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Economic & Planning Systems, Inc. <br />6 <br />other jurisdictions and can share the results with the City, adding that effort to the scope if <br />desired. <br />Task 5: Affordable Housing Fee Updates <br />Affordable housing fees require a distinct technical approach from the AB1600 nexus described <br />above. In this task, EPS will update the City’s existing affordable housing fees applicable to <br />commercial and residential development, as described below. For non-residential development, <br />EPS will update the City’s existing commercial linkage fee. For residential development, EPS <br />proposes to update the inclusionary zoning ordinance and associated affordable housing in-lieu <br />fee, which will replace the existing residential linkage fee for residential projects not required <br />to build on-site affordable housing, and also be used as the basis for fees charged if a project <br />is permitted to meet its inclusionary requirement through payment of fees. <br />Task 5.1: Affordable Housing Commercial Linkage Fee Update <br />EPS has already completed the nexus analysis for the impact of commercial development <br />(commercial linkage) in 2018 and will update the key inputs to this analysis as part of this task. <br />Specifically, EPS will update the following affordable housing nexus assumptions: Development cost (construction, land, fees, required financial returns, etc.), <br />Prices at which the units are affordable to income-qualified households (very low, low, <br />median, and moderate income). <br />Compensation estimates of future employees for several non-residential land use types <br />(retail, office, industrial, tourist accommodations). <br />Following these technical updates and further consultation with City staff, EPS will adjust the <br />affordable housing fee methodology as appropriate. The updates will inform the maximum <br />justifiable affordable housing fees for non-residential development. <br />Task 5.2: Evaluation of Existing Inclusionary Zoning Ordinance <br />EPS will review the existing Inclusionary Zoning Ordinance (IZO) and meet with City staff to <br />discuss any shortcomings the City has found, or any issues the City has faced in implementing <br />the ordinance. Of particular focus will be the need to include objective requirements and <br />standards in the IZO, aligned with the City’s policy objectives. EPS recognizes that there is a <br />relationship between factors such as the inclusionary rate (proportion of affordable units <br />required), and affordability levels, the in-lieu fee, and overall feasibility analysis, and therefore <br />the process of setting the inclusionary rate, and in-lieu fee, will be somewhat iterative in nature. <br />Task 5.3: Inclusionary Zoning Economic Feasibility Analysis <br />EPS will evaluate potential changes to inclusionary zoning rates for single-family and multifamily <br />projects as well as explore modifications to the inclusionary requirements for the 6th Cycle <br />Housing Element sites in the City’s Objective Design Standards. <br />Drawing on feedback provided at the project initiation meeting and preliminary research on local <br />development conditions, EPS will develop a set of up to four (4) ownership and rental housing <br />prototypes for feasibility analysis that will be vetted with City staff. EPS will research the local <br />housing market prices and development costs by housing prototype, recent construction and <br />pipeline projects, land pricing, required developer profit, and other trends reflecting housing and <br />DocuSign Envelope ID: 23AB0CDB-5A6C-4B09-80D1-0F699E28C524DocuSign Envelope ID: CB7E68CB-B5FA-40EC-AA35-142CA6B57242