Amended in Senate June 26, 2014

Amended in Senate June 17, 2014

Amended in Assembly May 5, 2014

Amended in Assembly April 22, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2222

Introduced by Assembly Member Nazarian

February 20, 2014

An act to amend Sections 65915 and 65915.5 of the Government Code, relating to housing.

LEGISLATIVE COUNSEL’S DIGEST

AB 2222, as amended, Nazarian. Housing density bonus.

The Planning and Zoning Law requires, when a developer of housing proposes a housing development within the jurisdiction of the local government, that the city, county, or city and county provide the developer with a density bonus and other incentives or concessions for the production of lower income housing units or the donation of land within the development if the developer, among other things, agrees to construct a specified percentage of units for very low, low-, or moderate-income households or qualifying residents.

Existing law requires continued affordability for 30 years or longer, as specified, of all very low and low-income units that qualified an applicant for a density bonus.

This bill instead would require continued affordability for 55 years or longer, as specified, of all very low and low-income rental units that qualified an applicant for a density bonus. This bill would also include very low and low-income persons among the initial occupants of for-sale units. This bill also would prohibit an applicant from receiving a density bonus unless the proposed housing development would, for units subject to certain affordability requirements that were occupied by qualifying persons on the date of application, provide at least the same number of units of equivalent size or type, or both, to be made available for rent at affordable housing costs to, and occupied by, persons and families in the same or lower income category as those households in occupancy. For those subject types of units that have been vacated or demolished at the time of begin delete application. This end delete begin insert application, this end insert bill would condition a density bonus upon at least the same number of units of equivalent size or type, or both, as existed at the highpoint in the preceding 5 years being made available for rent at affordable housing costs to, and occupied by, persons and families in the same or lower income category as those persons and families in occupancy at that time, if known.

Existing law also requires a city, county, or city and county to grant a density bonus or other incentives, as specified, when an applicant for approval to convert apartments to a condominium project agrees, among other things, to provide a specified percentage of units for low- or moderate-income persons and families or for lower income households, as defined.

This bill also would prohibit an applicant from receiving a density bonus unless the proposed condominium project would replace the existing affordable units with at least the same number of affordable units of equivalent size or type, or both, and the proposed development would either include the additional required set aside of affordable units according to specified percentages or consist entirely of affordable units.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 65915 of the Government Code is
amended to read:

65915.  

(a) When an applicant seeks a density bonus for a
housing development within, or for the donation of land for housing
within, the jurisdiction of a city, county, or city and county, that
local government shall provide the applicant with incentives or
concessions for the production of housing units and child care
facilities as prescribed in this section. All cities, counties, or cities
and counties shall adopt an ordinance that specifies how
compliance with this section will be implemented. Failure to adopt
an ordinance shall not relieve a city, county, or city and county
from complying with this section.

(b) (1) A city, county, or city and county shall grant one density
bonus, the amount of which shall be as specified in subdivision
(f), and incentives or concessions, as described in subdivision (d),
when an applicant for a housing development seeks and agrees to
construct a housing development, excluding any units permitted
by the density bonus awarded pursuant to this section, that will
contain at least any one of the following:

(A) Ten percent of the total units of a housing development for
lower income households, as defined in Section 50079.5 of the
Health and Safety Code.

(B) Five percent of the total units of a housing development for
very low income households, as defined in Section 50105 of the
Health and Safety Code.

(C) A senior citizen housing development, as defined in Sections
51.3 and 51.12 of the Civil Code, or mobilehome park that limits
residency based on age requirements for housing for older persons
pursuant to Section 798.76 or 799.5 of the Civil Code.

(D) Ten percent of the total dwelling units in a common interest
development as defined in Section 4100 of the Civil Code for
persons and families of moderate income, as defined in Section
50093 of the Health and Safety Code, provided that all units in the
development are offered to the public for purchase.

(2) For purposes of calculating the amount of the density bonus
pursuant to subdivision (f), the applicant who requests a density
bonus pursuant to this subdivision shall elect whether the bonus
shall be awarded on the basis of subparagraph (A), (B), (C), or (D)
of paragraph (1).

(3) For the purposes of this section, “total units” or “total
dwelling units” does not include units added by a density bonus
awarded pursuant to this section or any local law granting a greater
density bonus.

(c) (1) An applicant shall agree to, and the city, county, or city
and county shall ensure, continued affordability of all very low
and low-income rental units that qualified the applicant for the
award of the density bonus for 55 years or a longer period of time
if required by the construction or mortgage financing assistance
program, mortgage insurance program, or rental subsidy program.
Rents for the lower income density bonus units shall be set at an
affordable rent as defined in Section 50053 of the Health and Safety
Code.

(2) An applicant shall agree to, and the city, county, or city and
county shall ensure that, the initial occupant of all for-sale units
that qualified the applicant for the award of the density bonus are
persons and families of very low, low, or moderate income, as
required, and that the units are offered at an affordable housing
cost, as that cost is defined in Section 50052.5 of the Health and
Safety Code. The local government shall enforce an equity sharing
agreement, unless it is in conflict with the requirements of another
public funding source or law. The following apply to the equity
sharing agreement:

(A) Upon resale, the seller of the unit shall retain the value of
any improvements, the downpayment, and the seller’s proportionate
share of appreciation. The local government shall recapture any
initial subsidy, as defined in subparagraph (B), and its proportionate
share of appreciation, as defined in subparagraph (C), which
amount shall be used within five years for any of the purposes
described in subdivision (e) of Section 33334.2 of the Health and
Safety Code that promote home ownership.

(B) For purposes of this subdivision, the local government’s
initial subsidy shall be equal to the fair market value of the home
at the time of initial sale minus the initial sale price to the
moderate-income household, plus the amount of any downpayment
assistance or mortgage assistance. If upon resale the market value
is lower than the initial market value, then the value at the time of
the resale shall be used as the initial market value.

(C) For purposes of this subdivision, the local government’s
proportionate share of appreciation shall be equal to the ratio of
the local government’s initial subsidy to the fair market value of
the home at the time of initial sale.

(3) (A) An applicant shall be ineligible for a density bonus or
any other incentives or concessions under this section if the housing
development is proposed on any property that includes a parcel or
parcels on which rental dwelling units are or, if the dwelling units
have been vacated or demolished in the five-year period preceding
the application, have been subject to a recorded covenant,
ordinance, or law that restricts rents to levels affordable to persons
and families of lower or very low income; subject to any other
form of rent or price control through a public entity’s valid exercise
of its police power; or occupied by lower or very low income
households, unless the proposed housing development replaces
those units, and either of the following applies:

(i) The proposed housing development includes the additional
required set aside of affordable units at the percentages set forth
in subdivision (b).

(ii) Each unit in the begin delete development end delete begin insert development, exclusive of a
manager’s unit or units, end insert is affordable to, and occupied by, either
a lower or very low income household.

(B) For the purposes of this paragraph, “replace” shall mean
either of the following:

(i) If any dwelling units described in subparagraph (A) are
occupied on the date of application, the proposed housing
development shall provide at least the same number of units of
equivalent size or type, or both, to be made available for rent at
affordable housing costs to, and occupied by, persons and families
in the same or lower income category as those households in
occupancy. For unoccupied dwelling units described in begin delete this
paragraph end delete begin insert subparagraph (A) end insert in a development with occupied units,
the proposed housing development shall provide units of equivalent
size or type, or both, to be made available for rent at affordable
housing costs to, and occupied by, persons and families in the same
or lower income category in the same proportion of affordability
as the occupied units. All replacement calculations resulting in
fractional units shall be rounded up to the next whole number.
These units shall be subject to a recorded affordability restriction
for at least 55 years.

(ii) If all dwelling units described in subparagraph (A) have
been vacated or demolished within the five-year period preceding
the application, the proposed housing development shall provide
at least the same number of units of equivalent size or type, or
both, as existed at the highpoint of those units in the five-year
period preceding the application to be made available for rent at
affordable housing costs to, and occupied by, persons and families
in the same or lower income category as those persons and families
in occupancy at that time, if known. If the incomes of the persons
and families in occupancy at the highpoint is not known, then
one-half of the required units shall be made available for rent at
affordable housing costs to, and occupied by, very low income
persons and families and one-half of the required units shall be
made available for rent at affordable housing costs to, and occupied
by, low-income persons and families. begin insert All replacement calculations
resulting in fractional units shall be rounded up to the next whole
number. end insert These units shall be subject to a recorded affordability
restriction for at least 55 years.

(d) (1) An applicant for a density bonus pursuant to subdivision
(b) may submit to a city, county, or city and county a proposal for
the specific incentives or concessions that the applicant requests
pursuant to this section, and may request a meeting with the city,
county, or city and county. The city, county, or city and county
shall grant the concession or incentive requested by the applicant
unless the city, county, or city and county makes a written finding,
based upon substantial evidence, of any of the following:

(A) The concession or incentive is not required in order to
provide for affordable housing costs, as defined in Section 50052.5
of the Health and Safety Code, or for rents for the targeted units
to be set as specified in subdivision (c).

(B) The concession or incentive would have a specific adverse
impact, as defined in paragraph (2) of subdivision (d) of Section
65589.5, upon public health and safety or the physical environment
or on any real property that is listed in the California Register of
Historical Resources and for which there is no feasible method to
satisfactorily mitigate or avoid the specific adverse impact without
rendering the development unaffordable to low- and
moderate-income households.

(C) The concession or incentive would be contrary to state or
federal law.

(2) The applicant shall receive the following number of
incentives or concessions:

(A) One incentive or concession for projects that include at least
10 percent of the total units for lower income households, at least
5 percent for very low income households, or at least 10 percent
for persons and families of moderate income in a common interest
development.

(B) Two incentives or concessions for projects that include at
least 20 percent of the total units for lower income households, at
least 10 percent for very low income households, or at least 20
percent for persons and families of moderate income in a common
interest development.

(C) Three incentives or concessions for projects that include at
least 30 percent of the total units for lower income households, at
least 15 percent for very low income households, or at least 30
percent for persons and families of moderate income in a common
interest development.

(3) The applicant may initiate judicial proceedings if the city,
county, or city and county refuses to grant a requested density
bonus, incentive, or concession. If a court finds that the refusal to
grant a requested density bonus, incentive, or concession is in
violation of this section, the court shall award the plaintiff
reasonable attorney’s fees and costs of suit. Nothing in this
subdivision shall be interpreted to require a local government to
grant an incentive or concession that has a specific, adverse impact,
as defined in paragraph (2) of subdivision (d) of Section 65589.5,
upon health, safety, or the physical environment, and for which
there is no feasible method to satisfactorily mitigate or avoid the
specific adverse impact. Nothing in this subdivision shall be
interpreted to require a local government to grant an incentive or
concession that would have an adverse impact on any real property
that is listed in the California Register of Historical Resources.
The city, county, or city and county shall establish procedures for
carrying out this section, that shall include legislative body
approval of the means of compliance with this section.

(e) (1) In no case may a city, county, or city and county apply
any development standard that will have the effect of physically
precluding the construction of a development meeting the criteria
of subdivision (b) at the densities or with the concessions or
incentives permitted by this section. An applicant may submit to
a city, county, or city and county a proposal for the waiver or
reduction of development standards that will have the effect of
physically precluding the construction of a development meeting
the criteria of subdivision (b) at the densities or with the
concessions or incentives permitted under this section, and may
request a meeting with the city, county, or city and county. If a
court finds that the refusal to grant a waiver or reduction of
development standards is in violation of this section, the court
shall award the plaintiff reasonable attorney’s fees and costs of
suit. Nothing in this subdivision shall be interpreted to require a
local government to waive or reduce development standards if the
waiver or reduction would have a specific, adverse impact, as
defined in paragraph (2) of subdivision (d) of Section 65589.5,
upon health, safety, or the physical environment, and for which
there is no feasible method to satisfactorily mitigate or avoid the
specific adverse impact. Nothing in this subdivision shall be
interpreted to require a local government to waive or reduce
development standards that would have an adverse impact on any
real property that is listed in the California Register of Historical
Resources, or to grant any waiver or reduction that would be
contrary to state or federal law.

(2) A proposal for the waiver or reduction of development
standards pursuant to this subdivision shall neither reduce nor
increase the number of incentives or concessions to which the
applicant is entitled pursuant to subdivision (d).

(f) For the purposes of this chapter, “density bonus” means a
density increase over the otherwise maximum allowable residential
density as of the date of application by the applicant to the city,
county, or city and county. The applicant may elect to accept a
lesser percentage of density bonus. The amount of density bonus
to which the applicant is entitled shall vary according to the amount
by which the percentage of affordable housing units exceeds the
percentage established in subdivision (b).

(1) For housing developments meeting the criteria of
subparagraph (A) of paragraph (1) of subdivision (b), the density
bonus shall be calculated as follows:

 

Percentage Low-Income Units	Percentage Density Bonus
10	20
11	21.5
12	23
13	24.5
14	26
15	27.5
17	30.5
18	32
19	33.5
20	35

 

(2) For housing developments meeting the criteria of
subparagraph (B) of paragraph (1) of subdivision (b), the density
bonus shall be calculated as follows:

 

Percentage Very Low Income Units	Percentage Density Bonus
5	20
6	22.5
7	25
8	27.5
9	30
10	32.5
11	35

 

(3) For housing developments meeting the criteria of
subparagraph (C) of paragraph (1) of subdivision (b), the density
bonus shall be 20 percent of the number of senior housing units.

(4) For housing developments meeting the criteria of
subparagraph (D) of paragraph (1) of subdivision (b), the density
bonus shall be calculated as follows:

 

Percentage Moderate-Income Units	Percentage Density Bonus
10	5
11	6
12	7
13	8
14	9
15	10
16	11
17	12
18	13
19	14
20	15
21	16
22	17
23	18
24	19
25	20
26	21
27	22
28	23
29	24
30	25
31	26
32	27
33	28
34	29
35	30
36	31
37	32
38	33
39	34
40	35

 

(5) All density calculations resulting in fractional units shall be
rounded up to the next whole number. The granting of a density
bonus shall not be interpreted, in and of itself, to require a general
plan amendment, local coastal plan amendment, zoning change,
or other discretionary approval.

(g) (1) When an applicant for a tentative subdivision map,
parcel map, or other residential development approval donates
land to a city, county, or city and county in accordance with this
subdivision, the applicant shall be entitled to a 15-percent increase
above the otherwise maximum allowable residential density for
the entire development, as follows:

 

Percentage Very Low Income	Percentage Density Bonus
10	15
11	16
12	17
13	18
14	19
15	20
16	21
17	22
18	23
19	24
20	25
21	26
22	27
23	28
24	29
25	30
26	31
27	32
28	33
29	34
30	35

 

(2) This increase shall be in addition to any increase in density
mandated by subdivision (b), up to a maximum combined mandated
density increase of 35 percent if an applicant seeks an increase
pursuant to both this subdivision and subdivision (b). All density
calculations resulting in fractional units shall be rounded up to the
next whole number. Nothing in this subdivision shall be construed
to enlarge or diminish the authority of a city, county, or city and
county to require a developer to donate land as a condition of
development. An applicant shall be eligible for the increased
density bonus described in this subdivision if all of the following
conditions are met:

(A) The applicant donates and transfers the land no later than
the date of approval of the final subdivision map, parcel map, or
residential development application.

(B) The developable acreage and zoning classification of the
land being transferred are sufficient to permit construction of units
affordable to very low income households in an amount not less
than 10 percent of the number of residential units of the proposed
development.

(C) The transferred land is at least one acre in size or of
sufficient size to permit development of at least 40 units, has the
appropriate general plan designation, is appropriately zoned with
appropriate development standards for development at the density
described in paragraph (3) of subdivision (c) of Section 65583.2,
and is or will be served by adequate public facilities and
infrastructure.

(D) The transferred land shall have all of the permits and
approvals, other than building permits, necessary for the
development of the very low income housing units on the
transferred land, not later than the date of approval of the final
subdivision map, parcel map, or residential development
application, except that the local government may subject the
proposed development to subsequent design review to the extent
authorized by subdivision (i) of Section 65583.2 if the design is
not reviewed by the local government prior to the time of transfer.

(E) The transferred land and the affordable units shall be subject
to a deed restriction ensuring continued affordability of the units
consistent with paragraphs (1) and (2) of subdivision (c), which
shall be recorded on the property at the time of the transfer.

(F) The land is transferred to the local agency or to a housing
developer approved by the local agency. The local agency may
require the applicant to identify and transfer the land to the
developer.

(G) The transferred land shall be within the boundary of the
proposed development or, if the local agency agrees, within
one-quarter mile of the boundary of the proposed development.

(H) A proposed source of funding for the very low income units
shall be identified not later than the date of approval of the final
subdivision map, parcel map, or residential development
application.

(h) (1) When an applicant proposes to construct a housing
development that conforms to the requirements of subdivision (b)
and includes a child care facility that will be located on the
premises of, as part of, or adjacent to, the project, the city, county,
or city and county shall grant either of the following:

(A) An additional density bonus that is an amount of square
feet of residential space that is equal to or greater than the amount
of square feet in the child care facility.

(B) An additional concession or incentive that contributes
significantly to the economic feasibility of the construction of the
child care facility.

(2) The city, county, or city and county shall require, as a
condition of approving the housing development, that the following
occur:

(A) The child care facility shall remain in operation for a period
of time that is as long as or longer than the period of time during
which the density bonus units are required to remain affordable
pursuant to subdivision (c).

(B) Of the children who attend the child care facility, the
children of very low income households, lower income households,
or families of moderate income shall equal a percentage that is
equal to or greater than the percentage of dwelling units that are
required for very low income households, lower income
households, or families of moderate income pursuant to subdivision
(b).

(3) Notwithstanding any requirement of this subdivision, a city,
county, or city and county shall not be required to provide a density
bonus or concession for a child care facility if it finds, based upon
substantial evidence, that the community has adequate child care
facilities.

(4) “Child care facility,” as used in this section, means a child
day care facility other than a family day care home, including, but
not limited to, infant centers, preschools, extended day care
facilities, and schoolage child care centers.

(i) “Housing development,” as used in this section, means a
development project for five or more residential units. For the
purposes of this section, “housing development” also includes a
subdivision or common interest development, as defined in Section
4100 of the Civil Code, approved by a city, county, or city and
county and consists of residential units or unimproved residential
lots and either a project to substantially rehabilitate and convert
an existing commercial building to residential use or the substantial
rehabilitation of an existing multifamily dwelling, as defined in
subdivision (d) of Section 65863.4, where the result of the
rehabilitation would be a net increase in available residential units.
For the purpose of calculating a density bonus, the residential units
shall be on contiguous sites that are the subject of one development
application, but do not have to be based upon individual
subdivision maps or parcels. The density bonus shall be permitted
in geographic areas of the housing development other than the
areas where the units for the lower income households are located.

(j) (1) The granting of a concession or incentive shall not be
interpreted, in and of itself, to require a general plan amendment,
local coastal plan amendment, zoning change, or other discretionary
approval. This provision is declaratory of existing law.

(2) Except as provided in subdivisions (d) and (e), the granting
of a density bonus shall not be interpreted to require the waiver of
a local ordinance or provisions of a local ordinance unrelated to
development standards.

(k) For the purposes of this chapter, concession or incentive
means any of the following:

(1) A reduction in site development standards or a modification
of zoning code requirements or architectural design requirements
that exceed the minimum building standards approved by the
California Building Standards Commission as provided in Part 2.5
(commencing with Section 18901) of Division 13 of the Health
and Safety Code, including, but not limited to, a reduction in
setback and square footage requirements and in the ratio of
vehicular parking spaces that would otherwise be required that
results in identifiable, financially sufficient, and actual cost
reductions.

(2) Approval of mixed-use zoning in conjunction with the
housing project if commercial, office, industrial, or other land uses
will reduce the cost of the housing development and if the
commercial, office, industrial, or other land uses are compatible
with the housing project and the existing or planned development
in the area where the proposed housing project will be located.

(3) Other regulatory incentives or concessions proposed by the
developer or the city, county, or city and county that result in
identifiable, financially sufficient, and actual cost reductions.

(l) Subdivision (k) does not limit or require the provision of
direct financial incentives for the housing development, including
the provision of publicly owned land, by the city, county, or city
and county, or the waiver of fees or dedication requirements.

(m)  This section shall not be construed to supersede or in any
way alter or lessen the effect or application of the California
Coastal Act of 1976 (Division 20 (commencing with Section
30000) of the Public Resources Code).

(n) If permitted by local ordinance, nothing in this section shall
be construed to prohibit a city, county, or city and county from
granting a density bonus greater than what is described in this
section for a development that meets the requirements of this
section or from granting a proportionately lower density bonus
than what is required by this section for developments that do not
meet the requirements of this section.

(o) For purposes of this section, the following definitions shall
apply:

(1) “Development standard” includes a site or construction
condition, including, but not limited to, a height limitation, a
setback requirement, a floor area ratio, an onsite open-space
requirement, or a parking ratio that applies to a residential
development pursuant to any ordinance, general plan element,
specific plan, charter, or other local condition, law, policy,
resolution, or regulation.

(2) “Maximum allowable residential density” means the density
allowed under the zoning ordinance and land use element of the
general plan, or if a range of density is permitted, means the
maximum allowable density for the specific zoning range and land
use element of the general plan applicable to the project. Where
the density allowed under the zoning ordinance is inconsistent
with the density allowed under the land use element of the general
plan, the general plan density shall prevail.

(p) (1) Upon the request of the developer, no city, county, or
city and county shall require a vehicular parking ratio, inclusive
of handicapped and guest parking, of a development meeting the
criteria of subdivision (b), that exceeds the following ratios:

(A) Zero to one bedroom: one onsite parking space.

(B) Two to three bedrooms: two onsite parking spaces.

(C) Four and more bedrooms: two and one-half parking spaces.

(2) If the total number of parking spaces required for a
development is other than a whole number, the number shall be
rounded up to the next whole number. For purposes of this
subdivision, a development may provide “onsite parking” through
tandem parking or uncovered parking, but not through onstreet
parking.

(3) This subdivision shall apply to a development that meets
the requirements of subdivision (b) but only at the request of the
applicant. An applicant may request parking incentives or
concessions beyond those provided in this subdivision pursuant
to subdivision (d).

SEC. 2.  

Section 65915.5 of the Government Code is amended
to read:

65915.5.  

(a) When an applicant for approval to convert
apartments to a condominium project agrees to provide at least 33
percent of the total units of the proposed condominium project to
persons and families of low or moderate income as defined in
Section 50093 of the Health and Safety Code, or 15 percent of the
total units of the proposed condominium project to lower income
households as defined in Section 50079.5 of the Health and Safety
Code, and agrees to pay for the reasonably necessary administrative
costs incurred by a city, county, or city and county pursuant to this
section, the city, county, or city and county shall either (1) grant
a density bonus or (2) provide other incentives of equivalent
financial value. A city, county, or city and county may place such
reasonable conditions on the granting of a density bonus or other
incentives of equivalent financial value as it finds appropriate,
including, but not limited to, conditions which assure continued
affordability of units to subsequent purchasers who are persons
and families of low and moderate income or lower income
households.

(b) For purposes of this section, “density bonus” means an
increase in units of 25 percent over the number of apartments, to
be provided within the existing structure or structures proposed
for conversion.

(c) For purposes of this section, “other incentives of equivalent
financial value” shall not be construed to require a city, county,
or city and county to provide cash transfer payments or other
monetary compensation but may include the reduction or waiver
of requirements which the city, county, or city and county might
otherwise apply as conditions of conversion approval.

(d) An applicant for approval to convert apartments to a
condominium project may submit to a city, county, or city and
county a preliminary proposal pursuant to this section prior to the
submittal of any formal requests for subdivision map approvals.
The city, county, or city and county shall, within 90 days of receipt
of a written proposal, notify the applicant in writing of the manner
in which it will comply with this section. The city, county, or city
and county shall establish procedures for carrying out this section,
which shall include legislative body approval of the means of
compliance with this section.

(e) Nothing in this section shall be construed to require a city,
county, or city and county to approve a proposal to convert
apartments to condominiums.

(f) An applicant shall be ineligible for a density bonus or other
incentives under this section if the apartments proposed for
conversion constitute a housing development for which a density
bonus or other incentives were provided under Section 65915.

(g) An applicant shall be ineligible for a density bonus or any
other incentives or concessions under this section if the
condominium project is proposed on any property that includes a
parcel or parcels on which rental dwelling units are or, if the
dwelling units have been vacated or demolished in the five-year
period preceding the application, have been subject to a recorded
covenant, ordinance, or law that restricts rents to levels affordable
to persons and families of lower or very low income; subject to
any other form of rent or price control through a public entity’s
valid exercise of its police power; or occupied by lower or very
low income households, unless the proposed condominium project
replaces those units, as defined in subparagraph (B) of paragraph
(3) of subdivision (c) of Section 65915, and either of the following
applies:

(1) The proposed condominium project includes the additional
required set aside of affordable units at the percentages set forth
in subdivision (a).

(2) Each unit in the begin delete development end delete begin insert development, exclusive of a
manager’s unit or units, end insert is affordable to, and occupied by, either
a lower or very low income household.