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 Credit Transfers: The current IZO permits developers who provide more on-site units than the Ordinance requires to apply the excess as a “credit” for another project. No changes are recommended to this section.  Other Alternative Compliance: The current IZO allows developers to propose alternative “creative concepts” to meet the IZO’s requirement, “in order to bring down the cost of providing inclusionary units,” and subject to City Council approval. Staff recommends continuing to include this provision in the IZO to allow flexibility to consider new or alternative ways to meet the goals and intent of the ordinance. Payment of In-Lieu Fees City Councilmembers have expressed concern about projects being allowed to pay the affordable housing fee rather than provide on-site units, with limited discretion for the City to approve or deny such proposals. Indeed, the existing IZO grants developers the option of paying fees, and unlike other alternative compliance methods listed above, does not specify City Council approval of such proposals. Staff recommends that payment of in-lieu fees still be included among the menu of alternative compliance options. There may be instances where it is appropriate or advantageous to accept payment of fees: for example, building affordable units in an isolated, non-transit accessible part of the community may not be the preferred option. Collecting fees can also give the City the ability to aggregate funds toward housing programs or a dedicated affordable housing project that could create more, or more deeply affordable units than building on-site. However, approval of such payment should be solely at the discretion of the City Council, with adequate justification provided based on the specific circumstances of the project, and with a clearly stated policy preference for as many units as possible to be constructed on-site. As described above, it is a further recommendation to allow, on an interim basis, multi- family projects to pay in-lieu fees for up to 30% of their required inclusionary units, as a stimulus to multi-family and rental housing production. Other alternative compliance proposals, such as construction of units at another location, dedication or donation of land, should also be allowed to be proposed, and such proposals subject to City Council approval. Streamlined/Simplified Approval for Fully-Compliant Affordable Housing Agreements To further incentivize on-site construction and full compliance with the IZO, and offer a streamlining opportunity, staff further recommends that Affordable Housing Agreements that are fully compliant with the IZO and not including alternative compliance requests be approved at the same level as the underlying project, rather than always subject to City Council review and approval. Page 16 of 40