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consistent with City Council comments made during the St. Anton development review, the language related to fully accessible affordable units (Section 3) has been amended to clarify the required units modifications and to extend the amount of time that the units must be marketed prior to offering them to the general public. Note this option is not technically consistent with the provisions of the IZO that requires the units to be affordable to only Very Low and Low Income categories; it is however, consistent with the recently approved California Center/Carr America development. Regarding the option for the developer to make a payment of $4,500,000 rather than providing affordable units, staff supports this alternative primarily because it could provide the City with all or a significant portion of the funding needec to develop, or assist in developing future inclusionary affordable housing. Further, it could be used to develop programs or other options for creating housing for lower income households. In addition, the City has committed $8 million from its Lower Income Housing Fund to the Kottinger Place development project and this in lieu payment would represent a significant contribution toward replacing those funds for future uses. The proposed in lieu fee equals $13,043/unit which is significantly more than the existing lower income housing fee of $2,655/unit and $2.83 per square foot of commercial. Assuming the "standard" Lower Income Housing Fee payment, the amount would have been $915,975 for the apartments and $109,750 for the commercial for a total of $1,025,725 resulting in a difference of $3,474,275 above the "standard" fee. The amount was arrived at based on negotiations between the parties and reflects that: the new lower income housing nexus study may potentially result in a higher fee amount. However, the payment amount is not tied to any adjustments, or lack thereof, that comes out of the nexus study. The AHA requires the City Council to notify the developer of its selection of the fee versus the rent restricted unit option within 45 days after being notified of the developer's intent to begin project construction or within one year from the effective date of the AHA and as such, staff intends make a recommendation to the City Council at a later date consistent with that timeline. Further details regarding this matter are included in the Housing Commission agenda reports included as Exhibit D of Attachment 9. The recommended Affordable Housing Agreement is included as Attachment 2. Development Agreement The applicants have proposed a development agreement (Attachment 3) to vest the entitlements for the project. The applicant has proposed a 10-year term for the development agreement. The developer would be obligated to pay the applicable development impact fees which are in effect when the ordinance approving the agreement is effective. The agreement allows the City to utilize the project's in-lieu park dedication fees towards improving community parks in the City, including Phase II of Bernal Community Park. The agreement also references the Affordable Housing Agreement and the in-lieu payment option. Page 8 of 11