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a flexible approach to negotiating how residential projects may meet their affordable housing requirement. In addition to affordable units being provided on-site (such as in the higher density "Vines" and "Andares" developments), affordable housing fee payments and land dedication have also been accepted. A copy of the Inclusionary Zoning Ordinance is included for reference as Attachment 2. DISCUSSION Most Below Market Rate (BMR) ownership homes have been duets, townhomes, multi -family or smaller, detached single-family units of approximately 1,200 sf. There are no larger single-family BMR homes in the City's inventory and staff and the City Council have traditionally not pursued that type due to the significant gap between the market sales price of the homes and sales prices which are affordable for low and moderate income households. For example, using the current median list price per square foot for homes in Pleasanton of $561, a 2,500 sf single family home would be priced at approximately $1.4 million. The mortgage that a low income household of four could afford (at 80% of Area Median Income) would be approximately $270,000. The significant subsidy gap creates a "windfall" perception for individual homeowners, does not maximize affordable housing goals which may serve more residents through other housing development opportunities and programs, and is economically infeasible. Historically, developments with larger single family units such as the Lund Ranch and the Village at Valley Trails projects, have provided fee payments in lieu of providing units on site. These fee payments have been an important funding source for affordable housing goals at other sites, including Kottinger Gardens Phases 1 & 2, and in funding programs which support the variety of Housing Element goals. As the Commission is aware, the City Council approved an update to the City's Lower Income Housing fee in September 18, 2018. As part of that approval, the City Council acknowledged that a small number of projects were "in process" and had been conceived and proposed prior to the consideration of the new fee. Council chose to exempt these projects from the new fee and directed staff to pursue payment of the fees that could be justified by the Economic and Planning Systems Nexus Based Affordable Housing Fee Analysis report completed 2013. The Spotorno Ranch Project was one of these projects specifically identified for this exemption. Staff met with the Applicant and discussed how the Development will comply with the requirements of the Inclusionary Zoning Ordinance ("IZO"). In recognition of the significant need for resources to advance the City's affordable housing goals in the future, the Applicant has proposed to pay the current Lower Income Housing Fee and to make an affordable housing contribution to the City that when combined with the LIHF would be equal to the maximum lower income housing fee, adjusted by unit size, which was recommended in the 2013 Nexus Study. The 2013 report, which was discussed with the Commission, recommended that single-family homes pay fees on a sliding scale based on a home's square footage. That fee scale is reflected in the Affordable Housing Agreement. Additionally, the Applicant is proposing to construct Accessory Dwelling Units (ADUs) on at least twenty percent (20%) of the lots scattered throughout the Development. In applying and calculating this requirement, any decimal fraction less than or equal to 0.50 may be disregarded, and any decimal fraction greater than 0.50 shall be construed as one Accessory Dwelling Unit. Page-3-