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On a short-term/interim basis of up to two years, allow multi-family rental and condominium projects subject to the IZO to pay in-lieu fees for up to 30% of the otherwise required inclusionary units. (“Alternative compliance” requests to pay fees above this increment would require City Council review and approval.) These proposals would help to incentivize smaller rental projects not subject to the IZO and provide a temporary/short-term stimulus toward larger multi-family development projects (which constitute the bulk of the City’s future zoned housing supply), while not significantly affecting long-term affordable housing production. 3. Remaining Residential Capacity/Effect of IZO Amendment Changes To assist with the City Council’s decision-making, staff analyzed potential future residential development capacity, considering a) projects not yet approved or part of an existing development application, and b) of a probable size (10 units or more) that would be subject to the IZO. The properties considered include both sites that were re- zoned as part of the 6th Cycle Housing Element, and those that had residential zoning, and were identified as having residential development capacity in the Housing Element.4 The analysis, summarized in Table 4, finds there to be a very limited number of sites (a maximum of only 2-4 sites) that would be likely to yield traditional detached single-family residential projects subject to the IZO, with a total of 50-158 total units. Between existing zoned properties and the Housing Element “re-zone” sites, there are 5-17 “mid- density” sites that could collectively yield 420-560 housing units (generally expected to be for-sale townhomes), and 20-30 high-density housing sites yielding in the range of 4,200-5,600 apartment units, typically rental projects.5 Table 4 also provides a comparison of the yield of inclusionary units, based on various assumed inclusionary rates. Modifying the inclusionary rate for lower-density single- family and townhome projects will have relatively little effect on the actual production of affordable units (a difference of 25-40 units); whereas changing the inclusionary rate for apartment units has a much more significant effect on inclusionary production, in the order of 200-300 units. 4 A range is shown for each category, because while the Housing Element takes a conservative approach in projecting unit counts (e.g., assuming projects will develop at the low or mid-point of their allowable density), staff wanted to illustrate the maximum impact of an effect in change of the inclusionary rate. 5 The count and estimate of multi-family sites includes some sites, particularly smaller sites in the Downtown, that may ultimately develop as lower-density townhome projects. If this occurs, the townhome unit count would increase and the multi-family unit count would decrease. Page 11 of 40