(b) A small home lot development for purposes of this section is a development that meets all of the following requirements:

1. (1) The proposed development is located on a lot zoned for multifamily residential development that is no larger than five acres and is substantially surrounded by qualified urban uses.
2. (2) The development proponent proposes to construct single-family housing units on fee simple ownership lots.

3. (3) The proposed development will, pursuant to the requirements of this division, meet one of the following, as applicable:

   1. (A) If the parcel is identified in the jurisdiction’s housing element pursuant to Section 65583.2, the development will result in at least as many units as projected for that parcel in the housing element.
   2. (B) If the parcel is not identified in the jurisdiction’s housing element, the development will result in at least as many units as the maximum allowable residential density, unless the zoning for the site allows for midrange density.
   3. (C) If midrange density is specified for the site, the development will result in at least as many units as are allowed under the midrange density standard.
4. (4) The residential properties within a radius of 500 feet of the site are zoned to have an allowable residential density of less than 30 dwelling units per acre.
5. (5) The site complies with the external existing site front, side, and rear setback requirements.
6. (6) The proposed units comply with existing height limits, if applicable.
7. (7) The jurisdiction has adopted a housing element for the current planning period that is in substantial compliance with Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1.
8. (8) The proposed site is not identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdiction’s regional housing need for low-income or very low income households.
9. (9) The average total area of floorspace for the proposed units does not exceed 1,750 net habitable square feet.
10. (10) The development complies with any local inclusionary housing ordinances adopted by the local agency, if applicable.

11. (11) The development of a housing development project on the proposed site to be subdivided does not require the demolition or alteration of any of the following types of housing:

    1. (A) Housing that is subject to a recorded covenant, ordinance, or law that restricts rent to levels affordable to persons and families of moderate, low, or very low income.
    2. (B) Housing that is subject to any form of rent or price control through a public entity’s valid exercise of its police power.
    3. (C) Housing occupied by tenants within the seven years preceding the date of the application, including housing that has been demolished or that tenants have vacated prior to the submission of the application for a development permit.
    4. (D) A parcel on which an owner of residential real property has exercised the owner’s rights under Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 to withdraw accommodations from rent or lease within 15 years before the date that the development proponent submits an application.

(c)

1. (1) Except as provided in paragraph (2), the local agency may impose conditions upon a small lot development in accordance with this division that are not in conflict with this section.

2. (2) A local agency shall not impose any of the following requirements on a small home lot development:

   1. (A) A setback requirement between the units, except as required in the California Building Code (Title 24 of the California Code of Regulations).
   2. (B) A minimum requirement on the size of an individual small home lot created by the development.
   3. (C) A requirement that parking be enclosed or covered.
   4. (D) The formation of a homeowners’ association.
3. (3) A local agency may condition the approval and recordation of a small lot development upon issuance of a certificate of occupancy or final inspection for all units in the small lot development.

(e) For purposes of this section:

1. (1) “Maximum allowable residential density” means the density allowed under the zoning ordinance, or, if a range of density is permitted, means the maximum allowable density for the specific zoning range applicable to the multifamily site. If 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.
2. (2) “Local inclusionary housing ordinance” means a mandatory requirement, as a condition of the development of residential units, that the development include a certain percentage of residential units affordable to, and occupied by, households with incomes that do not exceed the limits for extremely low, very low, lower, low-, or moderate-income households specified in Sections 50079.5, 50093, 50105, and 50106 of the Health and Safety Code. The ordinance may provide alternative means of compliance that may include, but are not limited to, in-lieu fees, land dedication, offsite construction, or acquisition and rehabilitation of existing units.
3. (3) “Qualified urban use” has the same meaning as defined in Section 21072 of the Public Resources Code.
4. (4) “Site” means the proposed location for the small home lot development before it is subdivided into parcels for the small home lot development.
5. (5) “Substantially surrounded” has the same meaning as defined in paragraph (2) of subdivision (a) of Section 21159.25 of the Public Resources Code.
6. (6) “Unit” means a single-family housing unit constructed pursuant to this section.

(g) A city, county, or city and county shall approve an application for a small home lot development unless it makes one of the following findings:

1. (1) The small lot development does not meet the requirements of this section.
2. (2) The small lot development does not comply with all requirements of this division that are not in conflict with this section.
3. (3) The small lot development does not comply with all local general plan, zoning, subdivision, and design standards that do not conflict with this section.
4. (4) The small lot development would have a specific, adverse impact upon the public health or safety, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the small lot development financially infeasible. As used in this paragraph, a “specific, adverse impact” means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete.