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Page 6 of 8 individual, or a non-profit organization which would then lease the units to income-qualified tenants. As is the case with deed-restricted for-sale units, the purchase price is established based on a variety of factors including the equivalent household income limits established by Alameda County and total housing costs as a proportion of that income.2 The for-sale option is encompassed in the AHA, Section 5 and Attachment 4. Staff proposes that the Commission find that the AHA for Alternative 1, the 57-unit project, would meet the requirements of the IZO and recommend approval to the City Council. Alternative 2, as described above, is an alternative version of the project with changes made in an effort to voluntarily address some of the concerns raised by neighbors with respect to Alternative 1, the 57-unit project. In conjunction with Alternative 2, because the project would yield fewer units, the applicant has modified the proposed inclusionary units to include 8 for-sale one-bedroom units, and for those units to be deed-restricted to moderate income (120% AMI) households . 55 units would require the provision of 8.25 inclusionary units, and the applicant is also proposing to pay $77,228, which is an approximation of the construction cost of the fractional 0.25 unit. Analysis of AHA for Proposed 55-Unit Project Alternative 2 As noted, the IZO requires multi-family projects with 15 or more units to provide 15% on- site inclusionary units affordable to very low or low income (50% to 80% AMI) households. While the unit count would meet the 15% requirement, the units are proposed as moderate income (120% AMI) units, and thus do not fit the income categories specified by the IZO. The IZO does have provisions for creative ways to meet the purpose of the IZO. The developer has cited Section 17.44.080 of IZO – Alternatives to Constructing Inclusionary Units On-Site, which states, as follows: “The primary emphasis of this inclusionary zoning ordinance is to achieve the inclusion of affordable housing units to be constructed in conjunction with market rate units within the same project in all new residential projects. However, the city acknowledges that it may not always be practical to require that every project satisfy its affordable housing requirement through the construction of affordable units within the project itself. Therefore, the requirements of this chapter may be satisfied by various methods other than the construction of inclusionary units on the project site. Some examples of alternate methods of compliance appear below [off-site projects, land dedication, credit transfers, alternative methods of compliance, and lower income housing fee option]. As housing market conditions change, the city may need to allow alternatives to provide options to applicants to further the intent of providing affordable housing with new development projects.” Pursuant this section, the applicant has indicated their proposal would be allowable under subsection D, of Section 17.44.080, which states that “Alternate Methods of Compliance. Applicants may propose creative concepts for meeting the requirements of this chapter, in order to bring down the cost of providing inclusionary units, whether on-site or off-site. The 2 The estimated initial sales price for-sale cost is approximately $243,000 for a low income unit and $433,000 for a moderate income unit, although the exact figure would vary based on income limits and other factors, to be determined at the time of sale or re-sale.