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Mr. Dolan clarified that the current projects under construction are actually fairly in line with what is allowed under Growth Management, though the level of development may seem significant relative to recent years that were fairly devoid of development. This lack of development is a result of both the economy and the city's unwillingness to provide any inventory on which to build additional housing. The city's housing cap was overturned and it was forced to rezone enough inventory to meet its obligations from past RHNA cycles, which did ultimately result in a surge of entitled projects coming forward. However, that the current form of the Growth Management Ordinance took full force and effect on July 1, 2014 and will limit develop to 230 units annually on a going forward basis. Mayor Thome added that in addition to the housing cap, the lawsuit challenged the city's ability to implement enforceable development standards as new projects came forward. Mr. Dolan presented several slides describing the relationship between the city's current inventory and the new RHNA assignment. For the 2014-2022 Planning Period, the city has a total obligation of 2,067 units with 1,107 being reserved for the very low and low income categories. Per HCD guidelines, sites must have a minimum density of 30 units per acre to be considered inventory for the construction of very low and low income housing. While HCD does not dictate a minimum density for the moderate income category, staffs assumption has been that a density of 23 units per acre would accomplish this goal. In comparing the city's total inventory, which includes permitted and approved (but not yet built) projects as well as vacant or underutilized land, to the RHNA obligation it would appear to yield a surplus inventory of 1,292 units across all income categories. He cautioned that this can be a very misleading number because it includes some projects, the bulk of which fall into the moderate income category, that market conditions suggest may ultimately be built between now and the start of the next planning cycle. He therefore recommended that the Council and public really focus on the very low and low income categories which have a zoning surplus of 375 units. Councilmember Brown requested clarification on how projects which are permitted and approved factor into the obligation. Mr. Dolan explained that a number of projects resulting from the previous Housing Element Update have been approved but not yet constructed. This includes 1,515 units in the moderate income category and 291 units in the very low and low income category and, because they have not yet been built, the city is able to count those against its obligation during this planning cycle as well. Councilmember Cook-Kallio asked how the payment of in-lieu fees versus the development of affordable units affects this inventory. Mr. Dolan explained that if the Council were to allow a developer to exercise its option to pay in-lieu fees, the affordable units could no longer be counted in the very low and low income category. He estimated that combined, the two approved developments that have this option within their Housing Agreements could reduce the 375 unit buffer by 45 units. Vice-Chair Pentin asked and Mr. Dolan confirmed that the surplus exists largely because in developing a certified Housing Element, the city was required to approve those projects that came forward on the heels of the rezoning. He also confirmed that as of July 1, 2014, the Growth Management Ordinance is in full effect and replaces the city obligation to grandfather these approvals. Mr. Dolan then reviewed the impacts of the recommended down-zoning of the CM Capital 2 site, which if reduced from 30 units to 12 units per acre would result in the loss of 200 very low and low income units. This, combined with the potential loss of 45 units to in lieu fees, would reduce the buffer in this income category from 375 units to 130 units. Councilmember Cook-Kallio asked whether HCD has any opinion regarding in lieu fees. City Council Minutes Page 6 of 17 September 2,2014