(a)  Notwithstanding any other provision of law, or any rule, regulation, condition, covenant, or restriction to the contrary, if a public agency owns and operates, or owns and causes to be operated, or provides assistance to, a housing development, and if a private owner or operator of a housing development receives assistance from a public agency, an elderly or handicapped household may qualify and live together in an efficiency, studio, or one bedroom unit of that housing development.

(b)  (1)  The public agency, or private owner or operator of a housing development receiving assistance from a public agency, may prohibit residency as provided in subdivision (a) on any of the following grounds:

(A)  If compliance with subdivision (a) would violate or be inconsistent with a federal or state law or regulation or local ordinance or regulation relating to health and safety.

(B)  If the combined income of all persons in the elderly or handicapped household, considering all permitted deductions and adjustments, is not in the income category of a family of the same size that would be eligible for assisted rental housing, if and to the extent that income limitations or requirements exist.

(C)  If the density of use of the dwelling unit would violate the requirements for efficiency, studio, or one bedroom units as prescribed by the Uniform Housing Code, or regulations promulgated by the Department of Housing and Community Development pursuant to Section 50152.7.

(D)  Those persons otherwise violate the requirements imposed pursuant to state or federal law for the particular rental housing program for which they seek to qualify.

(2)  This subdivision does not apply to any residency, occupancy, or use of a dwelling that is permitted under Section 51.3 of the Civil Code.

(Amended by Stats. 1984, Ch. 1072, Sec. 1.5.)