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Planning Commission Duties with Planning Commission Respect to IZO and Housing Programs 3 of 6 •Design modifications: The City may grant design modifications that may include height restriction waivers, reduction in parking requirements, and/or reduced setbacks, open space and landscaping, or interior/exterior amenities. •Second mortgages: The City may provide second mortgages or subsidies in exchange for the inclusionary units. •Priority processing: Projects with inclusionary units may be entitled to priority processing of building and engineering approvals. Alternatives to Constructing Inclusionary Units The IZO requires the provision of Inclusionary Units only when the construction of the affordable housing units results in the feasibility of the residential project. However, if a project is found to be impractical or infeasible, the City and developer may agree on the following alternate methods of compliance with the IZO. •Off-site Projects: The inclusionary units may be permitted to be constructed at another project site within the city. •Land Dedication: An applicant may dedicate land to the City that may accommodate the development of inclusionary units. •Credit Transfers: A project owner may request inclusionary unit credits when a project exceeds the total number of inclusionary units required on a site. •Alternate Methods of Compliance: An applicant may propose creative concepts for meeting the IZO requirements that can bring down the costs of providing inclusionary units. •Lower Income Housing Fee Option: An applicant may pay the City’s Lower Income Housing Fee, in lieu of providing inclusionary units in a project.1 Note that the IZO provides discretion for the City to approve the first four of the alternative compliance methods listed above. The IZO allows the developer to either provide the inclusionary units or to utilize one of the alternatives described above. With respect to payment of Lower Income Housing Fee, the IZO as structured today is permissive in allowing a developer to choose to pay the Lower-Income Housing Fee, without discretionary approval by the City. In general, the City has been more successful in achieving inclusionary units in rental housing projects, with the majority (but not all) for-sale housing projects choosing to pay housing in-lieu fees. A small number of projects have provided a combination of fees and on-site construction. Benefits of In-Lieu Fee While the City prefers the construction of the inclusionary units over the payment of in -lieu fees, these fees do provide the City with a steady funding source for the development of affordable housing in the city particularly as funding from the county, the state, and/or the federal government continue to steadily diminish year after year. The City also no longer has ownership of any developable land for affordable housing. Consequently, the City’s Low Income Housing Fund (LIHF) (derived from the payment of in-lieu developer fees) is its main sole source of financial resource for the development of affordable housing. Over the past five 1 which was changed to the Affordable Housing Fee in January 2019,