City regulation with any certainty.
In order to enforce the owner-occupancy requirement, the City routinely requires property
owners to enter into recorded covenant agreements to acknowledge the owner occupancy
requirement associated with this use. The City’s standard covenant agreement authorizes the City
to inspect, upon reasonable notice, to ensure that the requirement is met. Independent of this
measure and in order to ensure consistency with state ADU legislation, Staff is recommending,
as part of the Accessory Dwelling Unit Regulations update, that the inspection provision of the
standard covenant agreement be eliminated. Thus, while that provisions likely would be
determined to run afoul of the proposed measure, if enacted, the current City inspection
provision is recommended for elimination. If the Council wished to retain such a provision, it
likely would be found in conflict with the proposed measure if enacted.
The City Council will have the opportunity to consider this situation as part of its consideration
and potential adoption of new Accessory Dwelling Unit regulations on May 2, 2017.
Impacts of the Proposed Initiative
1. Its Fiscal Impact.
The fiscal impact of the Initiative is evaluated based on three potential expenditures types that
could result from its approval. The first is the direct cost associated with implementation. The
second area identifies potential expenditures associated with defending current practices against
legal challenges that may arise from the plain language of the Initiative. And, the third area is the
indirect cost associated with accomplishing an existing program that may be subject to a
successful legal challenge in another way.
a. The Direct Cost of Implementation – There are no direct costs associated with
implementation of the Initiative if it is enacted. This assessment would change if,
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upon further analysis, the City chose to make proactive changes to the Zoning
Regulations to avoid a potential conflict with the non-discrimination provisions
contained in the Initiative.
b. Cost of Defending Against Legal Challenge - If the Initiative is enacted, the City
likely would continue to implement its mobile home park and affordable housing
programs, and to collect business tax and license fees from residential rental property
owners, despite lack of clarity as to the application of the proposed measure to those
programs, since there is no certainty that such programs would be found to be
prohibited by the ordinance. Notwithstanding the fact that the Initiative provides no
express authority to discriminate based on income for valid public purposes (such as
implementation of affordable housing objectives), the City would be in a position to
advance arguments to defend current programs against challenge and would likely
continue to operate its programs as it does today, absent any such challenge. If this
practice resulted in a legal challenge from the owner of a mobile home park, or a
developer that did not want to comply with the City’s Inclusionary Housing
Ordinance, or some other similarly situated individual, the cost to defend the City’s
practice could be significant, but is far too speculative to estimate at this point in
time.
c. Indirect Cost of Implementation – These costs are unpredictable, but potentially
significant. As previously discussed in this report, the Initiative’s non-discrimination
provisions do not expressly authorize some forms of discrimination that may be
necessary to maintain longstanding City programs, as outlined above, which could be
construed to discriminate based on “income” or “age.” If the City were prohibited
from imposing its mobile home rent control provisions or inclusionary housing
requirements, but still wanted to achieve stability in mobile home park rents and
advance affordable housing production, there could be a significant cost associated
with the development of a rent stabilization or City funded inclusionary housing
funds, or other City-funded mechanisms to accomplish the desired outcome.
The fiscal impact associated with funding currently operating programs that may not
be permitted if the Initiative is enacted is uncertain. For example, since the
Inclusionary Housing Ordinance was established in 1999, the City has spent over $7
million in funds collected from developers to provide 295 affordable dwelling units
for eligible households in the City. Through the implementation of this program, th e
City collects, on average, $556,000 annually. If the imposition of inclusionary
housing requirements was held to be invalid under the proposed anti-discrimination
ordinance and the City could not collect that revenue source, the City might choose to
use its General Fund to further important affordable housing objectives resulting in an
unknown cost.
Another indirect cost could be connected to the City’s practice of collecting Business
Tax and License Fees from owners of residential rental properties. The collection of
this tax currently results in approximately $200,000 of General Fund revenue,
annually, which obviously would not be realized if the program was successfully
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challenged under the ordinance.
In conclusion, the fiscal impacts associated with the Initiative are unknown. Depending on future
interpretations of the measure, if enacted, whether future legal challenges are presented, the
approach to defense of any actions, and the ultimate success or failure of any challenges, the
costs could be significant, but are too speculative to estimate.
2. Its effect of the internal consistency of the city’s general and specific plans, including the
housing element, the consistency between planning and zoning, and the limitations on
city actions under Section 65008 of the Government Code and Chapters 4.2
(commencing with Section 65913) and 4.3 (commencing with Section 65915) of the
Division 1 of Title 7 of the Government Code.
Sections 65008, 65913, and 65915 of the California Government Code provide protections for
housing projects intended to be occupied by very low, low, moderate, and middle income
households and ensures that local agencies in the State are prevented from discriminatory
practices that would prevent housing production in accordance with the Regional Housing Needs
Allocation, which is established by the State Department of Housing and Community
Development and incorporated into the City’s Housing Element. However, nothing in state law
compels the City to implement or maintain a local inclusionary housing program, like the one the
City has adopted.
Thus, the City is free to enact a measure that would prohibit the imposition of such a program on
developers within the City. If the Initiative is enacted and it was successfully argued to preclude
continued implementation of the City’s inclusionary housing program, it could inhibit the City’s
ability to implement its affordable housing goals and policies, many of which are achieved
through operation of the Inclusionary Housing Ordinance contained in the Zoning Regulations.
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Implementation of the Inclusionary Housing Requirement has resulted in the production of 555
affordable housing units - an average of 37 units annually - since the first expenditures were
made during the 2002-2003 fiscal year.
3. Its effect on the use of land, the impact on the availability and location of housing, and
the ability of the city to meet its regional housing needs.
If the Initiative is enacted and used to successfully challenge any of the programs discussed
above, it could make it much more difficult and expensive for the City’s to implement its
affordable housing goals and policies, which are implemented via the Inclusionary Housing
Ordinance contained in the Zoning Regulations. The ordinance allows either construction of
affordable units or payment of an in-lieu fee to meet the requirements. Failure to continue to
collect or distribute these funds would significantly reduce the amount of affordable units built in
the community by private developers and non-profit housing developers who rely on large
amounts of public funds to be successful at obtaining Low Income Housing Tax Credits. The
current Housing Element planning cycle runs through June 2019; SLOCOG has required the City
to accommodate 1,144 housing units for its Regional Housing Needs Allocation (RHNA). Of the
RHNA’s 1,144 dwelling units, 666 must be affordable to households making 120% or less of the
area median income. As the City does not develop, manage, or own affordable housing,
development of affordable units are mainly built by non-profit developers using Low Income
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Housing Tax Credit financing mechanisms.
Below is a table from the City’s Housing Element which identifies the RHNA and the City’s
Quantified Objectives for new construction, rehabilitation, preservation, conservation, and
financial assistance:
4. Its impact on funding for infrastructure of all types, including, but not limited to,
transportation, schools, parks, and open space. The report may also discuss whether the
measure would be likely to result in increased infrastructure costs or savings, including
the costs of infrastructure maintenance, to current residents and businesses.
No impacts identified.
5. Its impact on the community’s ability to attract and retain business and employment.
Housing affordability is one of the most significant economic development issues facing our
community. If the Initiative were to result in the City being unable to continue to implement the
Inclusionary Housing Ordinance or the other programs discussed above, this would reduce the
amount of affordable housing available to employees in the community and, thus, may limit the
ability of the City to attract and retain businesses who have expressed concern about the high
costs and availability of housing. However, due to the number of variable and uncertainty of
outcomes, it is not possible to determine whether and to what extent such impacts might be
realized.
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6. Its impact on the uses of vacant parcels of land.
No impacts identified.
7. Its impact on agricultural lands, open space, traffic congestion, existing business districts,
and developed areas designated for revitalization.
No impacts identified.
8. Any other matters the legislative body request to be in the report.
No impacts identified.
CONCURRENCES
Not Applicable
ENVIRONMENTAL REVIEW
In Tuolumne Jobs & Small Business Alliance v. Superior Court, No. S207173 (Supreme Court,
Aug. 7, 2014), the California Supreme Court ruled that the California Environmental Quality Act
(CEQA) does not apply when a lead agency receives a voter initiative petition that qualifies
under the Elections Code and the lead agency chooses to adopt the initiative without putting the
decision to the voters. Likewise, CEQA does not apply should the City Council determine to
place the matter before the voters.
FISCAL IMPACT
No fiscal impact associated with receiving this report. See other Agenda Item for fiscal impacts
associated with adopting the initiative language or setting a special election.
ALTERNATIVES
Not Applicable.
Attachments:
a - Notice of Intent to Circulate Petition
b - City Attorney Memo dated 02-09-2016
c - Matrix of Programs and Policies Evaluated for Impacts
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Information Regarding Impact of Ohio Court Decision on
City of San Luis Obispo’s Rental Housing Inspection Program
February 9, 2016
The City has received questions about the validity of the City’s Rental Housing Inspection ordinance
(SLOMC Chapter 15.10) in light of a federal district court decision in Ohio. For reasons listed below, the
City’s ordinance is valid.
In Baker v. City of Portsmouth, the a U.S. district court judge in the southern district of Ohio, western
division, struck down the City of Portsmouth’s rental inspection ordinance on 4th Amendment grounds.
The court held that because no exceptions to a warrant provision existed, the ordinance‘s failure to contain
a warrant provision was a violation of the 4th Amendment to the U.S. Constitution. A warrant provision is
one where an owner or tenant is given an opportunity to require a warrant for access before being subject
to penalties for failure to comply. No warrant is required if there is no objection to inspection. However,
under the ordinance before the district court, if an owner or tenant in the City of Portsmouth denied access
to a rental dwelling for an inspection, the person could face criminal charges.
The City of Portsmouth opinion does not affect the City of San Luis Obispo’s ordinance for several
reasons.
1. The San Luis Obispo’s ordinance DOES contain a warrant procedure if access for inspection is
denied in contrast to the City of Portsmouth ordinance. SLOMC 15.10.40C.
SLOMC 15.10.40C provides:
“C. If an inspection is scheduled and entry is thereafter refused or cannot be obtained, the
inspector shall have recourse to every remedy provided by law to secure lawful entry and inspect
the premises, including, but not limited, securing an inspection warrant pursuant to Cal. Code of
Civil Proc. 1822.50 through 1822.57. …”
2. The court struck down the ordinance solely on its failure to contain a warrant provision. The
district court did not strike down any other aspect of a rental housing inspection program.
3. Even if the ordinances were identical, which they are not, an Ohio district court opinion is not
binding in California. That opinion would have to be affirmed by the 6th Circuit Court of Appeals
(California is in the 9th), and then affirmed by the U.S. Supreme Court before it was binding in
California.
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Attachment C
Matrix of Programs and Policies Evaluated
Page 1
Policy/Program How it is used/implemented
Connection to
Non-Discrimination
Ordinance
Implications of Non-
Discrimination
Ordinance
Zoning Regulations Programs
Zoning Regulation Ch. 17.91 –
Inclusionary Housing Program
The City’s Inclusionary Housing Program
(Zoning Regulations Ch. 17.91) requires
developers of certain residential and
commercial development projects to provide a
percentage of affordable dwelling units or pay
an in-lieu fee based on building valuation.
The in-lieu fees from this program go into the
Affordable Housing Fund (AHF) and are then
distributed, at the discretion of the City
Council, as loans or grants to help develop or
rehabilitate affordable dwelling units.
This program has created over 260 affordable
dwelling units, and the funds have assisted
development of over 300 additional affordable
units.
This program is
mandatory for all
projects of 5 or more
units; or commercial
projects with 2,500
square feet or more.
As affordable housing
units are only available
to income qualifying
households, this
program could
therefore be subject to
legal challenge.
Municipal Code Ch. 5.44 – Mobile
Home Park Rent Stabilization
Mobile home park owners are restricted from
increasing rent for a tenant beyond a specified
amount, except upon certain conditions and
subject to a certain procedure.
Program specifically
benefits senior
citizens and low
income housing
As the Mobile Hoome
Rent Stabilization
Ordinance has the
discriminatory effect of
benefiting certain
individuals based on
age and income, the
Ordinance may be
subject to legal
challenge.
Municipal Code Ch. 16.17-
Condominium Conversions
When a developer proposes to convert an
existing rental apartment developmet into a
One mandatory
component of the
This compulsory
component to the
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Attachment C
Matrix of Programs and Policies Evaluated
Page 2
for-sale, condominium project, Staff reviews
the application for consistency with Chapter
16.17.
Condominium
Conversion process
is to provide an
equivalent number
of new units
comparable in
affordability and
amenities to those
being converted are
being created as
part of the new
project; and that
low- or moderate-
income persons will
not be displaced by
the proposed
conversion
requirements of
Condominium
Conversion could be
subject to legal
challenge as the units
could only be occupied
by households over
certain income
catagories.
Housing Element Programs & Policies
2.5 Continue to manage the
Affordable Housing Fund so that
the fund serves as a sustainable
resource for supporting
affordable housing development.
The fund shall serve as a source
of both grant funding and below-
market financing for affordable
housing projects; and funds shall
be used to support a wide variety
of housing types at the following
income levels: extremely low,
very low, low, and moderate, but
with a focus on production
efficiency to maximize housing
benefits for the City’s financial
The City’s Inclusionary Housing Program
(Zoning Regulations Ch. 17.91) requires
developers of certain residential and
commercial development projects to provide a
percentage of affordable dwelling units or pay
an in-lieu fee based on building valuation.
The in-lieu fees from this program go into the
Affordable Housing Fund (AHF) and are then
distributed, at the discretion of the City
Council, as loans or grants to help develop or
rehabilitate affordable dwelling units.
The grants/loans
made from in-lieu
fees are approved
by the Council and
may only be used
for development or
rehabilitation of
affordable dwelling
units. These
affordable units are
deed-restricted to
households who
qualify as extremely
low, very low, low or
moderate income.
Because the affordable
housing funds are
collected through the
mandatory inclusionary
housing program, the
program and related in-
lieu fees could be
subject to legal
challenge.
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Attachment C
Matrix of Programs and Policies Evaluated
Page 3
investment, and to support high-
quality housing projects that
would not be feasible without
Affordable Housing Fund
support.
2.15 Evaluate the Inclusionary Housing
Ordinance requirements and
the effect of Table 2A on the
City’s ability to provide
affordable housing in the
proportions shown in the
Regional Housing Needs
Allocation, per Policy 2.4.
Program to review aspects of the City’s
Inclusionary Housing Program (Zoning
Regulations Ch. 17.91), which requires
developers of certain residential and
commercial development projects to provide a
percentage of affordable dwelling units or pay
an in-lieu fee based on building valuation.
The Inclusionary
Housing Ordinance
is a program
mandatory for all
projects of 5 or more
units; or commercial
projects with 2,500
square feet or more.
This specific
program would
evaluate a portion of
that program.
As affordable housing
units are only available
to income qualifying
households, this
program could
therefore be subject to
legal challenge.
2.16 The City will evaluate and
consider including a workforce
level of affordability in its
Affordable Housing Standards to
increase housing options in the
City for those making between
121 percent and 160 percent of
the San Luis Obispo County
median income. This
affordability category cannot be
used to meet inclusionary
housing ordinance requirements
and is not eligible for City
Affordable Housing Funds.
While this is not yet implemented, this is one
of the key goals of the 2017-19 Major City
Goal. End result is creation of a new
affordability level called “Workforce” where
eligible households income would be between
121% and 160% of the Area Median Income.
This concept continues to be one of the
highest priority requests the City receives from
employers and residents, and local employers
struggle to retain employees.
This program would
result in a new
affordability
category. The City
has not yet started
implementation of
this project, however
it will likely include
incentives that
developers would
receive if they chose
to provide workforce
units in their
projects.
Depending on the
requirement of the
program, certain
aspects may or may
not be compulsory.
Should any component
be compulsory, those
pieces could be subject
to legal challenge.
3.8 Adopt an ordinance that
implements policy 3.2 to Not yet implemented. The creation of this
ordinance favors
Depending on
compulsory aspects of
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Attachment C
Matrix of Programs and Policies Evaluated
Page 4
discourage removal or
replacement of affordable
housing.
rehabilitation and
assisting at-risk
affordable units in
the community.
the ordinance at time
of adoption, certain
components
associated with the
affordable units could
be subject to legal
challenge.
4.5 Review new development
proposals for compliance with
City regulations and revise
projects or establish conditions of
approval as needed to implement
the mixed-income policies.
Staff works to review all development projects
to be sure they are complying with regulations
that
Revision/ creation of
Conditions of
Approval that could
modify market rate
projects to
provide/comply with
inclusionary housing
requirements.
Depending on the
extent certain projects
are revised,
compulsory
components could be
subject to legal
challenge.
4.6 Consider amending the City’s
Inclusionary Housing Ordinance
and Affordable Housing
Incentives to require that
affordable units in a development
be of similar number of
bedrooms, character and basic
quality as the non-restricted units
in locations that avoid
segregation of such units.
Program to modify aspects of the City’s
Inclusionary Housing Program (Zoning
Regulations Ch. 17.91), which requires
developers of certain residential and
commercial development projects to provide a
percentage of affordable dwelling units or pay
an in-lieu fee based on building valuation.
The Inclusionary
Housing Ordinance
is a program
mandatory for all
projects of 5 or more
units; or commercial
projects with 2,500
square feet or more.
This specific
program would
evaluate/amend a
portion of that
program.
As the Inclusionary
Housing Ordinance is
compulsory; affordable
housing units are only
available to income
qualifying households
and this program could
therefore be subject to
legal challenge.
6.16 Continue to provide resources
that support the SLO County
Housing Trust fund’s efforts to
provide below-market financing
and technical assistance to
affordable housing developers as
a way to increase affordable
Affordable Housing Funds are used to support
the SLO County Housing Trust Fund.
Approximately $30,000/year. The HTF assists
with the funding for development of hundreds
of affordable housing units per year in San
Luis Obispo.
AHF grants/loans
are result of the
City’s Inclusionary
Housing Program.
Because the affordable
housing funds are
collected through the
mandatory inclusionary
housing program, the
program and related in-
lieu fees could be
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Attachment C
Matrix of Programs and Policies Evaluated
Page 5
housing production in the City of
San Luis Obispo.
subject to legal
challenge.
6.20 Continue to financially assist in
the development of housing
affordable to extremely low, very-
low, low- or moderate income
households during the planning
period using State, Federal and
local funding sources, with
funding priority given to projects
that result in the maximum
housing benefits for the lowest
household income levels.
CDBG and AHF are currently used to assist
with development of affordable housing
projects. These are two of the largest and
most successful funding sources for projects
to use towards Tax Credit allocations. The City
has awarded over $8 million in AHF loans to
non-profit devleopers to assist with
development. The City has also awarded
millions of dollars in CDBG funds towards
affordbale housing development annually.
AHF grants/loans
are result of the
City’s Inclusionary
Housing Program.
CDBG is a federal
program with
specific application
guidelines and
criteria.
Because the Affordable
Housing Funds are
collected through the
mandatory inclusionary
housing program, the
program and related in-
lieu fees could be
subject to legal
challenge
Mobile Home Park Related
Policies/Programs:
8.2 Preserve manufactured housing
or mobile home parks and
support changes in these forms
of tenure only if such changes
provide residents with greater
long-term security or comparable
housing in terms of quality, cost,
and livability.
8.14 Continue the mobile home rent
stabilization program to minimize
increases in the cost of mobile
home park rents
8.22 Consider addition of an overlay
zone to existing and future
mobile home and trailer park
sites to provide constructive
notice that additional
requirements, such as rent
See Discussion on Page 1 Under Zoning Regulation Programs.
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Attachment C
Matrix of Programs and Policies Evaluated
Page 6
stabilization and a mobile home
park conversion ordinance may
apply.
Land Use Element Policy/Program
1.11.2 The City shall manage the growth
of the city's housing supply so
that it does not exceed one
percent per year, on average,
based on thresholds established
by Land Use Element Table 3,
excluding dwellings affordable to
residents with extremely low,
very low or low incomes as
defined by the Housing Element.
This rate of growth may continue
so long as the City's basic service
capacity is assured. Table 3
shows the approximate number
of dwellings and residents which
would result from the one percent
maximum average annual growth
rate over the planning period.
Approved specific plan areas
may develop in accordance with
the phasing schedule adopted by
each specific plan provided
thresholds established by Table 3
are not exceeded.
City manages growth rate not to exceed 1%
per year, on average, and excludes affordable
housing units from that average.
If City gets to a point
where 1% has been
reached or
surpassed,
affordable housing
developers would be
able to continue
developing.
Legal challenge could
arise should the City
reach the maximum
growth allowance and
no market rate units
are allowed to be
constructed while deed
restricted affordable
units proceed.
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