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Under California law, if the inclusionary requirement is adopted through a program in the jurisdiction's housing element, the program must provide developers with this option. However, nothing requires a jurisdiction to adopt an inclusionary requirement through its housing element, and this approach is not ideal. Should inclusionary requirements be structured differently in different neighborhoods? Inclusionary requirements most typically apply jurisdiction -wide. While different neighborhoods within a city may have differing development markets, a well-designed policy already adjusts for those differences. For example, in a neighborhood where the development market is especially hot and land costs are high, the value of an increase in allowable density is also much higher, making a higher inclusionary requirement feasible. SPECIFIC PLANS: However, in large cities, it may make sense to consider area - specific increases in an inclusionary requirement because some parts of town may be much hotter development markets than others. An effective way to accomplish this is through the adoption of a specific plan that lays out the land -use controls that apply within a designated geographic area. TRANSIT AREAS: Some jurisdictions have also crafted specific inclusionary policies that apply to areas adjacent to transit stations, recognizing the wide body of research demonstrating how crucial it is to build affordability into transit -oriented development and the resulting benefits that increase transit ridership, reduce greenhouse gas emissions, and strengthen community stability. How long should inclusionary units remain affordable? Given the time and resources that go into developing housing, an inclusionary ordinance should aim to set the affordability term — how many years a unit must remain "affordable"— for the longest period of time that is feasible. One important thing to consider in determining the affordability term is the cost of maintaining a unit's affordability over time compared to the cost of having to provide a new affordable unit to replace it when the deed -restriction period ends. In most cases,the former will be far more cost-effective than the latter. BUILDING WEALTH: One advantage of homeownership is the ability to build wealth through the ownership of an appreciable asset. Strict resale controls that require the home to be resold at an affordable price to another low- income homeowner significantly restrict the wealth -building advantages of homeownership. On the other hand, the program should protect against the owner of a for -sale inclusionary home quickly reselling the home at a significant profit. For rental units, 55 years is a common affordability term required by many affordable -housing funding programs in California. An inclusionary ordinance should require at least as long a period, although it's not uncommon for jurisdictions to require longer periods — or even to mandate that inclusionary rental units be deed restricted in perpetuity, as West Hollywood does. The typical term with for -sale units is 45 years. Affordability restric- tions for these units present some additional policy considerations about the sale of the home during the affordability term. SHARING EQUITY: The most common way of balancing these interests is an equity -sharing policy in which any appreciation is split between the selling homeowner and the jurisdiction. The jurisdiction then uses its share to assist in future homeownership opportunities for low-income buyers. Some policies have initial limits on resale (such as 10 years) that require the home to be resold only to a low-income buyer at an affordable price during that period. Other ordinances have a sliding -scale, equity -sharing provision that states that no proceeds to a homeowner who sells during the initial years, but provides a greater share of the proceeds to the homeowner closer toward the end of the 45 -year term. Should the inclusionary requirement change over time? Housing markets are constantly changing, and it would be a challenge to amend an inclusionary requirement in response to every rise and dip in local conditions. However, building in a set review period can be useful for a number of reasons. Periodic review can help determine whether the percentage of units required remains appropriate for local conditions so that the community is not losing out on affordable units that could feasibly be achieved with a higher inclusionary requirement. It can also help in assessing whether changes to income targeting are necessary. For example, if a community has steadily produced low-income units but not very low-income units, it may be necessary to increase the percentage of very low-income units required by the ordinance and adjust available incentives accordingly to account for the higher cost of providing these units. Every five years is a reasonable review period. SYNC WITH HOUSING ELEMENT: Another option is to review the ordinance concurrent with the housing -element adoption process every eight years. (While most local jurisdictions in California must update their housing ele- ment every eight years, some rural jurisdictions remain on a five-year cycle.) itiiEETING CALIFORNIA'S HOUSING NEEDS: BEST PRACTICES FOR INCLUSIONARY HOUSING